Baguio gov’t wants say in BCDA, CJHDevCo tiff : SEC orders CJH lessee:Stop selling securities

By Alfred Dizon and Aileen P. Refuerzo

BAGUIO CITY – The city government has signified it intention to be involved in the rental tiff between the Camp John Hay Development Corp. and the Bases Conversion Development Authority even as the Securities and Exchange Commission has ordered on June 7 the CJHDevCoand its wholly-owned subsidiary CJH Suites Corp. to “cease and desist” from selling securities to the public.

             

“There is here being a prima fade evidence that respondents are engaged in the business of selling securities without the proper registration issued by this Commission in violation Section 8 of the SRC,” the SEC order said.

           

It was signed was SEC chairperson Teresita J. Herbosa and commissioners Raul Palabrica and Manuel Huberbtob.  

           

“The respondents, their respective officers, directors, representatives, salesmen, agents and any and all persons claiming and acting for and in their behalf, are hereby ordered to immediately cease and desist from further engaging in the business of selling securities until they have complied with the requirements of law and its implementing rules and regulations,” the order said.

           

“Let copies of this Order be posted at the entrance of the main office and/or branches, if any, of the respondents, published in a newspaper of general circulation  and posted in the Commission's internet website.”

           

SEC papers said, the Commission acting on the Bases Conversion Development Authority’s request , sent a team to investigate the  operations of said lessees and gathered information

on the "leaseback" and "money-back" arrangements through their interview with Frank Delizo, director of sales of CJHD.

           

The team was reportedly also able to procure marketing materials utilized by both CJHD and CJHS in their dealings with the public in relation to these specific arrangements as well as samples of their "Contract to Sell", "Leaseback Agreement" and the "Deed of Absolute Sale".10.

           

The investigation department of the SEC also reportedly invited several buyers of units of "The Manor" and 'The Suites" to separate conferences to give information regarding their transactions with CJHD and CJHS.

           

Through these individuals, the EPD reportedly was able to compile correspondences12 and contracts13 between the said buyers and the respondents

further confirming the existence of the "Leaseback Agreements" and the manner in

which these were formed and entered into by the parties.

           

Based on the "leaseback" and/or "moneyback" arrangement, the buyer of the residential unit shall, after payment of the purchase price, surrender the management and possession of the same to either CJHD or CJHS.      

           

These corporations shall then consider these units as part of the pooled units in "The Manor" or in "The Suites" offered for billeting.

           

It was learned the arrangement shall be for a fifteen year period renewable for another 15 years or until 2046. Buyers may use their units for thirty days within a year and exempt from paying the monthly dues and utility fees.

           

Buyers will also be entitled to a proportionate share of seventy percent (70%) of the annual income derived from the hotel's operation of the pooled rooms or a guaranteed eight percent (8%) return on their investment.

           

For buyers who availed of the "money-back" arrangement, they shall reportedly receive the purchase price they paid for their units.

           

Meanwhile, the city government wants involvement in resolution of the lease payment dispute between BCDA and CJHDevCo.

 In a letter to BCDA president and chief executive officer ArnelPaciano Casanova dated June 5, city legal officer Melchor Carlos Rabanes upon instructions of Mayor Mauricio Domogan requested BCDA and John Hay Management Council (JHMC) “to involve the City Government of Baguio in resolving the current impasse between the BCDA/JHMC on one hand and the CJHDevCo on the other.”

               

“The City of Baguio has big stakes in all that happens at Camp John Hay.  It is in this light that we (are making the request).  After all, BCDA, JHMC, the City of Baguio and the developer, should all be partners in running the affairs of Camp John Hay,” Rabanes noted.

               

Domogan has time and again urged the parties to exercise diplomacy and settle the issue amicably.

           

However, the two parties’ conflict escalated resulting to a court and media battles.

               

Domogan said that despite the dispute, the city maintains its position for both parties “to exert extra effort to settle their legal differences amicably.”

               

Domogan said the two bodies can still “sit down to evaluate and determine the obligations that any of them failed to comply and its monetary value so that payments can be made at the soonest possible time.”

           

The mayor said the city as a stakeholder has been at the losing end of the conflict because of the continued delay in the payment of its share from the lease rental in question resulting to the delay in the implementation of priority programs.

           

This, as CJH DevCo officials of Tuesday asked the BCDA for an “out-of-court settlement” of their dispute involving their lease contract in the development of Camp John Hay here.

           

In a press conference at Club Filipino in San Juan City, CJHDevCo executive vice president and chief operating officer Alfredo Yñiguez III said BCDA’s threat to forcibly take over Camp John Hay would result in grave damage to the tourism industry in Baguio City.

           

Yñiguez said BCDA president and chief executive officer Arnel Casanova should stop flirting with the idea of forcibly taking over Camp John Hay as this would also render over 2,000 CJHDevCo employees jobless.

           

He said CJHDevCo has so far invested P7.5 billion in the development of Camp John Hay, but could not implement necessary developments in the area because of the existing cease-and-desist order issued by the Department of Environment and Natural Resources for the earthballing and cutting of trees on the land committed to the company by the BCDA.

           

“We have reached out to the President and Malacañang, through the Executive Secretary, to intervene in settling the dispute. We want an out-of-court settlement,” Yñiguez said.

           

“We want this resolved as soon as possible. (Some) 5,000 to 10,000 people are coming to Baguio. Camp John Hay is one of the flagship areas of Baguio City. We were not allowed to move trees, cut, earthball. We cannot implement the development of the land that we leased,” he added.

           

Yñiguez said the present situation in Baguio City is “tense” because of BCDA’s threat to forcibly take over Camp John Hay.