Chavez Vs Public Estates Authority - 133250 - July 9, 2002 - J

3/3/2017 ChavezvsPublicEstatesAuthority:133250:July9,2002:J.
Carpio:EnBanc
ENBANC
[G.R.No.133250.July9,2002]
FRANCISCOI.CHAVEZ,petitioner,vs.PUBLICESTATESAUTHORITYandAMARI
COASTALBAYDEVELOPMENTCORPORATION,respondents.
DECISION
CARPIO,J.:
This is an original Petition for Mandamus with prayer for a writ of preliminary injunction and a
temporary restraining order. The petition seeks to compel the Public Estates Authority (PEA for
brevity) to disclose all facts on PEAs then ongoing renegotiations with Amari Coastal Bay and
DevelopmentCorporation (AMARI for brevity) to reclaim portions of ManilaBay.The petition further
seekstoenjoinPEAfromsigninganewagreementwithAMARIinvolvingsuchreclamation.
TheFacts
OnNovember20,1973,thegovernment,throughtheCommissionerofPublicHighways,signeda
contractwiththeConstructionandDevelopmentCorporationofthePhilippines(CDCPforbrevity)to
reclaim certain foreshore and offshore areas of Manila Bay. The contract also included the
constructionofPhasesIandIIoftheManilaCaviteCoastalRoad.CDCPobligateditselftocarryout
alltheworksinconsiderationoffiftypercentofthetotalreclaimedland.
OnFebruary4,1977,thenPresidentFerdinandE.MarcosissuedPresidentialDecreeNo.1084
creatingPEA.PD No. 1084 tasked PEA to reclaim land, including foreshore and submerged areas,
andtodevelop,improve,acquire,xxxleaseandsellanyandallkindsoflands.[1]Onthesamedate,
thenPresidentMarcosissuedPresidentialDecreeNo.1085transferringtoPEAthelandsreclaimed
in the foreshore and offshore of the Manila Bay[2] under the ManilaCavite Coastal Road and
ReclamationProject(MCCRRP).
OnDecember29,1981,thenPresidentMarcosissuedamemorandumdirectingPEAtoamend
its contract with CDCP, so that [A]ll future works in MCCRRP x x x shall be funded and owned by
PEA. Accordingly, PEA and CDCP executed a Memorandum of Agreement dated December 29,
1981,whichstated:
(i)CDCPshallundertakeallreclamation,construction,andsuchotherworksintheMCCRRPasmay
beagreeduponbytheparties,tobepaidaccordingtoprogressofworksonaunitprice/lumpsum
basisforitemsofworktobeagreedupon,subjecttopriceescalation,retentionandothertermsand
conditionsprovidedforinPresidentialDecreeNo.1594.Allthefinancingrequiredforsuchworksshall
beprovidedbyPEA.
xxx
(iii)xxxCDCPshallgiveupallitsdevelopmentrightsandherebyagreestocedeandtransferin
favorofPEA,alloftherights,title,interestandparticipationofCDCPinandtoalltheareasofland
reclaimedbyCDCPintheMCCRRPasofDecember30,1981whichhavenotyetbeensold,
transferredorotherwisedisposedofbyCDCPasofsaiddate,whichareasconsistofapproximately
NinetyNineThousandFourHundredSeventyThree(99,473)squaremetersintheFinancialCenter
AreacoveredbylandpledgeNo.5andapproximatelyThreeMillionThreeHundredEightyTwo
ThousandEightHundredEightyEight(3,382,888)squaremetersofreclaimedareasatvarying
elevationsaboveMeanLowWaterLevellocatedoutsidetheFinancialCenterAreaandtheFirst
NeighborhoodUnit.[3]
On January 19, 1988, then President Corazon C. Aquino issued Special Patent No. 3517,
granting and transferring to PEA the parcels of land so reclaimed under the ManilaCavite Coastal
RoadandReclamationProject(MCCRRP)containingatotalareaofonemillionninehundredfifteen
thousand eight hundred ninety four (1,915,894) square meters. Subsequently, on April 9, 1988, the
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Register of Deeds of the Municipality of Paraaque issued Transfer Certificates of Title Nos. 7309,
7311, and 7312, in the name of PEA, covering the three reclaimed islands known as the Freedom
Islands located at the southern portion of the ManilaCavite Coastal Road, Paraaque City. The
Freedom Islands have a total land area of One Million Five Hundred Seventy Eight Thousand Four
HundredandFortyOne(1,578,441)squaremetersor157.841hectares.
OnApril25,1995,PEAenteredintoaJointVentureAgreement(JVAforbrevity)withAMARI,a
private corporation, to develop the Freedom Islands. The JVA also required the reclamation of an
additional250hectaresofsubmergedareassurroundingtheseislandstocompletetheconfiguration
in the Master Development Plan of the Southern Reclamation ProjectMCCRRP. PEA and AMARI
entered into the JVA through negotiation without public bidding.[4] On April 28, 1995, the Board of
DirectorsofPEA,initsResolutionNo.1245,confirmedtheJVA. [5]OnJune8,1995,thenPresident
FidelV.Ramos,throughthenExecutiveSecretaryRubenTorres,approvedtheJVA.[6]
OnNovember29,1996,thenSenatePresidentErnestoMacedadeliveredaprivilegespeechin
the Senate and denounced the JVA as the grandmother of all scams. As a result, the Senate
CommitteeonGovernmentCorporationsandPublicEnterprises,andtheCommitteeonAccountability
ofPublicOfficersandInvestigations,conductedajointinvestigation.TheSenateCommitteesreported
the results of their investigation in Senate Committee Report No. 560 dated September 16, 1997.[7]
Among the conclusions of their report are: (1) the reclaimed lands PEA seeks to transfer to AMARI
under the JVA are lands of the public domain which the government has not classified as alienable
landsandthereforePEAcannotalienatetheselands(2)thecertificatesoftitlecoveringtheFreedom
Islandsarethusvoid,and(3)theJVAitselfisillegal.
On December 5, 1997, then President Fidel V. Ramos issued Presidential Administrative Order
No.365creatingaLegalTaskForcetoconductastudyonthelegalityoftheJVAinviewofSenate
CommitteeReportNo.560.ThemembersoftheLegalTaskForceweretheSecretaryofJustice,[8]the
ChiefPresidentialLegalCounsel,[9]andtheGovernmentCorporateCounsel.[10]TheLegalTaskForce
upheldthelegalityoftheJVA,contrarytotheconclusionsreachedbytheSenateCommittees.[11]
OnApril4and5,1998,thePhilippineDailyInquirerandTodaypublishedreportsthattherewere
ongoingrenegotiationsbetweenPEAandAMARIunderanorderissuedbythenPresidentFidelV.
Ramos. According to these reports, PEA Director Nestor Kalaw, PEA Chairman Arsenio Yulo and
retiredNavyOfficerSergioCruzcomposedthenegotiatingpanelofPEA.
On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition for Prohibition with
ApplicationfortheIssuanceofaTemporaryRestrainingOrderandPreliminaryInjunctiondocketedas
G.R. No. 132994 seeking to nullify the JVA. The Court dismissed the petition for unwarranted
disregardofjudicialhierarchy,withoutprejudicetotherefilingofthecasebeforethepropercourt.[12]
OnApril27,1998,petitionerFrankI.Chavez(Petitionerforbrevity)asataxpayer,filedtheinstant
PetitionforMandamuswithPrayerfortheIssuanceofaWritofPreliminaryInjunctionandTemporary
RestrainingOrder.Petitionercontendsthegovernmentstandstolosebillionsofpesosinthesaleby
PEA of the reclaimed lands to AMARI.Petitioner prays that PEA publicly disclose the terms of any
renegotiation of the JVA, invoking Section 28, Article II, and Section 7, Article III, of the 1987
Constitutionontherightofthepeopletoinformationonmattersofpublicconcern.Petitioner assails
thesaletoAMARIoflandsofthepublicdomainasablatantviolationofSection3,ArticleXIIofthe
1987Constitutionprohibitingthesaleofalienablelandsofthepublicdomaintoprivatecorporations.
Finally,petitionerassertsthatheseekstoenjointhelossofbillionsofpesosinpropertiesoftheState
thatareofpublicdominion.
Afterseveralmotionsforextensionoftime,[13] PEAandAMARIfiledtheirCommentsonOctober
19, 1998 and June 25, 1998, respectively. Meanwhile, on December 28, 1998, petitioner filed an
OmnibusMotion:(a)torequirePEAtosubmitthetermsoftherenegotiatedPEAAMARIcontract(b)
for issuance of a temporary restraining order and (c) to set the case for hearing on oral argument.
Petitioner filed a Reiterative Motion for Issuance of a TRO dated May 26, 1999, which the Court
deniedinaResolutiondatedJune22,1999.
InaResolutiondatedMarch23,1999,theCourtgaveduecoursetothepetitionandrequiredthe
partiestofiletheirrespectivememoranda.
OnMarch30,1999,PEAandAMARIsignedtheAmendedJointVentureAgreement(Amended
JVA, for brevity). On May 28, 1999, the Office of the President under the administration of then
PresidentJosephE.EstradaapprovedtheAmendedJVA.
DuetotheapprovaloftheAmendedJVAbytheOfficeofthePresident,petitionernowpraysthat
onconstitutionalandstatutorygroundstherenegotiatedcontractbedeclarednullandvoid.[14]
TheIssues
Theissuesraisedbypetitioner,PEA[15]andAMARI[16]areasfollows:
I. WHETHER THE PRINCIPAL RELIEFS PRAYED FOR IN THE PETITION ARE MOOT AND
ACADEMICBECAUSEOFSUBSEQUENTEVENTS
II.WHETHERTHEPETITIONMERITSDISMISSALFORFAILINGTOOBSERVETHEPRINCIPLE
GOVERNINGTHEHIERARCHYOFCOURTS
III. WHETHER THE PETITION MERITS DISMISSAL FOR NONEXHAUSTION OF
ADMINISTRATIVEREMEDIES
IV.WHETHERPETITIONERHASLOCUSSTANDITOBRINGTHISSUIT
V. WHETHER THE CONSTITUTIONAL RIGHT TO INFORMATION INCLUDES OFFICIAL
INFORMATIONONONGOINGNEGOTIATIONSBEFOREAFINALAGREEMENT
VI.WHETHERTHESTIPULATIONSINTHEAMENDEDJOINTVENTUREAGREEMENTFORTHE
TRANSFER TO AMARI OF CERTAIN LANDS, RECLAIMED AND STILL TO BE RECLAIMED,
VIOLATETHE1987CONSTITUTIONAND
VII.WHETHERTHECOURTISTHEPROPERFORUMFORRAISINGTHEISSUEOFWHETHER
THE AMENDED JOINT VENTUREAGREEMENT IS GROSSLY DISADVANTAGEOUS TO THE
GOVERNMENT.
