THE Supreme Court has affirmed the validity of the joint venture agreement (JVA) between GlobalCity Mandaue Corporation (GMC) and the Mandaue City government for the largest reclamation project in the city.
In a ruling dated January 14, 2025 but only made public yesterday, the High Court’s Second Division rejected the appeal filed by Mandaue Land Consortium (MLC) seeking to reverse the 2020 ruling by the Pasig Regional Trial Court and the Court of Appeals, which ordered Mandaue City and GMC to fulfill their obligations under the 2014 Contractual Joint Venture Agreement.
Records of the case showed that the city government entered into contracts with MLC in 2001 and 2003 to reclaim 295 hectares of foreshore and submerged lands.
However, in 2012, the Mandaue City Legal Office voided the contracts, citing a local ordinance which held that no reclamation project shall be undertaken except upon prior consultation with the Public Estates Authority and approval from Malacanang.
It added that the city government can enter into a new reclamation contract with another entity.
In January 2014, the city government entered into an agreement with Sultan 900 Inc., along with GMC, for the conduct of the GlobalCity Mandaue Project, a reclamation and urban development initiative.
It involved the reclamation of 131 hectares of foreshore and submerged lands that the city government intends to develop for commercial, residential, industrial and tourism projects.
In 2015, the city council ratified the agreement.
Aggrieved, the MLC filed an arbitration case against the city government before the Construction Industry Arbitration Commission (CIAC).
In a ruling on August 2017, CIAC held that the contracts with MLC are valid, and explained that the city ordinance used by the Mandaue City Legal Office to void the contracts violated Republic Act 7160 or the Local Government Code, which allows local government units to conduct their own reclamation projects even without the approval from PEA and Malacanang.
In June 2020, Paradigm PH Power Corporation filed a complaint before the Regional Trial Court against the city government and GMC for specific performance and damages, claiming that GMC acquired the rights and obligations of Sultan Consortium under the JVA.
GMC has engaged the services of Paradigm for the engineering, design and construction of the power infrastructure for the reclamation project.
The RTC in December 2020 ordered the city government and GMC to comply with their respective obligations, and upon Paradigm’s motion, the RTC issued a writ of execution.
However, in May 2022, it filed a petition before the CA seeking to annul the RTC decision, but the appellate court junked the petition for lack of legal standing of the petitioner.
MLC elevated the case to the SC after the CA rejected its motion for reconsideration.
But the SC held the petition as “unmeritorious,” adding that the “MLC cannot pursue the remedies in the ordinary course of law such as new trial and appeal because it is not a party to the specific performance case that Paradigm PH filed against the City of Mandaue and GMC before the RTC.”
“The CA dismissed MLC’s petition for annulment of judgment for lack of legal standing. We agree with the CA’s findings,” the SC added.
The High Court further explained that the only exceptions to the rule that a nonparty to the original action may not bring an action for annulment of judgment are when they are successor-of-interest by title after the commencement of the action or when the action or proceeding is in rem, in which case the judgment is binding against them.
