BCDA offered for bid to lease a certain portion of the 695-hectare John Hay Air Station

in the John Hay Special Economic Zone (JHSEZ) consisting of 246.9967 hectares, including all
improvements thereon (the leased property), for the purpose of developing said Leased property.

On October 19, 1996, it entered into a Lease Agreement CJH DevCo., along with Fil-
Estate Management, Inc., and Pentacapital Investment Corporation among others, for the use,
management and operation of the leased property.

The trouble began when said lease was entered into.

BCDA alleges that as early as the second year of their contract, CJH DevCo already
manifested its inability to sustain its financial obligations under the 1996 Lease Agreement. As
such it asked BCDA to defer payment of the annual rentals for 1998 and 1999, for which a
Memorandum of Agreement (MOA) was executed.

Thereafter, a schedule for installment payment of the rentals for 1999 and 2000, was
made. However, CJH DevCo still delayed the payment of its lease rentals claiming force
majeure. BCDA refused to acknowledge the reason for the delay; nonetheless, it entered into a
MOA dated July 14, 2000. This too, however, was violated by CJH DevCo.

Before BCDA could serve a notice of termination, CJH DevCo submitted an improved
offer which the BCDA found acceptable. This agreement was contained in the MOA dated July
18, 2003. However, CJH DevCo failed to pay all its obligations which, as of June 30, 2008,
amounted to P2,686,481,646.00.

Several events occurred which led to the execution by the parties of a Restructuring
Memorandum of Agreement (RMOA) on July 1, 2008 which provided for the following
restructured payment scheme for CJH DevCo:

(a) P100,000,000.00 cash upon signing of the RMOA

(b) P180,341,118.00 dacion of specific properties
(c) P2,406,140,525.00 fifteen years.

They also executed a Security Agreement on July 1, 2008 to make the RMOA sustainable and
viable.

Despite the execution of the two agreements, CJH DevCo's non-payment of rentals
remained an issue between the parties.

On June 10, 2009, Robert John Sobrepea of CJH DevCo, wrote BCDA a letter
requesting the deferment of its financial obligations. The same was denied by the BCDA because
it would mean restructuring yet again CJH DevCo's financial obligation under the RMOA. CJH
DevCo failed to pay its financial obligations, which, based on the December 6, 2011 demand
letter of BCDA, CJH DevCo's current rental obligation amounted to P581,504,549.00.

On January 9, 2012, CJH DevCo moved to unilaterally rescind the RMOA alleging
fundamental and material breach by BCDA. Thereafter, CJH DevCo served BCDA a written
notice/demand to arbitrate.

On the same day, CJH DevCo filed a complaint against BCDA before the Philippine
Dispute Resolution Center, Inc. (PDRCI) for confirmation of the rescission of the RMOA and the
amended Lease Agreement, or, in the alternative, the rescission of the Lease Agreement. The
case was labelled PDRCI Case No. 60-2012.

On January 31, 2012, CJH DevCo's total obligations amounted to P2,945,313,862.00.

On January 24, 2012, CJH DevCo filed with the Baguio City Regional Trial Court an
Urgent Verified Petition for the issuance of interim relief by way of a writ of preliminary
injunction, and for an order compelling BCDA to arbitrate. On April 27, 2012, Judge Villacorta
issued the Order granting CJH DevCo's application for a writ of preliminary injunction. As such,
on May 16, 2012, BCDA served a Notice of termination on CJH DevCo.

Subsequently, CJH DevCo filed an urgent omnibus motion to resolve the petition to
compel arbitration and dispense with pre-trial and for partial reconsideration of the April 27,
2012 Order. Such was opposed by BCDA. On July 13, 2012, the court a quo issued the second
assailed Order denying BCDA's motion for partial reconsideration, directing BCDA to arbitrate,
and affirming the issuance of the writ of preliminary injunction.

Thereafter, the arbitration proceedings before the PDRCI continued. It was only on
February 11, 2015 that the Arbitral Tribunal, composed of lawyers Mario Valderrama, Teodoro
Kalaw IV and Rogelio Nicandro, issued its Final Award in PDRCI Case No. 60-2012.

The Award ordered that the 1996 Lease Agreement, together with all subsequent MOAs
and RMOA, be rescinded due to the mutual breach of the parties. As such the parties were
reverted as far as practicable to their original positions prior to the execution of the 1996 Lease
Agreement.

Further, it ordered CJH DevCo to vacate the Leased Property and promptly return the
same, together with all its improvements, to BCDA in a good and tenantable condition. In turn,
BCDA was to refund the CJH DevCo the rent that it has already paid, amounting to
P1,421,496,052.00. The Tribunal further stated that CJH DevCo is no longer liable for back
rentals on the leased property; that the benefits already received by CJH DevCo from BCDA will
compensate for any interest due for the latters use of CJH DevCos money; and that the
improvements and developments made by CJH DevCo on the property will compensate BCDA
for the formers use of the leased property in the meantime. No damages were awarded as there
was mutual breach.