Supreme Court rules sale of submerged lands void

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 nality 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 certi cates 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, 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 disquali ed 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, su ce 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 disquali ed 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 disquali ed aliens of
real property that, subsequently, are acquired by nationals quali ed 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 clari cation: (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 nd 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
nancial assistance, be a conceptual barrier to uphold probable rights of the initiator
and the nancier 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 re ection, 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 exible 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 con dent, 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 nanced 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.
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 o cially delimited or
classi ed 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 classi ed 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 classi cation 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 classi ed as alienable or disposable, private corporations
such as respondent AMARI, are disquali ed 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 classi ed 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.
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 gures, 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 O cers, 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 o cial documents submitted by the proper government
agencies during the Senate investigation. We quote the joint report of these two Senate
Committees, Senate Committee Report No. 560, as approved by the Senate in plenary
session on 27 September 1997: 3
The Consideration for the Property
PEA, under the JVA, obligated itself to convey title and possession over the
Property, consisting of approximately One Million Five Hundred Seventy Eight
Thousand Four Hundred Forty One (1,578,441) Square Meters for a total
consideration of One Billion Eight Hundred Ninety Four Million One Hundred
Twenty Nine Thousand Two Hundred (P1,894,129,200.00) Pesos, or a price of
One Thousand Two Hundred (P1,200.00) Pesos per square meter.
According to the zonal valuation of the Bureau of Internal Revenue, the
value of the Property is Seven Thousand Eight Hundred Pesos (P7,800.00) per
square meter. The Municipal Assessor of Parañaque, Metro Manila, where the
Property is located, pegs the market value of the Property at Six Thousand Pesos
(P6,000.00) per square meter. Based on these alone, the price at which PEA
agreed to convey the property is a pittance. And PEA cannot claim ignorance of
these valuations, at least not those of the Municipal Assessors' o ce, since it has
been trying to convince the O ce of the Municipal Assessor of Parañaque to
reduce the valuation of various reclaimed properties thereat in order for PEA to
save on accrued real property taxes.
PEA's justi cation 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 nalized the JVA with AMARI. Other offers were
made on various dates by Aspac Management and Development Group Inc. (for
P1,600 per square meter), Universal Dragon Corporation (for P1,600 per square
meter), Cleene Far East Manila Incorporated and Hyosan Prime Construction Co.
Ltd. which had prepared an Irrevocable Clean Letter of Credit for P100,000,000.
In addition, AMARI agreed to pay huge commissions and bonuses to

various persons, amounting to P1,596,863,050.00 (P1,754,707,150.00 if the
bonus is included), as will be discussed fully below, which indicate that AMARI
itself believed the market value to be much higher than the agreed purchase price.
If such commissions are added to the purchase price, AMARI's acquisition cost
for the Property will add-up to P3,490,992,250.00 (excluding the bonus). If AMARI
was willing to pay such amount for the Property, why was PEA willing to sell for
only P1,894,129,200.00, making the Government stand to lose approximately
P1,596,863,050.00?
xxx xxx xxx

Even if we simply assume that the market value of the Property is half of
the market value xed by the Municipal Assessors O ce of Parañaque for lands
along Roxas Boulevard, or P3,000.00 per square meter, the Government now
stands to lose approximately P2,841,193,800.00. But an even better assumption
would be that the value of the Property is P4,500.00 per square meter, as per the
AACI appraisal report dated 26 March 1996, since this is the valuation used to
justify the issuance of P4 billion worth of shares of stock of Centennial City Inc.
(CCI) in exchange for 4,800,000 AMARI shares with a total par value of only
P480,000,000.00. With such valuation, the Government's loss will amount to
P5,208,855,300.00.
Clearly, the purchase price agreed to by PEA is way below the actual value
of the Property, thereby subjecting the Government to grave injury and enabling
AMARI to enjoy tremendous benefit and advantage. (Emphasis supplied)
The Senate Committee Report No. 560 attached the following o cial documents
from the Bureau of Internal Revenue, the Municipal Assessor of Parañaque, Metro
Manila, and the Commission on Audit:
1. Annex "M," Certi ed True Copy of BIR Zonal Valuations as certi ed by
Antonio F. Montemayor, Revenue District O cer. This o cial document
fixed the market value of the 157.84 hectares at P7,800 per square meter.
2. Annex "N," Certi cation of Soledad S. Medina-Cue, Municipal Assessor,

