G.R. No.
152303 During the pendency of these cases, on September 1, 1980, MCI
UNIVERSITY PHYSICIANS SERVICES, INCORPORATED,
Petitioner, v. MARIAN CLINICS, INC. and DR. LOURDES MABANTA,
Respondents.
What happens when personal properties inside leased premises
are stipulated as included in the contract of lease? Does a
judgment on a suit for unlawful detainer ejecting the lessees from
the subject property carry with it the return of these personal
properties as well? Finally, the trickier part which is the crux of this
petition: what if some of these personal properties are lost,
destroyed or sold by the lessor? May the ejected lessees still be
ordered to pay for their value?
This is a Petition for Review under Rule 45[1] of the Rules of Court
assailing the October 18, 2001 Decision[2] of the Court of Appeals
in CA-G.R. CV No. 34971, which in turn affirmed the Order[3] in
Execution dated November 5, 1990 of the Regional Trial Court
(RTC) of Manila.
The factual and procedural antecedents of this case are as follows:
On May 31, 1973, Marian Clinics, Inc. (MCI) and University
Physicians Services, Incorporated (UPSI) entered into a Lease
Agreement whereby the former leased to the latter the Marian
General Hospital (MGH) and four schools for a period of ten (10)
years, from June 1, 1973 to May 31, 1983. The land, buildings,
facilities, fixtures and equipment appurtenant thereto, including
the Soledad Building, were included in the lease, for which a
monthly rental of P70,000 was agreed upon.
On October 7, 1975, UPSI filed a complaint for specific
performance against MCI, alleging that (1) MCI failed to deliver
Certificates of Occupancy on certain buildings, and (2) there were
some defective electrical installations that caused the issuance of a
Condemned Installation Notice by the Office of the City Electrician
of the City of Manila. UPSI prayed for the delivery of the
Certificates of Occupancy of the buildings leased, for the
correction of the defects in the electrical installations thereon, and
damages. The complaint was docketed as Civil Case No. 99934 in
the Court of First Instance[4] (CFI) of Manila, Branch 34.
On October 30, 1975, UPSI sent a letter to MCI, informing it of the
filing of the complaint and the suspension of payment of the
monthly rentals until the resolution of the case. On November 7,
1975, MCI sent a demand letter to UPSI for the payment of the
rent.[5]
On December 18, 1975, MCI and Dr. Lourdes F. Mabanta (Dr.
Mabanta) filed a Complaint for Unlawful Detainer against UPSI
with the then City Court of Manila (now the Metropolitan Trial
Court of Manila [MeTC]). The Complaint[6] was docketed as Civil
Case No. 006665-CV.
In the meantime, UPSI filed with the CFI a Motion availing of its
right to suspend payment of rentals under Article 1658[7] of the
Civil Code. In an Order dated January 29, 1976, the CFI ordered
that all payments shall be made to said court pending the
resolution of the case.
On August 10, 1980, the City Court rendered its Decision in Civil
Case No. 006665-CV, dismissing the unlawful detainer case on the
finding that (1) UPSIs suspension of rental payments was justified;
and (2) there was no ground to cause the rescission of the lease
and warrant the ejectment of UPSI. MCI and Dr. Mabanta appealed
to the RTC of Manila, where the case was raffled to Branch 35 and
was docketed as Civil Case No. 135396.
ceded to the Development Bank of the Philippines (DBP) some of
the leased buildings, including certain facilities, furniture, fixtures
and equipment found therein, in full settlement of MCIs debt to
DBP. The Deed of Cession of Properties in Payment of Debt (Dacion
en Pago) contained an annex (Annex A) which listed the properties
ceded to DBP.[8] Upon the execution of the dacion en pago, UPSI
paid P60,000 of the monthly rental to DBP as the new owner of the
properties subject of the dacion en pago.
On April 21, 1983, the RTC of Manila affirmed the City Court
Decision dismissing MCIs unlawful detainer case. This case was
appealed to the Intermediate Appellate Court[9] (IAC), where it was
docketed as CA-G.R. SP No. 00994.
On February 24, 1984, while the RTC Decision in the unlawful
detainer case was under review with the IAC, UPSI bought from
DBP the leased properties ceded to the latter by MCI under
the dacion en pago.[10]
On February 28, 1985, the IAC rendered its Decision[11] reversing
the rulings of the lower courts. According to the IAC, the absence
of the certificates of occupancy for two of the leased buildings,
being a matter between the owner of the building and the city
government, did not impair the peaceful and adequate enjoyment
by UPSI of the premises.[12] The IAC further held that the alleged
defective electrical installations on the premises leased is no
justification for the refusal to pay rentals, as, under Article 1663 of
the Civil Code, the lessee may have said installations properly
reinstalled at the expense of the lessor.[13] The dispositive portion
of the IAC Decision reads:
Upon all the foregoing considerations, the decision of respondent
court, under review, is hereby REVERSED. [UPSI] is hereby ordered
to pay to [MCI and Dr. Mabanta] the agreed rental of
PhP70,000.00 a month from November 1975 to May 31, 1983,
deducting therefrom the amount already withdrawn by [MCI and
Dr. Mabanta] from the rentals deposited with respondent court in
Civil Case No. 99934; crediting to [UPSI] the amount of
PhP60,000.00 monthly from September 24, 1980 to May 31, 1983,
said amount having been paid the DBP for the properties ceded by
[MCI and Dr. Mabanta] in the dacion en pago; and to pay interests
on the amounts still due, at the legal rate, from the time that said
amounts became due until they are fully paid.
[UPSIs] motion for reconsideration of the resolution of the Court
dated October 1, 1984 is hereby GRANTED and the issue of
compensation for the continued occupancy of the remaining
leased premises as well as the renewal of the lease and the return
of the hospital equipment, fixtures, and supplies prayed for, are
hereby left to the decision in Civil Case No. 83-21275 in the
Regional Trial Court in Manila. Costs against [UPSI].[14]
Both MCI and UPSI filed Motions for Reconsideration of the above
Decision. MCI assailed the IACs failure to include in its order the
ejectment of UPSI from the premises and the return of the
same. UPSI, however, insists that there was no violation of the
lease agreement, raising the same arguments it presented before
the February 28, 1985 Decision.
