Baguio execs in a quandary over SC ruling on John Hay

FOG AND GREENS Fog blankets the golf course at Camp John Hay on Wednesday but it did not stop golfers from enjoying the game. The former American base in Baguio City is undergoing a transition after the Supreme Court reinstated an arbitral ruling requiring the developer to hand over the property to the government. —Neil Clark Ongchangco

BAGUIO CITY, Philippines — Now that the Supreme Court has affirmed an arbitral ruling that voided Camp John Hay’s lease contract as if it never existed, city officials have started assessing where that leaves Baguio.

Mayor Benjamin Magalong, the city council and Baguio Rep. Marquez Go on Monday discussed the impact of the high court’s en banc decision on the city’s stake in Camp John Hay, particularly its 25-percent annual share from rent that a Camp John Hay consortium had been paying to the Bases Conversion and Development Authority (BCDA) since 1997.

On April 3, the high court reinstated the 2015 arbitral decision by a tribunal of the Philippine Dispute Resolution Center (PDRC), which requires the Camp John Hay Development Corp. (CJHDevco) led by businessman Robert John Sobrepeña to leave the former John Hay Air Station and relinquish all built-up properties there to the BCDA.

READ: SC lifts freeze order on eviction of Camp John Hay developer

The arbitral ruling also directs the government to return Sobrepeña’s investments, totaling P1.4 billion, after the tribunal concluded that both BCDA and CJHDevco violated the agreement.

It consequently voided the lease contract that converts 247 hectares of Camp John Hay into a tourism estate and restored the parties to their positions prior to the lease agreement.

The PDRC decision was supposed to have resolved a public quarrel between BCDA and CJHDevco over the contract that dates back to the administration of the late former President Benigno Aquino III.

Challenged

But the arbitration ruling was challenged before the higher courts by the developer’s customers, such as occupants of log homes and other facilities whose contractual rights were not addressed by the arbiter.

The summer capital is owed P817 million based on computations made in 2016, according to City Treasurer Alex Cabarrubias, during this week’s council session.

The 25-percent share is one of 19 conditions set by the Baguio government in 1994 before the council endorsed Camp John Hay’s commercialization.

Remittances stopped in 2013 and CJHDevco quit paying rent in 2011 because of the feud, said Cabarrubias. He said Baguio expected to earn up to P1.56 billion in the course of CJHDevco’s 25-year lease agreement, but was only given P238.62 million as of 2013.

BCDA promised to remit annually to Baguio P425 million for the first five years of the contract, followed by the release of P150 million in subsequent years.

The lease may have lapsed in 2021, although CJHDevco was entitled to secure another 25-year lease under the original agreement.

“But if there is no rent, do we even have the right to collect?” asked Councilor Betty Lourdes Tabanda, given that there was no more lease agreement.

Worse, the city could also be required to return money earned from Camp John Hay revenues, Tabanda said, noting that the national government has to reimburse all the expenses made by CJHDevco.

Citing a 2021 meeting with BCDA, Cabarrubias said: “We may be required to return the P238 million if they return P1.4 billion.”

But he said BCDA assured him at the time that the P238 million could also be credited instead as advances should the government enter a new lease agreement with another Camp John Hay developer.

Conditions

The arbitral ruling should not affect Baguio’s 19 conditions, the councilors said. Tabanda had sponsored City Resolution No. 362 series of 1994 which enumerates these conditions, one of which obliges the national government to return the developed John Hay property to Baguio jurisdiction once the lease is terminated or expires.

Councilors Jose Molintas and Peter Fianza pointed out that the SC had recognized the validity of Baguio’s 19 conditions, through at least two decisions.

But the city council is wrestling with national legislation that may affect these conditions, among them a revised Baguio charter that exempts all 625 ha of the Camp John Hay reservation from the Baguio townsite. The new charter, Republic Act No. 11689, is being amended in Congress to correct its critical flaws.

Vice Mayor Faustino Olowan said a congressional initiative to extend BCDA’s lifespan also threatens Baguio’s interests in Camp John Hay because it grants the agency the power to sell 5 percent of all former American baselands. “We should strive to exempt John Hay,” he said.

Despite the SC ruling, no action has taken place to enforce the arbitral decision at Camp John Hay.

In March, Sobrepeña revealed that CJHDevco and BCDA were in talks to settle the dispute.

In a May 17 interview, Allan Garcia, president of BCDA estate manager John Hay Management Corp., said he could not discuss how and when a formal turnover of Camp John Hay properties would take place because of ongoing talks regarding the transition.

“It may take months,” he told the Inquirer.