Court directs CJHDevco to post P736 M bond, lease termination stands
Posted: July 22, 2012 | Category: Freeport And Ecozones
The Baguio Regional Trial Court (RTC) ordered the Camp John Hay Development Corporation (CJHDevco) to post a P736 million bond as a prerequisite in to make effective the writ of preliminary injunction prayed for by the John Hay lessee.
With the order, the court rejected the P31 million offer made by CJHDevco to prevent a government takeover of their leased properties in John Hay, and upheld the original amount of P736 million as bond to protect government’s interest.
The court order directed CJHDevco to post the P736 million bond in within 30 days from receipt of the order. Without that, no injunctive relief would be extended to CJHDevco.
The Bases Conversion and Development Authority, the government body that owns Camp John Hay, pointed out that the termination of lease agreement still stands. BCDA earlier terminated the lease agreement with CJHDevco due to material and incurable breaches, foremost of which is the lessee’s continued refusal to pay its lease to the Philippine government, which has already ballooned to P3 billion.
BCDA President and CEO Arnel Paciano Casanova said, “CJHDevco directors have already benefited in the past 15 years exploiting government property for their own personal gains. Such practice no longer has a place in the present administration. Each day that they hold on to the property without any intention of paying their obligations is causing injury to the government and delays in the development of the Cordilleras. ”
Baguio City stands to receive P750 million if CJHDevco settles its total obligations to the Philippine government. “Such an amount will allow the local government of Baguio to undertake several development and infrastructure projects that can open up the floodgates of economic development, not only in Baguio City but the rest of the Cordillera region,” Casanova pointed out.
The same court order also simply confirmed the validity of the arbitration clause in the contract and directed both parties to observe the arbitration clause.
“The arbitration clause in our contract does not in any way impinge upon or prevent the BCDA from exercising its rights,” Casanova said, adding that the order however did not touch on the merits of the lease termination.
He emphasized "There is nothing in the order of the court that says BCDA cannot exercise its remedies under the contract and existing laws. We are confident that the courts will rule in favor of the people and will allow government to exercise its rights over government-owned property."
The termination notice was served to CJHDevco last May 16, 2012, ordering the lessee to pay its total obligations amounting to more than P3 billion, and vacate John Hay immediately. Prior to the lease termination, CJHDevco sought injunctive relief, fearing a government takeover of the leased properties due to the lessee’s delinquency in paying its arrears.
The Baguio RTC ordered CJHDevco to post a bond of P736 million to effect the injunction. CJHDevco appealed for a lower bond amounting to P31 million, but the court upheld the original bond amount of P736 million.
CJHDevco can only get injunctive relief once they post the full amount of the bond. Casanova pointed out however that the posting may contradict its earlier claim that financial losses prevented it from settling its lease obligation.
“Once CJHDevco posts the bond, it will demonstrate that they actually have the financial capability to pay its lease obligations,” he said. “We are doubtful that CJHDevco will post the bond as it would likely betray itself, since it has claimed financial losses as reason for defaulting on its obligations,” Casanova added.