Asiatic Integrated Corporation v. Alikpala

BARREDO, J.:

Three cases related to the decision of the Court of First Instance of Manila dated July 13, 1973 in Civil Case No. 89442, Armando Capistrano et al. vs. The City of Manila et al., declaring null and void the Management and Operating Contract between defendant City (for short) and its co-defendant Asiatic Integrated Corporation (Asiatic, for short) involving all the public markets in Manila and ordering in consequence the turning over of said markets to the City, an accounting of all income earned by Asiatic under the contract and the payment of attorney's fees and costs by the same respondent. The first case, G.R. No. L-37187, is for certiorari with preliminary injunction to restrain respondent judge from enforcing his aforementioned decision during the pendency of the appeals therefrom of the defendants City and Asiatic. The other two cases, G.R. Nos. L-37248 and L-37249 are precisely the separate appeals or petitions for review of the City and Asiatic, respectively, which, however, were deemed by the Court as special civic actions in its resolution of December 10, 1973.

I On December 13, 1972, the Market Committee created by Republic Act 6039, approved a resolution recommending that the City Mayor of Manila urgently consider the immediate lease and/or assignment of the administration of the city public markets and talipapas to "a multi-million peso corporation under such terms and conditions as (would be) most advantageous to the City of Manila." Evidently in pursuance of such recommendation, on December 28, 1972, an agreement captioned "Management and Operating Contract" was executed by and between the City, represented by its Mayor, and Asiatic covering all the thirty-five public markets and talipapas in Manila.

Said contract is as follows: MANAGEMENT AND OPERATING CONTRACT KNOW ALL MEN BY THESE PRESENTS: This Agreement, made and entered into at Manila, Philippines, this 28 day of December, 1972, by and between - The City of Manila, a municipal corporation organized existing under and by virtue of the laws of the Philippines (R.A. No. 409) with principal office at City Hall, Manila, represented in this act by RAMON D. BAGATSING, Mayor of said City, hereinafter known as the FIRST PARTY; - and - Asiatic Integrated Corporation, a 100% Filipino-owned corporation, organized and existing pursuant to Philippine Laws and with principal office at the 2nd Floor, Rojas Center Building, C.M. Recto Avenue, Manila, represented in this act by its President, JOSE A. ROJAS, duly authorized therefor, hereinafter known as the SECOND PARTY; WITNESSETH: That WHEREAS, the concept and main objectives of a public market are to provide an accessible, clean, safe, convenient and economical shopping services to the public; to provide livelihood to stallholders, peddlers, distributors, brokers, middlemen and other low income groups: provide income for the maintenance, repair and establishment of new public markets and to provide income for other areas of city improvement; WHEREAS, physically, the state of our public markets had been turning from bad to worse, there being no major repair and maintenance done in the public markets for the last ten (10) years as can be seen from the following building and sanitary deficiencies now prevalent in all public markets: a.

Out of the sixteen (16) major markets, fourteen (14) are of pre-war vintage. No major reconstruction has been made. b.

Building and sanitary deficiencies are prevalent in all public markets such as defective electrical system, broken down and inadequate drainage and sewerage facilities, wornout and unsafe market floorings, defective plumbing and water pipe fixtures, structural defects, rusted, dilapidated roofs, gutters and downspouts, building hazards, lack of ventilation facilities, etc. WHEREAS, economically because of the proliferation of supermarkets, groceries, wholesalers and retailers, profit-wise, the public markets have no chance at all to outlive, let alone survive, the unbalanced competition coming from those well entrenched sectors due to commodity economics and lack of adequate service facilities as well as credit and financial sources at legal interests; WHEREAS, based on an indepth analysis and study of the conditions prevailing in the public markets, it will take the City ten (10) to fifteen (15) years of massive capital infusion to put to service Class B shape the public markets and that without immediate total physical and economic rehabilitation, the public markets will be driven into obsolescence: WHEREAS, the City of Manila presently does not have the necessary funds to improve and develop the public markets the way they should be improved and developed to conform to modern marketing concepts and standard; WHEREAS, cognizant of the foregoing, the Market Committee in its regular meeting held on December 13, 1972, adopted a Resolution requesting the Mayor to urgently consider "the immediate lease and/or assignment of administration of the City public markets and talipapas and this be awarded to a reputable multi-million peso corporation with such terms and conditions that are most advantageous to the City of Manila"; WHEREAS, the ASIATIC INTEGRATED CORPORATION has offered to improve, repair, develop, reconstruct and rehabilitate the City Public Markets and talipapas presently existing, which are listed and indicated in Annex "A"

hereof. NOW, THEREFORE, for and in consideration of the mutual promises, covenants and stipulations contained in the following clauses, the respective parties hereto do contract and agree as follows: - I - That the SECOND PARTY shall conduct, manage, operate, develop and maintain the City public markets and talipapas enumerated in Annex "A" hereof for a period of ten (10) years commencing from the date of execution of this Contract, Provided, However, that the FIRST PARTY may at any time during the lifetime of this Contract revoke the same (if the services are unsatisfactory) or for violation of its terms and conditions.

