3 Chavez V Pea and Amari

6/19/2019 G.R. No. 133250, November 11, 2003.
htm
Supreme Court of the Philippines
461 Phil. 57
EN BANC
G.R. No. 133250, November 11, 2003
FRANCISCO I. CHAVEZ, PETITIONER, VS. PUBLIC
ESTATES AUTHORITY AND AMARI COASTAL BAY
DEVELOPMENT CORPORATION, RESPONDENTS.
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 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 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]
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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;
(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
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.
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:
Form of Payment Paid/Payable On Amount

Form of Payment Paid/Payable On Amount 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 60 days from date of letter 127,000,000.00
Checks (PDCs)
24 PDCs 31 Aug. '95 to 31 Jan. '98 150,000,000.00
48 PDCs Monthly, over a 12-month pd. 357,363,050.00
from date of letter
Cash bonus When sale of land begins not exceeding
157,844,100.00
Developed land Upon completion of each Costing

from Project 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)
The private entity that purchased the reclaimed lands for P1.894 billion expressly
admitted before the Senate Committees that it spent P1.754 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 Reconsideration
[7] filed by public respondent Public Estates Authority ("PEA") and private
respondent Amari Coastal Bay Development 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 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.
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 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 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 79[17] of PD No. 1445. This requirement of public bidding is reiterated in
Section 379[18] 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."
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.
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)
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 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 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.
Davide, Jr., C.J., Panganiban, Austria-Martinez, Carpio Morales, and Callejo, Sr., JJ.,
concur. Bellosillo, J., voted to grant reconsideration, pls. see dissenting opinion.
Puno, J., maintains previous qualified opinion.
Vitug, J., pls. see separate(concurring) opinion.
Quisumbing, J., voted to allow reconsideration, see separate opinion.
Ynares-Santiago, Sandoval-Gutierrez, and Corona, JJ., maintains their dissent.
Azcuna, J., no part. Tinga, J., see dissenting opinion.
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G.R. No. 133250, November 11, 2003.htm
[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.
[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."
[4] 9 July 2002 Decision, p. 4.
[5] Senate Committee Report No. 560, p. 48.
[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:
Paid/Payable On Amount Amount
28 April 1995 P 400,000,000.00
Upon signing of letter 262,500,000.00
60 days from date of letter 127,000,000.00
31 Aug. '95 to 31 Jan. '98 150,000,000.00
Monthly, over a 12-month pd. 357,363,050.00
from date of letter
When sale of land begins not exceeding
157,844,100.00
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;

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
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:
000009 dated 8/8/95 12,700,000
000010 dated 8/8/95 12,700,000
4. International Merchandising and Development Corporation:

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:

6. Chin San Cordova:

000043 dated 9/30/96 7,250,000
7. EY:
000049 dated 10/31/96 7,250,000
8. Wee Te Lato:
9. Bearer Instruments: CASH:

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:

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.
[7] Both filed on 26 May 2003. On 6 June 2003 Amari filed a Supplement to its
second Motion for Reconsideration.
[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.
[10] Sections 2 and 3, Article XII of the 1987 Constitution.
[11] Article 112 , Civil Code of the Philippines.