TheCourtsRuling
Firstissue:whethertheprincipalreliefsprayedforinthepetitionaremootandacademic
becauseofsubsequentevents.
The petition prays that PEA publicly disclose the terms and conditions of the ongoing
negotiations for a new agreement. The petition also prays that the Court enjoin PEA from privately
enteringinto,perfectingand/orexecutinganynewagreementwithAMARI.
PEA and AMARI claim the petition is now moot and academic because AMARI furnished
petitioneronJune21,1999acopyofthesignedAmendedJVAcontainingthetermsandconditions
agreeduponintherenegotiations.Thus,PEAhassatisfiedpetitionersprayerforapublicdisclosureof
therenegotiations.Likewise,petitionersprayertoenjointhesigningoftheAmendedJVAisnowmoot
becausePEAandAMARIhavealreadysignedtheAmendedJVAonMarch30,1999.Moreover,the
OfficeofthePresidenthasapprovedtheAmendedJVAonMay28,1999.
Petitioner counters that PEA and AMARI cannot avoid the constitutional issue by simply fast
tracking the signing and approval of the Amended JVA before the Court could act on the issue.
Presidentialapprovaldoesnotresolvetheconstitutionalissueorremoveitfromtheambitofjudicial
review.
We rule that the signing of the Amended JVA by PEA and AMARI and its approval by the
PresidentcannotoperatetomootthepetitionanddivesttheCourtofitsjurisdiction.PEAandAMARI
havestilltoimplementtheAmendedJVA.The prayer to enjoin the signing of the Amended JVA on
constitutionalgroundsnecessarilyincludespreventingitsimplementationifinthemeantimePEAand
AMARI have signed one in violation of the Constitution. Petitioners principal basis in assailing the
renegotiationoftheJVAisitsviolationofSection3,ArticleXIIoftheConstitution,whichprohibitsthe
government from alienating lands of the public domain to private corporations. If the Amended JVA
indeedviolatestheConstitution,itisthedutyoftheCourttoenjoinitsimplementation,andifalready
implemented,toannultheeffectsofsuchunconstitutionalcontract.
TheAmendedJVAisnotanordinarycommercialcontractbutonewhichseeksto transfer title
andownershipto367.5hectaresofreclaimedlandsandsubmergedareasofManilaBaytoa
single private corporation. It now becomes more compelling for the Court to resolve the issue to
insurethegovernmentitselfdoesnotviolateaprovisionoftheConstitutionintendedtosafeguardthe
national patrimony. Supervening events, whether intended or accidental, cannot prevent the Court
from rendering a decision if there is a grave violation of the Constitution. In the instant case, if the
Amended JVA runs counter to the Constitution, the Court can still prevent the transfer of title and
ownership of alienable lands of the public domain in the name of AMARI. Even in cases where
supervening events had made the cases moot, the Court did not hesitate to resolve the legal or
constitutionalissuesraisedtoformulatecontrollingprinciplestoguidethebench,bar,andthepublic.
[17]
Also,theinstantpetitionisacaseoffirstimpression.AllpreviousdecisionsoftheCourtinvolving
Section3,ArticleXIIofthe1987Constitution,oritscounterpartprovisioninthe1973Constitution,[18]
coveredagriculturallandssoldtoprivatecorporationswhichacquiredthelandsfromprivateparties.
Thetransferorsoftheprivatecorporationsclaimedorcouldclaimtherighttojudicialconfirmationof
their imperfect titles[19] under Title II of Commonwealth Act. 141 (CA No. 141 for brevity). In the
instant case, AMARI seeks to acquire from PEA, a public corporation, reclaimed lands and
submergedareasfornonagriculturalpurposesbypurchase under PD No. 1084 (charter of PEA)
andTitleIIIofCANo.141.Certain undertakings by AMARI under the Amended JVA constitute the
considerationforthepurchase.NeitherAMARInorPEAcanclaimjudicialconfirmationoftheirtitles
becausethelandscoveredbytheAmendedJVAarenewlyreclaimedorstilltobereclaimed.Judicial
confirmation of imperfect title requires open, continuous, exclusive and notorious occupation of
agriculturallandsofthepublicdomainforatleastthirtyyearssinceJune12,1945orearlier.Besides,
thedeadlineforfilingapplicationsforjudicialconfirmationofimperfecttitleexpiredonDecember31,
1987.[20]
Lastly, there is a need to resolve immediately the constitutional issue raised in this petition
becauseofthepossibletransferatanytimebyPEAtoAMARIoftitleandownershiptoportionsofthe
reclaimedlands.UndertheAmendedJVA,PEAisobligatedtotransfertoAMARIthelattersseventy
percentproportionateshareinthereclaimedareasasthereclamationprogresses.TheAmendedJVA
even allows AMARI to mortgage at any time the entire reclaimed area to raise financing for the
reclamationproject.[21]
Secondissue:whetherthepetitionmeritsdismissalforfailingtoobservetheprinciple
governingthehierarchyofcourts.
PEAandAMARIclaimpetitionerignoredthejudicialhierarchybyseekingreliefdirectlyfromthe
Court.Theprincipleofhierarchyofcourtsappliesgenerallytocasesinvolvingfactualquestions.Asit
is not a trier of facts, the Court cannot entertain cases involving factual issues. The instant case,
however, raises constitutional issues of transcendental importance to the public.[22] The Court can
resolvethiscasewithoutdetermininganyfactualissuerelatedtothecase.Also,theinstantcaseisa
petitionformandamuswhichfallsundertheoriginaljurisdictionoftheCourtunderSection5,Article
VIIIoftheConstitution.Weresolvetoexerciseprimaryjurisdictionovertheinstantcase.
Thirdissue:whetherthepetitionmeritsdismissalfornonexhaustionofadministrative
remedies.
PEAfaultspetitionerforseekingjudicialinterventionincompellingPEAtodisclosepubliclycertain
informationwithoutfirstaskingPEAtheneededinformation.PEAclaimspetitionersdirectresorttothe
Court violates the principle of exhaustion of administrative remedies. It also violates the rule that
mandamus may issue only if there is no other plain, speedy and adequate remedy in the ordinary
courseoflaw.
PEAdistinguishestheinstantcasefrom Taadav.Tuvera[23]wheretheCourtgrantedthepetition
formandamusevenifthepetitionerstheredidnotinitiallydemandfromtheOfficeofthePresidentthe
publicationofthepresidentialdecrees.PEApointsoutthatinTaada,theExecutiveDepartmenthad
anaffirmativestatutoryduty underArticle 2 of the Civil Code[24] and Section 1 of Commonwealth
ActNo.638[25]topublishthepresidentialdecrees.Therewas,therefore,noneedforthepetitionersin
TaadatomakeaninitialdemandfromtheOfficeofthePresident.Intheinstantcase,PEAclaimsit
has no affirmative statutory duty to disclose publicly information about its renegotiation of the JVA.
Thus,PEAassertsthattheCourtmustapplytheprincipleofexhaustionofadministrativeremediesto
the instant case in view of the failure of petitioner here to demand initially from PEA the needed
information.
The original JVA sought to dispose to AMARI public lands held by PEA, a government
corporation. Under Section 79 of the Government Auditing Code,[26]2 the disposition of government
landstoprivatepartiesrequirespublicbidding.PEAwasunderapositivelegaldutytodiscloseto
thepublicthetermsandconditionsforthesaleofitslands.ThelawobligatedPEAtomakethis
publicdisclosureevenwithoutdemandfrompetitionerorfromanyone.PEAfailedtomakethispublic
disclosurebecausetheoriginalJVA,liketheAmendedJVA,wastheresultofanegotiatedcontract,
not of a public bidding. Considering that PEA had an affirmative statutory duty to make the public
disclosure, and was even in breach of this legal duty, petitioner had the right to seek direct judicial
intervention.
Moreover, and this alone is determinative of this issue, the principle of exhaustion of
administrative remedies does not apply when the issue involved is a purely legal or constitutional
question.[27] TheprincipalissueintheinstantcaseisthecapacityofAMARItoacquirelandsheldby
PEAinviewoftheconstitutionalbanprohibitingthealienationoflandsofthepublicdomaintoprivate
corporations.Werulethattheprincipleofexhaustionofadministrativeremediesdoesnotapplyinthe
instantcase.
Fourthissue:whetherpetitionerhaslocusstanditobringthissuit
PEA argues that petitioner has no standing to institute mandamus proceedings to enforce his
constitutional right to information without a showing that PEA refused to perform an affirmative duty
imposedonPEAbytheConstitution.PEAalsoclaimsthatpetitionerhasnotshownthathewillsuffer
anyconcreteinjurybecauseofthesigningorimplementationoftheAmendedJVA.Thus,thereisno
actualcontroversyrequiringtheexerciseofthepowerofjudicialreview.
ThepetitionerhasstandingtobringthistaxpayerssuitbecausethepetitionseekstocompelPEA
tocomplywithitsconstitutionalduties.Therearetwoconstitutionalissuesinvolvedhere.Firstisthe
right of citizens to information on matters of public concern. Second is the application of a
constitutional provision intended to insure the equitable distribution of alienable lands of the public
domain among Filipino citizens. The thrust of the first issue is to compel PEA to disclose publicly
informationonthesaleofgovernmentlandsworthbillionsofpesos,informationwhichtheConstitution
and statutory law mandate PEA to disclose.The thrust of the second issue is to prevent PEA from
alienatinghundredsofhectaresofalienablelandsofthepublicdomaininviolationoftheConstitution,
compellingPEAtocomplywithaconstitutionaldutytothenation.
Moreover, the petition raises matters of transcendental importance to the public. In Chavez v.
PCGG,[28]theCourtupheldtherightofacitizentobringataxpayerssuitonmattersoftranscendental
importancetothepublic,thus
Besides,petitioneremphasizes,thematterofrecoveringtheillgottenwealthoftheMarcosesisan
issueoftranscendentalimportancetothepublic.Heassertsthatordinarytaxpayershavearightto
initiateandprosecuteactionsquestioningthevalidityofactsorordersofgovernmentagenciesor
instrumentalities,iftheissuesraisedareofparamountpublicinterest,andiftheyimmediatelyaffect
thesocial,economicandmoralwellbeingofthepeople.