- II - That immediately after the execution of this Contract, the SECOND PARTY shall start the painting, cleaning, sanitizing and repair of the public markets and talipapas and within ninety (90) days thereof, the SECOND PARTY shall submit a program of improvement, development, rehabilitation and reconstruction of the City public markets and talipapas subject to prior approval of the FIRST PARTY. - III - The SECOND PARTY shall, during the terms of this Contract, pay and defray all costs for utilities, repairs, maintenance, new equipment, improvement, rehabilitation and reconstruction, and any and all other expenses incurred incident to the management and operation of the City public markets and talipapas. - IV - That all constructions and improvements introduced by the SECOND PARTY, inclusive of equipment shall, upon expiration of this Contract, remain the property of the FIRST PARTY without payment of any amount to the SECOND PARTY.

- V - That all government licenses and permits required for the management and operation of the City public markets and talipapas and for the improvement, development, rehabilitation and reconstruction made by the SECOND PARTY pursuant to the provisions of this Contract shall be taken out and paid for by the SECOND PARTY in the name of the FIRST PARTY. - VI - That all present personnel of the City public markets and talipapas shall be retained by the SECOND PARTY as long as their services remain satisfactory and they shall be extended the same rights and privileges as heretofore enjoyed by them. Provided, however, that the SECOND PARTY shall have the right, subject to prior approval of the FIRST PARTY to discharge any of the present employees for cause.

- VII - That the SECOND PARTY may from time to time be required by the FIRST PARTY, or his duly authorized representative or representatives, to report on the activities and operation of the City public markets and talipapas and the facilities and conveniences installed therein, particularly as to their cost of construction, operation and maintenance in connection with the stipulations in this Contract. - VIII - That considering the investments which shall be made by the SECOND PARTY for improvement, maintenance, operation and rehabilitation of the City public markets and talipapas, the SECOND PARTY may not be removed from the management operation of the City public markets and talipapas during the period of this Contract except for any violation of the terms and conditions hereof. - IX - That the SECOND PARTY hereby warrants that it has sufficient credit and banking facilities to effectuate the improvement, repair, development, reconstruction and rehabilitation of the public markets as the necessary maintenance and upkeep thereof and for this purpose, binds itself to submit within ten (10) days from the execution this Constract such document or documents from any local responsible bank attesting to this fact.

- X - That the SECOND PARTY further agrees to execute and file a performance bond in the amount of FIVE HUNDRED THOUSAND (P500,000.00) PESOS in cash or equivalent amounts in surety bond acceptable of the FIRST PARTY, in lieu of such bond, to deposit with the City Treasurer of Manila a certified check in the amount of FIVE HUNDRED THOUSAND (P500,000.00) PESOS drawn in favor of the City against any local responsible bank in the Philippines, which shall answer for the following: a. Faithful compliance by the SECOND party with any and all of the terms with condition of this Contract; b. All losses, damages and destruction of properties in the public markets arising from the negligence or misdemeanor on the part of the employees, laborers and other personnel of the SECOND PARTY; c.

Any claims for unpaid wages that the market laborers and employees may have against it including obligations of the SECOND PARTY under the Workmen's Compensation Act and other pertinent laws. - IX - That it is understood and agreed that the SECOND PARTY binds itself to pay the salaries and wages, insurance and all other benefits of the retained market employees and shall at all times hold the FIRST PARTY from any liability for salaries, wages, insurance and any benefits due its laborers and employees under existing labor and other laws and for damages suffered by third persons for any cause attributable to the SECOND PARTY, its laborers or employees.. - XII - That it is further expressly stipulated and agreed that the SECOND PARTY shall hold the FIRST PART free and harmless from any action or liability whatsoever, arising from any claim by any or all the personnel assigned by the SECOND PARTY to perform the services herein agreed upon under the Workmen's Compensation Act, the Minimum Wage Law, the Eight-Hour Labor Laws, it being understood and agreed upon that the faithful compliance with the said laws shall devolve entirely upon the SECOND PARTY.

