EN BANC
FRANCISCO I. CHAVEZ,
Petitioner,
G. R. No. 133250
Present:
Davide, Jr., C.J.,
Bellosillo,
Puno,
Vitug,
Panganiban,
Quisumbing,
Ynares-Santiago,
Sandoval-Gutierrez,
Carpio,
Austria-Martinez,
Corona,
Carpio Morales,
Callejo, Sr.,
Azcuna, and
Tinga, JJ.
- versus -
PUBLIC ESTATES AUTHORITY and
Promulgated:
AMARI COASTAL BAY DEVELOPMENT
CORPORATION,
Respondents.
--------------x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
RESOLUTION
CARPIO, J.:
This Court is asked to legitimize a government contract that conveyed
to a private entity 157.84 hectares of reclaimed public lands along Roxas
Boulevard in Metro Manila at the negotiated price of P1,200 per square
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G.R. No. 133250
meter. However, published reports place the market price of land near that
area at that time at a high of P90,000 per square meter.1 The difference in
price is a staggering P140.16 billion, equivalent to the budget of the entire
Judiciary for seventeen years and more than three times the Marcos Swiss
deposits that this Court forfeited in favor of the government.
Many worry to death that the private investors will lose their
investments, at most not more than one-half billion pesos in legitimate
expenses,2 if this Court voids the contract. No one seems to worry about the
more than tens of billion pesos that the hapless Filipino people will lose if
the contract is allowed to stand. There are those who question these figures,
but the questions arise only because the private entity somehow managed to
inveigle the government to sell the reclaimed lands without public bidding in
patent violation of the Government Auditing Code.
Fortunately for the Filipino people, two Senate Committees, the
Senate Blue Ribbon Committee and the Committee on Accountability of
Public Officers, conducted extensive public hearings to determine the actual
market value of the public lands sold to the private entity. The Senate
Committees established the clear, indisputable and unalterable fact that
1
2
See “The Grandmother of All Scams” by Sheila S. Coronel and Ellen Tordesillas, 18-20 March 1998,
Philippine Center for Investigative Journalism. This report won the 1st Prize in the 1998 JVO
Investigative Journalism Awards.
6 May 2003 Resolution, p. 13.
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G.R. No. 133250
the sale of the public lands is grossly and unconscionably undervalued
based on official documents submitted by the proper government
agencies during the Senate investigation.
We quote the joint report of
these two Senate Committees, Senate Committee Report No. 560, as
approved by the Senate in plenary session on 27 September 1997:3
The Consideration for the Property
PEA, under the JVA, obligated itself to convey title and possession
over the Property, consisting of approximately One Million Five Hundred
Seventy Eight Thousand Four Hundred Forty One (1,578,441) Square Meters
for a total consideration of One Billion Eight Hundred Ninety Four Million
One Hundred Twenty Nine Thousand Two Hundred (P1,894,129,200.00)
Pesos, or a price of One Thousand Two Hundred (P1,200.00) Pesos per
square meter.
According to the zonal valuation of the Bureau of Internal
Revenue, the value of the Property is Seven Thousand Eight Hundred
Pesos (P7,800.00) per square meter. The Municipal Assessor of
Parañaque, Metro Manila, where the Property is located, pegs the
market value of the Property at Six Thousand Pesos (P6,000.00) per
square meter. Based on these alone, the price at which PEA agreed to
convey the property is a pittance. And PEA cannot claim ignorance of these
valuations, at least not those of the Municipal Assessors’ office, since it has
been trying to convince the Office of the Municipal Assessor of Parañaque to
reduce the valuation of various reclaimed properties thereat in order for PEA
to save on accrued real property taxes.
PEA’s justification for the purchase price are various appraisal reports,
particularly the following:
(1)
3
An appraisal by Vic T. Salinas Realty and Consultancy
Services concluding that the Property is worth P500.00 per
square meter for the smallest island and P750.00 per square
meter for the two other islands, or a total of P1,170,000.00 as
of 22 February 1995;
PEA’s Memorandum dated 4 August 1999 quoted extensively, in its Statement of Facts and the Case,
the Statement of Facts in Senate Committee Report No. 560 dated 16 September 1997. Moreover, the
existence of this report is a matter of judicial notice pursuant to Section 1, Rule 129 of the Rules of
Court which provides, “A court shall take judicial notice, without the introduction of evidence, of x x x
the official acts of the legislature.”
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G.R. No. 133250
(2)
An appraisal by Valencia Appraisal Corporation concluding
that the Property is worth P850 per square meter for Island I,
P800 per square meter for Island II and P600 per square meter
for the smallest island, or a total of P1,289,732,000, also as of
22 February 1995; and
(3)
An Appraisal by Asian Appraisal Company, Inc. (AACI),
stating that the Property is worth approximately P1,000 per
square meter for Island I, P950 per square meter for Island II
and P600 per square meter for Island III, or a total of
P1,518,805,000 as of 27 February 1995.
