Property Cases Session 2

8/12/2019 Property Cases Session 2

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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. 133250 November 11, 2003

FRANCISCO I. CHAVEZ, petitioner,

vs.PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENTCORPORATION, respondents.

R E S O L U T I O N

CARPIO,J.:

This Court is asked to legitimize a government contract that conveyed to a private entity157.84 hectares of reclaimed public lands along Roxas Boulevard in Metro Manila atthe negotiated pr ice of P1,200 per square meter. However, published reports place themarket price of land near that area at that time at a high of P90,000 per square meter.1Thedifference in price is a staggering P140.16 bill io n, equivalent to the budget of the entire

Judiciary for seventeen years and more than three times the Marcos Swiss deposits thatthis Court forfeited in favor of the government.

Many worry to death that the private investors will lose their investments, at most not morethan one-half billion pesos in legitimate expenses,2if this Court voids the contract. No oneseems to worry about the more than tens of billion pesos that the hapless Filipino peoplewill lose if the contract is allowed to stand. There are those who question these figures, butthe questions arise only because the private entity somehow managed t o inveigle thegovernment to sell the reclaimed lands without public bidding in patent violation of theGovernment Auditing Code.

Fortunately for the Filipino people, two Senate Committees, the Senate Blue RibbonCommittee and the Committee on Accountability of Public Officers, conducted extensive

public hearings to determine the actual market value of the public lands sold to the privateentity. The Senate Committees established the clear, indisputable and unalterable factthat the sale of the public lands is grossly and unconscionably undervalued based onofficial documents submitted by the proper government agencies during the Senateinvestigation.We quote the joint report of these two Senate Committees, SenateCommittee Report No. 560, as approved by the Senate in plenary session on 27September 1997:3

The Consideration for the Property

PEA, under the JVA, obligated itself to convey title and possession over theProperty, consisting of approximately One Million Five Hundred Seventy EightThousand Four Hundred Forty One (1,578,441) Square Meters for a totalconsideration of One Billion Eight Hundred Ninety Four Million One Hundred

Twenty Nine Thousand Two Hundred (P1,894,129,200.00) Pesos, or a price ofOne Thousand Two Hundred (P1,200.00) Pesos per square meter.

According to the zonal valuation of the Bureau of Internal Revenue, thevalue of the Property is Seven Thousand Eight Hundred Pesos (P7,800.00)per square meter. The Municipal Assessor of Paraaque, Metro Manila,where the Property is located, pegs the market value of the Property at Six

Thousand Pesos (P6,000.00) per square meter.Based on these alone, the price

at which PEA agreed to convey the property is a pittance. And PEA cannot claimignorance of these valuations, at least not those of the Municipal Assessors office,since it has been trying to convince the Office of the Municipal Assessor ofParaaque to reduce the valuation of various reclaimed properties thereat in orderfor PEA to save on accrued real property taxes.

PEAs justification for the purchase price are various appraisal reports, particularlythe following:

(1) An appraisal by Vic T. Salinas Realty and Consultancy Servicesconcluding that the Property is worth P500.00 per square meter for thesmallest 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 theProperty is worth P850 per square meter for Island I, P800 per squaremeter for Island II and P600 per square meter for the smallest island, ora total of P1,289,732,000, also as of 22 February 1995; and

(3) An Appraisal by Asian Appraisal Company, Inc. (AACI), stating thatthe Property is worth approximately P1,000 per square meter for Island I,P950 per square meter for Island II and P600 per square meter forIsland 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 asubsequent appraisal report of AACI stating that the property is worth P4,500.00per square meter as of 26 March 1996. Such discrepancies in the appraised valueas appearing in two different reports by the same appraisal company submittedwithin a span of one year render all such appraisal reports unworthy of even theslightest consideration. Furthermore, the appraisal report submitted by the

Commission on Audit estimates the value of the Property to beapproximately P33,673,000,000.00, or P21,333.07 per square meter.

There were also other offers made for the property from other parties whichindicate that the Property has been undervalued by PEA. For instance, on 06March 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 itswillingness to issue a stand-by letter of credit worth $10 million. PEA did notconsider this offer and instead finalized the JVA with AMARI. Other offers weremade on various dates by Aspac Management and Development Group Inc. (forP1,600 per square meter), Universal Dragon Corporation (for P1,600 per squaremeter), 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 isincluded), as will be discussed fully below, which indicate that AMARI itself


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believed the market value to be much higher than the agreed purchase price. Ifsuch commissions are added to the purchase price, AMARIs acquisition cost forthe Property will add-up to P3,490,992,250.00 (excluding the bonus). If AMARIwas willing to pay such amount for the Property, why was PEA willing to sell foronly P1,894,129,200.00, making the Government stand to lose approximatelyP1,596,863,050.00?

x x x

Even if we simply assume that the market value of the Property is half of themarket value fixed by the Municipal Assessors Office of Paraaque for lands alongRoxas Boulevard, or P3,000.00 per square meter, the Government now stands tolose approximately P2,841,193,800.00. But an even better assumption would bethat the value of the Property is P4,500.00 per square meter, as per the AACIappraisal report dated 26 March 1996, since this is the valuation used to justify theissuance of P4 billion worth of shares of stock of Centennial City Inc. (CCI) inexchange for 4,800,000 AMARI shares with a total par value of onlyP480,000,000.00. With such valuation, the Governments loss will amount toP5,208,855,300.00.

Clearly, the purchase price agreed to by PEA is way below the actual valueof the Property, thereby subjecting the Government to grave injury and

enabling AMARI to enjoy tremendous benefit and advantage.(Emphasis

supplied)

The Senate Committee Report No. 560 attached the following official documents fromthe Bureau of Internal Revenue,the Municipal Assessor of Paraaque, Metro Manila,and the Commission on Audit:

1. Annex "M," Certified True Copy of BIR Zonal Valuations as certified by AntonioF. Montemayor, Revenue District Officer. This official document fixed the marketvalue of the 157.84 hectares at P7,800 per square meter.

2. Annex "N," Certification of Soledad S. Medina-Cue, Municipal Assessor,Paraaque, dated 10 December 1996. This official document fixed the marketvalue at P6,000 per square meter.

3. Exhibit "1-Engr. Santiago," the Appraisal Report of the Commission onAudit. This official document fixed the market value at P21,333.07 per squaremeter.

Whether based on the official appraisal of the BIR, the Municipal Assessor or theCommission on Audit, the P1,200 per square meter purchase price, or a total of P1.894billion for the 157.84 hectares of government lands, is grossly and unconscionablyundervalued. The authoritative appraisal, of course, is that of the Commission on Auditwhich valued the 157.84 hectares at P21,333.07 per square meter or a total of P33.673billion. Thus, based on the official appraisal of the Commission on Audit, theindependent constitutional body that safeguards government assets, the actual lossto the Filipino people is a shocking P31.779 billion.

This gargantuan monetary anomaly, aptly earning the epithet "Grandmother of AllScams,"4is not the major defect of this government contract. The major flaw is not eventhe P1.754 billion in commissions the Senate Committees discovered the private entitypaid to various persons to secure the contract,5described in Senate Report No. 560 asfollows:

A Letter-Agreement dated 09 June 1995 signed by Messrs. Premchai Karnasutaand Emmanuel Sy for and in behalf of AMARI, on the one hand, and stockholdersof AMARI namely, Mr. Chin San Cordova (a.k.a. Benito Co) and Mr. Chua HunSiong (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 "professionalefforts and services in successfully negotiating and securing for AMARI theJoint Venture Agreement",as follows:

Form of Payment Paid/Payable On

Managers Checks 28 April 1995

Managers Checks Upon signing of letter

10 Post Dated Checks (PDCs) 60 days from date of letter

24 PDCs 31 Aug. 95 to 31 Jan. 98

48 PDCs Monthly, over a 12-month pd.from date of letter

Cash bonus When sale of land begins

Developed land from Project Upon completion of each phase

TOTAL

Mr. Luis Benitez of SGV, the external auditors of AMARI, testified that saidLetter-Agreement was approved by the AMARI Board.6(Emphasis supplied)

The private entity that purchased the reclaimed lands for P1.894 billion expressly admittedbefore the Senate Committees that it spent P1.754 billion in commissions to pay variousindividuals for "professional efforts and services in successfully negotiating andsecuring" the contract. By any legal or moral yardstick, the P1.754 billion incommissions obviously constitutes bribe money.Nonetheless, there are those whoinsist 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 oflegitimate investments deserving of protection by the law? Should this Court reward thepatently illegal and grossly unethical business practice of the private entity in securing thecontract? Should we allow those with hands dripping with dirty money equitable relief fromthis Court?

Despite these revolting anomalies unearthed by the Senate Committees, the fatal f law ofthis contract is that it glaringly violates provisions of the Constitution expressly prohibitingthe alienation of lands of the public domain.


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Thus, we now come to the resolution of the second Motions for Reconsideration7filed bypublic respondent Public Estates Authority ("PEA") and private respondent Amari CoastalBay Development Corporation ("Amari"). As correctly pointed out by petitioner Francisco I.Chavez in his Consolidated Comment,8the second Motions for Reconsideration raise nonew issues.

