BCDA’s debt to Baguio mounts to P225 million

Department of Agriculture officials led by Undersecretary for Rice Industry Development Christopher Morales, Assistant Secretary for Logistics Daniel Atayde and Cordillera Regional Executive Director Jennilyn Dawayan with Kalinga Governor James Edduba led the tasting of the “Paella a la Cordillera” that featured Cordilleran products and delicacies such as the heirloom rice or the chong-ak, kiniing or smoked pork, pinuneg or the blood sausage, pinnunnog or meat sausage to culminate the Farmers’ and Fisherfolk’s Month celebration at the Melvin Jones Burnham Park on Thursday, May 30, 2024. **RMC PIA-CAR
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The unpaid financial obligation of the Bases Conversion and Development Authority (BCDA) to the City Government of Baguio has reportedly ballooned to P225 million as of 2021.
With no clear timeline for when the BCDA will finally settle its debt, city officials are currently evaluating their next steps.
During its regular session on May 27, 2024, the city council requested the City Treasurer’s Office to transmit detailed documentation of communications and financial transactions between the city government and BCDA. The city council also tasked the Committee on Laws, Human Rights, and Justice to review all these documentations and provide recommendations.
To support the committee’s efforts, the city council also scheduled a dialogue with BCDA representatives regarding their unpaid debts to the city government on June 24, 2024.
The legal basis for imposing BCDA’s financial obligations to the city government is found in Sections 9 and 10 of City Council Resolution No. 362, Series of 1994 which set 19 conditionalities for the formulation of the master development plan by BCDA for Camp John Hay.
Section 9 (Condition No. 9) mandates that BCDA provide an equitable revenue-sharing arrangement, where the city government receives 3% of the gross income from operations within the John Hay Special Economic Zone (JHSEZ). Additionally, 1% should be allocated to a community development fund jointly administered by the city government and BCDA. This means that BCDA should allocate a total of 4% of the gross income from operations within the JHSEZ under Section 9 (Condition No. 9) in favor of Baguio City.
In addition to this revenue sharing, Section 10 (Condition No. 10) specifies that BCDA must allocate 25% of its lease rentals or 30% of its net income from its operations within JHSEZ, whichever is higher.
In his letter to Camp John Hay Management Corporation (CJHMC) dated July 6, 2023, Mayor Benjamin Magalong demanded payment of P56,843,842.08 under Condition No. 9 and P168,608,109.60 under Condition No. 10. These figures were derived from a videoconference between the city government and BCDA/CJHMC in April 2021.
According to a report from the City Treasury Office to the city council, BCDA has not made any payments under Condition No. 9 to date.
According to Magalong’s letter, the total amount paid by BCDA for Condition No. 10 (25% lease rental share) was P238,620,468.00. However, the total actual amount to be remitted was P407,228,577.60, leaving an outstanding balance of P168 million. This indebtedness was computed based on CJHDevCo’s lease payments to BCDA, which is significantly different from the P817 million outstanding balance calculated by the City Treasurer’s Office up to 2016 based on the terms of the lease agreement between BCDA and CJHDevCo.
The letter also requested a report of gross income from other locators other than CJHDevCo from 1997 to present.
On July 13, 2023, Garcia replied to Magalong, stating that JHMC, as the administrator of BCDA in Camp John Hay, had already forwarded the letter to BCDA for its attention and appropriate action.
City Treasurer Alex Cabarrubias mentioned that a follow-up demand letter to BCDA/CJHMC is currently under review by the City Legal Office.
City Budget Officer Leticia Clemente said the city government had demanded its share of the lease rentals in 2009. This had been a subject of reconciliation since the lease agreement was crafted in 1997. At that time, the city’s share had accumulated to approximately P652 million. She added that BCDA had written to then-Mayor Reinaldo Bautista Jr., providing a different computation due to renegotiations of the lease agreement. BCDA offered to pay in kind with two log homes at the Voice of America valued at P35 million each and 10 golf shares valued at P750,000 each. The former administration did not accept this offer.
During the discussion in the city council, Congressman Marquez Go suggested that BCDA’s debt could be collected without engaging in an adversarial approach.
“Why should we be adversarial with the other party if our goal is simply to collect? We can achieve this in a way that results in a win-win for both parties,” Go stated.
However, Councilor Fred Bagbagen pointed out that, despite the ideal goal of having a harmonious relationship with BCDA, the reality is that there is an ongoing “adversarial” situation caused by BCDA’s “refusal” to settle its liabilities to the city.
Vice Mayor Faustino Olowan questioned why the city government had never filed a case against BCDA regarding its financial obligations to Baguio City.
The discussion stemmed from the Supreme Court’s arbitral ruling in April 2024 which concluded that both CJHDevCo and BCDA had violated the lease agreement. In its ruling, the Court ordered CJHDevCo to return to BCDA the leased property together with all its improvements. In turn, BCDA must refund to CJHDevCo the rentals the latter had already paid amounting to P1.4 billion.
Councilor Betty Lourdes Tabanda highlighted a significant concern regarding the Supreme Court’s arbitral ruling. She claimed the city government may lose its legal claim to any share in the lease rentals if BCDA returns all the rental payments to CJHDevCo. Furthermore, she raised the issue of whether the city should return or reimburse any amounts it had already received from these rentals.
Tabanda said it is important to understand the city government’s legal standing and options regarding this matter. She suggested that the City Legal Office should investigate whether the city government can legally intervene.
City Legal Officer Althea Alberto affirmed that the city has a stake in the outcome of the said case but refrained from answering whether the city should intervene. She noted that the Supreme Court’s decision was only through a press release by the Court’s information office and that the actual decision is not yet accessible.
“It might be premature for me to give a legal opinion at this point,” Alberto stated.
She pointed out that until their office received and reviewed the official decision, they could not provide a definitive interpretation or analysis of its contents, subject matter, or arguments.
Councilor Jose Molintas explained that the city government cannot legally intervene in the case between BCDA and CJHDevCo because it is not a signatory to the lease agreement. He said the city’s agreement is specifically with BCDA founded on the 19 conditionalities.
In connection to the discussion on BCDA’s outstanding liabilities, city council members also mentioned the case involving BCDA and CJHMC vs. Baguio City regarding the requirement for businesses within JHSEZ to secure business permits and pay corresponding fees to the city government.
In February 2023, the Supreme Court ruled in favor of Baguio City. The ruling emphasized that only businesses registered with the Philippine Economic Zone Authority (PEZA) could enjoy tax exemptions while unregistered ones must pay all relevant taxes and fees. The ruling also stressed that BCDA’s income-sharing arrangement with the city government did not exempt it from compliance with local regulatory measures.
Cabarrubias said there is no way to compute the collectibles from the taxes of businesses within JHSEZ as BCDA had never granted the city government’s request for an inventory of all businesses.
Molintas expressed frustration over the challenges that the residents and the city government had faced due to the actions of BCDA. He argued that Congressman Go should prioritize making laws that support the city and its people rather than BCDA. He claimed the incorporation of certain provisions in the Revised City Charter empowers BCDA to create “an autonomous city within the city.” He said this autonomy could potentially allow BCDA to operate without being subject to local business taxes which undermines the city’s authority and financial resources.
In response, Go denied any favoritism towards BCDA. He argued that the inclusion of BCDA in the Revised City Charter was based on RA No. 7227. He said BCDA is a government agency that can help the country and should not be viewed as an “adversary” to Baguio City.
Molintas urged Go to take action to revoke these provisions which he described as potentially harmful to the city, otherwise, other city officials would pursue other means to address these concerns. **Jordan G. Habbiling


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