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Sticky BGC territorial issue

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Things aren’t looking good for Taguig City in its territorial dispute with Makati City over the land area that once formed part of the then Fort Bonifacio, now popularly known as Bonifacio Global City.

The Sixth Division of the Court of Appeals has ruled that the prime property on which high-end commercial and residential structures are built belongs to Makati City by virtue of two presidential proclamations.

The division, which consists of three justices, reversed the earlier ruling of a lower court awarding jurisdictional authority over the land to Taguig City.

The unanimity of the justices in their reading of a question of law is significant because the contending parties presented strong arguments on why the proclamations should be interpreted in their favor.

Had any of the justices dissented from the decision, two justices from other divisions would have been asked to participate in the proceedings to resolve the case. The decision of the majority will prevail.

Unfazed by the reversal, the Taguig City government has expressed its intention to bring the case all the way to the Supreme Court.

And rightly so because losing BGC to Makati City would mean the loss, now and in the future, of millions of pesos in taxes, fees and charges from the commercial and residential establishments that comprise what is now generally considered the country’s premier business district.

Interim period

The road to recovery from the legal setback starts with the filing of a motion for reconsideration of the decision.  If the motion is granted, fine. Taguig would have much to be thankful for.

If it’s denied, Taguig has no choice but elevate the matter to the Supreme Court for final resolution.

Considering the tortuous pace of justice in our country, the last word on the controversy may probably come only after two or three years.

The additional waiting period may be short compared to the 20 years or so that this issue has dragged in court. But for businesses that want to locate their offices or operations in BGC, that’s a long time.

True, the decision of the appellate court is not yet final. Until the tribunal rules otherwise, the Taguig City government continues to exercise political supervisory authority over BGC.

That legal principle, however, is small comfort to investors or businessmen who may be attracted to BGC’s superb infrastructure and efficient management system, thanks to the Ayala conglomerate that runs the place.

If, during the interim, they deal with Taguig authorities in the construction and operation of multimillion commercial enterprises at BGC, what assurance do they have that in case the tribunal rules in favor of Makati the latter will honor the financial arrangements they may have entered into with Taguig?

Commitments

It will be recalled that some years back, several companies moved out of Makati and relocated to Taguig because of the latter’s comparatively lower business taxes.

In the event Makati takes over BGC, will these tax perks be maintained? If they will be, it is likely the existing Makati business establishments that do not enjoy the same privilege will cry discrimination and demand that they be given similar treatment.

To maintain the trust and confidence of its business community, Makati may be forced to tweak its tax ordinances to accommodate that demand and, in the process, suffer lower revenue collections.

The reduction in revenue would invariably affect Makati’s ability to maintain its pro-poor programs on hospitalization, education, senior citizen welfare and other social activities that have been in place since then mayor, now vice president, Jejomar Binary took over Makati’s helm.

On the other hand, if Makati opts to disregard the tax breaks Taguig has given to BGC companies and require them to pay higher taxes, the affected businesses would have to make substantial adjustments in their business plans, profit forecasts and other activities to cope with the additional financial burden.

Relocating elsewhere is not a viable option if this happens, not when millions of pesos have been spent to establish the business at BGC.

Adjustments

Then there is the issue of differences in zoning, environmental and other operational rules between Makati and Taguig.

Depending on their policies and past experience, each city has its own set of regulations on how businesses in their respective areas should conduct themselves in relation to the authorities and the communities they operate in.

The existing commercial and residential buildings at BGC may have to brace themselves for possible changes or adjustments in their structures and operations in the event Makati prevails in its territorial dispute with Taguig.

Considering the high quality of these buildings, compliance with Makati’s regulations may turn out to be a very expensive proposition.

So what should an investor or businessman who plans to put up a commercial or residential structure at BGC take into account while the issue of territorial jurisdiction awaits final ruling by the tribunal?

He can go ahead and apply with Taguig for all the necessary permits and licenses for that purpose and keep his fingers crossed that Taguig wins the case or, in case it loses, Makati will give full credit to Taguig’s issuances.

If he is the risk-averse type, he can bide his time and, while awaiting the tribunal’s final action on the dispute, invest his money in other businesses. If that is not a suitable alternative, he can simply look elsewhere to build his planned structure.

Bottom line, while the case is pending, a climate of uncertainty or apprehension may pervade at BGC and result in a slowdown in commercial development in the area.

It is no exaggeration to say that the political and financial viability of Taguig will depend on the final outcome of this territorial dispute. It needs the best legal minds to win this case. (For comments, please send your email to rpalabrica@inquirer.com.ph.)


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Tags: Bonifacio Global City , Business , column , Makati , raul j. palabrica , Taguig , territorial dispute

  • panis_a

    No wonder pinag aagawan talaga ang higanteng BGC. anlaki kaya ng contribution nya sa IRA. hehehe

  • ChinaObserver

    The reduction in tax revenue from current Makati businesses in case the city tweaks its tax arrangements with them will be more than offset by new tax revenues from BGC businesses.

  • http://www.businessinsider.com/the-art-of-war-sun-tzu-2011-5?op=1 Sun Tzu

    BGC = Binay Global City



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