Camp John Hay Development Corp. (CJHDevco) has reportedly violated its security agreement with the Bases Conversion and Development Authority (BCDA) for its failure to establish an escrow account where it would deposit portions of the lease payments of locators in Camp John Hay.
Dean Santiago, vice president for business development and operations of the BCDA, said the escrow account is important as it serves as security for the full and timely payment of the principal and interest of CJHDevco’s past and current rental obligations to the state for the management of Camp John Hay.
According to the security agreement signed on July 1, 2008, together with the restructuring memorandum of agreement, 50 percent of actual common usage service assessment collections of CJHDevco should be deposited in the escrow account reckoned upon the date of the signing.
“CJHDevco has not, as provided for in the agreement, opened an escrow account nor has it deposited the amount as stipulated. This constitutes a violation of the security agreement and the [restructuring memorandum of agreement] signed in 2008,” Santiago said.
Santiago noted that reports have come out claiming CJHDevco had actually opened an escrow account already.
If this were true, Santiago said the BCDA is not aware and is not a party to it.
“We challenge CJHDevco to make the account public—if they did open one—so that everyone would see if they have complied with the lease agreement or not. We want to examine the account and see how CJHDevco arrived at the amount deposited based on their so-called proportionate rentals corresponding to the developed areas in the John Hay Special Economic Zone,” Santiago added.
According to the BCDA executive, CJHDevco still owes the BCDA P2.4 billion in restructured arrears, plus another P272 million for its unpaid lease from December 2009 to March 31, 2011.
“An escrow account is a trust account where, in this case, the lessee CJHDevco guarantees its obligations by depositing the amount in a bank and where the lessor BCDA is aware of the account and both CJHDevco and BCDA have agreed on the amount being deposited. How can we call it an escrow account when the money deposited is unilaterally determined by CJHDevco and they are the only ones who could withdraw from the account,” Santiago said.
