Pasay–SM reclamation deal: PEA-Amari, Part 2

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WHAT is it with the top officials of the Philippine Reclamation Authority (PRA)—formerly known as the Public Estates Authority (PEA)—and our rapidly dwindling and deteriorating Manila Bay?

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Despite the 2002 ruling of the Supreme Court (SC) in the PEA-Amari case that private companies cannot own reclaimed land, the national reclamation agency appears bent on approving the 360-hectare Manila Bay reclamation joint venture deal of the Pasay City government and mall and property giant ShoeMart (SM).

Last week, the PRA put out a paid advertisement in some daily newspapers (not the Times) to announce the conduct of a public hearing on the Pasay-SM deal, a necessary formality before it officially approves the reclamation scheme. This even if the reclamation project is a clear circumvention of the SC decision and a blatant violation of our Constitution.

To refresh the memory of our readers, PEA and Thai-Filipino company Amari Coastal Bay Resources Corp. made a deal in 1995 to reclaim around 600 hectares of Manila Bay, with the latter getting some 368 hectares as its 70-percent share while PEA was allocated the remaining 232 hectares (or 30 percent) of the reclaimed land.

A subsequent Senate investigation into the PEA-Amari deal—dubbed by then-Sen. Ernesto Maceda as the “grandmother of all scams”—concluded that the government was defrauded billions of pesos. The late (former Solicitor General) Frank Chavez then questioned the transaction before the SC.

In a 2002 decision written by SC Senior Associate Justice Antonio Carpio, the SC struck down the deal as unconstitutional, saying that, “[T]he constitutional prohibition in Section 3, Article XII of the 1987 Constitution is absolute and clear: Private corporations or associations may not hold such alienable lands of the public domain except by lease…”

More than two decades later, it appears the PEA-Amari deal is being resurrected, but with another set of players. In short, same dog, different collar.

This time, the reclamation is being recast as a public-private partnership (PPP) project of the Pasay City local government, with SM as the private-sector partner. Under the joint venture agreement, SM will undertake and finance the entire reclamation project and, in return, it will get 49 percent or 176.4 hectares of the reclaimed land, with the remaining 51 percent or 183.6 hectares allocated to Pasay City.

With lots at the Mall of Asia area currently selling at P250,000 per square meter according to brokers we have talked to, SM stands to earn at least P441 billion from its land deal with Pasay City. That’s almost a 1,000-percent return for its P54.5-billion investment for the cost of the project. This is a conservative estimate, especially if you consider that land prices in the vicinity will surely continue to rise until the seven-year reclamation project is completed.

But even if the reclamation project is spearheaded by a local government unit (LGU), it still cannot go around the constitutional ban on private ownership of reclaimed lands.

The SC also stated in the PEA-Amari case that even though the Local Government Code allows LGUs to pay the contractor or developer in kind by way of a percentage of the reclaimed land, “the constitutional restrictions on land ownership automatically apply, even though not expressly mentioned in the Local Government Code.” This means that “under either the BOT Law or the Local Government Code, the contractor or developer, if a corporate entity, can only be paid with leaseholds on portions of the reclaimed land.”

The SC explained that “this is the only way these provisions of the BOT Law and the Local Government Code can avoid a direct collision with Section 3, Article XII of the 1987 Constitution.”

“Lands reclaimed from foreshore … also form part of the public domain and are also inalienable, unless converted pursuant to law into alienable or disposable lands of the public domain… To insure equitable distribution [of alienable public lands], the 1973 and 1987 Constitutions have barred private corporations from acquiring any kind of alienable land of the public domain,” the SC added.

The SC also warned that “those who attempt to dispose of inalienable natural resources of the State, or seek to circumvent the constitutional ban on alienation of lands of the public domain to private corporations, do so at their own risk.”

The way we see it, the Pasay-SM reclamation project also goes against the SC’s writ of continuing mandamus issued in 2008, directing the government to preserve, restore and maintain the waters of Manila Bay in order to make it fit for swimming, skin-diving, and other forms of contact recreation.

With the reclamation plan expected to produce an additional 15 million sq m of building floor area and some 2.1 million more residents and workers, based on the project’s Environmental Impact Assessment (EIA) report, the increased population and commercial activity will definitely put more environmental stress on Manila Bay, making it almost impossible to clean up its heavily polluted waters.

In fact, it is quite laughable that the justification being given by the Pasay-SM group for the reclamation project is that proposed development would “help in decongesting Metro Manila … by providing alternative site for future development.” Seriously??!!

Environmentalists, environmental groups like Greenpeace, Haribon Foundation, World Wildlife Fund, Foundation for the Philippine Environment, and other “green” advocates should challenge this highly irregular project before the Ombudsman and the SC.

More on this fishy reclamation deal in our future columns.

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4 Comments

  1. Fill more of the bay so that SM can build more of its cheapo condos, which will sit empty until the earthquake comes and knocks them over. But, hey, at least the Sy family will get richer.

  2. Kelvin S. Rodolfo on

    In 2014, Philippine Science Letters published my scientific analysis of the natural hazards that threaten Manila Bay reclamations, [http://philsciletters.org/2014/PSL%202014-vol07-no01-p228-240%20Rodolfo.pdf]. The hazards include storm surges, land subsidence, and especially enhanced ground shaking and liquefaction during earthquakes. At present, Metro Manila is seriously preparing for a magnitude 7.2 to 7.9 earthquake. To develop new reclaimed land at the same time is simply insane. — Kelvin Rodolfo

  3. Pave way to progress in creating modern cities, They are supported by modern technology and techniques to address environmental concerns. That’s the way to catch up with our neighbors like Hong Kong and Singapore and to be on par with best around the world. This will result in increased tourism share in the region and more job creation.