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House body brokering settlement between BCDA, John Hay developers

By Paolo S. Romero (The Philippine Star) Updated March 26, 2012 12:00 AM

MANILA, Philippines - The House special committee on bases conversion is brokering an amicable settlement between the Camp John Hay Development Corp. (CJHDevCo) and the Bases Conversion Development Authority (BCDA) over dispute on unpaid rentals and breach of contract.

The move came after officials of the Baguio City government asked lawmakers to intervene in the dispute between CJHDevCo and BCDA while appealing to the two government corporations to seriously consider a “win-win solution” of an amicable settlement, instead of engaging in a protracted and bitter court litigation of their dispute.

In a letter to Rep. Manuel Agyao, chairman of the committee, the Baguio City officials, led by Mayor Mauricio Domogan and Sangguniang Panlungsod chairman Vice Mayor Daniel Farinas, formally informed the lawmakers of their strong opposition to the takeover bid by BCDA of the contested areas covered by the lease agreement with the developer CJHDevCo.

The city executives were referring to the suits filed by the CJHDevCo before the Baguio City Regional Trial Court, Branch 6, and with the Philippine Dispute Resolution Center, Inc. seeking to compel BCDA to comply with the provisions of the New Restructuring Memorandum of Agreement (RMOA) dated July 1, 2008, particularly the setting up of the so-called “One-Stop Action Center” with the “full authority to process and issue all business, building and other developmental permits, certificates and licenses, local and national, from all government agencies necessary to facilitate the construction and commercial operation of Camp John Hay.”

The BCDA presented to the special committee the alleged non-payment of some P2.9 billion in unpaid rentals by CJHDevCo to justify its take-over of the former US military recreational facility.

The CJHDevCo said it could not pay all the rental obligations since it cannot do business and therefore generate revenues without the permits from the BCDA.

Domogan and Farinas said in the letter dated March 12, 2012 that allowing the courts to decide the controversy “would be too much of a gamble and endanger the city’s own financial stake in the project.”

“Surely, the Honorable Chairman and members of the Committee and the august chamber would agree with us that there is no way of knowing which side would win the court’s nod. This fact would only be exacerbated by the tedious court processes which serve no other purpose, but to delay what benefits the people of Baguio can otherwise secure from the development of the Camp John Hay, like its 25-percent share from its lease rentals,” the local officials said.

The city officials noted that “despite the 2008 New Restructuring Memorandum of Agreement (RMOA), which clearly defines the rights and obligations of the contracting parties, it is unfortunate that the parties cannot agree to amicably settle their differences which created another standoff leading to the filing of the above mentioned case by CJHDevCo against BCDA which is now pending in the  (Baguio City) Regional Trial Court, Branch 6.”

Aside from institutional representation of the Baguio City government in the project, the city had been promised equitable sharing arrangement for the Baguio government from the gross income of operations within Camp John Hay special economic zone.

“Despite (Baguio City) resolution numbered 362, series of 1994 being approved thereafter by the Board of BCDA, the above provisos which greater benefit could have been derived by the host local government has not been complied with to the letter,” they said.

The city officials added that “because of the non-compliance with the terms and conditions of the original contract of lease, and the subsequent agreements, the deal between the city government and BCDA to utilize its 25-percent share from the lease rentals of Camp John Hay for the payment of the total consideration of P250-million purchase price of the Baguio Convention Center together with the one hectare lot where it is standing did not materialize.”

As a consequence, the city was then forced to pay the remaining unpaid  consideration in  the total amount of P208 million including not less than P110 million interest of the unpaid balance from its own resources after Government Service Insurance System had condoned P50 million as part of the said interest.

“We hereby plead and pray for the honourable members of the Committee . . . to support us . . . in urgently and collectively calling on both parties (BCDA and CJHDevCo) to exert extra effort in setting their legal differences amicably and abstemiously outside the four walls of the court, sitting down to negotiate based on the contract they have entered into which constitute the law between them,” the city executives said.

They also asked the lawmakers to put to task both the BCDA and CJHDevCo “to evaluate and determine the obligation that any of them failed to comply and its monetary value so that payment can be made at the soonest possible time, and in order that the City of Baguio can likewise collect its 25-percent share pursuant to the 19-conditionalities under Resolution No. 362, series of 1994 unanimously approved by the Board of Directors of BCDA,” the city official said.

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