- XIII - That the SECOND PARTY will appropriate a yearly amount of not less than thirty (30%) per cent of the gross income of the public markets and talipapas for the fiscal year 1971-1972 to answer for the maintenance and repair, reconstruction, development and rehabilitation of the public markets and talipapas and proof of such appropriation and minimum expenditure must be submitted to the FIRST PARTY or his duly authorize representative or representatives. The SECOND PARTY further agrees to insure the public market against fire. - XIV - That the SECOND PARTY further warrants that it will honor and respect the rights of the present stallholders and will make available to the stallholders, loans and financing (product purchase and/or inventory) at legal rates to eliminate loan sharks and will establish buying cooperatives to assist the stallholders on the purchase of products at the maximum volume discount and such other services like free seminars on practical small business management marketing as a means of assisting the stallholders in increasing their profits.

- XV - That during the term of this Contract, the SECOND PARTY shall to be entitled to the annual gross income from the City public markets and talipapas in excess of P500,000.00 for the first year thereof and for the succeeding years in such terms as hereinafter enumerated: - 2nd year - P550.000.00 3rd year - 600,000.00 4th year - 650,000.00 5th year - 700,000.00 6th year - 750,000.00 7th year - 800,000.00 8th year - 850,000.00 9th year - 900,000.00 10th year - 950,000.00 said sums being payable to the FIRST PARTY within sixty (6) days after the anniversary date of the execution of this contract, Provided, However, that the SECOND PARTY shall immediately advance to the FIRST PARTY the amount of ONE HUNDRED THOUSAND (100,000.00) PESOS within seven (7) day and the further, amount of FOUR HUNDRED THOUSAND (P400,000.00) PESOS within ninety (90) days from the extension for this Contract. IN WITNESS WHEREOF, the parties have hereunto affixed their signatures in the City of Manila, Philippines, on the day and year first above stated.

CITY OF MANILA By: ASIATIC INTEGRATED CORPORATION (Sgd.) RAMON BAGATSING Mayor (Sgd.) By: JOSE A. ROJAS President WITNESSES: (Sgd.) SERAFIN LUZ CUI (Sgd.) Illegible x x x x x x x x x In connection with this contract, We find annexed as Annex G of the petition in G.R. No. L-37248, the following: RESOLUTION EXPRESSING CONCURRENCE WITH AND SUPPORT FOR THE CONTRACT ENTERED INTO BY THE CITY OF MANILA TURNING OVER THE MANAGEMENT AND OPERATION OF PUBLIC MARKETS AND TALIPAPAS IN THE CITY TO A PRIVATE CONCERN. WHEREAS, a contract has been entered into by the City of Manila with the Asiatic Integrated Corporation for the latter to handle the management and operation of Manila's outmoded and deteriorating public markets and talipapas; WHEREAS, the deplorable state of these markets, most of which are of pre-war vintage, has always been the constant source of headaches of past administration, considering the mismanagement and corruption that have attended their operation for years; WHEREAS, the state of finances of the City Government does not permit it to undertake the massive and expensive task of rehabilitating and modernizing these public markets as to enable them to survive the stiff competition offered by mushrooming and sophisticated supermarkets without sacrificing other more vital and essential public services; WHEREAS, the members of the Municipal Board cannot close their eyes to the perrenial problem affecting the interests of their constituents, particularly the poor and underprivileged, but must take positive steps to bring about a change for the better; WHEREAS, the Municipal Board finds the contract entered into by the City to be a step in the right direction in that it may well be the only lasting solution to the ills that have continuously beset the administration and operation of public markets in the City and thus bring about the change long envisioned by this Body: Now therefore, be it.

Resolved by the Municipal Board of the City of Manila, to express, as it hereby expresses its concurrence with and support for the contract entered into by the City of Manila turning over the management and operation of public markets in the City to the Asiatic Integrated Corporation. Resolved, further, That a copy of this Resolution be transmitted to His Honor, Mayor Ramon D. Bagatsing. Adopted, January 12, 1973.

(Sgd) DANILO LACUNA (SGD) MANUEL UY, JR. (SGD) QUIRINO MARQUINEZ (SGD) ROSALINA ROBLES GONZALES (SGD) JOSE M. SEMBRANO (SGD) MARIANO M. MAGSALIN (SGD) AVELINO VILLACORTA (SGD) ROBERTO OCA, JR. (SGD) CARLOS FERNANDEZ (SGD) ALFONSO MENDOZA, JR.

