Business as usual at John Hay

It’s business as usual at one of the country’s favorite local tourist destinations – Camp John Hay in Baguio City.

This is even after the Supreme Court, ruling en banc, dismissed with finality all legal challenges to a bid by the Bases Conversion and Development Authority (BCDA) to oust businessman Bob Sobrepena’s Camp John Hay Development Corp. (CJHDevco) from the former American base and to recover the 247-hectare property inside the John Hay Special Economic Zone (SEZ).

The High Court has upheld its April 3 decision that reinstated an arbitral ruling voiding the John Hay development lease and mandated the eviction of CJHDevco, with the BCDA required to refund to CJHDevco the rent which the latter paid amounting to P1.42 billion. It also granted BCDA’s petition for review on certiorari of a decision by the Court of Appeals.

Following the transformation by BCDA of Camp John Hay into the John Hay SEZ, the lease and development of a 247-hectare portion was awarded to CJHDevco. BCDA as lessor entered into a lease agreement with CJHDevco, Fil-Estate Management Inc. and Penta Capital Investment Corp. as lessees for the use, management and operation of the leased property. BCDA  shall remain the owner of the leased property while CJHDevco shall own the improvements it will introduce but at the end of the lease agreement, CJHDevco is obligated to transfer the ownership of the improvement to BCDA, according to the SC.

CJHDevco took over the 1996 lease from a previous group and invested P1.42 billion over 16 years to build hotels, luxury residences, and a modernized golf course. It was also authorized under its contract with BCDA to sublease the leased property to third persons.

However, disputes arose in 2012 with  BCDA over the restructuring of the lease agreement, leading to a protracted legal battle.

In 2015, the Philippine Dispute Resolution Center issued an arbitral ruling that voided the lease agreement between BCDA and CJHDevco due to mutual breaches of contract by both parties. It required CJHDevco to return all properties to the government and BCDA to reimburse the former’s expenses.

However, CJHDevco’s 1600 clients that included golf club members and long-term lessees of forest homes contested the decision, arguing that their 25-year lease agreements, with option to renew for another 25 years, should be honored.

The SC also lifted all freeze orders affecting notices to vacate issued in 2015 to John Hay residents and business owners as well as the writ of execution issued by the Baguio Regional Trial Court.

But according to Baguio Mayor Benjamin Magalong, he was informed that BCDA would honor the agreements with third party stakeholders, although they would need to sign new contracts with the government.

BCDA also said that businesses would continue to operate at Camp John Hay and that it is closely coordinating with all stakeholders to ensure a smooth transition.

Just recently, BCDA and John Hay Management Corp. entered into its first partnership after the SC ruling with one of the longest standing locators in Camp John Hay – the Stem Real Estate and Development Corp. which operates Le Monet Hotel and Filling Station food court. This, the BCDA said, forms part of its promise of business continuity within John Hay.

BCDA president and CEO Joshua Bingcang assured its partners inside Camp John Hay that they have nothing to fear and that their condition will improve even more when they partner with BCDA.

Bingcang has offered all John Hay stakeholders to sign fresh 25-year lease contract with the government if they want to have a continued presence inside John Hay.

According to Bingcang, many of the roughly 100 John Hay locators have signified their intent to sign new agreements with BCDA, explaining that even if the locators’ contracts only have a few years’ left, they will be given fresh 25-year leases or more depending on how they contribute to John Hay.

Many of the 25-year contracts signed in 1996 or 1997 would have lapsed in 2021 and 2022 while some of the high-end luxury homes built by CJHDevco offered 50-year contracts, which according to BCDA is illegal.

For its part, Camp John Hay Golf Club Inc. said that while the SC decision directed CJHDevco to turnover possession of the leased property to BCDA as far as practicable has become final and executory, this cannot be enforced against the golf club since the latter has a direct and independent relationship with BCDA.

It explained that the golf club is not a mere sub-lessee of CJHDevCo but has a direct and separate contractual agreement with BCDA independent of the lease agreement between CJHDevco and BCDA, adding that BCDA itself conceived and mandated the creation of a separate entity, the Golf Club, to operate a golf course and issue golf memberships.

According to the Golf Club, BCDA has a commitment allowing it to use its parcels of land until 2047.

It also noted that the Golf Club was not part of the arbitration case and therefore, the orders issued by the Arbitral Tribunal, including the writ of execution and notice to vacate, cannot bind the club nor compel it to vacate the property.

The Golf Club emphasized that it is committed to supporting the rights of its members and will exhaust all legal remedies to safeguard these rights.

I was also informed that the Ayalas have a lease agreement with BCDA and not with CJHDevco for the Baguio-Ayala Land Technohub also inside Camp John Hay.

It is good that the government, through the BCDA, has decided to be a gracious winner of this protracted legal battle by encouraging the previous lessees of CJHDevco to enter into new contracts with it. After all, it would make any sense and it would be a bad business decision to drive away those who are already interested to locate inside John Hay.

 

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