The credibility of the foregoing appraisals, however, are [sic] greatly
impaired by a subsequent appraisal report of AACI stating that the property is
worth P4,500.00 per square meter as of 26 March 1996. Such discrepancies
in the appraised value as appearing in two different reports by the same
appraisal company submitted within a span of one year render all such
appraisal reports unworthy of even the slightest consideration. Furthermore,
the appraisal report submitted by the Commission on Audit estimates the
value of the Property to be approximately P33,673,000,000.00, or
P21,333.07 per square meter.
There were also other offers made for the property from other parties
which indicate that the Property has been undervalued by PEA. For instance,
on 06 March 1995, Mr. Young D. See, President of Saeil Heavy Industries
Co., Ltd., (South Korea), offered to buy the property at P1,400.00 and
expressed its willingness to issue a stand-by letter of credit worth $10 million.
PEA did not consider this offer and instead finalized the JVA with AMARI.
Other offers were made on various dates by Aspac Management and
Development Group Inc. (for P1,600 per square meter), Universal Dragon
Corporation (for P1,600 per square meter), Cleene Far East Manila
Incorporated and Hyosan Prime Construction Co. Ltd. which had prepared an
Irrevocable Clean Letter of Credit for P100,000,000.
In addition, AMARI agreed to pay huge commissions and bonuses to
various persons, amounting to P1,596,863,050.00 (P1,754,707,150.00 if the
bonus is included), as will be discussed fully below, which indicate that
AMARI itself believed the market value to be much higher than the agreed
purchase price. If such commissions are added to the purchase price,
AMARI’s acquisition cost for the Property will add-up to P3,490,992,250.00
(excluding the bonus). If AMARI was willing to pay such amount for the
Property, why was PEA willing to sell for only P1,894,129,200.00, making
the Government stand to lose approximately P1,596,863,050.00?
xxx
Resolution
5
G.R. No. 133250
Even if we simply assume that the market value of the Property is half
of the market value fixed by the Municipal Assessors Office of Parañaque for
lands along Roxas Boulevard, or P3,000.00 per square meter, the Government
now stands to lose approximately P2,841,193,800.00. But an even better
assumption would be that the value of the Property is P4,500.00 per square
meter, as per the AACI appraisal report dated 26 March 1996, since this is
the valuation used to justify the issuance of P4 billion worth of shares of
stock of Centennial City Inc. (CCI) in exchange for 4,800,000 AMARI
shares with a total par value of only P480,000,000.00. With such valuation,
the Government’s loss will amount to P5,208,855,300.00.
Clearly, the purchase price agreed to by PEA is way below the
actual value of the Property, thereby subjecting the Government to
grave injury and enabling AMARI to enjoy tremendous benefit and
advantage. (Emphasis supplied)
The Senate Committee Report No. 560 attached the following official
documents from the Bureau of Internal Revenue, the Municipal Assessor
of Parañaque, Metro Manila, and the Commission on Audit:
1. Annex “M,” Certified True Copy of BIR Zonal Valuations as
certified by Antonio F. Montemayor, Revenue District Officer.
This official document fixed the market value of the 157.84
hectares at P7,800 per square meter.
2. Annex “N,” Certification of Soledad S. Medina-Cue,
Municipal Assessor, Parañaque, dated 10 December 1996.
This official document fixed the market value at P6,000 per
square meter.
3. Exhibit “1-Engr. Santiago,” the Appraisal Report of the
Commission on Audit.
This official document fixed the
market value at P21,333.07 per square meter.
Resolution
6
G.R. No. 133250
Whether based on the official appraisal of the BIR, the Municipal
Assessor or the Commission on Audit, the P1,200 per square meter purchase
price, or a total of P1.894 billion for the 157.84 hectares of government
lands, is grossly and unconscionably undervalued.
The authoritative
appraisal, of course, is that of the Commission on Audit which valued the
157.84 hectares at P21,333.07 per square meter or a total of P33.673 billion.
Thus, based on the official appraisal of the Commission on Audit, the
independent constitutional body that safeguards government assets, the
actual loss to the Filipino people is a shocking P31.779 billion.
