CA junks Aumentado, Oculam-led Panglao reclamation petition 

The 19th Division of the Court of Appeals, on its Decision dated October 26, 2021, dismissed the appeal filed by the Oasis Leisure Islands Development Inc. (Oasis) represented by its chairman, Norris C. Oculam against the Provincial Government of Bohol (PGBh) assailing the decision of Branch 4 of the Regional Trial Court (RTC) based in Tagbilaran City.

The RTC earlier dismissed the case as rendered in its decision dated July 3, 2017 for lack of merit.

CASE BACKGROUND

According to court records, in a letter dated Oct. 2, 2009, Oasis, through Oculam, submitted an unsolicited proposal to the PGBh for a joint venture for the reclamation of at least 450 hectares off Panglao Bay to be developed into a leisure and resort.

Then Bohol Gov. Erico B. Aumentado submitted to the Vice Governor’s Office the Joint Venture Development Agreement (JVDA) for consideration by the Sangguniang Panlalawigan (SP) of Bohol.

Likewise, the Provincial Legal Office (PLO) submitted a legal opinion on the JVDA which was addressed to then Gov. Aumentado, with a copy furnished to the SP, the case records indicate.

The opinion provided the legal basis for the proposed Panglao reclamation project and has provided amendments to the JVDA.

On Dec. 22, 2009, the SP passed Resolution No. 2009-633 which states: “Authorizing the Honorable Provincial Governor Atty. Erico B. Aumentado to Represent the Provincial Government of Bohol and Enter Into a Negotiation for a Joint Venture and Development Agreement with the Oasis and Leisure Islands Development Incorporated on the Proposed Reclamation Project, Off Panglao Bay, Panglao, Bohol, Provided, However, that the Provisions and Amendments to the JVDA as Proposed by the Provincial Legal Office Shall be Made an Integral Part of the Same JVDA”.

After which, on June 19, 2010, roughly eleven days before then Gov. Aumentado stepped down as local chief executive of Bohol, Oasis, represented by Oculam, and the Province of Bohol, represented by then Gov. Aumentado entered into a JVDA for the Panglao reclamation project, the case records show.
The JVDA stated that the project consists of two phases: “(1) the reclamation of 450 hectares of land; and (2) the development thereof into an integrated leisure and/or resort park/complex.”

Former Gov. Aumentado also sent a Letter of Intent, on June 21, 2010, to Andrea D. Domingo, General Manager (GM) and Chief Executive Officer (CEO) of the Philippine Reclamation Authority (PRA), applying for the reclamation of approximately 450 hectares off of Panglao Bay, the records quip.

The PRA replied on July 13, 2010 and informed the Office of the Governor through then new Gov. Edgar M. Chatto, that they received two (2) project studies for similar land use. The PRA then advised that the two proponents should integrate the planning on the proposed reclamation projects within the bay in order to determine the physical, environment and development threshold of the bay.

According to the case records, Chatto informed the then new GM and CEO of PRA, Peter Anthony A. Abaya, in a letter dated Sept. 27, 2010, that Chatto’s office has endorsed the letter dated July 13, 2010 from PRA to the Sangguniang Panlalawigan for review of the proposed project by the appropriate committee, the records indicate.

On Oct. 15, 2010, the SP passed Resolution No. 2010-373 which states: “Holding in abeyance any action on the proposed reclamation project in Panglao Bay, Panglao, Bohol for further study and scrutiny by the Sangguniang Panlalawigan”.

On June 13 2011, the Committee on Natural Resources and Environmental Protection and the Committee on Tourism of the SP, conducted a meeting regarding the issue of the proposed Panglao reclamation project and its JVDA, the case records bare.

After a series of committee hearings, the Committee on Natural Resources and Environmental Protection and the Committee on Tourism submitted Committee Report No. 2011-03 finding that the Panglao reclamation project presents a clear and present danger to the healthy biodiversity and sensitive marine environment within the offshore area of Panglao Bay.

One of its recommendations was to cancel/rescind the JVDA and withdraw the application for the reclamation before the PRA and that the SP should pass a resolution opposing the establishment of any form of reclamation within the shores of Panglao Island, the records would show.

Subsequently, on Dec. 2, 2011, the SP passed Resolution No. 2011-673, “Authorizing the Honorable Provincial Governor, Atty. Edgar M. Chatto, to Cause the Cancellation/Rescission of the Joint Venture and Development Agreement Entered Into with Oasis Leisure Islands Development Inc. on the proposed Reclamation Project Off Panglao Bay as the said Project Presents a Clear and Present Danger to the Healthy Biodiversity and Sensitive Marine Environment Within the Offshore Area of Panglao Bay”.

