ChanRobles Virtual law Library
[G.R. No. 156887. November 22, 2006]
PHILIPPINE NATIONAL CONSTRUCTION CORPORATION v. HON. AMALIA F. DY, et al.
Special First Division
Sirs/Mesdames:
Quoted hereunder, for your information, is a resolution of this Court dated NOV. 22, 2006 .
G.R. No. 156887 (Philippine National Construction Corporation v. Hon. Amalia F. Dy, et al.);
(Republic
of the
After the decision of this Court was promulgated but before its entry of finality, the parties have submitted a Compromise Agreement stipulating as follows:
COMPROMISE AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This Agreement made and entered into this 17th day of
August 2006, in
PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, a government acquired asset corporation, created and existing under the laws of the Republic of the Philippines, with principal office address at EDSA corner Reliance Street, Mandaluyong City, Philippines, duly represented herein by its Chairman ARTHUR N. AGUILAR, pursuant to a Board Resolution attached herewith as Annex "A" and made an integral part hereof, hereinafter referred to as PNCC;
- and -
RADSTOCK SECURITIES LIMITED, a private corporation incorporated in the British Virgin Islands, with office address at Suite 1402 1 Duddell Street, Central Hongkong duly-represented herein by its Director, CARLOS G. DOMINGUEZ, pursuant to a Board Resolution attached herewith as Annex "B" and made an integral part hereof, hereinafter referred to as RADSTOCK.
WITNESSETH:
WHEREAS, on January 15. 2001, RADSTOCK, as assignee of Marubeni Corporation, filed a complaint for sum of money and damages with application for a writ of preliminary attachment with the Regional Trial Court (RTC), Mandaluyong City, docketed as Civil Case No. MC-01-1398, to collect on PNCC's guarantees on the unpaid loan obligations of CDCP Mining Corporation as provided under an Advance Payment Agreement and Loan Agreement;
WHEREAS, on December 10, 2002, the RTC of Mandaluyong rendered a decision in favor of plaintiff RADSTOCK directing PNCC to pay the total amount of Thirteen Billion One Hundred Fifty One Million Nine Hundred Fifty-Six Thousand Five Hundred Twenty-Eight Pesos (P13,151,956,528.00) with interest from October 15, 2001 plus Ten Million Pesos (P10,000,000.00) as attorney's fees.
WHEREAS, PNCC had elevated the case to the Court of Appeals (CA-G.R. SP No. 66654) on Certiorari and thereafter, to the Supreme Court (G.R. No. 156887) which Courts have consistently ruled that the RTC did not commit grave abuse of discretion when it denied PNCC's Motion to Dismiss which sets forth similar or substantially the same grounds or defenses as those raised in PNCC's Answer;
WHEREAS, the case has remained pending for almost six (6) years even after the main action was appealed to the Court of Appeals;
WHEREAS, on the basis of the RTC Decision dated December 10, 2002, the current value of the judgment debt against PNCC stands at P17,040,843,968.00 as of July 31, 2006 (the "Judgment Debt");
WHEREAS, RADSTOCK is willing to settle the case at the reduced Compromise Amount of Six Billion One Hundred Ninety-Six Million Pesos (P6,196,000,000.00) which may be paid by PNCC, either in cash or in kind to avoid the trouble and inconvenience of further litigation as a gesture of goodwill and cooperation;
WHEREAS, it is an established legal policy or principle that litigants in civil cases should be encouraged to compromise or amicably settle their claims not only to avoid litigation but also to put an end to one already commenced (Articles 2028 and 2029, Civil Code);
WHEREAS, this Compromise Agreement has been approved by the respective Board of Directors of both PNCC and RADSTOCK, subject to the approval of the Honorable Court;
NOW, THEREFORE, for and in consideration of the foregoing premises, and the mutual covenants, stipulations and agreements herein contained, PNCC and RADSTOCK have agreed to amicably settle the above captioned Radstock case under the following terms and conditions:
1.������ RADSTOCK agrees to receive and accept from PNCC in full and complete settlement of the Judgment Debt, the reduced amount of Six Billion, One Hundred Ninety-Six Million Pesos (P6,196,000,000.00) (the "Compromise Amount").
