The Lies of CJHDevco and THE TRUTH

(Factual information to enlighten the general public on the 

truth behind the issues besetting Camp John Hay.)

The Office of the Ex-Officio Sheriff of the First Judicial Region, Branch 6 of the Regional Trial Court in Baguio City served a notice on April 20, 2015 against Camp John Hay Development Corp. (CJHDevco) and “all persons claiming rights under them” to vacate the premises of Camp John Hay.

The main issue in the Camp John Hay dispute is the enormous debt of CJHDevco to the government spanning four presidents of the Republic. 

It is only under the Aquino Administration that this private developer has been exposed for what it really is.  Now the Court is evicting CJHDevco from Camp John Hay—a government property it benefited from while deliberately failing to deliver on its obligations to the government.

All the other issues the CJHDevco has been raising are nothing but diversionary tactics.  It is aimed at drowning the obvious—the Sobrepeña Group’s intention to back out on its obligations to third party sub lessees and buyers, to our government, and to the people of Baguio City and the Cordilleras.

CJHDEVCO LIES

TRUTH

The government (BCDA) is making the private developer of Camp John Hay suffer by evicting it from its leased premises.		The Court evicted CJHDevco and its sub-lessees AND NOT BCDA.  The truth is, CJHDevco ASKED AND PURSUED an arbitration process with the government.  BCDA adhered to the process as it is wont to uphold the Rule of Law. The arbitral award was eventually confirmed by the Court.   Then CJHDevco, who was so eager in submitting the case for arbitration and in seeking confirmation from the court, is now ADAMANT IN DEFYING THE COURT ORDER and openly going against the Court itself.
CJHDevco has the express approval of BCDA/JHMC in ALL third party sub-leases.		CJHDevco DELIBERATELY HID AND CONCEALED CONTRACTS it entered into with third party sub-lessees and buyers. In spite of repeated requests from BCDA and John Hay Management Corporation (JHMC) since 2011, CJHDevco deliberately concealed these contracts with third party sub-leases. A letter of CJHDevco COO Alfredo R. Yniguez III to JHMC dated 11 November 2011 said: “Owing to the nature of all these contracts which outline sensitive and confidential … information … we regret to inform you that CJHDevCo is under no clear obligation to furnish JHMC such copies.” Because CJHDevco deliberately hid and concealed these contracts, BCDA cannot be bound by these contracts.  CJHDevco is now accountable to these buyers for concealing these contracts to BCDA.
It is the legal obligation of the BCDA to honor and respect these third party leases until they expire on October 2046.		Again, CJHDevco is misleading the sub-lessees because BCDA cannot be bound by these contracts. As held by the Supreme Court, “A judgment of eviction against a lessee affects his sub-lessee, even if the latter are not sued in the ejectment case.  The sub-lessees right, if any, is to demand reparation for damages from his sub-lessor.” The 7-page order penned by Acting Presiding Judge Cecilia Corazon Dulay-Archog states that, “The Final Award (of the Arbitral Tribunal) is clear.  It needs no further interpretation.” The RTC also ruled that sub-lessees and or vested rights holders “will be governed by the law on obligations and contracts.”   The law on obligations and contracts applied to sub-lessees and or vested rights holders clearly states that the obligor (CJHDevCo) is liable to the obligee (sublessees) for damages that may be suffered by the obligee from the non-performance of the obligor.
The Notice to Vacate only applies to roads, forested areas, CJHDevco facilities, its employees, and security guards. Residences, log homes, hotel units and the golf course are owned by private individuals and therefore are not covered by the court’s Notice to Vacate.		The Baguio RTC decision (Acting Presiding Judge Cecilia Corazon Dulay-Archog) affirmed the arbitral tribunal’s final award that clearly rescinded the lease agreement undertaken between CJHDevco and BCDA.  