G.R. No. 203655 - SM Land, Inc. vs. Bases Conversion and Development Authority

Case Summary (G.R. No. 203655)

Applicable Law and Procedural History

The case is governed by the 1987 Philippine Constitution, specifically Article VIII on the Judiciary, and key statutory laws including Republic Act No. 7227 (Bases Conversion and Development Act of 1992), as amended by RA 10349, and the implementing guidelines of the National Economic Development Authority (NEDA) on joint ventures (NEDA JV Guidelines). Procedurally, the BCDA moved for leave to file a second motion for reconsideration against the Supreme Court’s August 13, 2014 Decision, which was denied on the grounds of prohibition under the Rules of Court and the Internal Rules of the Supreme Court. The Court asserted finality of its ruling after issuance of an Entry of Judgment.

Prohibition of Second Motions for Reconsideration

The Court emphasized that a second motion for reconsideration is generally prohibited under Rule 56, Section 2, in relation to Rule 52, Section 2 of the Rules of Court, except when the “higher interest of justice” demands relief, which requires: (i) the instant motion to explain satisfactorily the necessity in the higher interest of justice; (ii) filing before finality of the ruling; (iii) elevation by at least three members of the division; and (iv) approval by two-thirds of the Court en banc. The BCDA’s motion failed to meet these requirements and was largely a rehash of previously rejected arguments, thereby lacking extraordinary grounds to warrant admission.

Existence and Nature of Agreement Between BCDA and SMLI

Contrary to BCDA’s assertion that no perfected agreement existed, the Court found that a valid and binding agreement was represented by the Certification of Successful Negotiations executed by BCDA and SMLI. This certification established mutual consent (“meeting of the minds”) as to the terms and conditions for joint venture development and obligated BCDA to proceed with and complete the competitive challenge following the Terms of Reference under the NEDA JV Guidelines. The premature cancellation by BCDA was deemed a grave abuse of discretion and tantamount to arbitrariness.

Limitations of Contractual Clauses on Cancellation Rights

BCDA’s reliance on reservation clauses within the Terms of Reference (TOR), which purportedly allowed it to reject proposals or call off the disposition process at any time without liability (except returning proposal security), was rejected. Such clauses, the Court ruled, cannot be interpreted to undermine the NEDA JV Guidelines, which have the force and effect of law and require compliance with prescribed competitive challenge procedures. A contrary reading would contravene public policy and applicable procedural safeguards.

Applicability of Estoppel Doctrine and Government Accountability

Though the government is generally not bound by estoppel arising from mistakes or errors of its officials, the Court underscored that the doctrine is subject to exceptions where equity and justice require, and authorities must not act dishonorably or capriciously. BCDA’s conduct, including its repeated assurances to SMLI and subsequent repudiation, evidenced bad faith and capriciousness, justifying invocation of equitable estoppel. This prevented the government from unfairly abandoning its commitments and safeguarded private sector trust in government dealings.

Economic and Public Interest Considerations

BCDA raised concerns that SMLI’s offered floor price (P38,500.00 per square meter) was substantially below appraised market values (ranging from P78,000.00 to P500,000.00). However, the Court clarified that its ruling did not automatically award the project to SMLI but merely ordered the competitive challenge to proceed to determine if higher bids would emerge. The floor price was precisely that—a minimum starting point. The government’s fears of loss were therefore deemed speculative and insufficient to justify cancellation, as safeguards under the TOR and NEDA JV Guidelines allowed government to protect its interests.

Jurisdiction Over Presidential Orders and Doctrine in Ykalina v. Oricio

Respondent-movants contended that the cancellation via Supplemental Notice No. 5 was pursuant to a verbal presidential order, invoking the Ykalina doctrine on such orders and claiming that the Supreme Court en banc should exercise jurisdiction. The Court rejected this, holding that Ykalina’s principles on verbal orders pertain strictly to appointments, specifically those attested by the Executive Secretary. There was no evidence of any presidential or Executive Secretary-issued written or attested order directing cancellation. Thus, the case remained within the jurisdiction of the Third Division.

Denial of Intervention by DND and AFP

The DND and AFP sought to intervene as statutory beneficiaries of the proceeds derived from the disposition of BCDA-controlled military lands, claiming a legal interest in the outcome. The Court denied intervention, ruling that their interest was only expectant and contingent—dependent on the success of the bidding process—and not direct or immediate. Intervention requires an actual and material legal interest that would be directly affected by the judgment, not a contingent or inchoate expectation. Furthermore, their comment-in-intervention raised no new issues beyond those already resolved.