On July 18, 1985, the IAC issued a Resolution[15] granting MCIs
Motion for Reconsideration and denying that of UPSI. Noting the
finding that UPSI violated the lease agreement by failing to pay the
stipulated rentals, the IAC ruled that MCI may now require UPSI to
vacate the leased premises. As regards UPSIs Motion, the IAC held
that the issues concerning the alleged defective electrical
installations and failure to deliver certificates of occupancy had
already been sufficiently passed upon. The IAC thus amended the
dispositive portion of the February 28, 1985 Decision to read as
follows:

Upon all the foregoing considerations, the decision of respondent
court, under review, is hereby REVERSED. [UPSI] is hereby ordered
to pay to the [MCI and Dr. Mabanta] the agreed rentals
of P70,000.00 a month from November 1975 to May 31, 1983,
deducting therefrom the amount already withdrawn by [MCI and
Dr. Mabanta] from the rentals deposited with respondent court in
Civil Case No. 99934; crediting to [UPSI] the amount of P60,000.00
monthly from September 24, 1980 to May 31, 1983, said amount
having been paid the DBP for the properties ceded by [MCI and Dr.
Mabanta] in the dacion en pago; and to pay interests on the
amounts still due, at the legal rate, from the time that said
amounts became due until they are fully paid, and [UPSI] or
anyone occupying the premises under it, is hereby ordered to
vacate the leased properties including the fixtures, supplies and
equipment, listed in Exhibit A (other than the property ceded to
the Development Bank of the Philippines in the dacion en pago),
more particularly, what is now occupied by Juanchitos Restaurant
and the passageway of the premises still owned by [MCI and Dr.
Mabanta].
[UPSIs] motion for reconsideration of the resolution of this court
dated October 1, 1984 is hereby granted, and said resolution is
hereby set aside.[16]
The aforementioned Resolution was appealed to this Court, where
the petition was docketed as G.R. No. 71579. This Court dismissed
the same. Thus, the IAC judgment attained finality.
During execution, the RTC of Manila, Branch 33, acting on MCIs
Motion for the Delivery of Leased Facilities/Equipment/Supplies
and/or the Payment of their Value if Defendant cannot Deliver
Them, issued an Order dated November 5, 1990, the dispositive
portion of which reads:
Accordingly, Defendant University Physician Services, Inc. is hereby
directed to replace the equipment, facilities, supplies, etc. as
reflected in the inventories. Annexes A to A-8 and B to B-8. If the
same could not be substituted or replaced within the period of
thirty days from receipt of this order, said defendant has to pay
the value in the amount of P450,932.50 and P387,212.05 indicated
in the aforesaid annexes. Defendant is likewise directed to return
and deliver the leased facilities, equipments, supplies, etc., listed in
the Summary of Inventory with Annex A or pay the plaintiff their
value in the amount of P5,534,818.50 within the period of two
months from receipt of this order.[17]
On November 29, 1990, UPSI appealed the above Order to the
Court of Appeals, claiming that said Order varies the term of the
IAC judgment, arguing that said judgment did not order the
replacement of the leased properties lost or deteriorated and/or
to pay their value if replacement cannot be made. UPSI further
claims that the Court erred in giving MCI the discretion to
determine the circumstances when replacement or payment of
value shall be made. The appeal was docketed as CA-G.R. CV No.
34971.
On October 18, 2001, the Court of Appeals rendered the assailed
Decision affirming the November 5, 1990 RTC Order. Thus, this
Petition, in which UPSI submits the following issues for the
resolution of this Court:
A. WHETHER OR NOT THE ORDER IN EXECUTION DATED
NOVEMBER 5, 1990 OF THE REGIONAL TRIAL COURT, BR. 33, NCJR,
MANILA IS NULL AND VOID FOR IT TOTALLY CHANGED THE FINAL
JUDGMENT SOUGHT TO BE EXECUTED;
B. WHETHER OR NOT THE REGIONAL TRIAL COURT, BR. 33, NCJR,
MANILA, HAS JURISDICTION IN ISSUING THE ORDER IN EXECUTION
DATED NOVEMBER 5, 1990;
C. WHETHER OR NOT THE ORDER IN EXECUTION DATED
NOVEMBER 5, 1990 OF THE REGIONAL TRIAL COURT CHANGED
THE ORIGINAL CAUSE OF ACTION OF PRIVATE RESPONDENT FROM
UNLAWFUL DETAINER TO RECOVERY OF PERSONAL PROPERTIES
AND/OR REPLEVIN THUS VIOLATING PETITIONERS RIGHT TO DUE
PROCESS;
D. WHETHER OR NOT ARTICLE 1667 OF THE NEW CIVIL CODE IS
SQUARELY APPLICABLE TO THE CASE AT BENCH; AND
E. WHETHER OR NOT THE OBLIGATION OF THE PETITIONER UNDER
THE ORDER IN EXECUTION DATED NOVEMBER 5, 1990 FOR THE
REPLACEMENT/RETURN AND/OR PAYMENT OF SUBJECT FIXTURES
HAS BEEN RENDERED MOOT AND ACADEMIC FOR IT WAS
EXTINGUISHED FIRST BY DACION EN PAGO DATED SEPTEMBER 1,
1980 EXECUTED BY PRIVATE RESPONDENT WITH THE DBP AND
SECOND BY THE DEED OF CONDITIONAL SALE EXECUTED BY THE
DBP IN FAVOR OF PETITIONER UPSI AND THIRD BY WAY OF
PAYMENT IN FULL SATISFACTION OF THE JUDGMENT CREDIT IN
CIVIL CASE NO. 52978.[18]
UPSI explains that the judgment sought to be executed enjoined it
to do only the following:
1. to pay the back rentals with interest less the rentals
consigned in court and the subject of the dacion en pago; and
2. to vacate the Juanchitos Restaurant and passageway as
well as the fixtures appurtenant to the subject leased premises,
excluding those ceded in the dacion en pago.
UPSI points out that the Order in Execution dated November 5,
1990 of the RTC affirmed by the Court of Appeals varied the
judgment sought to be executed as it instead mandated the
following:
1. to replace and/or pay the value of the equipment,
facilities, supplies, etc., as reflected in Annexes A to A-8 and B to B-
8; and
2. to return and deliver and/or pay the value of the leased
facilities, equipment, supplies, etc., listed in the Summary of
Inventory with Annex A.
The Court of Appeals ruled that the judgment sought to be
executed reveals the intent of the court to have all of the leased
properties returned upon the execution of the judgment. Indeed,
the original Writ of Execution issued on April 10, 1987 included
these personal properties. As some of the leased properties were
not returned, causing only a partial execution of the judgment, the
November 5, 1990 Order was necessitated. Said Order, according
to the appellate court, did not vary the terms of the judgment but
merely implemented the IACs Decision. The Court of Appeals
added that a contrary ruling would result in unjust enrichment on
the part of UPSI.[19]
UPSI counters that the remedy of MCI is to file an action for
recovery of personal properties or collection of the value thereof,
as these actions have totally different and distinct cause of actions
from that of ejectment.[20] UPSI points out that the only issue to be
resolved in an unlawful detainer case is possession de facto, i.e.,
who between the party litigants has a better right of possession,
and therefore an order to replace or pay the value of a leased
property has no place in such action. UPSI argues that it was
precisely because the cause of action of MCI was ejectment that
the IAC merely directed UPSI to vacate the leased premises and
not to replace or pay the value of the appurtenances of the leased
properties if allegedly lost or destroyed.
