Caught in the crossfire

In April of last year, the Supreme Court upheld the arbitral ruling that ordered CJH Development Corp. (CJH DevCo) to vacate a portion of the John Hay Special Economic Zone it leased from the Bases Conversion Development Authority (BCDA).

The SC granted the petition for review on certiorari filed by BCDA assailing the Court of Appeal (CA)’s decision reversing the Regional Trial Court’s confirmation of the arbitral ruling. It also denied the petition for certiorari filed by CJH DevCo challenging the Commission on Audit’s dismissal of the company’s money claim arising from the arbitral body’s decision.

As explained by the High Tribunal, it all started when BCDA leased to CJH DevCo a 247-hectare portion of Camp John Hay. The lease agreement allowed CJH DevCo the use, management and operation of the leased property and to sublease the property to third persons.

CJH Devco later on complained that BCDA had not been complying with its obligations under the lease agreement so it filed against BCDA a complaint in arbitration with the Philippine Dispute Resolution Center Inc. (PDRCI), which found that both parties were guilty of breaching their obligations and thus, a mutual rescission was warranted. The PDRCI ordered the parties to revert their original position prior to the execution of the agreement “as far as practicable.”

CJH DevCo was specifically ordered to return to BCDA the leased property and any improvements made thereon while BCDA was required to refund to CJH DevCo the rent which the latter had already paid amounting to P1.42 billion.

The RTC confirmed the final arbitral award but the CA later on nullified the notice to vacate and writ of execution by the lower court after the appellate court found grave abuse of discretion on the part of the trial court for enforcing the final award against the sub-lessees who were excluded from the arbitration.

The CA enjoined the RTC from enforcing the final award, writ of execution and notice to vacate against the sub-lessees until their respective rights and interests are determined upon compulsory arbitration or as may be adjudicated by the regular courts.

BCDA then filed its petition before the SC while CJH DevCo brought before the COA a petition for enforcement and payment of a final and executory arbitral award. COA, however, dismissed the money claim.

The High Court last year held that the certiorari petition filed by CJH DevCo before the CA was premature and that the latter failed to abide by the rules of arbitration when it modified the arbitral body’s ruling on several points: first, when it made an exception to the obligations of CJH DevCo to vacate and deliver the leased property to the BCDA in favor of the former’s sub-lessees; second, when the CA declared CJH DevCo’s obligation to vacate the leased property contingent only upon BCDA’s full payment of the arbitral award; third, when it imposed additional obligations upon BCDA, specifically for the latter to respect and not disturb the various contracts of CJH DevCo with its sub-lessees; and fourth, when the appellate court ordered the arbitration and/or litigation with CJH DevCo’s sub-lessees to determine their respective rights and interests.

According to the SC, nowhere in the final award did the arbitral tribunal make CJH DevCo’s obligation to vacate the leased property contingent upon BCDA’s full payment of the rent already paid. The SC also said that COA did not commit grave abuse of discretion when it dismissed CJH DevCo’s money claim.

While the SC’s decision has already become final and executory, it did not sit well not only with CJH DevCo but also with the latter’s sub-lessees until now.

CJH DevCo for one claims that it was granted a 25-year lease with sole option to renew for another 25 years, an option it exercised from Day 1, that BCDA had full knowledge of the sales with 50-year terms, and that the CJH DevCo board, of which the BCDA chairman is a member, has authorized the sale of properties with 50-year terms.

The Sobrepena-led group pointed out that it was BCDA which instructed CJH DevCo to invite public investments in John Hay and to sell 50-year leasehold terms and that BCDA accepted rental payments in the form of golf shares, units in The Manor and The Forest Lodge, and log homes with dacion values all computed based on a 50-year term.

CJH DevCo also claims that BCDA has yet to refund the rental payments owed to it as ordered by the arbitral tribunal.

The real bone of contention, however, is whether the sub-lessees, buyers of 50-year leases, owners of golf shares at the John Hay Golf Club should be evicted or denied use of their property when the PDRCI order clearly provides that the parties, as part of mutual rescission, must revert their original position prior to the execution of the agreement “as far as practicable.”

Camp John Hay Golf Club Inc. for one maintains that its members’ rights are protected under membership certificates approved by the Securities and Exchange Commission and are valid until 2047, which BCDA allegedly refused to acknowledge.

A group of more than 60 private unit owners and investor at John Hay have also appealed to President Marcos to allow them to remain in their units at the Forest Lodge, The Manor, Forest Estates, Country Homes, Golf Estates and Forest Cabins. They emphasized that they were innocent purchasers for value and were in good faith when they acquired the properties from CJH DevCo or from third parties who had earlier bought the said properties.

They stressed that as third-party buyers, they were not part of the arbitration process but were unjustly caught in the crossfire.

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