EN BANC

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

FRANCISCO I. CHAVEZ, petitioner, vs. PUBLIC ESTATES AUTHORITY and AMARI
COASTAL BAY DEVELOPMENT CORPORATION, respondents.
RESOLUTION
CARPIO, J.:

This Court is asked to legitimize a government contract that conveyed to a private entity
157.84 hectares of reclaimed public lands along Roxas Boulevard in Metro Manila at the
negotiated price of P1,200 per square meter. However, published reports place the
market price of land near that area at that time at a high of P90,000 per square meter.[if !
supportFootnotes][1][endif] The difference in price is a staggering P140.16 billion, equivalent to the
budget of the entire Judiciary for seventeen years and more than three times the
Marcos Swiss deposits that this Court forfeited in favor of the government.

Many worry to death that the private investors will lose their investments, at most not
more than one-half billion pesos in legitimate expenses, [if !supportFootnotes][2][endif] if this Court
voids the contract. No one seems to worry about the more than tens of billion pesos that
the hapless Filipino people will lose if the contract is allowed to stand. There are those
who question these figures, but the questions arise only because the private entity
somehow managed to inveigle the government to sell the reclaimed lands without public
bidding in patent violation of the Government Auditing Code.

Fortunately for the Filipino people, two Senate Committees, the Senate Blue Ribbon
Committee and the Committee on Accountability of Public Officers, conducted extensive
public hearings to determine the actual market value of the public lands sold to the
private entity. The Senate Committees established the clear, indisputable and
unalterable fact that the sale of the public lands is grossly and unconscionably
undervalued based on official documents submitted by the proper government
agencies during the Senate investigation. We quote the joint report of these two
Senate Committees, Senate Committee Report No. 560, as approved by the Senate
in plenary session on 27 September 1997:[if !supportFootnotes][3][endif]

TheConsiderationfortheProperty
PEA,undertheJVA,obligateditselftoconveytitleandpossessionovertheProperty,consisting
ofapproximatelyOneMillionFiveHundredSeventyEightThousandFourHundredFortyOne
(1,578,441)SquareMetersforatotalconsiderationofOneBillionEightHundredNinetyFour
MillionOneHundredTwentyNineThousandTwoHundred(P1,894,129,200.00)Pesos,ora
priceofOneThousandTwoHundred(P1,200.00)Pesospersquaremeter.

According to the zonal valuation of the Bureau of Internal Revenue, the value of the
Property is Seven Thousand Eight Hundred Pesos (P 7,800.00) per square meter. The
MunicipalAssessorofParaaque,MetroManila,wherethePropertyislocated,pegsthe
marketvalueofthePropertyatSixThousandPesos(P 6,000.00)persquaremeter.Basedon
thesealone,thepriceatwhichPEAagreedtoconveythepropertyisapittance.AndPEAcannot
claimignoranceofthesevaluations,atleastnotthoseoftheMunicipalAssessorsoffice,sinceit
hasbeentryingtoconvincetheOfficeoftheMunicipalAssessorofParaaquetoreducethe
valuation of various reclaimed properties thereat in order for PEA to save on accrued real
propertytaxes.

PEAsjustificationforthepurchasepricearevariousappraisalreports,particularlythefollowing:
(1)AnappraisalbyVicT.SalinasRealtyandConsultancyServicesconcludingthattheProperty
isworthP500.00persquaremeterforthesmallestislandandP750.00persquaremeterforthe
twootherislands,oratotalofP1,170,000.00asof22February1995;
(2)AnappraisalbyValenciaAppraisalCorporationconcludingthatthePropertyisworthP850
persquaremeterforIslandI,P800persquaremeterforIslandIIandP600persquaremeterfor
thesmallestisland,oratotalofP1,289,732,000,alsoasof22February1995;and
(3)AnAppraisalbyAsianAppraisalCompany,Inc.(AACI),statingthatthePropertyisworth
approximatelyP1,000persquaremeterforIslandI,P950persquaremeterforIslandIIandP600
persquaremeterforIslandIII,oratotalofP1,518,805,000asof27February1995.

Thecredibilityoftheforegoingappraisals,however,are[sic]greatlyimpairedbyasubsequent
appraisalreportofAACIstatingthatthepropertyisworthP4,500.00persquaremeterasof26
March1996.Suchdiscrepanciesintheappraisedvalueasappearingintwodifferentreportsby
thesameappraisalcompanysubmittedwithinaspanofoneyearrenderallsuchappraisalreports
unworthyofeventheslightestconsideration.Furthermore,theappraisalreportsubmittedby
the Commission on Audit estimates the value of the Property to be approximately
P33,673,000,000.00,or
P
21,333.07persquaremeter.

