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CJHDevCo can't invoke OSAC to avoid lease payments - BCDA

By Rainier Allan Ronda (The Philippine Star) Updated January 16, 2012 12:00 AM

MANILA, Philippines - The Bases Conversion and Development Authority (BCDA) said Camp John Hay Development Corp. (CJHDevCo) could not invoke supposed deficiencies of the one-stop action center (OSAC) to evade payment of some P3.02 billion in unpaid lease obligations.

This developed as CJHDevCo filed an arbitration case against BCDA in a bid to rescind its restructuring memorandum of agreement (RMOA) in 2008.

Dean Santiago, BCDA vice president for business development, said that claims of the Sobrepena-led CJHDevCo that the OSAC has not been fully operational and had failed to give them tax incentives was baseless and was “farthest from the truth”.

Santiago said the OSAC claim is just another smokescreen tactic being resorted to by CJHDevco as an excuse for not settling its lease obligations on time.

“How can they (CJHDevCo) say that there is no OSAC when they twice attended the orientation (on OSAC)?” said Santiago.

Santiago pointed out that the CJHDevco had applied for, and had even been granted permits by the OSAC.

The lessee has cited the Supreme Court’s nullification of the tax incentives for locators inside John Hay Special Economic Zone (JHSEZ) as a reason for not fulfilling their financial obligations.

“This was already cured by Republic Acts 9399 and 9400, which BCDA actively lobbied in Congress during that time,” Santiago said.

RA 9399, a law that provides tax incentives to investors, effectively granted tax amnesty to CJHDevCo for all applicable tax and duties liabilities, including fines, penalties, interests and other additions. RA 9400, on the other hand, restored the tax incentives inside the Freeport Zones.

“This means CJHDevCo has not only been cleared of all their tax liabilities, they actually enjoyed continuous tax incentives up to the present,” Santiago stressed. “So they cannot use this as an excuse for not paying their debt to government.”

As stipulated in their 2008 RMOA, the OSAC would expeditiously process construction, building and occupancy permits for John Hay locators.

OSAC however, cannot issue permits for tree-cutting and earth-balling which are exclusively issued by the Department of Environment and Natural Resources (DENR).

Meanwhile, in a 42-page complaint filed with the Philippine Dispute Resolution Center Inc., CJHDevCo cited as grounds BCDA’s alleged “failures and breaches,” including the agency’s non-compliance of its obligation to immediately set up the so-called “One-Stop Action Center,” an effective mechanism that would facilitate development of the John Hay Special Economic Zone (JHSEZ).

CJHDevCo, through lawyer Gilbert Raymund Reyes, likewise asked the arbitral tribunal that in the event that amendment of the RMOA is no longer possible, it should order the original lease agreement between CJHDevCo and BCDA as “deemed rescinded,” and directed the agency to pay the John Hay developer actual damages amounting to P14.44 billion and the cost of the suit in the amount of P15 million.

The complainant invoked Section, Article X of the RMOA in demanding for arbitration of the dispute between them, particularly since the BCDA has not acceded to its request for the convening of the joint committee and its appeal to settle its dispute with the agency.– With Edu Punay

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