[12] Section 3.2 (a), Amended JVA.
[13] Section 3.3 (a), Amended JVA.
[14] Section 2.2, Amended JVA.
[15] Section 5.2 (c), Amended JVA.
[16] Ibid.
[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.
[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.
[20] 359 Phil. 530 (1998).
[21] Laurel v. Garcia, G.R. No. 92013, 25 July 1990, 187 SCRA 797.
SEPARATE OPINION
VITUG, J.:
I still maintain that the conclusion reached by the Court in its main decision is
correct, and while the reclaimed land from the submerged areas of Manila Bay
could perhaps be aptly classed as being "agricultural lands," respondent AMARI
Coastal Bay Development Corporation, being a private corporation, is
nevertheless disqualified under Article XII, Section 3,[1] of the 1987 Constitution
from directly acquiring, except by way of lease, land of the public domain.
Relative to the pronouncements in Case No. L-21870, entitled "Manuel O. Ponce,
et al. v. Hon. Amador Gomez, et al.," and Case No. L-22669, entitled "Manuel O.
Ponce, et al. v. City of Cebu, et al.," where this Court held to be valid the assailed
reclamation contracts, granting to a corporate entity the option to buy a portion of
reclaimed lands, suffice it to say that the foregoing cases were decided on 03
February 1965 and 24 June 1966, respectively, when the 1935 Constitution was still
in effect. Unlike the 1987 Charter, the 1935 Constitution did not contain any
proscription against corporations holding alienable lands of the public domain.[2]
Just the same, I should like to make a statement on what could be a grave concern
on the part of individuals, who, not being personally disqualified to hold alienable
lands of the public domain, may have been able to acquire in good faith, reclaimed
portions of the subject property from respondent AMARI Coastal Bay
Development Corporation. I believe that such contracts must be duly respected
and upheld in line with analogous and applicable jurisprudence, as well as
equitable considerations, in cases involving the conveyance to disqualified aliens of
real property that, subsequently, are acquired by nationals qualified to own such
property.[3]
In instances, where the successor-in-interest is itself a corporate entity, the

constitutional proscription would stand, but if the corporation has introduced
structures or permanent improvements thereon, such structures or improvements,
when so viewed as having been made in good faith,[4] could well be governed by
the Civil Code effectively entitling the builder to pay to the State a reasonable rent
for the use of the land[5] or to be reimbursed the value of the structures or
improvements.[6]
The above exceptional instances are issues that, in my view, could well be litigated
by the proper parties in separate proceedings.
[1]SEC. 3. Lands of the public domain are classified into agricultural, forest or
timber, mineral lands, and national parks. Agricultural lands of the public domain
may be further classified by law according to the uses to which they may be
devoted. Alienable lands of the public domain shall be limited to agricultural lands.
Private corporations or associations may not hold such alienable lands of the
public domain except by lease, for a period exceeding twenty-five years, renewable
for not more than twenty-five years, and not to exceed one thousand hectares in
area. Citizens of the Philippines may lease not more than five hundred hectares, or
acquire not more than twelve hectares thereof by purchase, homestead or grant.
Taking into account the requirements of conservation, ecology, and development,
and subject to the requirements of agrarian reform, the Congress shall determine,
by law, the size of lands of the public domain which may be acquired, developed,
held, or leased and the conditions therefore.
[2] Pertinent provisions in the 1935 Constitution provided -
Article XIII Conservation and Utilization of Natural Resources

Section 1. All agricultural, timber, and mineral lands of the public domain, waters,
minerals, coal, petroleum, and other mineral oils, all forces of potential energy and
other natural resources of the Philippines belong to the State and their disposition,
exploitation, development, or utilization shall be limited to citizens of the
Philippines or to corporations or associations at least sixty per centum of which
is owned by such citizens, subject to any existing right, grant, lease, or concession
at the time of the inauguration of the Government established under this
Constitution. Natural resources, with the exception of public agricultural land,
shall not be alienated, and no license, concession, or lease for the exploitation,
development, or utilization of any of the natural resources shall be granted for a
period exceeding twenty-five years, renewable for another twenty-five years, except
as to water rights for irrigation, water supply, fisheries, or industrial uses other
than the development of water power, in which cases beneficial use may be the
measure and the limit of the grant.
Section 3. The Congress may determine by law the size of private agricultural land
in which individuals, corporations, or associations may acquire and hold, subject
to rights existing prior to the enactment of such law.
Section 5. Save in cases of hereditary succession, no private agricultural land shall

