Sanctity of gov't contracts

If the Philippine government can renege on its contractual obligations just like that, then what message does it send to prospective investors?

- MARY ANN LL. REYES

While the Bases Conversion and Development Authority (BCDA) has been signing new lease contracts with former sub-lessees of CJH Development Corp. or CJH-DevCo covering areas inside Camp John Hay, there are those who still believe that their lease contracts with CJHDevCo should be upheld and be allowed to continue.

Last year, the Supreme Court upheld an arbitral ruling ordering CJHDevCo to vacate a portion of the John Hay Special Economic Zone, which the latter had leased from the BCDA covering around 247 hectares. The lease agreement authorized CJHDevCo to sublease the leased property to third persons, which it did.

But due to disputes involving the parties' respective obligations under the lease agreement, CJHDevCo filed a complaint in arbitration against BCDA with the Philippine Dispute Resolution Center Inc. (PDRCI). The arbitral tribunal found that both parties breached their obligations under the agreement and ordered mutual restitution, with the parties to revert to their original position prior to the execution of the agreement as far as practicable.

According to the High Court, CJHDevCo was specifically ordered by the said arbitral tribunal to return to BCDA the leased property together with all improvements while BCDA in turn must refund to CJH DevCo the rent, which the latter had already paid amounting to P1.42 billion.

The High Court's ruling had become final and executory and BCDA took over the areas that were previously leased to CJHDevCo last January.