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Chavez vs. Public Estates Authority (GR 133250. November 11, 2003)
● Submerged land. PEA. Grandmother of all scams.
FACTS
● The action is to legitimize a government contract that conveyed to Amari, a private
entity, 157.84 hectares of reclaimed public lands along Roxas Blvd. at the
negotiated price of P1200/sqm. Published reports say that the actual market value is
P90k/sqm.
● SC quoted the joint report of the Senate Blue Ribbon Committee and the Committee
on Accountability of Public Officers to emphasize the following points:
○ According to COA, the actual loss to the Filipino people is P31.779 billion,
earning the epithet “Grandmother of all scams”
○ P1.754 billion in commissions to pay various individuals for professional efforts
and services in successfully negotiating and securing the contract obviously
constitutes bribe money.
● Despite these anomalies, the fatal flaw of the contract is that it violates the
Constitution by alienating lands of the public domain.
ISSUE
● WON a private corporation can own reclaimed submerged lands NO
RATIO
● Respondents: According to the “Ponce Cases”, 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 Joint Venture Agreement
● According to Section 2, Article XII, 1987 Constitution, submerged lands, like the
waters (sea or bay) above them, are part of the State’s inalienable resources.
Submerged lands are property of public dominion, absolutely inalienable and outside
the commerce of man.
● The bulk of the lands subject to the amended JVA are still submerged lands, therefore
inalienable and outside the commerce of man.
● SC: Ponce Cases are inapplicable because the facts are different (refer to table
below)
Present Case Ponce Case
Reclaimed submerged land Reclaimed land
Amari’s right to own the submerged lands is The ownership of the reclaimed lands
immediately effective upon the approval of remained with Cebu City until Essel, Inc.
the amended JVA exercised its “irrevocable option” to
purchase
PEA is a central implementing agency. In Cebu City is an end user government
the hands of PEA, reclaimed foreshore (or agency. Thus, Congress may by law
submerged) lands are public lands. transfer public lands to the City of Cebu to
be used for municipal purposes, which may
be public or patrimonial.
Will be decided under the 1987 Constitution Decided under the 1935 Constitution
DECISION
● DENIED for being prohibited pleadings
DISSENT
● SandovalGutierrez
○ PEA can transfer ownership of land to Amari. The case is governed by PD
1084 and PD 1085
■ PEA is mandated to reclaim land, including foreshore and submerged
areas, or to acquire reclaimed land. Significantly, PEA is authorized to
transfer to the contractor or its assignees portions or portions of the
land reclaimed or to be reclaimed
○ It is agricultural land. Section 2, Article XII, 1987 Constitution
■ 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. Agricultural land of the public domain
may be alienated
○ The lands in the hands of PEA are patrimonial in nature.
■ 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.
● Tinga
○ When the conversion activity such as coproduction, joint venture, or
productionsharing agreements is authorized by the Government through a
law, the qualified party to the agreement may own the converted product or
part of it, when so provided in the agreement.
○ Reclamation not equal to sale.
■ Reclamation contract is not an outright sale. Reclamation is essentially
a construction and infrastructure contract. (BOT Laws)
○ Reclaimed land is not a natural resource
■ Its development from the seabed entails human intervention. Natural
resources are material objects of economic value and utility to man
produced by nature. They are in their original and native state.