The Supreme Court has cleared with finality businessman Robert John Sobrepeña and other officials of Camp John Hay Development Corp. of charges of malversation of public funds amounting to P4.33 million, paving the way for Baguio City Regional Trial Court to eventually dismiss the cases initiated in 2012 by Arnel Casanova, former president of the Bases Conversion and Development Authority.
In a three-page order dated May 15, 2017, Presiding Judge Cecillia Corazon S. Dulay-Archog ordered the dismissal of the two criminal complaints filed against Sobrepeña, CJHDEVCO chief executive officer and chairman; Ferdinand Santos, president; Alfredo Yñiguez, executive vice president and chief operating officer; and Emily Roces-Falco, chief finance officer, after it received an “Entry of Judgment” issued by the SC’s Second Division stating that the Nov. 9, 2016 resolution promulgated by the high court “affirming the August 12, 2015 decision of the Court of Appeals, which dismissed these cases, has become final and executory on December 21, 2016.”
“In view of the finality of the said resolution dated November 9, 2016 issued by the Second Division of the Supreme Court . . . as contained in the said “Entry of Judgment” received by this Court on May 4, 2017, these instant cases pending before this Court are hereby dismissed,” Judge Archog ruled.
Subsequently, the Baguio City court ordered the cancellation and release of the cash and travel bonds earlier posted by the accused officials of CJHDEVCO, the developer of the former American recreational facility in Baguio City.
Yñiguez lauded the Court’s decision to dismiss the complaint for malversation of public funds, saying it clearly shows Casanova’s abuse of power when he was still BCDA chief for instigating “nuisance cases” as part of its propaganda against Sobrepeña and other CJHDEVCO officials.
“The Supreme Court’s dismissal of the malversation case only indicates that Casanova resorted to filing of nuisance cases as part of its propaganda against us, in his attempt to besmirch our reputation and integrity. This also clearly shows how Casanova abused his power as BCDA president,” Yñiguez added.
In fact, Yñiguez noted a Pasig City regional trial court has ordered the arrest of Casanova after finding probable cause to hold him for trial for causing a “false” and “malicious” publication of a notice that tarnished the reputation of Sobrepeña.
The SC, in a three-page “Entry of Judgment,” certified that on Nov. 9, 2016, a resolution rendered in GR No. 220073, which resolved to affirm the Aug. 12, 2015 decision of the Court of Appeals, “and that the same has, on Dec. 21, 2016, become final and executory and is hereby recorded in the Book of Entries of Judgments.” In its Nov. 9, 2016 resolution, the SC’s Second Division denied the petition of the BCDA through the Office of the Solicitor General for its failure to show that the Court of Appeals “committed any reversible error in setting aside the orders dated June 27, 2013 and Oct. 31, 2013 of the Regional Trial Court of Baguio City, Branch 6,” finding probable cause for the arrest and trial of the CJHDEVCO officials concerning the charge of malversation of public funds in the amounts of P1,490,717.26 and P2,839,969.40.
“Under Article 217 of the Revised Penal Code, malversation is committed when an offender misappropriates public funds, for which he or she is accountable, for his own personal use or allows any other person to take such public funds for the latter’s personal use. What is essential is that the misappropriated funds are public funds,” the SC said.
“In this case, however, the sums involved are derived from rentals due to the (BCDA) under a Leaseback Agreement entered by both parties. The sums of money in this case are not the public funds contemplated by the penal provision of Article 217 of the RPC since this is commercial transaction. The CA is correct when it held that the respondents are indebted to the BCDA to pay sum of money ex contractu or derived from purely commercial terms. The amounts owed to the BCDA are merely corporate debts of the respondents which were not timely paid,” the SC noted.
According to the tribunal, the malversation case against the CJHDEVCO officials should be confined to a civil case for collection of sum of money. “To allow the petitioner to enforce its rights to be paid through a criminal action will run counter to Section 20 of the Bill of Rights which states that “no person shall be imprisoned for debt or non-payment of a poll tax,” the SC declared, even as it affirmed the decision of the CA’s Special Tenth Division to set aside the Baguio City RTC ruling, and instead ordered the dismissal of the charge of malversation of public funds against the CJHDEVCO officials.
In August 12, 2015, the CA had ordered the dismissal of the two complaints for malversation of public funds filed by the BCDA four top officials of the CJHDEVCO for lack of probable cause.
In a 15-page decision penned by Associate Justice Zenaida Galapate-Laguilles, the CA’s Special Tenth Division granted the petition filed by the four CJHDEVCO officials seeking to set aside the orders issued by Judge Archog finding probable cause for their arrest and trial.
