G.R. No. 103882, November 25, 1998,
♦ Decision,
Purisima, [J]
♦ Separate Opinion,
Romero, [J]
♦ Separate Opinion,
Puno, [J]
♦ Separate Opinion,
Panganiban, [J]
EN BANC
G.R. No. 103882 November 25, 1998
REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
THE HONORABLE COURT OF APPEALS AND REPUBLIC REAL ESTATE CORPORATION, respondents, CULTURAL CENTER OF THE PHILIPPINES, intervenor.
G.R. No. 105276 November 25, 1998
PASAY CITY AND REPUBLIC REAL ESTATE CORPORATION, petitioners,
vs.
COURT OF APPEALS and REPUBLIC OF THE PHILIPPINES, respondents.
SEPARATE OPINION
PANGANIBAN, J.:
I concur with the persuasive ponencia of Mr. Justice Fidel P. Purisima, as fortified by the Separate Opinion of Mr. Justice Reynato S. Puno, insofar as it (1) nullifies (a) the Reclamation Agreement between Pasay City and the Republic Real Estate Corporation (RREC) and (b) Pasay City Ordinance Nos. 121 and 158, and (2) retains ownership of the reclaimed land in favor of the Cultural Center of the Philippines. With due respect, I submit, however, that the majority has no factual basis for its determination of the compensation awarded to RREC and Pasay City.
(1) Nullity of Reclamation Agreement and Ordinance Nos. 121 and 158
Pasay City justifies its execution of the Reclamation Agreement with RREC and the Passage of Ordinance Nos. 121 and 158 on the basis of Republic Act No. 1899 (RA 1899), the law authorizing chartered cities and municipalities to undertake the reclamation of foreshore lands. The questioned Agreement and Ordinances, however, cover submerged areas of the Manila Bay. As explained in the ponencia, with which I agree, the legal and common definition of foreshore land does not include areas that are fully submerged by the sea.
The Manila Bay area is, therefore, definitely outside the scope of RA 1899. It remains part of the public domain and is, as such, outside the commerce of man. It could not be the object of ordinary contracts or ordinances.ℒαwρhi৷ The questioned Agreement and Ordinances, the objects of which involve such public property, are thus null and void.
(2) Reclaimed Area Belongs to CCP
As a consequence, the Cultural Center of the Philippines (CCP), to which PD Nos. 15 and 774 have conveyed ownership of the reclaimed land, remains the lawful owner of the subject land. Titles to the nine (9) lots, which Respondent Court wrongfully ordered to be turned over to Pasay City, had long been issued in favor of CCP (one subsequently to the GSIS as a successor-in-interest). Such titles are unaffected by the claims of RREC and cannot be collaterally attacked1 in this litigation.
(3) No Factual Basis for Determination of Compensation
Even if the Agreement and Ordinances were null and void, it cannot be denied that RREC and the city government of Pasay spent time, money and effort which undoubtedly inured to the benefit of the government. It is a time-honored that no one, not even the government, may be enriched at the expense of another,2 particularly one who, like RREC and Pasay City, acted in good faith.
While RREC and Pasay City should be compensated for their work on the reclamation project, I respectfully submit that the amount of such compensation must be supported by substantial and material proof of the reasonable expenses they incurred. But, the records of the case are bereft of any such factual evidence.
However, the records do indicate some attempts of the parties to reach an amicable settlement as a consequence of the promulgation of PD 3-A by former President Ferdinand Marcos. Thus, in 1978, RREC sought the amount of P30,396.878.20 representing the supposed monetary value of the reclamation work that it had undertaken so far. The then Ministry of Public Highways (MPH) (and later the solicitor general also) rejected this offer in 1981 and, instead, counteroffered P10,926,071.29 as the reasonable value of such work. RREC replied that it would consider such amount only if it would bear six (6) percent interest per annum from 1962 up to the time of payment. It submitted other proposals, but all were rejected by the government. No final-extrajudicial settlement was ever reached.
Obviously, the offers and counteroffer were made by the parties with a view to arriving at a compromise agreement. At that point, they were not submitted as evidence,ℒαwρhi৷ but only as a means of arriving at a peaceful settlement prior to judgment. By then, the case, which had commenced in December 1961 and was still on appeal with the Court of Appeals, was already dragging on for two decades.