This gargantuan monetary anomaly, aptly earning the epithet
“Grandmother of All Scams,”4 is not the major defect of this government
contract. The major flaw is not even the P1.754 billion in commissions the
Senate Committees discovered the private entity paid to various persons to
secure the contract,5 described in Senate Report No. 560 as follows:
A Letter-Agreement dated 09 June 1995 signed by Messrs. Premchai
Karnasuta and Emmanuel Sy for and in behalf of AMARI, on the one hand,
and stockholders of AMARI namely, Mr. Chin San Cordova (a.k.a. Benito
Co) and Mr. Chua Hun Siong (a.k.a. Frank Chua), on the other, sets forth
various payments AMARI paid or agreed to pay the aforesaid
stockholders by way of fees for “professional efforts and services in
successfully negotiating and securing for AMARI the Joint Venture
Agreement”, as follows:
4
5
9 July 2002 Decision, p. 4.
Senate Committee Report No. 560, p. 48.
Resolution
7
G.R. No. 133250
Form of Payment
Paid/Payable On
Manager’s Checks
28 April 1995
P
Manager’s Checks
Upon signing of letter
10 Post Dated Checks (PDCs) 60 days from date of letter
24 PDCs
31 Aug. ’95 to 31 Jan. ’98
48 PDCs
Monthly, over a 12-month pd.
from date of letter
Cash bonus
When sale of land begins
Developed land from Project Upon completion of each
phase
TOTAL
Amount
400,000,000.00
262,500,000.00
127,000,000.00
150,000,000.00
357,363,050.00
not exceeding
157,844,100.00
Costing
300,000,000.00
P1,754,707,150.00
==============
Mr. Luis Benitez of SGV, the external auditors of AMARI, testified that
said Letter-Agreement was approved by the AMARI Board.6 (Emphasis
supplied)
6
A more detailed discussion on this matter in Senate Report No. 560 reads as follows:
The Commissions
A Letter-Agreement dated 09 June 1995 signed by Messrs. Premchai Karnasuta and
Emmanuel Sy for and in behalf of AMARI, on the one hand, and stockholders of AMARI namely,
Mr. Chin San Cordova (a.k.a. Benito Co) and Mr. Chua Hun Siong (a.k.a. Frank Chua), on the other,
sets forth various payments AMARI paid or agreed to pay the aforesaid stockholders by way of fees
for “professional efforts and services in successfully negotiating and securing for AMARI the Joint
Venture Agreement”, as follows:
Form of Payment
Paid/Payable On
Amount
Manager’s Checks
28 April 1995
P 400,000,000.00
Manager’s Checks
Upon signing of letter
262,500,000.00
10 Post Dated Checks (PDCs) 60 days from date of letter
127,000,000.00
24 PDCs
31 Aug. ’95 to 31 Jan. ’98
150,000,000.00
48 PDCs
Monthly, over a 12-month pd.
from date of letter
357,363,050.00
Cash bonus
When sale of land begins
not exceeding
157,844,100.00
Developed land from Project
Upon completion of each
Costing
phase
300,000,000.00
TOTAL
P1,754,707,150.00
==============
Mr. Luis Benitez of SGV, the external auditors of AMARI, testified that said Letter-Agreement was
approved by the AMARI Board.
On the first payment of P400 million, records show that P300 million was paid in manager’s checks
of Citibank-Makati, while the balance of P100 million was deposited to the account of the two
Chinese in a Hongkong bank. On the basis of a Memorandum Order dated April 28, 1995 issued by
Messrs. Karnasuta and Emmanuel Sy, and upon the instruction of Messrs. Chin San Cordova and
Chua Hun Siong, 31 manager’s checks in the total amount of P300 million were issued by CitibankMakati in favor of a Mr. George Triviño, a Dominican Republic national, broken down as follows:
1)
Twenty-nine (29) manager’s checks at P10 million each;
Resolution
2)
3)
8
G.R. No. 133250
One (1) manager’s check at P7 million; and,
One (1) manager’s check at P3 million.
All these checks were indorsed by Mr. Triviño. Mr. Sy could not satisfactorily answer why Mr.
Triviño was made payee of the Manager’s Checks when he had nothing to do with the transactions.
Neither could he provide information regarding the said Mr. Triviño.
Mr. Emmanuel Sy admitted signing several blank checks as special request from Messrs. Co and
Chua and issuing said checks as follows:
1) Ten (10) Manager’s checks dated 60 days from the June 9 letter amounting to P127 million;
2) Twenty-four (24) blank checks amounting to P150 million dated from 31 August 1995 up to 31
January 1998; and,
3) Forty (40) blank checks amounting to P357 million.
In this regard, the pertinent portion of the 9 June 1995 letter-agreement provides as follows:
“3. Upon signing of this letter-agreement AMARI shall (a) pay to you (in cash in the form of
Bank Manager’s Checks) the sum of Two Hundred Sixty Two Million Five Hundred
Thousand Pesos (Pesos 262,500,000) and (b) pay and deliver to you the following checks:
“3.1 Ten (10) checks dated sixty (60) days from date of this letter agreement in the total
amount of One Hundred Twenty Seven Million Pesos (Pesos 127,000,000);
“3.2 Twenty-Four (24) checks in the total amount of One Hundred Fifty
(Pesos 150,000,000) as follows:
DUE DATE OF CHECK AMOUNT
August 31, 1995
March 31, 1996
April 30, 1996
May 31, 1996
June 30, 1996
July 31, 1996
August 31, 1996
September 30, 1996
October 31, 1996
November 30, 1996
December 31, 1996
January 31, 1997
February 28, 1997
March 31,1997
April 30, 1997
May 31, 1997
June 30, 1997
July 31, 1997
August 31, 1997
September 30, 1997
October 31, 1997
November 30, 1997
December 31, 1997
P
6,250,000
6,250,000
6,250,000
6,250,000
6,250,000
6,250,000
6,250,000
6,250,000
6,250,000
6,250,000
6,250,000
6,250,000
6,250,000
6,250,000
6,250,000
6,250,000
6,250,000
6,250,000
6,250,000
6,250,000
6,250,000
6,250,000
6,250,000
Million Pesos
Resolution
9
January 31, 1998
Total
G.R. No. 133250
6,250,000
P150,000,000
==========
“3.3 Forty Eight (48) checks in the total amount of Three Hundred Fifty Seven Million
Three Hundred Sixty Three Thousand Fifty Pesos (Pesos 357,363,050) payable over a
period of twelve (12) months as follows:
“Each monthly payment to consist of Four (4) checks, three (3) checks of which shall
each bear the amount of P7,250,000 and one (1) check of which shall bear the amount of
P8,000,000 for a total monthly amount of P29,750,000. These monthly payment of four
(4) checks each shall be dated the last date of the thirteen, fourteen, fifteen, sixteen,
seventeen, eighteen, nineteen, twenty, twenty-one, twenty-two, twenty-three, and twentyfour months from the date of this letter agreement. The last issued check hereunder shall
bear the sum of P8,363,050.”
The Provisional Receipt shows that Mr. Chin San Cordova and Mr. Chua Hun Siong received
the amount of P896,863,050.00 as of 09 June 1995. Based on the submitted photocopies of the
returned checks issued by AMARI vis-a-vis item 3(b) of the quoted Letter-Agreement, the following
persons were made payees: Emmanuel Sy, Manuel Sy, Sy Pio Lato, International Merchandising and
Development Corporation, Golden Star Industrial Corporation, Chin San Cordova, EY, and Wee Te
Lato. Other payments were made payable to Cash (bearer instruments). Each person was thus named
payee to the following amounts:
1.
2.
3.
Emmanuel Sy:
Citibank Check No. 000019 dated 10/31/96
P 6,250,000
Manuel Sy:
Citibank Check No. 000007 dated 8/8/95
12,700,000
Sy Pio Lato:
Citibank Check No. 000008 dated 8/8/95
000009 dated 8/8/95
000010 dated 8/8/95
12,700,000
12,700,000
12,700,000
4.
International Merchandising and Development Corporation:
Citibank Check No. 000013 dated 4/30/96
6,250,000
000014 dated 5/31/96
6,250,000
000015 dated 6/30/96
6,250,000
000016 dated 7/31/96
6,250,000
000045 dated 9/30/96
7,250,000
5.
Golden Star Industrial Corporation:
Citibank Check No. 000018 dated 9/30/96
6,250,000
Chin San Cordova:
Citibank Check No. 000041 dated 8/31/96
000043 dated 9/30/96
7,250,000
7,250,000
EY:
Citibank Check No. 000047 dated 10/31/96
000049 dated 10/31/96
7,250,000
7,250,000
6.
7.
Resolution
10
G.R. No. 133250
The private entity that purchased the reclaimed lands for P1.894
billion expressly admitted before the Senate Committees that it spent P1.754
8.
9.
10.
Wee Te Lato:
Citibank Check No. 000048 dated 10/31/96
7,250,000
Bearer Instruments: CASH:
Citibank Check No. 000001 dated 8/8/95
000002 dated 8/8/95
000003 dated 8/8/95
000004 dated 8/8/95
000005 dated 8/8/95
000006 dated 8/8/95
000012 dated 3/31/96
000017 dated 8/31/96
000039 dated 8/31/96
000040 dated 8/31/96
000042 dated 8/31/95
000044 dated 9/30/96
000046 dated 9/30/96
000050 dated 10/31/96
12,700,000
12,700,000
12,700,000
12,700,000
12,700,000
12,700,000
6,250,000
6,250,000
7,250,000
7,250,000
8,000,000
7,250,000
7,250,000
8,000,000
Payee’s Name Not Legible:
Citibank Check No. 000011 dated 8/31/96
6,250,000
On the other hand, Ms. Aurora Montano, a cousin of Mr. Justiniano Montano IV, was asked by a
Mr. Ben Cuevo if she knew anybody from PEA, and she answered: “Yes, I know Mr. Justiniano
Montano IV.” For this answer, and for introducing the AMARI representative to Mr. Montano, she
received P10 million in cash and P20 million in postdated manager’s checks in the office of Mr.
Benito Co and in the presence of, aside from Mr. Benito Co, Mr. Ben Cuevo and Mr. Frank Chua.
Ms. Montano, however, insisted that she actually received only P10 million.
Ms. Montano furthermore admitted that, through Mr. Ben Cuevo, she met Messrs. Chin San
Cordova and Chua Hun Siong in 1994 for this transaction.
In Executive Session, Mr. Ben Cuevo admitted to having encashed two checks at Pilipinas Bank,
worth P12.5 million. According to him, the two checks form part of the P150 million worth of postdated checks (PDCs), with a face value of P6.25 million per check, described in the LetterAgreement. Of this P150 million, Mr. Cuevo actually received five (5) PDCs worth P31 million, but
he was only able to encash 2 checks at P12.5 million.
Still in Executive Session, Mr. Ben Cuevo also admitted receiving a check worth P6.25 million
payable to his company, International Merchandising and Development Corporation. This was
deposited in his Current Account No. 604010562-A, and the amount was transferred by credit memo
to Mr. Montano IV’s account at Pilipinas Bank.
Mr. Montano IV admitted that he has an account with Pilipinas Bank, but invoked his
constitutional right against self-incrimination when asked if he received the amount of P6.25 million
transferred to his account. The Pilipinas Bank Credit Advice dated May 6, 1996, marked as Exhibit
1-Montano IV, indicating the transfer of the amount of P6.25 million was presented by Senator
Drilon. Once or twice, a certain Ms. Polly Tragico accompanied Mr. Montano IV to withdraw funds
from Pilipinas Bank-Pavilion.
Resolution
11
G.R. No. 133250
billion in commissions to pay various individuals for “professional efforts
and services in successfully negotiating and securing” the contract. By
any legal or moral yardstick, the P1.754 billion in commissions
obviously constitutes bribe money.
Nonetheless, there are those who
insist that the billions in investments of the private entity deserve protection
by this Court.
Should this Court establish a new doctrine by elevating
grease money to the status of legitimate investments deserving of protection
by the law?
Should this Court reward the patently illegal and grossly
unethical business practice of the private entity in securing the contract?
Should we allow those with hands dripping with dirty money equitable relief
from this Court?
Despite these revolting anomalies unearthed by the Senate
Committees, the fatal flaw of this contract is that it glaringly violates
provisions of the Constitution expressly prohibiting the alienation of lands of
the public domain.
Thus, we now come to the resolution of the second Motions for
Reconsideration7 filed by public respondent Public Estates Authority
(“PEA”) and private respondent Amari Coastal Bay Development
7
Both filed on 26 May 2003. On 6 June 2003 Amari filed a Supplement to its second Motion for
Reconsideration.
Resolution
12
G.R. No. 133250
Corporation (“Amari”). As correctly pointed out by petitioner Francisco I.
Chavez in his Consolidated Comment,8 the second Motions for
Reconsideration raise no new issues.
However, the Supplement to “Separate Opinion, Concurring and
Dissenting” of Justice Josue N. Bellosillo brings to the Court’s attention the
Resolutions of this Court on 3 February 1965 and 24 June 1966 in L- 21870
entitled “Manuel O. Ponce, et al. v. Hon. Amador Gomez, et al.” and No. L22669 entitled “Manuel O. Ponce, et al. v. The City of Cebu, et al.” (“Ponce
Cases”). In effect, the Supplement to the Dissenting Opinion claims that
these two Resolutions serve as authority that a single private corporation
like Amari may acquire hundreds of hectares of submerged lands, as well
as reclaimed submerged lands, within Manila Bay under the Amended
Joint Venture Agreement (“Amended JVA”).
We find the cited Ponce Cases inapplicable to the instant case.
First, as Justice Bellosillo himself states in his supplement to his
dissent, the Ponce Cases admit that “submerged lands still belong to the
National Government.”9
8
9
The correct formulation, however, is that
Filed on 19 August 2003.
Decision dated 17 January 1964 of Judge Amador E. Gomez. Also quoted in Justice Josue N.
Bellosillo’s Supplement to Separate Opinion, Concurring and Dissenting.
Resolution
13
G.R. No. 133250
submerged lands are owned by the State and are inalienable. Section 2,
Article XII of the 1987 Constitution provides:
All lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber,
wildlife, flora and fauna, and other natural resources are owned by the State.
With the exception of agricultural lands, all other natural resources shall
not be alienated. x x x. (Emphasis supplied)
Submerged lands, like the waters (sea or bay) above them, are part of
the State’s inalienable natural resources. Submerged lands are property of
public dominion, absolutely inalienable and outside the commerce of man. 10
This is also true with respect to foreshore lands. Any sale of submerged or
foreshore lands is void being contrary to the Constitution.11
This is why the Cebu City ordinance merely granted Essel, Inc. an
“irrevocable option” to purchase the foreshore lands after the reclamation
and did not actually sell to Essel, Inc. the still to be reclaimed foreshore
lands.
Clearly, in the Ponce Cases the option to purchase referred to
reclaimed lands, and not to foreshore lands which are inalienable.
Reclaimed lands are no longer foreshore or submerged lands, and thus may
qualify as alienable agricultural lands of the public domain provided the
requirements of public land laws are met.
10
11
Sections 2 and 3, Article XII of the 1987 Constitution.
Article 112 , Civil Code of the Philippines.
Resolution
14
G.R. No. 133250
In the instant case, the bulk of the lands subject of the Amended JVA
are still submerged lands even to this very day, and therefore inalienable
and outside the commerce of man. Of the 750 hectares subject of the
Amended JVA, 592.15 hectares or 78% of the total area are still
submerged, permanently under the waters of Manila Bay.
Under the
Amended JVA, the PEA conveyed to Amari the submerged lands even
before their actual reclamation, although the documentation of the deed of
transfer and issuance of the certificates of title would be made only after
actual reclamation.
The Amended JVA states that the PEA “hereby contributes to the
Joint Venture its rights and privileges to perform Rawland Reclamation and
Horizontal Development as well as own the Reclamation Area.”12 The
Amended JVA further states that “the sharing of the Joint Venture Proceeds
shall be based on the ratio of thirty percent (30%) for PEA and seventy
percent (70%) for AMARI.”13 The Amended JVA also provides that the
PEA “hereby designates AMARI to perform PEA’s rights and privileges to
reclaim, own and develop the Reclamation Area.”14 In short, under the
Amended JVA the PEA contributed its rights, privileges and ownership
over the Reclamation Area to the Joint Venture which is 70% owned by
12
13
14
Section 3.2 (a), Amended JVA.
Section 3.3 (a), Amended JVA.
Section 2.2, Amended JVA.
Resolution
15
G.R. No. 133250
Amari. Moreover, the PEA delegated to Amari the right and privilege to
reclaim the submerged lands.
The Amended JVA mandates that the PEA had “the duty to execute
without delay the necessary deed of transfer or conveyance of the title
pertaining to AMARI’s Land share based on the Land Allocation Plan.”15
The Amended JVA also provides that “PEA, when requested in writing by
AMARI, shall then cause the issuance and delivery of the proper certificates
of title covering AMARI’s Land Share in the name of AMARI, x x x.”16
In the Ponce Cases, the City of Cebu retained ownership of the
reclaimed foreshore lands and Essel, Inc. only had an “irrevocable option” to
purchase portions of the foreshore lands once actually reclaimed. In sharp
contrast, in the instant case ownership of the reclamation area, including the
submerged lands, was immediately transferred to the joint venture. Amari
immediately acquired the absolute right to own 70% percent of the
reclamation area, with the deeds of transfer to be documented and the
certificates of title to be issued upon actual reclamation. Amari’s right to
own the submerged lands is immediately effective upon the approval of the
Amended JVA and not merely an option to be exercised in the future if and
15
16
Section 5.2 (c), Amended JVA.
Ibid.
Resolution
16
G.R. No. 133250
when the reclamation is actually realized. The submerged lands, being
inalienable and outside the commerce of man, could not be the subject of the
commercial transactions specified in the Amended JVA.
Second, in the Ponce Cases the Cebu City ordinance granted Essel,
Inc. an “irrevocable option” to purchase from Cebu City not more than 70%
of the reclaimed lands.
The ownership of the reclaimed lands remained
with Cebu City until Essel, Inc. exercised its option to purchase. With the
subsequent enactment of the Government Auditing Code (Presidential
Decree No. 1445) on 11 June 1978, any sale of government land must be
made only through public bidding.
Thus, such an “irrevocable option” to
purchase government land would now be void being contrary to the
requirement of public bidding expressly required in Section 7917 of PD
17
SECTION 79. Destruction or sale of unserviceable property. — When government property has
become unserviceable for any cause, or is no longer needed, it shall, upon application of the officer
accountable therefor, be inspected by the head of the agency or his duly authorized representative in
the presence of the auditor concerned and, if found to be valueless or unsalable, it may be destroyed in
their presence. If found to be valuable, it may be sold at public auction to the highest bidder under the
supervision of the proper committee on awards or similar body in the presence of the auditor
concerned or other duly authorized representative of the Commission, after advertising by printed
notice in the Official Gazette, or for not less than three consecutive days in any newspaper of general
circulation, or where the value of the property does not warrant the expense of publication, by notices
posted for a like period in at least three public places in the locality where the property is to be sold. In
the event that the public auction fails, the property may be sold at a private sale at such price as may be
fixed by the same committee or body concerned and approved by the Commission.
Resolution
17
G.R. No. 133250
No. 1445. This requirement of public bidding is reiterated in Section 37918
of the 1991 Local Government Code.19
Obviously, the ingenious
reclamation scheme adopted in the Cebu City ordinance can no longer be
followed in view of the requirement of public bidding in the sale of
government lands.
In the instant case, the Amended JVA is a negotiated
contract which clearly contravenes Section 79 of PD No. 1445.
Third, Republic Act No. 1899 authorized municipalities and chartered
cities to reclaim foreshore lands. The two Resolutions in the Ponce Cases
upheld the Cebu City ordinance only with respect to foreshore areas, and
nullified the same with respect to submerged areas. Thus, the 27 June 1965
Resolution made the injunction of the trial court against the City of Cebu
“permanent insofar x x x as the area outside or beyond the foreshore land
proper is concerned.”
18
19
SECTION 379. Property Disposal. — When property of any local government unit has become
unserviceable for any cause or is no longer needed, it shall upon application of the officer accountable
therefor, be inspected and appraised by the provincial, city or municipal auditor, as the case may be, or
his duly authorized representative or that of the Commission on Audit and, if found valueless or
unusable, shall be destroyed in the presence of the inspecting officer.
If found valuable, the same shall be sold at public auction to the highest bidder under the supervision
of the committee on awards and in the presence of the provincial, city or municipal auditor or his duly
authorized representative. Notice of the public auction shall be posted in at least three (3) publicly
accessible and conspicuous places, and if the acquisition cost exceeds One hundred thousand pesos
(P100,000.00) in the case of provinces and cities, and Fifty thousand pesos (P50,000.00) in the case of
municipalities, notice of auction shall be published at least two (2) times within a reasonable period in
a newspaper of general circulation in the locality.
Under Section 380 of the 1991 Local Government Code, local governments can sell real property
through negotiated sale only with the approval of the Commission on Audit. Under paragraph 2 (a) of
COA Circular No. 89-296, on “Sale Thru Negotiation,” a negotiated sale may be resorted to only if
“[T]here was a failure of public auction.” The Commission on Audit enforces the express requirement
in Section 79 of the Government Auditing Code that a negotiated sale is possible only after there is a
failure of public auction.
Resolution
18
G.R. No. 133250
As we held in the 1998 case of Republic Real Estate Corporation v.
Court of Appeals,20 citing the Ponce Cases, RA No. 1899 applies only to
foreshore lands, not to submerged lands.
In his concurring opinion in
Republic Real Estate Corporation, Justice Reynato S. Puno stated that
under Commonwealth Act No. 141, “foreshore and lands under water were
not to be alienated and sold to private parties,” and that such lands
“remained property of the State.”
Justice Puno emphasized that
“Commonwealth Act No. 141 has remained in effect at present.”
The
instant case involves principally submerged lands within Manila Bay. On
this score, the Ponce Cases, which were decided based on RA No. 1899, are
not applicable to the instant case.
Fourth, the Ponce Cases involve the authority of the City of Cebu to
reclaim foreshore areas pursuant to a general law, RA No. 1899. The City
of Cebu is a public corporation and is qualified, under the 1935, 1973, and
1987 Constitutions, to hold alienable or even inalienable lands of the public
domain. There is no dispute that a public corporation is not covered by the
constitutional ban on acquisition of alienable public lands. Both the 9 July
2002 Decision and the 6 May 2003 Resolution of this Court in the instant
case expressly recognize this.
20
359 Phil. 530 (1998).
Resolution
19
G.R. No. 133250
Cebu City is an end user government agency, just like the Bases
Conversion and Development Authority or the Department of Foreign
Affairs.21
Thus, Congress may by law transfer public lands to the City of
Cebu to be used for municipal purposes, which may be public or
patrimonial. Lands thus acquired by the City of Cebu for a public purpose
may not be sold to private parties. However, lands so acquired by the City
of Cebu for a patrimonial purpose may be sold to private parties, including
private corporations.
