Sinister ploy

There must be something that they are doing wrong.

This appears to be the logical conclusion to the twin losses recently suffered by the Bases Conversion and Development Authority (BCDA) in the courts, amid government’s bid to encourage investments.

In a decision last Aug. 13, but which released only last week, the Supreme Court permanently ordered the BCDA to abide by its original agreement with SM Land Inc. (SMLI) on a competitive challenge for the development of the 33.1-hectare Bonifacio South Pointe property at BGC.

It will be recalled that SMLI filed a petition for certiorari, prohibition and mandamus against BCDA for reneging on its commitment to carry out a competitive challenge on SMLI’s unsolicited proposal. BCDA, according to SMLI arbitrarily decide to hold a public bidding instead for the state property in BGC where the Fort Bonifacio Development Corp. is the main private developer-partner. FBDC is controlled by Ayala Land and Evergreen Holdings of Joselito Campos.

The SC ordered the BCDA to go ahead with the competitive challenge as petitioned by SMLI, as the High Tribunal emphasized that doing otherwise might turn away investors eyeing public-private partnerships.

Meanwhile, in a Sept. 3 decision, the Pasay Regional Trial Court (RTC) cleared Camp John Hay Development Corp. (CJHDevco) chairperson Bob Sobrepeña of the estafa charges filed by BCDA head Arnel Casanova earlier this year. The BCDA case was filed on the basis of alleged unpaid rentals due the BCDA-controlled John Hay Special Economic Zone.

The Pasay RTC ruled that contrary to Casanova’s claim that CJHDevco had deliberately reneged on its rental obligations, it was actually a slew of factors — mostly traceable to BCDA — that led to a deferral in such lease payments. The court noted that the rental payment suspension was sanctioned or permitted by the pre-Casanova BCDA by virtue of three memorandums of agreement (MOAs) approved not only by then-chairman and now-Public Works Secretary Rogelio Singson, but by the Office of the President and Office of the Government Corporate Counsel as well.

It said the rental payment deferral was due to various factors, including the delay in the demolition by BCDA and its subsidiary John Hay Poro Point Development Corp. (JPDC) of Camp John Hay structures, which, in turn delayed the turnover to CJHDevco of certain portions covered by the leased 247-hectare JHSEZ property; delay in the issuance of the requisite Environment Compliance Certificate (ECC) so CJHDevco could proceed with the development of its leased property; urgency for CJHDevco stakeholders to resort to borrowings to continue the development of JHSEZ in Baguio City; and the negative impact on the domestic economy of the 1997 Asian financial crisis.

In response to this RTC’s dismissal of Casanova’s estafa case against Sobrepeña, CJHDevco EVP and COO Alfredo Yñiguez said that the decision only emphasizes that Sobrepeña and CJHDevCo have always been upfront and transparent in their dealings with BCDA.

They also noted that Casanova’s belligerent moves against CJHDevco couldn’t have come at a worse time as these took place as the Philippine Dispute Resolution Center  was deep in arbitration proceedings to amicably settle the issues that have in the first place led to this BCDA-CJHDevco row and Sobrepeña’s arrest order.

CJHDevco filed the arbitration case before PDRCI in January 2012 in a bid to collect P5 to P10 billion in damages from BCDA for the state-run firm’s repeated RMOA breaches, including its failure to put up the OSAC as agreed upon by both parties in the 2008 RMOA.

Peregrine defends project

In the past week, there was a barrage of news articles regarding a dispute over the development of the Global Gateway Logistics City (GGLC) Project at the Clark Freeport Zone, Pampanga and pointing to the former developer and prime contractor, Peregrine Development International (Peregrine), an American-owned firm as the culprit.

At issue is a dispute between Peregrine and the project owner, Global Gateway Development Corporation (GGDC) who committed to fund and finance the 177-hectare green-field site adjacent to the Clark International Airport that has become known as GGLC.

In a statement sent to this writer, Peregrine cited that it conceived the project in 2006 and paid $20,000 for the right to develop the site.  Through 2007, Peregrine conducted environmental and land use studies, developed a masterplan and financial models and sought out third-party investors.  In the course of this search, Peregrine identified and selected the Kuwait group known as KGL.

One of the affiliates of KGL, KGL Investment Company (KGLI) then agreed to carry the investment. The parties then memorialized their agreement in an Engineering Procurement Construction Management (EPCM) contract in 2008 which stipulated that Peregrine would retain exclusive rights to be the developer and prime contractor, while KGLI would fund and finance the project for the duration of the 50 year lease. KGLI initially funded the project through a private equity fund called The Port Fund (TPF) and a local entity established in the Philippines, GGDC.

As to reports that GGDC had already assumed “operational control” of the GGLC project after obtaining a favorable ruling from the Court of Appeals, Peregrine pointed out that it had filed an urgent motion for reconsideration. The CA last Aug. 12 issued a TRO enjoining the enforcement of the order of the Regional Trial Court, but according to Peregrine, it did not permanently nullify the orders issued by the RTC nor did it authorize GGDC to take over the project site. It added that the CA ruling did not give license to GGDC to bring in new contractors nor did it state that the EPCM agreement has been validly terminated.

As to claims by GGDC of alleged breaches by Peregrine including cost overruns, dealings unbene-ficial to GGDC, the use of GGDC-funded assets for non-GGDC projects, among others, Peregrine emphasized that these are not true and that in fact, for the past six years GGDC has evaluated Peregrine’s performance on a quarterly basis and that these evaluations reflect ratings of 100 percent for the last 10 consecutive quarters through the first quarter of 2014.

On allegations that Peregrine failed to abide by the termination of the agreement and has reportedly caused millions of dollars of unnecessary losses to GGDC, the contractor said that it was GGDC who failed to abide by the terms of the contract when it inappropriately issued its termination notice.

Meanwhile, as to GGDC’s statement that it intends to invest another $150 million in the Global City project by the end of 2015, Peregrine said that after a full six years of ownership, the Kuwaiti investor can only show that only 35 percent of the horizontal infrastructure is complete and only one building, a hospital, which is about 95 percent completed.

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