be transferred or assigned except to individuals, corporations or associations
qualified to acquire or hold lands of the public domain in the Philippines.
[3]In De Castro v. Tan (129 SCRA 85), the petitioner, the vendor in a contract of
sale, sought to recover the subject parcel of land, which she had sold to an alien
vendee. The foreigner had, in the meantime ceded the property to a naturalized
Filipino citizen. In denying the petitioner the right to recover the land, the Court
observed that while the vendee was an alien at the time of the sale, the land had
since become the property of a naturalized Filipino citizen, who was
constitutionally qualified to own land. The Court was convinced that no public
policy would be served if a contrary rule were to be adopted. So also, in Republic
v. IAC (175 SCRA 398), the Court sustained the conveyance of a land to a
foreigner who later became a Filipino citizen.
[4]"Good faith" is deemed to be attendant where the builder believes to have a
rightful claim of title to the property.
[5] Article 448, New Civil Code provides -
The owner of the land on which anything has been built, sown or planted in good
faith, shall have the right to appropriate as his own the works, sowing or planting,
after payment of the indemnity provided for in articles 546 and 548, or to oblige
the one who built or planted to pay the price of the land, and the one who sowed,
the proper rent. However, the builder or planter cannot be obliged to buy the land
if its value is considerably more than that of the building or trees. In such case, he
shall pay reasonable rent, if the owner of the land does not choose to appropriate
the building or trees after proper indemnity. The parties shall agree upon the
terms of the lease and in case of disagreement, the court shall fix the terms
thereof.
[6] Article 546 provides:
Necessary expenses shall be refunded to every possessor; but only the possessor
in good faith may retain the thing until he has been reimbursed therefore.
Useful expenses shall be refunded only to the possessor in good faith with the
same right of retention, the person who has defeated him in the possession having
the option of refunding the amount of the expenses or of paying the increase in
value which the thing may have acquired by reason thereof.
SEPARATE OPINION
QUISUMBING, J.:
Considering the crucial significance of the action to be taken by the Court on the
PEA motion, I vote to allow a final reconsideration of the controversy.
Two points, in my view, require painstaking elucidation and clarification:
(1) How should the parcels of land now above water* - regardless of actual size in
hectares - but conveyed already to private entities by PEA and/or its partner in the
joint venture, Amari Coastal Bay Development Corporation, be treated as a
consequence of the Court's decision?
(2) May the Court at this time outlaw the long standing practice of the executive
department to pay the private individual or corporate reclaimer/developer by
means of using a proportionate share in the reclaimed land itself ? If so, shouldn't
the Court's action be prospective in nature, with adequate regard to rights and
expectations of the private parties?
(1) How should the parcels of land now above water* - regardless of actual size in hectares - but
conveyed already to private entities by PEA and/or its partner in the joint venture, Amari
Coastal Bay Development Corporation, be treated as a consequence of the Court's decision?
(2) May the Court at this time outlaw the long standing practice of the executive department to
pay the private individual or corporate reclaimer/developer by means of using a
proportionate share in the reclaimed land itself ? If so, shouldn't the Court's action be
prospective in nature, with adequate regard to rights and expectations of the private parties?
I find the cited cases in Justice Bellosillo's separate opinion, L-21870 Ponce v. Hon.
A. Gomez (Res. of Feb. 3, 1965) and L-22669 (Res. of June 24, 1966) acceptable
and instructive for the resolution of the instant controversy before us. That the
submerged lands, under the sea or below baywater, should belong to the National
Government need not be debatable. Nor would the proposition that their
ownership should pass to the municipal corporation when the city had
successfully conducted the reclamation project, through private initiative and
financial assistance, be a conceptual barrier to uphold probable rights of the
initiator and the financier that made the projects not only feasible but indeed
successful. This much at this time I would concede: state ownership of submerged
land. But after reclamation, I could not concede total nullity of private efforts and
resources spent pursuant to prior law and executive policy. Nor would I neglect to
appreciate Justice Vitug's reference to De Castro v. Tan, 129 SCRA 85, for an
equitable approach to what appears now a constitutional conundrum.
Subject to further reflection, it does not appear to me pertinent to apply Sec. 79
on disposal or sale of unserviceable property, contained in P.D. No. 1445, the
General Auditing Code, or Sec. 379 of the Local Government Code. The
requirement of bidding in regard to corporate projects of PEA is obviously

distinguishable, if not outright distinct, from disposal of surplus/junk property.
The reclamation projects like those contemplated in the PEA-AMARI joint
venture call for a greater public appreciation of equitable investment regimes by
policy-makers and private entrepreneurs alike as they impact hugely on the
economic development concerns of the nation. Thus, we are of the view that of
more pertinence in this regard are the BOT (Build, Operate, and Transfer) Law,
R.A. 6957 as amended and the Charter of PEA (P.D. No. 1084) and P.D. No. 1085
concerning reclaimed lands along Manila Bay.
Lastly, we are informed that the possible criminal responsibility, if any, of certain
officers of PEA are allegedly now before the Sandiganbayan. Be that as it may, the
merit of the question before us regarding the validity of the PEA-AMARI joint
venture is not necessarily foreclosed by cases before the Sandiganbayan which of
necessity require the highest quantum of proof, beyond reasonable doubt. Here
we are not so constrained. For our principal concern now is a thorough review of
legal issues that might have previously eluded close scrutiny. Hence the need to
grant leave for a second reconsideration.
* It would appear from the ponencia (page 9 of the Resolution) that some 167.85
hectares out of 750 hectares have already been reclaimed.
DISSENTING OPINION
SANDOVAL-GUTIERREZ, J.:
It is after deep introspection that I am constrained to dissent from the denial by
the majority of the motions for reconsideration filed by respondents PEA and
AMARI.
Chief Justice Charles Evans Hughes of the United States Supreme Court stated
that a dissent is of value because it is "an appeal to the brooding spirit of the law,
to the intelligence of a future day, when a later decision may possibly correct the
error into which the dissenting judge believes the court to have been betrayed."[1]
While I joined in the initial grant of the petition, I realized, however, that the tenor
of our interpretation of the Constitutional prohibition on the acquisition of
reclaimed lands by private corporations is so absolute and circumscribed as to
defeat the basic objectives of its provisions on "The National Economy and
Patrimony."[2]
The Constitution is a flexible and dynamic document. It must be interpreted to
meet its objectives under the complex necessities of the changing times. Provisions
6/19/2019 j pG.R. No. 133250, November 11, 2003.htm g g
intended to promote social and economic goals are capable of varying
interpretations. My view happens to differ from that of the majority. I am
confident, however, that the demands of the nation's economy and the needs of
the majority of our people will bring the majority Decision and this Dissenting
Opinion to a common understanding. Always, the goals of the Constitution must
be upheld, not defeated nor diminished.
Infrastructure building is a function of the government and ideally should be
financed exclusively by public funds. However, present circumstances show that
this cannot be done. Thus, private corporations are encouraged to invest in
income generating national construction ventures.
Investments on the scale of reclamation projects entail huge amounts of money. It

is a reality that only private corporations can raise such amounts. In the process,
they assist this country in its economic development. Consequently, our
government should not take arbitrary action against these corporate developers.
Obviously, the courts play a key role in all disputes arising in this area of national
development.
This is the background behind my second hard look at the issues and my resulting
determination to dissent.
The basic issue before us is whether a private corporation, such as respondent
AMARI, can acquire reclaimed lands.
The Decision being challenged invokes the Regalian doctrine that the State owns
all lands and waters of the public domain. The doctrine is the foundation of the
principle of land ownership that all lands that have not been acquired by purchase
or grant from the Government belong to the public domain.[3]Property of public
dominion is that devoted to public use such as roads, canals, rivers, torrents, ports
and bridges constructed by the State, riverbanks, shores, roadsteads and that of a
similar character. [4] Those which belong to the State, not devoted to public use,
and are intended for some public service or for the development of the national
wealth, are also classified as property of public dominion.[5]All other property of
the State which is not of public dominion is patrimonial. [6] Also, property of
public dominion, when no longer intended for public use or public service, shall
form part of the patrimonial property of the State.[7]
In our Decision sought to be reconsidered,[8] we held that the following laws,

among others, are applicable to the particular reclamation project involved in this
case: the Spanish Law of Waters of 1866, the Civil Code of 1889, Act No. 1654
enacted by the Philippine Commission in 1907, Act No. 2874 (the Public Land
Act of 1919), and Commonwealth Act No. 141 of the Philippine National
Assembly, also known as the Public Land Act of 1936. Certain dictums are
emphasized. Reclaimed lands of the government may be leased but not sold to
private corporations and private individuals. The government retains title to lands
it reclaims. Only lands which have been officially delimited or classified as

alienable shall be declared open to disposition or concession.
Applying these laws and the Constitution, we then concluded that the submerged
areas of Manila Bay are inalienable natural resources of the public domain, outside
the commerce of man. They have to be classified by law as alienable or disposable
agricultural lands of the public domain and have to be declared open to
disposition. However, there can be no classification and declaration of their
alienable or disposable nature until after PEA has reclaimed these submerged
areas. Even after the submerged areas have been reclaimed from the sea and
classified as alienable or disposable, private corporations such as respondent
AMARI, are disqualified from acquiring the reclaimed land in view of Section 3,
Article XII of the Constitution, quoted as follows:
"Lands of the Public domain are classified into agricultural, forest or
timbre, mineral lands, and national parks. Agricultural lands of the
public domain may be further classified by law according to the uses to
which they may be devoted. Alienable lands of the public domain shall
be limited to agricultural lands. Private corporations or associations
may not hold such alienable lands of the public domain except by
lease, for a period not exceeding twenty-five years, renewable for not
more than twenty-five years, and not to exceed one thousand hectares in
area. Citizens of the Philippines may lease not more than five hundred
hectares, or acquire not more than twelve hectares thereof by purchase,
homestead, or grant.
"Taking into account the requirements of conservation, ecology, and

development, and subject to the requirements of agrarian reform, the
Congress shall determine, by law, the size of lands of the public domain
which may be acquired, developed, held, or leased and the conditions
therefor."
I dissent from the foregoing conclusions which are based on general laws mainly
of ancient vintage. Reclaimed lands, especially those under the Manila-Cavite
Coastal Road and Reclamation Project (MCCRRP), are governed by PD 1084[9]
and PD 1085[10] enacted in 1976 and 1977, respectively, or more than half a
century after the enactment of the Public Lands Acts of 1919 and 1936.
PD 1084 and PD 1085 provide:

PD 1084-
"Section 4. Purposes. - The Authority is hereby created for the following
purposes:
a. To reclaim land, including foreshore and submerged areas, by
dredging, filling or other means, or to acquire reclaimed land;
b. To develop, improve, acquire, administer, deal in, subdivide, dispose,

lease and sell any and all kinds of lands, buildings, estates and other
forms of real property, owned, managed, controlled and/or operated by
the government;
c. To provide for, operate or administer such services as may be
necessary for the efficient, economical and beneficial utilization of the
above properties. (Emphasis ours)
PD 1085-
"The land reclaimed in the foreshore and offshore area of Manila Bay
pursuant to the contract for the reclamation and construction of the
Manila- Cavite Coastal Road Project between the Republic of the
Philippines and the Construction and Development Corporation of the
Philippines dated November 20, 1973 and/or any other contract or
reclamation covering the same area is hereby transferred, conveyed
and assigned to the ownership and administration of the Public
Estates Authority established pursuant to P.D. No. 1084; Provided,
however, that the rights and interest of the Construction and
Development Corporation of the Philippines pursuant to the aforesaid
contract shall be recognized and respected.
xxx xxx xxx
"Special land patent/patents shall be issued by the Secretary of Natural

