G.R. No. 103882 - Separate Opinion




G.R. No. 103882, November 25, 1998, ♦ Decision, Purisima, [J] ♦ Separate Opinion, Romero, [J] ♦ Separate Opinion, Puno, [J] ♦ Separate Opinion, Panganiban, [J] EN BANC G.R. No. 103882 November 25, 1998 REPUBLIC OF THE PHILIPPINES, petitioner, vs. THE HONORABLE COURT OF APPEALS AND REPUBLIC REAL ESTATE CORPORATION, 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. Separate Opinions ROMERO, J., separate opinion; Culture doesn't save anything or any-one, it doesn't justify. But it's a product of man: he projects himself into it, he recognizes himself in it; that critical mirror alone offers him his image." So said Jean Paul Sartre, one of the greatest philosophical thinkers of our time. Matthew Arnold referred to it as the "pursuit of our total perfection" or the "study of perfection." The English mathematican and philosopher Alfred North Whitehead, placing premium on human subjectivity, declared, "Culture is activity of thought, and receptiveness to beauty and humane feeling. Image, perfection, beauty, and feeling. These are elements which are also associated with art and creation. Yet, art in itself is a multi-faceted concept. The revered and, at times, controversial President John Fitzgerald Kennedy, in one of his numerous speeches, elevated art to the level of a pyscho-social necessity of man when he said, ". . . (A)rt establishes the basic human truths which ust serve as the touchstone of our judgment." Indeed, there is no question that art satisfies one of the deepest spiritual needs of man. Of course, when one speaks of art and culture, he in fact speaks of it in two ways: the abstract and the concrete. What is abstract is conditioned by time; that which is and the concrete is ravaged by it. While the concept of "culture and art" endures man's folies, amassing innumerable, priceless enhancements as it effortlessly slides through generations of human progress, its tangible counterpart, that which is preserved for our children's appreciation, is unfortunately fragile. Art works, music, architecture, literature, and other cultural embellishments which exhibit extraordinary longevity are proclaimed as national treasures, and rightly so, for they are lasting testiminials of man's boundless imagination and creativity, that single trait that places the human species above all other creatures of the Almighty. Most evidence of a culture's richness are lost, not in the tide of nature's frivolity, but through man's foolishness and capriciousness. Wars used to be the main culprit in the virtual obliteration of the works of ancient scholars. We are now, and for the past century or so, faced with a greater foe: progress. Progress and development are the hallmarks of successful governance. Our leaders, and there are so many of them now, decide "what is best" for the public. Inopportunely, what is perceived to be in the "best interest" of the majority in the name of "progress" may sometimes, and in the long run, the calamitous to the entire people in terms of cultural atrophy. This is the quandary in which this Court finds itself as it attempts to weigh once more private rights against sovereignty and the general welfare. Background Facts In a nutshell, the undisputed facts in these consolidated petitions follow. Pursuant to Republic Act No. 1899, which authorized chartered cities and municipalities to reclaim adjoining foreshore lands, the City Council of Pasay resolved to reclaim a portion of the Manila Bay covering the Manila-Pasay-Parañaque bounderies and, for this purpose, enacted Ordinance No. 121 on May 6, 1958. Two days later, on the strength of said ordinance, Pasay City Mayor Pablo Cuneta contracted with Republic Real Estate Corporation (RREC) for the reclamation of portions of the Manila Bay. On April 21, 1959, the City Council of Pasay amended Ordinance No. 121 by enacting Ordinance No. 158. A new agreement between the parties (the Reclamation Agreement) was executed three days thereafter, whcih, among other things, granted the reclamation project to RREC and gave it an irrevocable option to purchase a maximum of 60% of the area reclaimed at P10.00 per square meter, the amount of which could be set off against any outstanding obligation of the City to RREC. Such an option could only be effected within a year from the time the City Engineer certified that 50 hectares had been reclaimed. The reclamation itself was made by the RREC through third parties who were awarded contracts on the various phases of the project through public bidding. To raise more funds, RREC entered into contracts to sell the reclaimed areas which it could purchase from Pasay City by exercising its option under the Reclamation Agreement. Proceedings before the trial court On December 19, 1961, the Republic of the Philippines filed a complaint (amended on March 5, 1962) against Pasay City and RREC for "Recovery of Possession and Damages with Writ of Preliminary Preventive Injunction and Mandatory Injunction" before Branch 7 of the then Court of First Instance of Rizal, Pasay City, praying for the declaration of nullity of Ordinance Nos. 121 and 158, the Reclamation Agreement, and