“Wherefore, premises considered, the instant petition for certiorari and prohibition is granted. The orders of the public respondent RTC dated 27 June 2013 and 31 October 2013 in criminal cases Nos. 34422-R and 34423-R finding probable cause for the petitioners’s arrest and trial concerning the charges of malversation of public funds in the amounts of P1,490,717.26 and P2,839,969.40 are set aside. Accordingly, the aforesaid criminal cases are dismissed for failure to establish probable cause pursuant to . . . the Revised Rules on Criminal Procedure,” the CA ruled.
The appellate court stressed that the amount of P4.33 million allegedly misused by the four CJHDEVCO officials is not considered public funds, which is an essential element of malversation under Articles 217 and 222 of the Revised Penal Code. The appellate court noted that the character of the case filed by BCDA is just a mere civil suit for a collection of sums of money. “For it is elementary that non-payment of an indebtedness is not a criminal act. More so is a mere delay in the payment of civil obligations, which in fact have already been paid, not the proper subject of a criminal charge nor penal litigation for malversation of public funds,” the CA declared. The appellate court pointed out that no less than the Constitution declares that no one may be criminally charged for a non-payment of a sum of money.
“We are aware that even an unfounded criminal charge may expose the clearly innocent to severe distress and tarnished reputation, that even a subsequent acquittal may not serve to fully alleviate nor cleanse,” it added.
In setting aside the ruling of the lower court, the appellate court said that in determination of probable cause for the arrest and trial of the accused, the courts are tasked 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 – for innocence, in itself, out to be enough.”
Associate Justices Florito Macalino and Manuel Barrios concurred in the ruling.
Prior to the controversy, BCDA entered into a lease agreement with CJHDevCo for the use, management and operation of 247-hectare property in John Hay Special Economic Zone. The annual rental was for P425 million or five percent of the gross revenues, whichever was higher, forthe first five years and P150 million starting on the sixth year.
In 2008, a restructuring memorandum of agreement (RMA) was executed by CJHDEVCO and the BCDA which provided that the former had an outstanding obligation in the amount of P2.68 billion. Pursuant to the RMA, CJHDevCo executed a deed of dacion en pago conveying ownership of 16 CampJohn Hay Manor units and 10 Camp John Hay Suites units to the BCDA in partial settlement of its outstanding obligation.
Instead of turning the units over to the BCDA, the Camp John Hay developer leased the units back, with approval from the agency. Under the leaseback agreements, the CJHDevCo pooled the units and operated them as regular hotel rooms made available to paying guests.
The agreement also mandates CJHDevCo to pay the BCDA, on a quarterly basis, rental equivalent to the BCDA’s percentage interest on the 70 percent of the net profits earned by the pooled units. In a letter dated January 2011, the BCDA demanded for payment of the 50 percent balance covering the Manor rentals for 2009, the rentals for January to December 2010, the 2009 audited financial statements of the CJH Hotel, and a report on the operational status of the CJH Suites Hotel. On July 4, 2012, final demand was made by the BCDA for CJHDEVCO to remit the sums relating to 2010 and subsequent years. It also demanded CJHDEVCO to turn over possession of 26 Manor units and desist from operating andmanaging the same.
On July 27, 2012, BCDA withdrew its consent to the leaseback arrangements due to the failure of CJHDEVCO to substantiate how the remitted sums of money were derived. On August 1, 2012, CJHDEVCO paid BCDA the amount of P2.7 million allegedly representing the rental equivalent of the BCDA’s percentage interest on 70 percent of the 16 pooled units in the Camp John Hay Manor for 2011. Despite the payment, the BCDA still claimed that the CJHDEVCO officials did not surrender the keys to the BCDA’s units, citing a provision in the leaseback agreements against the pre-termination of its 15year term. The BCDA also alleged that CJHDEVCO also did not make any payment in relation to the BCDA’s Suites units. This prompted BCDA to file a complaint on October 18, 2012 before the Department of Justice accusing the petitioners of malversation of public funds for allegedly embezzling and converting for their own personal use and benefit the 16 Manor units, 10 Suites units and the rentals derived therefrom. In a resolution issued on April 1, 2014, the DOJ found probable cause to indict the petitioners for two counts of malversation of public funds. On June 27, 2013, the Baguio RTC issued its order finding probable cause to arrest and hold the petitioners for trial. The Baguio RTC denied petitioners’ motion for reconsideration, prompting them to elevate the matter before the CA.