Parañaque, dated 10 December 1996. This o cial document xed the
market value at P6,000 per square meter.
3. Exhibit "I-Engr. Santiago," the Appraisal Report of the Commission on Audit.
This o cial document xed the market value at P21,333.07 per square
meter.
Whether based on the o cial 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 o cial 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 aw is not
even the P1 .754 billion in commissions the Senate Committees discovered the private
entity paid to various persons to secure the contract, 5 described in Senate Report No.
560 as follows:
A Letter-Agreement dated 09 June 1995 signed by Messrs. Premchai
Karnasuta and Emmanuel Sy for and in behalf of AMARI, on the one hand, and
stockholders of AMARI namely, Mr. Chin San Cordova (a.k.a. Benito Co) and Mr.
Chua Hun Siong (a.k.a. Frank Chua), on the other, sets forth various payments
AMARI paid or agreed to pay the aforesaid stockholders by way of fees for
"professional efforts and services in successfully negotiating and securing for
AMARI the Joint Venture Agreement", as follows:
Form of Payment Paid/Payable On Amount
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, testi ed that said
Letter-Agreement was approved by the AMARI Board. 6 (Emphasis supplied)
The private entity that purchased the reclaimed lands for P1.894 billion expressly
admitted before the Senate Committees that it spent P1.754 billion in commissions to
pay various individuals for "professional efforts and services in successfully negotiating
and securing" the contract. By any legal or moral yardstick, the P1.754 billion in
commissions obviously constitutes bribe money. Nonetheless, there are those who
insist that the billions in investments of the private entity deserve protection by this
Court. Should this Court establish a new doctrine by elevating grease money to the
status of legitimate investments deserving of protection by the law? Should this Court
reward the patently illegal and grossly unethical business practice of the private entity
in securing the contract? Should we allow those with hands dripping with dirty money
equitable relief from this Court?
Despite these revolting anomalies unearthed by the Senate Committees, the fatal
flaw of this contract is that it glaringly violates provisions of the Constitution expressly
prohibiting the alienation of lands of the public domain.
Thus, we now come to the resolution of the second Motions for Reconsideration
7 led by public respondent Public Estates Authority ("PEA") and private respondent
Amari Coastal Bay Development Corporation ("Amari"). As correctly pointed out by
petitioner Francisco I. Chavez in his Consolidated Comment, 8 the second Motions for
Reconsideration raise no new issues.
However, the Supplement to "Separate Opinion, Concurring and Dissenting" of
Justice Josue N. Bellosillo brings to the Court's attention the Resolutions of this Court
on 3 February 1965 and 24 June 1966 in L-21870 entitled "Manuel O. Ponce, et al. v.
Hon. Amador Gomez, et al." and No. L-22669 entitled " Manuel O. Ponce, et al. v. The City
of Cebu, et al." ("Ponce Cases"). In effect, the Supplement to the Dissenting Opinion
claims that these two Resolutions serve as authority that a single private corporation
like Amari may acquire hundreds of hectares of submerged lands, as well as reclaimed
submerged lands, within Manila Bay under the Amended Joint Venture Agreement
("Amended JVA").
We find the cited Ponce Cases inapplicable to the instant case.
First, as Justice Bellosillo himself states in his supplement to his dissent, the
Ponce Cases admit that "submerged lands still belong to the National Government." 9
The correct formulation, however, is that submerged lands are owned by the State and
are inalienable. Section 2, Article XII of the 1987 Constitution provides:
All lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, sheries, forests or timber, wildlife,
ora 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
o r 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 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 certi cates 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 nulli ed 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 quali ed, under the 1935, 1973, and 1987 Constitutions, to hold
alienable or even inalienable lands of the public domain. There is no dispute that a
public corporation is not covered by the constitutional ban on acquisition of alienable
public lands. Both the 9 July 2002 Decision and the 6 May 2003 Resolution of this Court
in the instant case expressly recognize this.
Cebu City is an end user government agency, just like the Bases Conversion and
Development Authority or the Department of Foreign Affairs. 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:
In the instant case, the only patent and certi cates 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 certi cate of title has been issued to
any private party. No one is asking the Director of Lands to cancel PEA's patent or
certi cates of title. In fact, the thrust of the instant petition is that PEA's
certi cates of title should remain with PEA, and the land covered by these
certi cates, 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 led 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 disquali ed
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,
su ce it to say that the foregoing cases were decided on 03 February 1965 and 24
June 1966, respectively, when the 1935 Constitution was still in effect. Unlike the 1987
Charter, the 1935 Constitution did not contain any proscription against corporations
holding alienable lands of the public domain. 2
Just the same, I should like to make a statement on what could be a grave
concern on the part of individuals, who, not being personally disquali ed 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 disquali ed 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 signi cance 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: TaDSCA
(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 nd 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 nancial assistance, be a conceptual
barrier to uphold probable rights of the initiator and the nancier 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 re ection, it does not appear to me pertinent to apply Sec. 79
on disposal or sale of unserviceable property, contained in P.D. No. 1445, the General
Auditing Code, or Sec. 379 of the Local Government Code. The requirement of bidding
in regard to corporate projects of PEA is obviously distinguishable, if not outright
distinct, from disposal of surplus/junk property. The reclamation projects like those
contemplated in the PEA-AMARI joint venture call for a greater public appreciation of
equitable investment regimes by policy-makers and private entrepreneurs alike as they
impact hugely on the economic development concerns of the nation. Thus, we are of
the view that of more pertinence in this regard are the BOT (Build, Operate, and
Transfer) Law, R.A. 6957 as amended and the Charter of PEA (P.D. No. 1084) and P.D.
No. 1085 concerning reclaimed lands along Manila Bay.
Lastly, we are informed that the possible criminal responsibility, if any, of certain
officers of PEA are allegedly now before the Sandiganbayan. Be that as it may, the merit
of the question before us regarding the validity of the PEA-AMARI joint venture is not
necessarily foreclosed by cases before the Sandiganbayan which of necessity require
the highest quantum of proof, beyond reasonable doubt. Here we are not so
constrained. For our principal concern now is a thorough review of legal issues that
might have previously eluded close scrutiny. Hence the need to grant leave for a second
reconsideration.
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 exible 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 con dent, 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
nanced exclusively by public funds. However, present circumstances show that this
cannot be done. Thus, private corporations are encouraged to invest in income
generating national construction ventures.
Investments on the scale of reclamation projects entail huge amounts of money.
It is a reality that only private corporations can raise such amounts. In the process, they
assist this country in its economic development. Consequently, our government should
not take arbitrary action against these corporate developers. Obviously, the courts play
a key role in all disputes arising in this area of national development.
This is the background behind my second hard look at the issues and my
resulting determination to dissent.
The basic issue before us is whether a private corporation, such as respondent
AMARI, can acquire reclaimed lands.
The Decision being challenged invokes the Regalian doctrine that the State owns
all lands and waters of the public domain. The doctrine is the foundation of the principle
of land ownership that all lands that have not been acquired by purchase or grant from
the Government belong to the public domain. 3 Property of public dominion is that
devoted to public use such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, riverbanks, shores, roadsteads and that of a similar character.
4 Those which belong to the State, not devoted to public use, and are intended for some
public service or for the development of the national wealth, are also classi ed 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 o cially
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 classi ed 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 classi cation 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 classi ed as alienable or disposable,
private corporations such as respondent AMARI, are disquali ed from acquiring the
reclaimed land in view of Section 3, Article XII of the Constitution, quoted as follows:
"Lands of the Public domain are classi ed into agricultural, forest or
timbre, mineral lands, and national parks. Agricultural lands of the public domain
may be further classi ed 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- ve years,
renewable for not more than twenty- ve years, and not to exceed one thousand
hectares in area. Citizens of the Philippines may lease not more than ve hundred
hectares, or acquire not more than twelve hectares thereof by purchase,
homestead, or grant.
"Taking into account the requirements of conservation, ecology, and