Moreover,themerefactthatheisacitizensatisfiestherequirementofpersonalinterest,whenthe
proceedinginvolvestheassertionofapublicright,suchasinthiscase.Heinvokesseveraldecisions
ofthisCourtwhichhavesetasidetheproceduralmatteroflocusstandi,whenthesubjectofthecase
involvedpublicinterest.
xxx
InTaadav.Tuvera,theCourtassertedthatwhentheissueconcernsapublicrightandtheobjectof
mandamusistoobtaintheenforcementofapublicduty,thepeopleareregardedastherealpartiesin
interestandbecauseitissufficientthatpetitionerisacitizenandassuchisinterestedinthe
executionofthelaws,heneednotshowthathehasanylegalorspecialinterestintheresultofthe
action.Intheaforesaidcase,thepetitionerssoughttoenforcetheirrighttobeinformedonmattersof
publicconcern,arightthenrecognizedinSection6,ArticleIVofthe1973Constitution,inconnection
withtherulethatlawsinordertobevalidandenforceablemustbepublishedintheOfficialGazetteor
otherwiseeffectivelypromulgated.Inrulingforthepetitioners'legalstanding,theCourtdeclaredthat
therighttheysoughttobeenforcedisapublicrightrecognizedbynolessthanthefundamentallaw
oftheland.
Legaspiv.CivilServiceCommission,whilereiteratingTaada,furtherdeclaredthatwhenamandamus
proceedinginvolvestheassertionofapublicright,therequirementofpersonalinterestissatisfiedby
themerefactthatpetitionerisacitizenand,therefore,partofthegeneral'public'whichpossessesthe
right.
Further,inAlbanov.Reyes,wesaidthatwhileexpenditureofpublicfundsmaynothavebeen
involvedunderthequestionedcontractforthedevelopment,managementandoperationoftheManila
InternationalContainerTerminal,publicinterest[was]definitelyinvolvedconsideringtheimportantrole
[ofthesubjectcontract]...intheeconomicdevelopmentofthecountryandthemagnitudeofthe
financialconsiderationinvolved.Weconcludedthat,asaconsequence,thedisclosureprovisioninthe
Constitutionwouldconstitutesufficientauthorityforupholdingthepetitioner'sstanding.
Similarly,theinstantpetitionisanchoredontherightofthepeopletoinformationandaccesstoofficial
records,documentsandpapersarightguaranteedunderSection7,ArticleIIIofthe1987
Constitution.Petitioner,aformersolicitorgeneral,isaFilipinocitizen.Becauseofthesatisfactionof
thetwobasicrequisiteslaiddownbydecisionallawtosustainpetitioner'slegalstanding,i.e.(1)the
enforcementofapublicright(2)espousedbyaFilipinocitizen,werulethatthepetitionatbarshould
beallowed.
We rule that since the instant petition, brought by a citizen, involves the enforcement of
constitutional rights to information and to the equitable diffusion of natural resources matters of
transcendentalpublicimportance,thepetitionerhastherequisitelocusstandi.
Fifthissue:whethertheconstitutionalrighttoinformationincludesofficialinformationonon
goingnegotiationsbeforeafinalagreement.
Section 7, Article III of the Constitution explains the peoples right to information on matters of
publicconcerninthismanner:
Sec.7.Therightofthepeopletoinformationonmattersofpublicconcernshallberecognized.
Accesstoofficialrecords,andtodocuments,andpaperspertainingtoofficialacts,
transactions,ordecisions,aswellastogovernmentresearchdatausedasbasisforpolicy
development,shallbeaffordedthecitizen,subjecttosuchlimitationsasmaybeprovidedbylaw.
(Emphasissupplied)
TheStatepolicyoffulltransparencyinalltransactionsinvolvingpublicinterestreinforcesthepeoples
righttoinformationonmattersofpublicconcern.ThisStatepolicyisexpressedinSection28,ArticleII
oftheConstitution,thus:
Sec.28.Subjecttoreasonableconditionsprescribedbylaw,theStateadoptsandimplementsa
policyoffullpublicdisclosureofallitstransactionsinvolvingpublicinterest.(Emphasis
supplied)
These twin provisions of the Constitution seek to promote transparency in policymaking and in
the operations of the government, as well as provide the people sufficient information to exercise
effectivelyotherconstitutionalrights.Thesetwinprovisionsareessentialtotheexerciseoffreedomof
expression.Ifthegovernmentdoesnotdiscloseitsofficialacts,transactionsanddecisionstocitizens,
whatever citizens say, even if expressed without any restraint, will be speculative and amount to
nothing.Thesetwinprovisionsarealsoessentialtoholdpublicofficialsatalltimesxxxaccountable
to the people,[29] for unless citizens have the proper information, they cannot hold public officials
accountable for anything. Armed with the right information, citizens can participate in public
discussions leading to the formulation of government policies and their effective implementation.An
informedcitizenryisessentialtotheexistenceandproperfunctioningofanydemocracy.Asexplained
bytheCourtinValmontev.Belmonte,Jr.[30]
Anessentialelementofthesefreedomsistokeepopenacontinuingdialogueorprocessof
communicationbetweenthegovernmentandthepeople.ItisintheinterestoftheStatethatthe
channelsforfreepoliticaldiscussionbemaintainedtotheendthatthegovernmentmayperceiveand
beresponsivetothepeopleswill.Yet,thisopendialoguecanbeeffectiveonlytotheextentthatthe
citizenryisinformedandthusabletoformulateitswillintelligently.Onlywhentheparticipantsinthe
discussionareawareoftheissuesandhaveaccesstoinformationrelatingtheretocansuchbearfruit.
PEA asserts, citing Chavez v. PCGG,[31] that in cases of ongoing negotiations the right to
information is limited to definite propositions of the government. PEA maintains the right does not
includeaccesstointraagencyorinteragencyrecommendationsorcommunicationsduringthestage
whencommonassertionsarestillintheprocessofbeingformulatedorareintheexploratorystage.
Also,AMARIcontendsthatpetitionercannotinvoketherightatthepredecisionalstageorbefore
theclosingofthetransaction.To supportitscontention, AMARI cites the following discussion in the
1986ConstitutionalCommission:
Mr.Suarez.Andwhenwesaytransactionswhichshouldbedistinguishedfromcontracts,
agreements,ortreatiesorwhatever,doestheGentlemanrefertothestepsleadingtothe
consummationofthecontract,ordoesherefertothecontractitself?
Mr.Ople:Thetransactionsusedhere,Isupposeisgenericandtherefore,itcancoverboth
stepsleadingtoacontractandalreadyaconsummatedcontract,Mr.PresidingOfficer.
Mr.Suarez:Thiscontemplatesinclusionofnegotiationsleadingtotheconsummationofthe
transaction.
Mr.Ople:Yes,subjectonlytoreasonablesafeguardsonthenationalinterest.
Mr.Suarez:Thankyou.[32](Emphasissupplied)
AMARI argues there must first be a consummated contract before petitioner can invoke the right.
Requiringgovernmentofficialstorevealtheirdeliberationsatthepredecisionalstagewilldegradethe
qualityofdecisionmakingingovernmentagencies.Governmentofficialswillhesitatetoexpresstheir
real sentiments during deliberations if there is immediate public dissemination of their discussions,
puttingthemunderallkindsofpressurebeforetheydecide.
WemustfirstdistinguishbetweeninformationthelawonpublicbiddingrequiresPEAtodisclose
publicly,andinformationtheconstitutionalrighttoinformationrequiresPEAtoreleasetothepublic.
Before the consummation of the contract, PEA must, on its own and without demand from anyone,
disclose to the public matters relating to the disposition of its property. These include the size,
location,technicaldescriptionandnatureofthepropertybeingdisposedof,thetermsandconditions
of the disposition, the parties qualified to bid, the minimum price and similar information.PEA must
prepare all these data and disclose them to the public at the start of the disposition process, long
before the consummation of the contract, because the Government Auditing Code requires public
bidding.IfPEAfailstomakethisdisclosure,anycitizencandemandfromPEAthisinformationatany
timeduringthebiddingprocess.
Information,however,onongoingevaluationorreviewofbidsorproposalsbeingundertaken
bythebiddingorreviewcommitteeisnotimmediatelyaccessibleundertherighttoinformation.While
the evaluation or review is still ongoing, there are no official acts, transactions, or decisions on the
bidsorproposals.However,oncethecommitteemakesitsofficialrecommendation,therearisesa
definite proposition on the part of the government. From this moment, the publics right to
information attaches, and any citizen can access all the nonproprietary information leading to such
definiteproposition.InChavezv.PCGG,[33]theCourtruledasfollows:
ConsideringtheintentoftheframersoftheConstitution,webelievethatitisincumbentuponthe
PCGGanditsofficers,aswellasothergovernmentrepresentatives,todisclosesufficientpublic
informationonanyproposedsettlementtheyhavedecidedtotakeupwiththeostensibleownersand
holdersofillgottenwealth.Suchinformation,though,mustpertaintodefinitepropositionsofthe
government,notnecessarilytointraagencyorinteragencyrecommendationsorcommunications
duringthestagewhencommonassertionsarestillintheprocessofbeingformulatedorareinthe
exploratorystage.Thereisneed,ofcourse,toobservethesamerestrictionsondisclosureof
informationingeneral,asdiscussedearliersuchasonmattersinvolvingnationalsecurity,diplomatic
orforeignrelations,intelligenceandotherclassifiedinformation.(Emphasissupplied)
Contrary to AMARIs contention, the commissioners of the 1986 Constitutional Commission

understood that the right to information contemplates inclusion of negotiations leading to the
consummationofthetransaction.Certainly,aconsummatedcontractisnotarequirementforthe
exerciseoftherighttoinformation.Otherwise,thepeoplecanneverexercisetherightifnocontractis
consummated,andifoneisconsummated,itmaybetoolateforthepublictoexposeitsdefects.
Requiringaconsummatedcontractwillkeepthepublicinthedarkuntilthecontract,whichmay
begrosslydisadvantageoustothegovernmentorevenillegal,becomesafaitaccompli.Thisnegates
theStatepolicyoffulltransparencyonmattersofpublicconcern,asituationwhichtheframersofthe
Constitutioncouldnothaveintended.Sucharequirementwillpreventthecitizenryfromparticipating
inthepublicdiscussionofanyproposedcontract,effectivelytruncatingabasicrightenshrinedinthe
BillofRights.Wecanallowneitheranemasculationofaconstitutionalright,noraretreatbytheState
ofitsavowedpolicyoffulldisclosureofallitstransactionsinvolvingpublicinterest.
