Arbitration body to CJHDevco: Vacate Camp John Hay

MANILA, Philippines - The Camp John Hay Development Corp. (CJHDevCo) has been ordered to vacate Camp John Hay and return the property to the Bases Conversion and Development Authority in a decision dated Feb. 11, 2015.

The arbitration tribunal under the Philippine Dispute Resolution Center Inc. (PDRCI) ordered CJHDevCo to vacate the property and return it to BCDA.

The arbitration tribunal was chaired by Mario Valderrama and composed of co-arbitrators Teodoro Kalaw IV  and Rogelio Nicandro.

“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 lawyer Mario E. Valderrama, said “since it cannot be determined which of the parties first violated the 2008 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 July 1, 2008, in the amount of P2,406,140,525.

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

BCDA is calling on investors and locators in Camp John Hay in Baguio City to get in touch with the agency following an order issued to Camp John Hay Development Corp. (CJHDevCo) to vacate the property.

“We are calling on all locators (of Camp John Hay) to coordinate with BCDA so that we would be able to evaluate the arrangement they’ve entered into,” Casanova said in a press conference yesterday.

The call was made after the arbitration committee ordered CJHDevCo to vacate the property and return it to BCDA.

“With that order, CJHDevCo ceases to be owners of the economic development zone and have no authority anymore to do business or transact with locators in the area,” Casanova said.

The order also affects all sub-leases entered into by CJHDevCo.

“If the right of sub-lessee emanates from original lease and the original lease has been rescinded, then the right of sub-lessees is now put into question. That is why they need to coordinate with BCDA so we know how to properly evaluate their situation,” Casanova said.

John Hay Management Corp. president and chief executive officer Jamie Eloise Agbayani said that based on their records, there are 118 business enterprises inside the camp, with majority being sub-lessees of CJHDevCo.

Apart from the business enterprises, there are 384 hotel rooms in Forest Lodge as well as an estimated 85 residential structures in Camp John Hay owned by individuals who will also need to get in touch with BCDA.

The order was issued amid a dispute between BCDA and CJHDevCo over alleged unpaid rentals for Camp John Hay.

The BCDA entered into a lease agreement with CJHDevCo for a portion of the John Hay Special Economic Zone in 1996.

Under the agreement, CJHDevCo was authorized to lease, develop, operate and manage the leased property for 25 years or until October 2021.

Locators in the property covered by the lease agreement have to enter into sub-lease agreements with CJHDevCo, which in turn collects the payments for the use of the property.

In May 2012, the BCDA terminated its lease agreement with CJHDevCo as it claimed that the latter avoided payment of its obligations to the government.