2.������ This Compromise Amount shall be paid by PNCC to RADSTOCK in the following manner:
a.������������� PNCC shall assign to a third party assignee to be designated by RADSTOCK all its rights and interests to the following real properties provided the assignee shall be duly qualified to own real properties in the Philippines;
(1)����������� PNCC's rights
over that parcel of land located in Pasay City with a total area of One Hundred
Twenty-Nine Thousand Five Hundred Forty-Eight (129,548) square meters, more or
less, and which is covered by and more particularly described in Transfer
Certificate of Title No. T-34997 of the Registry of Deeds for
PNCC's rights and interests in Transfer Certificate of Title No. T-34997 of the Registry of Deeds for Pasay City is defined and delineated by Administrative Order No. 397, Series of 1998, and RADSTOCK is fully aware and recognizes that PNCC has an undertaking to cede at least 2 hectares of this property to its creditor, the Philippine National Bank; and that furthermore, the Government Service Insurance System has also a current and existing claim in the nature of boundary conflicts, which undertaking and claim will not result in the diminution of area or value of the property. Radstock recognizes and acknowledges the rights and interests of GSIS over the said property.
(2)����������� T-452587 (T-23646) - Para�aque (5,123 sq. m.) subject to the clarification of the Privatization and Management Office (PMO) claims thereon. The transfer value is P45,000,900.00.
(3)����������� T-49499 (529715 including T-68146-G (S-29716) (1,9747-A)-Para�aque (107 sq. m.) (54 sq. m.) subject to the clarification of the Privatization and Management Office (PMO) claims thereon. The transfer value is P1,409,100.00.
(4)����������� 5-29716-Para�aque (27,762 sq. m.) subject to the clarification of the Privatization and Management Office (PMO) claims thereon. The transfer value is P242,917,500.00.
(5)����������� P-169 - Tagaytay (49,107 sq. m.). The transfer value is P13,749,400.00.
(6)����������� P-170 - Tagaytay (49,100 sq. m.). The transfer value is P13,749,400.00.
(7)����������� N-3320 - Town and Country Estate, Antipolo (10,000 sq. m.). The transfer value is P16,800,000.00.
(8)����������� N-7424 - Antipolo (840 sq. m.). The transfer value is P940,800.00.
(9)����������� N-7425 - Antipolo (850 sq. m.). The transfer value is P952,000.00.
(10)��������� N-7426 - Antipolo (958 sq. m.). The transfer value is P1,073,100.00.
(11)��������� T-485276 - Antipolo (741 sq. m.). The transfer value is P830,200.00.
(12)��������� T-485277 - Antipolo (680 sq. m.). The transfer value is P761,600.00.
(13)��������� T-485278 - Antipolo (701 sq. m.). The transfer value is P785,400.00.
(14)��������� T-131500 - Bulacan (CDCP Farms Corp.) (4,945 sq, m.). The transfer value is P6,475,000.00.
(15)��������� T-131501 - Bulacan (678 sq. m.). The transfer value is P887,600.00.
(16)��������� T-26,154 (M) - Bocaue, Bulacan (2,841 sq. m.). The transfer value is P3,779,300.00.
(17)��������� T-29,308 (M) - Bocaue, Bulacan (733 sq. m.). The transfer value is P974,400.00.
(18)��������� T-29,309 (M) Bocaue, Bulacan (1,141 sq. m.). The transfer value is P1,517,600.00.
(19)��������� T-260578 (R. Bengzon) Sta. Rita, Guiguinto, Bulacan (20,000 sq. m.). The transfer value is P25,200,000.00.
