Baguio execs back John Hay settlement, not court case

BAGUIO CITY—A Baguio government account of developments leading to the P3-billion debt feud between the developer and administrator of Camp John Hay showed that the government had problems fulfilling its obligations, a top city official said on Saturday.

Vice Mayor Daniel Fariñas said the city government appealed in a March 12 letter to the House special committee on bases conversion to convince the Bases Conversion and Development Authority (BCDA) and Camp John Hay Development Corp.  (CJHDevco) to settle their differences amicably. The letter was signed by Baguio Mayor Mauricio Domogan and Fariñas.

The BCDA and CJHDevco have been entangled in the debt feud since December last year, after the developer rescinded its third restructured lease agreement over alleged government breaches of the contract.

Fariñas said the city government decided to provide the House committee the background of the Camp John Hay project to arrive at a win-win solution to the feud without compromising Baguio’s 25-percent share from the rent payments and 3-percent share from the project’s gross revenues.

Based on the city’s account, the history of the project was marked with instances when government’s actions caused some of the delays plaguing the Camp John Hay development, Fariñas told the Inquirer.

For example, city officials told the committee that CJHDevco did not pursue development upon signing its original lease contract on Oct. 19, 1996, “which was attributable to the delayed issuance of the requisite environmental compliance certificate (ECC).”

The letter said the ECC was issued by the Department of Environment and Natural Resources on Jan. 26, 1998, which was about two years and three months later, but it coincided with the Asian currency crisis.

“There was likewise a deficiency in the lease area [because government] was short by 32 hectares of land,” it said.

Records showed that government offered CJHDevco the former Voice of America  lot to make up for the shortfall in a 2000 deal.

Fariñas and Domogan said BCDA agreed to restructure the CJHDevco contract on July 14, 2000, and again on July 18, 2003.

But they said 2003 was the year when the Supreme Court ruled that the John Hay Special Economic Zone was not legally equipped to provide CJHDevco its financial incentives. It took Congress until 2007 to reinstate these benefits, but BCDA had agreed to a third restructured contract in 2008 to grant CJHDevco more time to catch up with the project.

The letter said CJHDevco continued to pay its obligations in spite of these delays. Last year, CJHDevco claimed that BCDA continued to violate the contract. Vincent Cabreza, Inquirer Northern Luzon