02.05 Chavez vs. PEA-AMARI (G.R. No. 133250 11 Nov. 2003, 415 SCRA 403)

EN BANC
[G.R. No. 133250. November 11, 2003.]

FRANCISCO I. CHAVEZ , petitioner, vs . PUBLIC ESTATES AUTHORITY
and AMARI COASTAL BAY DEVELOPMENT CORPORATION ,
respondents.
Romulo, Mabanta, Buenaventura, Sayoc & Delos Angeles for Central Bay Reclamation, etc.
Zaldy V. Trespeses for intervenor Prime Orion Phil. Inc.
The Solicitor General for public respondent.
Sugay Law Office for movants R.S. Atienza, et al.
Abello, Concepcion, Regala and Cruz for movants Foreign Investors
Italian-Thai Dev't & Centasia, etc.
SYNOPSIS
The Supreme Court denied with finality respondents' motions for reconsideration seeking
to legitimize a government contract that conveyed to Amari Coastal Bay Development
Corporation without public bidding 157.84 hectares of reclaimed public lands along Roxas
Boulevard in Metro Manila, ruling that any sale of submerged or foreshore lands is void
being contrary to the Constitution. Submerged lands, like the waters (sea or bay) above
them, are property of the public dominion, absolutely inalienable and outside the
commerce of man under Sec. 2, Art. XII of the 1987 Constitution.
The ruling of the Court in the Ponce cases cannot serve as an authority for a private
corporation like Amari to acquire submerged lands or reclaimed submerged lands within
Manila Bay under an amended joint venture. In said Ponce cases, the Cebu City ordinance
merely granted Essel, Inc. an "irrevocable option" to purchase foreshore lands after the
reclamation. 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, public respondent Public Estates Authority (PEA) immediately
transferred its rights and ownership over the subject area, 78% of which is still submerged,
to the joint venture which is 70% owned by Amari. These still submerged lands are
inalienable and outside the commerce of man. The Supreme Court also ruled that under
the Government Auditing Code, government land should not be sold without public
bidding; and that under the present Constitution, a private corporation like Amari is
prohibited from acquiring alienable lands of the public domain.
SYLLABUS
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1. CONSTITUTIONAL LAW; REGALIAN DOCTRINE; SUBMERGED LANDS ARE PROPERTY OF

THE STATE AND ARE INALIENABLE. Submerged lands are owned by the State and are
inalienable. [Pursuant to] Article XII of the 1987 Constitution. . . 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. This is also true with respect to foreshore lands. Any sale of
submerged or foreshore lands is void being contrary to the Constitution.
2. ID.; ID.; ID.; RECLAIMED LANDS ARE NO LONGER FORESHORE OR SUBMERGED LANDS
AND THUS MAY QUALIFY AS ALIENABLE AGRICULTURAL LANDS; COURT RULING IN
PONCE CASES NOT APPLICABLE TO CASE AT BAR. This is why [in the Ponce Cases], 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.
3. ID.; ID.; P.D. NO. 1445, OTHERWISE KNOWN AS THE GOVERNMENT AUDITING CODE;
REQUIREMENT OF PUBLIC BIDDING IN THE SALE OF GOVERNMENT LANDS; VIOLATED IN
CASE AT BAR. 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 of PD No. 1445. This requirement of public bidding is
reiterated in Section 379 of the 1991 Local Government Code. 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.
4. ID.; ID.; PRIVATE CORPORATIONS ARE BARRED FROM ACQUIRING ALIENABLE LANDS
OF THE PUBLIC DOMAIN; CASE AT BAR. 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.
VITUG, J., Separate Opinion:
1. CONSTITUTIONAL LAW; REGALIAN DOCTRINE; RECLAIMED LANDS; A PRIVATE
CORPORATION IS DISQUALIFIED TO ACQUIRE RECLAIMED LANDS UNDER ARTICLE XII,
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SECTION 3 OF THE 1987 CONSTITUTION. I still maintain that the conclusion reached by
the Court in its main decision is correct, and while the reclaimed land for 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, of the 1987 Constitution from directly
acquiring, .except by way of lease, land of the public domain. Relative to the
pronouncements in Case No. 1-21870, entitled "Manuel 0. Ponce, et al. v. Hon. Amador
Gomez, et al.," and Case No. L-22669, entitled "Manuel 0. 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. ID.; ID.; ID.; RIGHTS OF PERSONS NOT DISQUALIFIED TO HOLD ALIENABLE LANDS OF
THE PUBLIC DOMAIN WHO MAY HAVE PREVIOUSLY ACQUIRED RECLAIMED LANDS
SHOULD BE RESPECTED. 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. 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, 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 or to be reimbursed the value of the
structures, or improvements.
QUISUMBING, J., Separate Opinion:
1. CONSTITUTIONAL LAW; REGALIAN DOCTRINE; COURT RULING ON STATE OWNERSHIP
AND INALIENABILITY OF SUBMERGED LAND SHOULD BE PROSPECTIVE IN NATURE;
ADEQUATE REGARD SHOULD BE GIVEN TO RECLAIMED LAND CONVEYED ALREADY TO
PRIVATE PARTIES. Two points, in my view, require painstaking elucidation and
clarification: (I) 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-22661(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
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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.
2. ID.; ID.; RECLAIMED LANDS; BUILD, OPERATE AND TRANSFER LAW, R.A. 6957 AS
AMENDED, THE CHARTER OF PEA (P.D. NO. 1084) AND P.D. NO. 1085 ARE OF MORE
PERTINENCE TO RECLAMATION PROJECTS THAN THE GENERAL AUDITING CODE (P.D.
NO. 1445) WHICH REQUIRES BIDDING OF CORPORATE PROJECTS. 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.
SANDOVAL-GUTIERREZ, J., Dissenting Opinion:
1. CONSTITUTIONAL LAW; REGALIAN DOCTRINE; PROHIBITION ON THE ACQUISITION OF
RECLAIMED LANDS BY PRIVATE CORPORATIONS SHOULD NOT BE ABSOLUTE AS TO
DEFEAT THE GOALS OF THE CONSTITUTION. 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." 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. .. 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 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.
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2. ID.; ID.; ID.; LAND RECLAIMED FROM MANILA BAY ARE GOVERNED BY PD 1084 AND PD
1085 WHICH ARE SPECIAL LAWS THEREON; CASE AT BAR. In our Decision sought to be
reconsidered, 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. . . 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 and PD 1085 enacted in 1976 and 1977,
respectively, or more than half a century after the enactment of the Public Lands Acts of
1919 and 1936.
3. STATUTORY CONSTRUCTION; RULE WHERE TWO OR MORE LAWS GOVERN THE SAME
SUBJECT; CASE AT BAR. 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: 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. Therefore, it is PD 1084 and PD
1085 which apply to the issues in this case.
TINGA, J., Dissenting Opinion:
1. CONSTITUTIONAL LAW; REGALIAN DOCTRINE; RECLAIMED LAND DOES NOT FALL
UNDER THE CATEGORY OF NATURAL RESOURCES WHICH UNDER THE CONSTITUTION
ARE INALIENABLE; STATUTORY LAW DETERMINES THE STATUS OF RECLAIMED LAND.
Reclaimed land does not fall under the category of natural resources which under the
Constitution are inalienable. This is so because its development from the seabed entails
human intervention. It is unlike land per se, which having become such on account of the
forces of nature, is considered a natural a resource. That being the case, it is statutory law
which determines the status of reclaimed land. In other words, the matter of
categorization of reclaimed land is a legislative function.
2. ID.; ID.; ID.; ID.; LAND RECLAIMED PURSUANT TO SPECIAL LAWS BY A PRIVATE
INDIVIDUAL OR ENTITY IS CLASSIFIED AS PRIVATE PROPERTY; CASE AT BAR.
Whenever land reclamation authorized by law is undertaken by a private individual or entity,
the reclaimed lands which the developer secures by way of payment is classified as
private property. There is no need for another special law declaring the lands alienable as
the reclamation law itself provides the legal basis that renders them alienable, unless of
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course there is a contrary provision in the law. The laws ordaining that reclaimed lands
become lands of the public domain are the exception rather than the rule. The Public Land
Acts (Act No. 2874 and Commonwealth Act No. 141) typify the few laws which provide
that reclaimed lands are not alienable. But the categorization applies only to lands
reclaimed by the National Government. It does not cover lands reclaimed by private
individuals or entities, including local government units authorized by law. In other words,
Commonwealth Act No. 141, being a general law, is not applicable to lands reclaimed
pursuant to special laws, such as the reclaimed land subject of this case.
RESOLUTION
CARPIO , J :
p
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
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
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meter. The Municipal Assessor of Paraaque, 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 Paraaque to reduce the
valuation of various reclaimed properties thereat in order for PEA to save on
accrued real property taxes.
PEA's justification for the purchase price are various appraisal reports, particularly
the following:
(1) An appraisal by Vic T. Salinas Realty and Consultancy Services
concluding that the Property is worth P500.00 per square meter for
the smallest island and P750.00 per square meter for the two other
islands, or a total of P1,170,000.00 as of 22 February 1995;
(2) An appraisal by Valencia Appraisal Corporation concluding that the
Property is worth P850 per square meter for Island I, P800 per
square meter for Island II and P600 per square meter for the
smallest island, or a total of P1,289,732,000, also as of 22 February
1995; and
(3) An Appraisal by Asian Appraisal Company, Inc. (AACI), stating that the
Property is worth approximately P1,000 per square meter for Island
I, P950 per square meter for Island II and P600 per square meter for
Island III, or a total of P1,518,805,000 as of 27 February 1995.
The credibility of the foregoing appraisals, however, are [sic] greatly impaired by a
subsequent appraisal report of AACI stating that the property is worth P4,500.00
per square meter as of 26 March 1996. Such discrepancies in the appraised value
as appearing in two different reports by the same appraisal company submitted
within a span of one year render all such appraisal reports unworthy of even the
slightest consideration. Furthermore, the appraisal report submitted by the
Commission on Audit estimates the value of the Property to be approximately
P33,673,000,000.00, or P21,333.07 per square meter.
There were also other offers made for the property from other parties which
indicate that the Property has been undervalued by PEA. For instance, on 06
March 1995, Mr. Young D. See, President of Saeil Heavy Industries Co., Ltd.,
(South Korea), offered to buy the property at P1,400.00 and expressed its
willingness to issue a stand-by letter of credit worth $10 million. PEA did not
consider this offer and instead finalized the JVA with AMARI. Other offers were
made on various dates by Aspac Management and Development Group Inc. (for
P1,600 per square meter), Universal Dragon Corporation (for P1,600 per square
meter), Cleene Far East Manila Incorporated and Hyosan Prime Construction Co.
Ltd. which had prepared an Irrevocable Clean Letter of Credit for P100,000,000.
In addition, AMARI agreed to pay huge commissions and bonuses to various
persons, amounting to P1,596,863,050.00 (P1,754,707,150.00 if the bonus is
included), as will be discussed fully below, which indicate that AMARI itself
believed the market value to be much higher than the agreed purchase price. If
such commissions are added to the purchase price, AMARI's acquisition cost for
the Property will add-up to P3,490,992,250.00 (excluding the bonus). If AMARI
was willing to pay such amount for the Property, why was PEA willing to sell for
only P1,894,129,200.00, making the Government stand to lose approximately
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P1,596,863,050.00?
xxx xxx xxx
Even if we simply assume that the market value of the Property is half of the
market value fixed by the Municipal Assessors Office of Paraaque for lands
along Roxas Boulevard, or P3,000.00 per square meter, the Government now
stands to lose approximately P2,841,193,800.00. But an even better assumption
would be that the value of the Property is P4,500.00 per square meter, as per the
AACI appraisal report dated 26 March 1996, since this is the valuation used to
justify the issuance of P4 billion worth of shares of stock of Centennial City Inc.
(CCI) in exchange for 4,800,000 AMARI shares with a total par value of only
P480,000,000.00. With such valuation, the Government's loss will amount to
P5,208,855,300.00.
Clearly, the purchase price agreed to by PEA is way below the actual value of the
Property, thereby subjecting the Government to grave injury and enabling AMARI
to enjoy tremendous benefit and advantage. (Emphasis supplied)
The Senate Committee Report No. 560 attached the following official documents from the
Bureau of Internal Revenue, the Municipal Assessor of Paraaque, Metro Manila, and the
Commission on Audit:
1. Annex "M," Certified True Copy of BIR Zonal Valuations as certified by Antonio
F. Montemayor, Revenue District Officer. This official document fixed the
market value of the 157.84 hectares at P7,800 per square meter.
2. Annex "N," Certification of Soledad S. Medina-Cue, Municipal Assessor,
Paraaque, dated 10 December 1996. This official document fixed the
market value at P6,000 per square meter.
3. Exhibit "I-Engr. Santiago," the Appraisal Report of the Commission on Audit.
This official document fixed the market value at P21,333.07 per square
meter.
Whether based on the official appraisal of the BIR, the Municipal Assessor or the
Commission on Audit, the P1,200 per square meter purchase price, or a total of P1.894
billion for the 157.84 hectares of government lands, is grossly and unconscionably
undervalued. The authoritative appraisal, of course, is that of the Commission on Audit
which valued the 157.84 hectares at P21,333.07 per square meter or a total of P33.673
billion. Thus, based on the official appraisal of the Commission on Audit, the independent
constitutional body that safeguards government assets, the actual loss to the Filipino
people is a shocking P31.779 billion.
This gargantuan monetary anomaly, aptly earning the epithet "Grandmother of All Scams," 4
is not the major defect of this government contract. The major flaw is not even the P1 .754
billion in commissions the Senate Committees discovered the private entity paid to
various persons to secure the contract, 5 described in Senate Report No. 560 as follows:
A Letter-Agreement dated 09 June 1995 signed by Messrs. Premchai Karnasuta
and Emmanuel Sy for and in behalf of AMARI, on the one hand, and stockholders
of AMARI namely, Mr. Chin San Cordova (a.k.a. Benito Co) and Mr. Chua Hun
Siong (a.k.a. Frank Chua), on the other, sets forth various payments AMARI paid
or agreed to pay the aforesaid stockholders by way of fees for "professional
efforts and services in successfully negotiating and securing for AMARI the Joint
Venture Agreement", as follows:
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Form of Payment Paid/Payable On Amount
Manager's Checks 28 April 1995 P400,000,000.00

Manager's Checks Upon signing of letter 262,500,000.00
10 Post Dated Checks (PDCs) 60 days from date of letter 127,000,000.00
24 PDCs 31 Aug. '95 to 31 Jan. '98 150,000,000.00
48 PDCs Monthly, over a 12-month
pd. from date of letter 357,363,050.00
Cash bonus When sale of land begins not exceeding
157,844,100.00
Developed land from Project Upon completion of each Costing
phase 300,000,000.00
TOTAL P1,754,707,150.00
==============
Mr. Luis Benitez of SGV, the external auditors of AMARI, testified that said LetterAgreement was approved by the AMARI Board. 6 (Emphasis supplied)
The private entity that purchased the reclaimed lands for P1.894 billion expressly admitted
before the Senate Committees that it spent P1.754 billion in commissions to pay various
individuals for "professional efforts and services in successfully negotiating and securing"
the contract. By any legal or moral yardstick, the P1 .754 billion in commissions obviously
constitutes bribe money. Nonetheless, there are those who insist that the billions in
investments of the private entity deserve protection by this Court. Should this Court
establish a new doctrine by elevating grease money to the status of legitimate
investments deserving of protection by the law? Should this Court reward the patently
illegal and grossly unethical business practice of the private entity in securing the
contract? Should we allow those with hands dripping with dirty money equitable relief from
this Court?
Despite these revolting anomalies unearthed by the Senate Committees, the fatal flaw of
this contract is that it glaringly violates provisions of the Constitution expressly prohibiting
the alienation of lands of the public domain.
Thus, we now come to the resolution of the second Motions for Reconsideration 7 filed by
public respondent Public Estates Authority ("PEA") and private respondent Amari Coastal
Bay Development Corporation ("Amari"). As correctly pointed out by petitioner Francisco I.
Chavez in his Consolidated Comment, 8 the second Motions for Reconsideration raise no
new issues.
However, the Supplement to "Separate Opinion, Concurring and Dissenting" of Justice
Josue N. Bellosillo brings to the Court's attention the Resolutions of this Court on 3
February 1965 and 24 June 1966 in L-21870 entitled "Manuel O. Ponce, et al. v. Hon.
Amador Gomez, et al." and No. L-22669 entitled "Manuel O. Ponce, et al. v. The City of Cebu,
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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. .
. . (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. 1 0 This is also true with respect to
foreshore lands. Any sale of submerged or foreshore lands is void being contrary to the
Constitution. 1 1
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." 1 2 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." 1 3 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." 1 4 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
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necessary deed of transfer or conveyance of the title pertaining to AMARI's Land share
based on the Land Allocation Plan." 1 5 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, . . ." 1 6
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 1 7 of PD No. 1445. This requirement of public bidding is
reiterated in Section 379 1 8 of the 1991 Local Government Code. 1 9 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 . . . 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, 2 0
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
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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. 2 1 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:
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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., concur.