However, the Supplement to "Separate Opinion, Concurring and Dissenting" of JusticeJosue N. Bellosillo brings to the Courts attention the Resolutions of this Court on 3February 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 t he Dissenting Opinionclaims that these two Resolutions serve as author i ty that a single pr ivate corporationl ike Amari may acquire hundreds of hectares of subm erged lands, as wel l asreclaimed submerged lands, within Mani la Bay under the Amend ed Joint VentureAgreement ( "Am ended 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 Casesadmit that "sub merged lands sti l l belong to the National Government. "9The correctformulation, however, is that submerged land s are owned by th e State and areinal ienable. Section 2, Article XII of the 1987 Constitution provides:

All lands of the publ ic dom ain, waters, minerals, coal, petroleum, and othermineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, floraand fauna, and other natural resources are owned by t he State. With theexception of agr icu l tural lands, al l other natural resources shal l not bealienated. x x x. (Emphasis supplied)

Submerged lands, like the waters (sea or bay) above them, are part of the Statesinalienable natural resources. Submerged lands are property of public dominion, absolutelyinalienable and outside the commerce of man.10This is also true with respect to foreshorelands. Any sale of submerged or foreshore lands is void being contrary to the Constitution.11

This is why the Cebu City ordinance merely granted Essel, Inc. an "irrevocable option" topurchase 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 purchasereferred to reclaimed lands,and not to foreshore lands which are inalienable. Reclaimedlands are no longer foreshore or submerged lands, and thus may qualify as alienableagricultural lands of the public domain provided the requirements of public land laws aremet.

In the instant case, the bulk of the lands subject of the Amended JVA are still submergedlandseven to this very day, and therefore inalienable and outside the commerce of man. Ofthe 750 hectares subject of the Amended JVA, 592.15 hectares or 78% of the to tal areaare sti l l submerged, permanently und er the waters of Mani la Bay. Under the AmendedJVA, 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 titlewould be made only after actual reclamation.

The Amended JVA states that the PEA "hereby con tr ibutes to the Joint Venture itsr ights and pr ivi legesto perform Rawland Reclamation and Horizontal Development as

well as own the Reclamation Area."12The Amended JVA further states that "the sharing ofthe Joint Venture Proceeds shall be based on the ratio of thirty percent (30%) for PEA andseventy percent (70%) for AMARI."13The Amended JVA also provides that the PEA "herebydesignates AMARI to perform PEAs rights and privileges to reclaim, own and develop theReclamation Area."14In short, under the Amended JVA the PEA contr ib uted its r ights,pr ivi leges and ownership o ver the Reclamation Area to the Joint Venture which is70% owned by Am ari . Moreover, the PEA delegated to Amari the r ight and p r ivi lege toreclaim 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 AMARIs Land sharebased on the Land Allocation Plan."15The Amended JVA also provides that "PEA, whenrequested in writing by AMARI, shall then cause the issuance and delivery of the propercertificates of title covering AMARIs Land Share in the name of AMARI, x x x."

16

In the Ponce Cases, the City of Cebu retained ownership of the reclaimed foreshore landsand Essel, Inc. only had an "irrevocable option" to purchase portions of the foreshore landsonce actually reclaimed. In sharp contrast, in the instant case ownership of the reclamationarea, including the submerged lands, was immediately transferred to the joint venture.

Amari immediately acquired the absolute right to own 70% percent of the reclamation area,with the deeds of transfer to be documented and the certificates of title to be issued uponactual reclamation. Amaris right to own the submerged lands is immediately effective uponthe approval of the Amended JVA and not merely an option to be exercised in the future ifand 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 transactionsspecified in the Amended JVA.

Second, in the Ponce Cases the Cebu City ordinance granted Essel, Inc. an "irrevocableoption" to purchase from Cebu City not more than 70% of the reclaimed lands. Theownership of the reclaimed lands remained with Cebu City until Essel, Inc. exercised itsoption 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 bemade only through public bidding. Thus, such an "irrevocable option" to purchasegovernment land would now be void being contrary to the requirement of public biddingexpressly required in Section 7917of PD No. 1445. This requirement of public bidding isreiterated in Section 37918of the 1991 Local Government Code.19Obviously, the ingeniousreclamation scheme adopted in the Cebu City ordinance can no longer be followed in viewof 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 toreclaim foreshore lands. The two Resolutions in the Ponce Cases upheld the Cebu Cityordinance only with respect to foreshore areas, and nullified the same with respect tosubmerged areas. Thus, the 27 June 1965 Resolution made the injunction of the trial courtagainst the City of Cebu "permanent insofar x x x as the area outside or beyond theforeshore land proper is concerned."

As we held in the 1998 case ofRepubl ic Real Estate Corporation v. Court ofAppeals,20citing the Ponce Cases, RA No. 1899 applies only to foreshore lands, notto submergedlands. In his concurring opinion inRepubl ic Real Estate Corporation,

Justice Reynato S. Puno stated that under Commonwealth Act No. 141, "foreshore andlands under water were not to be alienated and sold to private parties," and that such lands


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"remained property of the State." Justice Puno emphasized that "Commonwealth Act No.141 has remained in effect at present." The instant case involves principally submergedlands within Manila Bay. On this score, the Ponce Cases, which were decided based on RANo. 1899, are not applicable to the instant case.

Fourth, the Ponce Cases involve the authority of the City of Cebu to reclaim foreshore areaspursuant to a general law, RA No. 1899. The City of Cebu is a public corporation and isqualified, under the 1935, 1973, and 1987 Constitutions, to hold alienable or eveninalienable lands of the public domain. There is no dispute that a public corporation is notcovered 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 expresslyrecognize this.

Cebu City is an end user government agency, just like the Bases Conversion andDevelopment Authority or the Department of Foreign Affairs.21Thus, Congress may by lawtransfer public lands to the City of Cebu to be used for municipal purposes, which may bepublic or patrimonial. Lands thus acquired by the City of Cebu for a public purpose may notbe sold to private parties. However, lands so acquired by the City of Cebu for a patrimonialpurpose 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 thereclaimed lands under the Amended JVA. As we explained in the 6 May 2003 Resolution:

PEA is the central implementing agencytasked to undertake reclamationprojects nat ionwide.PEA took the place of the Department of Environment andNatural Resources ("DENR" for brevity) as the government agency charged withleasing or selling al l reclaimedlands of the public domain. In the hands of PEA,which too k over the leasing and sel l ing functions of DENR, reclaimedforeshore (or submerged lands) lands are publ ic lands in the same mannerthat these same lands wo uld have been publ ic lands in the hands o fDENR.(Emphasis supplied)

Our 9 July 2002 Decision explained the rationale for treating the PEA in the same manneras 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 onprivate corporations from acquiring any kind of alienable land of the public domain.PEA will simply turn around, as PEA has now done under the AmendedJVA,and transfer several hundreds of hectares of these reclaimed and still to bereclaimed lands to a single private corporation in only one transaction. Thisscheme will effectively nullify the constitutional ban in Section 3, Article XII of the1987 Constitution which was intended to diffuse equitably the ownership ofalienable lands of the public domain among Filipinos, now numbering over 80million strong. (Emphasis supplied)

Finally, the Ponce Cases were decided under the 1935 Constitution which allowed privatecorporations to acquire alienable lands of the public domain. However, the 1973Constitution prohibited private corporations from acquiring alienable lands of the publicdomain, 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 Amariis 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 thePonce 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 reclaimedlands covered by the Amended JVA. Neither the PEA nor Amari has sold any portion of thereclaimed lands to third parties. Title to the reclaimed lands remains with the PEA. As westated in our 9 July 2002 Decision:

In the instant case, the only patent and certificates of title issued are those in thename of PEA, a wholly government owned corporation performing public as wellas proprietary functions. No patent or certificate of title has been issued to anyprivate party. No one is ask ing the Director of Lands to cancel PEAs patent orcertificates of title. In fact, the thrust of the instant petition is that PEAs certificatesof title should remain with PEA, and the land covered by these certificates, beingalienable 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 and3, Article XII of the 1987 Constitution." In our 6 May 2003 Resolution,

we DENIEDwith FINALITY respondents Motions for Reconsideration. Litigations must endsome time. It is now time to write finis to this "Grandmother of All Scams."

WHEREFORE, the second Motions for Reconsideration filed by Public Estates Authorityand Amari Coastal Bay Development Corporation are DENIED for being prohibitedpleadings. In any event, these Motions for Reconsideration have no merit. No furtherpleadings shall be allowed from any of the parties.

SO ORDERED.

Davide, Jr., C.J., Panganiban, Austria-Martinez, Carpio-Morales, and Callejo, Sr.,JJ., concur.Bellosillo, J., voted to grant reconsideration, pls. see dissenting opinion.

Puno, J., maintains previous qualified opinion.Vitug, J., pls. see separate(concurring) opinion.Quisumbing, J.,voted to allow reconsideration, see separate opinion.Ynares-Santiago, Sandoval-Gutierrez, and Corona, JJ., maintains their dissent.

Azcuna, J., no part.Tinga, J., see dissenting opinion.


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Manila

EN BANC

G.R. No. 103882 November 25, 1998

REPUBLIC OF THE PHILIPPINES, petitioner,vs.THE HONORABLE COURT OF APPEALS AND REPUBLIC REAL ESTATECORPORATION, respondents, CULTURAL CENTER OF THE PHILIPPINES, intervenor.

G.R. No. 105276 November 25, 1998

PASAY CITY AND REPUBLIC REAL ESTATE CORPORATION, petitioners,vs.COURT OF APPEALS and REPUBLIC OF THE PHILIPPINES, respondents.

