The BCDA-CJHDevco Legal Battle: CHRONOLOGY OF MAJOR EVENTS

CAMP JOHN Hay Development Corp. (CJHDevCo) took possession of Camp John Hay in 1996 after paying a relatively paltry sum, and has since refused to pay the remainder of its obligations to the Bases Conversion and Development Authority (BCDA).  For almost two decades it has been using the camp property and profiting from subleases and business operations, to the detriment of the national government, several local governments, and other stakeholders. 

The following is a chronology of major events surrounding the issues besetting Camp John Hay:

• October 19, 1996 – The BCDA signed a 25-year lease agreement with the Fil-Estate Consortium, renewable for another 25 years. Fil Estate, through CJHDevCo made an advance payment of P250 million on October 16, 1996. Under the agreement, Fil-Estate will pay BCDA P425 million or five percent of gross revenues per year, whichever is higher.

• October 18, 1997 – CJHDevCo paid P425 million representing its first annual lease payment.

• November 12, 1998 – CJHDevCo requested a deferment of the 2nd annual lease payment.

• August 5, 1999 – CJHDevCo and the BCDA signed a memorandum of agreement to defer CJHDevCo’s second year payment. CJHDevCo cited delays caused by bureaucratic red tape and unusual change in weather conditions that adversely affected its finances. CJHDevCo paid BCDA P75 million worth of CJH Golf Club shares and condo units. The balance of P350 million was to be paid on the sixth year or 2002.

• July 14, 2000 – The BCDA and CJHDevCo signed the first restructuring agreement adjusting the lease period and rescheduling the terms of payment of the 1999 and 2000 rentals, with CJHDevCo recognizing that it owes the BCDA P425 million.

Despite claims of financial difficulties and nonpayment of its lease rentals, the board of CJHDevCo declared dividends totalling P953 million for the years 1998 to 2000 that the BCDA discovered only much later.

CJHDevCo invoked force majeure in the non-performance of its obligations because of the economic crisis and bureaucracy that delayed its projects in January 2002.

• February 2002 – The BCDA rejected CJHDevCo’s claim and was about to call for the termination of the lease agreement when CJHDevCo submitted a substantially improved offer.

• July 18, 2003 – The BCDA and CJHDevCo agreed to a second restructuring agreement. The second agreement amended the schedule and terms of lease rental payments, revising the installment payment of P311.94 million for 1999 and 2000 and restructuring the payment for 2001 and 2002 to P498.39 million and P438.89 million respectively.

• November 17, 2003 – CJHDevCo and the BCDA reached another deadlock when CJHDevCo refused to pay its maturing obligations because of the Supreme Court’s decision to nullify the grant of tax and financial incentives to John Hay locators.

After active lobbying, Congress passed a law restoring the incentives to John Hay locators and granting them amnesty from taxes and penalties from 1996 to 2007.

• July 1, 2008 – BCDA and CJHDevCo agreed to a third restructuring agreement with CJHDevCo recognizing that the latter’s unpaid lease rentals have amounted to P2.686 billion. CJHDevCo paid P100 million upon signing the third restructuring agreement. The agreement also called for the payment in kind to the BCDA of log homes and units in the Manor that was to remain under CJHDevCo management. The dacion en pago was for P180.34 million. The agreement required the establishment of a One Stop Action Center (OSAC) for the registration, licensing and issuance of permits within John Hay.

• June 10, 2009 – CJHDevCo requested for another deferment of the payment of its financial obligations saying that the BCDA’s failure to establish the OSAC has had an adverse impact on its finances. The BCDA declined the request.

• From July 2009 to January 2011– The BCDA sent CJHDevCo six demand letters, asking it to pay the lease rental and deposit the common usage service assessment collections to an escrow account.

• November 30, 2010 – The BCDA discovered that one of the log homes that CJHDevCo used as payment in kind in 2008 was already sold to a Wilson Sy.

• April 14, 2011 – The BCDA sent CJHDevCo a final demand letter seeking the payment of its unpaid obligations.

• August 2011 – CJHDevCo sought another restructuring and submitted a proposal that was rejected.

• December 17, 2011 – The Commission on Audit (COA) called on BCDA officials to take legal action against CJHDevCo for failure to pay rental obligations which have already ballooned to a whopping P2.667 billion.

