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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.
R E S O L U T I O N
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]
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:
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:
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:
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:
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.
[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:
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:
Mr. Emmanuel Sy admitted signing several blank checks as special request from Messrs. Co and Chua and issuing said checks as follows:
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.
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.
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?
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.
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 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:
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.
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]
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 :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:
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?x x x
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)
- 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.
- 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.
- 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.
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: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?
Form of Payment Paid/Payable On AmountMr. Luis Benitez of SGV, the external auditors of AMARI, testified that said Letter-Agreement was approved by the AMARI Board.[6] (Emphasis supplied)
Manager's Checks 10 Post Dated Checks (PDCs) 24 PDCs 48 PDCs
from date of letterCash bonus Developed land from Project
phase
300,000,000.00
==============
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.
[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:
Mr. Luis Benitez of SGV, the external auditors of AMARI, testified that said Letter-Agreement was approved by the AMARI Board.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:
from date of letter
phase
300,000,000.00
==============
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;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.
2) One (1) manager's check at P7 million; and,
3) One (1) manager's check at P3 million.
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;In this regard, the pertinent portion of the 9 June 1995 letter-agreement provides as follows:
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.
"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:DUE DATE OF CHECK AMOUNT
"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:
==========
"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: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:
"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."
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 |
| | | | | |
| | 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.
[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 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.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.
"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."
PD 1084 and PD 1085 provide: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.
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)
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.