development, and subject to the requirements of agrarian reform, the Congress
shall determine, by law, the size of lands of the public domain which may be
acquired, developed, held, or leased and the conditions therefor."
I dissent from the foregoing conclusions which are based on general laws mainly
of ancient vintage. Reclaimed lands, especially those under the Manila-Cavite Coastal
Road and Reclamation Project (MCCRRP), are governed by PD 1084 9 and PD 1085 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. T o 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 e cient, economical and bene cial 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. Signi cantly, 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 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, speci c kinds of land and a particular group of persons.
1 4 Their coverage is speci c and limited. More speci cally, 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 speci c 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 classi ed 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 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 nancial
institutions, like the Development Bank of the Philippines, the Government Service
Insurance System, the Social Security System or other agencies, would risk a major
portion of their funds in a problem- lled 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 pro ts. 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 o cial 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 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 classi es 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 quali ed 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.
Signi cantly, the reclamation contract is not an outright sale. Reclamation is
essentially a 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,
speci cally, 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 classi ed 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
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 classi ed 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 speci cally 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 of the country. However rich our country may be in natural resources,
these riches are not inexhaustible, land being among the most nite. 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:
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
Triviño, a Dominican Republic national, broken down as follows:
1) Twenty-nine (29) manager's checks at P10 million each;
2) One (1) manager's check at P7 million; and,
3) One (1) manager's check at P3 million.
All these checks were indorsed by Mr. Triviño. Mr. Sy could not satisfactorily answer why
Mr. Triviño was made payee of the Manager's Checks when he had nothing to do with
the transactions. Neither could he provide information regarding the said Mr. Triviño.
Mr. Emmanuel Sy admitted signing several blank checks as special request from Messrs.
Co and Chua and issuing said checks as follows:
1) Ten (10) Manager's checks dated 60 days from the June 9 letter amounting to
P127 million;
2) Twenty-four (24) blank checks amounting to P150 million dated from 31 August
1995 up to 31 January 1998; and,
3) Forty (40) blank checks amounting to P357 million.

In this regard, the pertinent portion of the 9 June 1995 letter-agreement provides as
follows:
"3. Upon signing of this letter-agreement AMARI shall (a) pay to you (in cash in the
form of Bank Manager's Checks) the sum of Two Hundred Sixty Two Million Five
Hundred Thousand Pesos (Pesos 262,500,000) and (b) pay and deliver to you the
following checks:
"3.1 Ten (10) checks dated sixty (60) days from date of this letter agreement in the
total amount of One Hundred Twenty Seven Million Pesos (Pesos 127,000,000) ;
"3.2 Twenty-Four (24) checks in the total amount of One Hundred Fifty Million Pesos
(Pesos 150,000,000) as follows:
DUE DATE OF CHECK AMOUNT
August 31, 1995 6,250,000

March 31, 1996 6,250,000
April 30, 1996 6,250,000
May 31, 1996 6,250,000
June 30, 1996 6,250,000

July 31, 1996 6,250,000
August 31, 1996 6,250,000
September 30, 1996 6,250,000

October 31, 1996 6,250,000
November 30, 1996 6,250,000
December 31, 1996 6,250,000
January 31, 1997 6,250,000

February 28, 1997 6,250,000
March 31, 1997 6,250,000
April 30, 1997 6,250,000

May 31, 1997 6,250,000
June 30, 1997 6,250,000
July 31, 1997 6,250,000

August 31, 1997 6,250,000
September 30, 1997 6,250,000
October 31, 1997 6,250,000
November 30, 1997 6,250,000