It is settled that a writ of execution must conform substantially to
every essential particular of the judgment promulgated. Execution
not in harmony with the judgment is bereft of validity. It must
conform, more particularly, to that ordained or decreed in the
dispositive portion of the decision.[21]
Did the writ of execution conform substantially to the essentials of
the promulgated judgment?
The Court rules in the affirmative.
To begin with, it cannot be disputed that the subject matter of the
lease agreement between the parties included real and personal
properties. The pertinent portion of the lease contract provides:
WHEREAS, MARIAN is the owner and operator of that enterprise,
consisting of a hospital and 4 schools (nursing, medical X-ray
technology, midwifery and medical secretarial science) operating
at 918 United Nations Avenue, Manila, under the names and style
of MARIAN GENERAL HOSPITAL, MARIAN SCHOOL OF NURSING,
MARIAN SCHOOL OF MIDWIFERY, and MARIAN SCHOOL OF
MEDICAL SECRETARIAL SCIENCE (the last 4 being known
collectively as MARIAN SCHOOLS), together with the land,
buildings, facilities, furnitures (sic), fixtures and equipment
appurtenant thereto, a inventory of which is hereto attached as
Annex A;
WHEREAS, MARIAN is the owner of that lot located at 918 United
Nations Avenue, Manila, covered by and described in Transfer
Certificate of Title No. 105778 of the Register of Deeds of Manila,
together with that building existing thereon known as the
SOLEDAD BUILDING, and other constructions and improvements
thereon, which are also used by the hospital and schools, a list of
which is hereto attached as Annex B;
xxxx
NOW, THEREFORE, for and in consideration of the above premises
and the terms and conditions hereinafter enumerated, the
LESSORS agree to deliver unto the LESSEE, by way of lease, with
right to possess, use, run and operate, that certain hospital and
schools above-described, together with the lands, buildings,
facilities, furnitures (sic), fixtures and equipment listed in Annexes
A and B hereto attached (all of which hospital, schools and assets
as enumerated are collectively referred to herein as the LEASED
ASSETS x x x.[22] (Emphasis supplied.)
As discussed in the Decision of the Court of Appeals, the basis for
the obligation of UPSI to return, and in certain circumstance,
replace or pay the value of the above-mentioned appurtenances in
the leased properties is both law and contract.
Article 1665 of the Civil Code provides that [t]he lessee shall return
the thing leased, upon the termination of the lease, just as he
received it, save what has been lost or impaired by the lapse of
time, or by ordinary wear and tear, or from an inevitable
cause. Article 1667 likewise states that [t]he lessee is responsible
for the deterioration or loss of the thing leased, unless he proves
that it took place without his fault. In other words, by law, a lessee
is obliged to return the thing(s) leased and be responsible for any
deterioration or loss of the properties, except for those that were
not his fault.
However, it is significant to note that the parties saw fit to go a
step further and stipulate the following:
4. During the term of this contract, the operation of the hospital
and schools shall be deemed exclusively the enterprise and
business of the LESSEE, and, therefore, the LESSEE:
xxxx
(d) Shall keep the LEASED ASSETS in good and decent condition
and maintain the same at its own expense. Maintenance shall
include, but shall not be limited to, keeping all equipment in good
running condition, x x x and painting and repairing the buildings as
may be necessary to keep them in decent and usable condition. x x
x.
xxxx
(h) Shall surrender quickly and peacefully unto the LESSORS all the
LEASED ASSETS, x x x upon termination of this Agreement.
xxx
8. In addition, the LESSEE agrees that:
(e) All pillows, linen, sheets, mattresses, rubber sheets, x x x and
such other similar breakable, losable or deteriorating items as may
be included in Annex A hereto attached, shall upon termination of
this Agreement, be replaced by the LESSEE in the same quantity as
turned over herewith by the LESSORS. All medical equipment also,
if deteriorated upon termination hereof, shall be replaced in the
same quantity and quality in which they were received by the
LESSEE, ordinary wear and tear excepted.[23] (Emphasis supplied.)
Under the principle of the parties freedom of contract, the
contracting parties may establish such stipulations, clauses, terms
and conditions as they may deem convenient, provided they are
not contrary to law, morals, good customs, public order, or public
policy.[24] Obligations arising from contracts have the force of law
between the parties.[25] The provisions in the lease contract that:
(1) All pillows, linen, sheets, mattresses, rubber sheets, x x x and
such other similar breakable, losable or deteriorating items x x x
shall upon termination of this Agreement, be replaced by the
LESSEE in the same quantity as turned over herewith by the
LESSORS; and
(2) All medical equipment also, if deteriorated upon termination
hereof, shall be replaced in the same quantity and quality in which
they were received by the LESSEE. x x x.[26]
clearly show the parties binding covenant that, upon the
termination of the lease, certain types of movable properties
subject of the lease will not simply be returned but replaced in the
same quantity and/or quality in case of loss or deterioration.
The IACs final and executory July 18, 1985 Resolution, ordering
UPSI to vacate the leased properties, including the fixtures,
supplies and equipment was in effect a judicial termination of the
lease. Upon the termination of the contract, UPSIs duty to return
and/or replace the leased properties arose. The return and/or
replacement of the leased properties being a necessary
consequence of the termination of the lease, the November 5,
1990 Order of the execution court did not vary the IAC judgment
which ordered the restitution of the leased assets.
UPSI further argues that Article 1667 of the Civil Code is not
applicable considering that the inventories of the leased properties
which it was obligated to return was not yet established. UPSI also
asserts that the order for the replacement of the subject fixtures
had been rendered moot as it had already been extinguished by
the dacion en pago dated September 1, 1980 with the DBP, by the
deed of conditional sale executed by the DBP in favor of UPSI, and
by UPSIs payment in full of the judgment in Civil Case No. 529778,
a complaint for compensation and damages filed by MCI against
UPSI.
As regards Article 1667 of the Civil Code, we hold that the
applicability thereof, or of the provision of the lease contract
holding UPSI liable in case of loss or deterioration of the subject
properties, are not dependent on the presence, at the moment, of
inventories. The execution court may conduct hearings to
determine the existence of such an inventory and, if found that
such is unavailable, further hearings may be conducted to
reconstruct the same and determine the value of the properties
that should be returned or replaced, if necessary.
