Sinister ploy

The long-running feud between the Bases Conversion and Development Authority (BCDA) and its private developer Camp John Hay Development Corp. (CJHDevco) involving the John Hay Special Economic Zone (JHSEZ) in Baguio City isn’t helping the country’s economic team in its bid to sell the Philippines as the region’s brand-new business hub.

The feud turned for the worse when the BCDA caused to have CJHDevco chairman Robert John Sobrepeña arrested in connection with the lease and development of the former US military camp in Baguio City.

This development also happened  when the Philippine Dispute Resolution Center Inc. (PDRCI) is deep in arbitration proceedings to amicably settle the issues that have in the first place led to this BCDA-CJHDevco row and Sobrepeña’s arrest order.

As expected, the CJHDevco boss and his allies cried “selective justice,” “harassment” and “personal vendetta” before and after he posted bail on June 16 following the arrest warrant issued by the Pasay Regional Trial Court in connection with the P1.15-billion estafa case filed by Casanova following the DOJ’s indictment of Sobrepeña for this private developer’s alleged non-payment of  JHSEZ rentals totaling that amount.

For his part, Casanova said the real issue is CJHDevco’s nonpayment of lease rentals to government while declaring dividends, extending  cash advances and assignment of shares to its stockholders in 1998 to 2000.

But CJHDevco officials dismiss Casanova’s move as a trumped-up charge, saying the private developer made a payment deferment request based on the unfairness of charging full payments while BCDA was defaulting on contractual obligations, and not because it was unable or unwilling to pay as the DOJ resolution contends.

They cited BCDA’s delays in providing rules to implement and regulate the contract; non-delivery of an Environmental Clearance Certificate or ECC (which prompted original developer Manuela Land to forfeit the project in August 1996); non-turnover of 32 hectares where an 18-hectare tourist hub would be built; failure to demolish existing structures; and non-creation of a One Stop Action Center (OSAC) to expedite the processing of CJHDevco’s and its locators’ business permits and other requirements.

Under the original Memorandum of Agreement (MOA) in 1996 on the 25-year lease of the 247-hectare JHSEZ in Baguio City, CJHDevco was to pay BCDA an annual rent of P425 million or five percent of the gross revenues for the first five years of the contract, whichever was higher. This meant that BCDA was supposed to receive P1.275 billion in rental fees from 1998 to 2000 under this 1996 MOA.

Sobrepena said that the case was a desperate attempt by BCDA to influence the arbitration panel’s decision in their case against CJHDevco, which is due for decision in one month.

Sobrepeña was referring to the PDRCI arbitration case, which was filed precisely to settle, among others, this feud over rental payments and CJHDevco’s charge that BCDA had repeatedly violated their revised MOAs (RMOAs) that followed the 1996 original contract.

Meanwhile, CJHDevco executive vice president and chief operating officer Alfredo Yñiguez III  noted that the timing of this Pasay RTC case was suspect,  as it was belatedly filed 14 years after the supposed case happened and at this time when the Baguio City court hearings had ended already and a three-member panel was now deliberating on CJHDevco’s petition to reform the lease contract and adjust payments as a result of BCDA’s defaults.

CJHDevco filed the arbitration case before PDRCI in January 2012 in a bid to collect P5-to P10-billion in damages from BCDA for the state-run firm’s repeated RMOA breaches, including its failure to put up the OSAC as agreed upon by both parties in the 2008 RMOA.

Like Yñiguez, Sobrepeña’s legal counsel Manuel Ubarra Jr. questioned the timing of the release of the DOJ resolution as he noted that, while the date of the resolution is June 5, 2013, it was released only one year later.

Ubarra is optimistic that his client will be vindicated in the RTC trial as the case is based solely on BCDA’s allegation that the private developer’s chairman committed “false pretense” on its financial state that resulted to the deferment of rental payments over the 1998-2000 period.

CJHDevco deferred rental payments over that three-year period because the 1997 Asian financial crisis, along with BCDA’s repeated RMOA violations, had impacted negatively on this private developer’s financial performance and prevented it from pursuing its development plans, reaching its projected earnings, and settling its rental commitments under the original 1996 contract.

BCDA, then headed by current Public Works Secretary Rogelio Singson, had agreed to the deferral of rental payments under two RMOAs sealed by both parties in August 1999 and July 2000.

The “whereas” clause in the revised agreements also expressly stated that CJHDevco’s inability to meet its development plans and realize its projected sales and revenues were caused by BCDA’s admitted breaches of the lease agreement, the delays in BCDA’s fulfillment of its obligations to the private developer, and the negative impact of the Asian economic flu.

The 1999 and 2000 RMOAs were validated not only by the Singson-chaired BCDA board at that time, but also by the Office of the Government Corporate Counsel (OGCC) before these were later on approved by the Office of the President.

Ubarra also noted that the DOJ resolution “appears to have unduly singled out Mr. Sobrepeña. The charges against the rest of the board of directors of CJHDevco were all dismissed on the ground of lack of probable cause. In contrast, Mr. Sobrepeña alone was charged to face prosecution for estafa.”

Ubarra likewise questioned how the DOJ investigating prosecutor was able to determine that it was Sobrepeña’s alleged statements that induced BCDA to okay the 1999 and 2000 RMOAs.

Sobrepeña pointed out that these questionable actions by the DOJ and BCDA would send the wrong signal to investors, given that while CJHDevco had paid 40% of its dues to the government, the BCDA had only delivered 25% of its commitments under the original lease agreement.

Despite the denial of building permits and other requirements in the absence of the agreed-upon OSAC, CJHDevco has managed to remit P1.4 billion to the BCDA, or 40% of its due rentals. This, despite BCDA’s RMOA breaches that had enabled CJHDevco to develop just four of 25 hectares, which thus affected severely its income generation.

CJHDevco director-lawyer Ferdinand Santos said the BCDA’s contract breaches prevented the firm from exercising true and effective possession of the entire leased property, thereby forcing it to eventually request BCDA for a deferment of payment.

Observers note that this estafa case is but the latest in a string of nuisance or harassment suits that Casanova has mounted against CJHDevco in an alleged ploy to kick Sobrepeña out from Camp John Hay.

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