the Contracts to Sell between RREC and the buyers of the reclaimed land. Among other things, the following matters were alleged: (a) the area reclaimed was already reserved as a national park under Proclamation No. 41, dated July 5, 1954 and Act No. 3915, hence, the subject of the Reclamation Agreement was beyond man's commerce; (b) Ordinance Nos. 121 and 158 were ultra vires and void ab initio for being violative of R.A. No. 1899, because they involved the reclamation of "submerged areas" and not "foreshore lands" as allowed by said law; and (c) the Reclamation Agreement was illegal, contrary to morals and public policy because it was executed with neither authority from the National Government nor any public bidding. In their separate answer, Pasay City and RREC set forth the following negative defenses: (a) Pasay City was empowered by R.A. No. 1899 to reclaim any portion of the Manila Bay; (b) the area reclaimed was not a portion of the Manila Bay Resort, which was the area reserved as a national park under Proclamation No. 41 and Act No. 3915; (c) under R.A. No. 1899, the term "foreshore lands" meant much more than its technical definition and extended to submerged areas beyond the water marks of the shore; and (d) all the actuations of the City RREC regarding the reclamation project were in accordance with R.A. No. 1899 and related laws. On April 26, 1962, the trial court issued a writ of preliminary injunction ordering Pasay City and RREC to refrain from their activities at the Manila Bay.ℒαwρhi৷ On January 10, 1968, however, RREC filed a "Motion to Dismiss" the complaint on the ground that the passage of Republic Act No. 5187 (otherwise known as the Public Works Act) on September 16, 1967, rendered the issues raised by the Republic of the Philippines moot and academic. Specifically, RREC relied on Section 3 (m) thereof which stated that all "contracts of city or municipal governments for the reclamation of foreshore and submerged lands shall be respected" during the construction by the national government of a sea wall and limited access highway passing through the projected area of the reclamation. In the meantime, the trial court allowed Jose Bautista and others who allegedly bought in good faith and for value from RREC some portions of the reclaimed land, to intervene in the action and join cause with Pasay City and RREC. On the other hand, the Pasay Law and Conscience Union, Inc. (PLCUI), a civic organization, joined with the Republic of the Philippines and filed a complaint in intervention. On May 24, 1972, the court a quo rendered a judgment on the pleadings, upholding the validity of Ordinance Nos. 121 and 158 of the Reclamation Agreement; dismissing the complaint as well as PLCUI's complaint in intervention; enjoining RREC and Pasay City "to have all the plans and specifications in the reclamation approved by the Director of Public Works, and to have all the contracts and subcontracts for said reclamation awarded by means of, and only after, public bidding"; and lifting the preliminary injunction, dated April 26, 1962, as soon as said conditions shall have been met by RREC and Pasay City. Proceedings before the Court of Appeals During the pendency of the State's appeal with the Court of Appeals, President Marcos issued on January 11, 1973, Pressidential Decree No. 3-A, providing, inter alia, that "the reclamation of areas under water, whether foreshore or inland, shall be limited to the National Government or any person aurhorized by it under a proper contract," and that it shall take over any validly existing reclamation contract on the basis of quantum meruit. On the strength of P.D. No. 3-A, the Commission of Public Highways and the Construction Development Corporation of the Philippines (CDCP) took over the reclamation contract between Pasay City and RREC for the construction of the Manila-Cavite City Coastal Road. CDCP development the area already reclaimed by RREC and continued reclaiming where the latter left off. These areas, which came to be known as the Cultural Center Complex and the Financial Center Complex, were registered in the name of the CCP. On February 4, 1977, the Public Estates Authority (PEA) was created by virtue of Presidential Decree No. 1084. It was designated as the agency primarily responsible for all the reclaation projects of the national government. The PEA then took over the Manila Bay reclamation contract between the Republic of the Philippines and CDCP. In 1978, RREC filed a claim for P30,396,878.20 with the ten Ministry of Public Highways (MPH) for its actual reclamation in the CCP Complex before CDCP assumed authority over the project. The MPH, on the other hand, determined the amount of reclamation by RREC to be only P10,926,071.29. Later, RREC offered to settle the case with the Office of the Solicitor General for the original amount of its claim. The OSG would, however, settle only for the lesser amount assessed by the MPH. This was acceptable to RREC only with an additional 6% interest per annum from 1962 up to the time of payment. Within the decade that followed, RREC's proposals for settling the case ballooned from a P35,455,011.31 cash