Court: BCDA liable over Poro Point mess

MANILA, Philippines - State-run Bases Conversion and Development Authority (BCDA) should be held liable for its failure to follow a deal with private developer Poro Point Industrial Corp. on the operation of the free port in La Union, the Court of Appeals said. In a 16-page decision penned by Associate Justice Noel G. Tijam, the appellate court denied the government agency’s attempt to have the case before the San Fernando, La Union Regional Trial Court in 2006 dismissed. BCDA officials could not be reached for comment. The BCDA and unit John Hay Poro Point Development Corp. entered into a memorandum of understanding with Bulk Handlers, Inc. in 1999 with the intention of drafting a mutually beneficial agreement for the development of the Poro Point Special Economic and Freeport Zone. After a series of negotiations, the parties finally executed a pre-incorporation agreement that provided for the formation of Poro Point Industrial. The agreement was supposedly prepared by government legal experts, including the Office of the Government Corporate Counsel. The agreement states that Poro Point Industrial would guarantee the government a yearly P50 million in revenues. For its part, the government agreed to a 25-year lease, renewable for another 25 years, of a 30-hectare of port area and a 50-hectare industrial area. Meanwhile, John Hay Poro Point Development Corp. was split into two corporations — Camp John Hay Development Corp. and the Poro Point Management Corp. — as BCDA’s implementing arms. Poro Point Management was specifically tasked to oversee the free port in La Union. In January 2006 however, Poro Point Management issued a report saying that the supposed agreement with Poro Point Industrial was "null and void ab initio" for violating selection procedures. However, the BCDA did not adopt the decision of its own implementing arm. Still, Poro Point Management unilaterally decided not to renew the annual registration application of Poro Point Industrial for 2006, prompting the latter to go to court. In its complaint, Poro Point Industrial said Poro Point Management’s resolution would adversely affect the entire operation of the free port. It also asked the BCDA to turn over the lease areas stipulated under the agreement, having received only 18 hectares of the port so far. The BCDA however moved to dismiss the suit, pointing out that it has adopted a policy contradicting its implementing arm, Poro Point Management. In short, the BCDA said it did not support the nullification of the agreement, it said. The trial court however stressed that "the principal issue involved necessitates the inclusion of defendant BCDA as a party defendant because the issue raised ... is tied up with the performance of the prestations of the contract from where the controversy arose." For its part however, the appellate court moved to uphold the trial court’s decision. "By virtue of its mandate, BCDA exercises oversight functions over the [Poro Point Management]. Not to be overlooked also is the fact that the BCDA ... [is] among the principal parties to the agreement," it said. The appellate court also stressed that while it did not "create any cloud or doubt as to the validity of the agreement, it has not, however, shown any clear manifestation that it took any step to reconcile its conflicting position with [Poro Point Management]." — I.P. Pedrasa, BusinessWorld