CA affirms ruling voiding Nampeidai property development

MANILA, Philippines - The Court of Appeals (CA) has affirmed its earlier ruling voiding the contract of the Philippine government with Japanese consortium Nagayama Taisei Corp. (NTC) for the development of the controversial Nampeidai property in Tokyo, Japan.

In an eight-page resolution, the former first division of the appellate court denied the motion for reconsideration filed by Japanese businessman Masahiro Nagayama.

The CA stood by its decision last July 13 nullifying the June 2011 ruling of Pasay City Regional Trial Court Branch 108 that directed the government to proceed with the deal with Nagayama, who claimed to be lead partner and manager of NTC.

The CA has reiterated its ruling to void the notice of award issued in favor of the NTC on Oct. 15, 2005, as well as the writ of execution issued by the Pasay RTC on April 2, 2012 for the implementation of the project and to reaffirm the notice issued on June 11, 2009 by the government canceling its award of the project to NTC.

“As we have previously elucidated in our decision, the subject contracts are void, it having been proven during the trial that the NTC failed to comply with the requirements set forth under Republic Act 9184, otherwise known as the Government Procurement and Reform Act,” read the latest ruling penned by presiding Justice Andres Reyes Jr.

The CA rejected Nagayama’s argument that service development fee and the performance bond should be returned to NTC as the latter’s principal or in the alternative forfeited as damages in favor of NTC.

“As the principal, NTC is a nonexistent consortium, private-respondent-appellant is deemed to have entered into contract in his personal capacity. In the same vain, private respondent-appellant is regarded to have assumed privileges and obligations resulting from the nullification of the SDA and its supplemental agreements,” the CA held.  

Associate Justices Ramon Bato Jr. and Rodil Zalameda concurred in this ruling released last week.

The CA also agreed with the Solicitor General that the deal was invalid for two reasons: nonexistence of NTC and violation of provisions of Republic Act 9184 (Government Procurement Reform Law).

It cited the failure of the consortium to comply with the requirement for the submission of a sworn undertaking, which violated not only RA 9184 but also the terms of reference for the development of the Philippine government properties in Japan. 

The court pointed out the Department of Finance (DOF) was correct in canceling the notice of award it issued to NTC.

The government made the cancellation after it was established that the documents submitted by the winning bidder NTC were falsified. 

It noted Taisei Corp., through its chief manager Shigeru Ikemoto, wrote the government denying participation in the formation of the NTC and in the bidding for the development of the property.

The CA also declared as void from the beginning the service development agreement (SDA) for the enforcement of the project that was executed by the government in favor of the NTC on Aug. 14, 2006.

But in voiding the deal, which covers development and lease for a period of 50 years, the CA directed the government to return to Masaichi Tsuchiya, attorney-in-fact of the NTC, the service development fee in the amount of ¥480 million with legal interest at six percent per annum.

It also cancelled and ordered released to Tsuchiya or any of his representatives the performance bond in the amount of P50.23 million.

The 2,489-square meter Nampeidai property is one of three Philippine properties in Japan that have been offered to investors under a build-operate-transfer scheme.

In the public bidding, NTC was declared the winning bidder after it offered to construct a ¥1.7-billion building on the property and pay the Philippine government an additional ¥480 million.

It also agreed to reserve 22 percent of the building for the exclusive use of the Philippine government, specifically to house the consulate. The development and lease agreement covers the period of 50 years.