State-run Bases Conversion and Development Authority bluntly told Camp John Hay Development Corp. (CJHDevco) of the Sobrepeña group to “shut up” and settle the P2.6 billion in unpaid rent for the Camp John Hay property in Baguio City.
BCDA on Tuesday issued the statement as it shrugged off demands made by CJDevco to comply with certain provisions of their contract.
“There is no point threatening us with suspension of payment, since CJHDevco has not been paying us in the first place. Last time we checked, it is the CJHDevco that owes BCDA P2.6 billion, and counting. So it (CJHDevco) has to either put up or shut up,” BCDA officials said in a release Tuesday.
“It is CJHDevco that must comply with our … demand letters for the settlement of its rental arrears that have been piling up over the past years,” added BCDA president and CEO Arnel Paciano D. Casanova. “Instead of complying with our demands, CJHDevco merely kept reincarnating the dead issues against the BCDA in a desperate attempt to evade paying its back rentals.”
Casanova described CJHDevco as a “delinquent lessee, obviously throwing a smokescreen to conceal from public scrutiny its own unsettled financial obligations” arising from the lease contract on Camp John Hay in Baguio City.
CJHDevco has refused to pay the lease for the John Hay property since late 2008.
The original lease contract for the John Hay property was signed by the BCDA and CJHDevco in October 1996. It was revised three times, with the last taking place in July 2008. In that revision, the Sobrepeña company was supposed to pay its outstanding debt of close to P2.7 billion, representing unpaid lease rentals and interest charges.
The total arrears were reduced to just P2.4 billion following CJHDevco’s payment of P100 million upon the signing of the revised memorandum of agreement, and P180.3 million worth of assets in a “dacion en pago,” or payment-in-kind transaction.
Casanova further pointed out that CJHDevco has already alienated itself from the people of Baguio, La Trinidad, Itugon, Sablan and Tuba (BLIST), particularly the stakeholders on the John Hay development into a special economic zone, for deliberately holding back its lease payments.
During a multi-sector consultation meeting in Baguio City last Monday, a number of participants representing the city government and other stakeholders urged the BCDA to take definitive steps to collect from CJHDevco.
Baguio is supposed to get 25 percent of CJHDevco’s lease payments. The city will, in turn, use the proceeds to pay the loan it secured from the Government Service Insurance System. The loan was used to purchase the Baguio City Convention Center.
Because CJHDevco consistently defaulted on its payments, the city government had to wrestle with mounting penalties and surcharges imposed by the state pension fund on the loan, translating into unrecoverable losses for the city.