John Hay firm’s arbitration bid a desperate act: JHMC

The Bases Conversion and Development Authority Thursday dismissed as a desperate act Camp John Hay Development Corporation's filing of an arbitration case for P14.4 billion in damages arising from its failed lease contract.

"So, all of a sudden it is BCDA that will now have to pay when as late as July 1, 2008 CJHDevco recognized its obligations which have now reached P3.024 billion," BCDA chair Felicito Payumo said.

Payumo said he has been treating the row with CJHDevco, which developed prior to his watch, with fairness and objectivity.

He added the rescission of the 2008 Restructured Memorandum of Agreement was “provocative and complicated matters.”

“There are no questions about the amount of the arrears. The fact that CJHDevco signed a Restructured Memorandum of Agreement on July 1, 2008 was an acknowledgment of its obligations."

Payumo also clarified that the ruling of the Supreme Court revoking the tax privileges in the John Hay Special Economic Zone in 2003 is already a non-issue as it has already been rectified when Congress restored the tax incentives to the locators of JHSEZ in 2007.

“That was the reason why a deferment of payments had been granted and three restructurings had been done,” he said.

He also shrugged off as “old issue” the One Stop Action Center row which the CJHDevco has been trying to resurrect as an excuse to evade payments.

“To put matters in perspective, the OSAC has been operational. Otherwise, it would not have been able to issue 22 building permits in 2009, 28 in 2010, and eight in the first quarter of 2011. A total of 60 locators have been granted permits to operate,” Payumo said.

With respect to the applications for permit to operate that are still pending, including the CJH Suites occupancy, the John Hay Management Corp. clarified that CJHDevco still has some violations of the Building and Fire Code. JHMC is BCDA’s management arm in the JHSEZ.

Because the JHMC has no authority to issue tree-cutting and tree-balling permits which the Department of Environment and Natural Resources (DENR) does not delegate, JHMC has actually arranged for a DENR representative to regularly visit and hold office at the OSAC for purposes of permit issuances.

“At any given time, there will always be a number of applications pending,” Payumo said, “but does that mean the OSAC is not operating? And is that a valid reason for CJHDevCo to withhold payment of its arrears totaling P3.024 billion?

“Clearly, the OSAC case is also a non-issue,” Payumo said.

Then again, the CJHDevco contradicted itself by saying it has set up an escrow account in lieu of direct remittances of its lease obligations, the BCDA added.

“Such account does not exist,” BCDA Vice President for Business Development and Operations Dean Santiago said.

He explained that it cannot be called an escrow account because the money allegedly deposited is unilaterally determined by CJHDevco, and only CJHDevco can withdraw from it.

Meanwhile, the BCDA vowed to explore all options available to protect the government’s interest in the Camp John Hay dispute and collect from the lessee CJHDevco all overdue accounts, even as it meets head on the legal moves being taken by the private developer.

Citing the Sobrepena Group’s history of failed big-ticket projects including the College Assurance Plan, Santiago said “ it came as nosurprise that CJHDevco, after defaulting on its lease payments for morethan ten years, would unilaterally rescind the Camp John Hay project.”