SBDMC, INC.

CUSA FEE POLICY

 SBMA’s Justifications for the
Implementation of CUSA Fee Policy

 Since 1992, SBMA has shouldered the full cost of providing all
municipal services within the Subic Bay Freeport Zone (SBFZ) such
as law enforcement, fire protection, emergency medical assistance,
roads and bridges construction and maintenance, grounds
maintenance, street lighting and street cleaning.

 The costs of providing municipal services are sourced by SBMA

solely from its operating revenues from leasing, port operations,
tourism operations and regulatory activities.

 None of the 5% tax paid by SBFZ Locators actually goes to the

SBMA since 3% goes to the National Government while the 2%
retained by SBMA is eventually distributed to the surrounding local
government units.
Imposition of CUSA Fee

 The CUSA Fee was imposed on locators and residents to partially recover
the cost of municipal services, purely as a cost-recovery mechanism, not a
revenue generating measure. The CUSA Fee aims to recover the cost only
of the following services:

a. law enforcement
b. fire protection
c. street cleaning
d. street lighting

 The CUSA Fee became effective on 1 October 2012 after public hearings
were held on on May 22, 26 and 27, 2012

 SBMA justified the imposition of CUSA Fee based on its powers and
functions under Section 13 (b) of RA 7227 and the Implementing Rules and
Regulations.

3
Penalties for Non-Payment of
CUSA Fee

1st Offense - 10% surcharge + 12% interest per annum

2nd Offense - 20% surcharge + 12% interest + suspension

of PTO for locators, non-collection of garbage
for resident.

3rd Offense - 25% surcharge + 12% interest + cancellation

of CRTE or Residential Lease Agreement

4
 CUSA Fee for SBDMC/SBGP
 The CUSA Fee is billed to SBMA’s direct lessees who have
the full and primary responsibility for payment.

 SBMA’s direct lessees have the option of passing on the

CUSA to their sub-lessees.

 Based on the Master Lease Agreement (MLA) between

SBMA and SBDMC, SBDMC is being billed by SBMA for the
CUSA Fee of the entire SBGP.

 The amount of CUSA Fee for SBDMC/SBDMC is

Php699,657.11/mo.

 Currently, SBDMC is paying CUSA Fee to SBMA under

protest

5
 CUSA Fee-SBGP Locators
 On September 20, 2012, SBDMC organized a forum on CUSA for
SBGP Locators. SBMA’s Senior Deputy Administrator for Support
Services Atty. Ramon O. Agregado was invited as the resource person.

 On October 19, 2012 SBDMC issued advisory to SBGP Locators

regarding the forum on CUSA and the outcome of the survey wherein
72% would like to pay CUSA Fee subject to condition that there shall
be no rate increase in the future and further charges of similar nature.

 On December 11, 2012, SBDMC began the collection of additional

US$0.01 as part of Management Fee due to effect of CUSA fee-it has
become part of the expenses of SBDMC in maintaining and operating
facilities that directly and indirectly benefit the SBGP Locators.

 SBDMC Management explained in the advisory to Locators that the

remittance to SBMA of CUSA Fee will be without prejudice and under
certain conditions.

6
 CUSA Fee Legal Action
 Since the enforcement of CUSA Fee policy, SBDMC has consistently
conveyed to SBMA its objection to the policy and exerted efforts to resolve
the issue by avoiding as much as possible litigation in consideration of the
joint venture partnership.
 SBMA has remained firm on its implementation of CUSA Fee policy.
 During SBDMC’s Board Meeting on August 26, 2019, the Board has
decided to to pursue legal action on CUSA Fee issue
 Objectives-Legal Action:
 Ask the court for a definite ruling if the imposition of CUSA fee is legally
justifiable under the Joint Venture Agreement (JVA), Master Lease
Agreements (PMAs) and Property Management Agreement (PMA)
between SBMA and SBMA
 To establish legal basis should SBMA impose similar charges in the
future
 Request for recovery/refund of CUSA Fee paid to SBMA under protest.
 SBDMC would like SBGP Locators’ collective participation in the legal
action.