MANILA, Philippines - The Court of Appeals ordered the Securities and Exchange Commission (SEC) to stop enforcing the cease and desist order (CDO) it issued against Camp John Hay Development Corporation (CJHDevCo).
The cease and desist order had prevented CJHDevCo from offering securities by selling Limited Warranty Deeds (LWD) and Leaseback Agreements to unit buyers at The Manor and Forest Lodge in Baguio City.
In a 3-page resolution dated September 25, the CA's Sixth Division issued a temporary restraining order enjoining the SEC from implementing its June 7, 2012 CDO on grounds that CJHDevCo has a "a clear right to be protected against the immediate enforcement of the assailed order” and that CJHDevCo will suffer grave and irreparable damage from the outright implementation" of the 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, penned by Associate Justice Hakim Abdulwahid, 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 sixty (60) days, unless otherwise recalled or set aside and upon petitioner’s posting of a bond in the amount of P500,000, within 5 days."
With the TRO, the developer can continue to offer LWDs and Leaseback Agreements to unit buyers of The Manor and Forest Lodge in Camp John Hay.
Associate Justices Marlene Gonzales-Sison and Edwin D. Sorongon concurred in the ruling.
The SEC issued the cease order after the Bases Conversion and Development Authority (BCDA) sent a letter seeking to prevent the John Hay developer from selling units under the LWD and Leaseback agreement, since it is classified as "sale of securities."
However, CJHDevCo defended the LWD, saying it is an accepted legal document, which describes the ownership interest of the unit buyers during the lease period. It added the offer of Leaseback agreements is only an option for unit buyers, so it is a simple lease agreement and not sale of securities.
The developer also questioned the SEC investigation, saying they were deprived of due process.
"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," CJH DevCo Executive Vice President Alfredo Yñiguez said.
The CA also directed the SEC to file comment on the petition in 10 days and "to show cause why the application of writ of preliminary injunction should not be granted."