THE Supreme Court (SC) has dismissed Mandaue Land Consortium’s (MLC) bid to stop a multi-billion reclamation project in Mandaue City, ruling it had no legal standing to challenge a lower court decision involving parties to a separate joint venture.
The high court’s Second Division upheld the earlier rulings of the Court of Appeals (CA), which dismissed MLC’s attempt to annul a 2020 decision by the Regional Trial Court (RTC) that ordered the Mandaue City Government and GlobalCity Mandaue Corp. (GMC) to proceed with the project in partnership with Paradigm PH Power Corp.
The decision resolves MLC’s attempt to derail the reclamation project. The CA rulings were handed down on June 16, 2022, and May 30, 2023.
MLC’s parent company, D.M. Wenceslao and Associates, said in a 2022 report that the reclamation area is along the Mactan Channel near the Marcelo Fernan Bridge. The P20-billion Global City Mandaue project will be constructed there, it said.
The SC Second Division handed its decision on Jan. 14, 2025. SunStar Cebu obtained a copy on Friday, July 11.
The roots of the dispute go back over two decades. In 2001 and 2003, the City Government signed contracts with MLC to reclaim 295 hectares of foreshore and submerged lands. This was during the time of then-mayor Thadeo “Teddy” Ouano.
However, in 2012, the city’s legal office during the administration of Jonas Cortes issued a legal opinion declaring those contracts void.
The opinion cited a local ordinance and national regulations that require prior consultation with the Public Estates Authority (now the Philippine Reclamation Authority) and approval from the President before any reclamation can proceed.
Following this legal opinion, the City entered a new joint venture agreement in 2014 with a different group, Sultan 900 Consortium, to reclaim a smaller portion of land: 131 hectares.
This agreement was later ratified by the City Council in 2015. Sultan 900 Consortium’s rights were eventually transferred to GMC, which then hired Paradigm PH Power Corp. to build the necessary power infrastructure for the reclamation site.
MLC’s case
While the city was already pursuing the new reclamation partnership, MLC filed a case before the Construction Industry Arbitration Commission (Ciac), arguing that its contracts with the city were still valid.
In 2017, the Ciac ruled in favor of MLC. It declared that the earlier contracts were legally binding and that the City should honor its obligations to MLC.
However, despite this Ciac ruling, the City and GMC continued with their newer project involving Paradigm PH.
Paradigm PH lawsuit
In 2020, Paradigm PH sued both GMC and the Mandaue City Government before the Regional Trial Court (RTC) after delays allegedly caused by the City’s failure to process permits and by GMC’s failure to designate an installation point for generator sets.
The RTC ruled in Paradigm PH’s favor and issued a judgment ordering both GMC and the City to fulfill their obligations under their joint venture agreement and allow the project to proceed. This included completing necessary documents like environmental permits and providing Paradigm PH access to the project site.
That RTC decision became final and executory, and a writ of execution was issued to enforce it.
MLC’s petition
In 2022, MLC filed a petition before the CA to annul the RTC ruling, claiming that the City acted in bad faith by not disclosing the earlier Ciac ruling.
MLC also said it was an “indispensable party” that should have been included in the case, and that extrinsic fraud — acts of deception outside the trial — had occurred.
Both the CA and the SC rejected MLC’s arguments. The courts stressed that MLC was not a party to the 2020 RTC case, which involved only Paradigm PH, GMC and the Mandaue City Government. The SC said MLC had no legal standing to file a petition for annulment because it was not directly affected by that decision.
The SC also clarified that the RTC case was an action for specific performance, where a party asks the court to compel another to fulfill a contractual obligation. This action is in personam, meaning it binds only the parties involved and does not affect outsiders like MLC.
The high court added that MLC’s allegations of extrinsic fraud were baseless. Since MLC was not a party to the RTC case, it could not claim to have been deceived or denied its day in court.
The court also clarified that the RTC had jurisdiction over the case Paradigm PH filed and there was no irregularity in the decision.
If MLC wants to enforce its reclamation contracts and the Ciac ruling, it must do so through a separate legal action against the City Government, not by intervening in a case that does not involve it, according to the SC.
“Obviously, MLC will not necessarily be directly or injuriously affected by the RTC order,” it said.
The decision pointed out that the RTC ruling only resolved the obligations of Paradigm PH, GMC and the City under a different agreement.
The SC also reiterated the principle that final judgments should not be easily disturbed. It warned that allowing non-parties like MLC to overturn court decisions would violate the constitutional guarantee of due process and prolong controversies.
“Controversies cannot drag on indefinitely because fundamental considerations of public policy and sound practice demand that the rights and obligations of every litigant must not hang in suspense for an indefinite period of time,” it said. /CAV