However, in the instant case the PEA is not an end user agency with
respect to the reclaimed lands under the Amended JVA. As we explained in
the 6 May 2003 Resolution:
PEA is the central implementing agency tasked to undertake
reclamation projects nationwide. PEA took the place of the Department of
Environment and Natural Resources (“DENR” for brevity) as the government
agency charged with leasing or selling all reclaimed lands of the public
domain. In the hands of PEA, which took over the leasing and selling
functions of DENR, reclaimed foreshore (or submerged lands) lands are
public lands in the same manner that these same lands would have been
public lands in the hands of DENR. (Emphasis supplied)
21
Laurel v. Garcia, G.R. No. 92013, 25 July 1990, 187 SCRA 797.
Resolution
20
G.R. No. 133250
Our 9 July 2002 Decision explained the rationale for treating the PEA
in the same manner as the DENR with respect to reclaimed foreshore or
submerged lands in this wise:
To allow vast areas of reclaimed lands of the public domain to be
transferred to PEA as private lands will sanction a gross violation of the
constitutional ban on private corporations from acquiring any kind of
alienable land of the public domain. PEA will simply turn around, as PEA
has now done under the Amended JVA, and transfer several hundreds of
hectares of these reclaimed and still to be reclaimed lands to a single private
corporation in only one transaction. This scheme will effectively nullify the
constitutional ban in Section 3, Article XII of the 1987 Constitution which
was intended to diffuse equitably the ownership of alienable lands of the
public domain among Filipinos, now numbering over 80 million strong.
(Emphasis supplied)
Finally, the Ponce Cases were decided under the 1935 Constitution
which allowed private corporations to acquire alienable lands of the public
domain. However, the 1973 Constitution prohibited private corporations
from acquiring alienable lands of the public domain, and the 1987
Constitution reiterated this prohibition. Obviously, the Ponce Cases cannot
serve as authority for a private corporation to acquire alienable public lands,
much less submerged lands, since under the present Constitution a private
corporation like Amari is barred from acquiring alienable lands of the public
domain.
Clearly, the facts in the Ponce Cases are different from the facts in the
instant case. Moreover, the governing constitutional and statutory provisions
Resolution
21
G.R. No. 133250
have changed since the Ponce Cases were disposed of in 1965 and 1966
through minute Resolutions of a divided (6 to 5) Court.
This Resolution does not prejudice any innocent third party purchaser
of the reclaimed lands covered by the Amended JVA. Neither the PEA nor
Amari has sold any portion of the reclaimed lands to third parties. Title to
the reclaimed lands remains with the PEA. As we stated in our 9 July 2002
Decision:
In the instant case, the only patent and certificates of title issued are
those in the name of PEA, a wholly government owned corporation
performing public as well as proprietary functions. No patent or certificate of
title has been issued to any private party. No one is asking the Director of
Lands to cancel PEA’s patent or certificates of title. In fact, the thrust of the
instant petition is that PEA’s certificates of title should remain with PEA, and
the land covered by these certificates, being alienable lands of the public
domain, should not be sold to a private corporation.
As we held in our 9 July 2002 Decision, the Amended JVA “violates
glaringly Sections 2 and 3, Article XII of the 1987 Constitution.” In our 6
May 2003 Resolution, we DENIED with FINALITY respondents’ Motions
for Reconsideration.
Litigations must end some time. It is now time to
write finis to this “Grandmother of All Scams.”
WHEREFORE, the second Motions for Reconsideration filed by
Public Estates Authority and Amari Coastal Bay Development Corporation
Resolution
22
G.R. No. 133250
are DENIED for being prohibited pleadings. In any event, these Motions for
Reconsideration have no merit. No further pleadings shall be allowed from
any of the parties.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
WE CONCUR:
HILARIO G. DAVIDE, JR.
Chief Justice
JOSUE N. BELLOSILLO
Associate Justice
JOSE C. VITUG
Associate Justice
REYNATO S. PUNO
Associate Justice
ARTEMIO V. PANGANIBAN
Associate Justice
Resolution
23
G.R. No. 133250
LEONARDO A. QUISUMBING
Associate Justice
CONSUELO YNARESSANTIAGO
Associate Justice
ANGELINA SANDOVALGUTIERREZ
Associate Justice
MA. ALICIA AUSTRIAMARTINEZ
Associate Justice
RENATO C. CORONA
Associate Justice
CONCHITA CARPIO MORALES
Associate Justice
ROMEO J. CALLEJO, SR.
Associate Justice
ADOLFO S. AZCUNA
Associate Justice
DANTE O. TINGA
Associate Justice
Resolution
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G.R. No. 133250
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, it is hereby
certified that the conclusions in the above Resolution were reached in
consultation before the case was assigned to the writer of the opinion of the
Court.
HILARIO G. DAVIDE, JR.
Chief Justice