PURISIMA, J. :

At bar are two consolidated petitions for review oncertiorari under Rule 45 of the RevisedRules of Court. Here, the Court is confronted with a case commenced before the then Courtof First Instance (now Regional Trial Court) of Rizal in Pasay City, in 1961, more than 3decades back, that has spanned six administrations of the Republic and outlasted thetenure of ten (10) Chief Justices of the Supreme Court.

In G.R. No. 103882, the Republic of the Philippines, as petitioner, assails the Decision,dated January 29, 1992 and Amended Decision, dated April 28, 1992, of the Court of

Appeals1which affirmed with modification the Decision of the former Court of First Instanceof Rizal (Branch 7, Pasay City) in Civil Case No. 2229-P, entitled "Republic of thePhilippines vs. Pasay City and Republic Real Estate Corporation".

The facts that matter are, as follows:

Republic Act No. 1899 ("RA 1899"), which was approved on June 22, 1957, authorized thereclamation of foreshore lands by chartered cities and municipalities. Section I of said law,reads:

Sec. 1. Authority is hereby granted to all municipalities and charteredcities to undertake and carry out at their own expense the reclamation bydredging, filling, or other means, of any foreshore lands bordering them,and to establish, provide, construct, maintain and repair proper andadequate docking and harbor facilities as such municipalities andchartered cities may determine in consultation with the Secretary ofFinance and the Secretary of Public Works and Communications.

On May 6, 1958, invoking the a forecited provision of RA 1899, the Pasay City Councilpassed Ordinance No. 121, for the reclamation of Three Hundred (300) hectares offoreshore lands in Pasay City, empowering the City Mayor to award and enter intoreclamation contracts, and prescribing terms and conditions therefor. The said Ordinancewas amended on April 21, 1959 by Ordinance No. 158, which authorized the Republic RealEstate Corporation ("RREC") to reclaim foreshore lands of Pasay City under certain termsand conditions.

On April 24, 1959, Pasay City and RREC entered into an Agreement 2for the reclamation ofthe foreshore lands in Pasay City.

On December 19, 1961, the Republic of the Philippines ("Republic") filed a Complaint 3forRecovery of Possession and Damages with Writ of Preliminary Preventive injunction andMandatory Injunction, docketed as Civil Case No. 2229-P before the former Court of FirstInstance of Rizal, (Branch 7, Pasay City).

On March 5, 1962, the Republic of the Philippines filed an AmendedComplaint 4questioning subject Agreement between Pasay City and RREC (Exhibit "P") onthe grounds that the subject-matter of such Agreement is outside the commerce of man,that its terms and conditions are violative of RA 1899, and that the said Agreement wasexecuted without any public bidding.

The Answers 5of RREC and Pasay City, dated March 10 and March 14, 1962, respectively,

averred that the subject-matter of said Agreement is within the commerce of man, that thephrase "foreshore lands" within the contemplation of RA 1899 has a broader meaning thanthe cited definition of the term in the Words and Phrases and in the Webster's Third NewInternational Dictionary and the plans and specifications of the reclamation involved wereapproved by the authorities concerned.

On April 26,1962, Judge Angel H. Mojica, (now deceased) of the former Court of FirstInstance of Rizal (Branch 7, Pasay City) issued an Order6the dispositive portion of whichwas to the following effect:

WHEREFORE, the court hereby orders the defendants, their agents,and all persons claiming under them, to refrain from "further reclaimingor committing acts of dispossession or dispoilation over any area within

the Manila Bay or the Manila Bay Beach Resort", until further orders ofthe court.

On the following day, the same trial court issued a writ of preliminary injunction 7whichenjoined the defendants, RREC and Pasay City, their agents, and all persons claimingunder them "from further reclaiming or committing acts of dispossession."

Thereafter, a Motion to Intervene8, dated June 27, 1962, was filed by Jose L. Bautista,Emiliano Custodio, Renato Custodio, Roger de la Rosa, Belen Gonzales, Norma Martiner,Emilia E. Paez, Ambrosio R. Parreno, Antolin M. Oreta, Sixto L. Orosa, Pablo S. Sarmiento,Jesus Yujuico, Zamora Enterprises, Inc., Industrial and Commercial Factors, Inc.,Metropolitan Distributors of the Philippines, and Bayview Hotel, Inc. statinginter alia thatthey were buyers of lots in the Manila Bay area being reclaimed by RREC, whose rightswould be affected by whatever decision to be rendered in the case. The Motion was granted

by the trial court and the Answer attached thereto admitted.9


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SO ORDERED. (See Court of Appeals' Decision dated January 28,1992; pp. 6-8)

Dissatisfied with the said judgment, the Republic appealed therefrom to the Court ofAppeals. However, on January 11, 1973, before the appeal could be resolved, PresidentialDecree No. 3-A issued, amending Presidential Decree No. 3, thus:

Sec. 1. Section 7 of Presidential Decree No. 3, dated September 26,1972, is hereby amended by the addition of the following paragraphs:

The provisions of any law to the contrary notwithstanding, thereclamation of areas under water, whether foreshore or inland, shall belimited to the National Government or any person authorized by it undera proper contract.

All reclamations made in violation of this provision shall be forfeited tothe State without need of judicial action.

Contracts for reclamation still legally existing or whose validity has beenaccepted by the National Government shall be taken over by theNational Government on the basis ofquantum meruit, for properprosecution of the project involved by administration.

On November 20, 1973, the Republic and the Construction Development Corporation of thePhilippines ("CDCP") signed a Contract13for the Manila-Cavite Coastal Road Project(Phases I and II) which contract included the reclamation and development of areascovered by the Agreement between Pasay City and RREC. Then, there was issuedPresidential Decree No. 1085 which transferred to the Public Estate Authority ("PEA") therights and obligations of the Republic of the Philippines under the contract between theRepublic and CDCP.

Attempts to settle amicably the dispute between representatives of the Republic, on the onehand, and those of Pasay City and RREC, on the other, did not work out. The partiesinvolved failed to hammer out a compromise.

On January 28, 1992, the Court of Appeals came out with a Decision 14dismissing theappeal of the Republic and holding, thus:

WHEREFORE, the decision appealed from is hereby AFFIRMED withthe following modifications:

1. The requirement by the trial court on public bidding and submission ofRREC's plans specification to the Department Public Works andHighways in order that RREC may continue the implementation of thereclamation work is deleted for being moot and academic;

2. Ordering the plaintiff-appellant to turn over to Pasay City theownership and possession over all vacant spaces in the twenty-onehectare area already reclaimed by Pasay City and RREC at the time ittook over the same. Areas thereat over which permanent structures has

(sic) been introduced shall, including the structures, remain in thepossession of the present possessor, subject to any negotiation betweenPasay City and the said present possessor, as regards the continuedpossession and ownership of the latter area.

3. Sustaining RREC's irrevocable option to purchase sixty (60%) percentof the Twenty-One (21) hectares of land already reclaimed by it, to beexercised within one (1) year from the finality of this decision, at thesame terms and condition embodied in the Pasay City-RRECreclamation contract, and enjoining appellee Pasay City to respect

RREC's option.

SO ORDERED.

On February 14, 1992, Pasay City and RREC presented a Motion for Reconsideration ofsuch Decision of the Court of Appeals, contending, among others, that RREC had actuallyreclaimed Fifty-Five (55) hectares, and not only Twenty-one (21) hectares, and therespondent Court of Appeals erred in not awarding damages to them, movants.

On April 28, 1992, the Court of Appeals acted favorably on the said Motion forReconsideration, by amending the dispositive portion of its judgment of January 28, 1992, toread as follows:

WHEREFORE, the dispositive portion of our Decision dated January 28,1992 is hereby AMENDED to read as follows:

1. The requirement by the trial court on public bidding and thesubmission of the RREC's plans and specification to the Department ofPublic Works and Highways in order that RREC may continue theimplementation of the reclamation work is deleted for being moot andacademic.

2. Ordering plaintiff-appellant to turn over to Pasay City the ownershipand possession of the above enumerated lots (1 to 9).

3. Sustaining RREC's irrevocable option to purchase sixty (60%) percentof the land referred to in No. 2 of this dispositive portion, to be exercisedwithin one (1) year from the finality of this Decision, at the same termsand condition embodied in the Pasay City-RREC reclamation contract,and enjoining Pasay City to respect RREC's irrevocable option.

SO ORDERED.

From the Decision and Amended Decision of the Court of Appeals aforementioned, theRepublic of the Philippines, as well as Pasay City and RREC, have come to this Court toseek relief, albeit with different prayers.

On September 10, 1997, the Court commissioned the former thirteenth Division of Court ofAppeals to hear and receive evidence on the controversy. The corresponding


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Commissioner's Report, dated November 25, 1997, was submitted and now forms part ofthe records.

On October 11, 1997, the Cultural Center of the Philippines ("CCP") filed a Petition inIntervention, theorizing that it has a direct interest in the case being the owner of subjectnine (9) lots titled in its (CCP) name, which the respondent Court of Appeals ordered to beturned over to Pasay City. The CCP, as such intervenor, was allowed to present itsevidence, as it did, before the Court of Appeals, which evidence has been considered in theformulation of this disposition.