(SGD) AMBROSIO LORENZO, JR. (SGD) HERMOGENES PABLO (Pp. 82-83, Rollo of L-37248.) All the signatories are councilors of the City of Manila.

The contract must have been brought to the attention of President Ferdinand E. Marcos, for on January 12, 1973, the President sent a memorandum to City Mayor Ramon D. Bagatsing, reading thus: In connection with the contract between the City of Manila and Asiatic Integrated Corporation for the management and operation by the latter of 35 markets in Manila, it is my desire, in the interest of the public welfare, that the following conditions be incorporated therein: 1. All market vendors should form cooperatives and should be sold shares in the market thus becoming co-owners. 2.

The market cooperatives should be authorized to directly procure from producers' cooperatives and other sources, domestically or internationally, and be given allocations for imports, provided they bring down prices in accordance with the policy and the regulations set forth by the Price Control Council, through its chairman. 3. The public should be part owner of such markets by the public sale of shares.

(Sgd.) FERDINAND E. MARCOS (P. 119-Rollo of L-37249, Annex "O".) In an effort evidently to comply with the foregoing presidential memorandum, a "Supplementary Contract" was executed by the parties on March 30, 1973, which provides: SUPPLEMENTARY CONTRACT KNOW ALL MEN BY THESE PRESENTS: This SUPPLEMENTARY CONTRACT, made and entered into the City of Manila, Philippines, this 30th day of March, 1973, by and between - The CITY OF MANILA, a municipal corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines, (R.A. No. 409-Revised Charter of the City of Manila), with principal office at the City Hall Building, Manila, represented in this Act by the Hon. RAMON BAGATSING, Mayor of the City of Manila, hereunto duly authorized and hereinafter referred to as the CITY; - and - ASIATIC INTEGRATED CORPORATION, a 100% Filipino owned Corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines, with principal office at the 2nd Floor, Rojas Center Building, Claro M. Recto Avenue, Manila, represented in this Act by JOSE A. ROJAS, President thereof, hereunto duly authorized and hereinafter referred to as the CORPORATION; WITNESSETH THAT: WHEREAS, on December 28, 1972, a contract was entered into by and between City of Manila and the Asiatic Integrated Corporation, described as Doc.

No. 5, Page No. 2, Book I, Series of 1972, of Notary Public Gabriel L. Gonzales of Manila, for the operation and management of the thirty-five (35) public markets and talipapas of Manila, subject to the terms and conditions therein set forth; WHEREAS, on January 12, 1973, His Excellency, President Ferdinand E. Marcossent a Memorandum to Mayor Ramon D.

Bagatsing of Manila directing the incorporation of certain conditions in the Management and Operating Contract of December 28, 1972, copy of which is hereto attached as Annex "A"; WHEREAS, the parties hereby agree that the conditions set forth in the Presidential Memorandum, if incorporated in the said Contract dated December 28, 1972 and implemented, will undoubtedly redound to the benefit not only of the market vendors concerned but also the public in general; NOW THEREFORE, for and in consideration of the foregoing principles and of the conditions hereinafter set forth, the parties have agreed as they hereby agree as follows; I That all legitimate vendors in the public markets and talipapas of the City of Manila who have or may hereafter form and/or organize cooperatives shall be extended and fullest help and assistance by the parties. II That the market cooperatives so formed or may hereafter be formed shall be extended the necessary aid and assistance by the CORPORATION so that they may directly procure from producers' cooperatives and other legitimate sources, domestically or internationally, such goods or products needed by said cooperatives: PROVIDED that they bring down prices of commodities in accordance with the policy and the regulations set forth by the Price Control Council, through its Chairman.

III That the CORPORATION hereby binds itself to take the necessary steps to put up shares to be sold to the public to the extent of allowing them to participate in the management and operation of the markets, PROVIDED that the market vendors shall be given preference in the sale of such shares. IN WITNESS WHEREOF, the parties hereunto set their hands at the place and on the date first above written. CITY OF MANILA By: ASIATIC INTEGRATED CORPORATION T.A.N. 0201-022-1 RAMON D. BAGATSING City Mayor By: JOSE A. ROJAS President T.A.N. 1701-719-4 ATTESTED: ROMAN G. GARGANTIEL Secretary to the Mayor SIGNED IN THE PRESENCE OF: