At a glance:
- DiliMall’s lease award to a private firm is a result of loose regulation and presidential discretion with little to no oversight.
- Displaced Shopping Center stall owners are lamenting DiliMall’s rental fees which they fear could force them to increase prices.
- Stall owners are calling for a dialogue with the UP administration. UP President Angelo Jimenez has yet to heed their demands.
The controversial DiliMall property is slated to partially open by August amid continued protests from various university sectors, especially the displaced Shopping Center (SC) tenants, who say they were completely left out of the process of rebuilding the fire-gutted SC.
Hermie Laroa, the vice president of the UP Shopping Center Stallholders Association Inc. (UPSCSAI), said they were not consulted by UP during the supposed negotiation between the university and possible third-party leases of DiliMall.
DiliMall is the successor to the SC, which was razed in a fire in 2018. Six years later, the SC is now DiliMall and under the control and management of a master leaseholder, CBMS Research and Management Consultancy Services (CBMS-RMCS).
“Tinanong pa kami ng UP [noong 2021] na magpasa raw kami ng letter of intent sa bagong Shopping Center, pero lumaon, hindi na UP yung kausap namin,” Laroa told the Collegian. “Nabigla kami, third-party operator na yung humaharap sa amin.”
Cecil Bien Sebastian, consultant of CBMS-RMCS, told the Collegian that the east building of DiliMall is slated to open by August. The grocery and the photocopiers on the third floor will be among the first to open. CBMS-RMCS aims to open the entire DiliMall before the year ends.
The east wing of DiliMall will be the first to open as its construction finishes first. This part of the mall, adjacent to Apacible Street, will house a grocery (Robinsons Easymart), a drugstore (Southstar Drug), and 14 food outlets. (Luisa Elago/Philippine Collegian)
Exorbitant Rent
Laroa used to own a photocopying stall in the SC, until he transferred to the old tennis court after the fire. He has not yet agreed to get a stall in the three-storey DiliMall due to the exorbitant cost of rent in the new structure.
An owner must pay at least P350 per square meter for a 43-square meter stall space on the third floor of DiliMall, according to a DiliMall proposal document shown to the Collegian.
On top of the rent, tenants must also pay 7 percent of their gross sales to CBMS-RMCS, plus 5 percent of their utility consumption as service charge. A tenant must also pay an advance payment and a security deposit, each worth four months of rent. Rent may also increase by 5 percent each year.
“Kapag tinaasan nila [ang renta] sa amin, tuloy-tuloy na iyan–mapipilitan din kaming taasan ang presyo namin sa inyo (mga estudyante) at sa mga customer namin,” said Laroa. “Domino effect na iyan, eh.”
Sebastian, however, said his firm will have to shell out money to construct improvements to the DiliMall building. Such improvements include furnishings for the food court, an electrical generator, and a provision for LPG lines to various stalls.
But for Laroa, it is a natural consequence that third-party firms will charge high costs. “Negosyo na yan, eh, hindi na yan serbisyo tulad ng Shopping Center,” he said.
The second floor of DiliMall’s west wing will be occupied by nonfood tenants, which include souvenir shops, a gadget shop, a commercial bank, and personal care establishments. (Luisa Elago/Philippine Collegian)
Left in the Dark
Sebastian stated that although his firm is expected to generate a profit, it will not be of the scale seen in major shopping centers. Without disclosing CBMS-RMCS’s projected earnings, he said he accepted the DiliMall offer to “help” UP.
Sebastian is a UP graduate and a former assistant vice president of business development at Robinsons Retail Holdings (RRH). RRH, whose president and CEO Robina Gokongwei-Pe attended UP from 1978 to 1981, has been supporting the UP Men’s Basketball Team since 2010. Sebastian said Gokongwei-Pe has no personal investment in DiliMall, though the mall will have a Robinsons Easymart branch.
As early as March 2021, UP was already on the lookout for prospective DiliMall operators, according to the UP administration’s statement sent to the Collegian on Friday. CBMS-RMCS was among the five potential master lessees invited by UP, it added.
