Was SC justice partial in BCDA-SM Land issue?
MANILA, Philippines – A multi-billion-peso prime property, stretching to 33 hectares in the upscale Bonifacio Global City, is at the center of a dispute before the Supreme Court. This case has raised issues far beyond the sprawling piece of real estate: a justice’s integrity, judicial overreach, and the modernization of the military.
At odds here are SM Land Inc and the Bases Conversion and Development Authority (BCDA). The giant developer sued BCDA in January 2013 for supposedly changing the rules late in the day, from a competitive challenge to public bidding, when SM Land was already deep in negotiations with the government agency over its unsolicited proposal. SM Land cried foul, saying that the BCDA had violated a contract.
SM Land offered to pay P38,500 per square meter or a total of P12.7 billion.
In August 2014, the Supreme Court (SC) ruled in favor of SM Land. SC Justice Presbitero Velasco, chairman of the 3rd Division, penned the decision, arguing that SM Land “has the right to a completed competitive challenge…” citing joint venture guidelines of government and BCDA’s acceptance of SM Land’s unsolicited proposal. Three voted with Velasco – Justices Diosdado Peralta, Martin Villarama, Jose Mendoza – while one dissented, Justice Marvic Leonen.
SC Justice Presbitero Velasco issued 3 versions of a TRO stopping the BCDA from proceeding with the public bidding. All of these were dated on the same day, January 9, 2013, and received by the BCDA on 3 separate days.
Leonen found the majority’s decision narrow. He cast the spotlight on public interest, saying that government is not “contractually bound to complete the competitive challenge…In a situation where there can be many possible bidders where the first offer is lower than the potential floor for open competitive bidding may be disadvantageous to public interest.”
The BCDA claimed at the time that it could get a minimum bid of P40,000 per square meter, higher than that of SM Land’s, through public bidding.
The property up for privatization is occupied by the Bonifacio Naval Station and the Marines.
Red flag: 3 TROs
Something strange, however, happened on the way to this decision. Velasco issued 3 versions of a TRO stopping the BCDA from proceeding with the public bidding. All of these were dated on the same day, January 9, 2013, and received by the BCDA on 3 separate days. We obtained copies of these TROs.
The first version directed the BCDA to carry out the TRO…”until further orders from the Court.” BCDA received this on January 9, 2013.
The next day, another TRO was sent to BCDA, sounding more urgent. It added a new phrase, “effective immediately” and retaining “until further orders from this court.” This time, the process server asked the BCDA if he could pull out the documents he had given them the previous day. In its motion for reconsideration (MR), the BCDA narrated that it refused, finding the whole thing “curious.”
That was not the end of it. On January 11, 2013, a 3rd and final version of the TRO reached the BCDA. It was practically the same as the second version.
“The ruse attempted by the Process Server, coupled with the several variants of the same order, give Respondents cause for concern,” the BCDA said. “…the Process Server’s bid to recall the original order that was served is stealthy and highly irregular, a subterfuge unbecoming of such an august institution.”
We asked lawyers if the issuance of multiple versions of a TRO is common. They say this is unusual, a rarity in the annals of the Philippine Supreme Court.
The BCDA filed a motion to inhibit, asking Velasco to recuse himself because they deemed him no longer impartial. Using strong language, the BCDA said, “…the haste and the reckless manner by which the TROs were served and re-served create an impression of bias and manifest partiality in the minds of the respondents and erode their faith in the Honorable Court.”
The Court denied this.
The BCDA pinned accountability solely on the head of the 3rd Division, who has the power to issue TROs. But it triggers questions about how the Court works.
Normally, majority in the Court, whether division or en banc, approve TROs. Was the decision to issue a TRO subjected to a discussion in the division? Could the issuance of incorrect TROs have been avoided?
The public will most likely not get answers to these questions because internal deliberations of the Court are kept confidential.
In its MR filed in September 2014, the BCDA broadened its case with a new argument: that the Court has encroached upon the powers of the executive. It built its case by showing that questions hounded the integrity of the previous process and that it was within the powers of the Office of the President to “exercise control” over all the executive departments – including changing the mode of disposition of government properties.
‘…the haste and the reckless manner by which the TROs were served and re-served create an impression of bias and manifest partiality in the minds of the respondents and erode their faith in the Honorable Court.’ – BCDA
When he took over, President Aquino suspended the privatization and development of the 33-hectare property via competitive challenge or “Swiss Challenge” as part of a wide-ranging policy review and due diligence process. Fort Bonifacio was not singled out; the Food Terminal Inc complex and the Subic-Clark-Tarlac Expressway were subjected to the same rigor.
In 2012, Aquino decided that the Bonifacio property should be opened to public bidding.
In its narration, the BCDA said that “a shadow was cast on the integrity of the process” because the previous board appeared to have rushed approval of the unsolicited proposal of SM Land days before the May 2010 elections.
“The undue haste by which the award was made was a cause for concern of the newly appointed directors and for President Aquino himself,” the BCDA wrote.
Moreover, the offer of SM Land was way below the market value of the land. The BCDA cited the recent appraisal by Cuervo Appraisers placing the cost of each square meter at P78,000. Besides, the BCDA pointed out, SM Land can participate anew, this time in a public bidding.
Fund for armed forces
Another factor that gives this case a sharp public-interest dimension is the beneficiary of the sale: the military. A substantial chunk of the billions of pesos that will be generated from the privatization will be used to modernize the Armed Forces. (50% of the income will go to the AFP and an equal amount to the BCDA.)
This issue gains more traction as the security situation in Southeast Asia remains volatile in the light of China flexing its muscles.
The Department of National Defense has asked the Court permission to intervene; this has yet to be acted upon.
In its “comment in intervention,” the DND said it will be “heavily injured” by SM Land’s petition. It asked the Court to lift the TRO.
En banc case?
With all these issues swirling over the case, the BCDA asked the 3rd Division to refer it to the en banc. In 2013, the 3rd Division denied the BCDA’s motion, but it persisted and filed an MR which remains unresolved to this day.
The BCDA said that the suit filed by SM Land involves the constitutionality of a presidential order and, as such, should be decided by the en banc, as the Constitution provides. The internal rules of the Court echo this.
In past practice, a vote of 3 out of 5 members of a Division is needed to elevate a case to the en banc. This rule is currently being reviewed by the Court.
In a separate move, BCDA CEO Arnel Casanova wrote all the justices early October requesting them to take up the case. “The peculiarities of the case, public interest, the Constitution and the Internal Rules of the Supreme Court allow this,” he wrote in an 8-page letter, copies of which were given to President Benigno Aquino III and Defense Secretary Voltaire Gazmin.
“SMLI [SM Land Inc] is effectively calling on the Honorable Court to diminish the President’s exercise of his power of control,” Casanova said. “There is no doubt that the issue under question here is the …validity of President Aquino’s order…to terminate the competitive challenge process and instead proceed with a public and transparent bidding…to best serve the interest of government.” – Rappler.com
Editor's Note: Marites Vitug has written extensively on the Supreme Court, and has written 3 books on it. She obtained information on her own, independent of her spouse who is a part-time consultant with the BCDA.