by businessmirror Ernesto Hilario – January 5, 2015

WHEN it rains, it pours.
The legal setbacks of the Bases Conversion and Development Authority (BCDA) never seem to end.

Last month before the year came to a close, the government agency was castigated anew by Judge Pedro Gutierrez of Regional Trial Court in Pasay City Branch 119 for having engaged in “selective prosecution” and violating the Bill of Rights in filing an estafa case against Robert John Sobrepeña, chairman of the Camp John Hay Development Corp. (CJHDevco), its private developer-partner at the former Camp John Hay in Baguio City.

Gutierrez upheld his September 3 decision that BCDA President Arnel Paciano Casanova had failed to establish probable cause in filing an estafa case against Sobrepeña for alleged failure to pay rentals for its 247-hectare holding at the John Hay Special Economic Zone (JHSEZ).

“BCDA agreed to restructure the debt under the lease agreement,” Gutierrez said in his final decision last December 19. “The accused [Sobrepeña] cannot be held liable for CJHDevco’s failure to pay those rentals.”

“This case was filed with the Department of Justice (DOJ) after a lapse of 14 years when the obligation was incurred in 1998. This violated the Bill of Rights under our Constitution for accused to have a speedy trial and due process of law,” Gutierrez added.

Moreover, Gutierrez said that in acting on BCDA’s estafa complaint, the DOJ “made a palpable error of selective prosecution” in filing this case against Sobrepeña without including all the members of CJHDevco’s Board of Directors.

Also this year, the Court of Appeals (CA) upheld the earlier decision by the RTC in Baguio City ordering BCDA to settle its long-standing dispute with CJHDevco over the lease and development of a JHSEZ property.

In a 14-page decision penned by Associate Justice Victoria Isabel Paredes, the CA’s Special 11th Division affirmed the July 13, 2012 order by Baguio RTC Judge Cecilia Corazon Archog ordering the BCDA to submit itself to arbitration proceedings to resolve its financial dispute with CJHDevco.

The appellate court emphasized the Supreme Court’s (SC) policy favoring arbitration as an alternative method of dispute resolution: “Finally, the records of the case reveal that the factual allegations of the parties already refer to the merits of the controversy between them, which is the alleged breach of their RMOA [restructuring memorandum of agreement]. These issues are best threshed out in the appropriate arbitration proceedings.”

At the SC, meantime, the justices ordered the BCDA last August 13 to abide by its original agreement with SM Land Inc. (SMLI) on a Swiss or competitive challenge for the development of the 33-hectare Bonifacio South Pointe property at Bonifacio Global City (BGC).

This SC order made permanent the temporary restraining order (TRO) that it issued in January 2013 after SMLI filed a petition for certiorari, prohibition and mandamus against BCDA for reneging on its commitment to carry out a competitive challenge on SMLI’s unsolicited proposal in arbitrarily deciding to hold a public bidding instead for this state property in BGC.

Penned by Associate Justice Presbitero Velasco Jr., the 26-page SC ruling ordered the BCDA to go ahead with the Swiss or competitive challenge as petitioned by SMLI, as the High Tribunal said that doing otherwise might turn away investors eyeing public-private partnerships.

“To permit BCDA to suddenly cancel the procurement process and strip SMLI of its earlier-enumerated rights as an original proponent at this point—after the former has already benefited from SMLI’s proposal through the acquisition of information and ideas for the development of the subject property—would unjustly enrich the agency through the efforts of petitioner,” the SC said in its August 13 ruling.

BCDA’s recent legal setbacks come close on the heels of two similar court debacles two years ago in which the RTC in Baguio City issued separate TROs stopping the agency from taking over the properties either built or managed by CJHDevco such as Manor Hotel, Camp John Hay Suites and the Camp John Hay Golf Club.

As of now, BCDA and CJHDevco are waiting for the resolution of their case at the Philippine Dispute Resolution Center Inc. The PDRCI is poised to hand out its decision any time now on issues pertaining to the lessor’s serial violations of its original MOA and subsequent RMOAs with the lessee.

Apart from losing its cases against CJHDevco at the RTC and CA and against SMLI at the SC, BCDA is also facing a possible court battle with the Manila North Tollways Corp. over the state-run firm’s unexpected move to subject the MNTC-run Subic-Tarlac-Clark Expressway to a price challenge despite the thrice-negotiated operation and maintenance deal under the Aquino presidency that the Arroyo administration already approved in 2009.

With its losing streak, this government-run agency should, at the very least, study carefully its legal position before going to court. Or else get better lawyers.