On UPSIs argument that the order for the replacement of the
subject properties had been rendered moot by dacion en pago, by
a deed of conditional sale, and by payment in full satisfaction of
the judgment credit in Civil Case No. 529778, we rule that the
same may also be and are best threshed out in hearings to be
conducted by the execution court. Indeed, there is a need for the
execution court to (1) identify the mass of properties actually
leased to UPSI; (2) identify and exclude the properties transferred
to DBP under the dacion en pago and to UPSI under the
conditional deed of sale; and (3) identify and exclude properties
which UPSI already returned, replaced or paid the value of in Civil
Case No. 529778. UPSI can be made responsible for only the
remaining leased assets which have not been previously returned
or replaced, if there are any. As these matters are factual in nature
and it is elementary that this Court is not a trier of facts, remand of
the case to the execution court would be in order.
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV
No. 34971 dated October 18, 2001, which affirmed the Order in
Execution dated November 5, 1990 of the Regional Trial Court of
Manila, is AFFIRMED with the MODIFICATION that the case
be REMANDED to the Regional Trial Court of Manila, Branch 33, for
further proceedings on the execution of the judgment in Civil Case
No. 135396. Costs against petitioner University Physicians Services,
Incorporated.
SO ORDERED.
[G.R. No. 147465. January 30, 2002]
METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner,
vs. JANCOM ENVIRONMENTAL CORPORATION and JANCOM
INTERNATIONAL DEVELOPMENT PROJECTS PTY. LIMITED OF
AUSTRALIA, respondents.
DECISION
MELO, J.:
Before the Court is a petition for review on certiorari under Rule 45
of the Rules of Civil Procedure filed by petitioner Metropolitan
Manila Development Authority (MMDA), seeking to reverse and
set aside the November 13, 2000 decision of the Court of Appeals
declaring valid and perfected the waste management contract
entered into by the Republic of the Philippines, represented by the
Secretary of National Resources and the Executive Committee to
oversee the build-operate-transfer implementation of solid waste
management projects, and JANCOM Environmental Corporation.
The pertinent facts are as follows:
In 1994, then President Fidel V. Ramos issued Presidential
Memorandum Order No. 202 creating the Executive Committee
(EXECOM) to oversee the BOT implementation of solid waste
management projects, headed by the Chairman of the MMDA and
the Cabinet Officer for Regional Development-National Capital
Region (CORD-NCR). The EXECOM was to oversee and develop
waste-to-energy projects for the waste disposal sites in San Mateo,
Rizal and Carmona, Cavite under the build-operate-transfer (BOT)
scheme. The terms of reference for the waste-to-energy projects
provided that its proponents should have the capability to
establish municipal solid waste thermal plants using incineration
technology. This type of technology was selected because of its
alleged advantages of greatly reduced waste volume, prolongation
of the service life of the disposal site, and generation of electricity.
While eleven (11) proponents submitted their pre-qualification
documents, most failed to comply with the requirements under
Section 5.4 of the Implementing Rules and Regulations (IRR) of
Republic Act No. 6957, otherwise known as the Build-Operate-
Transfer Law. On July 21, 1995, the Pre-qualification, Bids and
Awards Committee (PBAC) recommended the pre-qualification of
three proponents, namely: i) JANCOM International Pty. Ltd.; ii)
First Philippine International W-E Managers; and iii) PACTECH
Development Corporation. On July 26, 1995, the EXECOM
approved the recommendation of the PBAC. On July 27, 1995,
MMDA forwarded to the Investment Coordinating Committee
(ICC) Secretariat the pre-feasibility study on the privatization of the
Carmona and San Mateolandfill sites. The project was later
presented to the ICC-Technical Board (ICC-TB) and then endorsed
to the ICC-Cabinet Committee (ICC-CC).
On May 2, 1996, the PBAC conducted a pre-bid conference where
it required the three pre-qualified bidders to submit, within ninety
(90) days, their bid proposals. On August 2, 1996, JANCOM and
First Philippines requested for an extension of time to submit their
bids. PACTECH, on the other hand, withdrew from the bidding.
Subsequently, JANCOM entered into a partnership with Asea
Brown Boveri (ABB) to form JANCOM Environmental Corporation
while First Philippines formed a partnership with OGDEN. Due to
the change in the composition of the proponents, particularly in
their technology partners and contractors, the PBAC conducted a
post pre-qualification evaluation.
During the second bid conference, the bid proposals of First
Philippines for the Carmona site and JANCOM for the San
Mateo site were found to be complete and
responsive. Consequently, on February 12, 1997, JANCOM and
First Philippines were declared the winning bidders, respectively,
for the San Mateo and the Carmona projects.
In a letter dated February 27, 1997, then MMDA Chairman
Prospero I. Oreta informed JANCOMs Chief Executive Officer Jay
Alparslan that the EXECOM had approved the PBAC
recommendation to award to JANCOM the San Mateo Waste-to-
Energy Project on the basis of the final Evaluation Report declaring
JANCOM International Ltd., Pty., together with Asea Brown Boveri
(ABB), as the sole complying (winning) bidder for the San Mateo
Waste Disposal site, subject to negotiation and mutual approval of
the terms and conditions of the contract of award. The letter also
notified Alparslan that the EXECOM had created a negotiating
team composed of Secretary General Antonio Hidalgo of the
Housing and Urban Development Coordinating Council, Director
Ronald G. Fontamillas, General Manager Roberto Nacianceno of
MMDA, and Atty. Eduardo Torres of the host local government
unit to work out and finalize the contract award. Chairman Oreta
requested JANCOM to submit to the EXECOM the composition of
its own negotiating team.
Thereafter, after a series of meetings and consultations between
the negotiating teams of EXECOM and JANCOM, a draft BOT
contract was prepared and presented to the Presidential Task
Force on Solid Waste Management.
On December 19, 1997, the BOT Contract for the waste-to-energy
project was signed between JANCOM and the Philippine
Government, represented by the Presidential Task Force on Solid
Waste Management through DENR Secretary Victor Ramos, CORD-
NCR Chairman Dionisio dela Serna, and MMDA Chairman Prospero
Oreta.
On March 5, 1998, the BOT contract was submitted to President
Ramos for approval but this was too close to the end of his term
which expired without him signing the contract. President Ramos,
however, endorsed the contract to incoming President Joseph E.
Estrada.
