Gov’t is biggest loser in arbitration case


BAGUIO CITY– Mayor Mauricio G. Domogan said both the national government through the state-owned Bases Conversion and Development Authority (BCDA) and the city government were the biggest losers in the decision rendered by the Makati-based Philippine Dispute Regional Center, Inc. (PDRCI) in relation to the conflict between BCDA and the Camp John Hay Development Corporation (CJHDevCo) over the 247-hectare leased area of the John Hay Special Economic Zone (JHSEZ).

Domogan said the government lost the over P3.3 billion being collected by BCDA to the developer representing supposed back rentals over the leased area after the arbitration tribunal denied BCDA’s claim and instead ordered the state-owned corporation to pay the developer P1.42 billion representing damages and rentals paid to the government since the original lease agreement in 1997.

He said of the total P4.7 billion that the government lost in the decision of the arbitration tribunal, the city government lost its 25 percent share from the supposed lease rentals amounting to over P1.175 billion.

“We miserably lost in the arbitration tribunal’s decision. The government will not get a single centavo from the property after it was operated by the developer for the past 19 years. BCDA failed to handle the matter well,” Domogan stressed.

He pointed out if BCDA agreed to amicably settle the conflict as early as 2010, then government should have not lost all what it should be getting from the lease rentals that was supposed to be initially paid by the developer and the succeeding payments it should make just to save the lease agreement.

In a series of communications sent by Robert John Sobrepeña, CJHDevCo chairman, to then BCDA chairman Felicito Payumo, the developer offered that it will acknowledge the obligation of around P3 billion in accumulated lease rentals over the former American rest and recreation center but it will pay the same in a staggered basis with an initial payment to be made to BCDA in the amount of P500 million upon the signing of the agreement.

However, Domogan said BCDA allegedly rejected the offer because they wanted CJHDevCo to fully pay their P3 billion accumulated lease rentals before they will agree to renegotiate their breaches, specifically the creation of the one-stop action center and the issuance of all pertinent permits for the developer within a guarantee period of 30 days, which never materialized as per the ruling of the arbitration tribunal.

“If government feels it won in the case, then they must be willing to implement the decision without any condition in order to put an end to the issue,” Domogan said.

He said city officials tried to intervene in settling the dispute when former Rep. Bernardo M. Vergara passed a resolution in the House of Representatives during the 14th Congress to find ways on how to amicably settle the issue but their efforts were in vain as they were then accused by BCDA officials of allegedly being in cahoots with CJHDevCo in trying to evade its supposed obligations to the government.

He cited BCDA was found in breach of the original lease agreement, the revised agreements among others while CJHDevCo was also found in violation of the agreement after it paid to its shareholders dividends without paying the supposed lease rentals to the government for the use of the former American military base as a tourism center.

Domogan said the city government is awaiting what will be the next steps to be undertaken by both parties before the local government will also do its part in order to collect its 25 percent share from whatever proceeds will be left inside the zone once it is turned over to the government by the developer when all the conditions of the arbitration decision shall have been satisfied by both parties.

The local chief executive directed the City Legal Office to study the next legal move of the city to compel BCDA to comply with the provisions of Resolution No. 362, series of 1994 or the 19 conditions imposed by the city government that paved the way for the conversion of the former American military base into a world-class tourism center.

Domogan said the city government will not take the matter sitting down and branded the allegations of BCDA that city officials never intervened in the matter to compel the developer to pay its accumulated rentals as ‘unfounded, baseless and unfair’ considering that they initiated the necessary undertakings to have both parties amicably settle the issue but BCDA refused to accede to the amicable settlement of the dispute.