The SP also passed Resolution No. 2011-674, on the same date, which states: “Authorizing the Honorable Provincial Governor, Atty. Edgar M. Chatto, to Represent the Provincial Government of Bohol and Cause the Withdrawal of the Application for the Reclamation Filed with the Philippine Reclamation Authority”.

Furthermore, the SP passed Resolution No. 2011-675, “Opposing the Establishment of Any Form of Reclamation Within the Shores of Panglao Island”.

On Dec. 16, 2011, lawyer Carlos Ceasar C. Castillo, legal counsel of Oasis, wrote to Chatto requesting that the PGBh immediately perform its obligation under the JVDA by undertaking the environmental study and constituting the environmental study team as provided for and in accordance with the JVDA.

According to the records, Chatto replied through a letter dated Jan. 6, 2012, informing Castillo that he cannot give due course to the lawyer’s request because the JVDA is legally defective and morally and socially questionable.

Chatto invoked the joint finding of SP Committee on Natural Resources and Environmental Protection and Tourism, which was approved by the SP through Resolution Nos. 2011-673 to 2011-675 thereof. He further stated that the joint venture is grossly disadvantageous to the province; that it was entered into without complying with the requirements set forth by the Local Government Code; and that the project poses a clear and present danger to the environment, the court records indicate.

On the basis of the reply from Chatto, Oasis filed a complaint on June 1, 2012 for Specific Performance against the PGBh and the SP before the RTC, docketed as Civil Case No. 8083.

The complaint prayed that the JVDA between Oasis and the PGBh be specifically performed, and that the respondent be compelled to comply therewith. The complaint likewise prayed for attorney’s fees and litigation expenses.

CA RULING

In a 26-page decision, the Court of Appeals (CA) has dismissed the appeal filed by Oasis based on two grounds: for gross violation of Section 13 of Rule 44 of the Rules of Court and for utter lack of merit.

According to the decision of the CA, the JVDA, is void ab initio [since
the start] for non-compliance with substantive requirements of the law.

The CA wrote, “While we find that the outright dismissal of the instant appeal is warranted, we shall not shy away from discussing the merits if only to give finality to a controversy that arose almost a decade ago, the Complaint having been filed in 2012.”

According to the CA, “An action for specific performance is the remedy to demand the exact performance of a contract in the specific form in which it was made, or according to the precise terms agreed upon by a party bound to fulfill it. Before the remedy of specific performance is availed of, there must first be a breach of the contract. Logically, for there to be a breach of contract, there must be a valid contract to speak of in the first place.”

The CA decision stated, “In the instant case, the JVDA is ultra vires [beyond one’s authority] for non-compliance with substantive requirements of the law. Thus, it is void ab initio, and its performance cannot be compelled through an action for specific performance.”

In its decision, the CA disclosed that Aumentado was not authorized to sign, execute, or enter into a JVDA with Oasis.

Under Section 22(c) of the Local Government Code of 1991, contracts may be entered into by the local chief executive in behalf of the local government unit, upon authority of the Sanggunian concerned as part of its corporate powers.

In the provincial level, under Section 465(b)(1)(vi) of the Local Government Code, the Governor may represent the province in all its business transactions and sign in its behalf contracts and obligations upon the authority of the Sangguniang Panlalawigan or pursuant to law or ordinance.

The requirement of prior authorization from the Sanggunian concerned is a measure of check and balance. It is added to temper the authority of the Local Chief Executive,according to the Local Government Code.

The CA added, “In the case at bar, it is not disputed that no explicit authorization was given to Governor Erico B. Aumentado to sign, execute, or enter into the JVDA. SP Resolution No. 2009-633, relied upon by Oasis, authorized Gov. Aumentado to negotiate the terms of the JVDA with Oasis.”

Oasis however claims, that the authority to negotiate granted to Former Governor Aumentado under SP Resolution No. 2009-633 carried with it the authority to execute the JVDA, once the conditions imposed by the Sangguniang Panlalawigan were accepted.

Oasis further asserts, that obtaining another authorization for the provincial governor to sign and execute the JVDA is redundant and not in accordance with the principles of perfection of contracts and security of juridical relations. CA said, “We cannot subscribe to appellant’s [Oasis] view.”