With the change of administration, the composition of the
EXECOM also changed. Memorandum Order No. 19 appointed the
Chairman of the Presidential Committee on Flagship Programs and
Project to be the EXECOM chairman. Too, Republic Act No. 8749,
otherwise known as the Clean Air Act of 1999, was passed by
Congress. And due to the clamor of residents of Rizal province,
President Estrada had, in the interim, also ordered the closure of
the San Mateo landfill. Due to these circumstances, the Greater
Manila Solid Waste Management Committee adopted a resolution
not to pursue the BOT contract with JANCOM. Subsequently, in a
letter dated November 4, 1999, Roberto Aventajado, Chairman of
the Presidential Committee on Flagship Programs and Project
informed Mr. Jay Alparslan, Chairman of JANCOM, that due to
changes in policy and economic environment (Clean Air Act and
non-availability of the San Mateo landfill), the implementation of
the BOT contract executed and signed between JANCOM and the
Philippine Government would no longer be pursued. The letter
stated that other alternative implementation arrangements for
solid waste management for Metro Manila would be considered
instead.
JANCOM appealed to President Joseph Estrada the position taken
by the EXECOM not to pursue the BOT Contract executed and
signed between JANCOM and the Philippine Government, refuting
the cited reasons for non-implementation. Despite the pendency
of the appeal, MMDA, on February 22, 2000, caused the
publication in a newspaper of an invitation to pre-qualify and to
submit proposals for solid waste management projects for Metro
Manila. JANCOM thus filed with the Regional Trial Court of Pasig a
petition for certiorari to declare i) the resolution of the Greater
Metropolitan Manila Solid Waste Management Committee
disregarding the BOT Contract and ii) the acts of MMDA calling for
bids and authorizing a new contract for Metro Manila waste
management, as illegal, unconstitutional, and void; and for
prohibition to enjoin the Greater Metropolitan Manila Solid Waste
Management Committee and MMDA from implementing the
assailed resolution and disregarding the Award to, and the BOT
contract with, JANCOM, and from making another award in its
place. On May 29, 2000, the trial court rendered a decision, the
dispositive portion of which reads:
WHEREFORE, in view of the foregoing, the Court hereby renders
judgment in favor of petitioners JANCOM ENVIRONMENTAL
CORPORATION, and JANCOM INTERNATIONAL DEVELOPMENT
PROJECTS PTY., LIMITED OF AUSTRALIA, and against respondent
GREATER METROPOLITAN MANILA SOLID WASTE MANAGEMENT
COMM., and HON. ROBERTO N. AVENTAJADO, in his Capacity as
Chairman of the said Committee, METRO MANILA DEVELOPMENT
AUTHORITY and HON. JEJOMAR C. BINAY, in his capacity as
Chairman of said Authority, declaring the Resolution of respondent
Greater Metropolitan Manila Solid Waste Management Committee
disregarding petitioners BOT Award Contract and calling for bids
for and authorizing a new contract for the Metro Manila waste
management ILLEGAL and VOID.
Moreover, respondents and their agents are hereby PROHIBITED
and ENJOINED from implementing the aforesaid Resolution and
disregarding petitioners BOT Award Contract and from making
another award in its place.
Let it be emphasized that this Court is not preventing or stopping
the government from implementing infrastructure projects as it is
aware of the proscription under PD 1818. On the contrary, the
Court is paving the way for the necessary and modern solution to
the perennial garbage problem that has been the major headache
of the government and in the process would serve to attract more
investors in the country.
(Rollo,p. 159.)
Instead of appealing the decision, MMDA filed a special civil action
for certiorari with prayer for a temporary restraining order with
the Court of Appeals which was later docketed therein as CA-G.R.
SP No. 59021. The appellate court not only required JANCOM to
comment on the petition, it also granted MMDAs prayer for a
temporary restraining order. During the pendency of the petition
for certiorari, JANCOM moved for the execution of the RTC
decision, which was opposed by MMDA. However, the RTC granted
the motion for execution on the ground that its decision had
become final since MMDA had not appealed the same to the Court
of Appeals. MMDA moved to declare respondents and the RTC
judge in contempt of court, alleging that the RTCs grant of
execution was abuse of and interference with judicial rules and
processes.
On November 13, 2001, the Court of Appeals dismissed the
petition in CA-G.R. SP No. 59021 and a companion case, CA-G.R. SP
No. 60303.
MMDAs motion for reconsideration of said decision having been
denied, MMDA filed the instant petition, alleging that the Court of
Appeals gravely erred in finding that:
1) There is a valid and binding contract between the Republic of
the Philippines and JANCOM given that: a) the contract does not
bear the signature of the President of the Philippines; b) the
conditions precedent specified in the contract were not complied
with; and c) there was no valid notice of award.
2) The MMDA had not seasonably appealed the Decision of the
lower court via a petition for certiorari.
Before taking up the substantive issue in question, we shall first
dispose of the question as to whether it is fatal to petitioners
cause, that rather than appealing the trial courts decision to the
Court of Appeals, it instead filed a petition for certiorari. While
petitioner claims that the trial courts decision never became final
by virtue of its having appealed by certiorari to the Court of
Appeals, the trial court ruled that petitioners failure to file an
appeal has made its decision final and executory. At bottom, the
question involves a determination of the propriety of petitioners
choice of the remedy of certiorari in questioning the decision of
the trial court.
Section 1, Rule 65 of the 1997 Rules of Civil Procedure provides:
Section 1. Petition for certiorari. When any tribunal, board or
officer exercising judicial or quasi-judicial functions has acted
without or in excess of its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, and there is
no appeal, or any plain, speedy, and adequate remedy in the
ordinary course of law, a person aggrieved thereby may file a
verified petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered annulling or
modifying the proceedings of such tribunal, board or officer, and
granting such incidental reliefs as law and justice may require.
The petition shall be accompanied by a certified true copy of the
judgment, order, or resolution subject thereof, copies of all
pleadings and documents relevant and pertinent thereto, and a
sworn certification of non-forum shopping as provided in the third
paragraph of section 3, Rule 46.
Plain it is from a reading of the above provision that certiorari will
lie only where a court has acted without or in excess of jurisdiction
or with grave abuse of discretion. If the court has jurisdiction over
the subject matter and of the person, its rulings upon all questions
involved are within its jurisdiction, however irregular or erroneous
these may be, they cannot be corrected by certiorari. Correction
may be obtained only by an appeal from the final decision.
Verily, Section 1, Rule 41 of the 1997 Rules of Civil Procedure
provides:
SEC. 1. Subject of appeal. An appeal may be taken from a judgment
or final order that completely disposes of the case or of a
particular matter therein when declared by these Rules to be
appealable.
xxx xxx xxx
In all the above instances where the judgment or final order is not
appealable, the aggrieved party may file an appropriate special civil
action under Rule 65.