Therewerealsootheroffersmadeforthepropertyfromotherpartieswhichindicatethatthe
PropertyhasbeenundervaluedbyPEA.Forinstance,on06March1995,Mr.YoungD.See,
PresidentofSaeilHeavyIndustriesCo.,Ltd.,(SouthKorea),offeredtobuythepropertyat
P1,400.00andexpresseditswillingnesstoissueastandbyletterofcreditworth$10million.
PEAdidnotconsiderthisofferandinsteadfinalizedtheJVAwithAMARI.Otherofferswere
madeonvariousdatesbyAspacManagementandDevelopmentGroupInc.(for P1,600per
squaremeter),UniversalDragonCorporation(for P1,600persquaremeter),CleeneFarEast
ManilaIncorporatedandHyosanPrimeConstructionCo.Ltd.whichhadpreparedanIrrevocable
CleanLetterofCreditforP100,000,000.

Inaddition,AMARIagreedtopayhugecommissionsandbonusestovariouspersons,amounting
to P1,596,863,050.00(P1,754,707,150.00ifthebonusisincluded),aswillbediscussedfully
below,whichindicatethatAMARIitselfbelievedthemarketvaluetobemuchhigherthanthe
agreedpurchaseprice.Ifsuchcommissionsareaddedtothepurchaseprice,AMARIsacquisition
costforthePropertywilladdupto P3,490,992,250.00(excludingthebonus).IfAMARIwas
willing to pay such amount for the Property, why was PEA willing to sell for only
P1,894,129,200.00,makingtheGovernmentstandtoloseapproximatelyP1,596,863,050.00?
xxx
EvenifwesimplyassumethatthemarketvalueofthePropertyishalfofthemarketvaluefixed
bytheMunicipalAssessorsOfficeofParaaqueforlandsalongRoxasBoulevard,orP3,000.00
persquaremeter,theGovernmentnowstandstoloseapproximatelyP2,841,193,800.00.Butan
evenbetterassumptionwouldbethatthevalueofthePropertyisP4,500.00persquaremeter,as
pertheAACIappraisalreportdated26March1996,sincethisisthevaluationusedtojustifythe
issuanceof P4billionworthofsharesofstockofCentennialCityInc.(CCI)inexchangefor
4,800,000AMARIshareswithatotalparvalueofonlyP480,000,000.00.Withsuchvaluation,
theGovernmentslosswillamounttoP5,208,855,300.00.

Clearly,thepurchasepriceagreedtobyPEAiswaybelowtheactualvalueoftheProperty,
thereby subjecting the Government to grave injury and enabling AMARI to enjoy
tremendousbenefitandadvantage.(Emphasissupplied)

The Senate Committee Report No. 560 attached the following official documents from
the Bureau of Internal Revenue, the Municipal Assessor of Paraaque, Metro Manila,
and the Commission on Audit:
1. Annex M, Certified True Copy of BIR Zonal Valuations as certified by Antonio F.
Montemayor,RevenueDistrictOfficer.Thisofficialdocumentfixedthemarketvalueofthe
157.84hectaresatP 7,800persquaremeter
.
2.AnnexN,CertificationofSoledadS.MedinaCue,MunicipalAssessor,Paraaque,dated10
December1996.ThisofficialdocumentfixedthemarketvalueatP 6,000persquaremeter.
3.Exhibit1Engr.Santiago,theAppraisalReportoftheCommissiononAudit.Thisofficial
documentfixedthemarketvalueatP 21,333.07persquaremeter
.
Whether based on the official appraisal of the BIR, the Municipal Assessor or the
Commission on Audit, the P1,200 per square meter purchase price, or a total of P1.894
billion for the 157.84 hectares of government lands, is grossly and unconscionably
undervalued. The authoritative appraisal, of course, is that of the Commission on Audit
which valued the 157.84 hectares at P21,333.07 per square meter or a total of P33.673
billion. Thus, based on the official appraisal of the Commission on Audit, the
independent constitutional body that safeguards government assets, the actual
loss to the Filipino people is a shocking P31.779 billion.

This gargantuan monetary anomaly, aptly earning the epithet Grandmother of All
Scams,[if !supportFootnotes][4][endif] is not the major defect of this government contract. The major
flaw is not even the P1.754 billion in commissions the Senate Committees discovered
the private entity paid to various persons to secure the contract, [if !supportFootnotes][5][endif]
described in Senate Report No. 560 as follows:

ALetterAgreementdated09June1995signedbyMessrs.PremchaiKarnasutaandEmmanuel
SyforandinbehalfofAMARI,ontheonehand,andstockholdersofAMARInamely,Mr.Chin
SanCordova(a.k.a.BenitoCo)andMr.ChuaHunSiong(a.k.a.FrankChua),ontheother,sets
forthvariouspaymentsAMARIpaidoragreedtopaytheaforesaidstockholdersbywayof
fees for professional efforts and services in successfully negotiating and securing for
AMARItheJointVentureAgreement,asfollows:

