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Held
The Compromise Agreement is contrary to the Constitution, existing laws and public policy.
PNCCs toll fees are public funds. PNCC cannot use public funds like toll fees that indisputably form part
of the General Fund, to pay a private debt of CDCP Mining to Radstock. Such payment cannot qualify as
expenditure for a public purpose. The toll fees are merely held in trust by PNCC for the National
Government, which is the owner of the toll fees. Considering that there is no appropriation law passed
by Congress for the compromise amount, the Compromise Agreement is void for being contrary to law,
specifically Section 29(1), Article VI of the Constitution. And since the payment pertains to CDCP
Minings private debt to Radstock, the Compromise Agreement is also void for being contrary to the
fundamental public policy that government funds or property shall be spent or used solely for public
purposes.
Radstock is not qualified to own land in the Philippines. Consequently, Radstock is also disqualified to
own the rights to ownership of lands in the Philippines. Radstock cannot own the rights to ownership of
any land in the Philippines because Radstock cannot lawfully own the land itself. Otherwise, there will
be a blatant circumvention of the Constitution, which prohibits a foreign private corporation from
owning land in the Philippines. In addition, Radstock cannot transfer the rights to ownership of land in
the Philippines if it cannot own the land itself. It is basic that an assignor or seller cannot assign or sell
something he does not own at the time the ownership, or the rights to the ownership, are to be
transferred to the assignee or buyer. The third party assignee under the Compromise Agreement who
will be designated by Radstock can only acquire rights duplicating those which its assignor is entitled by
law to exercise. Thus, the assignee can acquire ownership of the land only if its assignor owns the land.
Clearly, the assignment by PNCC of the real properties to a nominee to be designated by Radstock is a
circumvention of the Constitutional prohibition against a private foreign corporation owning lands in the
Philippines. The said circumvention renders the Compromise Agreement void.