Therightcoversthreecategoriesofinformationwhicharemattersofpublicconcern,namely:(1)
officialrecords(2)documentsandpaperspertainingtoofficialacts,transactionsanddecisionsand
(3)governmentresearchdatausedinformulatingpolicies.Thefirstcategoryreferstoanydocument
that is part of the public records in the custody of government agencies or officials. The second
categoryreferstodocumentsandpapersrecording,evidencing,establishing,confirming,supporting,
justifyingorexplainingofficialacts,transactionsordecisionsofgovernmentagenciesorofficials.The
thirdcategoryreferstoresearchdata,whetherraw,collatedorprocessed,ownedbythegovernment
andusedinformulatinggovernmentpolicies.
The information that petitioner may access on the renegotiation of the JVA includes evaluation
reports, recommendations, legal and expert opinions, minutes of meetings, terms of reference and
other documents attached to such reports or minutes, all relating to the JVA. However, the right to
information does not compel PEA to prepare lists, abstracts, summaries and the like relating to the
renegotiation of the JVA.[34] The right only affords access to records, documents and papers, which
meanstheopportunitytoinspectandcopythem.Onewhoexercisestherightmustcopytherecords,
documents and papers at his expense. The exercise of the right is also subject to reasonable
regulations to protect the integrity of the public records and to minimize disruption to government
operations,likerulesspecifyingwhenandhowtoconducttheinspectionandcopying.[35]
Therighttoinformation,however,doesnotextendtomattersrecognizedasprivilegedinformation
under the separation of powers.[36] The right does not also apply to information on military and
diplomaticsecrets,informationaffectingnationalsecurity,andinformationoninvestigationsofcrimes
by law enforcement agencies before the prosecution of the accused, which courts have long
recognized as confidential.[37] The right may also be subject to other limitations that Congress may
imposebylaw.
There is no claim by PEA that the information demanded by petitioner is privileged information
rooted in the separation of powers. The information does not cover Presidential conversations,
correspondences, or discussions during closeddoor Cabinet meetings which, like internal
deliberationsoftheSupremeCourtandothercollegiatecourts,orexecutivesessionsofeitherhouse
ofCongress,[38]arerecognizedasconfidential.Thiskindofinformationcannotbepriedopenbyaco
equalbranchofgovernment.Afrankexchangeofexploratoryideasandassessments,freefromthe
glare of publicity and pressure by interested parties, is essential to protect the independence of
decisionmakingofthosetaskedtoexercisePresidential,LegislativeandJudicialpower.[39]Thisisnot
thesituationintheinstantcase.
We rule, therefore, that the constitutional right to information includes official information on on
going negotiations before a final contract. The information, however, must constitute definite
propositions by the government and should not cover recognized exceptions like privileged
information,militaryanddiplomaticsecretsandsimilarmattersaffectingnationalsecurityandpublic
order.[40] Congress has also prescribed other limitations on the right to information in several
legislations.[41]
Sixthissue:whetherstipulationsintheAmendedJVAforthetransfertoAMARIoflands,
reclaimedortobereclaimed,violatetheConstitution.
TheRegalianDoctrine
TheownershipoflandsreclaimedfromforeshoreandsubmergedareasisrootedintheRegalian
doctrinewhichholdsthattheStateownsalllandsandwatersofthepublicdomain.UpontheSpanish
conquest of the Philippines, ownership of all lands, territories and possessions in the Philippines
passedtotheSpanishCrown.[42]TheKing,asthesovereignrulerandrepresentativeofthepeople,
acquiredandownedalllandsandterritoriesinthePhilippinesexceptthosehedisposedofbygrantor
saletoprivateindividuals.
The1935,1973and1987ConstitutionsadoptedtheRegaliandoctrinesubstituting,however,the
State, in lieu of the King, as the owner of all lands and waters of the public domain. The Regalian
doctrineisthefoundationofthetimehonoredprincipleoflandownershipthatalllandsthatwerenot
acquiredfromtheGovernment,eitherbypurchaseorbygrant,belongtothepublicdomain.[43]Article
339 of the Civil Code of 1889, which is now Article 420 of the Civil Code of 1950, incorporated the
Regaliandoctrine.
OwnershipandDispositionofReclaimedLands
The Spanish Law of Waters of 1866 was the first statutory law governing the ownership and
disposition of reclaimed lands in the Philippines. On May 18, 1907, the Philippine Commission
enacted Act No. 1654 which provided for the lease, but not the sale, of reclaimed lands of the
government to corporations and individuals. Later, on November 29, 1919, the Philippine
Legislature approved Act No. 2874, the Public Land Act, which authorized the lease, but not the
sale, of reclaimed lands of the government to corporations and individuals. On November 7,
1936,theNationalAssemblypassedCommonwealthActNo.141,alsoknownasthePublicLandAct,
which authorized the lease, but not the sale, of reclaimed lands of the government to
corporations and individuals. CA No. 141 continues to this day as the general law governing the
classificationanddispositionoflandsofthepublicdomain.
TheSpanishLawofWatersof1866andtheCivilCodeof1889
Under the Spanish Law of Waters of 1866, the shores, bays, coves, inlets and all waters within
the maritime zone of the Spanish territory belonged to the public domain for public use.[44] The
SpanishLawofWatersof1866allowedthereclamationoftheseaunderArticle5,whichprovidedas
follows:
Article5.LandsreclaimedfromtheseainconsequenceofworksconstructedbytheState,orbythe
provinces,pueblosorprivatepersons,withproperpermission,shallbecomethepropertyoftheparty
constructingsuchworks,unlessotherwiseprovidedbythetermsofthegrantofauthority.
UndertheSpanishLawofWaters,landreclaimedfromtheseabelongedtothepartyundertakingthe
reclamation,providedthegovernmentissuedthenecessarypermitanddidnotreserveownershipof
thereclaimedlandtotheState.
Article339oftheCivilCodeof1889definedpropertyofpublicdominionasfollows:
Art.339.Propertyofpublicdominionis
1.Thatdevotedtopublicuse,suchasroads,canals,rivers,torrents,portsandbridgesconstructedby
theState,riverbanks,shores,roadsteads,andthatofasimilarcharacter
2. That belonging exclusively to the State which, without being of general public use, is employed in
somepublicservice,orinthedevelopmentofthenationalwealth,suchaswalls,fortresses,andother
worksforthedefenseoftheterritory,andmines,untilgrantedtoprivateindividuals.
Property devoted to public use referred to property open for use by the public.In contrast, property
devotedtopublicservicereferredtopropertyusedforsomespecificpublicserviceandopenonlyto
thoseauthorizedtousetheproperty.
Property of public dominion referred not only to property devoted to public use, but also to
propertynotsousedbutemployedtodevelopthenationalwealth.Thisclassofpropertyconstituted
propertyofpublicdominionalthoughemployedforsomeeconomicorcommercialactivitytoincrease
thenationalwealth.
Article341oftheCivilCodeof1889governedthereclassificationofpropertyofpublicdominion
intoprivateproperty,towit:
Art.341.Propertyofpublicdominion,whennolongerdevotedtopublicuseortothedefenseofthe
territory,shallbecomeapartoftheprivatepropertyoftheState.
Thisprovision,however,wasnotselfexecuting.Thelegislature,ortheexecutivedepartmentpursuant
to law, must declare the property no longer needed for public use or territorial defense before the
governmentcouldleaseoralienatethepropertytoprivateparties.[45]
ActNo.1654ofthePhilippineCommission
OnMay8,1907,thePhilippineCommissionenactedActNo.1654whichregulatedtheleaseof
reclaimedandforeshorelands.Thesalientprovisionsofthislawwereasfollows:
Section1.Thecontrolanddispositionoftheforeshoreasdefinedinexistinglaw,andthetitleto
allGovernmentorpubliclandsmadeorreclaimedbytheGovernmentbydredgingorfillingor
otherwisethroughoutthePhilippineIslands,shallberetainedbytheGovernmentwithoutprejudice
tovestedrightsandwithoutprejudicetorightsconcededtotheCityofManilaintheLunetaExtension.
Section2.(a)TheSecretaryoftheInteriorshallcauseallGovernmentorpubliclandsmadeor
reclaimedbytheGovernmentbydredgingorfillingorotherwisetobedividedintolotsorblocks,with
thenecessarystreetsandalleywayslocatedthereon,andshallcauseplatsandplansofsuchsurveys
tobepreparedandfiledwiththeBureauofLands.
(b)UponcompletionofsuchplatsandplanstheGovernorGeneralshallgivenoticetothepublic
thatsuchpartsofthelandssomadeorreclaimedasarenotneededforpublicpurposeswill
beleasedforcommercialandbusinesspurposes,xxx.
xxx
(e)Theleasesaboveprovidedforshallbedisposedoftothehighestandbestbiddertherefore,
subjecttosuchregulationsandsafeguardsastheGovernorGeneralmaybyexecutiveorder
prescribe.(Emphasissupplied)
ActNo.1654mandatedthatthegovernmentshouldretaintitletoalllandsreclaimedbythe
government. The Act also vested in the government control and disposition of foreshore lands.
Private parties could lease lands reclaimed by the government only if these lands were no longer
needed for public purpose. Act No. 1654 mandated public bidding in the lease of government
reclaimed lands. Act No. 1654 made government reclaimed lands sui generis in that unlike other
publiclandswhichthegovernmentcouldselltoprivateparties,thesereclaimedlandswereavailable
onlyforleasetoprivateparties.
ActNo.1654,however,didnotrepealSection5oftheSpanishLawofWatersof1866.Act No.
1654didnotprohibitprivatepartiesfromreclaimingpartsoftheseaunderSection5oftheSpanish
LawofWaters.Landsreclaimedfromtheseabyprivatepartieswithgovernmentpermissionremained
privatelands.
ActNo.2874ofthePhilippineLegislature
OnNovember29,1919,thePhilippineLegislatureenactedActNo.2874,thePublicLandAct.[46]
ThesalientprovisionsofActNo.2874,onreclaimedlands,wereasfollows:
Sec.6.TheGovernorGeneral,upontherecommendationoftheSecretaryofAgricultureand
NaturalResources,shallfromtimetotimeclassifythelandsofthepublicdomaininto
(a)Alienableordisposable,
(b)Timber,and
(c)Minerallands,xxx.
Sec.7.Forthepurposesofthegovernmentanddispositionofalienableordisposablepubliclands,
theGovernorGeneral,uponrecommendationbytheSecretaryofAgricultureandNatural
Resources,shallfromtimetotimedeclarewhatlandsareopentodispositionorconcession
underthisAct.
Sec.8.Onlythoselandsshallbedeclaredopentodispositionorconcessionwhichhavebeen
officiallydelimitedorclassifiedxxx.
xxx
Sec.55.Anytractoflandofthepublicdomainwhich,beingneithertimbernormineralland,shallbe
classifiedassuitableforresidentialpurposesorforcommercial,industrial,orotherproductive
purposesotherthanagriculturalpurposes,andshallbeopentodispositionorconcession,shallbe
disposedofundertheprovisionsofthischapter,andnototherwise.
Sec.56.Thelandsdisposableunderthistitleshallbeclassifiedasfollows:
(a)LandsreclaimedbytheGovernmentbydredging,filling,orothermeans
(b)Foreshore
(c)Marshylandsorlandscoveredwithwaterborderingupontheshoresorbanksof
navigablelakesorrivers
(d)Landsnotincludedinanyoftheforegoingclasses.
xxx.
Sec.58.Thelandscomprisedinclasses(a),(b),and(c)ofsectionfiftysixshallbedisposedof
toprivatepartiesbyleaseonlyandnototherwise,assoonastheGovernorGeneral,upon
recommendationbytheSecretaryofAgricultureandNaturalResources,shalldeclarethatthe
samearenotnecessaryforthepublicserviceandareopentodispositionunderthischapter.
Thelandsincludedinclass(d)maybedisposedofbysaleorleaseundertheprovisionsof
thisAct.(Emphasissupplied)
Section6ofActNo.2874authorizedtheGovernorGeneraltoclassifylandsofthepublicdomain
intoxxxalienableordisposable[47]lands.Section7oftheActempoweredtheGovernorGeneralto
declare what lands are open to disposition or concession. Section 8 of the Act limited alienable or
disposablelandsonlytothoselandswhichhavebeenofficiallydelimitedandclassified.
Section 56 ofAct No. 2874 stated that lands disposable under this title[48] shall be classified as
governmentreclaimed,foreshoreandmarshylands,aswellasotherlands.Alltheselands,however,
mustbesuitableforresidential,commercial,industrialorotherproductivenonagriculturalpurposes.
These provisions vested upon the GovernorGeneral the power to classify inalienable lands of the
public domain into disposable lands of the public domain. These provisions also empowered the
GovernorGeneral to classify further such disposable lands of the public domain into government
reclaimed,foreshoreormarshylandsofthepublicdomain,aswellasothernonagriculturallands.
Section 58 ofAct No. 2874 categorically mandated that disposable lands of the public domain
classified as government reclaimed, foreshore and marshy lands shall be disposed of to private
partiesbyleaseonlyandnototherwise.TheGovernorGeneral,beforeallowingtheleaseofthese
landstoprivateparties,mustformallydeclarethatthelandswerenotnecessaryforthepublicservice.
ActNo.2874reiteratedtheStatepolicytoleaseandnottosellgovernmentreclaimed,foreshoreand
marshy lands of the public domain, a policy first enunciated in 1907 in Act No. 1654. Government
reclaimed, foreshore and marshy lands remained sui generis, as the only alienable or disposable
landsofthepublicdomainthatthegovernmentcouldnotselltoprivateparties.
The rationale behind this State policy is obvious. Government reclaimed, foreshore and marshy
public lands for nonagricultural purposes retain their inherent potential as areas for public service.
Thisisthereasonthegovernmentprohibitedthesale,andonlyallowedthelease,oftheselandsto
privateparties.TheStatealwaysreservedtheselandsforsomefuturepublicservice.
Act No. 2874 did not authorize the reclassification of government reclaimed, foreshore and
marshylandsintoothernonagriculturallandsunderSection56(d).LandsfallingunderSection56(d)
weretheonlylandsfornonagriculturalpurposesthegovernmentcouldselltoprivateparties.Thus,
under Act No. 2874, the government could not sell government reclaimed, foreshore and marshy
landstoprivateparties,unlessthelegislaturepassedalawallowingtheirsale.[49]
ActNo.2874didnotprohibitprivatepartiesfromreclaimingpartsoftheseapursuanttoSection5
of the Spanish Law of Waters of 1866. Lands reclaimed from the sea by private parties with
governmentpermissionremainedprivatelands.
Dispositionsunderthe1935Constitution
OnMay14,1935,the1935ConstitutiontookeffectuponitsratificationbytheFilipinopeople.The
1935Constitution,inadoptingtheRegaliandoctrine,declaredinSection1,ArticleXIII,that
Section1.Allagricultural,timber,andminerallandsofthepublicdomain,waters,minerals,coal,
petroleum,andothermineraloils,allforcesofpotentialenergyandothernaturalresourcesofthe
PhilippinesbelongtotheState,andtheirdisposition,exploitation,development,orutilizationshallbe
limitedtocitizensofthePhilippinesortocorporationsorassociationsatleastsixtypercentumofthe
capitalofwhichisownedbysuchcitizens,subjecttoanyexistingright,grant,lease,orconcessionat
thetimeoftheinaugurationoftheGovernmentestablishedunderthisConstitution.Natural
resources,withtheexceptionofpublicagriculturalland,shallnotbealienated,andnolicense,
concession,orleasefortheexploitation,development,orutilizationofanyofthenaturalresources
shallbegrantedforaperiodexceedingtwentyfiveyears,renewableforanothertwentyfiveyears,
exceptastowaterrightsforirrigation,watersupply,fisheries,orindustrialusesotherthanthe
developmentofwaterpower,inwhichcasesbeneficialusemaybethemeasureandlimitofthegrant.
(Emphasissupplied)
The 1935 Constitution barred the alienation of all natural resources except public agricultural
lands, which were the only natural resources the State could alienate. Thus, foreshore lands,
considered part of the States natural resources, became inalienable by constitutional fiat, available
onlyforleasefor25years,renewableforanother25years.Thegovernmentcouldalienateforeshore
landsonlyaftertheselandswerereclaimedandclassifiedasalienableagriculturallandsofthepublic
domain. Government reclaimed and marshy lands of the public domain, being neither timber nor
mineral lands, fell under the classification of public agricultural lands.[50] However, government
reclaimedandmarshylands,althoughsubjecttoclassificationasdisposablepublicagriculturallands,
couldonlybeleasedandnotsoldtoprivatepartiesbecauseofActNo.2874.
Theprohibitiononprivatepartiesfromacquiringownershipofgovernmentreclaimedandmarshy
landsofthepublicdomainwasonlyastatutoryprohibitionandthelegislaturecouldthereforeremove
such prohibition. The 1935 Constitution did not prohibit individuals and corporations from acquiring
government reclaimed and marshy lands of the public domain that were classified as agricultural
lands under existing public land laws. Section 2, Article XIII of the 1935 Constitution provided as
follows:
Section2.Noprivatecorporationorassociationmayacquire,lease,orholdpublicagricultural
landsinexcessofonethousandandtwentyfourhectares,normayanyindividualacquire
suchlandsbypurchaseinexcessofonehundredandfortyhectares,orbyleaseinexcessof
onethousandandtwentyfourhectares,orbyhomesteadinexcessoftwentyfourhectares.Lands
adaptedtograzing,notexceedingtwothousandhectares,maybeleasedtoanindividual,private
corporation,orassociation.(Emphasissupplied)
Still,aftertheeffectivityofthe1935Constitution,thelegislaturedidnotrepealSection58ofActNo.
2874toopenforsaletoprivatepartiesgovernmentreclaimedandmarshylandsofthepublicdomain.
On the contrary, the legislature continued the long established State policy of retaining for the
governmenttitleandownershipofgovernmentreclaimedandmarshylandsofthepublicdomain.
CommonwealthActNo.141ofthePhilippineNationalAssembly
OnNovember7,1936,theNationalAssemblyapprovedCommonwealthActNo.141,alsoknown
asthePublicLandAct,whichcompiledthethenexistinglawsonlandsofthepublicdomain.CANo.
141, as amended, remains to this day the existing general law governing the classification and
dispositionoflandsofthepublicdomainotherthantimberandminerallands.[51]
Section 6 of CA No. 141 empowers the President to classify lands of the public domain into
alienableordisposable[52]landsofthepublicdomain,whichpriortosuchclassificationareinalienable
andoutsidethecommerceofman.Section7ofCANo.141authorizesthePresidenttodeclarewhat
landsareopentodispositionorconcession.Section8ofCANo.141statesthatthegovernmentcan
declare open for disposition or concession only lands that are officially delimited and classified.
Sections6,7and8ofCANo.141readasfollows:
Sec.6.ThePresident,upontherecommendationoftheSecretaryofAgricultureand
Commerce,shallfromtimetotimeclassifythelandsofthepublicdomaininto
(a)Alienableordisposable,
(b)Timber,and
(c)Minerallands,
andmayatanytimeandinlikemannertransfersuchlandsfromoneclasstoanother,[53]forthe
purposeoftheiradministrationanddisposition.
Sec.7.Forthepurposesoftheadministrationanddispositionofalienableordisposablepubliclands,
thePresident,uponrecommendationbytheSecretaryofAgricultureandCommerce,shall
fromtimetotimedeclarewhatlandsareopentodispositionorconcessionunderthisAct.
Sec.8.Onlythoselandsshallbedeclaredopentodispositionorconcessionwhichhavebeen
officiallydelimitedandclassifiedand,whenpracticable,surveyed,andwhichhavenotbeen
reservedforpublicorquasipublicuses,norappropriatedbytheGovernment,norinanymanner
becomeprivateproperty,northoseonwhichaprivaterightauthorizedandrecognizedbythisActor
anyothervalidlawmaybeclaimed,orwhich,havingbeenreservedorappropriated,haveceasedto
beso.xxx.
Thus,beforethegovernment could alienate or dispose of lands of thepublicdomain,thePresident

must first officially classify these lands as alienable or disposable, and then declare them open to
dispositionorconcession.Theremustbenolawreservingtheselandsforpublicorquasipublicuses.
ThesalientprovisionsofCANo.141,ongovernmentreclaimed,foreshoreandmarshylandsof
thepublicdomain,areasfollows:
Sec.58.Anytractoflandofthepublicdomainwhich,beingneithertimbernormineralland,is
intendedtobeusedforresidentialpurposesorforcommercial,industrial,orotherproductive
purposesotherthanagricultural,andisopentodispositionorconcession,shallbedisposed
ofundertheprovisionsofthischapterandnototherwise.
(a)LandsreclaimedbytheGovernmentbydredging,filling,orothermeans
(b)Foreshore
(c)Marshylandsorlandscoveredwithwaterborderingupontheshoresorbanksof
navigablelakesorrivers
(d)Landsnotincludedinanyoftheforegoingclasses.