Resources in favor of the Public Estates Authority without prejudice to
the subsequent transfer to the contractor or his assignees of such
portion or portions of the land reclaimed or to be reclaimed as
provided for in the above-mentioned contract. On the basis of such
patents, the Land Registration Commission shall issue the
corresponding certificates of title." (Emphasis Ours)
Pursuant to the above provisions, PEA is mandated inter alia to reclaim land,
including foreshore and submerged areas, or to acquire reclaimed land. Likewise,
PEA has the power to sell any and all kinds of lands and other forms of real
property owned and managed by the government. Significantly, PEA is
authorized to transfer to the contractor or its assignees portion or portions
of the land reclaimed or to be reclaimed.
It is a fundamental rule that if two or more laws govern the same subject, every
effort to reconcile and harmonize them must be taken. Interpretare et concordare
legibus est optimus interpretandi. Statutes must be so construed and harmonized with
other statutes as to form a uniform system of jurisprudence.[11] However, if
several laws cannot be harmonized, the earlier statute must yield to the later
enactment. The later law is the latest expression of the legislative will.[12]
Therefore, it is PD 1084 and PD 1085 which apply to the issues in this case.
Moreover, the laws cited in our Decision are general laws which apply equally to
all the individuals or entities embraced by their provisions. [13] The provisions
refer to public lands in general.
Upon the other hand, PD 1084 and PD 1085 are special laws which relate to
particular economic activities, specific kinds of land and a particular group of
persons.[14] Their coverage is specific and limited. More specifically, these
special laws apply to land reclaimed from Manila Bay by private
corporations.
If harmonization and giving effect to the provisions of both sets of laws is

not possible, the special law should be made to prevail over the general law,
as it evinces the legislative intent more clearly. The special law is a specific
enactment of the legislature which constitutes an exception to the general statute.
[15]
Our Decision cites the constitutional provision banning private corporations from
acquiring any kind of alienable land of the public domain. [16]
Under the Constitution, lands of the public domain are classified into agricultural,
forest or timber, mineral lands, and natural parks. [17] Land reclaimed from the
sea cannot fall under any of the last three categories because it is neither
forest or timber, mineral, nor park land. It is, therefore, agricultural land.
[18] Agricultural land of the public domain may be alienated. [19] However,
the Constitution states that private corporations may not hold such alienable land
except by lease. It follows that AMARI, being a private corporation, cannot hold
any reclaimed area. But let it be made clear that PD 1084 transfers the public
agricultural land formed by reclamation to the "ownership and administration" of
PEA, a government owned corporation. The transfer is not to AMARI, a private
corporation, hence, the constitutional prohibition does not apply. Corollarily,
under PD 1085, PEA is empowered to subsequently transfer to the contractor
portion or portions of the land reclaimed or to be reclaimed.
Does the Constitution restrain PEA from effecting such transfer to a private
corporation? Under Article 421 of the Civil Code, all property of the State which
is not of public dominion is patrimonial. PEA does not exercise sovereign
functions of government. It handles business activities for the government.
Thus, the property in its hands, not being of public dominion, is held in a
patrimonial capacity. PEA, therefore, may sell this property to private corporations
without violating the Constitution. It is relevant to state that there is no
constitutional obstacle to the sale of real estate held by government owned
corporations, like the National Development Corporation, the Philippine National
Railways, the National Power Corporation, etc. to private corporations. Similarly,
why should PEA, being a government owned corporation, be prohibited to sell its
reclaimed lands to private corporations?
I take exception to the view of the majority that after the enactment of the 1935
Constitution, Section 58 of Act 2874 continues to be applicable up to the present
and that the long established state policy is to retain for the government title and
ownership of government reclaimed land. This simply is an inaccurate statement
of current government policy. When a government decides to reclaim the land,
such as the area comprising and surrounding the Cultural Center Complex and
other parts of Manila Bay, it reserves title only to the roads, bridges, and spaces
allotted for government buildings. The rest is designed, as early as the drawing
board stage, for sale and use as commercial, industrial, entertainment or services-
oriented ventures. The idea of selling lots and earning money for the government
is the motive why the reclamation was planned and implemented in the first place.
May I point out that there are other planned or on-going reclamation projects in
the Philippines. The majority opinion does not only strike down the Joint Venture
Agreement (JVA) between AMARI and PEA but will also adversely affect or
nullify all other reclamation agreements in the country. I doubt if government
financial institutions, like the Development Bank of the Philippines, the
Government Service Insurance System, the Social Security System or other
agencies, would risk a major portion of their funds in a problem-filled and highly
speculative venture, like reclamation of land still submerged under the sea.
Likewise, there certainly are no private individuals, like business tycoons and
similar entrepreneurs, who would undertake a major reclamation project without
using the corporate device to raise and disburse funds and to recover the
amounts expended with a certain margin of profits. And why should corporations
part with their money if there is no assurance of payment, such as a share in the
land reclaimed or to be reclaimed? It would be most unfair and a violation of
procedural and substantive rights [20] to encourage investors, both Filipino and
foreign, to form corporations, build infrastructures, spend money and efforts only
to be told that the invitation to invest is unconstitutional or illegal with absolutely
no indication of how they could be compensated for their work.
It has to be stressed that the petition does not actually assail the validity of the
JVA between PEA and AMARI. The petition mainly seeks to compel PEA to
disclose all facts on the then on-going negotiations with respondent AMARI with
respect to the reclamation of portions of Manila Bay. Petitioner relies on the
Constitutional provision that the right of the people to information on matters of
public concern shall be recognized and that access to papers pertaining to official
transactions shall be afforded the citizen.[21] I believe that PEA does not have to
reveal what was going on from the very start and during the negotiations with a
private party. As long as the parties have the legal capacity to enter into a valid
contract over an appropriate subject matter, they do not have to make public,
especially to competitors, the initial bargaining, the give- and-take arguments,
the mutual concessions, the moving from one position to another, and other
preliminary steps leading to the drafting and execution of the contract. As in
negotiations leading to a treaty or international agreement, whether sovereign or
commercial in nature, a certain amount of secrecy is not only permissible but
compelling.
At any rate, recent developments appear to have mooted this issue, and anything
in the Decision which apparently approves publicity during on-going negotiations
without pinpointing the stage where the right to information appears is obiter. The
motions for reconsideration all treat the JVA as a done thing, something
already concrete, if not finalized.
Indeed, it is hypothetical to identify exactly when the right to information begins
and what matters may be disclosed during negotiations for the reclamation of land
from the sea.
Unfortunately for private respondent, its name, "AMARI," happens to retain

