Pasay-SM reclamation project: The new PEA-Amari?

Atty. Dodo Dulay

Atty. Dodo Dulay

Remember the PEA-Amari deal which was dubbed by then senator Ernesto Maceda in a privileged speech as the “grandmother of all scams?” Well, it seems there’s another PEA-Amari deal in the offing, only this time with a different cast of characters: Pasay City and SM Land, the retail and property giant owned by the Sy family.

We recall that in 1995, the Public Estates Authority (now called the Philippine Reclamation Authority or PRA) entered into a joint venture agreement with Amari Coastal Bay Resources Corp., a Thai-Filipino company, to reclaim some 600 hectares of submerged areas of Manila Bay.

Part of the deal was that Amari would own 70 percent of the reclaimed land amounting to some 367.5 hectares while PEA retained the remaining 30 percent.

Not long after Maceda’s privilege speech, two Senate committees investigated the transaction and concluded that the government was defrauded of billions of pesos.

Former Solicitor General Francisco Chavez subsequently filed a petition before the Supreme Court (SC) questioning the validity of the transaction. In an erudite decision penned by Associate Supreme Court Justice Antonio Carpio in 2002, the SC struck down the PEA-Amari deal as unconstitutional.

Notwithstanding the SC’s ruling, the PEA-Amari deal is apparently being replicated almost two decades later, albeit at the local government level.

A public notice published last October 1 revealed that SM Land submitted an unsolicited proposal to the Pasay City government to reclaim approximately 300 hectares of the latter’s municipal waters in Manila Bay at an estimated cost of P54.5-billion. The reclaimed land will then be divvied up, with Pasay getting 51 percent (or 153 hectares) and the remaining 147-hectares going to SM Land.

Business rival, Ayala Land, wanted to submit a competing offer but failed to secure an extension of the October 31st deadline for the submission of bid proposals.

The Pasay-SM reclamation project has generated various reactions from the public, foremost of which is, whether Pasay can legally and validly undertake the proposed reclamation project in light of the SC’s ruling in the PEA-Amari case.

According to the SC, “(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 . . .” Hence, “a private corporation, even one that undertakes the physical reclamation of a government BOT project, cannot acquire reclaimed alienable lands of the public domain in view of the constitutional ban.”

The SC also said that while the local government code authorizes local government units (LGUs) in land reclamation projects to pay the contractor or developer in kind consisting 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.”

“Thus, 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 added. 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.”

If we were to go by the SC ruling, the private-sector partner of Pasay for the reclamation pro—ject—be it SM Land or Ayala Land—cannot legally acquire or own any part of the reclaimed land, let alone 147-hectares of it. At most, they can only hold the property by way of a long-term lease.

Some people also asked whether LGUs like Pasay should be allowed to pursue reclamation projects in Manila Bay, which is a natural resource owned by the State and not by any city or municipality in particular.

They argue that under the local government code, cities like Pasay do not have explicit authority to undertake reclamation projects. They point out that under Presidential Decree 3-A, it is only the national government, through the PRA, which has the power to reclaim areas under water.

We can certainly understand the apprehension of many Filipinos.

Can you imagine what would happen if all the bordering cities and provinces—Manila, Pasay, Parañaque, Las Piñas, Navotas, Bataan, Pampanga, Bulacan, and Cavite—began reclaiming their piece of Manila Bay? That would be an ecological and economic disaster for millions of Filipinos.

As it is, Manila, Parañaque and Las Piñas already have their own dubious Manila Bay reclamation projects in the pipeline.

Perhaps what’s more alarming is that these LGU reclamation schemes, if allowed, will —in the words of the SC— “open the floodgates to corporations . . . acquiring hundreds, if not thousands, of hectares of alienable lands of the public domain” and “result in corporations amassing huge landholdings never before seen in this country—creating the very evil that the constitutional ban was designed to prevent.”


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