Sec.60.Anytractoflandcomprisedunderthistitlemaybeleasedorsold,asthecasemaybe,toany
person,corporation,orassociationauthorizedtopurchaseorleasepubliclandsforagricultural
purposes.xxx.
Sec.61.Thelandscomprisedinclasses(a),(b),and(c)ofsectionfiftynineshallbedisposed
oftoprivatepartiesbyleaseonlyandnototherwise,assoonasthePresident,upon
recommendationbytheSecretaryofAgriculture,shalldeclarethatthesamearenotnecessaryfor
thepublicserviceandareopentodispositionunderthischapter.Thelandsincludedinclass(d)
maybedisposedofbysaleorleaseundertheprovisionsofthisAct.(Emphasissupplied)
Section61ofCANo.141 readopted,aftertheeffectivityofthe1935Constitution,Section58of
ActNo.2874prohibitingthesaleofgovernmentreclaimed,foreshoreandmarshydisposablelandsof
the public domain. All these lands are intended for residential, commercial, industrial or other non
agriculturalpurposes.Asbefore,Section61allowedonlythelease of such lands to private parties.
ThegovernmentcouldselltoprivatepartiesonlylandsfallingunderSection59(d)ofCANo.141,or
those lands for nonagricultural purposes not classified as government reclaimed, foreshore and
marshydisposablelandsofthepublicdomain.Foreshorelands,however,becameinalienableunder
the1935Constitutionwhichonlyallowedtheleaseoftheselandstoqualifiedprivateparties.
Section58ofCANo.141expresslystatesthatdisposablelandsofthepublicdomainintendedfor
residential, commercial, industrial or other productive purposes other than agricultural shall be
disposedofundertheprovisionsofthischapterandnototherwise.UnderSection10ofCANo.
141, the term disposition includes lease of the land. Any disposition of government reclaimed,
foreshore and marshy disposable lands for nonagricultural purposes must comply with Chapter IX,
TitleIIIofCANo.141,[54]unlessasubsequentlawamendedorrepealedtheseprovisions.
InhisconcurringopinioninthelandmarkcaseofRepublicRealEstateCorporationv.Courtof
Appeals,[55]JusticeReynatoS.Punosummarizedsuccinctlythelawonthismatter,asfollows:
Foreshorelandsarelandsofpublicdominionintendedforpublicuse.Sotooarelandsreclaimedby
thegovernmentbydredging,filling,orothermeans.Act1654mandatedthatthecontroland
dispositionoftheforeshoreandlandsunderwaterremainedinthenationalgovernment.Saidlaw
allowedonlytheleasingofreclaimedland.ThePublicLandActsof1919and1936alsodeclaredthat
theforeshoreandlandsreclaimedbythegovernmentweretobedisposedoftoprivatepartiesby
leaseonlyandnototherwise.Beforeleasing,however,theGovernorGeneral,uponrecommendation
oftheSecretaryofAgricultureandNaturalResources,hadfirsttodeterminethatthelandreclaimed
wasnotnecessaryforthepublicservice.Thisrequisitemusthavebeenmetbeforethelandcouldbe
disposedof.Buteventhen,theforeshoreandlandsunderwaterwerenottobealienatedand
soldtoprivateparties.Thedispositionofthereclaimedlandwasonlybylease.Theland
remainedpropertyoftheState.(Emphasissupplied)
AsobservedbyJusticePunoinhisconcurringopinion,CommonwealthActNo.141hasremainedin
effectatpresent.
The State policy prohibiting the sale to private parties of government reclaimed, foreshore and
marshyalienablelandsofthepublicdomain,firstimplementedin1907wasthusreaffirmedinCANo.
141afterthe1935Constitutiontookeffect.The prohibition on the sale of foreshore lands, however,
became a constitutional edict under the 1935 Constitution. Foreshore lands became inalienable as
natural resources of the State, unless reclaimed by the government and classified as agricultural
lands of the public domain, in which case they would fall under the classification of government
reclaimedlands.
Aftertheeffectivityofthe1935Constitution,governmentreclaimedandmarshydisposablelands
of the public domain continued to be only leased and not sold to private parties.[56] These lands
remainedsuigeneris,astheonlyalienableordisposablelandsofthepublicdomainthegovernment
couldnotselltoprivateparties.
Since then and until now, the only way the government can sell to private parties government
reclaimed and marshy disposable lands of the public domain is for the legislature to pass a law
authorizing such sale. CA No. 141 does not authorize the President to reclassify government
reclaimed and marshy lands into other nonagricultural lands under Section 59 (d). Lands classified
underSection59(d)aretheonlyalienableordisposablelandsfornonagriculturalpurposesthatthe
governmentcouldselltoprivateparties.
Moreover, Section 60 of CA No. 141 expressly requires congressional authority before lands
underSection59thatthegovernmentpreviouslytransferredtogovernmentunitsorentitiescouldbe
soldtoprivateparties.Section60ofCANo.141declaresthat
Sec.60.xxxTheareasoleasedorsoldshallbesuchasshall,inthejudgmentoftheSecretaryof
AgricultureandNaturalResources,bereasonablynecessaryforthepurposesforwhichsuchsaleor
leaseisrequested,andshallnotexceedonehundredandfortyfourhectares:Provided,however,
Thatthislimitationshallnotapplytogrants,donations,ortransfersmadetoaprovince,municipalityor
branchorsubdivisionoftheGovernmentforthepurposesdeemedbysaidentitiesconducivetothe
publicinterestbutthelandsogranted,donated,ortransferredtoaprovince,municipalityor
branchorsubdivisionoftheGovernmentshallnotbealienated,encumbered,orotherwise
disposedofinamanneraffectingitstitle,exceptwhenauthorizedbyCongress:xxx.
(Emphasissupplied)
The congressional authority required in Section 60 of CA No. 141 mirrors the legislative authority
requiredinSection56ofActNo.2874.
One reason for the congressional authority is that Section 60 of CA No. 141 exempted
governmentunitsandentitiesfromthemaximumareaofpubliclandsthatcouldbeacquiredfromthe
State.Thesegovernmentunitsandentitiesshouldnotjustturnaroundandselltheselandstoprivate
parties in violation of constitutional or statutory limitations. Otherwise, the transfer of lands for non
agricultural purposes to government units and entities could be used to circumvent constitutional
limitationsonownershipofalienableordisposablelandsofthepublicdomain.In the same manner,
such transfers could also be used to evade the statutory prohibition in CA No. 141 on the sale of
governmentreclaimedandmarshylandsofthepublicdomaintoprivateparties.Section60ofCANo.
141constitutesbyoperationoflawalienontheselands.[57]
IncaseofsaleorleaseofdisposablelandsofthepublicdomainfallingunderSection59ofCA
No.141,Sections63and67requireapublicbidding.Sections63and67ofCANo.141provideas
follows:
Sec.63.Wheneveritisdecidedthatlandscoveredbythischapterarenotneededforpublic
purposes,theDirectorofLandsshallasktheSecretaryofAgricultureandCommerce(nowthe
SecretaryofNaturalResources)forauthoritytodisposeofthesame.Uponreceiptofsuchauthority,
theDirectorofLandsshallgivenoticebypublicadvertisementinthesamemannerasinthecaseof
leasesorsalesofagriculturalpublicland,xxx.
Sec.67.Theleaseorsaleshallbemadebyoralbiddingandadjudicationshallbemadetothe
highestbidder.xxx.(Emphasissupplied)
Thus,CANo.141mandatestheGovernmenttoputtopublicauctionallleasesorsalesofalienableor
disposablelandsofthepublicdomain.[58]
LikeActNo.1654andActNo.2874beforeit,CANo.141didnotrepealSection5oftheSpanish
Law of Waters of 1866. Private parties could still reclaim portions of the sea with government
permission. However, the reclaimed land could become private land only if classified as
alienableagriculturallandofthepublicdomainopentodispositionunderCANo.141.The1935
Constitutionprohibitedthealienationofallnaturalresourcesexceptpublicagriculturallands.
TheCivilCodeof1950
TheCivilCodeof1950readoptedsubstantiallythedefinitionofpropertyofpublicdominionfound
intheCivilCodeof1889.Articles420and422oftheCivilCodeof1950statethat
Art.420.Thefollowingthingsarepropertyofpublicdominion:
(1)Thoseintendedforpublicuse,suchasroads,canals,rivers,torrents,portsandbridgesconstructed
bytheState,banks,shores,roadsteads,andothersofsimilarcharacter
(2) Those which belong to the State, without being for public use, and are intended for some public
serviceorforthedevelopmentofthenationalwealth.
xxx.
Art.422.Propertyofpublicdominion,whennolongerintendedforpublicuseorforpublicservice,
shallformpartofthepatrimonialpropertyoftheState.
Again, the government must formally declare that the property of public dominion is no longer
neededforpublicuseorpublicservice,beforethesamecouldbeclassifiedaspatrimonialpropertyof
the State.[59] In the case of government reclaimed and marshy lands of the public domain, the
declaration of their being disposable, as well as the manner of their disposition, is governed by the
applicableprovisionsofCANo.141.
LiketheCivilCodeof1889,theCivilCodeof1950includedaspropertyofpublicdominionthose
properties of the State which, without being for public use, are intended for public service or the
development of the national wealth.Thus, government reclaimed and marshy lands of the State,
evenifnotemployedforpublicuseorpublicservice,ifdevelopedtoenhancethenationalwealth,are
classifiedaspropertyofpublicdominion.
The 1973 Constitution, which took effect on January 17, 1973, likewise adopted the Regalian
doctrine.Section8,ArticleXIVofthe1973Constitutionstatedthat
Sec.8.Alllandsofthepublicdomain,waters,minerals,coal,petroleumandothermineraloils,all
forcesofpotentialenergy,fisheries,wildlife,andothernaturalresourcesofthePhilippinesbelongto
theState.Withtheexceptionofagricultural,industrialorcommercial,residential,and
resettlementlandsofthepublicdomain,naturalresourcesshallnotbealienated,andno
license,concession,orleasefortheexploration,development,exploitation,orutilizationofanyofthe
naturalresourcesshallbegrantedforaperiodexceedingtwentyfiveyears,renewablefornotmore
thantwentyfiveyears,exceptastowaterrightsforirrigation,watersupply,fisheries,orindustrialuses
otherthanthedevelopmentofwaterpower,inwhichcases,beneficialusemaybethemeasureand
thelimitofthegrant.(Emphasissupplied)
The 1973 Constitution prohibited the alienation of all natural resources with the exception of
agricultural, industrial or commercial, residential, and resettlement lands of the public domain. In
contrast,the1935Constitutionbarredthealienationofallnaturalresourcesexceptpublicagricultural
lands. However, the term public agricultural lands in the 1935 Constitution encompassed industrial,
commercial, residential and resettlement lands of the public domain.[60] If the land of public domain
were neither timber nor mineral land, it would fall under the classification of agricultural land of the
publicdomain.Boththe1935and1973Constitutions,therefore,prohibitedthealienationofall
naturalresourcesexceptagriculturallandsofthepublicdomain.