Bellosillo, J ., I vote to grant reconsideration.
Puno, J ., I maintain my previous qualified opinion.
Quisumbing, J ., I vote to allow reconsideration.
Ynares-Santiago, J ., I maintain my previous dissent.
Sandoval-Gutierrez and Corona, JJ ., we maintain our dissent.
Azcuna, J ., took no part.
Separate Opinions
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
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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.
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:
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(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
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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.
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.
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This is the background behind my second hard look at the issues and my resulting
determination to dissent.
The basic issue before us is whether a private corporation, such as respondent AMARI, can
acquire reclaimed lands.
The Decision being challenged invokes the Regalian doctrine that the State owns all lands
and waters of the public domain. The doctrine is the foundation of the principle of land
ownership that all lands that have not been acquired by purchase or grant from the
Government belong to the public domain. 3 Property of public dominion is that devoted to
public use such as roads, canals, rivers, torrents, ports and bridges constructed by the
State, riverbanks, shores, roadsteads and that of a similar character. 4 Those which belong
to the State, not devoted to public use, and are intended for some public service or for the
development of the national wealth, are also classified as property of public dominion. 5 All
other property of the State which is not of public dominion is patrimonial. 6 Also, property
of public dominion, when no longer intended for public use or public service, shall form
part of the patrimonial property of the State. 7
In our Decision sought to be reconsidered, 8 we held that the following laws, among others,
are applicable to the particular reclamation project involved in this case: the Spanish Law
of Waters of 1866, the Civil Code of 1889, Act No. 1654 enacted by the Philippine
Commission in 1907, Act No. 2874 (the Public Land Act of 1919), and Commonwealth Act
No. 141 of the Philippine National Assembly, also known as the Public Land Act of 1936.
Certain dictums are emphasized. Reclaimed lands of the government may be leased but
not sold to private corporations and private individuals. The government retains title to
lands it reclaims. Only lands which have been officially delimited or classified as alienable
shall be declared open to disposition or concession.
Applying these laws and the Constitution, we then concluded that the submerged areas of
Manila Bay are inalienable natural resources of the public domain, outside the commerce
of man. They have to be classified by law as alienable or disposable agricultural lands of
the public domain and have to be declared open to disposition. However, there can be no
classification and declaration of their alienable or disposable nature until after PEA has
reclaimed these submerged areas. Even after the submerged areas have been reclaimed
from the sea and classified as alienable or disposable, private corporations such as
respondent AMARI, are disqualified from acquiring the reclaimed land in view of Section 3,
Article XII of the Constitution, quoted as follows:
"Lands of the Public domain are classified into agricultural, forest or timbre,
mineral lands, and national parks. Agricultural lands of the public domain may be
further classified by law according to the uses to which they may be devoted.
Alienable lands of the public domain shall be limited to agricultural lands. Private
corporations or associations may not hold such alienable lands of the public
domain except by lease, for a period not exceeding twenty-five years, renewable
for not more than twenty-five years, and not to exceed one thousand hectares in
area. Citizens of the Philippines may lease not more than five hundred hectares,
or acquire not more than twelve hectares thereof by purchase, homestead, or
grant.
"Taking into account the requirements of conservation, ecology, and development,
and subject to the requirements of agrarian reform, the Congress shall determine,
by law, the size of lands of the public domain which may be acquired, developed,
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held, or leased and the conditions therefor."
I dissent from the foregoing conclusions which are based on general laws mainly of
ancient vintage. Reclaimed lands, especially those under the Manila-Cavite Coastal Road
and Reclamation Project (MCCRRP), are governed by PD 1084 9 and PD 1085 1 0 enacted in
1976 and 1977, respectively, or more than half a century after the enactment of the Public
Lands Acts of 1919 and 1936.
PD 1084 and PD 1085 provide:
PD 1084
"Section 4. Purposes. The Authority is hereby created for the following
purposes:
a. To reclaim land, including foreshore and submerged areas, by dredging, filling
or other means, or to acquire reclaimed land;
b. To develop, improve, acquire, administer, deal in, subdivide, dispose, lease and
sell any and all kinds of lands, buildings, estates and other forms of real property,
owned, managed, controlled and/or operated by the government;
c. To provide for, operate or administer such services as may be necessary for the
efficient, economical and beneficial utilization of the above properties. (Emphasis
ours)
PD 1085
"The land reclaimed in the foreshore and offshore area of Manila Bay pursuant to
the contract for the reclamation and construction of the Manila-Cavite Coastal
Road Project between the Republic of the Philippines and the Construction and
Development Corporation of the Philippines dated November 20, 1973 and/or any
other contract or reclamation covering the same area is hereby transferred,
conveyed and assigned to the ownership and administration of the Public Estates
Authority established pursuant to P.D. No. 1084; Provided, however, that the rights
and interest of the Construction and Development Corporation of the Philippines
pursuant to the aforesaid contract shall be recognized and respected.
xxx xxx xxx
"Special land patent/patents shall be issued by the Secretary of Natural
Resources in favor of the Public Estates Authority without prejudice to the
subsequent transfer to the contractor or his assignees of such portion or portions
of the land reclaimed or to be reclaimed as provided for in the above-mentioned
contract. On the basis of such patents, the Land Registration Commission shall
issue the corresponding certificates of title." (Emphasis Ours)
Pursuant to the above provisions, PEA is mandated inter alia to reclaim land, including
foreshore and submerged areas, or to acquire reclaimed land. Likewise, PEA has the
power to sell any and all kinds of lands and other forms of real property owned and
managed by the government. Significantly, PEA is authorized to transfer to the contractor
or its assignees portion or portions of the land reclaimed or to be reclaimed.
It is a fundamental rule that if two or more laws govern the same subject, every effort to
reconcile and harmonize them must be taken. Interpretare et concordare legibus est
optimus interpretandi. Statutes must be so construed and harmonized with other statutes
as to form a uniform system of jurisprudence. 1 1 However, if several laws cannot be
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harmonized, the earlier statute must yield to the later enactment. The later law is the latest
expression of the legislative will. 1 2 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. 1 3 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. 1 4 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. 1 5
Our Decision cites the constitutional provision banning private corporations from acquiring
any kind of alienable land of the public domain. 1 6
Under the Constitution, lands of the public domain are classified into agricultural, forest or
timber, mineral lands, and natural parks. 1 7 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. 1 8 Agricultural land of the public domain may be
alienated. 1 9 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
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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 problemfilled 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 2 0 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. 2 1 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
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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.
TINGA, J .:
With all due respect, I dissent from the majority.
Central to the adjudication of this case is the determination of the status of reclaimed
lands. Lands of the State are either lands of the public domain or lands of the private
domain. Thus, Section 2, Article XII of the 1987 Constitution, incorporating the Regalian
Doctrine, provides that "[a]ll lands of the public domain . . . are owned by the State."
Unwritten but implicit in this provision is that the State may own lands of the private
domain. In the same vein, the New Civil Code classifies properties of the State as either
property of the public dominion 1 or patrimonial property. 2
If reclaimed land is part of the public domain, it is covered by the proscription in Section 3,
Article XII of the 1987 Constitution, 3 which prohibits private corporations from acquiring
alienable lands of the public domain. On the other hand, if it is patrimonial property, the
constitutional proscription does not apply.
First, the fundamentals. The Constitution ordains that natural resources are not alienable.
Then it gives examples of natural resources: "[a]ll 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." 4
Obviously, the common characteristics of natural resources are that they are still in their
original, raw state. Natural resources are material objects of economic value and utility to
man produced by nature. 5 In other words, they refer to property and materials in their
original and native state, not to those which have been produced through the intervention
of man.
Natural resources are capable of conversion or, in the words of the Constitution, 6 "
[e]xploration, development and utilization." But the conversion is, again pursuant to the
Constitution, 7 "under the full control and supervision of the State." When the conversion
activity such as co-production, joint venture or production-sharing agreements is
authorized by the Government through a law, the qualified party to the agreement may own
the converted product or part of it, when so provided in the agreement. The rationale is
that the converted product is not the same as the original natural resource. Thus, the
timber concessionaire may own the logs cut from the timber concession; the miner may
dispose of the gold produced from the gold ores taken from the mine; the developer may
market the energy harnessed from a geothermal field.
Significantly, the reclamation contract is not an outright sale. Reclamation is essentially a
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construction and infrastructure contract. 8 This is also clear from the BOT Laws. 9
Specifically, the contract subject of this case is a joint venture agreement.
Reclaimed land does not fall under the category of natural resources which under the
Constitution are inalienable. This is so because its development from the seabed entails
human intervention. It is unlike land per se, which having become such on account of the
forces of nature, is considered a natural resource.
That being the case, it is statutory law which determines the status of reclaimed land. In
other words, the matter of categorization of reclaimed land is a legislative function.
From the advent of the Spanish Law of Waters of 1886 onwards, it is at least implicit if not
express in the laws authorizing reclamation that the resulting reclaimed lands are private
property of the Government.
Under the Spanish Law of Waters of 1866, reclaimed land may be categorized even as
private individual property. Article 5 thereof provides:
Art. 5. Lands reclaimed from the sea in consequence of works constructed by
the State, or by the provinces, pueblos, or private persons, with proper permission
shall become the property of the party constructing such works, unless otherwise
provided by the terms of the grant of authority.
Following the trail blazed by the Spanish Law of Waters, quite a number of local
government units undertook, after liberation, reclamation work under the aegis of special
laws. 1 0
Other local government units availed of a general reclamation statute, specifically, Republic
Act No. 1899, entitled "An Act to Authorize the Reclamation of Foreshore Lands by
Chartered Cities and Municipalities," which was enacted in 1957. It provides inter alia:
SEC. 2. Any and all lands reclaimed, as herein provided, shall be the property of
the respective municipalities or chartered cities: Provided, however, That the new
foreshore along the reclaimed areas shall continue to be the property of the
National Government.
Of more recent vintage is Republic Act No. 7160, otherwise known as the Local
Government Code of 1991. It empowers local government units to undertake reclamation
projects by themselves or through contractors. Section 302 thereof provides that "(t)he
contractor shall be entitled to a reasonable return of its investment in accordance with its
bid proposal as accepted by the local government unit concerned . . . In case of land
reclamation or construction of industrial estates, the repayment plan may consist of the
grant of the portion or percentage of the reclaimed lands or the industrial estate
concerned."
The lands reclaimed under the auspices of the aforementioned special laws, Republic Acts
No. 1899 and 7601 included, are patrimonial property of the local government units
concerned or private property of the developer, as the case may be. Nevertheless, the
reclamation law or the local government may reserve certain portions of the reclaimed
area for public use such as for plazas, schools or hospitals, in which case, the reclaimed
land is characterized as land of the public domain. 1 1
Hence, portions of the reclaimed land may be classified as property of public ownership
while other portions may be categorized as patrimonial or private property, depending on
the text of the reclamation statute. 1 2
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Clearly, the characterization of reclaimed land as patrimonial or public property emanates

