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Baguio City suffers from CJHDevCo non-payment

Published on 19 July 2012 [ manilatimes.net ]
Written by Lovelyn Quintos, Reporter

The refusal of Camp John Hay Development Corp. (CJHDevCo) to pay arrear obligations amounting to P3.2 billion to the government has hindered social and economic growth in the Cordillera region, the Bases Conversion and Development Authority (BCDA) said on Wednesday.

In a press conference, BCDA President and Chief Executive Officer Arnel Casanova stressed that 25 percent or about P750 million of the total leases payable by the Sobrepena-led CJH DevCo to BCDA will go to the city government of Baguio for developmental and infrastructure projects.

“John Hay is envisioned to be the catalyst of development in the Cordilleras. It is supposed to be the hub of economic activity in Baguio and neighboring communities in order to create a ripple effect of social and economic development in the region,” he said.

BCDA said the P750 million revenue could translate to 12,000 low-cost housing, 5, 000 classrooms and the rehabilitation of hospitals.

Casanova added that they are expecting the city government of Baguio to support BCDA in upholding the law and collecting the arrears from CJH DevCo.

“We are doing this in behalf of the people in Baguio and the people of Cordillera because they are supposed to receive out of the P3 billion payment that we should be receiving, they’re supposed to receive 25 percent of that or about P750 million. Definitely the non-collection and the failure to receive the P750 million by the city government and the municipality of Cordillera hampers the development project in that locality,” he said.

Despite the string of legal cases, Casanova said that investors continue to come to the Camp John Hay Economic Zone. He said that BCDA intends to inform the public of the status of the agreement so that possible investors can consult the BCDA before opening their business there.

Casanova said that BCDA has no information on whether locators are still paying rental to CJHDevCo, but since the lease agreement has been terminated, BCDA will not refuse lease payments from locators.

He also said that they have requested the House of Representatives to subpoena all the financial statements of all the businesses of Sobrepena and associates who failed to disclose their books to the Securities and Exchange Commission.

No to joint venture
BCDA Chairman Felicito Payumo, meanwhile, clarified that the invitation given to CJHDevCo was to submit a proposal which the board decided not to consider.

“We invited them to submit a proposal. But when we saw the proposal, it was not addressing the obligations, the P3 billion, and how it will be paid and whether it is credible,” he said.

CJHDevCo argued earlier that Payumo invited the company’s executives to present the proposal to the board, a day before BCDA announced it is terminating the contract with CJH DevCo. CJH Devco said that the proposal could have given the government P8.5 billion in revenues had the BCDA board approved it.

However, Payumo noted that what CJHDevCo offered was a joint venture, which the BCDA board would not approve because switching to a joint venture would mean writing off of the P3 billion.

Payumo added that contrary to what CJHDevCo’s claims that the One-Stop Action Center is non-existent, locators are able to secure permits and are not complaining. He said the permits requested by CJHDevCo should be secured from other agencies and not the BCDA.

The 1996 lease agreement has had three restructurings in 2000, 2003 and 2008.

“[The former BCDA board] probably thought CJHDevCo could really pay, and they were in good faith when they did,” Payumo said.

He said that the previous BCDA leadership should have asked the developer post-dated checks as guarantee before agreeing to restructure.
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