EN BANC

Document Sample
EN BANC Powered By Docstoc
					                                          EN BANC

FRANCISCO I. CHAVEZ,                                                   G. R. No. 133250
               Petitioner,
                                                                       Present:
                                                                        Davide, Jr., C.J.,
                                                                        Bellosillo,
                                                                        Puno,
                                                                        Vitug,
                                                                        Panganiban,
                                                                        Quisumbing,
            - versus -                                                  Ynares-Santiago,
                                                                        Sandoval-Gutierrez,
                                                                        Carpio,
                                                                        Austria-Martinez,
                                                                        Corona,
                                                                        Carpio Morales,
                                                                        Callejo, Sr.,
                                                                        Azcuna, and
                                                                         Tinga, JJ.

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
Resolution                                       2                              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
    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.
2
    6 May 2003 Resolution, p. 13.
Resolution                                           3                                 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)      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;

3
    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.”
Resolution                                  4                            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
    9 July 2002 Decision, p. 4.
5
    Senate Committee Report No. 560, p. 48.
Resolution                                           7                               G.R. No. 133250




               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.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 Citibank-
    Makati 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                                          8                                  G.R. No. 133250




     2)   One (1) manager’s check at P7 million; and,
     3)   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             Million Pesos
           (Pesos 150,000,000) as follows:

             DUE DATE OF CHECK AMOUNT

                          August 31, 1995                      P   6,250,000
                          March 31, 1996                           6,250,000
                          April 30, 1996                           6,250,000
                          May 31, 1996                             6,250,000
                          June 30, 1996                            6,250,000
                          July 31, 1996                            6,250,000
                          August 31, 1996                          6,250,000
                          September 30, 1996                       6,250,000
                          October 31, 1996                         6,250,000
                          November 30, 1996                        6,250,000
                          December 31, 1996                        6,250,000
                          January 31, 1997                         6,250,000
                          February 28, 1997                        6,250,000
                          March 31,1997                            6,250,000
                          April 30, 1997                           6,250,000
                          May 31, 1997                             6,250,000
                          June 30, 1997                            6,250,000
                          July 31, 1997                            6,250,000
                          August 31, 1997                          6,250,000
                          September 30, 1997                       6,250,000
                          October 31, 1997                         6,250,000
                          November 30, 1997                        6,250,000
                          December 31, 1997                        6,250,000
Resolution                                        9                                G.R. No. 133250




                        January 31, 1998                      6,250,000
                                 Total                     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 twenty-
             four 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.   Emmanuel Sy:
       Citibank Check No. 000019 dated 10/31/96       P 6,250,000

  2.   Manuel Sy:
       Citibank Check No. 000007 dated 8/8/95          12,700,000

  3.   Sy Pio Lato:
        Citibank Check No. 000008 dated 8/8/95         12,700,000
                           000009 dated 8/8/95         12,700,000
                           000010 dated 8/8/95         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

  6.   Chin San Cordova:
        Citibank Check No. 000041 dated 8/31/96          7,250,000
                           000043 dated 9/30/96          7,250,000

  7.   EY:
       Citibank Check No. 000047 dated 10/31/96         7,250,000
                          000049 dated 10/31/96         7,250,000
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.    Wee Te Lato:
         Citibank Check No. 000048 dated 10/31/96        7,250,000

  9.    Bearer Instruments: CASH:
         Citibank Check No. 000001 dated 8/8/95         12,700,000
                            000002 dated 8/8/95         12,700,000
                            000003 dated 8/8/95         12,700,000
                            000004 dated 8/8/95         12,700,000
                            000005 dated 8/8/95         12,700,000
                            000006 dated 8/8/95         12,700,000
                            000012 dated 3/31/96         6,250,000
                            000017 dated 8/31/96         6,250,000
                            000039 dated 8/31/96         7,250,000
                            000040 dated 8/31/96         7,250,000
                            000042 dated 8/31/95         8,000,000
                            000044 dated 9/30/96         7,250,000
                            000046 dated 9/30/96         7,250,000
                            000050 dated 10/31/96        8,000,000

  10.   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 post-
  dated checks (PDCs), with a face value of P6.25 million per check, described in the Letter-
  Agreement. 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. L-

22669 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             The correct formulation, however, is that



8
    Filed on 19 August 2003.
9
    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
     Sections 2 and 3, Article XII of the 1987 Constitution.
11
     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
     Section 3.2 (a), Amended JVA.
13
     Section 3.3 (a), Amended JVA.
14
     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
     Section 5.2 (c), Amended JVA.
16
     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
     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.
19
     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                     REYNATO S. PUNO
        Associate Justice                       Associate Justice




        JOSE C. VITUG                   ARTEMIO V. PANGANIBAN
        Associate Justice                   Associate Justice
Resolution                    23                 G.R. No. 133250




 LEONARDO A. QUISUMBING             CONSUELO YNARES-
      Associate Justice                SANTIAGO
                                      Associate Justice




    ANGELINA SANDOVAL-              MA. ALICIA AUSTRIA-
        GUTIERREZ                        MARTINEZ
       Associate Justice               Associate Justice




      RENATO C. CORONA         CONCHITA CARPIO MORALES
        Associate Justice            Associate Justice




    ROMEO J. CALLEJO, SR.            ADOLFO S. AZCUNA
       Associate Justice               Associate Justice




                      DANTE O. TINGA
                       Associate Justice
Resolution                             24                       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

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:18
posted:8/14/2011
language:Latin
pages:24