The transfer values of the foregoing properties are based on 70% of the appraised value of the respective properties.
b.������������� PNCC shall issue to RADSTOCK or its assignee common shares of the capital stock of PNCC issued at par value which shall comprise 20% of the outstanding capital stock of PNCC after the conversion to equity of the debt exposure of the Privatization Management Office (PMO) and the National Development Company (NDC) and other government agencies and creditors such that the total government holdings shall not fall below 70% voting equity subject to the approval of the Securities and Exchange Commission (SEC) and ratification of PNCC's stockholders, if necessary. The assigned value of the shares issued to RADSTOCK is P713 Million based on the approximate last trading price of PNCC shares in the Philippine Stock Exchange as the date of this agreement, based further on current generally accepted accounting standards which stipulates the valuation of shares to be based on the lower of cost or market value.
Subject to the procurement of any and all necessary approvals from the relevant governmental authorities, PNCC shall deliver to RADSTOCK an instrument evidencing an undertaking of the Privatization and Management Office (PMO) to give RADSTOCK or its assignee the right to match any offer to buy the shares of the capital stock and debts of PNCC held by PMO, in the event the same shares and debt are offered for privatization.
c.������������� PNCC shall assign to RADSTOCK or its assignee 50% of the PNCC's 6% share in the gross toll revenue of the Manila North Tollways Corporation (MNTC), with a Net Present Value of P1.287 Billion computed in the manner outlined in Annex "C" herein attached as an integral part hereof, that shall be due and owing to PNCC pursuant to the Joint Venture Agreement between PNCC and First Philippine Infrastructure Development Corp. dated August 29, 1995 and other related existing agreements, commencing in 2008. It shall be understood that as a result of this assignment, PNCC shall charge and withhold the amounts, if any, pertaining to taxes due on the amounts assigned.
3.������ To implement the terms of this Compromise Agreement, the parties will cause to be immediately executed upon the approval of the said Compromise Agreement by the appropriate Court the necessary implementing documents.
4.������ Any and all taxes due to the National Government, including but not limited to documentary stamp and transfer taxes and registration fees, relative to the implementation of the provisions of this Compromise Agreement in such manner as may be mutually agreed by the Parties, shall be for the exclusive account of Radstock.
5.������ This Compromise Agreement is a complete settlement of all the parties' claims, demands, complaints and counterclaims against each other with respect to the acts/facts in connection with the case. Accordingly, the Parties have by this Compromise Agreement irrevocably waived, released, acquitted and extinguished any and all claims and causes of action which it has raised or may have had occasion to raise against each other, its stockholders, directors, officers, personnel and agents in this case or in relation to the subject matter thereof, including its claims for actual, moral and exemplary damages, attorney's fees, cost of suit and expenses of litigation.
6.������ The parties acknowledge that no representation, undertaking, promise, commitment, opinion or event, except those stated herein, has been made by each party to induce the execution of this Compromise Agreement. The parties have freely entered into this Compromise Agreement, relying solely on their independent inquiries and evaluation of all relevant facts, circumstances, laws and jurisprudence, with full knowledge or full opportunity to obtain such knowledge, of all the facts, circumstances, laws and jurisprudence relating to the execution of this Compromise Agreement.
7.������ Failure on the part of PNCC to comply with any of the terms of this Compromise Agreement as approved by the Honorable Court shall render the entire unpaid balance of the judgment debt due and payable and shall immediately entitle RADSTOCK to a writ of execution for the said total unpaid amount plus legal interest. However, in case 80% of the total Compromise Amount had been paid or complied with by the PNCC, only the remaining balance of said Compromise Amount shall be due and demandable applying the same rate of interest. Provided that the diminution in the area or value of any of the assets or properties being assigned in the Compromise Agreement does not exceed 20% of the total compromise amount, PNCC shall deliver a property or asset of equivalent value as mutually agreed upon by the Parties. In case of conflict with any other provision in this Agreement, the provisions of this Section shall prevail.