• January 9, 2012 – CJHDevCo said it was rescinding the restructuring memorandum of agreement dated July 1, 2008 because of the failure of the BCDA to set up a fully functional one-stop-action-center in Camp John Hay.

• January 24, 2012 – CJHDevCo sought a temporary restraining order before the Baguio RTC to prevent the BCDA from taking control of Camp John Hay. Judge Villacorta of Baguio RTC issued a writ of preliminary injunction on April 26, 2012 against the BCDA but required CJHDevCo to post an injunction bond.

• April 10, 2012 – The Housing and Land Use Regulatory Board (HLURB) issued a notice of violation to CJHDevCo for selling lots and units at the Camp John Hay Suites without first securing the required permits. CJHDevCo violated PD No. 957, a law that protects subdivision and condominium buyers from fraudulent sellers and swindlers.

• April 23, 2012 – Former Deputy Speaker Eric Singsong (Ilocos Norte), representing the Stern Real Estateand Development Corporation, the Meehan Cellars, and the Ilocos Coastal View Resorts, filed charges against CJHDevCo at the DOJ, claiming that his firms were duped into leasing John Hay properties for 50 years, even though the CJHDevCo contract only has a 25-year duration.

Korean national Kim Sung-hwan filed the first suit of this nature against CJHDevCo claiming that he and his father were deceived into leasing a unit of the John Hay Suites for 50 years.

• May 15, 2012 – CJHDevCo chairman Robert John Sobrepena wrote BCDA chairman Payumo a letter seeking to write off P3 billion of its arrears and extend the term of the lease agreement until 2061 that was unanimously rejected by the BCDA board.

• May 16, 2012 – The BCDA issued CJHDevCo a notice of termination for material and incurable breaches of its contractual obligations.

• June 7, 2012 – The Securities and Exchange Commission (SEC) issued as cease-and-desist order against CJHDevCo ordering the latter to stop selling condotel units in Camp John Hay for failing to register guarantee schemes behind the property sales.

• November 10, 2012 – The Baguio City prosecutor’s office dismissed a P100-million libel suit filed by CJHDevCo against the BCDA for the latter’s notices published in newspapers that warned the public against investing with CJHDevCo.

• September 2013 – BCDA and CJHDevCo entered into arbitration.

• September 30, 2014 – The Court of Appeals overturned the Baguio RTC decision, effectively lifting the injunction on BCDA.

• October 14, 2014 – The BCDA filed an urgent motion with the Baguio RTC because CJHDevCo’s bond was issued by a company that was not authorized by the Insurance Commission or the Supreme Court.

• February 11, 2015 – The Philippine Dispute Resolution Center Inc. (PDRCI) confirmed the termination of the Original Lease Agreement between the BCDA and CJHDevCo and the order for BCDA to return the paid amount of rentals of CJHDevCo in the amount of P1, 421,096,052.00.00 while CJHDevCo is no longer liable to pay arrears amounting to P3.3B.

In a separate opinion, co-arbitrator Teodoro Kalaw IV said CJHDevco should pay rentals in arrears amounting to P2.4 billion.  CJHDevco did not pay the BCDA its lease rentals and its arrears have ballooned to over P3.4 billion.  About P850 million of the total arrears should have been remitted to the local governments of Baguio City, La Trinidad, Itogon, Sablan, Tuba and Tublay as their share from the income of BCDA.

In the same arbitral decision, CJHDevco is ordered to VACATE the leased premises and promptly deliver the leased property, inclusive of all new constructions and permanent improvements to the BCDA in good and tenantable condition in all respects, reasonable wear and tear excepted.

• March 7, 2015 – BCDA said it welcomes a congressional investigation on financial and management issues of Camp John Hay and fully supports House Resolution 1936 authored by Quezon City Rep. Winston Castelo (LP, 2nd district) seeking a congressional probe into the management and operations of Camp John Hay.

• March 6, 2015 – CJHDevco sought confirmation of the arbitral tribunal's decision. It asked the court to issue a writ of execution for the payment of the award by BCDA and to appoint an official who would oversee the turnover after the BCDA pays the amount. 

• March 13, 2015 – BCDA sought confirmation of the arbitral tribunal's decision and the issuance of a writ of execution in a petition filed before Branch 6 of Baguio City Regional Trial Court.
  (To be continued)