The1973Constitution,however,limitedthealienationoflandsofthepublicdomaintoindividuals
whowerecitizensofthePhilippines.Privatecorporations,evenifwhollyownedbyPhilippinecitizens,
werenolongerallowedtoacquirealienablelandsofthepublicdomainunlikeinthe1935Constitution.
Section11,ArticleXIVofthe1973Constitutiondeclaredthat
Sec.11.TheBatasangPambansa,takingintoaccountconservation,ecological,anddevelopment
requirementsofthenaturalresources,shalldeterminebylawthesizeoflandofthepublicdomain
whichmaybedeveloped,heldoracquiredby,orleasedto,anyqualifiedindividual,corporation,or
association,andtheconditionstherefor.Noprivatecorporationorassociationmayholdalienable
landsofthepublicdomainexceptbyleasenottoexceedonethousandhectaresinareanormay
anycitizenholdsuchlandsbyleaseinexcessoffivehundredhectaresoracquirebypurchase,
homesteadorgrant,inexcessoftwentyfourhectares.Noprivatecorporationorassociationmayhold
bylease,concession,licenseorpermit,timberorforestlandsandothertimberorforestresourcesin
excessofonehundredthousandhectares.However,suchareamaybeincreasedbytheBatasang
PambansauponrecommendationoftheNationalEconomicandDevelopmentAuthority.(Emphasis
supplied)
Thus, under the 1973 Constitution, private corporations could hold alienable lands of the public
domainonlythroughlease.Onlyindividualscouldnowacquirealienablelandsofthepublicdomain,
andprivatecorporationsbecameabsolutelybarredfromacquiringanykindofalienablelandof
the public domain. The constitutional ban extended to all kinds of alienable lands of the public
domain,whilethestatutorybanunderCANo.141appliedonlytogovernmentreclaimed,foreshore
andmarshyalienablelandsofthepublicdomain.
PDNo.1084CreatingthePublicEstatesAuthority
On February 4, 1977, then President Ferdinand Marcos issued Presidential Decree No. 1084
creatingPEA,awhollygovernmentownedandcontrolledcorporationwithaspecialcharter.Sections
4and8ofPDNo.1084,vestsPEAwiththefollowingpurposesandpowers:
Sec.4.Purpose.TheAuthorityisherebycreatedforthefollowingpurposes:
(a)Toreclaimland,includingforeshoreandsubmergedareas,bydredging,fillingor
othermeans,ortoacquirereclaimedland
(b)Todevelop,improve,acquire,administer,dealin,subdivide,dispose,leaseandsellany
andallkindsoflands,buildings,estatesandotherformsofrealproperty,owned,managed,
controlledand/oroperatedbythegovernment
(c)Toprovidefor,operateoradministersuchserviceasmaybenecessaryfortheefficient,
economicalandbeneficialutilizationoftheaboveproperties.
Sec.5.PowersandfunctionsoftheAuthority.TheAuthorityshall,incarryingoutthepurposesfor
whichitiscreated,havethefollowingpowersandfunctions:
(a)Toprescribeitsbylaws.
xxx
(i)Toholdlandsofthepublicdomaininexcessoftheareapermittedtoprivate
corporationsbystatute.
(j)Toreclaimlandsandtoconstructworkacross,orotherwise,anystream,watercourse,
canal,ditch,flumexxx.
xxx
(o)Toperformsuchactsandexercisesuchfunctionsasmaybenecessaryfortheattainmentofthe
purposesandobjectiveshereinspecified.(Emphasissupplied)
PD No. 1084 authorizes PEA to reclaim both foreshore and submerged areas of the public
domain. Foreshore areas are those covered and uncovered by the ebb and flow of the tide.[61]
Submerged areas are those permanently under water regardless of the ebb and flow of the tide.[62]
Foreshore and submerged areas indisputably belong to the public domain[63] and are inalienable
unless reclaimed, classified as alienable lands open to disposition, and further declared no longer
neededforpublicservice.
The ban in the 1973 Constitution on private corporations from acquiring alienable lands of the
public domain did not apply to PEA since it was then, and until today, a fully owned government
corporation. The constitutional ban applied then, as it still applies now, only to private corporations
andassociations.PDNo.1084expresslyempowersPEAtoholdlandsofthepublicdomaineven
in excess of the area permitted to private corporations by statute. Thus, PEA can hold title to
privatelands,aswellastitletolandsofthepublicdomain.
In order for PEA to sell its reclaimed foreshore and submerged alienable lands of the public
domain, there must be legislative authority empowering PEA to sell these lands. This legislative
authorityisnecessaryinviewofSection60ofCANo.141,whichstates
Sec.60.xxxbutthelandsogranted,donatedortransferredtoaprovince,municipality,orbranchor
subdivisionoftheGovernmentshallnotbealienated,encumberedorotherwisedisposedofina
manneraffectingitstitle,exceptwhenauthorizedbyCongressxxx.(Emphasissupplied)
Without such legislative authority, PEA could not sell but only lease its reclaimed foreshore and
submerged alienable lands of the public domain. Nevertheless, any legislative authority granted to
PEAtosellitsreclaimedalienablelandsofthepublicdomainwouldbesubjecttotheconstitutional
ban on private corporations from acquiring alienable lands of the public domain. Hence, such
legislativeauthoritycouldonlybenefitprivateindividuals.
The1987Constitution,likethe1935and1973Constitutionsbeforeit,hasadoptedtheRegalian
doctrine. The 1987 Constitution declares that all natural resources are owned by the State, and
except for alienable agricultural lands of the public domain, natural resources cannot be alienated.
Sections2and3,ArticleXIIofthe1987Constitutionstatethat
Section2.Alllandsofthepublicdomain,waters,minerals,coal,petroleumandothermineraloils,all
forcesofpotentialenergy,fisheries,forestsortimber,wildlife,floraandfauna,andothernatural
resourcesareownedbytheState.Withtheexceptionofagriculturallands,allothernatural
resourcesshallnotbealienated.Theexploration,development,andutilizationofnaturalresources
shallbeunderthefullcontrolandsupervisionoftheState.xxx.
Section3.Landsofthepublicdomainareclassifiedintoagricultural,forestortimber,minerallands,
andnationalparks.Agriculturallandsofthepublicdomainmaybefurtherclassifiedbylawaccording
totheuseswhichtheymaybedevoted.Alienablelandsofthepublicdomainshallbelimitedto
agriculturallands.Privatecorporationsorassociationsmaynotholdsuchalienablelandsof
thepublicdomainexceptbylease,foraperiodnotexceedingtwentyfiveyears,renewablefor
notmorethantwentyfiveyears,andnottoexceedonethousandhectaresinarea.Citizensof
thePhilippinesmayleasenotmorethanfivehundredhectares,oracquirenotmorethantwelve
hectaresthereofbypurchase,homestead,orgrant.
Takingintoaccounttherequirementsofconservation,ecology,anddevelopment,andsubjecttothe
requirementsofagrarianreform,theCongressshalldetermine,bylaw,thesizeoflandsofthepublic
domainwhichmaybeacquired,developed,held,orleasedandtheconditionstherefor.(Emphasis
supplied)
The 1987 Constitution continues the State policy in the 1973 Constitution banning private
corporations from acquiring any kind of alienable land of the public domain. Like the 1973
Constitution, the 1987 Constitution allows private corporations to hold alienable lands of the public
domainonlythroughlease.As in the 1935 and 1973 Constitutions, the general law governing the
leasetoprivatecorporationsofreclaimed,foreshoreandmarshyalienablelandsofthepublicdomain
isstillCANo.141.
TheRationalebehindtheConstitutionalBan
Therationalebehindtheconstitutionalbanoncorporationsfromacquiring,exceptthroughlease,
alienable lands of the public domain is not well understood. During the deliberations of the 1986
ConstitutionalCommission,thecommissionersprobedtherationalebehindthisban,thus:
FR.BERNAS:Mr.VicePresident,myquestionshavereferencetopage3,line5whichsays:
`Noprivatecorporationorassociationmayholdalienablelandsofthepublicdomainexcept
bylease,nottoexceedonethousandhectaresinarea.
Ifwerecall,thisprovisiondidnotexistunderthe1935Constitution,butthiswasintroducedinthe
1973Constitution.Ineffect,itprohibitsprivatecorporationsfromacquiringalienablepubliclands.But
ithasnotbeenveryclearinjurisprudencewhatthereasonforthisis.Insomeofthecases
decidedin1982and1983,itwasindicatedthatthepurposeofthisistopreventlarge
landholdings.Isthattheintentofthisprovision?
MR.VILLEGAS:Ithinkthatisthespiritoftheprovision.
FR.BERNAS:InexistingdecisionsinvolvingtheIglesianiCristo,therewereinstanceswherethe
IglesianiCristowasnotallowedtoacquireamere313squaremeterlandwhereachapelstood
becausetheSupremeCourtsaiditwouldbeinviolationofthis.(Emphasissupplied)
InAyogv.Cusi,[64]theCourtexplainedtherationalebehindthisconstitutionalbaninthisway:
Indeed,onepurposeoftheconstitutionalprohibitionagainstpurchasesofpublicagriculturallandsby
privatecorporationsistoequitablydiffuselandownershiportoencourageownercultivatorshipand
theeconomicfamilysizefarmandtopreventarecurrenceofcasesliketheinstantcase.Huge
landholdingsbycorporationsorprivatepersonshadspawnedsocialunrest.
However, if the constitutional intent is to prevent huge landholdings, the Constitution could have
simply limited the size of alienable lands of the public domain that corporations could acquire. The
Constitution could have followed the limitations on individuals, who could acquire not more than 24
hectaresofalienablelandsofthepublicdomainunderthe1973Constitution,andnotmorethan12
hectaresunderthe1987Constitution.