8.������ This Compromise Agreement is not contrary to law, morals, good customs, public order and public policy.
9.������ This Compromise Agreement shall be effective, enforceable and binding upon the parties only upon the approval of the Court. The non-approval of this Compromise Agreement shall nullify the terms and conditions thereof, and the parties shall have the option of resuming all cases pending against each other, unless the parties agree to submit a new Compromise Agreement to the Court.
IN WITNESS WHEREOF, the
duly authorized representatives of the parties, as assisted by their respective
counsel, have hereunto affixed their respective signatures this 17th
day of August, 2006 at
|
PHILIPPINE NATIONAL CONSTRUCTION CORPORATION |
RADSTOCK SECURITIES LIMITED |
|
By: |
By: |
|
(Sgd.) ARTHUR N. AGUILAR |
(Sgd.) CARLOS G. DOMINGUEZ |
|
Chairman |
Director |
|
Assisted by: |
Assisted by: |
|
OFFICE OF THE GOVERNMENT CORPORATE COUNSEL |
AGABIN VERZOLA HERMOSO & LAYAOEN LAW OFFICES |
|
3rd Floor, |
Counsel for Private Respondent 26th Floor, Pacific Star Bldg. Gil Puyat Ave. cor. Makati Avenue Makati City |
|
By: |
By: |
|
(Sgd.) AGNES VST DEVANADERA |
(Sgd.) DELIA L. HERMOSO |
|
Government Corporate Counsel Lifetime IBP No. 05084 01/08/05
|
PTR No. 4186059/01/05/06/Makati IBP No. 665291/01/03/06/Makati Roll No. 14791 |
WITNESSES:
(Sgd.)������������������������������������������������������������������������������������ (Sgd.)
ACKNOWLEDGMENT
REPUBLIC OF THE
BEFORE ME, Notary Public for and in the City of Mandaluyong,
|
Name |
CTC No. |
Issued at |
Issued on |
|
ARTHUR N. AGUILAR |
24796044 |
|
January 10, 2006 |
|
CARLOS G. DOMINGUEZ |
04021774 |
|
January 9, 2006 |
|
AGNES VST DEVANADERA |
1200501356783 |
Sampaloc, Quezon |
January 3, 2006 |
|
DELIA HERMOSO |
24337773 |
|
March 9, 2006 |
who are known to me to be the same persons who executed and signed the foregoing instrument and who acknowledged to me that the same is their true and voluntary act and deed.
This Compromise Agreement consisting of seven (7) pages including this page whereon this Acknowledgment is written had been signed by the parties' respective authorized representatives, their witnesses and counsels on each and every page hereof.
WITNESS MY HAND AND SEAL this 17th day of August 2006 at
(Sgd.) MELVYN M. GONZALES
Notary Public
Until December 31, 2007
PTR No. 856699 01-10-06 Mand.
IBP No. 6695639 01-10-06 Q.C.
ROLL No. 39266/TIN 165-353-483
Doc. No. 441
Page No. 89
Book No. X
Series of 2006.
This Court referred the matter to the Commission on Audit for its comment and that body has submitted its Comment, as follows:
COMPLIANCE
(Comment and Recommendation)
The Commission on Audit (COA), through counsels, unto this Honorable Court, most respectfully submits this comment and recommendation in compliance with the Resolution of the Special First Division of this Honorable Court dated August 23, 2006, duly received by COA on September 4, 2006.
The efforts of the parties, namely, the Philippine National Construction Corporation (PNCC) and Radstock Securities Limited, (Radstock for brevity), to come up with a compromise agreement are noteworthy and COA joins them in their desire to finally settle the case between them which has remained pending for almost six years. The Office of the Government Corporate Counsel (OGCC) considers the conclusion of the compromise agreement to be favorable to PNCC and recommended the inclusion of the following items, which indeed have been considered, to wit:
1.������������� Fifty percent (50%) of PNCC's 6% share in the Toll Gross Revenue of the Manila North Tollways Corporation (MNTC) with the corresponding tax to be paid by Radstock.