The tribunal ordered CJHDevco to vacate and turnover to the government “all leased premises in good and tenantable condition in all respects, reasonable wear and tear excepted.” The Sheriff’s Notice to Vacate is served against CJHDevco “AND ALL PERSONS CLAIMING RIGHTS UNDER THEM.” It says: “By virtue of the Writ of Execution issued by the Honorable Court, Regional Trial Court, Branch 6, Baguio City, dated April 14, 2015 … you are hereby notified to voluntarily / peacefully vacate the premises … and surrender / turnover the possession thereof to the respondent Bases Conversion (and) Development Authority (BCDA) within thirty (30) days from receipt of this notice.” The Notice to Vacate also ordered CJHDevco to turn over control of Camp John Hay, including the Manor Hotel, Forest Lodge, log homes and the golf course, to the BCDA. This means that CJHDevco and its sub lessees must vacate the premises of Camp John Hay on or before May 20, 2015 when the 30-day notice expires.
The BCDA is using sub-lessees as pawns in its dispute with CJHDevco.  It is truly concerned about the plight of sub-lessees.		On the contrary, sub-lessees are misled and are actually being used as pawns by CJHDevco against the Court because CJHDevco is instigating sub-lessees to defy a court order. CJHDevco’s move is really aimed at avoiding its responsibility to these third party investors. By agitating them to defy a court order, CJHDevco effectively eludes their responsibility to refund its sub-lessees.
The BCDA is defying the court order by not directly paying up CJHDevco the amount of P1.42 billion.		In April 2015, the BCDA has already deposited the P1.42 billion with the Development Bank of the Philippines in escrow under the account of the Baguio RTC Branch 6, without any previous objection from CJHDevco. The disposition of the Php1.4 billion refund is now up to the Court. The BCDA will respect whether the court order is for the refund to go directly to the evicted developer, to secure new lease payments for sub lessees, to be fairly dispensed among third party claimants who wish to recover their investments, or for a portion of the fund to be allotted as revenue share to Baguio City and deserving LGUs.
REVIEW OF CJHDEVCO’S PATTERN OF LIES AND DECEPTION
CJHDEVCO LIES		TRUTH
CJHDevco’s businesses in John Hay suffered losses that it was not able to pay its obligations to government.		BCDA discovered that CJHDevco has been declaring dividends for its firm and for its stockholders while asking for restructuring in deferment of payments to the government. Records show that Sobrepena’s group declared annual dividends from the time of the contract restructuring in 1998 up to 2010 but has not remitted any amount to BCDA as rental fees.   CJHDEVCO BENEFITS FROM A PROPERTY THAT IT NEVER OWNS AND, WORSE, NEVER PAYS ITS OBLIGATIONS. CJHDevco’s audited financial statements to shareholders: 1998 – P378 million in dividends 1999 – P350 million in dividends 2000 – P200 million in dividends In all the years that CJHDevco paid dividends to shareholders, it did not pay rentals to the BCDA. In fact, Mr. Sobrepena is presently on bail and is on trial for the criminal charges of Malversation of Public Funds filed by the DOJ against him before the Regional Trial Court of Baguio City. At the time when Mr. Sobrepena was asking for restructuring and deferment, he was actually receiving dividends or personal earnings.  That is fraud.
CJHDevco abides by and upholds lawful and ethical business practices.		CJHDevCo has not been very forthright will all its records and contracts.  It has not been filing audited financial statements to the Security and Exchange Commission (SEC). When the BCDA discovered that the company had been declaring dividends yet failing to pay rental to government, CJHDevCo stopped submitting audited financial statements to the SEC. If Mr. Sobrepena and his group are diligent and law abiding citizens, as what they repeatedly claim, why will they not file audited financial statements to SEC?  Even a small entrepreneur in John Hay files this important document. This is a layman’s simple question which leads one to recall that the Sobrepena group made news during the past years for its involvement in the College Assurance Plan (CAP) fiasco and other controversial government contracts including the Metro Rail Transit 3 (MRT 3) project.
CJHDevco is transparent in its business dealings in Camp John Hay.		CJHDevco had not been very transparent and has been secretive of the way it did business in John Hay; it collects payments from third party buyers but never remitted payments to BCDA. It never disclosed and actively concealed the contracts despite repeated requests of BCDA. CJHDevco is trying to escape liability from its buyers by trying to mislead them.  IT IS NOW THE RESPONSIBILITY OF CJHDEVCO TO REFUND THESE BUYERS.
