John Hay arrears hit P2.4B

MANILA, Philippines—The unpaid lease rentals of the Sobrepeña-led Camp John Hay Development Corp. (CJHDevco) for the 247-hectare Camp John Hay in Baguio City have ballooned to P2.4 billion, records from the Bases Conversion and Development Authority showed.

The BCDA said CJHDevco’s arrears now ran up to the billions because the property developer failed to settle lease obligations, in accordance with the restructured memorandum of agreement (RMoA) that the two parties signed in 2008.

In a statement issued Monday, BCDA vice president for planning and business development Dean Santiago said that under Section 3 of the agreement, CJHDevco agreed to settle about P2.7 billion in obligations, including interest.

The amount represented lease obligations from 1999 to June 30, 2008, when the lease contract for Camp John Hay was last restructured.

The 2008 RMoA provided that CJHDevco would pay P2.68 billion to BCDA over a 15-year period, with a three-year moratorium.

Of the total, CJHDevco remitted P100 million upon signing of the RMoA. Another P180.3 million was paid to the BCDA by way of “dacion en pago” involving various properties.

Deducting these payments, CJHDevco’s arrears now amount to about P2.4 billion.

“This means that CJHDevco will pay BCDA the amount of P419 million starting 2011 to 2023 on a diminishing balance,” Santiago said.

CJHDevco incurred another P272 million in arrears from September 2009 to March 2011, representing unpaid current rentals.

Instead of paying the government, however, Santiago said CJHDevco had resorted to making “incredible, malicious, and dishonest” alibis.

He further belied CJHDevco’s claims that the money it should be remitting to BCDA as lease payments was deposited in an escrow account, as “no such escrow account has been established in trust for BCDA.”

“To the contrary, CJHDevco refuses to put up the escrow account for the security agreement required under the 2008 RMoA,” he said.

In this case, he said the BCDA had already exhausted all possible means to come up with a mutually acceptable solution to the issue, including the signing of three restructuring agreements in October 1996, July 2000, and July 2003.

He said the BCDA would be unable to fulfill its own financial commitments to the Baguio City local government until CJHDevco settles its arrears.

CJHDevco entered into a lease agreement with the BCDA in 1996 for the development of portion of Camp John Hay into an eco-tourism destination.