from the laws themselves and becomes complete following the accomplishment of the
reclamation project.
The challenged Joint Venture Agreement was undertaken under the aegis of Presidential
Decree No. 1084, 1 3 Presidential Decree No. 1085 1 4 and the so-called Build Operate and
Transfer (BOT) laws, Republic Act No. 6957, as amended by Republic Act No. 7718. The
latter BOT law 1 5 enumerates the infrastructure or development projects which may be
implemented by the private sector, among which are land reclamation projects. According
to the same law, 1 6 the proponent in land reclamation projects may be repaid by way of
"grant of a portion or percentage of the reclaimed land." The payment in the form of
reclaimed land in the case of land reclamation projects completes the essence of
privatization which is the underlying economic philosophy of the BOT laws. In the
beginning, the private sector is tapped to undertake grant infrastructure and development
project and in the end it is paid in the form of land which naturally is thenceforth classified
as private property.
In sum, whenever land reclamation authorized by law is undertaken by a private individual

or entity, the reclaimed lands which the developer secures by way of payment is classified
as private property. There is no need for another special law declaring the lands alienable
as the reclamation law itself provides the legal basis that renders them alienable, unless of
course there is a contrary provision in the law. The laws ordaining that reclaimed lands
become lands of the public domain are the exception rather than the rule.
The Public Land Acts (Act No. 2874 and Commonwealth Act No. 141) typify the few laws
which provide that reclaimed lands are not alienable. But the categorization applies only to
lands reclaimed by the National Government. It does not cover lands reclaimed by private
individuals or entities, including local government units, authorized by law. In other words,
Commonwealth Act No. 141, being a general law, is not applicable to lands reclaimed
pursuant to special laws, such as the reclaimed land subject of this case.
I have no quarrel with the majority's ruling that "submerged areas [of the Manila Bay] are,
under the Constitution, 'waters . . . owned by the State,' forming part of the public domain
and consequently inalienable." 1 7 I take exception, however, to the holding that the subject
JVA is invalid since it covers such submerged areas. I do not think that the parties
contemplated the transfer of the submerged lands per se but, rather, the conveyance of
the reclaimed lands which shall stand on the submerged lands. If there is any doubt as to
the object of the prestation in this case, that interpretation which would render the
contract valid is to be favored. Where the instrument is susceptible of two interpretations,
one which will make it invalid and illegal, and another which will make it valid and legal, the
latter interpretation should be adopted. 1 8 Thus, the New Civil Code states:
Art. 1373. If some stipulation of any contract should admit of several meanings, it
shall be understood as bearing that import which is most adequate to render it
effectual.
The Constitution 1 9 specifically mentions joint venture agreements as among the contracts
that the State may enter into with the private sector for the development of natural
resources. Consequently, there is nothing aberrant for the respondents in this case to
secure reconveyance in the form of reclaimed land.
Finally, I submit that this case should be resolved in terms of the long range development
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of the country. However rich our country may be in natural resources, these riches are not
inexhaustible, land being among the most finite. The total area of Philippine agricultural
lands is estimated to be 10.4 million hectares; the total area of mountainous lands, about
9.4 million hectares. Such a limited land area could hardly sustain a population, which, as of
October 2000, stood at 76.5 million Filipinos (projected to be 81.1 million by the end of
2003) and growing at a rate of 2.36% per annum. Moreover, the Philippine economy is
expanding at a rate of 3.5% (2000-2001) to 4.5% (2001-2002). There is no single solution
to address these developments but the extension of our coastlines consisting of 36,289
kilometers may be one of them.
It is with this end in mind that the Government pursues policies established or recognized
by the Constitution, one of which is land reclamation. No less than the Constitution, under
the general welfare clause, 2 0 empowers and obliges the State to execute such a policy.
The State, though, need not go at it alone. Indeed, the Constitution itself acknowledges
that the State cannot perform this task by itself. Thus, the fundamental law, under the
Article on National Economy and Patrimony, 2 1 vests the State with the concomitant
authority to draw on the resources of the private sector, whose role is aptly described
elsewhere as "indispensable," 2 2 to aid it in such an awesome endeavor. To deny the
motions for reconsideration in this case would be to turn a blind eye to this stark reality
and, ultimately, to defeat State policy:
Accordingly, I vote to GRANT respondents' second motions for reconsideration.
AIHTEa
Footnotes
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 . . . the official acts of the
legislature."
4. 9 July 2002 Decision, p. 4.
5. Senate Committee Report No. 560, p. 48.
6. A more detailed discussion on this matter in Senate Report No. 560 reads as follows:
The Commissions
A Letter-Agreement dated 09 June 1995 signed by Messrs. Premchai Karnasuta and
Emmanuel Sy for and in behalf of AMARI, on the one hand, and stockholders of AMARI
namely, Mr. Chin San Cordova (a.k.a. Benito Co) and Mr. Chua Hun Siong (a.k.a. Frank
Chua), on the other, sets forth various payments AMARI paid or agreed to pay the
aforesaid stockholders by way of fees for "professional efforts and services in
successfully negotiating and securing for AMARI the Joint Venture Agreement", as
follows:
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Form of Payment Paid/Payable On Amount