lingering unpleasant connotations. The phrase "grandmother of all scams," arising
from the Senate investigation of the original contract, has not been completely
erased from the public mind.
However, any suspicion of anything corrupt or improper during the initial

negotiations which led to the award of the reclamation to AMARI are completely
irrelevant to this petition. It bears stressing that the Decision and this Dissenting
Opinion center exclusively on questions of constitutionality and legality earlier
discussed.
To recapitulate, it is my opinion that there is nothing in the Constitution or

applicable statutes which impedes the exercise by PEA of its right to sell or
otherwise dispose of its reclaimed land to private corporations, especially where, as
here, the purpose is to compensate respondent AMARI, the corporate developer,
for its expenses incurred in reclaiming the subject areas. Pursuant to PD 1084 and
PD 1085, PEA can transfer to the contractor, such as AMARI, such portion
or portions of the land reclaimed or to be reclaimed.
WHEREFORE, I vote to GRANT the motions for reconsideration and to
DISMISS the petition for lack of merit.
[1] Hughes, The Supreme Court of the United States, p. 68; cited in Sinco,
Philippine Political Law, Eleventh Edition, 326.
[2] Sections 1, 3 and 6, Article XII; Section 9, Article II, Constitution.
[3] Cariño vs. Insular Government, 41 Phil. 935 (1909).
[4] Article 420, Civil Code.
[5] Id.
[6] Article 421, id.