		Buyers and BCDA should work together to make CJHDevco accountable for payments by buyers to CJHDevco which CJHDevco failed to remit to BCDA/JHMC.  The buyers should be claiming for refund against CJHDevco.
CJHDevco has a lease hold rights with BCDA for 50 years.		The Lease Agreement between the government (BCDA) and CJHDevco is only for 25 years, renewable for another 25 and NOT a 50-year straight lease. Several sub lessees were lured by CJHDevco into leasing for a 50-year period.  The original lease agreement was only for 25 years and yet CJHDevco leased out for 50 years. The option to renew happens only on the 24th year and it presupposes that you are a tenant in good standing.  However, this is now irrelevant because the entire lease agreement has been voided.
		The agreement states that: “Unless sooner terminated for reasons specified in this Agreement, this Agreement shall have a term of twenty five (25) years, renewable for another twenty five (25) years under the same terms and conditions at the option of the LESSEE, effective upon the signing of this Agreement.  Within ninety (90) days immediately prior to the expiration of the 25-year period, the LESSEE shall manifest its desire to renew the lease.”
The BCDA-CJHDevco row is a bad example on the Public-Private Partnership program of the Aquino administration.		The Sobrepeña group should not use the PPP program to divert the issue.  Our government should study the CJHDevco case as a consequence that should be avoided by the PPP program where the private partner will try to renege on its legal obligations while enjoying all the benefits.
CJHDevco was deprived of revenues because of the nullification by the Supreme Court in 2003 on the grant of tax and financial incentives to locators at John Hay as a Special Economic Zone.		This is a dead issue.  Soon after the SC decision, the BCDA actively lobbied for the passage of RA No. 9399 (declaring a one-time amnesty on certain tax and duty liabilities incurred by businesses operating within the SEZ and Freeports) and RA No. 9400 (amending RA No. 7227 restoring the incentives inside the Freeport Zones). RA No. 9399 and RA No. 9400 are two new laws that remedied the SC nullification inside John Hay and effectively granted tax amnesty to CJHDevco. This is the reason why a deferment of payments has been granted to CJHDevco and two prior restructurings made.
CJHDevco was deprived of revenues because of the non-operation of BCDA’s One-Stop-Action Center (OSAC) for permits.		This is one of the diversionary issues of CJHDevco.  To justify non-payment of its whopping P3-billion obligation, it raises the “problems” with the One-Stop Action Center (OSAC) that it demanded to be created by BCDA and its subsidiary, the John Hay Management Corporation (JHMC).
		Records show that OSAC, which is run by JHMC, granted permits to operate to 37 locators of CJHDevco in 2009, 28 in 2010, 8 in 2011 (1stQ), 126 in 2012, and 140 in 2013. In 2012, there were a total of 3,533 miscellaneous permits processed and issued by OSAC.
		In December 2011, BCDA politely declined a request from CJHDevco for ten permits for tree-cutting and earthballing that would affect more than 1,000 trees because only the DENR can issue such permits. BCDA strictly complies with environmental laws.  CJHDevco wants BCDA to exceed authority by demanding tree-cutting permits. After BCDA’s refusal to grant CJHDevco’s request, CJHDevco raised the issue of “a non-functional OSAC, then unilaterally rescinded the contract and are claiming an atrocious amount of P14.4 billion from government.
		Applications for permits are received and are issued continuously.  At any given time, there will always be a number of applications pending.  But it does not mean that OSAC is non operational.  And is that a valid reason for CJHDevco to withhold payment of its arrears?
CJHDevco does not owe the government anything.		CJHDevco’s debt has reached P3.024 billion as of December 31, 2011.