Manager's Checks 28 April 1995 P400,000,000.00
Manager's Checks Upon signing of letter 262,500,000.00
10 Post Dated Checks (PDCs) 60 days from date of letter 127,000,000.00
24 PDCs 31 Aug. '95 to 31 Jan. '98 150,000,000.00
48 PDCs Monthly, over a 12-month
pd. from date of letter 357,363,050.00
Cash bonus When sale of land begins not exceeding
157,844,100.00
Developed land from Project Upon completion of each Costing
phase 300,000,000.00
TOTAL P1,754,707,150.00
==============
Mr. Luis Benitez of SGV, the external auditors of AMARI, testified that said Letter-Agreement
was approved by the AMARI Board.
On the first payment of P400 million, records show that P300 million was paid in manager's
checks of Citibank-Makati, while the balance of P100 million was deposited to the
account of the two Chinese in a Hongkong bank. On the basis of a Memorandum Order
dated April 28, 1995 issued by Messrs. Karnasuta and Emmanuel Sy, and upon the
instruction of Messrs. Chin San Cordova and Chua Hun Siong, 31 manager's checks in
the total amount of P300 million were issued by Citibank-Makati in favor of a Mr. George
Trivio, a Dominican Republic national, broken down as follows:
1) Twenty-nine (29) manager's checks at P10 million each;
2) One (1) manager's check at P7 million; and,
3) One (1) manager's check at P3 million.
All these checks were indorsed by Mr. Trivio. Mr. Sy could not satisfactorily answer why Mr.
Trivio 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. Trivio.
Mr. Emmanuel Sy admitted signing several blank checks as special request from Messrs. Co
and Chua and issuing said checks as follows:
1) Ten (10) Manager's checks dated 60 days from the June 9 letter amounting to P127 million;
2) Twenty-four (24) blank checks amounting to P150 million dated from 31 August 1995 up to
31 January 1998; and,
3) Forty (40) blank checks amounting to P357 million.
In this regard, the pertinent portion of the 9 June 1995 letter-agreement provides as follows:
"3. Upon signing of this letter-agreement AMARI shall (a) pay to you (in cash in the form of
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Bank Manager's Checks) the sum of Two Hundred Sixty Two Million Five Hundred
Thousand Pesos (Pesos 262,500,000) and (b) pay and deliver to you the following
checks:
"3.1 Ten (10) checks dated sixty (60) days from date of this letter agreement in the total
amount of One Hundred Twenty Seven Million Pesos (Pesos 127,000,000) ;
"3.2 Twenty-Four (24) checks in the total amount of One Hundred Fifty Million Pesos (Pesos
150,000,000) as follows:
DUE DATE OF CHECK AMOUNT
August 31, 1995 6,250,000
March 31, 1996 6,250,000
April 30, 1996 6,250,000
May 31, 1996 6,250,000
June 30, 1996 6,250,000
July 31, 1996 6,250,000
August 31, 1996 6,250,000
September 30, 1996 6,250,000
October 31, 1996 6,250,000
November 30, 1996 6,250,000
December 31, 1996 6,250,000
January 31, 1997 6,250,000
February 28, 1997 6,250,000
March 31, 1997 6,250,000
April 30, 1997 6,250,000
May 31, 1997 6,250,000
June 30, 1997 6,250,000
July 31, 1997 6,250,000
August 31, 1997 6,250,000
September 30, 1997 6,250,000
October 31, 1997 6,250,000
November 30, 1997 6,250,000
December 31, 1997 6,250,000
January 31, 1998 6,250,000
Total P150,000,000
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=========
"3.3 Forty Eight (48) checks in the total amount of Three Hundred Fifty Seven Million Three
Hundred Sixty Three Thousand Fifty Pesos (Pesos 357,363,050) payable over a period
of twelve (12) months as follows:
"Each monthly payment to consist of Four (4) checks, three (3) checks of which shall each
bear the amount of P7,250,000 and one (1) check of which shall bear the amount of
P8,000,000 for a total monthly amount of P29,750,000. These monthly payment of four
(4) checks each shall be dated the last date of the thirteen, fourteen, fifteen, sixteen,
seventeen, eighteen, nineteen, twenty, twenty-one, twenty-two, twenty-three, and twentyfour months from the date of this letter agreement. The last issued check hereunder
shall bear the sum of P8,363,050."
The Provisional Receipt shows that Mr. Chin San Cordova and Mr. Chua Hun Siong received
the amount of P896,863,050.00 as of 09 June 1995. Based on the submitted
photocopies of the returned checks issued by AMARI vis-a-vis item 3(b) of the quoted
Letter-Agreement, the following persons were made payees: Emmanuel Sy, Manuel Sy,
Sy Pio Lato, International Merchandising and Development Corporation, Golden Star
Industrial Corporation, Chin San Cordova, EY, and Wee Te Lato. Other payments were
made payable to Cash (bearer instruments). Each person was thus named payee to the
following amounts:
1. Emmanuel Sy :
Citibank Check No. 000019 dated 10/31/96 P6,250,000
2. Manuel Sy :
Citibank Check No. 000007 dated 8/8/95 12,700,000
3. Sy Pio Lato:
000009 dated 8/8/95 12,700,000
000010 dated 8/8/95 12,700,000
4. International Merchandising and Development Corporation:
000014 dated 5/31/96 6,250,000
000015 dated 6/30/96 6,250,000
000016 dated 7/31/96 6,250,000
000045 dated 9/30/96 7,250,000
5. Golden Star Industrial Corporation:
6. Chin San Cordova:
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000043 dated 9/30/96 7,250,000