FormofPaymentPaid/PayableOnAmount
ManagersChecks28April1995P400,000,000.00

ManagersChecksUponsigningofletter262,500,000.00

10PostDatedChecks(PDCs)60daysfromdateofletter127,000,000.00

24PDCs31Aug.95to31Jan.98150,000,000.00

48PDCsMonthly,overa12monthpd.

fromdateofletter357,363,050.00

CashbonusWhensaleoflandbeginsnotexceeding

157,844,100.00

DevelopedlandfromProjectUponcompletionofeachCosting

phase300,000,000.00

TOTALP1,754,707,150.00
==============

Mr. Luis Benitez of SGV, the external auditors of AMARI, testified that said Letter
AgreementwasapprovedbytheAMARIBoard.[if !supportFootnotes][6][endif](Emphasissupplied)

The private entity that purchased the reclaimed lands for P1.894 billion expressly
admitted before the Senate Committees that it spent P1.754 billion in commissions to
pay various individuals for professional efforts and services in successfully
negotiating and securing the contract. By any legal or moral yardstick, the P1.754
billion in commissions obviously constitutes bribe money. Nonetheless, there are
those who insist that the billions in investments of the private entity deserve protection
by this Court. Should this Court establish a new doctrine by elevating grease money to
the status of legitimate investments deserving of protection by the law? Should this
Court reward the patently illegal and grossly unethical business practice of the private
entity in securing the contract? Should we allow those with hands dripping with dirty
money equitable relief from this Court?

Despite these revolting anomalies unearthed by the Senate Committees, the fatal flaw
of this contract is that it glaringly violates provisions of the Constitution expressly
prohibiting the alienation of lands of the public domain.

Thus, we now come to the resolution of the second Motions for Reconsideration [if !
supportFootnotes][7][endif] filed by public respondent Public Estates Authority (PEA) and private
respondent Amari Coastal Bay Development Corporation (Amari). As correctly pointed
out by petitioner Francisco I. Chavez in his Consolidated Comment, [if !supportFootnotes][8][endif]
the second Motions for Reconsideration raise no new issues.

However, the Supplement to Separate Opinion, Concurring and Dissenting of Justice

Josue N. Bellosillo brings to the Courts attention the Resolutions of this Court on 3
February 1965 and 24 June 1966 in L- 21870 entitled Manuel O. Ponce, et al. v. Hon.
Amador Gomez, et al. and No. L-22669 entitled Manuel O. Ponce, et al. v. The City of
Cebu, et al. (Ponce Cases). In effect, the Supplement to the Dissenting Opinion
claims that these two Resolutions serve as authority that a single private
corporation like Amari may acquire hundreds of hectares of submerged lands, as
well as reclaimed submerged lands, within Manila Bay under the Amended Joint
Venture Agreement (Amended JVA).

We find the cited Ponce Cases inapplicable to the instant case.

First, as Justice Bellosillo himself states in his supplement to his dissent, the Ponce
Cases admit that submerged lands still belong to the National Government.[if !
supportFootnotes][9][endif] The correct formulation, however, is that submerged lands are owned
by the State and are inalienable. Section 2, Article XII of the 1987 Constitution
provides:

Alllandsofthepublicdomain, waters,minerals,coal,petroleum,andothermineraloils,all
forcesofpotentialenergy,fisheries,forestsortimber,wildlife,floraandfauna,andothernatural
resources areownedbytheState.Withtheexceptionofagriculturallands,allothernatural
resourcesshallnotbealienated.xxx.(Emphasissupplied)

Submerged lands, like the waters (sea or bay) above them, are part of the States
inalienable natural resources. Submerged lands are property of public dominion,
absolutely inalienable and outside the commerce of man. [if !supportFootnotes][10][endif] This is also
true with respect to foreshore lands. Any sale of submerged or foreshore lands is void
being contrary to the Constitution.[if !supportFootnotes][11][endif]

This is why the Cebu City ordinance merely granted Essel, Inc. an irrevocable option to
purchase the foreshore lands after the reclamation and did not actually sell to Essel,
Inc. the still to be reclaimed foreshore lands. Clearly, in the Ponce Cases the option to
purchase referred to reclaimed lands, and not to foreshore lands which are inalienable.
Reclaimed lands are no longer foreshore or submerged lands, and thus may
qualify as alienable agricultural lands of the public domain provided the
requirements of public land laws are met.