In G.R. No. 103882, the Republic of the Philippines theorizes, by way of assignment oferrors, that:

I

THE COURT OF APPEALS ERRED IN UPHOLDINGTHE VALIDITY OF PASAY CITY ORDINANCE NO.158 DATED APRIL 21, 1959 AND THERECLAMATION CONTRACT ENTERED INTOBETWEEN PASAY CITY AND RREC;

II

THE COURT OF APPEALS ERRED IN FINDINGTHAT RREC HAD RECLAIMED 55 HECTARES ANDIN ORDERING THE TURN-OVER TO PASAY CITYOF THE OWNERSHIP AND POSSESSION OF NINE(9) LOTS TITLED IN THE NAME OF CCP.

In G.R. No. 105276, the petitioners, Pasay City and RREC, contend, that:

I

THE COURT OF APPEALS ERRED IN NOTDECLARING PRESIDENTIAL DECREE NO. 3-A

UNCONSTITUTIONAL;

II

THE COURT OF APPEALS ERRED IN NOTAWARDING DAMAGES IN FAVOR OF PASAY CITYAND RREC.

Let us first tackle the issues posed in G.R. No. 103882.

On the first question regarding the validity of Pasay City Ordinance No. 158 dated April 21,1959 and the Agreement dated April 24, 1959 between Pasay City and RREC, we rule inthe negative.

Sec. 1 of RA 1899, reads:

Sec. 1. Authority is hereby granted to allmunicipalities and chartered cities to undertake andcarry out at their own expense the reclamation bydredging, filling, or other means, of any foreshorelands bordering them, and to establish, provide,construct, maintain and repair proper and adequatedocking and harbor facilities as such municipalitiesand chartered cities may determine in consultation

with the Secretary of Finance and the Secretary ofPublic Works and Communications.

It is the submission of the petitioner, Republic of the Philippines, that there are no foreshorelands along the seaside of Pasay City 15; that what Pasay City has are submerged oroffshore areas outside the commerce of man which could not be a proper subject matter ofthe Agreement between Pasay City and RREC in question as the area affected is within theNational Park, known as Manila Bay Beach Resort, established under Proclamation No. 41,dated July 5, 1954, pursuant to Act No. 3915, of which area it (Republic) has been in open,continuous and peaceful possession since time immemorial.

Petitioner faults the respondent court for unduly expanding what may be considered"foreshore land" through the following disquisition:

The former Secretary of Justice Alejo Mabanag, inresponse to a request for an opinion from the thenSecretary of Public Works and Communications as towhether the term, "foreshore areas" as used inSection I of the immediately aforequoted law is thatdefined in Webster's Dictionary and the Law ofWaters so as to make any dredging or filling beyondits prescribed limit illegal, opined:

According to the basic letter of theDirector of Public Works, the lawof Waters speaks of "shore" anddefines it thus: "that space

movement of the tide. Its interioror terrestrial limit in the linereached by highest equinoctialtides."

Webster's definition of foreshore reads as follows:

That part of the shore betweenhigh water and low-water marksusually fixed at the line to whichthe ordinary means tide flows:also, by extension, the beach, theshore near the water's edge.


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If we were to be strictly literal theterm foreshore or foreshore landsshould be confined to but a portionof the shore, in itself a very limitedarea. (p. 6, Intervenors-appellees'brief).

Bearing in mind the (Webster'sand Law of Waters) definitions of"shore" and of foreshore lands,

one is struck with the apparentinconsistency between the areasthus described and the purpose towhich that area, when reclaimedunder the provision of Republic

Act No. 1899, shall be devoted.Section I (of said Law) authorizesthe construction thereat of"adequate docking and harborfacilities". This purpose isrepeated in Sections 3 and 4 ofthe Act.

And yet, it is well known fact that

foreshore lands normally extendonly from 10 to 20 meters alongthe coast. Not very much more ifat all. In fact certain parts inManila bordering on Manila Bay,has no foreshore to speak of sincethe sea washes the sea wall.

It does not seem logical, then, thatCongress had in mind. Webster'slimited concept of foreshore whenit enacted Republic Act No. 1899,unless it intends that the wharves,piers, docks,etc.should be

constructed parallel to the shore,which is impractical.

Since it is to be presumed thatCongress could not have intendedto enact an ineffectual measurenot one that would lead to absurdconsequences, it would seem thatit used "foreshore" in a sensewider in scope that defined byWebster. . . .

To said opinion on the interpretation of the R.A. 1899,

plaintiff-appellant could not offer any refutation orcontrary opinion. Neither can we. In fact, the above

construction is consistent with the "rule on context" instatutory construction which provides that inconstruing a statute, the same must be construed asa whole. The particular words, clauses and phrasesshould not be studied as detached and isolatedexpressions, but the whole and every part of thestatute must be considered in fixing the meaning ofany of its parts in order to produce a harmoniouswhole (seeAraneta vs. Concepcion, 99 Phil. 709).There are two reasons for this. Firstly, the force andsignificance of particular expressions will largelydepend upon the connection in which they are foundand their relation to the general subject-matter of thelaw. The legislature must be understood to haveexpressed its whole mind on the special object towhich the legislative act is directed but the vehicle forthe expressions of that meaning is the statute,considered as one entire and continuous act, and notas an agglomeration of unrelated clauses. Eachclause or provision will be illuminated by those whichare cognate to it and by the general tenor of thewhole statute and thus obscurities end ambiguitiesmay often be cleared up by the most direct andnatural means. Secondly effect must be given, if it ispossible, to every word and clause of the statute, so

that nothing shall be left devoid of meaning ordestitute of force. To this end, each provision of thestatute should be read in the light of the whole. Forthe general meaning of the legislature, as gatheredfrom the entire act, may often prevail over theconstruction which would appear to be the mostnatural and obvious on the face of a particular clause.If is by this means that contradiction and repugnancebetween the different parts of the statute may beavoided. (See Black, Interpretation of Laws, 2nd Ed.,pp. 317-319).

Resorting to extrinsic aids, the "Explanatory Note" toHouse Bill No. 3830, which was subsequentlyenacted as Republic Act No. 1899, reads:

In order to develop and expandthe Maritime Commerce of thePhilippines, it is necessary thatharbor facilities becorrespondingly improved and,where necessary, expanded anddeveloped. The nationalgovernment is not in a financialposition to handle all this work. Onthe other hand, with a greaterautonomy many chartered cities

and provinces are financially ableto have credit position which will


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allow them to undertake theseprojects. Some cities, such as theCity of Bacolod under R.A. 161,has been authorized to reclaimforeshore lands bordering it.

Other cities end provinces havecontinuously been requesting forauthority to reclaim foreshorelands on the basis of the Bacolod

City pattern, and to undertakework to establish, construct on thereclaimed area and maintain suchport facilities as may benecessary. In order not to undulydelay the undertaking of theseprojects, and inorder to obviatethe passage of individual pieces oflegislation for every chartered cityand province, it is herebyrecommended that theaccompanying bill be approved. Itcovers Authority for All charteredcities and provinces to undertake

this work. . . . (emphasis supplied)

Utilizing the above explanatory note in interpretingand construing the provisions of R.A. 1899, thenSecretary of Justice Mabanag opined:

It is clear that the "Bacolod Citypattern" was the basis of theenactment of the aforementionedbill of general application. This so-called "Bacolod City pattern"appears to be composed of 3parts, namely: Republic Ad No.161, which grants authority to

Bacolod City to undertake or carryout . . . the reclamation . . . of any[sic] carry out the reclamationproject conformably with Republic

Act No. 161; and Republic Act No.1132 authorizing Bacolod City tocontract indebtedness or to issuebonds in the amount notexceeding six million pesos tofinance the reclamation of land insaid city.

Republic Act No. 161 did not initself specify the precise spacetherein referred to as "foreshore"

lands, but it provided that dockingand harbor facilities should beerected on the reclaimed portionsthereof, while not conclusivewould indicate that Congress usedthe word "foreshore" in itsbroadest sense. Significantly, theplan of reclamation of foreshoredrawn up by the Bureau of PublicWorks maps out an area ofapproximately 1,600,000 squaremeters, the boundaries of whichclearly extend way beyondWebster's limited concept of theterm "foreshore". As acontemporaneous construction bythat branch of the Governmentempowered to oversee at least,the conduct of the work, such aninterpretation deserves greatweight. Finally, Congress inenacting Republic Act No. 1132(supplement to RA 161), tacitlyconfirmed and approved theBureau's interpretation of the term

'foreshore' when instead of takingthe occasion to correct the Bureauof over extending its plan, itauthorized the city of Bacolod toraise the full estimated cost ofreclaiming the total area coveredby the plan. The explanatory noteto House Bill No. 1249 whichbecame Republic Act No. 1132states among the things:

The Bureau of Public Worksalready prepared a plan for thereclamation of about 1,600,000square meters of land at anestimated costs of aboutP6,000,000.00. The project is self-supporting because the proceedsfrom the sales or leases of landsso reclaimed will be more thansufficient to cover the cost of theproject.

Consequently, when Congresspassed Republic Act No. 1899 inorder to facilitate the reclamationby local governments of foreshore

lands on the basis of the BacolodCity pattern and in order to obviate


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the passage of individual pieces oflegislation for every chartered cityand provinces requesting authorityto undertake such projects, thelawmaking body could not havehad in mind the limited areadescribed by Webster as"foreshore" lands. . . . .