[7] Article 422, id.
[8] Pp. 27-28.
[9] Creating the Public Estate Authority, defining its powers and functions,
providing funds therefor and for other purposes.
[10] Conveying the land reclaimed in the foreshore and offshore of the Manila Bay
(The Manila-Cavite Coastal Road Project) as property of the Public Estates
Authority as well as rights and interest with assumption of obligations in the
reclamation contract covering areas of the Manila Bay between the Republic of the
Philippines and the Construction and Development Corporation of the
Philippines.
[11] Valera vs. Tuazon, 80 Phil. 823 (1948).
[12] Eraña vs. Vergel de Dios, 85 Phil. 17 (1947); City of Naga vs. Agna, 71 SCRA
176 (1976).
[13] U.S. vs. Serapio, 23 Phil. 584 (1912); Villegas vs. Subido, 41 SCRA 190 (1971);
Bagatsing vs. Ramirez, 74 SCRA 306 (1976).
[14] U.S. vs. Serapio, supra; Valera vs. Tuazon, supra.
[15] Licauco & Co. vs. Apostol, 44 Phil. 138 (1922); De Jesus vs. People, 120 SCRA
760 (1983).
[16] Section 3, Article XII, Constitution.
[17] Id.
[18] Krivenko vs. Register of Deeds, 79 Phil. 461 (1947).
[19] Section 3, Article XII, Constitution.
[20] Section 1, Article III, id. on deprivation of property without due process of
law, Section 9 on eminent domain is also infringed.
[21] Section 7, Article III, id.
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6/19/2019 G.R. No. 133250, November 11, 2003.

Supreme Court of the Philippines

This Court is asked to legitimize a government contract that conveyed to a private

The Consideration for the Property

(2) An appraisal by Valencia Appraisal Corporation concluding that the Property is

The credibility of the foregoing appraisals, however, are [sic] greatly

In addition, AMARI agreed to pay huge commissions and bonuses to

1. Annex "M," Certified True Copy of BIR Zonal Valuations as certified by

2. Annex "N," Certification of Soledad S. Medina-Cue, Municipal Assessor,

3. Exhibit "1-Engr. Santiago," the Appraisal Report of the Commission on

A Letter-Agreement dated 09 June 1995 signed by Messrs. Premchai

Form of Payment Paid/Payable On Amount

Developed land Upon completion of each Costing

Mr. Luis Benitez of SGV, the external auditors of AMARI,

However, the Supplement to "Separate Opinion, Concurring and Dissenting" of

A Letter-Agreement dated 09 June 1995 signed by Messrs. Premchai

1) Twenty-nine (29) manager's checks at P10 million each;

"3.2 Twenty-Four (24) checks in the total amount of One Hundred

DUE DATE OF CHECK AMOUNT

4. International Merchandising and Development Corporation:

5. Golden Star Industrial Corporation:

6. Chin San Cordova:

9. Bearer Instruments: CASH:

10. Payee's Name Not Legible:

[11] Article 112 , Civil Code of the Philippines.

[12] Section 3.2 (a), Amended JVA.

[13] Section 3.3 (a), Amended JVA.

[14] Section 2.2, Amended JVA.

[15] Section 5.2 (c), Amended JVA.

[17] SECTION 79. Destruction or sale of unserviceable property. -- When government

In instances, where the successor-in-interest is itself a corporate entity, the

Article XIII Conservation and Utilization of Natural Resources

Section 5. Save in cases of hereditary succession, no private agricultural land shall

requirement of bidding in regard to corporate projects of PEA is obviously

Investments on the scale of reclamation projects entail huge amounts of money. It

In our Decision sought to be reconsidered,[8] we held that the following laws,

it reclaims. Only lands which have been officially delimited or classified as

"Taking into account the requirements of conservation, ecology, and

PD 1084 and PD 1085 provide:

b. To develop, improve, acquire, administer, deal in, subdivide, dispose,

"Special land patent/patents shall be issued by the Secretary of Natural

If harmonization and giving effect to the provisions of both sets of laws is

Unfortunately for private respondent, its name, "AMARI," happens to retain

However, any suspicion of anything corrupt or improper during the initial

To recapitulate, it is my opinion that there is nothing in the Constitution or

[3] Cariño vs. Insular Government, 41 Phil. 935 (1909).

[4] Article 420, Civil Code.

[6] Article 421, id.

[8] Pp. 27-28.

[18] Krivenko vs. Register of Deeds, 79 Phil. 461 (1947).

[19] Section 3, Article XII, Constitution.

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