[G.R. No. 163258. August 16, 2006]

SUMICON PHILIPPINES CORPORATION vs. HON. REBECCA R. MARIANO AND LIMA LAND, INCORPORATED

First Division

Sirs/Mesdames:

Quoted hereunder, for your information, is a resolution of this Court dated AUG. 16, 2006

G.R. No. 163258 (Sumicon Philippines Corporation vs. Hon. Rebecca R. Mariano and Lima Land, Incorporated) and

G.R. No. 165874 (Lima Land, Incorporated vs. Hon. Oscar B. Pimentel, Sumicon Philippines Corporation and Construction Industry Arbitration Commission)

Before the Court is the July 31, 2006 Joint Motion to Approve Compromise Agreement filed by both Lima Land, Incorporated and Sumicon Philippines Corporation. In the Compromise Agreement, attached as Annex A to the Motion, the said parties agree as follows:

1. SUBJECT LITIGATION. The parties agree that this Agreement shall cover the following litigation cases between the Parties in the Philippines (the "Subject Litigation"):

1.1 "Sumicon Philippines Corporation v. Lima Land, Incorporated", Civil Case No. 02-761, Regional Trial Court, Branch 149, Makati City, Metro Manila, Philippines;

1.2 "Lima Land, Inc. v. Court of Appeals, the Hon. Oscar B. Pimentel, etc., Sumicon Philippines Corporation and Construction Industry Arbitration Commission", SC G.R. No. 165874, Third Division, Supreme Court, Manila, Philippines;

1.3 Sumicon Philippines Corporation v. Hon. Rebecca R. Mariano, etc., and Lima Land, Inc." SC G.R. No. 163258, Third Division, Supreme Court, Manila, Philippines;

1.4 "Sumicon Philippines Corporation v. Lima Land, Inc." CIAC Case No. 08-2004, Construction Industry Arbitration Commission ("CIAC"), Jupiter Street, Makati City, Metro Manila, Philippines; and

1.5 "Lima Land, Inc. v. Sumicon Philippines Corporation" CA G.R. No. 93695, First Division, Court of Appeals, Manila, Philippines.

2. PURPOSE OF AGREEMENT. The Parties agree to amicably settle their respective claims in the Subject Litigation by entering into this Agreement, specifically for the following purposes:

2.1 To terminate, withdraw and dismiss the Subject Litigation, except as provided for below; and,

2.2 To enable the Parties to co-exist and proceed unhampered with their respective businesses in the Philippines.

The Parties agree that this Agreement shall not be construed in any way as an admission by a Party of any fault or liability to the other Party for the claims in the Subject Litigation.

3. WAIVER AND QUITCLAIM. Subject to the provisions of this Agreement and full compliance by Lima Land of its obligation hereunder, Sumicon on the one hand, and Lima Land, on the other, each on behalf of itself, its successors and assigns, hereby releases and forever discharges the other, its successors and assigns, agents, employees, officers, directors and shareholders from all causes of action, claims, demands, obligations, or liabilities (including without limitation, past, present, or future actual or consequential damages) of whatever kind or character, in law, equity or otherwise, which in any way arise out of or are related to the Subject Litigation.

4. CONSIDERATION. For and in consideration of the terms and conditions specified in this Agreement and as full and final settlement of the respective claims in the Subject Litigation, Lima Land shall pay Sumicon, at the office and business address of Sumicon, the total amount of Two Hundred Three Million Two Hundred Fifty Three Thousand Three Hundred One and 98/100 Pesos (Php203,253,301.98), Philippine Currency, inclusive of all taxes, as indicated in Annex "A" hereof, which is the Award of the CIAC dated 28 February 2006, in the form of a Manager's Check, payable as follows:

4.1 A down payment of Fifty Million Pesos (Php50,000,000.00), Philippine Currency, within sixty (60) days from the date of approval by the courts (RTC Makati, CIAC, Court of Appeals, and Supreme Court) of this Compromise Agreement;

4.1.1. On a best efforts basis, Lima Land shall pay Sumicon an additional down payment in the amount of Fifty Million Pesos (Php50,000,000.00), Philippine Currency, within one hundred twenty (120) days from the date of approval by the courts (RTC Makati, CIAC, Court of Appeals, and Supreme Court) of this Compromise Agreement. Should Lima Land be unable to pay this additional amount, such failure of Lima Land shall not constitute an Event of Default. This Compromise Agreement shall also remain valid notwithstanding Lima Land's failure to pay this additional down payment.

4.2 The Balance (which is whatever remaining amount after deducting the down payment in paragraph 4.1 and the additional down payment in paragraph 4.1.1., if applicable) shall be payable within a maximum period of five (5) years from the last date of Entry of Judgment based on this Compromise Agreement by the courts. The last date of Entry of Judgment shall be referred to as Day One for purposes of reckoning the five (5) year period.