If it was really the intention of Congress to limit the

area to the strict literal meaning of "foreshore" landswhich may be reclaimed by chartered cities andmunicipalities, Congress would have excluded thecities of Manila, Iloilo, Cebu, Zamboanga and Davaofrom the operation of RA 1899 as suggested bySenator Cuenco during the deliberation of the billconsidering that these cities do not have ' foreshore'lands in the strict meaning of the term. Yet, Congressdid not approve the proposed amendment of SenatorCuenco, implying therefore, that Congress intendednot to limit the area that may be reclaimed to the strictdefinition of "foreshore" lands.

The opinion of the then Secretary of Justice

Mabanag, who was at that time the chief law officerand legal adviser of the government and whose officeis required by law to issue opinions for the guidanceof the various departments of the government, therebeing then no judicial interpretation to the contrary, isentitled to respect (see Bengzon vs. Secretary ofJustice and Insular Auditor, 68 Phil. 912).

We are not unmindful of the Supreme CourtResolution dated February 3, 1965 in Ponce vs.Gomez (L-21870) andPonce vs. City of Cebu (L-2266), by a unanimous vote of six (6) justices (theother five (5) members deemed it unnecessary toexpress their view because in their opinion the

questions raised were not properly brought before thecourt), which in essence applied the strict dictionarymeaning of "foreshore lands" as used in RA 1899 inthe case of the city of Cebu. But this waspromulgated long after the then Secretary of JusticeMabanag rendered the above opinion on November16, 1959 and long after RREC has started the subjectreclamation project.

Furthermore, as held by the lower court, Congress,after the Supreme Court issued the aforementionedResolution, enacted RA 5187. In Sec. 3 (m) of saidlaw, Congress appropriated money "for theconstruction of the seawall and limited accesshighway from the South boundary of the city of

Manila to Cavite City, to the South, and from theNorth boundary of the city of Manila to themunicipality of Mariveles, province of Bataan, to theNorth (including the reclamation of foreshore andsubmerged areas . . .provided . . . that . . . existingprojects and/or contracts of city or municipalgovernments for the reclamation of foreshore andsubmerged lands shall be respected . . ." This is aclear manifestation that Congress in enacting RA1899, did not intend to limit the interpretation of theterm "foreshore land" to its dictionary meaning.

It is presumed that the legislature was acquaintedwith and had in mind the judicial construction given toa former statute on the subject, and that the statuteon the subject, and that the statute was enactedhaving in mind the judicial construction that the priorenactment had received, or in the light of suchexisting judicial decisions as have direct bearing uponit (see 50 Am. Jur., Sec. 321, pp. 312-313). Butnotwithstanding said interpretation by the SupremeCourt of RA 1899 in the Ponce cases, Congressenacted a law covering the same areas previouslyembraced in a RA 1899 (as mentioned earlier, cities

without foreshore lands which were sought to beexcluded from the operation of RA 1899 were notexcluded), providing that respect be given thereclamation of not only foreshore lands but also ofsubmerged lands signifying its non-conformity to the

judicial construction given to RA 1899. If Congresswas in accord with the interpretation and constructionmade by the Supreme Court on RA 1899, it wouldhave mentioned reclamation of "foreshore lands" onlyin RA 5187, but Congress included "submergedlands" in order to clarify the intention on the grant ofauthority to cities and municipalities in thereclamation of lands bordering them as provided inRA 1899. It is, therefore, our opinion that it is actuallythe intention of Congress in RA 1899 not to limit theauthority granted to cities and municipalities toreclaim foreshore lands in its strict dictionary meaningbut rather in its wider scope as to include submergedlands.

The Petition is impressed with merit.

To begin with, erroneous and unsustainable is the opinion of respondent court that underRA 1899, the term "foreshore lands" includes submerged areas. As can be gleaned from itsdisquisition and rationalization aforequoted, the respondent court unduly stretched andbroadened the meaning of "foreshore lands", beyond the intentment of the law, and againstthe recognized legal connotation of "foreshore lands". Well entrenched, to the point of beingelementary, is the rule that when the law speaks in clear and categorical language, there is

no reason for interpretation or construction, but only for application.16

So also, resort toextrinsic aids, like the records of the constitutional convention, is unwarranted, the language


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of the law being plain and unambiguous. 17Then, too, opinions of the Secretary of Justiceare unavailing to supplant or rectify any mistake or omission in the law. 18To repeat, theterm "foreshore lands" refers to:

The strip of land that lies between the high and lowwater marks and that is alternately wet and dryaccording to the flow of the tide. (Words and Phrases,"Foreshore")

A strip of land margining a body of water (as a lake or

stream); the part of a seashore between the low-water line usually at the seaward margin of a low-tideterrace and the upper limit of wave wash at high tideusually marked by a beach scarp or berm. (Webster'sThird New International Dictionary)

The duty of the court is to interpret the enabling Act, RA 1899. In so doing, we cannotbroaden its meaning, much less widen the coverage thereof. If the intention of Congresswere to include submerged areas, it should haveprovided expressly. That Congress did notso provide could only signify the exclusion of submerged areas from the term "foreshorelands".

Neither is there any valid ground to disregard the Resolution of this Court dated February 3,

1965 inPonce v. Gomez (L-21870) andPonce v. City of Cebu (L-22669) despite theenactment of Republic Act No. 5187 ("RA 5187"), the relevant portion of which, reads:

Sec. 3. Miscellaneous Projects

xxx xxx xxx

m. For the construction of seawall and limited accesshighway from the south boundary of the City ofManila to Cavite City, to the south, and from the northboundary of the City of Manila to the municipality ofMariveles, province of Bataan, to the north, includingthe reclamation of the foreshore and submerged

areas:Provided, That priority in the construction ofsuch seawalls, highway and attendant reclamationworks shell be given to any corporation and/orcorporations that may offer to undertake at its ownexpense such projects, in which case the President ofthe Philippines may, after competitive bidding, awardcontracts for the construction of such projects, withthe winning bidder shouldering all costs thereof, thesame to be paid in terms of percentage fee of thecontractor which shall not exceed fifty percent of thearea reclaimed by the contractor and shall representfull compensation for the purpose, the provisions ofthe Public Land Law concerning disposition ofreclaimed and foreshore lands to the contrary

notwithstanding:Provided, finally, that the foregoingprovisions and those of other laws, executive orders,

rules and regulations to the contrary notwithstanding,existing rights, projects and/or contracts of city ormunicipal governments for the reclamation offoreshore and submerged lands shall be respected. .. . .

There is nothing in the foregoing provision of RA 5187 which can be interpreted to broadenthe scope of "foreshore lands." The said law is not amendatory to RA 1899. It is an

Appropriations Act, entitled "AN ACT APPROPRIATING FUNDS FOR PUBLIC WORKS,SYNCHRONIZING THE SAME WITH PREVIOUS PUBLIC WORKS APPROPRIATIONS."

All things viewed in proper perspective, we reiterate what was said inPonce v. Gomez(L-21870) andPonce v. City of Cebu (L-22669) that the term "foreshore" refers to "that part ofthe land adjacent to the sea which is alternately covered and left dry by the ordinary flow ofthe tides." As opined by this Court in said cases:

WHEREAS, six (6) members of the Court (JusticesBautista Angelo, Concepcion, Reyes, Barrera, Dizonand Jose P. Bengzon) opine that said city ordinanceand contracts areultra vires and hence, null and void,insofar as the remaining 60% of the areaaforementioned, because the term "foreshore lands"as used in Republic Act No. 1899 should beunderstood in the sense attached thereto by common

parlance; (emphasis ours)

The aforesaid ruling was applied by then Secretary of Justice Claudio Teehankee, in hisopinion dated December 22, 1966, in a case with analogous facts as the present one, towit:6

The Secretary of Agriculture

and Natural Resources

Diliman, Quezon City

Sir:

xxx xxx xxx

I. Facts

1. On January 19, 1961, pursuant to the provisions ofRepublic Act No. 1899, the Municipality of Navotasenacted Ordinance No. 1 authorizing the MunicipalMayor to enter into a reclamation contract with Mr.Chuanico.

2. On March 15, 1961, a reclamation contract wasconcluded between the Municipality of Navotas,


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represented by the Municipal Mayor, and Mr.Chuanico in accordance with the above ordinance.Thereunder, Mr. Chuanico shall be the attorney-in-fact of the Municipality in prosecuting the reclamationproject and shall advance the money neededtherefor; that the actual expenses incurred shall bedeemed a loan to the Municipality; that Mr. Chuanicoshall have the irrevocable option to buy 70% of thereclaimed area at P7.00 per square meter; that heshall have the full and irrevocable powers to do anyand all things necessary and proper in and about thepremises," including the power to hire necessarypersonnel for the prosecution of the work, purchasematerials and supplies, and purchase or leaseconstruction machineries and equipment, but any andall contracts to be concluded by him in behalf of theMunicipality shall be submitted to public bidding.

xxx xxx xxx

3. On March 16, 1961, the Municipal Council ofNavotas passed Resolution No. 22 approving andratifying the contract.

xxx xxx xxx

III. Comments

1. The above reclamation contract was concluded onthe basis of Navotas Ordinance No. 1 which, in turn,had been enacted avowedly pursuant to Republic ActNo. 1899. This being so, the contract, in order to bevalid, must conform to the provisions of the said law.

