CDC chief legal counsel Jose Cornelio Lukban said that aside from non-payment of arrears worth more than P65.60 million to CDC and National Power Corp. (Napocor), the former was also prompted to take over the CPC management due to several contract violations committed by the power firm.
To date, CPC has pending obligations amounting P30.40 million to Napocor, and P54.80 million to CDC.
There are 342 investment projects inside Clark as of June 30, and "power failure would result to massive lost of income to Clark, which is not acceptable in the event Napocor cut its power supply to Clark," said Lukban.
Lukban stressed that the entire economic zone, including the Clark aviation complex and the Philippine Air Force area are largely dependent on the power supply from Napocor. A cut in the power supply would mean substantial impact on flight operations of both CDC and the local contingent of AFP.
Among the violations of contractual agreements are CPC’s failure to rehabilitate eight engine sets, the non-implementation of the five percent discount, failure to generate power in the zone, and the failure to secure permit to operate since December 2001 as specified in the agreement, Lukban said.
The CPC also ignored demand and clarification letters sent by the CDC on June 9, 2001; July 10, 2001; Aug. 14, 2001; March 25, 2002; and Dec. 4, 2002 all of which, except the July 10 letter needed 10-day compliance as sent by CDC’s Treasury Department, have required compliance of 30 days.
Lukban cited Article VI Section 2 of CPC’s lease agreement as grounds for termination/cancellation/suspension. The provision states: "Lessor may, at its sole option, by giving at least 30 days written notice to the Lessee (which in this case the CPC), terminate/cancel this agreement or suspend the Lessee’s permit to operate/incentives/privilege granted upon the occurrence of any of the following events."
Lukban said that the terms of the contract explicitly states that failure of the lessee to pay monthly rent when the same falls due or within the grace period provided the CDC a round to terminate contracts or suspend incentives.
Lukban also said that CPC has violated the terms and condition of its agreement with CDC following on the non-compliance of the 30 days notice by CPC from the lessor.