In the instant case, the bulk of the lands subject of the Amended JVA are still
submerged lands even to this very day, and therefore inalienable and outside the
commerce of man. Of the 750 hectares subject of the Amended JVA, 592.15 hectares
or 78% of the total area are still submerged, permanently under the waters of
Manila Bay. Under the Amended JVA, the PEA conveyed to Amari the submerged
lands even before their actual reclamation, although the documentation of the deed of
transfer and issuance of the certificates of title would be made only after actual
reclamation.
The Amended JVA states that the PEA hereby contributes to the Joint Venture its
rights and privileges to perform Rawland Reclamation and Horizontal Development as
well as own the Reclamation Area.[if !supportFootnotes][12][endif] The Amended JVA further states
that the sharing of the Joint Venture Proceeds shall be based on the ratio of thirty
percent (30%) for PEA and seventy percent (70%) for AMARI. [if !supportFootnotes][13][endif] The
Amended JVA also provides that the PEA hereby designates AMARI to perform PEAs
rights and privileges to reclaim, own and develop the Reclamation Area. [if !supportFootnotes][14]
[endif] In short, under the Amended JVA the PEA contributed its rights, privileges
and ownership over the Reclamation Area to the Joint Venture which is 70%
owned by Amari. Moreover, the PEA delegated to Amari the right and privilege to
reclaim the submerged lands.

The Amended JVA mandates that the PEA had the duty to execute without delay the
necessary deed of transfer or conveyance of the title pertaining to AMARIs Land share
based on the Land Allocation Plan.[if !supportFootnotes][15][endif] The Amended JVA also provides
that PEA, when requested in writing by AMARI, shall then cause the issuance and
delivery of the proper certificates of title covering AMARIs Land Share in the name of
AMARI, x x x.[if !supportFootnotes][16][endif]

In the Ponce Cases, the City of Cebu retained ownership of the reclaimed foreshore
lands and Essel, Inc. only had an irrevocable option to purchase portions of the
foreshore lands once actually reclaimed. In sharp contrast, in the instant case
ownership of the reclamation area, including the submerged lands, was immediately
transferred to the joint venture. Amari immediately acquired the absolute right to own
70% percent of the reclamation area, with the deeds of transfer to be documented and
the certificates of title to be issued upon actual reclamation. Amaris right to own the
submerged lands is immediately effective upon the approval of the Amended JVA and
not merely an option to be exercised in the future if and when the reclamation is actually
realized. The submerged lands, being inalienable and outside the commerce of man,
could not be the subject of the commercial transactions specified in the Amended JVA.

Second, in the Ponce Cases the Cebu City ordinance granted Essel, Inc. an irrevocable
option to purchase from Cebu City not more than 70% of the reclaimed lands. The
ownership of the reclaimed lands remained with Cebu City until Essel, Inc. exercised its
option to purchase. With the subsequent enactment of the Government Auditing Code
(Presidential Decree No. 1445) on 11 June 1978, any sale of government land must be
made only through public bidding. Thus, such an irrevocable option to purchase
government land would now be void being contrary to the requirement of public bidding
expressly required in Section 79 [if !supportFootnotes][17][endif] of PD No. 1445. This requirement of
public bidding is reiterated in Section 379 [if !supportFootnotes][18][endif] of the 1991 Local
Government Code.[if !supportFootnotes][19][endif] Obviously, the ingenious reclamation scheme
adopted in the Cebu City ordinance can no longer be followed in view of the
requirement of public bidding in the sale of government lands. In the instant case, the
Amended JVA is a negotiated contract which clearly contravenes Section 79 of PD No.
1445.

Third, Republic Act No. 1899 authorized municipalities and chartered cities to reclaim
foreshore lands. The two Resolutions in the Ponce Cases upheld the Cebu City
ordinance only with respect to foreshore areas, and nullified the same with respect to
submerged areas. Thus, the 27 June 1965 Resolution made the injunction of the trial
court against the City of Cebu permanent insofar x x x as the area outside or beyond
the foreshore land proper is concerned.

As we held in the 1998 case of Republic Real Estate Corporation v. Court of

Appeals,[if !supportFootnotes][20][endif] citing the Ponce Cases, RA No. 1899 applies only to
foreshore lands, not to submerged lands. In his concurring opinion in Republic Real
Estate Corporation, Justice Reynato S. Puno stated that under Commonwealth Act
No. 141, foreshore and lands under water were not to be alienated and sold to private
parties, and that such lands remained property of the State. Justice Puno emphasized
that Commonwealth Act No. 141 has remained in effect at present. The instant case
involves principally submerged lands within Manila Bay. On this score, the Ponce
Cases, which were decided based on RA No. 1899, are not applicable to the instant
case.

