February 24, 2015
Several officials of the Baguio City local government are totally miffed over the recent decision handed down by an arbitration panel in canceling the 1999 memorandum of agreement between the state-owned Bases Conversion Development Authority (BCDA) and its erstwhile business partner Camp John Hay Development Corp. (CJHDevco) as it would deprive them of badly-needed funds.
The 274-page ruling of the Philippine Dispute Resolution Center Inc. (PDRCI) is being met with a lot of derision in the summer capital, mostly from members of the City Council whose main job it is to drum up funds to finance plans and projects intended to improve the economic lot of their constituents. Several officials of the Baguio City local government are totally miffed over the recent decision handed down by an arbitration panel in canceling the 1999 memorandum of agreement between the state-owned Bases Conversion Development Authority (BCDA) and its erstwhile business partner Camp John Hay Development Corp. (CJHDevco) as it would deprive them of badly-needed funds.
The 274-page ruling of the Philippine Dispute Resolution Center Inc. (PDRCI) is being met with a lot of derision in the summer capital, mostly from members of the City Council whose main job it is to drum up funds to finance plans and projects intended to improve the economic lot of their constituents.
The PDRCI came into the picture after the Baguio Regional Trial Court directed the BCDA to submit to arbitration proceedings by an independent body with the proper expertise. The BCDA had earlier filed a court case seeking collection of some P3.3 billion in alleged rental arrears from Devco for the lease of 247 hectares of prime real estate dating back to 1996.
Two city dads, who asked not to be identified as they didn’t have the authority to speak on the issue, explained that the PDRCI ruling in effect represents a huge setback for the local government which won’t be receiving anytime soon its rightful share of the revenues generated from business locators inside the John Hay Special Economic Zone (the site of the former US military reservation known as Camp John Hay) which is wholly located inside city limits.
Under the original agreement, City Hall is supposed to get an allocation from the BCDA equivalent to 25 percent of all rentals paid or 30 percent of net income from operations, whichever is higher.
Councilor Peter Fianza, a former city administrator, reportedly said Baguio City had been eagerly awaiting the remittance of its rental share to offset the P250 million it had ponied up to acquire in 2011 the foreclosed Baguio Convention Center (BCC) from the GSIS. He said the Office of the Mayor had in fact mortgaged the BCC to the bank against future income to be realized from the BCDA rentals.
As told to us, certain city councilors are now agitating for Mayor Mauricio Domogan to take more drastic measures to safeguard the interests of City Hall.
“We cannot wait forever for the BCDA to settle things amicably with its biggest lessee, Devco, so business can get off the ground. At the rate they are going, it will take forever before we can taste even a single centavo of the hundreds of millions due to us and so we would end up the biggest loser,” a Domogan aide confided.
One option, city legal officer Mel Rabanes was quoted as saying, is to sue the BCDA so they would be forced to cede a portion of the land which the PDRCI had ordered Devco to return as part of the dispute settlement.
Councilor Fianza disclosed the BCDA had offered to pay City Hall with shares from the Camp John Hay golf club and attempted to pass on some obscenely-priced lots to offset their accounts, but these were politely refused.
Per the PDRCI’s “Solomonic” ruling of Feb. 11, 2014, the BCDA is going to get back the entire 247 hectares of land leased by Devco in 1996. In return BCDA, which is mandated to manage all former US base lands, has to remunerate the private developer the sum of P1.42 billion representing rental payments it made since 1998.
Unfortunately, the complicated legal wrangling has left the majority of the owners of the 118 business establishments and 85 residential buildings inside the JHSEZ, who are Devco clients, confused and bewildered not knowing whom to deal with officially, whether the BCDA or Devco.
Immediately after the PDRCI released its decision, BCDA president Arnel Casanova called a press conference to announce his agency’s “victory” and advised locators to coordinate with his office regarding the status of their existing contracts. He pointed out that Devco no longer had authority to do business in Camp John Hay due to the PDRCI ruling, one-half of it at least.
As for Devco’s president, Robert Sobrepena, the BCDA claim is just braggadocio as neither party can proceed without an order confirming the PDRCI decision and the issuance of a writ of execution by the Baguio RTC. He said his lawyers are looking at the legal options open to the company.
Sobrepena said Devco would abide by the arbiter’s award and cooperate with the proper authorities vis a vis the peaceful transition of power in the economic zone, for as long as all legal niceties are met.
He assured the lessees of continued protection as they had acquired their contracts in good faith. He said all their rights to the rented properties would be respected and protected.
And of course there is this small matter of the P1.42 billion which is supposed to be remunerated by the BCDA. It was indicated Devco would not budge an inch unless due process is observed and the money is paid in full.