Finality and Immutability of the Supreme Court Decision

The Court reiterated the binding force and immutability of its final judgments, recognizing only a few narrow exceptions (clerical errors, nunc pro tunc entries, and void judgments). The Entry of Judgment declared the August 13, 2014 Decision and subsequent resolutions final and executory by March 18, 2015, thereby divesting the Court of jurisdiction to entertain further motions for reconsideration. The principle of finality serves a vital function in upholding orderly administration of justice and preventing endless litigation.

Importance of Rule of Law and Government Good Faith

The Court underscored the principle that government entities must act honorably and in good faith in their contractual undertakings, reinforcing public confidence. Allowing the government to arbitrarily renounce its obligations under the guise of public interest would undermine legal certainty and the rule of law. The decision sought to send a strong signal that government must respect the commitments it makes in partnerships with

Case Syllabus (G.R. No. 203655)

Background and Procedural Posture

SM Land, Inc. (SMLI) filed a petition for certiorari against the Bases Conversion and Development Authority (BCDA) and its President, Arnel Paciano D. Casanova.
The case involves the cancellation by BCDA of the competitive challenge process concerning the development of a 33.1-hectare Fort Bonifacio property.
The Supreme Court, through its Third Division, had issued a decision on August 13, 2014, granting SMLI’s petition, ordering BCDA to subject SMLI’s unsolicited proposal to a competitive challenge.
BCDA and Casanova filed a Motion for Leave to file a Second Motion for Reconsideration and to elevate the case to the Court en banc, asserting the ruling would cause irreparable injury to the government and its beneficiaries, including the Department of National Defense (DND) and Armed Forces of the Philippines (AFP).
The Motion was denied by the Special Third Division on September 7, 2015, for lack of merit, citing procedural prohibitions and absence of extraordinarily persuasive reasons.

Nature of the Second Motion for Reconsideration and Prohibition by Rules of Court

The second motion for reconsideration is generally prohibited under Section 2, Rule 56 and related rules of court.
The rationale is to ensure finality of judgments and prevent endless delays through piecemeal attacks on decisions.
Only under extraordinary circumstances, involving “higher interest of justice” and upon meeting strict procedural conditions, can such motions be admitted.
The requirements include: showing the higher interest of justice, filing before finality of the ruling, approval by at least three members of the division to elevate the case en banc, and a two-thirds favorable vote of the en banc.
In this case, BCDA did not meet these requirements, as the second motion merely rehashed previous arguments without new compelling grounds.

The Agreement Between SMLI and BCDA: Existence and Enforcement

There was a perfected agreement between SMLI and BCDA embodied in a Certification of Successful Negotiation.
The certification reflected that SMLI’s Original Proposal was to be subjected to a competitive challenge pursuant to the NEDA Joint Venture (JV) Guidelines.
BCDA was contractually obligated to proceed with and complete the competitive challenge.
The Court ruled that BCDA gravely abused its discretion by cancelling the competitive challenge without completing it, causing damage to SMLI.

BCDA’s Grounds for Cancellation and Court’s Rejection

BCDA cited policy decision, waiver provisions in the Terms of Reference (TOR), and government interest to justify cancellation.
The TOR’s Qualifications and Waivers section reserved BCDA’s right to call off the disposition prior to acceptance of proposals.
The Court found that the TOR provision applicable only to eligibility requirements, not to outright cancellation of the entire Swiss Challenge.
The NEDA JV Guidelines, having the force and effect of law, preclude BCDA from arbitrarily cancelling the competitive challenge.
BCDA’s reliance on estoppel was rejected since estoppel against the government is disfavored and only applies in rare, just circumstances.
BCDA acted capriciously, evidenced by conflicting statements on the proposal’s advantage to the government and renege of its assurances to SMLI.

Alleged Economic Loss and Government Safeguards

BCDA asserted that SMLI’s offer at P38,500 per square meter was below the property’s market value (appraised as high as P78,000).
The Court clarified that proceeding with the competitive challenge does not guarantee awarding the project to SMLI nor acceptance of the floor price.
The floor price is merely a starting point; the competitive challenge solicits better proposals to achieve fair market value.
Government interests remain protected by safeguards in the TOR and NEDA JV Guidelines, including the approval of awards by the Head of the government entity.
BCDA failed to justify cancelling the competitive challenge on economic grounds.

On the Jurisdictional Issue and Presidential Orders

BCDA argued that the cancellation originated from a verbal presidential order, which under Section 4(2), Article VIII of the Constitution, should be handled en banc.
BCDA re