The selection of the master lessee was based on five criteria, with “proposed compensation for UP” having the greatest weight (30 percent). The other criteria were business experience (20 percent), customer base (20 percent), capitalization (20 percent), and organization structure (10 percent).
A copy of the contract between UP and CBMS-RMCS showed that the document was signed between Sebastian and former UP President Danilo Concepcion on January 6, 2023. The same contract mandates CBMS-RMCS to pay UP a monthly rent, calculated based on the mall’s income and occupancy rate. DiliMall’s first year of operation is free of rent (see sidebar story).
Infographics by Darlene Cruz.
Obscure Processes
For Laroa, it is baffling that UP decided to give the operation of DiliMall to a private third-party entity, considering that the university in 2021 even asked them if they were willing to rent a spot in the new SC, which was still being rebuilt at the time.
The university, however, contended that “by outsourcing the day-to-day management of DiliMall to a professional retail manager, [UP] can better focus its work and resources on academic and institutional goals instead of being sidetracked by the complexities of retail operation.”
Laroa lamented that if UP cannot manage the property on its own, the university could have simply restored the single-storey design of the SC. UP, however, argued that it was simply maximizing the use of the SC lot.
But the corporate takeover of DiliMall is caused in large part by a combination of loose regulatory framework and excessive discretion by university officials to lease out any government-owned building for commercial or private use.
According to UP, “[the UP Charter] grants the [UP] Board of Regents the authority to exercise the general power of the corporation which includes the power to lease property under the Revised Corporation Code of the Philippines.”
While government projects must undergo a procurement process per Republic Act 9184, the UP Charter has explicitly carved out an exemption for UP, given that a lease contract must be five years or less only.
But despite less stringent requirements, the UP Charter still mandates that income generating activities must be “consistent with the academic mission and orientation of the national university,” and that such deals be “subject to a transparent and democratic process of consultation with the constituents of the national university.”
Yet, as Laroa has pointed out, the DiliMall project hasn’t been consulted with them. Worse, even the UP Board of Regents’ approval is no longer needed as the board in 1986 already delegated the approval of such lease agreements to the UP president alone.
As DiliMall prepares to open, tenants who were displaced from the Shopping Center and temporarily relocated to the old tennis court express disappointment with UP's handling of the situation. They lament exclusion from the UP-CBMS dealings. (Luisa Elago/Philippine Collegian)
Red Flags
The lack of oversight on UP’s commercial dealings has previously led to state auditors flagging the university. In the case of the UP Town Center, the Commission on Audit (COA), in various audit reports, noted the university’s failure to collect at least P129 million for Ayala’s lease of UP lands across Katipunan Avenue.
As a result of government agencies entering lease contracts “disadvantageous to the interests of the government,” COA issued Circular 2019-005 requiring agencies with lease agreements to submit the agreements to state auditors “upon execution of the contract.”
UP has not yet submitted a copy of the DiliMall contract to COA, according to COA Assistant Commissioner Pearl Ramos in an email exchange with the Collegian on April 8. The Office of the Vice President for Development told the Collegian on Friday that it intends to comply with the said circular.
What Laroa and other displaced SC tenants are at least seeking is a dialogue with the UP administration to raise their concerns about the DiliMall rental rate and their stall location. But, in the March 21 dialogue between UP and student leaders, the University Student Council (USC) asserted for allowing UPSCSAI representatives to join. Jimenez declined.
Laroa said they have not received an update yet from the UP administration regarding the planned dialogue.
For its part, the USC was able to secure commitments from Jimenez to hold a town hall meeting before DiliMall opens. But beyond their short-term clamors, Laroa said the impending DiliMall opening only indicates UP’s pivot toward commercial interests.
“Sinasabi nilang para sa pag-unlad ng facilities itong DiliMall. Pero mall ito–hindi naman ito makinarya para sa mga estudyante o mga klasrum,” he said. “Tandaan nating academic institution ang UP, hindi commercial.” ●
