Mayor warns of hitch in John Hay rental payment

By Aileen P. Refuerzo

BAGUIO CITY – Mayor Mauricio Domogan warned failure of Camp John Hay Development Corp. to settle its Camp John Hay rental obligations with the Bases Conversion Development Authority would resort to more arbitration issues that will further delay in lease payment.

By the mayor expressed confidence the developer will comply with its obligation to settle part of the mounting lease obligation by May 31 as mandated by the revised memorandum of agreement covering the lease.

“We have our best expectation and we did our best effort so we hope that they will comply so we can also collect our share for the project we intend to pursue, but if something happens and the developer fails to pay, then it will again go to arbitration which (is what) we do not like to happen,” the mayor said.

The mayor said he met anew with the BCDA and John Hay Management Corp. officials to iron out issues that might hinder the developer’s debt settlement.

The mayor said one of the issues discussed was the city’s requirement for the Camp John Hay locators to secure business licenses from the city government which is now the subject of a court case.

The Regional Trial Court earlier upheld the city government’s stand that the locators are not exempted from the city’s permit and local tax payment requirement but the developer appealed the decision to a higher court.

The mayor said that to prevent the developer from using the case as an excuse to not paying its dues, he suggested to the BCDA to include in the agreement a stipulation that the city will not collect business taxes until after the court ruled in its favor with finality.

The developer managed to have the MOA on the lease revised and the lease rental payment restructured to lower levels not only once but several times by suing over inconsistent tax laws and other claims.

“They are looking for justification not to pay and we don’t want that they will use the issue on business license as another excuse,” the mayor said.
The exact amount of the city’s share has still to be determined due to numerous revisions of the terms of the lease agreement between the BCDA and the CJHDevCo over the years.

The original agreement pegged the lease rental at P425 million annually for the first five years starting in 1996 and P150 million annually thereafter.

The city’s share from the rental was supposed to be 25 percent or P106 million for the first five years and P35,500,000 for the succeeding years.

However, the lease agreement was restructured in 2000 and in 2003 resulting to the reduction of the rental figures.

The BCDA earlier reported that the developer paid a total of P956,377,410 from October 18, 1997 to July 1, 2008 and of the amount, the city’s 25 percent share amounts to P245,940,084.

The BCDA said it released a total of P185,466,197 as share of the city broken down as follows: P10,000,000 for the first batch; P44,568,167 for the second batch; P30,898,030 for the third batch and P100,000,000 for the purchase of the Baguio Convention Center. Thus the unremitted share of the city for said period is P60,473,887.

The BCDA also submitted to the mayor a schedule of lease payments and rental due which shows that the developer has an outstanding cumulative balance of P592,589,239.18 from January 2010 to December 2011.