Santos affirms termination of Rota Resort’s land lease

Public Lands Secretary Teresita A. Santos has affirmed the DPL administrative hearing officer’s decision that terminates DPL’s land lease agreement with Rota Resort & Country Club.

Santos said in her order Friday last week that the administrative hearing officer’s decision last Dec. 5, 2023, correctly concludes that Article II of the lease agreement does not apply to payment of rent or abandonment of the premises.

Article 11 states that when a delay is caused by a force majeure event, the period of delay “shall be added to the period allowed for the completion of such work.”

Force majeure refers to an unforeseeable circumstance that hinders a party from fulfilling its part in a contract.

Santos said the AHO’s decision correctly concludes that Rota Resort LLC, which owns Rota Resort & Country Club, failed to establish that its failures were in whole or in part due to the COVID-19 pandemic because the company cannot establish that its failures would not have occurred but for COVID-19.

The DPL secretary said the AHO decision correctly concludes that actual notice under Article 11 was required and that Rota Resort LLC failed to provide it.

She said the AHO decision correctly concludes that Rota Resort LLC abandoned the premises and that the abandonment was not excused by Article 11.

Pursuant to the Commonwealth Code, Rota Resort LLC is entitled to a judicial review of Santos’ decision in Superior Court within 30 days.

Rota Resort LLC and its owner, Hee Kyon Cho, through counsel Colin M. Thompson, appealed to Santos to reverse administrative hearing officer Ramon S. Dela Cruz’s decision in December 2023.

In that decision, Dela Cruz denied Rota Resort’s appeal of DPL’s termination of its lease agreement over approximately 150 hectares of public land on Rota for the Rota Resort & Country Club.

Santos, as then-acting DPL secretary, executed the DPL notice of termination and notice of violations on March 8, 2023, citing DPL records that shows that Rota Resort LLC owes DPL $101,277 in lease and interest fees from July 1, 2020, to Nov. 30, 2020.

In Rota Resort LLC’s appeal last Jan. 4, Thompson said Dela Cruz erred in several ways, including her conclusion that the force majeure clause does not apply to payment of rent or abandonment.

Cho, who also owns four hotels in Guam, insisted he has not abandoned Rota Resort and is, in fact, planning to transform it into a world-class golfing destination that’s close to Asia.

Cho has owned the Rota Resort since 2008. Rota Resort was timely with payments to DPL until July 2020.

In affirming the AHO’s decision, Santos said the questions in dispute are whether Rota Resort’s failure to make rental payments to DPL was excusable under Article 11 of the lease agreement and whether Rota Resort abandoned the premises.

Santos said Rota Resort LLC suggests that payment of rent and operation of the premises is “work.” However, Santos said, the plain language does not support Rota Resort LLC’s proposed interpretation that a payment or operating the business is “work.”

Santos said it is clear from the record that there was no partial payment made toward rent, nor did Rota Resort LLC contact DPL to discuss a payment plan or to discuss intentions, leaving DPL to only have the information from its inspections.

The DPL secretary said Rota Resort resumed operation of the hotel rooms and restaurant in July 2021 and continued such operations until approximately June 2022. During this time there was no communication with DPL, Santos said.

Santos pointed out that notice of an Article 11 event causing Rota Resort LLC’s closure of the resort in March 2020 does not put DPL on notice of appellant’s position that its subsequent closure of the resort in July 2022—after any restrictions on restaurant businesses had been lifted, after flights to Rota had resumed, and after Rota Resort has been again opened to tourism for a period of a year—was also caused by that same event.