4.2.1 Sumicon agrees that the Balance has no fixed interim dates for principal repayments but requests Lima Land to exert its best efforts to repay the principal in equal annual amounts on Day 365, Day 730, Day 1095, Day 1460 and Day 1825. Should Lima Land be unable to repay the principal on Day 365, Day 730, Day 1095 and Day 1460, such failure of Lima Land shall not constitute an Event of Default. This Compromise Agreement shall also remain valid notwithstanding Lima Land's failure to pay the principal on said dates.

4.3 Lima Land shall pay simple interest on the outstanding Balance at an annual rate of six percent (6%), starting from 27 April 2006 until full payment of the Balance, payable semi-annually starting from Day 180 and every six (6) months thereafter.

4.3.1 Sumicon and Lima Land shall discuss and agree on the appropriate procedures for the payment of the interest.

4.4 Lima Land will assign and hereby assigns its full share of the cash proceeds from its Low Cost Housing Project, known as Summer Hills, located at the Lima Technology Center, Malvar, Lipa, Batangas, (the "Project") to Sumicon, to be applied against the Balance, Lima Land agrees to pay to Sumicon the cash proceeds from the Project within thirty (30) days from the date of cash availability with Lima Land.

4.4.1 Lima Land shall allow Sumicon reasonable access to the sales and collection data of the Project to validate the cash collections. Lima Land shall also provide a quarterly schedule of the Project's cash collection and joint venture cash allocation of proceeds. Lima Land shall also provide the annual financial statement of the Low Cost Housing Project within Sixty (60) days of the end of the fiscal year.

4.5 Lima Land will cause a supersedeas bond to be issued by Malayan Insurance Co., Inc. or its equivalent (hereinafter referred to as the "Replacement Bond"), within thirty (30) days from the discharge of the bonds mentioned in the immediately succeeding section, in favor of Sumicon in an amount equal to the Balance, or the outstanding balance thereof. Both the bonding company and the terms of the bond shall be subject to Sumicon's approval. The validity of the bond shall be from the date of entry of judgment by the courts until three (3) business days after Day 1825. The supersedeas bond shall be "on demand" and payable upon the first written demand by Sumicon.

4.5.1 The parties shall cause the cancellation of the following bonds upon the date of entry of judgment by the courts, to wit: (a) Sumicon's attachment bond before the RTC-Makati City, (b) Lima Land's counter-attachment bond before the RTC-Makati City, and (c) Lima Land's counter bond to stay the execution of the CIAC Decision.

5. MOTION. Within Seven (7) days from execution of this Agreement, the Parties will seek the approval of this Agreement and the dismissal of the pending Subject Litigation, by jointly submitting a Motion to Approve Compromise Agreement in the following cases:

5.1 "Lima Land, Inc. vs. Court of Appeals, the Hon. Oscar B. Pimentel, etc., Sumicon Philippines Corporation and Construction Industry Arbitration Commission", SC G.R. No. 165874, Third Division, Supreme Court, Manila, Philippines;

5.2 "Sumicon Philippines Corporation vs. Hon. Rebecca R. Mariano, etc., and Lima Land, Inc." SC G.R. No. 163258, Third Division, Supreme Court, Manila, Philippines;

5.3 "Lima Land, Inc. vs. Sumicon Philippines Corporation" CA G.R. No. 93695, First Division, Court of Appeals, Manila, Philippines; and

5.4 "Sumicon Philippines Corporation vs. Lima Land, Incorporated", Civil Case No. 02-761, Regional Trial Court, Branch 149, Makati City, Metro Manila, Philippines;

After issuance by the Supreme Court and the Court of Appeals of an order approving the Compromise Agreement or a decision based on the Compromise Agreement, the parties agree, if Sumicon deems if necessary, to submit a Joint Motion to Approve Compromise Agreement before the CIAC.

6. BREACH. There are only eight (8) Events of Default, which shall entitle Sumicon to the remedies mentioned below, to wit:

a. Lima Land's failure to pay the Cash payment of Fifty Million Pesos (Php50,000,000.00), Philippine currency, mentioned in paragraph 4.1;

b. Lima Land's failure to remit its share of the cash proceeds from the Project to Sumicon, within thirty (30) days from the date of cash availability with Lima Land, mentioned in paragraph 4.4;

c. Lima Land's failure to fully pay the Balance by Day 1825, mentioned in paragraph 4.2.1

d. Lima Land's failure to provide the financial information referred to in paragraph 4.4.1.

e. Lima Land's failure to provide the Replacement Bond referred to in paragraph 4.5.

f. Lima Land's failure to maintain the validity and effectivity of the Replacement Bond, or its equivalent, referred to in paragraph 4.5.

g. Lima Land consolidates with or merges into another company.

h. Lima Land's actual or threatened insolvency, bankruptcy, suspension of payments or corporate rehabilitation under Philippine bankruptcy and corporate rehabilitation laws, rules and regulations, or any amendment/s thereto.