There can be no dispute that the trial courts May 29, 2000 decision
was a final order or judgment which MMDA should have appealed,
had it been so minded. In its decision, the trial court disposed of
the main controversy by declaring the Resolution of respondent
Greater Metropolitan Manila Solid Waste Management Committee
disregarding petitioners BOT Award Contract and calling for bids
for and authorizing a new contract for the Metro Manila waste
management ILLEGAL and VOID. This ruling completely disposed of
the controversy between MMDA and JANCOM. In BA Finance
Corporation vs. CA (229 SCRA 5667 [1994]), we held that a final
order or judgment is one which disposes of the whole subject
matter or terminates a particular proceeding or action, leaving
nothing to be done but to enforce by execution what has been
determined. An order or judgment is deemed final when it finally
disposes of the pending action so that nothing more can be done
with it in the trial court. In other words, a final order is that which
gives an end to the litigation. A final order or judgment finally
disposes of, adjudicates, or determines the rights, or some right or
rights of the parties, either on the entire controversy or on some
definite and separate branch thereof, and concludes them until it
is reversed or set aside. Where no issue is left for future
consideration, except the fact of compliance or non-compliance
with the terms of the judgment or doer, such judgment or order is
final and appealable (Investments, Inc. vs. Court of Appeals, 147
SCRA 334 [1987]).
However, instead of appealing the decision, MMDA resorted to the
extraordinary remedy of certiorari, as a mode of obtaining reversal
of the judgment. This cannot be done. The judgment was not in
any sense null and void ab initio, incapable of producing any legal
effects whatever, which could be resisted at any time and in any
court it was attempted. It was a judgment which could or may
have suffered from some substantial error in procedure or in
findings of fact or of law, and on that account, it could have been
reversed or modified on appeal. But since it was not appealed, it
became final and has thus gone beyond the reach of any court to
modify in any substantive aspect. The remedy to obtain reversal or
modification of the judgment on the merits is appeal. This is true
even if the error, or one of the errors, ascribed to the court
rendering the judgment is its lack of jurisdiction over the subject
matter, or the exercise of power in excess thereof, or grave abuse
of discretion in the findings of fact or of law set out in the
decision. The existence and availability of the right of appeal
proscribes a resort to certiorari, because one of the requirements
for availment of the latter remedy is precisely that there should be
no appeal (Mercado vs. CA, 162 SCRA 75 [1988]). As incisively
observed by the Court of Appeals:
The special civil action for certiorari is available only when there is
no appeal nor any plain, speedy and adequate remedy in the
ordinary course of law (Sec. 1, rule 65, id.)
Admittedly, appeal could have been taken from the assailed RTC
decision. However, petitioners maintain that appeal is not a
speedy remedy because the RTC decision prohibiting them from
conducting a bidding for a new waste disposal project has adverse
and serious effects on the citys garbage situation.
Nevertheless, the RTC decision is not immediately executory. Only
judgments in actions for injunction, receivership, accounting and
support and such other judgments as are now or may hereafter be
declared to be immediately executory shall be enforced after their
rendition and shall not be stayed by an appeal therefrom, unless
otherwise ordered by the trial court (Sec. 4, rule 39, id.).
Since the RTC decision is not immediately executory, appeal would
have stayed its execution. Consequently, the adverse effects of
said decision will not visit upon petitioners during the appeal. In
other words, appeal is a plain, speedy and adequate remedy in the
ordinary course of the law.
But as no appeal was taken within the reglementary period, the
RTC decision had become final and executory.Well-settled is the
rule that the special civil action for certiorari may not be invoked
as a substitute for the remedy of appeal (BF Corporation vs. Court
of Appeals, 288 SCRA 267). Therefore, the extraordinary remedy of
certiorari does not lie.
Moreover, petitioners instituted the instant action without filing a
motion for reconsideration of the RTC decision.Doctrinal is the rule
that certiorari will not lie unless a motion for reconsideration is
first filed before the respondent tribunal to allow it an opportunity
to correct its errors (Zapanta vs. NLRC, 292 SCRA 580).
(Rollo, p. 47-48.)
Admittedly, there are instances where the extraordinary remedy
of certiorari may be resorted to despite the availability of an
appeal. In Ruiz, Jr. vs. Court of Appeals (220 SCRA 490 [1993]), we
held:
Considered extraordinary, [certiorari] is made available only when
there is no appeal, nor any plain, speedy or adequate remedy in
the ordinary course of the law (Rule 65, Rules of Court, Section
1). The long line of decisions denying the petition
for certiorari, either before appeal was availed or specially in
instances where the appeal period has lapsed, far outnumbers the
instances when certiorari was given due course. The few significant
exceptions were: when public welfare and the advancement of
public policy dictate; or when the broader interests of justice so
require, or when the writs issued are null . . . or when the
questioned order amounts to an oppressive exercise of judicial
authority.
In the instant case, however, MMDA has not sufficiently
established the existence of any fact or reason to justify its resort
to the extraordinary remedy of certiorari. Neither does the record
show that the instant case, indeed, falls under any of the
exceptions aforementioned.
The Court thus holds that the Court of Appeals did not err in
declaring that the trial courts decision has become final due to the
failure of MMDA to perfect an appeal within the reglementary
period.
With the foregoing disquisition, it would appear unnecessarily to
discuss and resolve the substantive issue posed before the Court.
However, the procedural flaw notwithstanding, the Court deems it
judicious to take cognizance of the substantive question, if only to
put petitioners mind to rest.
In its second assignment of errors, petitioner MMDA contends that
there is no valid and binding contract between the Republic of the
Philippines and respondents because: a) the BOT contract does not
bear the signature of the President of the Philippines; b) the
conditions precedent specified in the contract were not complied
with; and that c) there was no valid notice of award.
These contentions hold no water.
Under Article 1305 of the Civil Code, [a] contract is a meeting of
minds between two persons whereby one binds himself, with
respect to the other, to give something or to render some service.
