G.R. No. 178158 Strategic Alliance Development
Corporation v.
Radstock Securities Limited,
and Philippine
National Construction
Corporation
G.R. No. 180428 Luis Sison v. Philippine National
Construction
Corporation, and Radstock
Securities Limited
Promulgated:
December
4, 2009
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CONCURRING OPINION
CARPIO MORALES, J.:
I
join the majority in granting the petition in G.R. No. 180428.
In G.R. No. 178159, petitioner Strategic Alliance Development
Corporation (Stradec) assails the appellate court’s Resolutions of
This opinion dwells only on the legal
claims and defenses surrounding the execution of the Compromise Agreement, the
validity of which is challenged in the present petitions.
The
debt-to-equity transaction between the government and the PNCC (then CDCP)
covered the assumption of ownership not only as to the assets but also as to
the liabilities of CDCP to the extent of its equity.
The separate issue of defensibility
of the subject liability could not be taken into account in rejecting the
compromise agreement, since part of a compromise is the concession to surrender
or waive the defenses against the claim.
Whether such waiver subjected the PNCC officers to personal liability is
likewise a different question altogether.
Going
beyond the mathematical computations in arriving at the P6.185 Billion value
of the properties subject of the Compromise Agreement vis-à-vis the P17.04 Billion liability adjudged by the trial
court, the immediate effect of approving the Compromise Agreement is pulling
Radstock from the queue of PNCC creditors and placing it in front of the line
in order to collect on a debt ahead of the other PNCC creditors. Yet Radstock
itself was complaining and crying foul about this same scenario in its
application for a writ of preliminary attachment, the subject of this Court’s
decision in Philippine National Construction Corporation v. Dy.[1] Thus Radstock alleged:
. . . PNCC
knowing that it is bankrupt and that it does not have enough assets
to meet its existing obligations is now offering for sale its assets
as shown in the reports published in newspapers of general circulation.[2] (emphasis
and underscoring supplied)
The Court in that case did not find
such allegation as constitutive of fraud to merit Radstock’s prayer for the
attachment of PNCC properties because
. . . the fact that
PNCC has insufficient assets to cover its obligations is no indication of fraud
even if PNCC attempts to sell them because it is quite possible that PNCC
was entering into a bona fide . . . sale where at least fair market value for the
assets will be received. In such
a situation, Marubeni[-predecessor-in-interest of Radstock] would not be in
a worse position than before as the assets will still be there but just
liquidated.[3] (italics
in the original; emphasis and underscoring supplied)
Finding
itself in the same position it abhors, Radstock now finds no objection to PNCC
“selling”[4]
its assets to Radstock and placing itself in a worse position than before as
the assets will be actually conveyed and not merely liquidated. Even worse, Radstock admits that PNCC is
financially in distress and intimates that the creditors cannot in any manner
collect the claims due them.
Furthermore, Executive Order No. 292
or the Administrative Code of 1987 requires congressional approval on the
compromise of claims valued at more than P100,000, thus the pertinent
section provides:
Section 20. Power
to Compromise Claims. - (1) When the interest of the Government so
requires, the Commission [on Audit] may compromise or release in whole or in part,
any settled claim or liability to any government agency not
exceeding ten thousand pesos arising out of any matter or case before it or
within its jurisdiction, and with the written approval of the President, it may
likewise compromise or release any similar claim or liability not exceeding one
hundred thousand pesos. In case the
claim or liability exceeds one hundred thousand pesos, the application
for relief therefrom shall be submitted, through the Commission and the
President, with their recommendations, to the Congress x x x.[5] (emphasis
and underscoring supplied)
At
the outset, it bears clarification that the phrase “any settled claim or
liability to any government agency” includes not just liabilities to
the government but also claims against the government. Although the two relevant cases (infra)
so far decided by this Court involved only liabilities to the government, there is nothing in the law that prohibits the
government from amicably settling its own liability to a person, subject to the
same stringent qualifications and conditions.