December 31, 1997 6,250,000
January 31, 1998 6,250,000
Total P150,000,000
=========
"3.3 Forty Eight (48) checks in the total amount of Three Hundred Fifty Seven Million
Three Hundred Sixty Three Thousand Fifty Pesos (Pesos 357,363,050) payable over a
period of twelve (12) months as follows:
"Each monthly payment to consist of Four (4) checks, three (3) checks of which shall each
bear the amount of P7,250,000 and one (1) check of which shall bear the amount of
P8,000,000 for a total monthly amount of P29,750,000. These monthly payment of four
(4) checks each shall be dated the last date of the thirteen, fourteen, fifteen, sixteen,
seventeen, eighteen, nineteen, twenty, twenty-one, twenty-two, twenty-three, and twenty-
four months from the date of this letter agreement. The last issued check hereunder
shall bear the sum of P8,363,050."
The Provisional Receipt shows that Mr. Chin San Cordova and Mr. Chua Hun Siong
received the amount of P896,863,050.00 as of 09 June 1995. Based on the submitted
photocopies of the returned checks issued by AMARI vis-a-vis item 3(b) of the quoted
Letter-Agreement, the following persons were made payees: Emmanuel Sy, Manuel Sy,
Sy Pio Lato, International Merchandising and Development Corporation, Golden Star
Industrial Corporation, Chin San Cordova, EY, and Wee Te Lato. Other payments were
made payable to Cash (bearer instruments). Each person was thus named payee to the
following amounts:
1. Emmanuel Sy:
Citibank Check No. 000019 dated 10/31/96 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:

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
(5) PDCs worth P31 million, but he was only able to encash 2 checks at P12.5 million.
Still in Executive Session, Mr. Ben Cuevo also admitted receiving a check worth P6.25
million payable to his company, International Merchandising and Development
Corporation. This was deposited in his Current Account No. 604010562-A, and the
amount was transferred by credit memo to Mr. Montano IV's account at Pilipinas Bank.
Mr. Montano IV admitted that he has an account with Pilipinas Bank, but invoked his
constitutional right against self-incrimination when asked if he received the amount of
P6.25 million transferred to his account. The Pilipinas Bank Credit Advice dated May 6,
1996, marked as Exhibit 1-Montano IV, indicating the transfer of the amount of P6.25
million was presented by Senator Drilon. Once or twice, a certain Ms. Polly Tragico
accompanied Mr. Montano IV to withdraw funds from Pilipinas Bank-Pavilion.
7. Both filed on 26 May 2003. On 6 June 2003 Amari filed a Supplement to its second
Motion for Reconsideration.
8. Filed on 19 August 2003.
9. Decision dated 17 January 1964 of Judge Amador E. Gomez. Also quoted in Justice
Josue N. Bellosillo's Supplement to Separate Opinion, Concurring and Dissenting.
10. Sections 2 and 3, Article XII of the 1987 Constitution.
11. Article 112, Civil Code of the Philippines.
12. Section 3.2 (a), Amended JVA.
13. Section 3.3 (a), Amended JVA.

