CA stops SEC’s cease and desist order over John Hay

By Dexter A. See

BAGUIO CITY  - The Court of Appeals issued a temporary restraining order enjoining the Securities and Exchange Commission from enforcing the cease and desist order it issued against Camp John Hay Development Corp. which prevented CJH DevCo from allegedly ‘engaging in the business of selling securities by selling “limited warranty deeds’ and leaseback agreements to unit buyers for hotel operations of The Manor and Forest Lodge, formerly known as The Suites within the 247-hectare John Hay Special Economic Zone.

The CA issued a TRO Sept. 25, stating that the CJH DevCo has a “clear right to be protected against the enforcement of the CDO, and that CJH DevCo will suffer grave and irreparable damage from the outright implementation of the CDO that will prohibit the developer of the former American base from pursuing with its allowed business operations inside the declared economic zone.”

The SEC issued the CDO last June 7 after receiving a letter from the Bases Conversion and Development Authority seeking to prevent CJH DevCo from selling units under a LWD and leaseback agreement, arguing that this classifies as a sale of securities that warrants authority from the regulating agency.

However, CJH DevCo argued that the Limited Warranty Deed (LWD) is the accepted and approved legal document which describes the ownership interest of the unit buyers during the lease period of the units acquired from the Manor and Forest Lodge.

On the other hand, the offer of leaseback agreements only an option for unit buyers and therefore, does not classify the transaction as a sale of securities but only as a simple lease agreement.

Both legal documents described have been in place since the very beginning or when the developer started introducing improvements within the former American rest and recreation area over 17 years ago.

CJH DevCo also questioned the manner in which the alleged investigation by the SEC was conducted, arguing that they were deprived of due process of law considering that they were not given a fair chance by the SEC to reply to the allegations of BCDA before the issuance of the cease and desist order.

Alfredo Yñiguez CJH DevCo Executive Vice President, stressed the importance of abiding by the rule of law.

“All our contracts and actions are based on following the rule of law and we expect that due process also be followed at all times,” Yniguez told the Manila Standard, citing that all the transactions being done by the developers are within the ambit of the law, thus, they expect concerned government agencies not to “bully them out” but instead observe lawful means in the quest for what is to the public.

With the CA enjoining the CDO, CJH DevCo can continue offering Limited Warranty Deeds and Leaseback Agreements to unit buyers for The Manor and Forest Lodge in Camp John Hay.

The Manor and forest Lodge have a combined 408-room high-end accommodation facility that has greatly contributed in providing descent accommodations to foreign and domestic visitors spending a well deserved break in the mountain resort city.