By authorizing local governments "to executebyadministrationany reclamation work," (Republic ActNo. 1899 impliedly forbids the execution of saidproject bycontract. Thus, in the case orPonce etal. vs. Gomez (February 3, 1966), five justices of theSupreme Court voted to annul the contract betweenCebu Development Corporation and Cebu City for thereclamation of foreshore lands because "theprovisions of said . . . contract are not . . . inaccordance with the provisions of Republic Act No.1899," as against one Justice who opined that thecontract substantially complied with the provisions ofthe said law. (Five Justices expressed no opinion onthis point.)

Inasmuch as the Navotas reclamation contract is

substantially similar to the Cebu reclamation contract,

it is believed that the former is likewise fatallydefective.

2. The Navotas reclamation project envisages theconstruction of a channel along the Manila Bayperiphery of that town and the reclamation ofapproximately 650 hectares of land from said channelto a seaward distance of one kilometer. In the basicletter it is stated that "practically, all the 650 hectaresof lands proposed to be reclaimed under the

agreement" do not constitute foreshore lands and that"the greater portion of the area . . . is in fact navigableand presently being used as a fishing harbor bydeep-sea fishing operators as well as a fishingground of sustenance fisherman. Assuming thecorrectness of these averments, the Navotasreclamation contract evidently transcends theauthority granted under Republic Act No. 1899, whichempowers the local governments to reclaim nothingmore than "foreshore lands,i.e., "that part of the landadjacent to the see which is alternately covered andleft dry by the ordinary flow of the tides." (26 C.J.890.) It was for this reason that in the citedcasePoncecase, the Supreme Court, by a vote of 6-

0 with five Justices abstaining, declared ultra viresand void the contractual stipulation for thereclamation of submerged lands off Cebu City, andpermanently enjoined its execution under Republic

Act No. 1899.

xxx xxx xxx

In accordance with the foregoing, I have the honor tosubmit the view that the Navotas reclamation contractis not binding and should be disregarded for non-compliance with law.

The said opinion of Justice Secretary Teehankee who became Associate Justice, and laterChief Justice, of this Court, did, in our considered view, supersede the earlier opinion offormer justice Secretary Alejo Mabanag, aforestated, as the cases, in connection with whichsubject opinions were sought, were with similar facts. The said Teehankee opinion accordswith RA 1899.

It bears stressing that the subject matter of Pasay City Ordinance No. 121, as amended byOrdinance No. 158, and the Agreement under attack, have been found to be outside theintendment and scope of RA 1899, and thereforeultra viresand null and void.

What is worse, the same Agreement was vitiated by the glaring absence of a public bidding.

Obviously, there is a complete dearth of evidence to prove that RREC had really reclaimed

55 hectares. The letter of Minister Baltazar Aquino relied upon by RREC is no proof at allthat RREC had reclaimed 55 hectares. Said letter was just referring to a tentative schedule


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of work to be done by RREC, even as it required RREC to submit the pertinent papers toshow its supposed accomplishment, to secure approval by the Ministry of Public Works andHighways to the reclamation plan, and to submit to a public bidding all contracts and sub-contracts for subject reclamation project but RREC never complied with such requirementsand conditionssine qua non.

No contracts or sub-contracts or agreements, plans, designs, and/or specifications of thereclamation project were presented to reflect any accomplishment. Not even any statementor itemization of works accomplished by contractors or subcontractors or vouchers andother relevant papers were introduced to describe the extent of RREC's accomplishment.

Neither was the requisite certification from the City Engineer concerned that "portions of thereclamation project not less than 50 hectares in area shall have been accomplished orcompleted" obtained and presented by RREC.

As a matter of fact, no witness ever testified on any reclamation work done by RREC, andextent thereof, as of April 26, 1962. Not a single contractor, sub-contractor, engineer,surveyor, or any other witness involved in the alleged reclamation work of RREC testified onthe 55 hectares supposedly reclaimed by RREC. What work was done, who did the work,where was it commenced, and when was it completed, was never brought to light by anywitness before the court. Certainly,onus probandi was on RREC and Pasay City to showand point out the as yet unidentified 55 hectares they allegedly reclaimed. But this burden ofproof RREC and Pasay City miserably failed to discharge.

So also, in the decision of the Pasay Court of First Instance dismissing the complaint ofplaintiff-appellant, now petitioner Republic of the Philippines, the lifting of the writ ofPreliminary Injunction issued on April 26, 1962 would become effective only "as soon asDefendant Republic Real Estate Corporation and Defendant Pasay City shall havesubmitted the corresponding plans and specifications to the Director of Public Work, andshall have obtained approval thereof, and as soon as corresponding public bidding for theaward to the contractor and sub-contractor that will undertake the reclamation project shallhave been effected." (Rollo, pp. 127-129, G.R. No. 103882)

From the records on hand, it is abundantly clear that RREC and Pasay City never compliedwith such prerequisites for the lifting of the writ of Preliminary Injunction. Consequently,RREC had no authority to resume its reclamation work which was stopped by said writ ofpreliminary injunction issued on April 26, 1962.

From the Contract for Dredging Work, dated November 26, 1960, marked Exhibit "21-A" forRREC before the lower court, and Exhibit "EE" for CCP before the Court of Appeals, it canbe deduced that only on November 26, 1960 did RREC contract out the dredging work to Cand A Construction Company, Inc., for the reclamation of the 55 hectares initiallyprogrammed to be reclaimed by it. But, as stated by RREC itself in the position paper filedwith this Court on July 15, 1997, with reference to CDCP's reclamation work, mobilization ofthe reclamation team would take one year before a reclamation work could actually begin.Therefore, the reclamation work undertaker by RREC could not have started beforeNovember 26, 1961.

Considering that on April 26, 1962 RREC was enjoined from proceeding any further with itsreclamation work, it had barely five (5) months, from November, 1961 to April, 1962, to workon subject reclamation project. It was thus physically impossible for RREC to reclaim 55hectares, with the stipulated specifications and elevation, in such a brief span of time. In the

report of RREC (Exhibit "DD" for CCP), it was conceded that due to the writ of preliminary

injunction issued on April 26, 1962, C and A Construction Co., Inc. had suspended itsdredging operation since May, 1962.

The "graphical report" on the Pasay Reclamation project, as of April 30, 1962, attached tothe Progress Report marked Exhibit "DD", is a schematic representation of the workaccomplishment referred to in such Progress Report, indicating the various elevations of theland surface it embraced, ranging from 0.00 meters to the highest elevation of 2.5 metersabove MLLW. Such portrayal of work accomplished is crucial in our determination ofwhether or not RREC had actually "reclaimed" any land as under its Contract for DredgingWork with C and A Construction Company (Exhibit "EE", the required final elevation for a

completely reclaimed land was 3.5 meters above MLLW, as explicitly provided in saidContract for Dredging Work. So, the irresistible conclusion is when the work on subjectRREC-Pasay City reclamation project stopped in April, 1962 in compliance with the writ ofpreliminary injunction issued by the trial court of origin, no portion of the reclamation projectworked on by RREC had reached the stipulated elevation of 3.5 meters above MLLW. Theentire area it worked on was only at sea level or 0.00 meter above MLLW. In short, RREChad not yet reclaimed any area when the writ of preliminary injunction issued in April 1962.

On this point, the testimonies of Architect Ruben M. Protacio, Architect and Managingpartner of Leandro V. Locsin and partners, Architect and City Planner Manuel T. Maoza,Jr. of Planning Resources and Operation System, Inc., Rose D. Cruz, Executive Assistant,Office of the President, from 1966 to 1970, and Dr. Lucrecia Kasilag, National Artist andmember of CCP Advisory Committee, come to the fore. These credible, impartial andknowledgeable witnesses recounted on the witness stand that when the construction of the

Main Building of the Cultural Center of the Philippines (CCP) began in 1966, the onlysurface land available was the site for the said building (TSN, Sept. 29, 1997, pages 8, 14and 50), what could be seen in front of and behind it was all water (TSN, Sept. 29, 1997pages 127-128). When the CCP Main Building was being constructed, from 1968 to 1969,the land above sea level thereat was only where the CCP Main Building was erected andthe rest of the surroundings were all under water, particularly the back portion fronting thebay. (TSN, Sept. 13, 1997, pp. 181, 182, 185, 186, 188). Dr. Lucrecia R. Kasilag stressedthat on April 16, 1966, during the ground breaking for the CCP Main Building, it was waterall around (TSN, Sept. 30, 1997, pp. 320, 324, 325).

There was indeed no legal and factual basis for the Court of Appeals to order and declarethat "the requirement by the trial court on public bidding and the submission of RREC'splans and specification to the Department of Public Works and Highways in order thatRREC may continue the implementation of the reclamation work is deleted for being moot

and academic." Said requirement has never become moot and academic. It has remainedindispensable, as ever, and non-compliance therewith restrained RREC from lawfullyresuming the reclamation work under controversy, notwithstanding the rendition below ofthe decision in its favor.