2.������������� All real estate properties previously attached by Radstock, except those mortgaged to PNB.
3.������������� PNCC's rights under A.O. 397 pertaining to the 12.7 hectares in the Financial Center Area (FCA).
4.������������� Twenty percent (20%) of PNCC common shares issued at par value subject to the right to match in case of privatization.
It is the assessment of the Government Corporate Counsel that PNCC has only a 50-50 percent chance of winning the case, thus, entering into a compromise agreement will spare the corporation from losing at least P13 billion of its assets. COA shares the view that with this settlement, the PNCC, armed with its remaining assets can start anew and pursue its plans to revitalize its operations.
The comments of COA on the following terms in the compromise agreement shall be limited to the relevance of existing auditing rules and regulations as may be applicable.
"2.a. --
PNCC shall assign to a third party assignee to be designated by RADSTOCK all its rights and interests to the following real properties provided the assignee shall be duly qualified to own real properties in the Philippines."
Section 2 of Presidential Decree (P.D.) No. 1445, otherwise known
as the "Government Auditing Code of the
"The transfer values of the foregoing properties are based on 70% of the appraised value of the respective properties."
The Government Accounting and Auditing Manual (GAAM) Volume I, prescribed under COA Circular No. 91-368 dated January 1, 1992, specifically under Title 7, Chapter 3 thereof, primarily governs the disposal/divestment of government assets. Section 501 of said Chapter states:
"Sec. 501. Authority or responsibility for property disposal/divestment. -- The full and sole authority and responsibility for the divestment or disposal of property and other assets owned by the national government agencies or instrumentalities, local government units and government-owned and/or controlled corporations and their subsidiaries shall be lodged in the heads of the departments, bureaus and offices of the national government, the local government units and the governing bodies or managing heads of government-owned or controlled corporations and their subsidiaries conformably to their respective corporate charters or articles of incorporation, who shall constitute the appropriate committee or body to undertake the same."
The sale or disposal of the properties of the government is based on their assessed value and not just on a percentage thereof. Admittedly, and as discussed earlier, the audit guidelines under COA Circular No. 89-296 as reiterated in the Government Accounting and Auditing Manual are not applicable in the herein case. Nonetheless, consistent with the objective of public bidding, COA favors the disposal of government properties in the amount most advantageous to the government. It is noted that the transfer value of 70% of assessed value still falls within the standards set by government financial institutions which invariably range from 70% to 100% of the appraised value for properties situated in urban areas. The maximum percentage prescribed in Section 37 of Republic Act No. 8791, the Banking Law of 2000, provides that loans and other credit accommodations against real estate shall not exceed 75% of the appraised value of the respective real estate security. Taking this into account and the declared policy that the authority to dispose its assets is lodged with the head of the entity, COA deems the herein transfer valuation reasonable.
Under the regular procedure involving disposal of government property, COA would have initially conducted an appraisal of the property to determine its valuation. However, considering the exceptional circumstances in the instant case, the appraisals performed by the established independent appraisers are allowable. The parties engaged the services of Royal Asia Appraisal Corporation, Cuervo Appraisers, Inc., Asian Appraisal Co., Inc. and Valencia Appraisal Corporation, which are reputable appraisal firms. Even COA has had occasions to engage the services of the last three independent appraisers mentioned above to help ensure that the government will not be disadvantaged in any manner. Hence, COA finds no reason to doubt the reasonableness of their appraisal.
The other terms and conditions of the compromise agreement appear to be fair and above board and COA finds no compelling grounds to oppose the same. Accordingly, COA recommends the approval of the parties' compromise agreement appended in their "Joint Motion for Judgment Based on Compromise."
