Baguio residents want solution to John Hay debts

BAGUIO CITY—Why can’t the Aquino administration force the developer of Camp John Hay to finally pay its P2.6-billion debts to the city government?

Several Baguio residents asked that question six times on Monday at a breakfast meeting organized by the Bases Conversion and Development Authority.

And each time, the reply of Arnel Paciano Casanova, BCDA president, was a general statement: “Rest assured we will collect these debts.”

Casanova and Dr. Jaime Eloise Agbayani, president of John Hay Management Corp., organized the meeting which briefed  civic leaders and old Baguio families about 2012 projects lined up for Camp John Hay and other BCDA-administered special economic zones.

But Casanova’s evasiveness about the  debts from the Camp John Hay Development Corp. (CJHDevco) puzzled some residents and offended others. CJHDevco is operated by real estate giant Fil Estate, both chaired by Robert John Sobrepeña.

Michael Pearson, a former commissioner of the Baguio Centennial Commission, said Baguio people had heard the same statement before. He said they feared the BCDA because the agency’s previous officials had not been transparent about the deals involving Camp John Hay and might have even protected the developer.

BCDA general counsel Peter Paul Flores later told reporters that Casanova wanted to keep details of government’s plans for CJHDevco under the lid as a legal strategy.

He said Sobrepeña’s lawyers had beaten their predecessors to the punch with legal maneuvers.

On Friday, CJHDevco said in a statement that it would continue suspending payment of rental obligations to BCDA “until government complies with its contract.”

Sobrepeña began developing the former American rest and recreation baseland during the term of President Fidel Ramos in 1994. He was  able to convince BCDA officials under the term of former President Gloria Macapagal-Arroyo to restructure the John Hay lease and end all its debt issues in 2008.

The July 1, 2008, restructured lease allowed CJHDevco to turn over developed property to make up for its outstanding obligations. But the developer held back payments again from October 2009 until this year allegedly over unfulfilled government obligations.

In the Friday statement, CJHDevco president Ferdinand Santos said the restructured contract compelled the BCDA to create a One-Stop Action Center (Osac), which would provide all of the developer’s permits and licensing requirements.

The CJHDevco statement said when the government signed the restructured deal, it had accepted “several substantial concessions, including the assumption of ‘prior rental obligations’ amounting to more than P2.69 billion and current rental of P150 million.”

Complying with the Osac would “enable [the developer] to meet these massive financial obligations,” the statement said.

The BCDA said it had set up the Osac.

But according to the CJHDevco statement, “Up to the present day, there is still no fully functional Osac and the much-needed permits and licenses still cannot be issued within 30 days as promised.”

Santos urged the BCDA “to cause the approval of all the applications currently pending and overdue [within five days].”

BCDA lawyers admitted that the government was forced to negotiate a restructured deal with CJHDevco because of a 2003 Supreme Court decision that nullified the tax and financial incentives of the John Hay Special Economic Zone.

Congress had to amend Republic Act No. 7227 (the 1992 BCDA law), with  RA 9400 in 2007, to reinstate the tax incentives of the zones in John Hay, Clark Freeport, the Bataan Technopark and Poro Point Special Economic Zone.

Last week, Casanova turned down a CJHDevco settlement offer for its arrears.

Flores said the settlement offer was tantamount to crafting a second John Hay restructured contract “which was no longer acceptable to the current administration.” He said the settlement offer would have led CJHDevco to pay its debts by turning over its million-peso country homes.