BCDA vows to protect interest of public in John Hay

MANILA, Philippines - State-owned Bases Conversion and Development Authority (BCDA) vowed to take the “necessary legal steps to enforce the rules and protect the public interest” in the Camp John Hay dispute, and thus collect the unpaid debt of its lessee Camp John Hay Development Corp. (CJHDevCo).

BCDA president and chief executive officer Arnel Paciano Casanova, in a formal letter to Sobrepeña-led CJHDevCo, asserted that the latter “has no right to ask to rescind the contract and to recover damages from the BCDA.”

Casanova stressed that the BCDA has always complied in good faith with its obligations. “In contrast, it is CJHDevCo which has committed material breaches of its undertakings and obligations,” Casanova pointed out, adding “CJHDevCo has fundamentally frustrated and thus destroyed the purposes of the agreement between the parties.”

CJHDevCo has continually defaulted on its lease payments for the John Hay Special Economic Zone (JHSEZ), even if BCDA agreed to restructure the lessee’s debt three times, with the view to enable the private developer to meet its financial obligations. As of end-2011, the lessee’s arrears have reached P3.024 billion.

Earlier this year, CJHDevCo sent a notice to rescind the 2008 restructured memorandum of agreement (RMOA), and filed for arbitration to forestall government’s efforts in collecting the lessee’s ballooning debt.

“As we have consistently maintained in our letters in the past, there is no lawful basis for CJHDevCo to suspend and continue to suspend payment of its rental obligations to BCDA,” Casanova stated in his letter.

The lessee’s non-payment of rental fees is depriving the government-owned BCDA of much-needed funds for its operations and contribution to regional development. Baguio City is also starved of its 25 percent share of the proceeds of CJHDevCo’s lease in Camp John Hay.

CJHDevCo claimed that the absence of a fully functioning One-Stop Action Center (OSAC) was its reason for rescinding the contract. However, the John Hay Management Corp. (JHMC), BCDA’s subsidiary in JHSEZ, say the OSAC has been granting around of 80 permits each year to CJHDEvCo and its locators.

CJHDevCo, in particular, has secured 22 permits from the OSAC in 2009, 28 permits in 2010 and eight in the first quarter of 2011. Records also show that CJHDevCo has twice attended the OSAC orientations, contradicting their claim that the OSAC was not in existence.

In fact, the lessee’s letter last Dec. 21 said CJHDevCo demanded that BCDA approve fifteen permits that are pending with the OSAC. The letter indicated that of the 15 pending permits that CJHDevCo wanted approved, 10 were for tree-cutting and earth-balling, three were for occupancy permits of the Camp John Hay Suites and two were excavation permits.

Dr. Jamie Agbayani, JHMC president and CEO, said that only the Department of Environment and Natural Resources (DENR) can issue tree-cutting and earth-balling permits.

“The occupancy permits of the Camp John Hay Suites, on the other hand, were not issued because CJHDevCo committed violations against the New National Building Code (RA6541) and the New Fire Code (PD9514), which precisely the lessee needs to rectify,” Agbayani pointed out.

The original lease contract, which was signed in 1996, obligates CJHDevco to pay the BCDA annual rentals, but has defaulted since.

BCDA agreed to three debt restructurings to enable the lessee to meet its overdue financial obligations to government. The lessee, however, continually refused to fulfill its obligations, causing its arrears to balloon to P3.024 billion as of end-2011.

Strained relations between the BCDA and CJHDevco worsened further after the Sobrepena-led firm announced on January 9 that it unilaterally rescinded their 2008 RMOA.