		There are no questions about the amount of the arrears.  The fact that CJHDevco signed a Restructured Memorandum of Agreement on July 1, 2008 was an acknowledgement of its obligations. The lease obligations of CJHDevco have gone through three restructuring agreements.  During the last quarter of 2011, it sought to restructure its debt for the fourth time, but BCDA rejected a new restructuring agreement and asked CJHDevco to pay up.
Given the Sobrepeña group’s track record and achievements in business and capital investments in our country, it would be a huge loss if it vacates John Hay.		The glaring truth is most of the businesses of the Sobrepena group had failed and attended by so many controversies. Southwoods Golf and Country Club (Sobrepeña Group) In June 2011, Sobrepeña declared a no-quorum during the much-anticipated annual shareowners’ meeting of the Manila Southwoods Golf and Country Club in Carmona, Cavite.  The Fil-Estate Corp, which manages the club, failed to issue some 450 stock certificates to paying members.
		College Assurance Plan [CAP] (Sobrepeña Group) CAP sold over P20 billion worth of pre-need plans in the late 1990s to early 2000.  Sobrepeña is a member of the BOD of CAP while his brother, Enrique, is the president and CEO.  CAP shattered the dreams of thousands of families when it went bankrupt because of mismanagement of funds.  Until now, many of the CAP holders remain unpaid.
		Sobrepeña is believed to have used the millions that CAP raised toinvest in such ventures as the Edsa MRT-3 project, the Southwoods golf course, and CJHDevco.
		Metro Rail Transit Corporation [MRTC] (Sobrepeña Group) MRTC is 76 percent owned by Fil-Estate Corp which invested $300 million in the railway firm, but soon after secured a loan for $700 million with a sovereign guarantee. After that it was a simple matter of not paying back the dollar loan, which the government was obligated to pay.  Fil-Estate Corp is part of an intricate scheme of overlapping corporate relationships to elude financial liability.
		MRTC has a debt of P1 billion.  On July 27, 2012, the DOTC issued ademand letter for this operator of MRT 3 to immediately settle its debt.  One wonders how the MRT 3, practically a goldmine with a daily ridership of some 450,000, is unable to pay its debt.
		In 2014, the DOTC was locked in a legal battle with the MRT Holdings II, which Sobrepeña chaired, for the latter’s failure to add much-needed train coaches to the rail line, after Sobrepeña claimed to own 100 percent of the Metro Rail Transit Corp.’s (MRTC).  The government is now forced to offer an equity value buy-out to address problems besetting MRT-3.
		Fil-Estate Corporation (Sobrepeña Group) A desperate lot owner in the Fil-Estate-owned Forest Hills subdivision in Antipolo City claims that development work stopped some 13 years ago, leaving an unsightly white elephant behind.
		CJH Development Corporation (Sobrepeña Group) Former Deputy Speaker Eric Singson (Ilocos Norte), representing the Stern Real Estate and Development Corp., 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.
		On April 23, 2012, 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.
		On June 7, 2012, the Securities and Exchange Commission (SEC) issued a 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.
BCDA continues to harass locators and third party sub lessees		BCDA will never respect a fraudulent contract but it will definitely protect the sanctity of contracts that have been entered into in good faith and in transparency. BCDA acknowledges and respects buyers that invested in the Camp and believed in the project from the beginning.  We will continue to make them partners in the development of John Hay. BCDA HAS COMPLIED WITH THE RULE OF LAW for the refund of the P1.4-billion to CJHDevco.  Now the buyers should lay a claim on this P1.4-billion refund.
BCDA reiterates that the government’s stand in the John Hay issue bespeaks of its strict adherence to the principles of transparency, accountability and good governance under the leadership of His Excellency President Benigno S. Aquino III.  The public and the business sector want to end the impunity caused by CJHDevco in John Hay. As soon as CJHDevco vacates Camp John Hay and refunds its buyers, we will be able to usher in an era of prosperity and development, transparency and accountability in the John Hay Special Economic Zone for the long-term benefit of the general public, and especially of the people of Baguio and the Cordilleras.