Fourth, the Ponce Cases involve the authority of the City of Cebu to reclaim foreshore
areas pursuant to a general law, RA No. 1899. The City of Cebu is a public
corporation and is qualified, under the 1935, 1973, and 1987 Constitutions, to hold
alienable or even inalienable lands of the public domain. There is no dispute that a
public corporation is not covered by the constitutional ban on acquisition of alienable
public lands. Both the 9 July 2002 Decision and the 6 May 2003 Resolution of this Court
in the instant case expressly recognize this.
Cebu City is an end user government agency, just like the Bases Conversion
and Development Authority or the Department of Foreign Affairs. [if !supportFootnotes][21][endif]
Thus, Congress may by law transfer public lands to the City of Cebu to be used for
municipal purposes, which may be public or patrimonial. Lands thus acquired by the
City of Cebu for a public purpose may not be sold to private parties. However, lands so
acquired by the City of Cebu for a patrimonial purpose may be sold to private parties,
including private corporations.
However, in the instant case the PEA is not an end user agency with respect to
the reclaimed lands under the Amended JVA. As we explained in the 6 May 2003
Resolution:
PEAisthecentralimplementingagencytaskedtoundertakereclamationprojectsnationwide.
PEA took the place of the Department of Environment and Natural Resources (DENR for
brevity)asthegovernmentagencychargedwithleasingorselling allreclaimed landsofthe
publicdomain. InthehandsofPEA,whichtookovertheleasingandsellingfunctionsof
DENR,reclaimedforeshore(orsubmergedlands)landsarepubliclandsinthesamemanner
that these same lands would have been public lands in the hands of DENR. (Emphasis
supplied)

Our 9 July 2002 Decision explained the rationale for treating the PEA in the same
manner as the DENR with respect to reclaimed foreshore or submerged lands in this
wise:
ToallowvastareasofreclaimedlandsofthepublicdomaintobetransferredtoPEAasprivate
lands will sanction a gross violation of the constitutional ban on private corporations from
acquiringanykindofalienablelandofthepublicdomain.PEAwillsimplyturnaround,asPEA
hasnowdoneundertheAmendedJVA,andtransferseveralhundredsofhectaresofthese
reclaimedandstilltobereclaimedlandstoasingleprivatecorporationinonlyonetransaction.
ThisschemewilleffectivelynullifytheconstitutionalbaninSection3,ArticleXIIofthe1987
Constitutionwhichwasintendedtodiffuseequitablytheownershipofalienablelandsofthe
publicdomainamongFilipinos,nownumberingover80millionstrong.(Emphasissupplied)

Finally, the Ponce Cases were decided under the 1935 Constitution which allowed
private corporations to acquire alienable lands of the public domain. However, the 1973
Constitution prohibited private corporations from acquiring alienable lands of the public
domain, and the 1987 Constitution reiterated this prohibition. Obviously, the Ponce
Cases cannot serve as authority for a private corporation to acquire alienable public
lands, much less submerged lands, since under the present Constitution a private
corporation like Amari is barred from acquiring alienable lands of the public domain.

Clearly, the facts in the Ponce Cases are different from the facts in the instant case.
Moreover, the governing constitutional and statutory provisions have changed since the
Ponce Cases were disposed of in 1965 and 1966 through minute Resolutions of a
divided (6 to 5) Court.

This Resolution does not prejudice any innocent third party purchaser of the reclaimed
lands covered by the Amended JVA. Neither the PEA nor Amari has sold any portion of
the reclaimed lands to third parties. Title to the reclaimed lands remains with the PEA.
As we stated in our 9 July 2002 Decision:

Intheinstantcase,theonlypatentandcertificatesoftitleissuedarethoseinthenameofPEA,a
whollygovernmentownedcorporationperformingpublicaswellasproprietaryfunctions.No
patentorcertificateoftitlehasbeenissuedtoanyprivateparty.NooneisaskingtheDirectorof
LandstocancelPEAspatentorcertificatesoftitle.Infact,thethrustoftheinstantpetitionisthat
PEAscertificatesoftitleshouldremainwithPEA,andthelandcoveredbythesecertificates,
beingalienablelandsofthepublicdomain,shouldnotbesoldtoaprivatecorporation.
As we held in our 9 July 2002 Decision, the Amended JVA violates glaringly Sections 2
and 3, Article XII of the 1987 Constitution. In our 6 May 2003 Resolution, we DENIED
with FINALITY respondents Motions for Reconsideration. Litigations must end some
time. It is now time to write finis to this Grandmother of All Scams.
WHEREFORE, the second Motions for Reconsideration filed by Public Estates
Authority and Amari Coastal Bay Development Corporation are DENIED for being
prohibited pleadings. In any event, these Motions for Reconsideration have no merit. No
further pleadings shall be allowed from any of the parties.
SO ORDERED.
Davide, Jr., C.J., Panganiban, Austria-Martinez, Carpio-Morales, and Callejo, Sr.,
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.
[if!supportFootnotes]

