Arbitration at Camp John Hay

The recent move by a Baguio City court to finally step in and order the start of the arbitration process between the Bases Conversion Development Authority (BCDA) and its private developer of Camp John Hay has brought a glimmer of hope on the settlement of their longstanding dispute over a botched agreement involving the lease of the former American military base in the country’s summer capital.

One would think that with this much-awaited development, BCDA and the Camp John Hay Development Corp. (CJHDevco) would finally face each other at the negotiating table to save this 247-hectare project at Baguio’s special economic zone, more so after the latter demonstrated its good faith by complying with the order of the Regional Trial Court (RTC) to pay an injunction bond of P736 million as a prerequisite to the start of talks.

But subsequent moves by BCDA, notably its apparent hesitance to engage in arbitration proceedings while moving ahead on its demolition job and court cases against its private developer, suggest no end in sight in the near future.

The speedy resolution of the Camp John Hay problem is crucial to the government because of its impact on the country’s investment generation program, particularly President Aquino’s centerpiece Public-Private Partnership (PPP) program. The business community has been following closely the Camp John Hay drama because it serves as a showcase on how the government deals with its current and prospective big-time investors from the private sector.

Statements of BCDA president and CEO Arnel Casanova indicate that this government corporation was not yet sure if it would comply with the court’s arbitration order.

Rather than welcome the arbitration order of the Baguio Regional Trial Court, Casanova even doubted the legitimacy of the bond filed by CJHDevco and questioned the financial capability of the bonding agency used by the private developer. The bond, incidentally, was issued by the surety firm Liberty Insurance Corp., the only bonding company now with Supreme Court Certification of Accreditation and Authority.

Casanova also made it clear that despite the arbitration process, the BCDA would still pursue the criminal cases it filed against CJHDevco. And to stress this point, the BCDA even filed estafa charges against CJHDevco, on top of the malversation and other suits it lodged against the firm earlier this year.

The Baguio RTC court could not have been clearer in issuing its directive. It said that it finds the arbitration clause of the 2008 Restructuring Memorandum of Agreement (RMOA) between BCDA and CJHDevco) valid, existing and enforceable.

A separate injunction order issued by Baguio RTC Judge Cleto Villacorta III against the BCDA last April 27 also prevented BCDA from taking over Camp John Hay and prohibited it from awarding the disputed property to a new entity.

Casanova likewise ignored the well-meaning initiative by the House of Representatives in forming a technical working group (TWG) to try to amicably settle its row with CJHDevco and save the John Hay development project.

The Philippine Dispute Resolution Center (PDRCI) should proceed as called for by the Baguio RTC as such could be the breakthrough that this drawn-out feud needs to salvage the Camp John Hay project. The courts should stand firm in compelling BCDA and CJHDevco to sit down and submit themselves to an amicable resolution of their dispute. 

The residents of Baguio are no longer amused by the BCDA’s confrontational attitude in dealing with the dispute. Baguio City Mayor Mauricio Domogan has called on the BCDA to submit to arbitration for the benefit of the city and its residents.

After all, Baguio City is entitled to 25 percent of the lease rentals that CJHDevco pays to BCDA for the development of Camp John Hay.

The CJHDevco cannot be called to task on this score because it had complied with all the orders and initiatives of Congress, the courts and the PDRC to amicably resolve the dispute with the BCDA. In fact, the P736 million injunction bond it paid is the latest manifestation of CJHDevco’s desire to end the row.

 This private developer has no intention of derailing the Camp John Hay project, given that it has thus far invested over P5 billion to develop the economic zone, remitted P1.5 billion in rental payments to the BCDA and created at least 2,000 jobs in Baguio City.

President Aquino should step in while the Camp John Hay project is still worth saving.

For CJHDevco executives, BCDA’s never-ending violations of the original lease agreements and subsequent three Revised Memoranda of Agreement (RMOAs) form part of a “recipe for disaster” that this state corporation appears to have designed for CJHDevco to guarantee its failure - and then justify a Gestapo-style takeover of the leased property from its hapless private partner.

This suspected agenda was confirmed at the onset of 2012 when all indications pointed to its impending forceful takeover of the leased property, prompting the CJHDevco to file a P14.44-billion damage suit against the agency before the PDRCI and then ask for a Temporary Restraining Order (TRO) from the Baguio City RTC to stop the planned takeover while both parties go through arbitration proceedings.

BCDA has demanded payment of P3 billion in back rental fees from CJHDevco, despite BCDA’s breach of an agreement in the 3rd RMOA that CJHDevco would honor all its financial obligations on condition that the government put up a One Stop Action Center (OSAC) to expedite within 30 days the processing of all business permits needed by the private developer and its sub-locators.

Unfortunately, there has never been a fully operational OSAC as envisioned in the 3rd RMOA. In fact the OSAC has only exacerbated the situation, because in failing to do its job of speeding up the processing of business permits, it has only added one more bureaucratic layer between the applicant and the permit giver.

BCDA could not accuse CJHDevco of breach of agreement to justify its takeover because, on the contrary, it is this state corporation that has repetitively violated the original and revised lease agreements.

Manila Water improves water supply

Manila Water has spent P23.6 billion of its P50-billion capital investment program to fund the replacement of old and leaking pipes since becoming the East Zone concessionaire of the Metropolitan Waterworks and Sewerage System in 1997.    

Saving the precious commodity from being lost has always been a top priority of the company because of the huge demand for water brought on by the increasing population in the concession zone especially since 98 percent of Metro Manila’s water supply comes from a single source which is Angat.

As of end of 2011, the company has laid 4,156 kilometers of pipelines and has used a significant amount of its yearly capital to bring down the high level of water losses from 63 percent in 1997 to the present level of 11 percent. For 2011 alone, Manila Water has invested P2.3 billion in capital. 

The pipe program covers the replacement and laying of new tertiary, secondary and primary lines that will ensure increased reliability and access of water to more people. 

Because of the huge reduction in losses, unprecedented in the history of the water industry in the Philippines, about 3.1 million more people now have clean water bringing to 6.2 million the total number of people currently being supplied by clean, potable and reliable water supply.

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