Case Summary (G.R. No. 133250)
Petitioner and Respondents
Petitioner: Francisco I. Chavez, who challenged the conveyance of reclaimed public lands without proper procedures.
Respondents:
– Public Estates Authority (PEA), a wholly government-owned corporation tasked with nationwide reclamation and subsequent leasing or sale of reclaimed lands.
– Amari Coastal Bay Development Corporation (Amari), the private partner entitled under the JVA to 70% of the reclamation area.
Key Dates and Applicable Law
Decision Date: November 11, 2003 (applying the 1987 Constitution).
Constitutional Provisions:
– Article XII, Section 2 (State ownership of public domain and inalienability of natural resources)
– Article XII, Section 3 (ban on private corporate acquisition of alienable public lands)
Special Laws:
– Presidential Decree (PD) 1084 (creating PEA and empowering it to reclaim, develop, and dispose of government lands)
– PD 1085 (transferring Manila Bay reclamation to PEA and authorizing subsequent transfers to contractors)
General Laws:
– PD 1445 (Government Auditing Code, requiring public bidding for disposal of government property)
– Republic Act No. 1899 (authorizing municipal reclamation of foreshore lands)
– 1991 Local Government Code (reiterating bidding requirements)
Factual Background
In 1995 PEA and Amari executed a JVA conveying 157.84 hectares of reclaimed lands at P1,200 per square meter (total P1.894 billion). Contemporary published reports placed market values as high as P90,000 per square meter, implying a government loss of over P140 billion. Amari agreed to reimburse PEA through transfer of land shares and paid approximately P1.75 billion in commissions to secure the JVA.
Findings on Valuation Discrepancies
Senate Committee Report No. 560 established multiple official and private valuations:
– Bureau of Internal Revenue zonal valuation: P7,800/m²
– Municipal Assessor of Parañaque: P6,000/m²
– Commission on Audit (COA): P21,333.07/m² (total P33.673 billion)
Private appraisals ranged from P500 to P4,500/m², and unsolicited offers from other purchasers reached P1,600/m². By any standard, the P1,200/m² price was grossly unconscionable.
Legal Issue: Neglected Bidding Requirement
Under PD 1445, any sale of valuable government lands must undergo public auction; only after failed bidding may private negotiation occur. The negotiated sale to Amari violated this mandate, as PEA never conducted public bidding for the bulk of the reclaimed area.
Constitutional Prohibition on Alienation of Public Domain
Article XII, Section 2 of the 1987 Constitution declares all lands of the public domain and natural resources as State-owned and inalienable (except agricultural lands, subject to law). Section 3 prohibits private corporations from acquiring alienable public lands except by limited lease. Submerged and foreshore lands remain public domain outside commerce; any sale or transfer to a private corporation is void.
Inapplicability of the Ponce Cases
Respondents invoked two 1965–1966 resolutions (Ponce Cases) permitting a private option to purchase reclaimed foreshore lands in Cebu. The Court distinguished them on four grounds:
- Ponce Cases concerned only foreshore lands, not submerged areas (the latter inalienable).
- They granted an option to purchase post-reclamation, not immediate conveyance.
- RA 1899 applied then; present law (1987 Constitution, PD 1445, Local Government Code) requires public bidding.
- Ponce Cases under the 1935 Constitution allowed broader corporate land acquisition; the 1987 Charter tightened the ban.
Role and Character of the Public Estates Authority
PEA succeeded the Department of Environment and Natural Resources in leasing and selling recl
Case Syllabus (G.R. No. 133250)
Facts and Procedural History
- Petition initiated by Francisco I. Chavez challenging the Joint Venture Agreement (JVA) between the Public Estates Authority (PEA) and Amari Coastal Bay Development Corporation (AMARI) concerning 157.84 hectares of reclaimed public land along Roxas Boulevard.
- The contested contract fixed the price at ₱1,200.00 per square meter, while contemporaneous land values ranged up to ₱90,000.00 per square meter.
- Senate Blue Ribbon and Accountability Committees conducted hearings and issued Report No. 560 (27 September 1997), establishing gross undervaluation and improprieties in negotiation without public bidding.
- The case progressed through a July 9, 2002 decision and a May 6, 2003 resolution denying respondents’ first motions for reconsideration; respondents filed second motions for reconsideration on May 26, 2003.
Undervaluation of Reclaimed Land and Senate Findings
- Total consideration under the JVA: ₱1,894,129,200.00 for 1,578,441 m² (₱1,200.00/m²).
- Bureau of Internal Revenue zonal valuation: ₱7,800.00/m²; Municipal Assessor of Parañaque: ₱6,000.00/m².
- Commission on Audit (COA): ₱21,333.07/m² (total ₱33.673 billion), indicating a government loss of ₱31.779 billion.
- Senate concluded the sale was “grossly and unconscionably undervalued,” violating the Government Auditing Code’s public-bidding requirement.
Appraisal Reports and Market Value Discrepancies
- AMARI‐commissioned appraisals (February 1995): Vic T. Salinas Realty – ₱500–₱750/m²; Valencia Appraisal Corp. – ₱600–₱850/m²; Asian Appraisal Co. (AACI) – ₱600–₱1,000/m².
- AACI’s later report (March 1996) valued the land at ₱4,500.00/m², undermining credibility of initial low valuations.
- COA appraisal (date unspecified): ₱21,333.07/m².
- Multiple unsolicited offers by third parties at ₱1,400–₱1,600/m², with letters of credit, went unconsidered by PEA.
Commissions Paid by AMARI and Their Legal Implications
- Senate Report No. 560 uncovered P1,754,707,150.00 in commissions paid to secure the JVA, detailed in a 9 June 1995 letter‐agreement among AMARI and stockholders:
- Manager’s checks, postdated checks, blank checks