That the State has the whole government machinery to contest any alleged
liability and protect the release of government funds to pay off such claim is
not in consonance with the avowed State policy expressed by law[6]
that encourages settlement of civil cases.
In
Benedicto v. Board of Administrators of Television Stations RPN, BBC and IBC,[7]
the Court ruled that the requirement of prior congressional approval for the
compromise of an amount exceeding P100,000 applies only to a settled
claim or liability.
In
his dissent, Justice Lucas Bersamin states that the liability of PNCC to
Radstock was not yet settled at the time of the execution of the Compromise
Agreement since the case was still the subject of litigation, in which PNCC
resisted liability by pleading various defenses. He expounds:
The exception of a compromise or release of a claim or liability yet to be settled from the requirement for presidential or congressional approval is realistic and practical. In a settlement by compromise agreement, the negotiating party must have the freedom to negotiate and bargain with the other party. Otherwise, tying the hands of the Government representative by requiring him to submit each step of the negotiation to the President and to Congress will unduly hinder him from effectively entering into any compromise agreement. (italics in the original omitted)
The
majority opinion, meanwhile, declares that the claim was already settled
upon recognition of the obligation in the books of PNCC via the Board
Resolution.
[It] was precisely enacted to
prevent government agencies from admitting liabilities against the government,
then compromising such “settled” liabilities.
The present case is exactly what the law seeks to prevent, a compromise
agreement on a creditor’s claim settled through admission by a government
agency without the approval of Congress for amounts exceeding P100,000.00. What makes the application of the law even
more necessary is that the PNCC Board’s twin moves are manifestly and grossly
disadvantageous to the Government. x x x (emphasis in the original omitted)
I
submit that a claim or liability is settled once it has been liquidated or
determined and no issue remains as to the amount or identity of the liability.
In
Benedicto, the Court explained that “[t]he Government’s claim against
Benedicto is not yet settled, and the ownership of the alleged ill-gotten
assets is still being litigated in the Sandiganbayan, hence, the PCGG’s Compromise
Agreement with Benedicto need not be submitted to the Congress for approval.” In Benedicto, there was yet no
determination as to the ownership of the sequestered properties.
The
determination, if it be a judicial one, need not be final and executory. Since the aim of a compromise is to “avoid a
litigation or put an end to one already commenced,” there is no rhyme or reason
to end a litigation that is already terminated and to wait for a final and
executory decision before discussing a possible compromise.
In
The Alexandra Condominium Corporation v. Laguna Lake Development Corporation,[8] the
subject of compromise was the P1,062,000 fine imposed by the Laguna Lake
Development Authority against a condominium corporation as
compensation for damages resulting from failure to meet established water and
effluent quality standards. The Court therein
ruled that the condominium corporation should have first pursued the administrative recourse to the Department
of Environment and Natural Resources Secretary before filing the petition in
court. On the issue of the alleged
pending amicable settlement vis-à-vis the claim of
non-exhaustion of administrative remedies, the Court ruled that congressional approval of a
compromise agreement is “not administrative but legislative [in nature],
and need not be resorted to before filing a judicial action.”
In
the scheme of things, the congressional approval acts as a safeguard in
reviewing the soundness of the business judgment. It is not for the Court to preempt the
legislative branch and say that “under the circumstances, the compromise
agreement could not be considered as disadvantageous to PNCC and the National
Government.”
CONCHITA CARPIO
MORALES
Associate
Justice
[1] G.R.
No. 156887,
[2]
[3]
[4] Civil Code, Art. 1245 provides that the law of sales governs dation in payment whereby property is alienated to the creditor in satisfaction of a debt in money. Admittedly, the Compromise Agreement is essentially a dacion en pago.
[5] Executive Order No. 292, Book V, Title I, Subtitle B, Chapter IV, Sec. 20, par. 1.
[6] Civil Code, Arts. 2028-2029.
[7] G.R.
No. 87110,
[8] G.R.
No. 169228,