[endif]
[if !supportFootnotes][1][endif] See The Grandmother of All Scams by Sheila S. Coronel and Ellen
Tordesillas, 18-20 March 1998, Philippine Center for Investigative Journalism.
This report won the 1st Prize in the 1998 JVO Investigative Journalism Awards.
[if !supportFootnotes][2][endif] 6 May 2003 Resolution, p. 13.
[if !supportFootnotes][3][endif] PEAs Memorandum dated 4 August 1999 quoted extensively, in its
Statement of Facts and the Case, the Statement of Facts in Senate Committee
Report No. 560 dated 16 September 1997. Moreover, the existence of this
report is a matter of judicial notice pursuant to Section 1, Rule 129 of the Rules
of Court which provides, A court shall take judicial notice, without the
introduction of evidence, of x x x the official acts of the legislature.
[if !supportFootnotes][4][endif] 9 July 2002 Decision, p. 4.
[if !supportFootnotes][5][endif] Senate Committee Report No. 560, p. 48.
[if !supportFootnotes][6][endif] A more detailed discussion on this matter in Senate Report No. 560
reads as follows:
The Commissions
A Letter-Agreement dated 09 June 1995 signed by Messrs. Premchai Karnasuta and
Emmanuel Sy for and in behalf of AMARI, on the one hand, and stockholders
of AMARI namely, Mr. Chin San Cordova (a.k.a. Benito Co) and Mr. Chua Hun
Siong (a.k.a. Frank Chua), on the other, sets forth various payments AMARI
paid or agreed to pay the aforesaid stockholders by way of fees for
professional efforts and services in successfully negotiating and securing for
AMARI the Joint Venture Agreement, as follows:
Form of Payment Paid/Payable On Amount
Managers Checks 28 April 1995 P 400,000,000.00
Managers Checks Upon signing of letter 262,500,000.00
10 Post Dated Checks (PDCs) 60 days from date of letter 127,000,000.00
24 PDCs 31 Aug. 95 to 31 Jan. 98 150,000,000.00
48 PDCs Monthly, over a 12-month pd.
from date of letter 357,363,050.00
Cash bonus When sale of land begins not exceeding
157,844,100.00
Developed land from Project Upon completion of each Costing
Phase 300,000,000.00
TOTAL P1,754,707,150.00
===========
===
Mr. Luis
Benitez of SGV, the
external auditors of
AMARI, testified that
said Letter-Agreement
was approved by the
AMARI Board.
On the first
payment of P400 million,
records show that P300
million was paid in
managers checks of
Citibank-Makati, while
the balance of P100
million was deposited to
the account of the two
Chinese in a Hongkong
bank. On the basis of a
Memorandum Order
dated April 28, 1995
issued by Messrs.
Karnasuta and
Emmanuel Sy, and upon
the instruction of
Messrs. Chin San
Cordova and Chua Hun
Siong, 31 managers
checks in the total
amount of P300 million
were issued by Citibank-
Makati in favor of a Mr.
George Trivio, a
Dominican Republic
national, broken down
as follows:
1) Twenty-nine
(29) managers checks
at P10 million each;
2) One (1)
managers check at P7
million; and,
One (1)
managers check at P3
million.
All these
checks were indorsed
by Mr. Trivio. Mr. Sy
could not satisfactorily
answer why Mr. Trivio
was made payee of the
Managers Checks when
he had nothing to do
with the transactions.
Neither could he provide
information regarding
the said Mr. Trivio.
Mr. Emmanuel
Sy admitted signing
several blank checks as
special request from
Messrs. Co and Chua
and issuing said checks
as follows:
1) Ten (10)
Managers checks dated
60 days from the June 9
letter amounting to P127
million;
2) Twenty-four
(24) blank checks
amounting to P150
million dated from 31
August 1995 up to 31
January 1998; and,
3) Forty (40)
blank checks amounting
to P357 million.
In this regard,
the pertinent portion of
the 9 June 1995 letter-
 agreement provides as
follows:
3. Upon signing
of this letter-agreement
AMARI shall (a) pay to
you (in cash in the form
of Bank Managers
Checks) the sum of Two
Hundred Sixty Two
Million Five Hundred
Thousand Pesos
(Pesos 262,500,000)
and (b) pay and deliver
to you the following
checks:
3.1 Ten (10)
checks dated sixty (60)
days from date of this
letter agreement in the
total amount of One
Hundred Twenty Seven
Million Pesos (Pesos
127,000,000);
3.2 Twenty-
Four (24) checks in the
total amount of One
Hundred Fifty Million
Pesos (Pesos
150,000,000) as follows:
DUE DATE OF CHECK AMOUNT
August 31, 1995 P 6,250,000
March 31, 1996 6,250,000
April 30, 1996 6,250,000
May 31, 1996 6,250,000
June 30, 1996 6,250,000
July 31, 1996 6,250,000
August 31, 1996 6,250,000
September 30, 1996 6,250,000
October 31, 1996 6,250,000
November 30, 1996 6,250,000
December 31, 1996 6,250,000