A contract undergoes three distinct stages preparation or
negotiation, its perfection, and finally, its
consummation. Negotiation begins from the time the prospective
contracting parties manifest their interest in the contract and ends
at the moment of agreement of the parties. The perfection or birth
of the contract takes place when the parties agree upon the
essential elements of the contract. The last stage is
the consummation of the contract wherein the parties fulfill or
perform the terms agreed upon in the contract, culminating in the
extinguishment thereof (Bugatti vs. CA, 343 SCRA 335
[2000]). Article 1315 of the Civil Code, provides that a contract is
perfected by mere consent. Consent, on the other hand, is
manifested by the meeting of the offer and the acceptance upon
the thing and the cause which are to constitute the contract (See
Article 1319, Civil Code). In the case at bar, the signing and
execution of the contract by the parties clearly show that, as
between the parties, there was a concurrence of offer and
acceptance with respect to the material details of the contract,
thereby giving rise to the perfection of the contract. The execution
and signing of the contract is not disputed by the parties. As the
Court of Appeals aptly held:
[C]ontrary to petitioners insistence that there was no perfected
contract, the meeting of the offer and acceptance upon the thing
and the cause, which are to constitute the contract (Arts. 1315 and
1319, New Civil Code), is borne out by the records.
Admittedly, when petitioners accepted private respondents bid
proposal (offer), there was, in effect, a meeting of the minds upon
the object (waste management project) and the cause (BOT
scheme). Hence, the perfection of the contract. In City of Cebu vs.
Heirs of Candido Rubi (306 SCRA 108), the Supreme Court held that
the effect of an unqualified acceptance of the offer or proposal of
the bidder is to perfect a contract, upon notice of the award to the
bidder.
(Rollo, p. 48-49.)
In fact, in asserting that there is no valid and binding contract
between the parties, MMDA can only allege that there was no
valid notice of award; that the contract does not bear the
signature of the President of the Philippines; and that the
conditions precedent specified in the contract were not complied
with.
In asserting that the notice of award to JANCOM is not a proper
notice of award, MMDA points to the Implementing Rules and
Regulations of Republic Act No. 6957, otherwise known as the BOT
Law, which require that i) prior to the notice of award, an
Investment Coordinating Committee clearance must first be
obtained; and ii) the notice of award indicate the time within
which the awardee shall submit the prescribed performance
security, proof of commitment of equity contributions and
indications of financing resources.
Admittedly, the notice of award has not complied with these
requirements. However, the defect was cured by the subsequent
execution of the contract entered into and signed by authorized
representatives of the parties; hence, it may not be gainsaid that
there is a perfected contract existing between the parties giving to
them certain rights and obligations (conditions precedents) in
accordance with the terms and conditions thereof. We borrow the
words of the Court of Appeals:
Petitioners belabor the point that there was no valid notice of
award as to constitute acceptance of private respondents
offer. They maintain that former MMDA Chairman Oretas letter to
JANCOM EC dated February 27, 1997 cannot be considered as a
valid notice of award as it does not comply with the rules
implementing Rep. Act No. 6957, as amended. The argument is
untenable.
The fact that Chairman Oretas letter informed JANCOM EC that it
was the sole complying (winning) bidder for the San Mateo project
leads to no other conclusion than that the project was being
awarded to it. But assuming that said notice of award did not
comply with the legal requirements, private respondents cannot
be faulted therefore as it was the government representatives
duty to issue the proper notice.
In any event, petitioners, as successors of those who previously
acted for the government (Chairman Oreta, et al), are estopped
from assailing the validity of the notice of award issued by the
latter. As private respondents correctly observed, in negotiating on
the terms and conditions of the BOT contract and eventually
signing said contract, the government had led private respondents
to believe that the notice of award given to them satisfied all the
requirement of the law.
While the government cannot be estopped by the erroneous acts
of its agents, nevertheless, petitioners may not now assail the
validity of the subject notice of award to the prejudice of private
respondents. Until the institution of the original action before the
RTC, invalidity of the notice of award was never invoked as a
ground for termination of the BOT contract. In fact, the reasons
cited for terminating the San Mateo project, per Chairman
Aventajados letter to JANCOM EC dated November 4, 1999, were
its purported non-implementability and non-viability on account of
supervening events, e.g., passage of the Clean Air Act, etc.
(Rollo, p. 49-50.)
MMDA also points to the absence of the Presidents signature as
proof that the same has not yet been perfected. Not only that, the
authority of the signatories to bind the Republic has even been put
to question. Firstly, it is pointed out that Memorandum Order No.
202 creating the Executive Committee to oversee the BOT
implementation of solid waste management projects only charged
the officials thereof with the duty of recommending to the
President the specific project to be implemented under the BOT
scheme for both San Mateo and Carmona sites. Hence, it is
concluded that the signatories, CORD-NCR Chairman Dionisio dela
Serna and MMDA Chairman Prospero Oreta, had no authority to
enter into any waste management project for and in behalf of the
Government. Secondly, Section 59 of Executive Order No. 292 is
relied upon as authority for the proposition that presidential
approval is necessary for the validity of the contract.
The first argument conveniently overlooks the fact that then
Secretary of Environment and Natural Resources Victor Ramos was
likewise a signatory to the contract. While dela Serna and Oreta
may not have had any authority to sign, the Secretary of
Environment and Natural Resources has such an authority. In fact,
the authority of the signatories to the contract was not denied by
the Solicitor General.Moreover, as observed by the Court of
Appeals, [i]t was not alleged, much less shown, that those who
signed in behalf of the Republic had acted beyond the scope of
their authority.
In truth, the argument raised by MMDA does not focus on the lack
of authority of the signatories, but on the amount involved as
placing the contract beyond the authority of the signatories to
approve.Section 59 of Executive Order No. 292 reads:
Section 59. Contracts for Approval by the President. Contracts for
infrastructure projects, including contracts for the supply of
materials and equipment to be used in said projects, which involve
amounts above the ceilings provided in the preceding section shall
be approved by the President: Provided, That the President may,
when conditions so warrant, and upon recommendation of the
National Economic and Development Authority, revise the
aforesaid ceilings of approving authority.
However, the Court of Appeals trenchantly observed in this
connection:
As regards the Presidents approval of infrastructure projects
required under Section 59 of Executive Order No. 292, said section
does not apply to the BOT contract in question. Sec. 59 should be
correlated with Sec. 58 of Exec. Order No. 292. Said sections read:
SECTION 58. Ceiling for Infrastructure Contracts. The following
shall be the ceilings for all civil works, construction and other
contracts for infrastructure projects, including supply contracts for
said projects, awarded through public bidding or through
negotiation, which may be approved by the Secretaries of Public
Works and Highways, Transportation and Communications, Local
Government with respect to Rural Road improvement Project and
governing boards of government-owned or controlled corporations:
xxx xxx xxx
Save as provided for above, the approval ceilings assigned to the
departments/agencies involved in national infrastructure and
construction projects shall remain at the levels provided in existing
laws, rules and regulations.
Contrary to petitioners claim that all infrastructure contracts
require the Presidents approval (Petition, p. 16), Sec. 59 provides
that such approval is required only in infrastructure contracts
involving amounts exceeding the ceilings set in Sec.