If any Event of Default mentioned in sub-paragraphs [c], [e], [f], [g] and [h] of this Compromise Agreement occurs, Sumicon shall immediately be entitled to move for the issuance by the Construction Industry and Arbitration Commission ("CIAC") or the Regional Trial Court of Makati of a writ of execution to enforce the provisions of this Agreement and/or the compromise judgment to be rendered by the courts based on this Agreement and satisfy its full claim in the CIAC Decision promulgated on 28 February 2006, in the amount of Two Hundred Three Million Two Hundred Fifty Three Thousand Three Hundred One and 98/100 Pesos (Php203,253,301.98), Philippine Currency, with interest of six percent (6%) per annum from 27 April 2006 until the same is fully paid, less payments on the principal already made under this Agreement.

If any Event of Default mentioned in sub-paragraphs [a], [b] and [d] occurs, Sumicon shall serve on Lima Land written notice to demand that Lima Land comply with its obligation/s in this Agreement within Thirty (30) days from receipt of such notice. After the expiration of the period of Thirty (30) days from receipt of such notice, if the default has not been cured, the entire balance remaining unpaid shall accrue and become due and demandable as above.

In addition, Sumicon shall be entitled to enforce payment from the Replacement Bond, or its equivalent, upon the happening of an Event of Default. In case any Event of Default mentioned in sub-paragraphs [a], [b], and [d] occurs, Sumicon shall be entitled to enforce payment from the Replacement Bond if the Event of Default has not been cured as provided for above.

7. EFFECTIVITY AND VALIDITY. This agreement shall be effective upon its signing, and shall be valid and against all assigns and successors-in-interest of the Parties herein.

The parties shall not assign the obligations of this Agreement without the consent, in writing, of the other party.

8. GENERAL PROVISIONS

8.1 COSTS. Each Party shall be responsible for and bear it own costs for each and all of the duties, and responsibilities and tasks to be performed by such Party as set forth in this Agreement and all tasks attendant thereto.

8.2 CONFIDENTIALITY. Except as provided herein, the Parties agree that this Agreement shall remain confidential and shall not be published, reproduced, copied, transferred, or conveyed in whatsoever form; no publicity, press release or announcement concerning this Agreement or any of its provisions shall be issued by either Party.

8.3 REPRESENTATIONS AND WARRANTIES. The Parties hereby represent and warrant that they have the requisite power, authority and capacity to enter, execute and conclude this Agreement (as per attached secretary's certificates) and that they have no legal or contractual impediment that would in any way impair the validity or enforcement hereof. Further, this Agreement and all other documents related or supplemental hereto have been authorized by all necessary acts and when executed and delivered as contemplated by this Agreement, will be valid and binding in accordance with their respective terms.

8.4 SEPARABILITY. Any provision under this Agreement declared by final judgment to be invalid, illegal or unenforceable in any respect under any applicable laws, shall not affect the other provisions of this Agreement, unless it affects the very intent or consent of the Parties in entering into this Agreement.

8.5 AGREEMENT. This Agreement constitutes the full agreement between the Parties with respect to the subject matter hereof, superseding any prior agreement or arrangement with respect thereto, and no modification, amendments, or supplements to this Agreement shall be effective for any purpose unless in writing and signed by each of the Parties hereto. The paragraph headings do not form part of this Agreement and shall not be taken into account in its construction or interpretation. The Parties hereto have read and fully understood this Agreement and are in full agreement with the terms hereof.

8.6 GOVERNING LAW. This Agreement shall be construed, both as to its validity and as to the performance of the Parties, in accordance with the laws and regulations of the Philippines.

They pray that their Compromise Agreement be approved by the Court and that judgment be rendered in accordance therewith.

The Court notes that the Compromise Agreement is not contrary to law, morals and public policy and is, in fact, in line with this Court's policy of encouraging litigants to settle their differences amicably.

WHEREFORE, the Compromise Agreement between Lima Land, Incorporated and Sumicon Philippines Corporation is APPROVED. The October 26, 2004 Decision of the Court of Appeals in CA-GR SP No. 82972 is SET ASIDE. Accordingly, Civil Case No. 02-761, pending before the Regional Trial Court of Makati City, Branch 149, is DISMISSED; Sumicon's attachment bond as well as Lima Land's counterbond therein are both DISCHARGED. Lima Land, Incorporated and Sumicon Philippines Corporation are ORDERED to comply with their respective undertakings as set forth in their Compromise Agreement. These consolidated cases are considered CLOSED and TERMINATED. Should it become necessary, enforcement of the Compromise Agreement shall be executed by the court of origin. Costs against petitioners in both cases.

SO ORDERED.

Very truly yours,

(Sgd.) ENRIQUETA ESGUERRA-VIDAL

Clerk of Court

First Division