settlement or a property settlement of 3.5 hectares in the CCP Complex covered by TCT No. 75676, to a cash settlement of P175 million, then later, P245 million. The Office of the President, to which the proposals were referred, rejected the same. In other words, no amicable settlement was reached. The first decision On January 28, 1992, the Court of Appeals rendered a decision, affirming the trial court's judgment with the following modifications: (a) the requirement on public bidding and submission of plans and specifications to the DPWH by RREC was deleted; (b) the Republic of the Philippines was ordered to turn over to Pasay City the ownership and possession of the 21 hectares already reclaimed by RREC; and (c) RREC's irrevocable option to purchase 60% of the 21 hectares it had already reclaimed was sustained. The amended decision On April 28, 1992, the appellate court rendered an amended decision. It agreed with the position of Pasay City and RREC in their motion for reconsideration that the actual the reclaimed was 55, not 21, hectares. Considering, however, that latter were willing to accept 35 hectares of open land in the CCP Complex, the court ordered the Republic of the Philippines to reconvey to Pasay City and RREC said parcels of land comprising nine lots registered in the name of CCP. This is the decision being assailed by both parties in the instant consolidated petitions. Issues raised In G.R. No. 103882 Are Ordinance Nos. 121 and 158, as well as the Reclamation Agreement between Pasay City and RREC, valid and bindings as against the National Government and the Cultural Center of the Philippines? The Republic of the Philippines claims that the Court of Appeals erred in sustaining the validity of Ordinance Nos. 121 and 158 and the Reclamation Agreement executed pursuant thereto, and in ordering the reconveyance of the nine lots titled in the name of CCP to the City of Pasay and RREC. It stresses that the reclamation project undertaken by Pasay City and RREC violated R.A. No. 1899, especially since the subject areas were "submerged lands", not "foreshore lands" which are the only lands that may be reclaimed by local governments under said law. The CCP, as intervenor in G.R. No. 103882, alleges that the appellate court's amended decision was not binding upon it because it was never made a party to the action and that it was compelled to intervene in the instant petitions to protect its proprietary interests. It claims that the Court of Appeals erred in findings that the actual area reclaimed by RREC was 55 hectares, and in ordering it to turn over to RREC and Pasay City the nine lots registered in its name. In G.R. No. 105276 Is P.D. 3-A constitutional? The City of Pasay and RREC claim it is not and that the Court of Apealls erred in not ruling upon its constitutionality, considering that said decree deprived them of their property and rights of ownership without due process of law and without payment of just compensation, and that it violated the non-impairment clause of the Constitution; and in not awarding them damages for the alleged illegal takeover of the reclamation contract and the reclaimed area. Thus, they pray for the modification of the assailed amended decision by awarding them damages and conveying to them, not merely 35, but 55 hectares of the land allegedly reclaimed. The Commissioner's Report On September 10, 1997, the Court's Second Division issued a Resolution remanding the case to the Court of Appeals to receive further evidence and determine the actual area reclaimed by RREC and the arreas of the CCP Complex which are "open spaces." In its Commissioner's Report dated November 25, 1997, the appellate court conclude that the CCP and the Solicitor General failed to refute its earleir finding that RREC and Pasay City were able to reclaim 55 hectares of the Manila Bay. Discussion of Issues 1. Ordinance Nos. 121 and 158, as well as the Reclamation Agreement between Pasay City and RREC, are null and void for violating the clear and unambiguous provisions of R.A. No. 1899. In 1984, the term "foreshore lands" was defined by this Court in the case of Republic v. Court of Appeals.1 Although the subject of this case was part of the Laguna de Bay, the Court nevertheless applied Bouvier's definition of "foreshore lands," viz: "that part of the land immediately in front of the shore; the part which is between high and low water marks, and alternately covered with water and left dry by the flux and reflux of the tides. It is indicated by a middle line between the highest and lowest tides." This judicial interpretation did not escape the attention of the legislature in the enactment of later related laws. In R.A. No. 5187, for example, Congress specified the areas that may be reclaimed in the construction of the Manila-Cavite City Coastal Road to include both "foreshore and submerged areas." The Chief Executive also recognized the disparity between the two terms when he signed into law P.D. No. 3-A, authorizing the reclamation of "areas under water, whether foreshore or inland." Similarly, P.D. No. 1094, creating the Public Estates authority to "reclaim land, including foreshore and