MMDA v.

Jancom
G.R. No. 147465
Jan. 30, 2002

FACTS: After bidding for a waste management project with the MMDA, Jancom won a contract for the
MMDA’s San Mateo waste management project. A BOT contract for the waste to energy project was
signed on Dec 19, 1997, between Jancom and the Philippine Government, represented by the
Presidential Task Force on Solid Waste Management through DENR Secretary Victor Ramos, CORD-NCR
chair Dionisio dela Serna, and MMDA chair Prospero Oreta.

The contract, however, was never signed by President Ramos as it was too close to the end of his term.
He endorsed it to President Estrada, but Estrada refused to sign it, for two reasons: the passage of RA
8749, or the Clean Air Act of 1999 and the clamor of San Mateo residents for the closure of the
dumpsite.

When the MMDA published another call for proposals for solid waste management projects for Metro
Manila, Jancom filed a petition with the Pasig RTC asking the court to declare as void the resolution of
the Greater Metropolitan Manila Solid Waste Management Committee disregarding the BOT contract
with Jancom, and the call for bids for a new waste management contract.

On May 29, 2000, the lower court decided in favor of Jancom. When the CA dismissed the petition, the
MMDA went to the Supreme Court, arguing that the contract with Jancom was not binding because it
was not signed by the President, the conditions precedent to the contract were not complied with, and
there was no valid notice of award.

ISSUE: Whether or not the contract between the Republic of the Philippines and Jancom was a valid and
a perfected contract.

HELD: The contract with Jancom is valid: citing Article 1305, 1315 and 1319 of the Civil Code.
In asserting that there was no valid and binding contract, MMDA can only allege that there was no valid
notice of award; the contract does not bear the signature of the President; the conditions precedent
specified in the contract were not complied with.

But the Court said that the lack of notice was the government’s fault; though the President did not sign,
his alter-ego did; and anyway his signature was only necessary for the effectivity of the contract, not its
perfection; and that the two-month period within which Jancom should comply with the conditions had
not yet started to run because the contract had not yet taken effect, precisely because of the absence of
the President’s signature.

Moreover, if after a perfected and binding contract has been executed between the parties, it occurs to
one of them to allege some defect therein as reason for annulling it, the alleged defect must be
conclusively proven, since the validity and the fulfillment of contracts cannot be left to the will of one of
the contracting parties. In the case at bar, the reasons cited by MMDA for not pushing through with the
subject contract were: 1) the passage of the Clean Air Act, which allegedly bans incineration; 2) the
closure of the San Mateo landfill site; and 3) the costly tipping fee. These reasons are bereft of merit.

The Court of Appeals did not err when it declared the existence of a valid and perfected contract
between the Republic of the Philippines and Jancom. The MMDA cannot revoke or renounce the same
without the consent of the other. Although the contract is a perfected one, it is still ineffective or
unimplementable until and unless it is approved by the President.

The Supreme Court made reference to the insightful declarations of the Court of Appeals:

Sec. 20 of the Clean Air Act pertinently reads:

SECTION 20. Ban on Incineration. Incineration, hereby defined as the burning of municipal, bio-chemical
and hazardous wastes, which process emits poisonous and toxic fumes, is hereby prohibited: x x x.

Section 20 does not absolutely prohibit incineration as a mode of waste disposal; rather only those
burning processes which emit poisonous and toxic fumes are banned.

As regards the projected closure of the San Mateo landfill vis--vis the implementability of the contract,
Art. 2.3 thereof expressly states that [i]n the event the project Site is not delivered x x x, the Presidential
task Force on Solid Waste Management (PTFSWM) and the Client, shall provide within a reasonable
period of time, a suitable alternative acceptable to the BOT COMPANY.

With respect to the alleged financial non-viability of the project because the MMDA and the local
government units cannot afford the tipping fees under the contract, this circumstance cannot, by itself,
abrogate the entire agreement.

Petition is dismissed.