Raps vs John Hay developer junked

The Court of Appeals (CA) has ordered the dismissal for lack of probable cause of the two malversation complaints filed by the Bases Conversion Development Authority (BCDA) against four officials of Camp John Hay Development Corp. (CJHDevCo), the developer of the former US facility in Baguio.

In a decision dated Aug. 12, the court’s Special 10th Division granted the petition filed by CJHDevCo chair Robert John Sobrepeña, president Ferdinand Santos, executive vice president Alfredo Yñiguez and chief finance officer Emily Roces-Falco, who had sought to set aside the 2013 orders issued by a Baguio Regional Trial Court (RTC) finding probable cause for their arrest and trial.

“[W]e remind the public respondent RTC that in penal litigations, more importantly in the determination of probable cause for the arrest and trial of the accused, the courts are mandated by the Constitution not only to acquit the innocent after trial, but to insulate them, from the very start, from tenuous charges and ensuing proceedings,” the appeals court said in its decision written by Justice Zenaida Galapate-Laguilles.

Other division members, Justices Florito Macalino and Manuel Barrios, concurred in the ruling.

Baguio RTC Branch 6 Judge Cecilia Corazon Dulay-Archog ordered the arrest of the CJHDevCo officials in June and October 2013 after finding probable cause in connection with charges of malversation of public funds worth P4.33 million that the BCDA had filed.

The appellate court said the amount the CJHDevCo officials had allegedly misused was not public funds, an essential element of malversation under the Revised Penal Code. The appeals court noted that the case was a mere civil suit for a collection of money.

The justices pointed out that the Constitution declares that no one may be criminally charged for non-payment of a sum of money.

Before the controversy, the BCDA entered into a lease agreement with CJHDevCo for the use, management and operation of the 247-hectare property in the Camp John Hay Special Economic Zone.

The annual rent was P425 million, or 5 percent of the gross revenue, whichever was higher, for the first five years, and P150 million starting in the sixth year.

In 2008, a restructuring memorandum of agreement (RMA) was executed by CJHDevCo and the BCDA, which provided that the former had P2.68 billion in outstanding obligations.

Pursuant to the RMA, CJHDevCo conveyed ownership of 16 Camp John Hay Manor units and 10 Camp John Hay Suites units to the BCDA in partial settlement of its obligation. The developer, instead of turning the units over to the BCDA, leased them back, with approval from the agency.

Under the leaseback deal, the company operated the units as regular hotel rooms made available to paying guests.

The agreement also mandated CJHDevCo to pay the BCDA, on a quarterly basis, rental equivalent to BCDA’s percentage interest on 70 percent of the net profits earned by the pooled units.

In January 2011, the BCDA demanded payment of a 50-percent balance covering the Manor rent for 2009, the rent for the whole of 2010, the 2009 audited financial statements of the CJH Hotel and a report on CJH Suites Hotel’s operational status.