The Supreme Court has upheld the arbitral ruling ordering Camp John Hay Development Corporation (CJH DevCo) to vacate part of the John Hay Special Economic Zone (John Hay SEZ) leased from the Bases Conversion Development Authority (BCDA).

In a decision penned by Associate Justice Japar B. Dimaampao on 3 April but released only yesterday 10 April, the Supreme Court En Banc granted the petition for review on certiorari filed by the BCDA assailing the ruling of the Court of Appeals (CA’s) which had reversed the Regional Trial Court (RTC) confirmation of the arbitral ruling.

It also denied the petition for certiorari filed by CJH DevCo challenging the rulings of the Commission on Audit (CoA) for dismissing CJH DevCo’s money claim arising from the arbitral ruling.

The BCDA was created in 1992 to implement the government’s policy accelerating the sound and balanced conversion of former United States (US) military bases into alternative productive uses and enhance derived benefits to promote economic and social development.

BCDA’s powers

BCDA’s powers include ownership, holding, and/or administration of several former US military reservations including Camp John Hay in Baguio City.

Following the transformation of Camp John Hay into the 625-hectare John Hay SEZ, the lease and development of a 247-hectare portion within the SEZ was awarded to CJH DevCo.

BCDA, as lessor, then entered into a lease agreement with CJH DevCo, Fil-Estate Management Inc., and Penta Capital Investment Corporation, as lessees, for the use, management, and operation of the Leased Property.

Under the lease agreement, the BCDA remains the owner of the Leased Property, with CJH DevCo owning its introduced improvements. However, at the end of the lease agreement, CJH DevCo is obligated to transfer ownership of the improvements to BCDA.

CJH DevCo was also authorized under the agreement to sublease the Leased Property to third persons.

Prompted by disputes as to the parties’ respective obligations under the lease agreement, CJH DevCo filed against BCDA a complaint in arbitration with the Philippine Dispute Resolution Center Inc. (PDRCI).

The PDRCI arbitral tribunal found that both parties were guilty of breaches of their obligations under the agreement, thus its mutual rescission was warranted.

Arbitral ruling

The arbitral ruling (Final Award) thus ordered mutual restitution, with the parties reverted to their original position prior to the execution of the agreement as far as practicable.

Specifically, CJH DevCo was ordered to return to BCDA the Leased Property, together with all improvements. In turn, the BCDA, must refund CJH DevCo the rent the latter had already paid, which to date, amounts to P1,421,096,052.

The RTC confirmed in an order the Final Award and when the order became final and executory, the RTC issued a Writ of Execution.