14. Section 2.2, Amended JVA.
15. Section 5.2 (c), Amended JVA.
16. Ibid.
17. SECTION 79. Destruction or sale of unserviceable property. — When government
property has become unserviceable for any cause, or is no longer needed, it shall, upon
application of the officer accountable therefor, be inspected by the head of the agency or
his duly authorized representative in the presence of the auditor concerned and, if found
to be valueless or unsalable, it may be destroyed in their presence. If found to be
valuable, it may be sold at public auction to the highest bidder under the supervision of
the proper committee on awards or similar body in the presence of the auditor concerned
or other duly authorized representative of the Commission, after advertising by printed
notice in the Official Gazette, or for not less than three consecutive days in any
newspaper of general circulation, or where the value of the property does not warrant the
expense of publication, by notices posted for a like period in at least three public places
in the locality where the property is to be sold. In the event that the public auction fails,
the property may be sold at a private sale at such price as may be fixed by the same
committee or body concerned and approved by the Commission.
18. SECTION 379. Property Disposal. — When property of any local government unit
has become unserviceable for any cause or is no longer needed, it shall upon application
of the officer accountable therefor, be inspected and appraised by the provincial, city or
municipal auditor, as the case may be, or his duly authorized representative or that of the
Commission on Audit and, if found valueless or unusable, shall be destroyed in the
presence of the inspecting officer.
If found valuable, the same shall be sold at public auction to the highest bidder under the
supervision of the committee on awards and in the presence of the provincial, city or
municipal auditor or his duly authorized representative. Notice of the public auction shall
be posted in at least three (3) publicly accessible and conspicuous places, and if the
acquisition cost exceeds One hundred thousand pesos (P100,000.00) in the case of
provinces and cities, and Fifty thousand pesos (P50,000.00) in the case of
municipalities, notice of auction shall be published at least two (2) times within a
reasonable period in a newspaper of general circulation in the locality.
19. Under Section 380 of the 1991 Local Government Code, local governments can sell real
property through negotiated sale only with the approval of the Commission on Audit.
Under paragraph 2 (a) of COA Circular No. 89-296, on "Sale Thru Negotiation," a
negotiated sale may be resorted to only if "[T]here was a failure of public auction." The
Commission on Audit enforces the express requirement in Section 79 of the Government
Auditing Code that a negotiated sale is possible only after there is a failure of public
auction.
20. 359 Phil. 530 (1998).
21. Laurel v. Garcia, G.R. No. 92013, 25 July 1990, 187 SCRA 797.
VITUG, J.:
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.
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. Cariño vs. Insular Government, 41 Phil. 935 (1909).
4. Article 420, Civil Code.
5. Id.
6. Article 421, id.
7. Article 422, id.
8. Pp. 27-28.
9. Creating the Public Estates Authority, defining its powers and functions, providing funds
therefor and for other purposes.
10. Conveying the land reclaimed in the foreshore and offshore of the Manila Bay (The
Manila-Cavite Coastal Road Project) as property of the Public Estates Authority as well
as rights and interest with assumption of obligations in the reclamation contract
covering areas of the Manila Bay between the Republic of the Philippines and the
Construction and Development Corporation of the Philippines.
11. Valera vs. Tuazon, 80 Phil. 823 (1948).
12. Eraña vs. Vergel de Dios, 85 Phil. 17 (1947); City of Naga vs. Agna, 71 SCRA 176
(1976).
13. U.S . vs. Serapio, 23 Phil. 584 (1912); Villegas vs. Subido, 41 SCRA 190 (1971);
Bagatsing vs. Ramirez, 74 SCRA 306 (1976).
14. U.S . vs. Serapio, supra; 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,
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. Peña, 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
L-22669, 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. De Luna v. Linatoc, n 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.
n Note from the Publisher: Written as "Luna v. Linatoc" in the original document.

Supreme Court rules sale of submerged lands void

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Supreme Court rules sale of submerged lands void

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EN BANC

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

FRANCISCO I. CHAVEZ , petitioner, vs . PUBLIC ESTATES AUTHORITY

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1. CONSTITUTIONAL LAW; REGALIAN DOCTRINE; RECLAIMED LANDS; A

1. CONSTITUTIONAL LAW; REGALIAN DOCTRINE; COURT RULING ON STATE

1. CONSTITUTIONAL LAW; REGALIAN DOCTRINE; PROHIBITION ON THE

1. CONSTITUTIONAL LAW; REGALIAN DOCTRINE; RECLAIMED LAND DOES

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

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

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

xxx xxx xxx

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

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

It is after deep introspection that I am constrained to dissent from the denial by

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

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

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a. T o reclaim land, including foreshore and submerged areas, by

xxx xxx xxx

With all due respect, I dissent from the majority.

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2. 6 May 2003 Resolution, p. 13.

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

Developed land from Project Upon completion of each Costing

3) Forty (40) blank checks amounting to P357 million.

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June 30, 1996 6,250,000

September 30, 1996 6,250,000

January 31, 1997 6,250,000

April 30, 1997 6,250,000

July 31, 1997 6,250,000

November 30, 1997 6,250,000

000009 dated 8/8/95 12,700,000

000014 dated 5/31/96 6,250,000

000045 dated 9/30/96 7,250,000

6. Chin San Cordova:

000002 dated 8/8/95 12,700,000

000005 dated 8/8/95 12,700,000

000017 dated 8/31/96 6,250,000

000042 dated 8/31/96 8,000,000

10. Payee 's Name Not Legible:

13. Section 3.3 (a), Amended JVA.

Article XIII Conservation and Utilization of Natural Resources

xxx xxx xxx ( Emphasis supplied.]

6. Section 2, Art. XII, 1987 Constitution.

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