submerged areas." Initially, legislative intent and later jurisprudential usage clearly delimited the term "foreshore lands" to that part of the land where the tides literally converge, thus excluding submerged lands. This restricted explication was unquestionably ackonwledged by the other branches of government when, in passing subsequent related statutes, they added the terms "submerged areas" or "areas under water" to foreshore lands." Under the principles of legal construction, since R.A No. 1899 partakes of the nature of a legislative grant of a sovereign right to municipalities and chartered cities, that is, the right "to reclaim," it must be strictly construed against the latter. R.A. No. 1899 was, therefore, enacted to apply strictly to "foreshore lands." Thus, when RREC was permitted by the City of Pasay, through Ordinance Nos. 121 and 158 and the ensuing Reclamation Agreement, to reclaim up to a one-kilometer stretch into the Manila Bay, more than just "foreshore lands" was obviously contemplated and involved. Furthermore, R.A. No. 1899 mandates that any reclamation must be carried out by the municipality or chartered city concerned2 with the aid of funds which it may borrow from third persons or lending institution. 3 The reclamation of Manila Bay was undertaken, not by Pasay City, but by RREC itself under a special power of attorney from Pasay City using funds exclusively borrowed by the latter from RREC. To compound the anomaly of it all, the reclamation project itself was awarded by Pasay City to RREC without any public bidding. Finally, to complete Pasay City's absolute abdication of its duty to champion public over private interest, RREC was granted an irrevocable option to purchase the land reclaimed in lieu of simply paying for it using a determinable and liquadated amount "in Philippine currency or in the currency in which the principal has been originally received,"4 as required by R.A. No. 1899. In fact, RREC began disposing of the land by entering into contracts to sell with various third persons while the reclamation project was still in progress and long before it acquired any right of dominion over the lands yet to be reclaimed. These are all blatant violations of R.A. No. 1899. Hence, Ordinance Nos. 121 and 158, no less than the Reclamation Agreement and the Contracts to Sell it has spawned, should all be deemed null and void, the reclamation itself being ultra vires. 2. P.D. No. 3-A is constitutional and valid Applying the regalian doctrine, the State owns all waters and lands of the public domain, including those physically reclaimed. As a general rule, therefore, only the National Government can reclaim foreshore lands and other submerged areas. At times, though, the State, to effectuate an expressed public, policy, delagates some of its sovereign powers either to the legislature or to some of its alter egos. One such instance was R.A. No. 1899 which was intended to increase the autonomy of local governments, an innovation introduced by the Marcos administration. There is no doubt, however, that R.A. No. 1899 was a mere public grant, a privilege which may be withdrawn by the granting authority, the sovereign, in the exercise of police power. This is precisely what President Marcos did when he issued P.D. No. 3-A, a valid and effective means of regaining the State's right to reclaim. It must be noted that this decree was not revoked by President Aquino when she assumed the presidency. P.D. No. 3-A does not violate the equal protection clause, as claimed by Pasay City and RREC, because, far from singling out the latter, its terminology is simple and extensive enough to cover just about any municipality or city. The decree was signed by President Marcos under his emergency powers when martial law was in effect throughout the country. Thus, it is not an undue delegation or usurpation of legislation power. Neither does it authorize the taking of property without just compensation, for it specifically allows such payment, albeit based on quantum meruit. Incidentally, while RREC attacks the constitutionality of P.D. No. 3-A, and only at this late stage in the proceedings, it relied on this "quantum meruit compensation" clause in the same decree when it filed a claim before the then Ministry of Public Works way back in 1978 and again in 1983. This is an oddity which this Court takes notice of in disallowing RREC from taking contrary positions regarding the validity of a statute in this action. It cannot take advantage of a provision of law even as it attacks the same. Finally, the Court notes that the amended decision of the Court of Appeals dated April 28, 1992, is based on inadequate evidence.