Fight over control of Camp John Hay on

BCDA orders CJHDevCo to vacate but latter won’t budge 

BAGUIO CITY – The fight over control of Camp John Hay here is far from over between the Bases Conversion and Development Authority and Camp John Hay Development Corp. of the Sobrepena group despite ruling from arbitration tribunal for CJHDevco to leave and BCDA to pay the lessee P1.42 billion.

CJHDevco stood pat in its decision not to leave Camp John Hay despite an order from the BCDA last week.

This, after the arbitration tribunal decided rescission of the memorandum of agreement between the BCDA and CJHDevCo noting failure of both parties to abide with their memorandum of agreement over lease of the former American military camp.

Mayor Mauricio Domogan said here Wednesday the decision has left the city government at a losing end as it won’t be able to collect more than P700 million as its 25 percent share from lease rental ofthe prime real estate.

He said despite this, the lessee cannot be booted out yet from Camp John Hay without a court confirmation of the PDRCI ruling as CJHDevCO still had legal options.

The 274-page final decision of the three-man arbitration tribunal, headed by Mario Valderrama, ordered rescission of the 1999 MOA between lessor BCDA and the lessee, that the lessee return Camp John Hay Special Economic Zone to the lessor, including all improvements made by Sobrepena’s group worth around P5 billion, and that BCDA pay in full P1.42-billion representing damages based on rental payments since 1996.

Due to BCDA’s breach of contract involving failure to comply with its obligations under the MOA and several revisions to the original MOA, the arbitration tribunal denied BCDA’s claim for P3.3 billion in back rentals from CJHDevCo.

According to CJHDevCo, it will abide by the arbitral award and will cooperate with BCDA for peaceful transition, provided the award is confirmed by the Baguio Regional Trial Court, and P1.42 billion has been received in full by the private developer.

BCDA chief Arnel Paciano Casanova said Monday the decision was a “government victory in the legal battle” even as there wasstill no writ of execution from the Baguio Regional Trial Court andBCDA has not yet paid the P1.42-billion arbitral award in full.

Despite this, Casanova ordered its private partner, the CJHSevCo, to vacate CJHSEZ and for the zone’s locators to ignore CJHSEZ and transact business only with BCDA.

In a press conference here last week, a CJHDevCo official said due process should be observed and there was need for both parties to wait to wait until the court issues a writ of execution before any court decision or arbitral award for that matter can be implemented.”

A loser due to the arbitral decision, city officials said,would also be the Armed Forces of the Philippines, because part of proceeds of privatization of the former American military bases and facilities should go to the AFP’s modernization program.

City officials said the arbital decision was a setback to the government’s public-private-partnership program. Had the BCDA been more investor-friendly, none of this would have happened, they said.
CJHDevCo chairman Robert John Sobrepeña said they felt vindicated by the arbitration tribunal when the latter upheld the company’s position that CJHDevCo does not owe P3.3 billion in back rentals to the BCDA. Instead, it was the finding of the tribunal that it is BCDA which now owes P1.42 billion as reimbursement for rental payments since 1996.

Sobrepeña,assured CJHDevCo’s locators of protection as they acquired CJH sub-leases in good faith.
He expressed  hope BCDA would sustain CJHDevCo’s vision for the JHSEZ to become the “leading eco-tourism destination in Northern Luzon” and continue nurturing almost half-million pine trees that CJHDevCo had taken good care of in the course of its almost two-decade stewardship.

CJHDevCo EVP/COO Alfredo 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 he said, eventually undermined the developer’s capability to generate revenues from its CJH operations.

The sole condition in the 2008 RMOA, he added, was establishment of the OSAC to facilitate the 30-day release of permits.

But this did not happen, he said, so without permits, there was no development, which meant there was “no revenue.”

Although financial losses from the OSAC non-compliance could not be quantified, Yñiguez said the amount is higher than the 2008 estimate of P250 million.

There are 15 existing projects, including the CJH Suites, requiring various permits that the promised OSAC was supposed to process in a month’s time but which remains pending till now, he added.
As of 2012, CJHDevco already completed 90 construction projects and was finishing another nine projects in its leased area. These 90 completed projects include the Camp John Manor Hotel, Golf Clubhouse, CAP Convention Center, luxury log homes and forest cabins, a new main gate, a filling station of the Eco-Village, and two buildings of the Ayala Technohub.

CJHDevCo filed its arbitration complaint before the PDRCI as a last resort after Casanova and the BCDA allegedly ignored the lessee’s request for its lessor to convene the joint BCDA-CJHDevCo committee that is supposed to tackle and settle disputes over MOA/RMOA provisions.

This developer had sought PDRCI’s confirmation of the validity of CJHDevCo’s January 9, 2012 decision to rescind its 2008 RMOA with the BCDA arising from the lessor’s “failures and breaches,” including non-compliance with its revised MOA obligation to immediately establish the OSAC.

CJHDevCo, in its submission said if reformation is impossible, Original Lease Agreement should be deemed rescinded, and that respondent (BCDA) pay claimant actual damages.

In its Feb. 11 decision, the PDRCI arbitral tribunal said: “It is undeniable that the One-Stop Action Center (OSAC), which the BCDA claims to have established in compliance with the 2008 restructured memorandum of agreement (RMOA), was unable to perform its warranties. For one, the OSAC was manifestly not fully authorized to process and issue developmental permits, such as tree-cutting, earth balling, and tree-pruning permits.”

The panel further said that the BCDA had failed to issue business permits even after the signing of this RMOA in 2008.

BCDA officials said they did not consider this controversy a closed case because its lawyers are still looking at the option of contesting the PDRCI panel’s order for the lessor to return CJHDevCo’s P1.42-billion rentals.