58. Significantly, the infrastructure contracts treated in Sec. 58
pertain only to those which may be approved by the Secretaries of
Public Works and Highways, Transportation and Communications,
Local Government (with respect to Rural Road Improvement
Project) and the governing boards of certain government-owned
or controlled corporations. Consequently, the BOT contract in
question, which was approved by the DENR Secretary and the
EXCOM Chairman and Co-Chairman, is not covered by Exec. Order
No. 292.
(Rollo, p. 51-52.)
The provision pertinent to the authority of the Secretary of
Environment and Natural Resources would actually be Section 1 of
Executive Order No. 380, Series of 1989 which provides that The
Secretaries of all Departments and Governing Boards of
government-owned or controlled corporations [except the
Secretaries of Public Works and Highways, Transportation and
Communication, and Local Government with respect to Rural Road
Improvement projects] can enter into publicly bidded contracts
regardless of amount (See also Section 515, Government
Accounting and Auditing Manual Volume I). Consequently, MMDA
may not claim that the BOT contract is not valid and binding due to
the lack of presidential approval.
Significantly, the contract itself provides that the signature of the
President is necessary only for its effectivity (not perfection),
pursuant to Article 19 of the contract, which reads:
This contract shall become effective upon approval by the
President of the Republic of the Philippines pursuant to existing
laws subject to the condition, precedent in Article 18. This contract
shall remain in full force and effect for twenty-five (25) years
subject to renewal for another twenty-five (25) years from the
date of Effectivity. Such renewal will be subject to mutual
agreement of the parties and approval of the President of the
Republic of the Philippines.
(Rollo, p. 94.)
Stated differently, while the twenty-five year effectivity period of
the contract has not yet started to run because of the absence of
the Presidents signature, the contract has, nonetheless, already
been perfected.
As to the contention that there is no perfected contract due to
JANCOMs failure to comply with several conditions precedent, the
same is, likewise, unmeritorious. Article 18 of the BOT contract
reads:
ARTICLE 18
CONDITIONS PRECEDENT
xxx
18.2.1. The BOT COMPANY hereby undertakes to provide the
following within 2 months from execution of this Contract as an
effective document:
a) sufficient proof of the actual equity contributions from the
proposed shareholders of the BOT COMPANY in a total amount not
less than PHP500,000,000 in accordance with the BOT Law and the
implementing rules and regulations;
b) sufficient proof of financial commitment from a lending
institution sufficient to cover total project cost in accordance with
the BOT Law and the implementing rules and regulations;
c) to support its obligation under this Contract, the BOT COMPANY As regards the projected closure of the San Mateo landfill vis--vis
shall submit a security bond to the CLIENT in accordance with the the implementability of the contract, Art. 2.3 thereof expressly
form and amount required under the BOT Law. states that [i]n the event the project Site is not delivered x x x, the
Presidential task Force on Solid Waste Management (PTFSWM)
xxx
and the Client, shall provide within a reasonable period of time, a
18.2.3 Completion of Documentary Requirements as per Schedule 4 suitable alternative acceptable to the BOT COMPANY.
by the BOT Company
With respect to the alleged financial non-viability of the project
As clearly stated in Article 18, JANCOM undertook to comply with because the MMDA and the local government units cannot afford
the stated conditions within 2 months from execution of the the tipping fees under the contract, this circumstance cannot, by
Contract as an effective document. Since the President of itself, abrogate the entire agreement.
the Philippineshas not yet affixed his signature on the contract, the
Doctrinal is the rule that neither the law nor the courts will
same has not yet become an effective document.Thus, the two-
extricate a party from an unwise or undesirable contract, or
month period within which JANCOM should comply with the
stipulation for that matter, he or she entered into with full
conditions has not yet started to run. It cannot thus be said that
awareness of its consequences (Opulencia vs. CA, 293 SCRA
JANCOM has already failed to comply with the conditions
385). Indeed, the terms and conditions of the subject contract
precedent mandated by the contract. By arguing that failure [of
were arrived at after due negotiations between the parties
JANCOM] to comply with the conditions results in the failure of a
thereto.
contract or prevents the judicial relation from coming into
existence, MMDA reads into the contract something which is not (Rollo, p. 54.)
contemplated by the parties. If the terms of a contract are clear
WHEREFORE, premises considered, the petition is hereby
and leave no doubt upon the intention of the contracting parties,
DISMISSED for lack of merit and the decision of the Court of
the literal meaning of its stipulations shall control (Art. 1370, Civil
Appeals in CA-G.R. SP No. 59021 dated November 13,
Code).
2001 AFFIRMED. No costs.
We, therefore, hold that the Court of Appeals did not err when it
SO ORDERED.
declared the existence of a valid and perfected contract between
the Republic of the Philippines and JANCOM. There being a
perfected contract, MMDA cannot revoke or renounce the same
without the consent of the other. From the moment of perfection,
the parties are bound not only to the fulfillment of what has been
expressly stipulated but also to all the consequences which,
according to their nature, may be in keeping with good faith,
usage, and law (Article 1315, Civil Code). The contract has the
force of law between the parties and they are expected to abide in
good faith by their respective contractual commitments, not
weasel out of them. Just as nobody can be forced to enter into a
contract, in the same manner, once a contract is entered into, no
party can renounce it unilaterally or without the consent of the
other. It is a general principle of law that no one may be permitted
to change his mind or disavow and go back upon his own acts, or
to proceed contrary thereto, to the prejudice of the other
party. Nonetheless, it has to be repeated that although the
contract is a perfected one, it is still ineffective or
unimplementable until and unless it is approved by the President.

Moreover, if after a perfected and binding contract has been

executed between the parties, it occurs to one of them to allege
some defect therein as reason for annulling it, the alleged defect
must be conclusively proven, since the validity and the fulfillment
of contracts cannot be left to the will of one of the contracting
parties. In the case at bar, the reasons cited by MMDA for not
pushing through with the subject contract were: 1) the passage of
the Clean Air Act, which allegedly bans incineration; 2) the closure
of the San Mateo landfill site; and 3) the costly tipping fee. These
reasons are bereft of merit

Once again, we make reference to the insightful declarations of

the Court of Appeals:

Sec. 20 of the Clean Air Act pertinently reads:

SECTION 20. Ban on Incineration. Incineration, hereby defined as

the burning of municipal, bio-chemical and hazardous
wastes, which process emits poisonous and toxic fumes, is hereby
prohibited: x x x.

Section 20 does not absolutely prohibit incineration as a mode of

waste disposal; rather only those burning processes which emit
poisonous and toxic fumes are banned.