John Hay developer gets P1.42 billion award from arbitration board


BAGUIO CITY  – The Philippine Dispute Resolution Center, Inc., (PDRCI) Thursday ordered the State-owned Bases Conversion Development Authority (BCDA) to pay P1.42 Billion to the Camp John Hay Developer, CJH Development Corporation (CJHDEVCO) representing rental payments made by CJHDEVCO to BCDA since 1996 even as the latter insists that it was the one that gained the upper hand in the decision of the arbitration tribunal.

Alfredo Yñiguez, CJHDevCo executive vice president, said the arbitration body also ordered that BCDA is not entitled to the P3.3 Billion alleged unpaid rentals to the State Corporation over the past several years.

“The decision is a confirmation of our previous claims that it was BCDA which was remised in the delivery of its mandated obligations to us in order to fastrack the development of the former American rest and recreation center. The decision also calls for undeveloped portions within Camp John Hay to be returned to BCDA,” Yñiguez stressed.

However, the CJHDevCo official underscored a large portion of the areas which are still undeveloped are mostly populated with trees which are covered by a log ban, as stated in a memo issued by BCDA subsidiary, John Hay Management Corp. (JHMC).\

“Buyers of improvements within Camp John Hay are expected to be protected and honored as buyers in good faith,” he said.

Earlier, the BCDA stated the arbitration committee has ordered CJH Development Corporation (CJHDevco) to vacate Camp John Hay and return the property to the government.

“We see this as a victory for government. Finally it will be returned and it can now be developed for the benefit of the public,” BCDA president and chief executive officer Arnel Paciano D. Casanova said.

“However, we are studying the decision and weighing our legal options. While it is good that the property will be returned to government, it is not just that government will not be compensated for CJHDevco’s use of the facility for over a decade and for which it has earned billions.”

CJHDevco has not been paying the BCDA its lease rentals and its arrears have ballooned to over P3.4 billion, 25 percent of which should have been for the local government of Baguio.

The tribunal, chaired by Atty. Mario E. Valderrama, said “since it cannot be determined which of the parties first violated the 2008 revised memorandum of agreement (RMOA), such is hereby deemed extinguished due to the mutual breach of the same by both parties…the termination by respondent of the original lease agreement is hereby confirmed in view of the breach of the same by claimant: the claimant is ordered to vacate the leased premises and promptly deliver the leased property, inclusive of all new constructions and permanent improvements introduced during the term of the lease as reckoned from the execution of the original lease agreement to respondent in good and tenantable condition in all respects, reasonable wear and tear excepted.”

In a separate opinion, co-arbitrator Teodoro Kalaw IV said CJHDevco should pay rentals in arrears amounting to P2.4 billion.

Kalaw said : “Claimant has expressly acknowledged to owe Respondent at the time of the execution of the 2008 RMOA on 1 July 2008, in the amount of Two Billion Four Hundred Six Million One Hundred Forty Thousand Five Hundred Twenty Five Pesos (PHP 2,406,140,525.00).”

In a decision dated September 30, 2014, the Court of Appeals agreed with the BCDA’s position that “it is the public that suffers for the failure of CJHDevco to fulfill its obligations…”

Mayor Mauricio G. Domogan cited the decision of the arbitration tribunal will give light on the responsibilities of both parties but what is not clear is how will the city be able to secure its 25 percent share from the lease rentals of the former American military base.

Domogan said the city government will continue to respect whatever the decision of each of the parties concerned whether or not to seek for clarification of the decision so that all issues and concerns will be effectively and efficiently addressed.

Under the original lease agreement, the city government is entitled to a 25 percent share of the lease rentals to be paid by the developers of CJH in recognition of the city being the host to the facility.

Some 247 hectares within the declared John Hay Special Economic Zone (JHSEZ) was supposed to be developed in order to convert the area into a multi-use watershed and forest reservation and a world-class tourism destination.

By Dexter A. See