A regional trial court in Baguio City has granted the petition of Camp John Hay developer, CJH Development Corporation for confirmation of the P1.42 billion-award given to it by the Philippine Dispute Resolution Center Inc. in a move that could cost the Bases Conversion and Development Authority a lot more money in foregone revenues.
In a decision promulgated last March 27, Presiding Judge Cecilia Corazon Dulay-Archog of Baguio City RTC Branch 6, rendered judgment confirming the “Final Award” by the PDRCI to CJHDEVCO ordering BCDA to return to CJHDEVCO P1,421,096,052, representing the total amount of rentals the developer has paid to the agency.
Judge Archog also confirmed the PDRCI ruling that CJHDEVCO is not liable for any unpaid back rent consistent with the ruling that rescission and mutual restitution is proper in the case.
The lower court held that the PDRCI’s “Final Award is clear” and “it needs no further interpretation.”
Developer Robert John Sobrepena described the arbiter’s February 11 award as a “win” for CJHDEVCO. He said the ruling dealt a black eye to the government’s private-public partnership program” as a result of miscalculations by the BCDA under Arnel Paciano Casanova, president and chief executive officer.
The RTC stressed that it “is not authorized to revise, interpret or in any way encroach upon the work of the Arbitral Tribunal except to act on specific grounds to vacate an award which does not exist in the instant case.”
“And finding that no ground exists to vacate or modify the same, this Court hereby confirms the Final Award dated February 11, 2015 in PDRCI Case No. 60-2012 entitled “In the Matter of An Arbitration Under the Rules of Arbitration of the Philippine Dispute Resolution Center, Inc. (PDRCI) between (CJHDEVCO) and (BCDA)” the order said.
“As to the list of sub-lessees and/or vested rights holders, they will be governed by the law on obligations and contracts,” the Court added.
The RTC also lifted the writ of preliminary injunction it issued on August 23, 2012 stopping the BCDA from taking over the Camp John Hay facility from CJHDEVCO.
It also ordered that “an entry of judgment be made”, and the issuance of a writ of execution to implement the Final Award.
CJHDEVCO’s Chief Operating Officer Alfredo Yniguez hailed the lower court order, adding that significant to the decision of the Baguio RTC is that the vested right holders — the existing locators, sub-lessees, unit owners, lot owners and golf club members who acquired their interests in good faith – will be governed by the law on obligations and contracts.
“This statement of Judge Archog confirms our legal position that the arbitral award did not carry with it the order for our locators, sub-lessees, units owners, lot owners and golf club members to vacate as well, but that their vested rights are to be protected by law,” he said, when sought for comment on the RTC order.
“Article 1385 of the Civil Code, which is the law relied upon by the vested rights holders, provides that an “order for mutual restitution”, as in this case, cannot include properties currently in the possession of third persons who acted in good faith,” Yniguez stressed.
The CJHDEVCO executive said that with this ruling by the Baguio RTC recognizing that there are vested right holders in the Camp, BCDA cannot just evict the vested right holders nor order them to vacate without their due process afforded to them by the laws on obligations and contract.
Last March 6, CJHDEVCO filed a petition before the Baguio City RTC seeking for confirmation against the BCDA of the P1.42 billion money award to CJHDEVCO by the PDRCI.
In a petition for confirmation of final award by PDRCI, CJHDEVCO asked the court to confirm the final award, enter judgment in accordance with the award, issue the writ of execution for the P1.42 billion money award and appoint a commissioner to oversee the turn-over of the leased property to the BCDA after BCDA pays the P1.42 billion money award to the developer of the former American recreational facility.
CJHDEVCO also submitted to the court a list of third parties with vested rights in the leased property.
The PDRCI final award rendered last February 11, 2015 adjudged CJHDEVCO as not liable for the P3.3 billion back rental claimed by BCDA and instead ordered BCDA to pay CJHDEVCO by way of damages for breach of contract, P1.42 billion, effectively returning to CJHDEVCO all rental payments for the former American rest and recreation center since 1997.
In its 274-page Final Award, the three-man PDRCI also declared CJHDEVCO as “not liable for any unpaid back rent” after it found both the BCDA and CJHDEVCO of mutually committing breach of their contractual obligations, in connection with the development of the Camp John Hay in Baguio City.
“The Original Lease Agreement, the subsequent Memorandums of Agreement and the Restructuring Memorandum of Agreement of 2008 are hereby rescinded due to the mutual breach thereof by the parties. The parties are hereby reverted as far as practicable to their original position prior to the execution of the Original Lease Agreement,” the PDRCI ruling stated.
The PDRCI stressed that BCDA failed to comply with its obligation of setting up a One-Stop Action Center, which would have been an effective mechanism to facilitate development of the John Hay Special Economic Zone.
“It is undeniable that the OSAC which the BCDA claims to have established in compliance with the 2008 restructured memorandum of agreement (RMOA), was unable to perform its warranties. For one, the OSAC was manifestly not fully authorized to process and issue developmental permits, such as tree-cutting, earth balling, and tree-pruning permits,” the arbitration body said in its ruling.
The PDRCI also noted that BCDA failed to issue business permits even after the execution of the RMOA in 2008.
“From a review of the evidence submitted by the parties, this tribunal is not inclined to accept the reasons put forward by BCDA that allegedly justify why these permits could not be timely issued.”
“For instance, on the matter of the renewal of the building permit of Camp John Hay Suites Hotel, BCDA claims that the 5-storey Suites Hotel violated the 4-storey height restriction. However, there is evidence to show that it did not enforce the supposed 4-storey height restriction with respect to the 7-storey Monet Hotel,” the PDRCI said.
The tribunal also denied BCDA’s plea for Camp John Hay Development Corporation (CJHDEVCO) to cough up P3.3 billion in supposedly unpaid rentals.
“The Claimant (CJHDEVCO) is ordered to vacate the Leased Premises and promptly deliver the Leased Property, inclusive of all new constructions including permanent improvements introduced during the term of the Lease as reckoned from the execution of the Original Lease Agreement, to Respondent in good and tenantable condition in all respects, reasonable wear and tear excepted,” the arbitral decision stressed.
“The Respondent (BCDA) is ordered to return to Claimant (CJHDEVCO) the total amount of rentals Claimant has paid in the total amount of Php1,421,096,052.00,” the PDRCI said, adding “Claimant is hereby declared as not liable for any unpaid back rent consistent with the ruling that rescission and mutual restitution is proper in this case.”
In January 2012, CJH DEVCO filed a complaint for arbitration against BCDA seeking to confirm the validity of its decision to rescind the RMOA for the government agency’s alleged “failures and breaches.”