Verily, contrary to what the Court of Appeals found, RREC had not reclaimed any area withthe prescribed elevation of 3.5 meters above MLLW, so much so that in 1978, it (RREC)opted to file with the former Ministry of Public Highways, a claim for compensation ofP30,396,878.20, for reclamation work allegedly done before the CDCP started working onthe reclamation of the CCP grounds. On September 7, 1979, RREC asked the SolicitorGeneral to settle its subject claim for compensation at the same amount of P30,396,878.20.But on June 10, 1981, guided by the cost data, work volume accomplished and otherrelevant information gathered by the former Ministry of Public Highways, the SolicitorGeneral informed RREC that the value of what it had accomplished, based on 1962 pricelevels, was only P8,344,741.29, and the expenses for mobilization of equipment amounted


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to P2,581,330.00. The aforesaid evaluation made by the government, through the thenMinister of Public Highways, is factual and realistic, so much so that on June 25, 1981,RREC, in its reply letter to the Solicitor General, stated:

We regret that we are not agreeable to the amount ofP10,926,071.29, based on 1962 cost data,etc., ascompensation based on quantum meruit. The leastwe would consider is the amount of P10,926,071.29plus interest at the rate of 6% per annum from 1962to the time of payment. We feel that 6% is very much

less than the accepted rate of inflation that hassupervened since 1962 to the present, and even lessthan the present legal rate of 12% per annum. 19

Undoubtedly, what RREC claimed for was compensation for what it had done, and for thedredge fill of 1,558,395 cubic meters it used, on subject reclamation project.

Respondent Court likewise erred in ordering the turn-over to Pasay City of the followingtitled lots, to wit:

LOT NO. BUILDING AREA OCT/TCT

42 Gloria Maris 9,516 sq.m. OCT 159 in the

Restaurant name of GSIS

3 Asean Garden 76,299 sq.m. OCT 10251 in the

name of CCP

12 Folk Arts Theater 1.7503 hec. TCT 18627 in the

and PICC parking name of CCP

space

22 landscaped with 132,924 sq.m. TCT 75676 in the

sculpture of Asean name of CCP

Artists-site of

Boom na Boom

23 open space, back 34,346 sq.m. TCT 75677 in the

of Philcite name of CCP

24 Parking space for 10,352 sq.m. TCT 75678 in the

Star City, CCP, name of CCP

Philcite

25 open space 11,323 sq.m. TCT 75679 in the

occupied by Star name of CCP

City

28 open space, 27,689 sq.m. TCT 75684 in the

beside PICC name of CCP

29 open space, 106,067 sq.m. TCT 75681 in the

leased by El name of CCP

Shaddai

We discern no factual basis nor any legal justification therefor. In the f irst place, intheir answer to the Complaint and Amended Complaint below, RREC and PasayCity never prayed for the transfer to Pasay City of subject lots, title to which hadlong become indefeasible in favor of the rightful title holders, CCP and GSIS,respectively.

The annotation of a notice oflis pendens on the certificates of title covering the said lots isof no moment. It did not vest in Pasay City and RREC any real right superior to the absoluteownership thereover of CCP and GSIS. Besides, the nature of the action did not reallywarrant the issuance of a notice oflis pendens.

Sec. 14 of Rule 13, Revised Rules of Civil Procedure, reads:

Sec. 14. Notice of lis pendens. In an actionaffecting the title or the right of possession of realproperly, the plaintiff and the defendant, whenaffirmative relief is claimed in his answer, may recordin the office of the registry of deeds of the province inwhich the property is situated a notice of thependency of the action. Said notice shall contain thenames of the parties and the object of the action ordefense, and a description of the property in thatprovince affected thereby. Only from the time of filingsuch notice for record shall a purchaser, orencumbrancer of the property affected thereby, be

deemed to have constructive notice of the pendency


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of the action, and only of its pendency against theparties designated by their real names.

The notice oflis pendens herein above mentionedmay be cancelled only upon order of the court, afterproper showing that the notice is for the purpose ofmolesting the adverse party, or that it is notnecessary to protect the rights of the party whocaused it to be recorded.

Under the aforecited provision of law in point, a notice oflis pendens is necessary when theaction is for recovery of possession or ownership of a parcel of land. In the present litigation,RREC and Pasay City, as defendants in the main case, did not counterclaim for theturnover to Pasay City of the titled lots aforementioned.

What is more, a torrens title cannot be collaterally attacked. The issue of validity of a torrenstitle, whether fraudulently issued or not, may be posed only in an action brought to impugnor annul it. (Halili vs. National Labor Relations Commission, 257 SCRA 174, Cimafranca vs.Intermediate Appellate Court, 147 SCRA 611.) Unmistakable, and cannot be ignored, is thegermane provision of Section 48 of P.D. 1529, that a certificate of title can never be thesubject of a collateral attack. It cannot be altered, modified, or cancelled except in a directproceeding instituted in accordance with law.

Although Pasay City and RREC did not succeed in their undertaking to reclaim any areawithin subject reclamation project, it appearing that something compensable wasaccomplished by them, following the applicable provision of law and hearkening to thedictates of equity, that no one, not even the government, shall unjustly enrich oneself/itselfat the expense of another 20, we believe; and so hold, that Pasay City and RREC should bepaid for the said actual work done and dredge-fill poured in, worth P10,926,071.29, asverified by the former Ministry of Public Highways, and as claimed by RREC itself in itsaforequoted letter dated June 25, 1981.

It is fervently hoped that long after the end of our sojourn in this valley of tears, the court, forits herein historic disposition, will be exalted by the future generations of Filipinos, for thepreservation of the national patrimony and promotion of our cultural heritage. As writerChanning rightly puts it: "Whatever expands the affections, or enlarges the sphere of oursympathiesWhatever makes us feel our relation to the universe and all that it inherits in

time and in eternity, and to the great and beneficent cause of all, must unquestionably refineour nature, and elevate us in the scale of being."

WHEREFORE:

In G.R. No. 103882, the Petition is GRANTED; the Decision, dated January 28, 1992, andAmended Decision, dated April 28, 1992, of the Court of Appeals, are both SET ASIDE; andPasay City Ordinance No. 121, dated May 6, 1958, and Ordinance No. 158, dated April 21,1959, as well as the Reclamation Agreements entered into by Pasay City and Republic RealEstate Corporation (RREC) as authorized by said city ordinances, are declared NULL andVOID for beingultra vires, and contrary to Rep. Act 1899.

The writ of preliminary injunction issued on April 26, 1962 by the trial courta quoin Civil

Case No. 2229-P is made permanent and the notice oflis pendens issued by the Court ofAppeals in CA G.R. CV No. 51349 ordered CANCELLED. The Register of Deeds of Pasay

City is directed to take note of and annotate on the certificates of title involved, thecancellation of subject notice oflis pendens.

The petitioner, Republic of the Philippines, is hereby ordered to pay Pasay City andRepublic Real Estate Corporation the sum of TEN MILLION NINE HUNDRED TWENTY-SIXTHOUSAND SEVENTY-ONE AND TWENTY-NINE CENTAVOS (P10,926,071.29) PESOS,plus interest thereon of six (6%) percent per annum from May 1, 1962 until full payment,which amount shall be divided by Pasay City and RREC, share and share alike.

In G.R. No. 105276, the Petition is hereby DENIED for lack of merit.

No pronouncement as to costs.

SO ORDERED.

Bellosillo, Melo, Quisumbing and Pardo, JJ., concur.

Narvasa, C.J., I DISSENT: Ponce is not binding precedent, and P.D. 3-A is in utter nullity:

Davide, Jr., J., also that of the concurring opinion of Mr. Justice Puno.

Romero, J., Please see Separate Opinion.

Puno, J., Please see Concurring Opinion.

Vitug, J., In the result.

Kapunan, J., No part, having appeared for the Gov't. when I was in the OSG.

Mendoza, J., I concur in this and in the concurring opinion of Justice Puno.

Panganiban, J., Please see Separate Opinion.

Martinez, J., I join the Chief Justice in his dissent.


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Manila

SECOND DIVISION

G.R. No. L40474 August 29, 1975

CEBU OXYGEN & ACETYLENE CO., INC., petitioner,vs.HON. PASCUAL A. BERCILLES Presiding Judge, Branch XV, 14th Judicial District,and JOSE L. ESPELETA, Assistant Provincial Fiscal, Province of Cebu, representingthe Solicitor General's Office and the Bureau of Lands, respondents.

Jose Antonio R Conde for petitioner.

Office of the Acting Solicitor General Hugo E. Gutierrez, Jr., Assistant Solicitor GeneralOctavio R. Ramirez and Trial Attorney David R. Hilario for respondents. .

CONCEPCION, Jr., J. :

This is a petition for the review of the order of the Court of First Instance of Cebu dismissingpetitioner's application for registration of title over a parcel of land situated in the City ofCebu.

The parcel of land sought to be registered was only a portion of M. Borces Street, Mabolo,Cebu City. On September 23, 1968, the City Council of Cebu, through Resolution No. 2193,approved on October 3, 1968, declared the terminal portion of M. Borces Street, Mabolo,Cebu City, as an abandoned road, the same not being included in the City DevelopmentPlan.1Subsequently, on December 19, 1968, the City Council of Cebu passed ResolutionNo. 2755, authorizing the Acting City Mayor to sell the land through a public

bidding.2Pursuant thereto, the lot was awarded to the herein petitioner being the highestbidder and on March 3, 1969, the City of Cebu, through the Acting City Mayor, executed adeed of absolute sale to the herein petitioner for a total consideration of P10,800.00.3Byvirtue of the aforesaid deed of absolute sale, the petitioner filed an application with the Courtof First instance of Cebu to have its title to the land registered.4

On June 26, 1974, the Assistant Provincial Fiscal of Cebu filed a motion to dismiss theapplication on the ground that the property sought to be registered being a public roadintended for public use is considered part of the public domain and therefore outside thecommerce of man. Consequently, it cannot be subject to registration by any privateindividual.5

After hearing the parties, on October 11, 1974 the trial court issued an order dismissing the

petitioner's application for registration of title.6

Hence, the instant petition for review.

