GR 147465; (January, 2002) (Digest)
G.R. No. 147465 ; January 30, 2002
METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner, vs. JANCOM ENVIRONMENTAL CORPORATION and JANCOM INTERNATIONAL DEVELOPMENT PROJECTS PTY. LIMITED OF AUSTRALIA, respondents.
FACTS
The Republic, through an Executive Committee (EXECOM) chaired by the MMDA Chairman, pursued a Build-Operate-Transfer (BOT) project for waste-to-energy facilities. Following a public bidding process, JANCOM was declared the winning bidder for the San Mateo project. After negotiations, a BOT contract was signed on December 19, 1997, by JANCOM and government representatives, including the DENR Secretary and the MMDA Chairman. The signed contract was submitted to then-President Fidel Ramos for final approval, but his term ended without his signature. The contract was endorsed to incoming President Joseph Estrada.
Under the new administration, policy changes occurred, including the passage of the Clean Air Act of 1999 and the closure of the San Mateo landfill site. Consequently, the government, through the MMDA, informed JANCOM that it would no longer pursue the contract. JANCOM filed a case, and the Court of Appeals upheld the validity of the contract, prompting the MMDA to elevate the matter to the Supreme Court.
ISSUE
Whether the BOT contract between the Republic and JANCOM is valid, perfected, and binding, thereby precluding the government from unilaterally abandoning it.
RULING
The Supreme Court affirmed the Court of Appeals and ruled that the contract was perfected and binding. The legal logic rests on contract law principles and the nature of governmental authority in such agreements. A contract is perfected by mere consent, which occurs upon a meeting of the minds regarding the object and cause. Here, the parties had clearly consented, as evidenced by the completion of the bidding process, negotiations, and the signing of the contract by authorized government representatives. The signature of the President, while a necessary suspensive condition for the contract’s effectivity, was not a requirement for its perfection. The contract existed as a validly perfected agreement, albeit not yet operative.
The Court rejected the government’s justifications for abandonment. The Clean Air Act prohibits only incineration that emits poisonous fumes, not all waste-to-energy technologies. The contract itself provided mechanisms for an alternative site if San Mateo became unavailable. Financial concerns about tipping fees do not warrant unilateral rescission, as parties are bound by contracts they enter knowingly. The government, having perfected the contract through its agents, cannot renounce it without the other party’s consent. The petition was dismissed for lack of merit.