January 31, 1997 6,250,000
February 28, 1997 6,250,000
March 31,1997 6,250,000
April 30, 1997 6,250,000
May 31, 1997 6,250,000
June 30, 1997 6,250,000
July 31, 1997 6,250,000
August 31, 1997 6,250,000
September 30, 1997 6,250,000
October 31, 1997 6,250,000
November 30, 1997 6,250,000
December 31, 1997 6,250,000
January 31, 1998 6,250,000
Total P150,000,000
==========
3.3 Forty Eight (48) checks in the total amount of Three Hundred Fifty Seven Million
Three Hundred Sixty Three Thousand Fifty Pesos (Pesos 357,363,050)
payable over a period of twelve (12) months as follows:
Each monthly payment to consist of Four (4) checks, three (3) checks of which shall
each bear the amount of P7,250,000 and one (1) check of which shall bear the
amount of P8,000,000 for a total monthly amount of P29,750,000. These
monthly payment of four (4) checks each shall be dated the last date of the
thirteen, fourteen, fifteen, sixteen, seventeen, eighteen, nineteen, twenty,
twenty-one, twenty-two, twenty-three, and twenty-four months from the date of
this letter agreement. The last issued check hereunder shall bear the sum of
P8,363,050.
The Provisional Receipt shows that Mr. Chin San Cordova and Mr. Chua Hun Siong
received the amount of P896,863,050.00 as of 09 June 1995. Based on the
submitted photocopies of the returned checks issued by AMARI vis-a-vis item
3(b) of the quoted Letter-Agreement, the following persons were made payees:
Emmanuel Sy, Manuel Sy, Sy Pio Lato, International Merchandising and
Development Corporation, Golden Star Industrial Corporation, Chin San
Cordova, EY, and Wee Te Lato. Other payments were made payable to Cash
(bearer instruments). Each person was thus named payee to the following
amounts:
1. Emmanuel Sy:
Citibank Check No. 000019 dated 10/31/96 P 6,250,000
2. Manuel Sy:
Citibank Check No. 000007 dated 8/8/95 12,700,000
3. Sy Pio Lato:
Citibank Check No. 000008 dated 8/8/95 12,700,000
000009 dated 8/8/95 12,700,000
000010 dated 8/8/95 12,700,000
4. International Merchandising and Development Corporation:
Citibank Check No. 000013 dated 4/30/96 6,250,000
000014 dated 5/31/96 6,250,000
000015 dated 6/30/96 6,250,000
000016 dated 7/31/96 6,250,000
000045 dated 9/30/96 7,250,000
5. Golden Star Industrial Corporation:
Citibank Check No. 000018 dated 9/30/96 6,250,000
6. Chin San Cordova:
Citibank Check No. 000041 dated 8/31/96 7,250,000
000043 dated 9/30/96 7,250,000
7. EY:
Citibank Check No. 000047 dated 10/31/96 7,250,000
000049 dated 10/31/96 7,250,000
8. Wee Te Lato:
Citibank Check No. 000048 dated 10/31/96 7,250,000
9. Bearer Instruments: CASH:
Citibank Check No. 000001 dated 8/8/95 12,700,000
000002 dated 8/8/95 12,700,000
000003 dated 8/8/95 12,700,000
000004 dated 8/8/95 12,700,000
000005 dated 8/8/95 12,700,000
000006 dated 8/8/95 12,700,000
000012 dated 3/31/96 6,250,000
000017 dated 8/31/96 6,250,000
000039 dated 8/31/96 7,250,000
000040 dated 8/31/96 7,250,000
000042 dated 8/31/95 8,000,000
000044 dated 9/30/96 7,250,000
000046 dated 9/30/96 7,250,000
000050 dated 10/31/96 8,000,000
10. Payees Name Not Legible:
Citibank Check No. 000011 dated 8/31/96 6,250,000
On the other hand, Ms. Aurora Montano, a cousin of Mr. Justiniano Montano IV, was
asked by a Mr. Ben Cuevo if she knew anybody from PEA, and she answered:
Yes, I know Mr. Justiniano Montano IV. For this answer, and for introducing the
AMARI representative to Mr. Montano, she received P10 million in cash and
P20 million in postdated managers checks in the office of Mr. Benito Co and in
the presence of, aside from Mr. Benito Co, Mr. Ben Cuevo and Mr. Frank
Chua. Ms. Montano, however, insisted that she actually received only P10
million.
Ms. Montano furthermore admitted that, through Mr. Ben Cuevo, she met Messrs. Chin
San Cordova and Chua Hun Siong in 1994 for this transaction.
In Executive Session, Mr. Ben Cuevo admitted to having encashed two checks at
Pilipinas Bank, worth P12.5 million. According to him, the two checks form part
of the P150 million worth of post-dated checks (PDCs), with a face value of
P6.25 million per check, described in the Letter-Agreement. Of this P150
million, Mr. Cuevo actually received five (5) PDCs worth P31 million, but he
was only able to encash 2 checks at P12.5 million.
Still in Executive Session, Mr. Ben Cuevo also admitted receiving a check worth P6.25
million payable to his company, International Merchandising and Development
Corporation. This was deposited in his Current Account No. 604010562-A, and
the amount was transferred by credit memo to Mr. Montano IVs account at