WHEREFORE, it is most respectfully prayed of this Honorable Court that the herein comments and recommendation of the Commission of Audit in compliance of Its resolution be accordingly NOTED.
Respectfully Submitted.
Quezon City for Manila, October 3, 2006
(Sgd.) SOFRONIO L. FLORES, Jr.
Assistant Commissioner
General Counsel
Roll No. 22429
IBP No. 675349
February 6, 2006,
(Sgd.) SALVADOR P. ISIDERIO
Director IV
Roll No. 25168
IBP No. 624246
February 9, 2005,
(Sgd.) ROLAND C. GAMMAD
Attorney VI
Roll No. 30395
IBP No. 634338
January 7, 2005, Quezon City
COMPLIANCE
(Confirmation of Compliance dated October 3, 2006)
The Commission on Audit (COA), on October 18, 2006, duly received a copy of the Resolution dated October 11, 2006 of the Special First Division of this Honorable Court requiring COA to CONFIRM the Compliance (Comment and Recommendation) dated October 3, 2006 filed on its behalf by Sofronio L. Flores, Jr. Assistant Commissioner and General Counsel, Salvador P. Isiderio, Director IV and Roland C. Gammad, Attorney VI, Legal and Adjudication Sector, Commission on Audit, within fifteen (15) days from notice.
May it be known by this Honorable Court that the undersigned Chairman and Commissioners of the Commission Proper, Commission on Audit, hereby CONFIRM the Compliance (Comment and Recommendation) dated October 3, 2006 submitted by the Assistant Commissioner and General Counsel Sofronio L. Flores, Jr., Salvador P. Isiderio, Director IV and Roland C. Gammad, Attorney VI, who acted in their capacity as counsels for this Commission.
WHEREFORE, it is most respectfully prayed of this Honorable Court that the herein CONFIRMATION of the Commission Proper, Commission on Audit in compliance with Its resolution dated October 11, 2006 be accordingly NOTED.
Respectfully submitted.
Quezon City for Manila, October 26, 2006.
(Sgd.) GUILLERMO N. CARAGUE
Chairman
(Sgd.) REYNALDO A. VILLAR
Commissioner
(Sgd.) JUANITO G. ESPINO, JR.
Commissioner
On the other hand, third parties are seeking to intervene and object to the submitted Compromise Agreement, namely, Rodolfo M. Cuenca, an alleged stockholder of petitioner's predecessor CDCP; Asiavest Merchants Bankers Berhad ("Asiavest"), an alleged foreign judgment creditor of petitioners; and, Strategic Alliance Development Corporation ("Stradec"), an alleged rejected bidder. After considering the submissions of the parties and those of the Commission on Audit and the Motions for Intervention, the Court rules, as follows:
1.� The Decision of this Court has already become final, although it has not yet been entered. Private respondent RADSTOCK received a copy of the denial of Motion for Reconsideration on February 6, 2006 whereas the Compromise Agreement was submitted only on August 18, 2006. [1] cralaw The Court, therefore, is in no position to resolve the proposed Compromise Agreement and the Motions for Intervention.
2.� The case brought to this Court concerned only the incident of the propriety of certiorari to correct the denial of the motion to dismiss and the attachment of the properties of petitioner. The main controversy is pending in the Court of Appeals.
3.� The proper recourse, therefore, is for the parties, if they so desire, to refer these matters to the Court of Appeals.
WHEREFORE, the proffered Compromise Agreement filed by the parties and the Motions to Intervene and the Comments thereon, are hereby NOTED without action.
SO ORDERED.
Very truly yours,
(Sgd.) ENRIQUETA ESGUERRA-VIDAL
Clerk of Court
First Division
Endnotes:
[1] cralaw Rollo, pp. 1085, 1113.
HERE FOR THE LATEST SUPREME COURT JURISPRUDENCE
PHILIPPINE SUPREME COURT DECISIONS
QUICK SEARCH
