John Hay firm resumes selling hotel shares after CA decision
BAGUIO CITY—The developer of Camp John Hay has resumed the sale of its hotel rooms through a money-back scheme after the Court of Appeals (CA) nullified a ban imposed by the Securities and Exchange Commission (SEC) and which the developer said was issued with “great haste.”
Lawyer Manuel Ubarra, vice president for litigation of the Camp John Hay Development Corp. (CJHDevco), said the firm is reviewing the status of its business transactions, which were frozen by the cease-and-desist order issued by the SEC on June 7, 2012.
In a nine-page ruling penned by Associate Justice Hakim Abdulwahid, the appellate court granted CJHDevco a permanent injunction against the SEC order, after concluding that the sale of the units was not an investment in a common enterprise that would generate profits benefiting other parties.
It also ordered the dismissal of the SEC case against CJHDevco and CJH Suites Corp.
The court said the agency had not provided conclusive evidence that CJHDevco’s business deals needed to be restrained.
“The sale of The Manor and The Suites units to the general public with ‘leaseback’ or ‘money-back’ arrangements cannot be considered as an investment contract, and therefore does not fall within the definition of securities, [which] need not be registered as required by the SEC,” it said.
In a statement, CJHDevco said the SEC order was highly irregular and issued only on the request of the Bases Conversion and Development Authority (BCDA). It said “backers” of current BCDA officials are suspected of being behind the SEC order.
In its ruling, the CA also said the SEC denied due process to the two Camp John Hay corporations because while it could issue a cease-and-desist order without prior hearing, the SEC may proceed only to prevent fraud on investors or to mitigate grave or irreparable injury or prejudice to investors.
“We are hoping to determine the extent of damage [the SEC’s 2012 order] had cost the firm. Many of our clients had withdrawn their purchases,” Ubarra said.
He said the court decision should make government agencies more circumspect about information they receive about private enterprises feuding with government agencies.
Ubarra said the SEC acted based on a complaint made by the BCDA, with which CJHDevco had been feuding since 2011 over the developer’s outstanding debts. Vincent Cabreza, Inquirer Northern Luzon, and Christine Avendaño in Manila