For the resolution of this case, the petitioner poses the following questions:

(1) Does the City Charter of Cebu City (Republic Act No. 3857) underSection 31, paragraph 34, give the City of Cebu the valid right to declarea road as abandoned? and

(2) Does the declaration of the road, as abandoned, make it thepatrimonial property of the City of Cebu which may be the object of acommon contract?

(1) The pertinent portions of the Revised Charter of Cebu City provides:

Section 31. Legislative Powers. Any provision of law and executive orderto the contrary notwithstanding, the City Council shall have the followinglegislative powers:

xxx xxx xxx

(34) ...; to close any city road, street or alley, boulevard, avenue, park orsquare. Property thus withdrawn from public servitude may be used orconveyed for any purpose for which other real property belonging to theCity may be lawfully used or conveyed.

From the foregoing, it is undoubtedly clear that the City of Cebu is empowered to close acity road or street. In the case of Favis vs. City of Baguio,7where the power of the cityCouncil of Baguio City to close city streets and to vacate or withdraw the same from publicuse was similarly assailed, this court said:

5. So it is, that appellant may not challenge the city council's act ofwithdrawing a strip of Lapu-Lapu Street at its dead end from public useand converting the remainder thereof into an alley. These are acts wellwithin the ambit of the power to close a city street. The city council, itwould seem to us, is the authority competent to determine whether ornot a certain property is still necessary for public use.

Such power to vacate a street or alley is discretionary. And the discretionwill not ordinarily be controlled or interfered with by the courts, absent aplain case of abuse or fraud or collusion. Faithfulness to the public trustwill be presumed. So the fact that some private interests may be servedincidentally will not invalidate the vacation ordinance.

(2) Since that portion of the city street subject of petitioner's application for registration oftitle was withdrawn from public use, it follows that such withdrawn portion becomespatrimonial property which can be the object of an ordinary contract.

Article 422 of the Civil Code expressly provides that "Property of public dominion, when nolonger intended for public use or for public service, shall form part of the patrimonialproperty of the State."


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Besides, the Revised Charter of the City of Cebu heretofore quoted, in very clear andunequivocal terms, states that: "Property thus withdrawn from public servitude may be usedor conveyed for any purpose for which other real property belonging to the City may belawfully used or conveyed."

Accordingly, the withdrawal of the property in question from public use and its subsequentsale to the petitioner is valid. Hence, the petitioner has a registerable title over the lot inquestion.

WHEREFORE, the order dated October 11, 1974, rendered by the respondent court in Land

Reg. Case No. N-948, LRC Rec. No. N-44531 is hereby set aside, and the respondent courtis hereby ordered to proceed with the hearing of the petitioner's application for registrationof title.

SO ORDERED.

Makalintal, C.J, Fernando, Barredo and Aquino, JJ., concur.


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Manila

EN BANC

G.R. No. 92013 July 25, 1990

SALVADOR H. LAUREL, petitioner,vs.RAMON GARCIA, as head of the Asset Privatization Trust, RAUL MANGLAPUS, asSecretary of Foreign Affairs, and CATALINO MACARAIG, as ExecutiveSecretary, respondents.

G.R. No. 92047 July 25, 1990

DIONISIO S. OJEDA, petitioner,vs.EXECUTIVE SECRETARY MACARAIG, JR., ASSETS PRIVATIZATION TRUSTCHAIRMAN RAMON T. GARCIA, AMBASSADOR RAMON DEL ROSARIO, et al., asmembers of the PRINCIPAL AND BIDDING COMMITTEES ON THEUTILIZATION/DISPOSITION PETITION OF PHILIPPINE GOVERNMENT PROPERTIESIN JAPAN,respondents.

Arturo M. Tolentino fo r peti t ioner in 92013.

GUTIERREZ, JR., J. :

These are two petitions for prohibition seeking to enjoin respondents, theirrepresentatives and agents from proceeding with the bidding for the sale of the 3,179square meters of land at 306 Roppongi, 5-Chome Minato-ku Tokyo, Japan scheduledon February 21, 1990. We granted the prayer for a temporary restraining ordereffective February 20, 1990. One of the petitioners (in G.R. No. 92047) likewise prayes

for a writ of mandamus to compel the respondents to fully disclose to the public thebasis of their decision to push through with the sale of the Roppongi property inspireof strong public opposition and to explain the proceedings which effectively preventthe participation of Filipino citizens and entities in the bidding process.

The oral arguments in G.R. No. 92013, Laur el v. Garcia, et al.were heard by the Courton March 13, 1990. After G.R. No. 92047,Ojeda v. Secretary Macaraig, et al. was filed,the respondents were required to file a comment by the Court's resolution datedFebruary 22, 1990. The two petitions were consolidated on March 27, 1990 when thememoranda of the parties in the Laurelcase were deliberated upon.

The Court could not act on these cases immediately because the respondents filed amotion for an extension of thirty (30) days to file comment in G.R. No. 92047, followedby a second motion for an extension of another thirty (30) days which we granted onMay 8, 1990, a third motion for extension of time granted on May 24, 1990 and a

fourth motion for extension of time which we granted on June 5, 1990 but calling theattention of the respondents to the length of time the petitions have been pending.After the comment was filed, the petitioner in G.R. No. 92047 asked for thirty (30)days to file a reply. We noted his motion and resolved to decide the two (2) cases.

I

The subject property in this case is one of the four (4) properties in Japan acquiredby the Philippine government under the Reparations Agreement entered into withJapan on May 9, 1956, the other lots being:

(1) The Nampeidai Property at 11-24 Nampeidai-machi, Shibuya-ku, Tokyo which hasan area of approximately 2,489.96 square meters, and is at present the site of thePhilippine Embassy Chancery;

(2) The Kobe Commercial Property at 63 Naniwa-cho, Kobe, with an area of around764.72 square meters and categorized as a commercial lot now being used as awarehouse and parking lot for the consulate staff; and

(3) The Kobe Residential Property at 1-980-2 Obanoyama-cho, Shinohara, Nada-ku,Kobe, a residential lot which is now vacant.

The properties and the capital goods and services procured from the Japanesegovernment for national development projects are part of the indemnification to theFilipino people for their losses in life and property and their suffering during WorldWar II.

The Reparations Agreement provides that reparations valued at $550 mil lion wouldbe payable in twenty (20) years in accordance with annual schedules ofprocurements to be fixed by the Philippine and Japanese governments (Article 2,Reparations Agreement). Rep. Act No. 1789, the Reparations Law, prescribes thenational policy on procurement and utilization of reparations and development loans.The procurements are divided into those for use by the government sector and thosefor pr ivate part ies in projects as the then National Economic Council shall determine.Those intended for the private sector shall be made available by sale to Filipinocitizens or to one hundred (100%) percent Fil ipino-owned entities in national

development projects.

The Roppongi property was acquired from the Japanese government under theSecond Year Schedule and listed under the heading "Government Sector", throughReparations Contract No. 300 dated June 27, 1958. The Roppongi property consistsof the land and building "for the Chancery of the Philippine Embassy" (Annex M-D toMemorandum for Petitioner, p. 503). As intended, it became the site of the PhilippineEmbassy until the latter was transferred to Nampeidai on July 22, 1976 when theRoppongi building needed major repairs. Due to the fai lure of our government toprovide necessary funds, the Roppongi property has remained undeveloped sincethat time.

A proposal was presented to President Corazon C. Aquino by former PhilippineAmbassador to Japan, Carlos J. Valdez, to make the property the subject of a leaseagreement with a Japanese firm - Kajima Corporation which shall construct two (2)


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buildings in Roppongi and one (1) building in Nampeidai and renovate the presentPhilippine Chancery in Nampeidai. The consideration of the construction would bethe lease to the foreign corporation of one (1) of the buildings to be constructed inRoppongi and the two (2) buildings in Nampeidai. The other building in Roppongishall then be used as the Phil ippine Embassy Chancery. At the end of the leaseperiod, all the three leased buildings shall be occupied and used by the Philippinegovernment. No change of ownership or title shall occur. (See Annex "B" to Reply toComment) The Philippine government retains the title all throughout the lease periodand thereafter. However, the government has not acted favorably on this proposalwhich is pending approval and ratification between the parties. Instead, on August11, 1986, President Aquino created a committee to study the disposition/utilization of

Philippine government properties in Tokyo and Kobe, Japan through AdministrativeOrder No. 3, followed by Administrative Orders Numbered 3-A, B, C and D.

On July 25, 1987, the President issued Executive Order No. 296 entitling non-Filipinocitizens or entities to avail of separations' capital goods and services in the event ofsale, lease or disposition. The four properties in Japan including the Roppongi werespecifically mentioned in the first "Whereas" clause.

Amidst opposition by various sectors, the Executive branch of the government hasbeen pushing, with great vigor, its decision to sell the reparations properties startingwith the Roppongi lot. The property has twice been set

Documents

Property Cases Session 2