Appellate court stops SEC cease order on Baguio property-A A +A
Thursday, September 27, 2012
THE Court of Appeals (CA) has stopped the Securities and Exchange Commission (SEC) from implementing its cease and desist order on the alleged sale of securities and leaseback agreements by a private consortium to unit buyers of its hotel properties within the complex in Baguio City.
In a three-page resolution, the CA's Sixth Division through Associate Justice Hakim Abdulwahid granted Camp John Hay Development Corporation's (CJHDevCo) prayer for a temporary restraining order, effective for 60 days, enjoining SEC and its Enforcement and Prosecution Department from enforcing its June 7, 2012, stay-order, pending the court's hearing on the case.
Concurring with Abdulwahid were Associate Justices Marlene Gonzales-Sison and Edwin Sorongon.
According to the CA, CJHDevCo has a clear right to be protected, and that the property developer stands to suffer grave and irreparable injury from the outright implementation of the assailed SEC order.
"(S)o as not to render the instant petition moot and academic, we hold that, pending determination of the propriety of the application for issuance of a writ of preliminary injunction, the grant of petitioner’s application for a TRO is warranted," the CA ruled.
CJHDevCo, however, was ordered by the appellate court to post a bond of P500,000 within five days from receipt of the court's notice. The CA ruling was promulgated last September 25.
The appellate court likewise gave respondents, SEC and the state-owned Bases Conversion Development Authority, 10 days to submit their respective comments on the petition filed by CJHDevCo and to show cause why a writ of preliminary injunction should not be granted.
Petitioner may file its reply within five days upon receipt of respondents' comment.
With the CA's ruling, CJHDevCo may continue offering Limited Warranty Deeds (LWD) and Leaseback Agreements to unit buyers for The Manor and Forest Lodge (formerly known as The Suites) in Camp John Hay.
The SEC issued the CDO after receiving a letter from the BCDA seeking to prevent the property developer from selling units under the LWD and Leaseback Agreement, arguing that this is considered as a "sale of securities."
In its petition at the CA, CJHDevCo said the LWD is an accepted and approved legal document, which describes the ownership interest of the unit buyers during the lease period. On the other hand, the offer of Leaseback Agreements is 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, it claimed.
CJHDevCo also questioned the manner in which the alleged investigation by the SEC was conducted, arguing that they were deprived of "due process of law."
The CA suit is just one of a string of cases filed in court. Earlier, a complaint for perjury was filed by CJHDevCo against Casanova before the Office of the City Prosecutor in Manila, while BCDA filed malversation raps at the Department of Justice.
CJHDevCo has been the lessee over the BCDA-administered CJH Manor Hotel and The Suites for 25 years, renewable for another 25 years, commencing on October 19, 1996.
In 2008, CJHDevCo gave the title of the 26 hotel rooms to government as partial payment of its unpaid lease rentals amounting to P2.6 billion.
BCDA however claimed that it never signed the leaseback agreement over the units as the term of the leaseback exceeded the term of CJHDEVCo's lease over Camp John Hay, which is only for 25 years. (JCV/Sunnex)