“The language of the SP Resolution No. 2009-633 is clear. Gov. Erico Aumentado is merely authorized to negotiate the terms of the JVDA with Oasis. There is nothing in SP Resolution No. 2009-633 that would imply that Gov. Aumentado is likewise authorized to sign, execute and enter into a JVDA with Oasis immediately after negotiation” the CA decision bared.

The CA further revealed, “Indeed, if the Sangguniang Panlalawigan intended to grant Gov. Erico B. Aumentado the authority to sign, execute, or enter into a JVDA with Oasis, it would have stated so in clear, express, and explicit terms. That the SP did not do so, and instead merely used the terms “negotiate” and “negotiation”, reveals its intention to limit his authority to the same.”

THE JVDA WAS ENTERED INTO WITHOUT THE REQUISITE PUBLIC BIDDING

Oasis asserts, that the issue on public bidding was being raised for the first time on appeal, which is not allowed.

In its answer with Special Affirmative Defenses, the PGBh raised the absence of a public bidding in the instant case.

Nevertheless, Oasis avers, that public bidding is not required because the project proponent is the PGBh, and Oasis is merely a joint venture partner that will assist and provide financial and technical resources.

The CA decision wrote, “Oasis is palpably mistaken.”

According to the CA, Section 1 of the Executive Order No. 543, series of 2006 provides that all reclamation contracts to be executed with any person or entity shall go through public bidding.

Furthermore, Section 5 of PRA Administrative Order No. 2007-2, cited by Oasis, likewise provides that all reclamation contracts shall be awarded through public bidding.

“In this case, the Panglao reclamation project is being implemented through a joint venture between Oasis and the Province of Bohol, which arrangement is embodied in the JVDA. Thus, it does not matter that the Province of Bohol, applied as the project proponent with the PRA. What the requires is that reclamation contracts, in this case the JVDA, should undergo public bidding”, the CA added.

To further deny the need for public bidding, Oasis tries to diminish its role in the Panglao reclamation project by making it appear that it merely made an unsolicited proposal and will only assist and provide financial and technical resources.

The CA said, “This is far from true.”

The CA has painstakingly dissected the JVDA and provided its opinion on the matter, as follows: “A careful reading of the JVDA shows that Oasis plays a large role in the implementation of the project, and will in fact benefit greatly therefrom.”

“First, Oasis is granted the exclusive right to implement the actual reclamation and develop the integrated leisure and/or resort park/complex. Should the project be awarded or implemented by another, Oasis will be entitled to ten percent (10%) of the fair market value of the reclamation or its equivalent area of lots in the reclamation. Second, Oasis can freely enter into contractors, consultants and advisors in implementing and completing any phase of the project. Third, Oasis shall enjoy all the income and profit from the project, as it is not obliged to share any part of the income or profit with any other persons or entities. Notably, there is nothing in the JVDA that obligated Oasis to share any income or profit from the project with the Province of Bohol, its joint venture partner. The Province of Bohol, however, is obliged “to deal therewith and resolve the matter accordingly” should another local government unit claim entitlement to a share in the profit of the project. Fourth, the Province of Bohol is required to transfer the reclaimed land to Oasis for One Million Pesos (Php 1,000,000.00) per hectare, or one hundred pesos (Php 100.00) per square meter. Incongruously, should that Province of Bohol fail to transfer the reclaimed land to Oasis, it shall be liable to pay Oasis the fair market value thereof,” the CA noted.

“Thus, the role of Oasis in the reclamation project is not limited to mere assistance and provision of financial and technical resources. Under the JVDA, Oasis will not only gain four hundred fifty (450) hectares of land in a location which is known to be a tourist destination, it will likewise be able to build a leisure and/or resort park/complex without being obligated to share the income or profit thereof with any person or entity. This, coupled with protestations of the Province of Bohol that the JVDA contains onerous terms, highlights the necessity of a public bidding. This being said, the JVDA should have been awarded after public bidding. For failure to comply with the requirements of public bidding, the JVDA is ultra vires,” the court said.

The CA finally wrote, “In fine, the JVDA was entered into without authorization from the Sangguniang Panlalawigan in violation of the requirements of Section 22(c) and Section 465(b)(1)(vi) of the Local Government Code of 1991. Moreover, no public bidding was conducted in violation of Section 1 of Executive Order No. 543, s. 2006.
Non-compliance with substantive requirements of law renders an act ultra virus and thus, void ab initio. As such its performance cannot be compelled through an action for specific performance.”