7. EY:
000049 dated 10/31/96 7,250,000
8. Wee Te Lato:
9. Bearer Instruments: CASH:
000002 dated 8/8/95 12,700,000
000003 dated 8/8/95 12,700,000
000004 dated 8/8/95 12,700,000
000005 dated 8/8/95 12,700,000
000006 dated 8/8/95 12,700,000
000012 dated 3/31/96 6,250,000
000017 dated 8/31/96 6,250,000
000039 dated 8/31/96 7,250,000
000040 dated 8/31/96 7,250,000
000042 dated 8/31/96 8,000,000
000044 dated 9/30/96 7,250,000
000046 dated 9/30/96 7,250,000
000050 dated 10/31/96 8,000,000
10. Payee 's Name Not Legible:
On the other hand, Ms. Aurora Montano, a cousin of Mr. Justiniano Montano IV, was asked by
a Mr. Ben Cuevo if she knew anybody from PEA, and she answered: "Yes, I know Mr.
Justiniano Montano IV. " For this answer, and for introducing the AMARI representative
to Mr. Montano, she received P10 million in cash and P20 million in postdated
manager's checks in the office of Mr. Benito Co and in the presence of, aside from Mr.
Benito Co, Mr. Ben Cuevo and Mr. Frank Chua. Ms. Montano, however, insisted that she
actually received only P10 million.
Ms. Montano furthermore admitted that, through Mr. Ben Cuevo, she met Messrs. Chin San
Cordova and Chua Hun Siong in 1994 for this transaction.
In Executive Session, Mr. Ben Cuevo admitted to having encashed two checks at Pilipinas
Bank, worth P12.5 million. According to him, the two checks form part of the P150
million worth of post-dated checks (PDCs), with a face value of P6.25 million per check,
described in the Letter-Agreement. Of this P150 million, Mr. Cuevo actually received five
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(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.
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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.:
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 not exceeding twenty-five years, renewable for not more than twenty-five
years, and not to exceed one thousand hectares in area. Citizens of the Philippines may
lease not more than five hundred hectares, or acquire not more than twelve hectares
thereof by purchase, homestead or grant.
Taking into account the requirements of conservation, ecology, and development, and subject
to the requirements of agrarian reform, the Congress shall determine, by law, the size of
lands of the public domain which may be acquired, developed, held, or leased and the
conditions therefor.
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 the capital 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.
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Section 3. The Congress may determine by law the size of private agricultural land 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 tress 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 therefor.
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.:
* 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.:
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. Cario vs. Insular Government, 41 Phil. 935 (1909).
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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 ManilaCavite 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. Eraa 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; Valero 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.
TINGA, J.:
1. Art 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constricted by the State, banks, shores, roadsteads, and others of similar character;
(2) Those which belong to the State, without being for public use and are intended for some
public service for the development of the national wealth.
2. Art. 421. All other property of the State, which is not of the character stated in the preceding
article, is patrimonial property.
3. 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,
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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.
xxx xxx xxx ( Emphasis supplied.]
4. Sec. 2, Art: XII, 1987 Constitution.
5. Pea, Philippine Law on Natural Resources, 1982 ed, p. 2.
6. Section 2, Art. XII, 1987 Constitution.
7. Ibid.
8. Malayan Integrated Industries Corp. v. Court of Appeals, G.R. No. 104169, September 4, 1992,
213 SCRA 640; Gov. Garcia v. Hon. Burgos, 353 Phil. 740.
9. R.A. No. 6957 as amended by R.A. No. 7718.
10. Bacolod City pursuant to R.A. No. 161; Municipality of Catbalogan, Samar, R.A. No. 287;
Cebu City pursuant to R.A. No. 3857, as amended by R.A. No. 4654; Tacloban City
pursuant to R.A. No. 4776; General Santos City pursuant to R.A. No. 5412; Oroquieta City
pursuant to R.A. No. 5518; and Mandaue City pursuant to R.A. No. 5519.
11. See Act No. 2360; Manila Lodge No. 761 vs. Court of Appeals, G.R. No. L-41001, Sept. 30,
1976, 73 SCRA 162.
12. E.g., R.A. No. 1899; Resolution dated 3 February 1965 and 24 June 1966 in L-21870 and L22669, referred to as the Ponce cases.
13. Creating the Public Estates Authority, Defining its Powers and Functions, Providing Funds
therefor and for other purposes.
14. 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.
15. Sec. 2.
16. Sec. 8.
17. Decision, p. 52.
18. Luna v. Linatoc, 74 Phil. 15.
19. Sec. 2, Art. XII, 1987 Constitution.
20. Sec. 5, Art. II, 1987 Constitution. Sec. 9 of the same Article likewise provides, 'The State shall
promote a just and dynamic social order that will ensure the prosperity and
independence of the
21. Sec. 2, Art. XII, 1987 Constitution.
22. Sec. 20, Art II, 1987 Constitution.
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02.05 Chavez vs. PEA-AMARI (G.R. No. 133250 11 Nov. 2003, 415 SCRA 403)

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02.05 Chavez vs. PEA-AMARI (G.R. No. 133250 11 Nov. 2003, 415 SCRA 403)

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EN BANC

[G.R. No. 133250. November 11, 2003.]

1. CONSTITUTIONAL LAW; REGALIAN DOCTRINE; SUBMERGED LANDS ARE PROPERTY OF

Form of Payment Paid/Payable On Amount

Manager's Checks 28 April 1995 P400,000,000.00

Davide, Jr ., C .J ., Panganiban, Austria-Martinez, Carpio Morales and Callejo, Sr., concur.

held, or leased and the conditions therefor."

Clearly, the characterization of reclaimed land as patrimonial or public property emanates

In sum, whenever land reclamation authorized by law is undertaken by a private individual

Form of Payment Paid/Payable On Amount

000043 dated 9/30/96 7,250,000

4. Article 420, Civil Code.

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