At the same time, CJHDevCo wants to return to the BCDA half of the remaining 18 hectares for development which would result in a lower lease payment to the BCDA.
Under the original lease agreement, CJHDevCo was supposed to pay BCDA P425 million a year for the first five years, going down to P150 million a year for the next 25 years.
However, CJHDevCo was able to pay BCDA only P825 million in rental payments since 1999.
According to BCDA president and chief executive officer Ret. Gen. Narciso L. Abaya, CJHDevCo’s dacion arrangement would leave at least P1.2 billion in debts to be restructured.
He added that with the return of at least nine hectares of land for development, the BCDA could rebid these properties for mixed use development.
However, the offer of CJHDevCo, Abaya said, would also depend on government’s favorable resolution of the Supreme Court ruling nullifying the John Hay Special Economic Zone (JHSEZ) tax and duty free incentives extended under the lease contract.
Abaya said legislative efforts are underway to correct errors of Presidential Proclamation 420 granting special economic zone tax and duty incentives in John Hay.
The withdrawal of the tax and duty incentives would significantly affect CJHDevCo’s ability to settle its financial obligations.
CJHDevCo stopped its rental payments for the Baguio property in December 2003 after the Supreme Court ruled that it is not qualified to avail of incentives.
CJHDevCo had first sought a debt restructuring of its rental/lease payments to BCDA in 1999 with the original amount of P425 million.
However, by 2002, CJHDevCo started defaulting on its payments until the back-rental ballooned to P1.1 billion.
The second restructuring in March 2003 covered the P1.1 billion back-rental.