Court to BCDA: Pay first, evict later

The bully in the Bases Conversion and Development Authority (BCDA) may strike again this week at Camp John Hay.

The BCDA’s Arnel Casanova is preparing to send his storm troopers, again, to try to seize the two five-star hotels in Camp John Hay built by CJH Development Corp., The Manor and Forest Lodge.

Casanova has tried this tactic twice before but failed due to the resistance of the hotels’ security guards and a stop order from the Baguio court. Now he is going to try again because the BCDA cannot pay the P1.4 billion rent that the arbitration court has ordered it to refund to CJHDevCo and wants to take possession of the two hotels and other improvements in the former American leisure camp immediately. The decision is clear: The BCDA should pay first and CJHDevCo will return the whole camp, including improvements, to the BCDA. The court even gave CJHDevCo the right to levy BCDA assets if the latter does not refund the P1.4 billion in full.

The developer is willing to return the whole camp, including all the improvements, as soon as it receives the P1.4 billion. But the BCDA has resorted to misrepresentations because it wants the two hotels and other improvements. It claims in press statements that it has paid the amount to CJHDevCo. It has not.

What Casanova did was deposit the amount in a DBP (Development Bank of the Philippines) account in the BCDA’s name, not in the name of CJHDevCo. What he did was open an escrow account, in the name of the BCDA. That is not payment.

Casanova is a lawyer, and he should have known that under the Rules of Court, there are only two ways to make payment: Give cash or a manager’s check to whoever is entitled to it. Therefore, an escrow account is not payment.

In fact, the sheriff should be collecting from the BCDA. But what is it doing? It has issued notices of eviction to 1,631 investors who have subleased homes and hotel units for 25 years renewable for another 25 years. These investors, many of whom are retirees, are buyers in good faith and have nothing to do with the quarrel between the BCDA and CJHDevCo. In fact, there was no mention of them in the arbitral decision and Casanova should not touch them because they are innocent third parties. But the BCDA is using them as a pawn because it cannot pay the P1.4 billion that it is required to refund to CJHDevCo.

Recently, the BCDA admitted that what it deposited in DBP is not payment, but only to show that it is ready to pay. Its excuse is that it still needs approval by the Commission on Audit. So why is Casanova trying to evict when he is not paying?

The BCDA cannot order parties in CJHDevCo to vacate because the court order is clear that payment must first be made.

The developer can take care of itself, but what about the investors enticed by the government to invest in Camp John Hay? It is clear in the court’s order that the rights of third parties will be governed by the laws on obligations and contracts. And they are not parties to arbitration.

The BCDA can file ejection proceedings in the metropolitan trial court or a petition for recovery of possession in the regional trial court so the third parties will at least have their day in court.

Under the Rules of Court, the sheriff must not move unless it requires the BCDA to post a bond to cover possible damages to the investors. Unless the BCDA files a bond, the sheriff cannot proceed with ejection.

The investors have asked President Aquino for help against the BCDA in several open letters in the newspapers, but so far he has not done anything. In a desperate measure, they have filed petitions in court to protect the homes they have subleased.

Another distortion with which the BCDA has tried to fool the public is its claim that CJHDevCo defrauded the investing public by selling them land that it does not own (“sublease” is the correct word).

But under the 1996 lease contract and subsequent agreements between the two parties, the BCDA itself authorized the development of several pieces of real estate to be sold to the public, among them the forest cabins, country homes, log homes and units in The Manor and Forest Lodge. While the BCDA continued to be the owner of the land, it stipulated that CJHDevCo is the owner of all the improvements it introduced.

Since the obligation to transfer ownership of the improvement arises only at the expiration of the lease, CJHDevCo is in the meantime the owner of the improvements it constructed, with valid titles which it can convey and transfer to the public.

At no time did CJHDevCo sell land it does not own. A reading of the contracts between it and third parties will show that what was sold by CJHDevCo—consistent with its obligations to the BCDA—were only the improvements it has constructed, thus “buyer’s interest pertains exclusively to the unit….”

All the contracts between CJHDevCo and the investors are prefaced with reference to the 1996 original lease agreement clearly indicating that the developer is a lessee of the CJH Special Economic Zone. It never conveyed title to the land. What was conveyed was only the ownership over the improvements which CJHDevCo constructed and owned.

Finally, it was the BCDA itself that mandated CJHDevCo to introduce these improvements. The BCDA also expressly consented to the developer contracting with third parties with respect to these various real estate properties.