‘DISADVANTAGEOUS’ DEAL: Iloilo-Guimaras Terminal Review Stalled for Two Years

By Rjay Zuriaga Castor

The Iloilo City Council is still waiting for the City Legal Office (CLO) to issue recommendations nearly two years after initiating a review of the Joint Venture Agreement (JVA) for the Guimaras-Iloilo Ferry Terminal Services (GIFTS) at Parola Wharf.

Councilor Sedfrey Cabaluna, chairman of the Committee on Transportation, said the CLO has yet to release its recommendation on the appropriate legal action regarding Double Dragon Properties Corporation’s (DDPC) alleged failure to comply with key provisions of the JVA.

In March 2023, the City Council requested the CLO to review the JVA provisions and assess the compliance of involved parties to determine the possibility of renegotiating or rescinding the contract.

“We proposed to revisit the whole contract with the City Legal. Our committee report, based on the documents provided and those not submitted by the required agencies, indicates the need for a thorough review,” Cabaluna said on Jan. 8.

He added that “it appears the JVA is disadvantageous to the city.”

Key Issues Raised

A committee report obtained by the Daily Guardian highlighted the following concerns:

• DDPC’s remitted payments seemed disproportionately low compared to the volume of passengers and cargo using the terminal.
• The city’s share appeared incommensurate with the value of its land versus the infrastructure built by DDPC.
• DDPC failed to properly account for the city’s share of terminal earnings.
• DDPC representatives did not attend committee hearings called by the City Council on Dec. 13, 2022, and Feb. 7, 2023.

“There are issues we want remedied. If both sides agree, the contract could be reinstated, but if not, it may need to be rescinded for being disadvantageous to the city,” Cabaluna added.

He emphasized that the investigation cannot proceed without legal input from the CLO, as the matter involves a binding contract.

The Joint Venture Agreement

The JVA, signed in 2012 during the administration of then-Mayor Jed Patrick Mabilog, granted DDPC exclusive 25-year rights to develop and operate the 13,000-square-meter terminal complex.

In exchange, DDPC was tasked with building an air-conditioned passenger terminal and earning revenues from terminal, berthing, and cargo fees, as well as subleasing commercial spaces.

Under the JVA, the city’s share included 1-5% of gross terminal fee revenues, 1% of gross berthing fee revenues, 1% of gross cargo fee revenues, and 1% of gross rental revenue (exclusive of VAT).

“Out of respect, the council then ratified the JVA, confirming it as valid and fair to the city. That’s why we are taking our time and letting the CLO provide legal guidance,” Cabaluna said.

CLO Findings

An initial 2023 CLO report to the City Council flagged several issues:

• DDPC failed to submit annual reports on the commercial operation and maintenance of the GIFTS terminal.
• The city government could not verify whether the terminal project’s design, construction, and development adhered to the Master Development Plan due to the absence of a final plan submission.
• DDPC ignored requests from the City Treasurer’s Office for financial statements and revenue-sharing breakdowns for the period of July 2018 to July 2022.

While the City Treasurer’s Office began collecting revenues in August 2019, it could not verify compliance with the JVA due to missing financial reports and itemized income breakdowns.

The JVA outlines three grounds for contract termination: abandonment of the project, failure to complete it, or bankruptcy/insolvency of the developer.

The JVA issue resurfaced in 2022 after the City Council denied a request by Navimar Shipping to open the old wharf in Ortiz for cargo operations.

Cabaluna noted that as long as the JVA with DDPC is active, no other port terminal in the city can operate for the Guimaras-Iloilo route.

“The old wharf in Ortiz was lobbying if they can be revived as a wharf going to Guimaras but if we do that our share and responsibilities to the JVA will be affected,” he said.