Pilipinas Bank.
Mr. Montano IV admitted that he has an account with Pilipinas Bank, but invoked his
constitutional right against self-incrimination when asked if he received the
amount of P6.25 million transferred to his account. The Pilipinas Bank Credit
Advice dated May 6, 1996, marked as Exhibit 1-Montano IV, indicating the
transfer of the amount of P6.25 million was presented by Senator Drilon. Once
or twice, a certain Ms. Polly Tragico accompanied Mr. Montano IV to withdraw
funds from Pilipinas Bank-Pavilion.
[if !supportFootnotes][7][endif] Both filed on 26 May 2003. On 6 June 2003 Amari filed a Supplement
to its second Motion for Reconsideration.
[if !supportFootnotes][8][endif] Filed on 19 August 2003.
[if !supportFootnotes][9][endif] Decision dated 17 January 1964 of Judge Amador E. Gomez. Also
quoted in Justice Josue N. Bellosillos Supplement to Separate Opinion,
Concurring and Dissenting.
[if !supportFootnotes][10][endif] Sections 2 and 3, Article XII of the 1987 Constitution.
[if !supportFootnotes][11][endif] Article 112 , Civil Code of the Philippines.
[if !supportFootnotes][12][endif] Section 3.2 (a), Amended JVA.
[if !supportFootnotes][13][endif] Section 3.3 (a), Amended JVA.
[if !supportFootnotes][14][endif] Section 2.2, Amended JVA.
[if !supportFootnotes][15][endif] Section 5.2 (c), Amended JVA.
[if !supportFootnotes][16][endif] Ibid.
[if !supportFootnotes][17][endif] SECTION 79. Destruction or sale of unserviceable property. When
government property has become unserviceable for any cause, or is no longer
needed, it shall, upon application of the officer accountable therefor, be
inspected by the head of the agency or his duly authorized representative in
the presence of the auditor concerned and, if found to be valueless or
unsalable, it may be destroyed in their presence. If found to be valuable, it may
be sold at public auction to the highest bidder under the supervision of the
proper committee on awards or similar body in the presence of the auditor
concerned or other duly authorized representative of the Commission, after
advertising by printed notice in the Official Gazette, or for not less than three
consecutive days in any newspaper of general circulation, or where the value
of the property does not warrant the expense of publication, by notices posted
for a like period in at least three public places in the locality where the property
is to be sold. In the event that the public auction fails, the property may be sold
at a private sale at such price as may be fixed by the same committee or body
concerned and approved by the Commission.
[if !supportFootnotes][18][endif] SECTION 379. Property Disposal. When property of any local
government unit has become unserviceable for any cause or is no longer
needed, it shall upon application of the officer accountable therefor, be
inspected and appraised by the provincial, city or municipal auditor, as the
case may be, or his duly authorized representative or that of the Commission
on Audit and, if found valueless or unusable, shall be destroyed in the
presence of the inspecting officer.
If found valuable, the same shall be sold at public auction to the highest bidder under
the supervision of the committee on awards and in the presence of the
provincial, city or municipal auditor or his duly authorized representative.
 Notice of the public auction shall be posted in at least three (3) publicly
accessible and conspicuous places, and if the acquisition cost exceeds One
hundred thousand pesos (P100,000.00) in the case of provinces and cities,
and Fifty thousand pesos (P50,000.00) in the case of municipalities, notice of
auction shall be published at least two (2) times within a reasonable period in a
newspaper of general circulation in the locality.
[if !supportFootnotes][19][endif] Under Section 380 of the 1991 Local Government Code, local
governments can sell real property through negotiated sale only with the
approval of the Commission on Audit. Under paragraph 2 (a) of COA Circular
No. 89-296, on Sale Thru Negotiation, a negotiated sale may be resorted to
only if [T]here was a failure of public auction. The Commission on Audit
enforces the express requirement in Section 79 of the Government Auditing
Code that a negotiated sale is possible only after there is a failure of public
auction.
[if !supportFootnotes][20][endif] 359 Phil. 530 (1998).
[if !supportFootnotes][21][endif] Laurel v. Garcia, G.R. No. 92013, 25 July 1990, 187 SCRA 797.