Case Digest (G.R. No. 126000)
Facts:
This case consolidated two petitions filed by the Metropolitan Waterworks and Sewerage System (MWSS) involving disputes over the sale and conveyance of approximately 128 hectares of land in Balara, Quezon City, leased originally to Capitol Hills Golf & Country Club, Inc. (CHGCCI). The land was leased by MWSS (then NAWASA) to CHGCCI in 1965 for 25 years with a 15-year renewal option, allowing CHGCCI a right of first refusal if the property was put up for sale, subject to presidential approval. Following Letter of Instruction No. 440 by President Marcos in 1976, negotiations began to cancel the lease and sell the property. In 1980-81, MWSS notified CHGCCI of its preferential right to buy the lot, which was appraised at P40 per square meter.
President Marcos expressed approval of the sale in 1982 based on a letter from respondents including Pablo Roman, Jr., president of CHGCCI. Subsequently, MWSS’s Board of Trustees passed Resolution 36-83 approving the sale of the property t
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Case Digest (G.R. No. 126000)
Facts:
- Parties and Nature of the Case
- Petitioner: Metropolitan Waterworks and Sewerage System (MWSS), formerly NAWASA.
- Respondents: Capitol Hills Golf & Country Club Inc. (CHGCCI), Silhouette Trading Corporation (STC), Ayala Corporation, Ayala Land, Inc. (AYALA), Pablo Roman, Jr., and others.
- Case Description: MWSS filed an action to declare null and void the MWSS-SILHOUETTE sales agreement and all subsequent conveyances involving the subject property, seeking its recovery with damages.
- Background and Transaction History
- In 1965, MWSS leased approximately 128 hectares of land ("subject property") to CHGCCI for 25 years, renewable for 15 more years until 2005, with CHGCCI holding a right of first refusal in case of sale, subject to presidential approval.
- By Letter of Instruction No. 440 (July 29, 1976) from President Marcos, MWSS was directed to negotiate cancellation of the lease for disposition of the land.
- In November 1980, MWSS, via General Manager Oscar Ilustre, informed CHGCCI of its preferential right to buy the property at a price set by MWSS’s chosen appraisal company, Asian Appraisal Co., Inc., which on January 30, 1981, valued the land at P40.00 per square meter (total P53,800,000).
- Negotiations led to an agreement in principle on the sale, which President Marcos approved as reflected in a marginal note on a December 20, 1982 letter from respondents Roxas and Roman.
- MWSS Board of Trustees passed Resolution 36-83 approving sale of the land to Silhouette Trading Corporation, assignee of CHGCCI, at the appraised value of P40.00/sqm, authorizing MWSS General Manager to sign the contract documents.
- A sales agreement was executed on May 11, 1983 in favor of Silhouette for P50,925,200 with P25 million payable upon presidential approval and balance within one year with 12% interest secured by an irrevocable letter of credit.
- A Supplemental Agreement (August 11, 1983) was executed to precisely identify the subject property.
- Silhouette sold about 67 hectares to Ayala (July 26, 1984) at P110.00 per sqm, involving payments directly to MWSS and Silhouette with agreed terms. Ayala developed this into Ayala Heights Subdivision.
- Litigation and Proceedings
- MWSS filed suit on March 26, 1993 for nullity of the MWSS-Silhouette sale and all subsequent conveyances, claiming fraud and illegal acts.
- Respondents, especially Ayala, filed affirmative defenses including prescription, laches, waiver/estoppel/ratification, non-joinder of indispensable parties, and lack of cause of action.
- Trial court dismissed MWSS’s complaint against Ayala in June 1993 based on prescription, laches, estoppel, and non-joinder. Motion for reconsideration denied.
- MWSS appealed to the Court of Appeals (CA-G.R. CV No. 50654), assigning errors regarding dismissal and treatment of defenses.
- Other respondents’ motions to dismiss were denied by trial court and this was affirmed by the Court of Appeals in August 1996, but the dismissal of MWSS complaint against Ayala was affirmed.
- MWSS filed a petition for review before the Supreme Court docketed as G.R. No. 126000 and another petition for review related to a subsequent dismissal based on prescription docketed as G.R. No. 128520, later consolidated.
Issues:
- Whether the complaint filed by MWSS is barred by prescription.
- Whether the defense of laches applies to bar MWSS's claim despite imprescriptibility of void contracts.
- Whether the sales agreements are void or voidable contracts and implication on prescription and laches.
- Whether ratification by MWSS’s Board of Trustees and conduct amounts to binding approval of the sale agreements despite alleged defects.
- Whether the absence of lot owners as indispensable parties in the suit warrants dismissal.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)