Friday, 28 September 2012 00:00 [
tribune.net.ph ]
A ruling by
the Court of Appeals (CA) has stopped
the Securities and Exchange Commission (SEC) from enforcing the cease and
desist order (CDO) it issued against Camp John Hay Development Corp.
(CJHDevCo)
which prevented CJHDevCo from allegedly “engaging in the business of selling
securities by selling Limited Warranty Deeds (LWD) and Leaseback Agreements to
unit buyers for hotel operations” of The Manor and Forest Lodge, formerly known
as The Suites at Camp John Hay, in Baguio City.
In a
three-page resolution the CA’s Sixth
Division through Associate Justice Hakim Abdulwahid issued a temporary
restraining order (TRO) enjoining the SEC from implementing its June 7, 2012
CDO on ground that the John Hay developer has “a clear right to be protected
against the immediate enforcement of the assailed order” and that CJH DevCo
will suffer grave and irreparable damage from the outright implementation” of
the cease and desist order.
“So as not
to render this instant petition moot in academic, we hold that, pending
determination of the propriety of the application for the issuance of writ of
preliminary injunction, the grant of petitioner’s application for a temporary
restraining order is warranted,” the resolution stated.
“Wherefore,
a temporary restraining order is hereby issued enjoining respondents SEC
chairperson and Commissioners, EPD (Enforcement and Prosecution Department),
and other persons acting in their behalf from enforcing the assailed order
dated June 7, 2012 ... effective for the period of 60 days, unless otherwise
recalled or set aside and upon petitioner’s posting of a bond in the amount of
P500,000, within five days,” the CA ordered.
Associate
Justices Marlene Gonzales-Sison and Edwin
Sorongon concurred in the ruling.
The SEC
earlier had issued the CDO after receiving a letter from the Bases Conversion
and Development Authority (BCDA) seeking to prevent CJHDevCo from selling units
under a LWD and Leaseback Agreement, arguing that this classifies as a “sale of
securities.”
However,
CJHDevCo argued that the LWD is the 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.
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.”
CJH DevCo
executive vice president Alfredo Yñiguez stressed the importance of abiding by
the rule of law. “All our contracts and actions are based on following the rule
of law and we expect that ‘due process’ also be followed at all times,” Yñiguez
said.
With the CA
enjoining the CDO, CJHDevCo can continue offering LWD and Leaseback Agreements
to unit buyers for The Manor and Forest Lodge in Camp John Hay.
The appellate
court also directed the SEC Chairman Teresita Herbosa to file their comment to
the petition in 10 days, and “to show cause why the application of writ of
preliminary injunction should not be granted.”
After which,
the CJHDevCo is ordered to file their reply to the comment of the SEC on their
petitioner.
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