ℒαwρhi৷ Its conclusion that RREC was able to reclaim 35 hectares is totally unsupported by the dubious proof presented by Pasay City and RREC. In ruling in favor of Pasay City and RREC, the appellate court relied mostly on three documents issued by the government to the RREC, namely, the "Cost of Data for Items of Work Covered by the Republic Real Estate Corporation for Work Performed in the Manila Bay" issued by the Ministry of Public Highways, and two letters both addressed to RREC Executive Vice President Vicente Asuncion, Jr., one dated June 6, 1979, from then Minister of Public Highways Baltazar Aquino, and another, dated June 10, 1981; from then Solicitor General Estelito Mendoza. These documents, however, never proved that RREC was able to reclaim 35 hectares. In fact, the letter of Aquino, finding that RREC had reclaimed 55 hectares, was in its own words, merely "tentative, pending the submittal of corroborative documents"; hence, it does not amount to the "certification" contemplated in R.A. No. 1899. Mendoza's letter, on the other hand, far from supporting RREC's position, rejected RREC's proposal in the latter's attempt at settlement. It is puzzling why the appellate court even considered this letter in favor of RREC and Pasay City . On the other hand, there is aimple proof that RREC was not able to reclaim the 55 hectares which it claims it did, or even 35 hectares, as found by the Court of Appeals as follows: aerial photographs of the Manila Bay area in 1966 and 1968; photographs of the CCP taken 1967 and 1968 during construction of the main building; and the testimonies of the persons familiar with the circumstances under which said photographs were taken, as well as the other witnesses who were, one way or another, connected with the construction of the CCP main building, including a member of the Board of Directors of RREC. 3. RREC is entitled to some monetary award While the extent of reclamation actually done by RREC is debatable, there is no dispute that it did reclaim some portion of the Manila Bay. In the preceding discussion, we declared the nullity of Ordinace Nos. 121 and 158 and the Reclamation Agreement, which are the wellsprings of RREC's right to be compensated. Its reclamation efforts were also found to be ultra vires. Equity and fairness, however, dictate that it be compensated for the work actually performed by it. After all, the State cannot deny that it did benefit from such reclamation. RREC was initially willing to settle the case for P30,396,878.20. In view of the foregoing premises, we believe that RREC should only be given the amount which the State was willing to pay, that is P10,929,071.29, without legal interest. It is axiomatic that legal interest is given either for the use of the money (a loan or forbearance of money) or as a penalty for beach of an obligation (damages). In the case of Eastern Shipping Lines, Inc. v. Court of Appeals,5 the Court had occassion to set the guidelines by which litigants may claim or be awarded interest as or by way of actual or compensatory damages. Thus, II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows: 1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code. 2. When an obligation not consisting of a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages can be established with reasonable certainty. Accordingly, were the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged. . . . (Citations omitted) These are the only circumstances under which interest in the concept of actual or compensatory damages, liquidated or otherwise, may be justified. In the case at bar, no loan or forbearance of money is involved; neither is there any breach of obligation. Consequently, the lone commitment of the State would be the payment for services allegedly rendered, services for which RREC would have the National Government cede to it its property, the value of which has been inflated to unimaginable proportions since the inception of the reclamation project. This is manifestly cupidity at its worst. Neither should the state be penalized for something for which it is entirely blameless. The circumstances which led to the filing of these twin actions have long been overtaken by supervening events, rendering the issues incipiently raised moot and academic. Thus, RREC and Pasay City are, as they should be, only entilled to P10,926,071.29. No more, no less. Conclusion For almost three decades, the Cultural Center of the Philippines has been the principal, if not the sole, purveyor of the arts in this country. It has weathered criticism, civil unrest, and "internecine" politics. It relies on the occasional beneficence of loyal patrons, the so-called "cultured" class scorned and spurned by the "masa." Otherwise, it subsists on the rental income it receives from private entities leasing portions of the CCP Complex. With the trial and appellate courts upholding their claims, Pasay City and RREC wish to dismember this bastion of cultural heritage and stunt its growth by claiming ownership over a substantial portion of its property, that which literally serves as its bloodline. This must not be countenanced. The CCP is certainly not about to draw its curtains and take a final bow. As Matthew Arnold said more than a century ago, "I am a Liberal, yet I am a Liberal tempered by experience, reflection, and renouncement, and I am, above all, a believer in culture. I vote to grant the State's petition, with the qualification adverted to above. Footnotes 1 131 SCRA 532. 2 At Section 1, in relation to Section 9. 3 At Section 3. 4 At Section 6. 5 234 SCRA 78, 95-96 (1994). The Lawphil Project - Arellano Law Foundation