Baguio court orders arbitration of John Hay debt row

The luxurious Manor at Camp John Hay. INQUIRER file photo

BAGUIO CITY—A court here has directed the administrator and developer of Camp John Hay to undergo arbitration in a July 13 ruling that is expected to end a debt dispute that has delayed development of the former American rest and recreation baseland.

Judge Cecilia Corazon Dulay-Archog of the regional trial court here directed the Bases Conversion and Development Authority (BCDA) to submit to the authority of the Philippine Dispute Resolution Center to settle a P3-billion debt feud with the Camp John Hay Development Corp. (CJHDevco).

CJHDevco, which is owned and chaired by businessman Robert John Sobrepeña, had filed the civil suit early this year to compel BCDA to agree to mediation, as well as to restrain the agency from taking over the tourist complex.

Soured lease

The developer rescinded a restructured lease agreement it negotiated in 2008 with BCDA, owing to the government’s alleged contractual breaches, and had pursued arbitration.

This restructured lease was the product of talks following another dispute with BCDA in 2005 when the agency first served CJHDevco with a termination notice over debts.

On May 15, BCDA terminated the CJHDevco lease contract, arguing that the developer sought arbitration to change its lease agreement instead of fulfilling its financial obligations.

“The volleyball of accusations is a matter that can be best threshed [out] by arbitration,” Archog said.

The John Hay lease agreement has a clause guiding contractual disputes, she said.

“In petitions of this nature, the court intervention is a special proceeding where the court is not called upon to pass judgment on the merits of the disputes of the parties… So that if the arbitration contract is valid and subsisting, the court must refer the parties to arbitration,” she said.

Restraining BCDA

Archog’s ruling affirmed the provisions of an April 27 writ of preliminary injunction, issued by another Baguio judge, which restrained BCDA from taking over Camp John Hay.

The ruling also cited a provision of the injunction which requires CJHDevco to pay P736,38,465.50 representing its injunction bond.

Alfredo Yñiguez III, CJHDevco executive vice president and chief operating officer, said the firm had asked the court to lower the bond because it was computed against a P3.2-billion obligation, which CJHDevco is contesting.