The Supreme Court (SC) has declared valid the 2010 compromise agreement between the Metro Manila Development Authority (MMDA) and a private firm in the construction, improvement and maintenance of all passenger stations on all roads within Metro Manila.

In a decision made public last March 4 and written by Associate Justice Ramon Paul L. Hernando, the SC denied the petition filed by then MMDA Chairperson and now Sen. Francis N. Tolentino who challenged the Court of Appeals (CA) 2013 ruling which upheld the 2011 orders of the regional trial court (RTC).

Tolentino claimed that the compromise agreement was invalid without prior notice, consultation, and approval by the Office of the Solicitor General (OSG).

Declared valid was the compromise settlement in a memorandum of agreement (MOA) between MMDA and High Desert Stop Overs, Inc. (HDSOI), which – aside from constructing, maintaining and improving passenger stations – was authorized to have “sole and exclusive right to install, operate and maintain advertising displays on all passenger stations and to charge fees therefor for HDSOI’s sole benefit.”

There was a commitment on the part of MMDA to comply with the MOA for the first 10 years and renewable for another five years “regardless of any changes on administration or government....”

Court records showed there were three agreements between MMDA (then Metropolitan Manila Authority) in 1992, 1994 and 1996 on the construction, financing, operation, and maintenance of passenger stations.

On Aug. 8, 2006, then MMDA Chairman Bayani Fernando terminated the agreements and directed HDSOI to remove all the installed waiting sheds and commercial advertisements.

On Oct. 1, 2006, HDSOI filed a case before the RTC which acted on it favorably.

Thereafter, MMDA through then Chairman Oscar Inocentes and HDSOI entered into a MOA in 2010 to terminate all legal issues pending before the trial court.

On July 2, 2010, the trial court approved the compromise settlement under the MOA.

However, on Nov. 23, 2010 then MMDA Chairman Tolentino sought the opinion of the OSG on the enforceability of the compromise agreement. The OSG then filed its opposition to the agreement but the RTC denied it. On April 25, 2011, the trial court granted HDSOI’s plea for execution of the agreement. The OSG elevated the case to the CA.

In its July 31, 2013 decision, the CA denied the OSG’s petition with a ruling that the MMDA's failure to submit the MOA to the OSG for approval did not divest the trial court of its jurisdiction.

The CA noted there is nothing in the MMDA law that requires the approval of the OSG to validly enter into compromise agreements on matters over which it has authority to do so.

In dismissing Tolentino’s petition in behalf of MMDA, the SC said:

“In the case before Us, the Government is bound by the MOA due to estoppel. The OSG is assumed to have known about the existence of the MOA as petitioner's (MMDA) principal counsel.

“At the very least, even if the OSG had no prior knowledge of the MOA, it was duly notified on Nov. 10, 2010 when it received a copy of the assailed Judgment dated July 2, 2010 together with other Orders issued by the trial court which approved the MOA.

“Notwithstanding such knowledge, the OSG failed to file an appeal or resort to other remedies to contest the validity of the MOA. This Court also agrees with the appellate court's ruling that the action for annulment of judgment is not a substitute for the lost remedy of appeal.

“In the case at bar, the CA is correct when it ruled that what is being assailed is not the trial court's lack of jurisdiction but only the exercise thereof -- which is not a ground for Annulment of Judgment under Rule 47 of the Rules of Court.

“Indubitably, as a court of general jurisdiction, the trial court has jurisdiction over the subject matter of the complaint for injunction and damages and over the person of MMDA. While jurisprudence dictates that the lack of jurisdiction may be raised at any time during the proceedings, even for the first time in appeal, it is not an absolute rule.

“It admits of an exception as when the defendant actively participated in the proceedings and invoked the court's jurisdiction. Therefore, as correctly held by the appellate court, there is no basis for the argument of lack of jurisdiction considering MMDA's active participation in the proceedings because it even jointly moved for the trial court's approval of the MOA.

“Lastly, this Court finds it unnecessary to belabor itself as to the propriety of the terms and conditions of the MOA for the same reason stated above that petitioner did not resort to available remedies at that time to contest the same.

“After a decision is declared final and executory, vested rights are acquired by the winning party. Whether through inadvertence or negligence of its deputized counsel or the OSG itself, the decision has already become final and executory. Besides, there would be no end to litigation if the parties who have failed to avail of any of the appropriate remedies or lost them through their fault or inadvertence could have unfavorable decisions annulled by simply bringing an action for annulment of judgment.

“Considering the foregoing, the MOA entered into by MMDA and HDSOI without the OSG's prior approval is valid.

“WHEREFORE, the Petition for Review on Certiorari is DENIED for failure to establish any reversible error on the part of the Court of Appeals. The assailed July 31, 2013 Decision and June 6, 2014 Resolution of the Court of Appeals in CA-G.R. SP No. 125286 are hereby AFFIRMED. SO ORDERED.”