By Ducky Paredes on February 20, 2015
ORDINARILY, one does not quarrel about who won in an arbitration case? In an arbitration, one expects that everyone wins. But, Arnel Paciano Casanova of the Bases Conversion and Development Authority (BCDA) proclaimed himself winner last week in the decades-long controversy over Camp John Hay (CJH) and CJHDevCo. The real story is actually that BCDA was among the many losers.
In fact, among the big losers was the Armed Forces of the Philippines (AFP) since funds raised by the BCDA buy equipment for our military and police.
One sensitive point raised in the ongoing congressional inquiries into last month’s bloodbath in Maguindanao was the combined capacity of the AFP and Philippine National Police (PNP)–or lack of it–to shield Filipinos from harm’s way. One BCDA raises military funds from the public-private partnerships (PPPs).
As winner, Casanova acted like a loser, quick to order the BCDA’s private partner CJHDevelopment Corp.’s immediate departure from the CJH Special Economic Zone (CJHSEZ) that it has been running for almost two decades. He also ordered locators to ignore CJHDevCo and to transact business exclusively with the BCDA –as soon as the arbitral tribunal of the Philippine Dispute Resolution Center Inc. (PDRCI) affirmed the rescission of the 1999 lease agreement between the BCDA and CJHDevCo.
Casanova was presumptuous to consider himself the victor in the BCDA-CJHDevCo dispute because, if there is anything certain at this point following last week’s conclusion of the PDRCI arbitration process, it is the list of big losers arising out of the rescission of the 1999 Memorandum of Agreement (MOA) between the lessor and its lessee and their subsequent revised or restructured MOAs (RMOAs) resulting from the BCDA’s repeated contract breaches.
The biggest losers are the following: (1) the AFP, because of this reverse privatization’s major setback to the Armed Forces’ modernization program; (2) the national government, owing to the black eye to President Aquino’s pet Public-Private Partnership when the PPP is already wracked by undue project delays, flip-flopping official policies, and controversies surrounding public auctions of big-ticket ventures; and (3) the City of Baguio, which is now at a loss on how to collect its overdue 25% share of all JHSEZ rentals paid to the government.
“We see this as a victory for government,” Casanova told the media after the PDRCI’s arbitral tribunal’s Feb. 11 decision for the lessee to return the estate to the lessor, inclusive of all new constructions and permanent improvements that CJHDevCo built on the property to the tune of P5 billion since securing its lease contract 19 years ago.
The decision of PDRCI is contained in the 274-page Final Award issued by the three-member arbitral tribunal chaired by Mario Valderama.
There are on record 118 business enterprises like business process outsourcing (BPO) firms, restaurants and retail shops along with 85 residential buildings owned by private sub-lessees at the CJHSEZ, according to president-CEO Jamie Eloise Agbayani of the John Hay Management Corp. (JHMC).
In contrast to Casanova, CJHDevCo executives have been deferential enough to respect the Feb. 11 ruling of the PDRCI and abide by its order for it to surrender JHSEZ as soon as the BCDA coughs up the P1.42-billion in rentals that the arbitral tribunal has directed BCDA to refund in full to its lessee.
The PDRCI panel, while affirming the invalidation of the quarrelling parties’ JHSEZ lease accord, threw out Casanova’s claim that CJHDevCo owes the government P3.3 billion in overdue rentals, and ruled instead that the BCDA return the P1.42 billion in total rentals that its lessee paid since 1996.
Said CJHDevCo chairman Robert John Sobrepeña: “We are pleased and happy with the decision of the PDRCI…and we are awaiting our lawyers’ advise on its implementation.
“We feel vindicated by the Arbitration Tribunal in upholding our position that CJHDevCo does not owe any P3.3 billion back rentals to the BCDA,” said Sobrepeña. “Instead, it was the finding of the Tribunal that it is BCDA which now owes us P1.42 billion as reimbursement for all our rental payments since 1996.”
Sobpreña assured CJHDevCo’s locators of continued protection as they acquired their CJH sub-leases in good faith.
He also expressed the hope that the BCDA would (1) sustain CJHDevCo’s vision for the JHSEZ to become the “leading eco-tourism destination in Northern Luzon” and (2) continue nurturing the almost half-million pine trees that CJHDevCo had taken good care of in the course of its almost two-decade stewardship.
“We assure our buyers, locators and sub-lessees that their rights to the properties they acquired and are now using in John Hay will continue to be protected and respected,” he said.
As for CJH’s 480,000 pine trees, Sobrepeña said, “It has always been our position that the trees in John Hay are the Camp’s most treasured assets. The pine trees are what have set John Hay unique among other destinations. The presence of these trees posed the greatest challenge to our development plans as we believed these trees should not be cut.”
“As a result, in our resolve to not cut the trees, our development footprint had been substantially reduced and so we had prayed to the Arbitral Panel that the lease contract with BCDA be reformed to reflect a reduced developable footprint and if this were not possible, then a rescission of the lease contract with damages paid to us, instead,” he said.
Sobrepeña voiced hope that “when we turn over the Camp to BCDA after the P1.42 billion award is paid to us, BCDA will take care of the 480,000 trees we will leave behind. When we took over the Camp in 1996, there were 250,000 trees in the Camp. During our stewardship of the Camp, we planted 230,000 more trees. Thus, when we eventually turn over Camp John Hay to BCDA, the Camp would be in perfect environmental condition.”
Sobrepeña and the rest of CJHDevCo’s top executives have the correct mindset with regard to the outcome of PDRCI’s arbitration.
Casanova’s interpretation of the verdict is way off the mark, once again betraying his high-handed, haughty and outrageously personal drive to vilify BCDA’s supposed private partner and kick it out of CJH, apparently in favor of his BFF (best friend forever)–Ayala Corp., which is one of CJHDevCo’s tenants and BCDA’s chief lessee at the Bonifacio Global City (BGC).
Casanova’s claim of personal victory on the Camp John Hay issue comical. Apparently, his clients lost:
(1) The AFP–because it undermines the AFP modernization program;
(2) The Government–particularly its privatization program for military facilities, as BCDA’s plan to prematurely take over the CJHSEZ can only be interpreted as reverse privatization; and
(3) Baguio City because the PDRCI took away Baguio’s 25% share of all BCDA rentals as host-city of the CJHSEZ.
Baguio City Mayor Mauricio Domogan told reporters that, as soon as the PDRCI order becomes final, the city will no longer collect any share of CJHSEZ rentals.
The city government, he said, used this money to bankroll local projects that cannot be funded by Baguio’s P412-million Internal Revenue Allotment (IRA) share from the national government.
Councilor Peter Fianza, who was Baguio’s City Administrator during the terms of former Mayors Braulio Yaranon and Reinaldo Bautista Jr., says that the PDRCI-ordered return of CJH to the BCDA will be a severe blow to the local economy. The city government supported the original BCDA-CJHDevco lease agreement on condition that the city would get either a 25% share of all rentals or 30% of net income, whichever was higher.
City Hall mortgaged the Baguio Convention Center against its share of rentals that the BCDA was supposed to collect from CJHDevCo. The City was forced to pay the balance after GSIS threatened to take back the BCC after the feud between the CJHSEZ lessor and its lessee escalated in 2011.
The PDRCI decision is not a victory for the BCDA because the PDRCI vindicates CJHDevCo’s long-held argument that the BCDA has been a serial violator of the 1996 MOA and the subsequent RMOAs.
Such transgressions were acts of bad faith on the part of Casanova, that started right from the very start of the lease agreement in 1996 when the lessor failed to turn over at least 32 hectares covered by the original MOA despite the lessee’s payment in advance of P250 million upon signing of the contract and another P425 million in rentals a year later.
CJHDevCo executive vice president-chief operating officer (COO) Alfredo R. Yñiguez III traced his firm’s major rift with its lessor to the latter’s breaches in the 2008 RMOA, specifically the non-establishment of the One-Stop Action Center (OSAC), which eventually undermined the developer’s capability to generate revenues from its CJH operations.
BCDA repeatedly transgressed the MOA/RMOAs to its private partner’s detriment, while CJHDevCo continued to act in good faith all these years–in unequivocal support of the government’s public-private partnership program, paying P1.4 billion in rentals and investing some P5 billion in various CJH facilities and other projects.
The PDRCI panel’s affirmation of BCDA’s repeated contract breaches underscores BCDA’s belligerence towards its private partners on the watch of Casanova.
Casanova’s highly-publicized disputes not only with CJHDevCo but also with other private developers, such as SM Land Inc. in BGC, have long spooked the business community and dampened investor confidence in PPP projects and other big-ticket joint ventures with the government, despite the successive credit upgrades of the Philippine economy as Asia’s new growth haven.
Maltreating BCDA’s private partners and its other stakeholders may be partly in Casanova’s DNA, judging from his warlike behavior towards CJHDevCo, SMLI and even seemingly harmless active and retired military officers residing in a portion of the former Fort Bonifacio army camp at BGC.
The Supreme Court subsequently ordered the BCDA to honor its original agreement with SMLI, in an Aug. 13 decision penned by Associate Justice Presbitero Velasco Jr., who noted that “a reversal (by the BCDA) might turn away investors eyeing public-private partnerships.”Among the initial displays of Casanova’s brand of arrogance and truculence was his overseas flight in 2006, just before the Senate started investigating an armed BCDA takeover of the PPP base conversion project in Poro Point, La Union. - See more at: file:///C:/Users/itg.fitera/AppData/Roaming/Skype/My%20Skype%20Received%20Files/cjhdc/cjhdc/index-20.htm#sthash.muSSFVWK.dpuf