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Sobrepeña developer told to stop selling units

Posted on June 10, 2012 09:43:46 PM [ BusinessWorld Online ]

THE SECURITIES and Exchange Commission (SEC) has ordered Camp John Hay Development Corp. (CJHDevco) to stop selling condotel units in a Baguio City ecozone as permits had not been issued for a leaseback scheme the firm was using to market the assets.

Last June 7, the corporate regulator issued a seven-page cease-and-desist order against the Sobrepeña-led developer for allegedly failing to register guarantee schemes behind the property sales, which the SEC classified as investment contracts.

Under CJHDevco’s scheme, buyers of The Manor and The Suites units are to surrender to the company the management and possession of the units, allowing the buyers to earn a proportionate 70% of the “pooled” units’ annual income, or an 8% guaranteed return on their respective investments.

Buyers will be able to use their units exclusive of monthly dues and utility fees for a period of time under a scheme intended to run for 15 years beginning 2016, renewable for another 15 years until 2046 -- the same year buyers are expected redeem the purchase price they originally paid for the units, the state agency Bases Conversion and Development Authority (BCDA) said in a statement.

The BCDA had sued the developer for unpaid lease at the Camp John Hay special economic zone and had also added a string of lawsuits to the dispute which now include estafa complaints.

CJHDevco has yet to deliver the promised condotel units to buyers, as well as various golf club shares, the BCDA claimed.

The latest SEC ban order comes on top of a similar Housing and Land Use Regulatory Board ruling banning the sale of units at The Suites due to the lack of permits to sell and an array of fire safety violations there, according to a survey conducted the Bureau of Fire Protection, the BCDA said further in the statement.

“CJHDevco is profiting at the expense of the government and the public, and have even put public safety at risk because of their refusal to comply with government regulations,” the BCDA said.

CJHDevco officials could not be immediately reached to comment.

The BCDA, established in 1992, is engaged in public-private partnerships on public infrastructure, including airports, seaports, and real estate, having developed former US military base lands and Metro Manila camps into economic and investment locations, according to its Web site.

In addition to the BCDA-administered zones in Pampanga, Baguio City, La Union, and Bataan, the agency is also developing Bonifacio Global City and Newport City in Taguig and Pasay cities.

The agency is also set to develop the Diosdado Macapagal International Airport in Clark, Pampanga, Poro Point Freeport Zone’s San Fernando International Seaport, and San Fernando Airport in La Union. -- FJGDLF
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