Baguio caught in dispute over Camp John Hay

The people of Baguio City deserve better. In fact, they should get more than P125 million from the Bases Conversion and Development Authority, but BCDA president and chief executive officer Arnel Casanova is preventing them from getting it. Imagine what P125 million can do to improve Baguio. However, a disagreement between BCDA, owner of Camp John Hay, and its developer, Camp John Hay Development Corp. (CJHDevCo), has caught the city in a vise.

By congressional authority, when the lease agreement for Camp John Hay was signed in 1997, the city of Baguio was given an equitable share of 2 percent from the gross income of operations within Camp John Hay. Baguio is also entitled to 25 percent of the rentals paid to the BCDA or 30 percent of the net income from all operations within Camp John Hay, whichever is higher. In fact, the city received its share when CJHDevCo first started developing the area. Among other payments, CJHDevCo paid BCDA P250 million upon signing of the original lease contract in 1996, from the P425 million in 1997, from the P125 million in 2000 after the first restructuring memorandum of agreement, and from the P100 million in July and August of 2003.

However, based on the last memorandum of agreement in July 2008, the BCDA’s subsidiary, John Hay Management Corp. (JHMC), was supposed to set up a “One Stop Action Center” (Osac) that would process and issue all local and national permits for CJHDevCo within 30 days. This was necessary to facilitate the developments in Camp John Hay. Under the management then of Cristina Corona, wife of the Chief Justice, and now under Jamie Eloise Manzano-Agbayani, BCDA/JHMC never fulfilled and has caused delays in developments in Camp John Hay.

What is a private corporation to do when the government wants it to continue payments but refuses to allow it to operate? Naturally, CJHDevCo felt that the BCDA was putting it in a position where payment was being demanded even if the government side had not yet fulfilled its part of the contract. So in 2008, CJHDevCo suspended payments.

But CJHDevCo is willing to pay—if the BCDA would fulfill its end of the contract. In a letter to the BCDA last Jan. 9, CJHDevCo offered payment of back rentals with a substantial percentage to be paid up front, provided the BCDA fully complies with its obligations under the agreement, particularly the establishment of the Osac with the “full authority to process and issue all business, building and other development permits, certificates and licenses, local and national, from all government agencies necessary to facilitate the construction and commercial operation of the John Hay Special Economic Zone.”

Baguio Mayor Mauricio Domogan laments the loss of at least P125 million in the city’s share of rentals from Camp John Hay while the BCDA refuses to talk to developer CJHDevCo to negotiate and reach a settlement of payments on back rentals. The BCDA has ignored letters from CJHDevCo.

The city of Baguio is now pleading with the BCDA to settle with CJHDevCo as soon as possible because the dispute is affecting the city and its people in terms of lost income amounting to hundreds of millions of pesos. Mayor Domogan said that if the BCDA agreed to collect from CJHDevCo its offer of P500 million, the 25-percent share of the rental income, which would amount to P125 million, would have greatly benefited the Baguio community.

In a position paper to Congress, Domogan said the two parties needed to settle their dispute quickly. “Because of the noncompliance with the terms and conditions of the original contract of lease and the various restructuring memoranda of agreement that followed, the agreement between the city government and BCDA to utilize its 25-percent share from the lease rentals of Camp John Hay could not be realized. The payment of the total consideration of P250 million purchase price of the Baguio Convention Center together with the one-hectare lot where it is standing, did not materialize. The city was then forced to pay the remaining P208 million including not less than P110-million interest of the unpaid balance from its own resources after GSIS (Government Service Insurance System) condoned P50 million as part of the said interest,” Domogan said.

Last month, the special committee on bases conversion in the House of Representatives passed a resolution to form a technical working group (TWG) led by Rep. Bernardo Vergara to settle the John Hay dispute.

In an interview, Mayor Domogan said an exchange of letters between the BCDA and CJHDevCo showed the willingness and good faith of the latter to pay rentals but that it was also seeking the commitment of the government to live up to its own end of the contract.

Said Domogan: “As far as I understand, CJHDevCo is willing to pay as much as P500 million within a year if the BCDA is able to fulfill its part of the contract. I don’t know why the BCDA refuses to negotiate with them, given this offer. That is why we are asking the TWG to make the parties negotiate and settle as soon as possible because the 25 percent of even just P500 million is already considerable earnings that the city of Baguio could use for our people.”

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ERRATUM: Because of a mix-up in the e-mail, the wrong column was sent for the Monday (April 9) issue of the Inquirer. The correct column should have been the above. My sincerest apologies.