Nature of Compromise
A compromise is an agreement between two or more parties whereby their differences are adjusted in a manner which they mutually agree on, and which they prefer to "the hope of gaining, balanced by the danger of losing."3 The parties usually make reciprocal concessions in order to avoid litigation or terminate a pending one.4
However, basic is the rule on evidence that in civil cases, an offer of compromise cannot be taken as an admission of liability; nor can it be admissible as an evidence against the offeror.5 The offer to compromise a claim or a clause of action is not an admission that the claim is valid, but merely admits that there is a dispute and that an amount is to be paid to avoid or end the controversy.6 I submit that an unaccepted offer or counteroffer of compromise cannot be the basis of the sum to be adjudged in favor of or against a party, more so if such sum is unsupported by competent evidence. In such case, the court itself insofar as it adopts the amount either offered or counteroffered would be bereft of factual basis for its decision. Where the proposed compromise is not accepted, the parties to the litigation would be back to square one: they have to present before the court sufficient and credible evidence to prove their respective claims.
As a rule, an offer or a counteroffer given in an effort to reach a compromise should not be accorded evidentiary value on its face, because by its very nature, a compromise is concessionary. And if one of the parties does not concur, the court cannot impose an amount based on the unaccepted offer, even if the culpability of a party has been duly established. The amount of any such liability must be independently ascertained with competent evidence. Otherwise, this Court would be setting a dangerous precedent. Hence, parties would not submit offers to compromise for fear that such offers, if not accepted, would be used by the Court against them. Upon the other hand, parties may offer bloated amounts in the hope that said sums could influence the court to eventually grant them a relief more than they deserve. In any event, the rationale for the policy encouraging compromises would be defeated.
In the case at bar, we should bear in mind that when RREC conceded in 1981 to the solicitor general's counteroffer of P10,926,071.29, provided the amount would bear 6 percent interest per annum, it was with the caveat that such interest rate was already "very much less than the accepted rate of inflation that has supervened since 1962 xxx." Indeed, if we are to compare current prices with those of three and a half decades ago, or even seventeen years ago, such interest rate on the principal may no longer compensate the 1962 expense. In other words, what may have been a "fair and reasonable" compromise in 1981 may no longer be acceptable at this time. In any event, the solicitor general's counteroffer, not being supported with factual evidence, still cannot be the basis of a judicial award.
Need to Receive Evidence of Value of RREC Accomplishment
In the instant case, there appears no dispute that RREC has undertaken partial work for the Manila Bay reclamation project to the extent of P1,558,395 cubic meters of dredge-fill work. In the words of the ponencia:
"Undoubtedly, what RREC claimed for was the payment for what it had done on, and for the dredge-fill of 1,558,395 cubic meters used for the reclamation project worked on."
This case must therefore be remanded for the purpose of receiving evidence of the peso value of the 1,558,395 cubic meters of dredge-fill work undisputedly done by RREC.
WHEREFORE, I vote for the following:
1. The DECLARATION of the nullity of (a) the Reclamation Agreement between Pasay City and RREC and (b) Ordinance Nos. 121 and 158 of Pasay City
2. The RETENTION of ownership of the reclaimed land in favor of the Cultural Center of the Philippines
3. The REMAND of the case to the Commission composed of the former Thirteenth Division of the Court of Appeals (consisting of Associate Justices Arturo B. Buena, chairman; Minerva P. Gonzaga-Reyes and Quirino D. Abad Santos Jr.) for the sole purpose of receiving evidence of the peso value of the work accomplished by RREC and Pasay City for which they shall be paid by the National government.
Footnotes
1 Halili v. Court of Industrial Relations, 257 SCRA 174, 184, May 30, 1996.
2 Art. 22, Civil Code. Commissioner of Internal Revenue v. Fireman's Fund Ins. Co., 148 SCRA 315, 324, March 9, 1987; Ramie Textiles, Inc. v. Mathay Sr., 89 SCRA 586, 592, April 30, 1979.
3 Del Rosario v. Madayag, 247 SCRA 767, August 28, 1995.
4 Galay v. Court of Appeals. 250 SCRA 629, December 4, 1995; Domingo v. Court of Appeals, 255 SCRA 189, March 20, 1996; Sanchez v. Court of Appeals, 279 SCRA 647, 675, September 29, 1997.
5 § 26, Rule 130, Rules of Court. See also Servicewide Specialists, Inc. v. Court of Appeals, 257 SCRA 643, 656, June 26, 1996.
6 Servicewide Specialists, Inc. ibid., citing 15A CJS Compromise and Settlement § 22.
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