If the constitutional intent is to encourage economic familysize farms, placing the land in the
nameofacorporationwouldbemoreeffectiveinpreventingthebreakupoffarmlands.Ifthefarmland
isregisteredinthenameofacorporation,uponthedeathoftheowner,hisheirswouldinheritshares
in the corporation instead of subdivided parcels of the farmland. This would prevent the continuing
breakupoffarmlandsintosmallerandsmallerplotsfromonegenerationtothenext.
In actual practice, the constitutional ban strengthens the constitutional limitation on individuals
from acquiring more than the allowed area of alienable lands of the public domain. Without the
constitutionalban,individualswhoalreadyacquiredthemaximumareaofalienablelandsofthepublic
domain could easily set up corporations to acquire more alienable public lands. An individual could
ownasmanycorporationsashismeanswouldallowhim.Anindividualcouldevenhidehisownership
of a corporation by putting his nominees as stockholders of the corporation. The corporation is a
convenientvehicletocircumventtheconstitutionallimitationonacquisitionbyindividualsofalienable
landsofthepublicdomain.
Theconstitutionalintent,underthe1973and1987Constitutions,istotransferownershipofonlya
limitedareaofalienablelandofthepublicdomaintoaqualifiedindividual.Thisconstitutionalintentis
safeguarded by the provision prohibiting corporations from acquiring alienable lands of the public
domain,sincethevehicletocircumventtheconstitutionalintentisremoved.The available alienable
public lands are gradually decreasing in the face of an evergrowing population. The most effective
way to insure faithful adherence to this constitutional intent is to grant or sell alienable lands of the
public domain only to individuals. This, it would seem, is the practical benefit arising from the
constitutionalban.
TheAmendedJointVentureAgreement
The subject matter of the Amended JVA, as stated in its second Whereas clause, consists of
threeproperties,namely:
1. [T]hree partially reclaimed and substantially eroded islands along Emilio Aguinaldo Boulevard in
ParanaqueandLasPinas,MetroManila,withacombinedtitledareaof1,578,441squaremeters
2.[A]notherareaof2,421,559squaremeterscontiguoustothethreeislandsand
3.[A]tAMARIsoptionasapprovedbyPEA,anadditional350hectaresmoreorlesstoregularizethe
configurationofthereclaimedarea.[65]
PEA confirms that the Amended JVA involves the development of the Freedom Islands and further
reclamation of about 250 hectares x x x, plus an option granted to AMARI to subsequently reclaim
another350hectaresxxx.[66]
Inshort,theAmendedJVAcoversareclamationareaof750hectares.Only157.84hectaresof
the750hectarereclamationprojecthavebeenreclaimed, and the rest of the 592.15 hectares
arestillsubmergedareasformingpartofManilaBay.
Under the Amended JVA, AMARI will reimburse PEA the sum of P1,894,129,200.00 for PEAs
actualcostinpartiallyreclaimingtheFreedomIslands.AMARIwillalsocomplete,atitsownexpense,
thereclamationoftheFreedomIslands.AMARIwillfurthershoulderallthereclamationcostsofallthe
other areas, totaling 592.15 hectares, still to be reclaimed. AMARI and PEA will share, in the
proportionof70percentand30percent,respectively,thetotalnetusableareawhichisdefinedinthe
Amended JVA as the total reclaimed area less 30 percent earmarked for common areas. Title to
AMARIsshareinthenetusablearea,totaling367.5hectares,willbeissuedinthenameofAMARI.
Section5.2(c)oftheAmendedJVAprovidesthat
xxx,PEAshallhavethedutytoexecutewithoutdelaythenecessarydeedoftransferorconveyance
ofthetitlepertainingtoAMARIsLandsharebasedontheLandAllocationPlan.PEA,when
requestedinwritingbyAMARI,shallthencausetheissuanceanddeliveryoftheproper
certificatesoftitlecoveringAMARIsLandShareinthenameofAMARI,xxxprovided,thatif
morethanseventypercent(70%)ofthetitledareaatanygiventimepertainstoAMARI,PEAshall
delivertoAMARIonlyseventypercent(70%)ofthetitlespertainingtoAMARI,untilsuchtimewhena
correspondingproportionateareaofadditionallandpertainingtoPEAhasbeentitled.(Emphasis
supplied)
Indisputably, under the Amended JVA AMARI will acquire and own a maximum of 367.5
hectaresofreclaimedlandwhichwillbetitledinitsname.
ToimplementtheAmendedJVA,PEAdelegatedtotheunincorporatedPEAAMARIjointventure
PEAs statutory authority, rights and privileges to reclaim foreshore and submerged areas in Manila
Bay.Section3.2.aoftheAmendedJVAstatesthat
PEAherebycontributestothejointventureitsrightsandprivilegestoperformRawlandReclamation
andHorizontalDevelopmentaswellasowntheReclamationArea,therebygrantingtheJointVenture
thefullandexclusiveright,authorityandprivilegetoundertaketheProjectinaccordancewiththe
MasterDevelopmentPlan.
TheAmendedJVAistheproductofarenegotiationoftheoriginalJVAdatedApril25,1995andits
supplementalagreementdatedAugust9,1995.
TheThresholdIssue
The threshold issue is whether AMARI, a private corporation, can acquire and own under the
AmendedJVA367.5hectaresofreclaimedforeshoreandsubmergedareasinManilaBayinviewof
Sections2and3,ArticleXIIofthe1987Constitutionwhichstatethat:
Section2.Alllandsofthepublicdomain,waters,minerals,coal,petroleum,andothermineraloils,all
forcesofpotentialenergy,fisheries,forestsortimber,wildlife,floraandfauna,andothernatural
resourcesareownedbytheState.Withtheexceptionofagriculturallands,allothernatural
resourcesshallnotbealienated.xxx.
xxx
Section3.xxxAlienablelandsofthepublicdomainshallbelimitedtoagriculturallands.Private
corporationsorassociationsmaynotholdsuchalienablelandsofthepublicdomainexcept
bylease,xxx.(Emphasissupplied)
ClassificationofReclaimedForeshoreandSubmergedAreas
PEAreadilyconcedesthatlandsreclaimedfromforeshoreorsubmergedareasofManilaBayare
alienableordisposablelandsofthepublicdomain.InitsMemorandum,[67]PEAadmitsthat
UnderthePublicLandAct(CA141,asamended),reclaimedlandsareclassifiedasalienableand
disposablelandsofthepublicdomain:
(a)Landsreclaimedbythegovernmentbydredging,filling,orothermeans
xxx.(Emphasissupplied)
Likewise, the Legal Task Force[68] constituted under Presidential Administrative Order No. 365
admitted in its Report and Recommendation to then President Fidel V. Ramos, [R]eclaimed lands
areclassifiedasalienableanddisposablelandsofthepublicdomain.[69]TheLegalTaskForce
concludedthat
D.Conclusion
Reclaimedlandsarelandsofthepublicdomain.However,bystatutoryauthority,therightsof
ownershipanddispositionoverreclaimedlandshavebeentransferredtoPEA,byvirtueofwhich
PEA,asowner,mayvalidlyconveythesametoanyqualifiedpersonwithoutviolatingtheConstitution
oranystatute.
Theconstitutionalprovisionprohibitingprivatecorporationsfromholdingpublicland,exceptbylease
(Sec.3,Art.XVII,[70]1987Constitution),doesnotapplytoreclaimedlandswhoseownershiphas
passedontoPEAbystatutorygrant.
Under Section 2, Article XII of the 1987 Constitution, the foreshore and submerged areas of
ManilaBayarepartofthelandsofthepublicdomain,watersxxxandothernaturalresourcesand
consequently owned by the State. As such, foreshore and submerged areas shall not be alienated,
unlesstheyareclassifiedasagriculturallandsofthepublicdomain.The mere reclamation of these
areas by PEA does not convert these inalienable natural resources of the State into alienable or
disposable lands of the public domain. There must be a law or presidential proclamation officially
classifying these reclaimed lands as alienable or disposable and open to disposition or concession.
Moreover, these reclaimed lands cannot be classified as alienable or disposable if the law has
reservedthemforsomepublicorquasipublicuse.[71]
Section8ofCANo.141providesthatonlythoselandsshallbedeclaredopentodispositionor
concessionwhichhavebeenofficiallydelimitedandclassified.[72] ThePresidenthastheauthority
to classify inalienable lands of the public domain into alienable or disposable lands of the public
domain, pursuant to Section 6 of CA No. 141. In Laurel vs. Garcia,[73] the Executive Department
attempted to sell the Roppongi property in Tokyo, Japan, which was acquired by the Philippine
Government for use as the Chancery of the Philippine Embassy. Although the Chancery had
transferredtoanotherlocationthirteenyearsearlier,theCourtstillruledthat,underArticle422[74] of
the Civil Code, a property of public dominion retains such character until formally declared
otherwise.TheCourtruledthat
ThefactthattheRoppongisitehasnotbeenusedforalongtimeforactualEmbassyservicedoesnot
automaticallyconvertittopatrimonialproperty.Anysuchconversionhappensonlyifthepropertyis
withdrawnfrompublicuse(CebuOxygenandAcetyleneCo.v.Bercilles,66SCRA481[1975].A
propertycontinuestobepartofthepublicdomain,notavailableforprivateappropriationor
ownershipuntilthereisaformaldeclarationonthepartofthegovernmenttowithdrawitfrom
beingsuch(Ignaciov.DirectorofLands,108Phil.335[1960].(Emphasissupplied)
PD No. 1085, issued on February 4, 1977, authorized the issuance of special land patents for
landsreclaimedbyPEAfromtheforeshoreorsubmergedareasofManilaBay.OnJanuary19,1988
thenPresidentCorazonC.AquinoissuedSpecialPatentNo.3517inthenameofPEAforthe157.84
hectares comprising the partially reclaimed Freedom Islands. Subsequently, on April 9, 1999 the
Register of Deeds of the Municipality of Paranaque issued TCT Nos. 7309, 7311 and 7312 in the
nameofPEApursuanttoSection103ofPDNo.1529authorizingtheissuanceofcertificatesoftitle
correspondingtolandpatents.Tothisday,thesecertificatesoftitlearestillinthenameofPEA.
PDNo.1085,coupledwithPresidentAquinosactualissuanceofaspecialpatentcoveringthe
FreedomIslands,isequivalenttoanofficialproclamationclassifyingtheFreedomIslandsasalienable
or disposable lands of the public domain. PD No. 1085 and President Aquinos issuance of a land
patentalsoconstituteadeclarationthattheFreedomIslandsarenolongerneededforpublicservice.
The Freedom Islands are thus alienable or disposable lands of the public domain, open to
dispositionorconcessiontoqualifiedparties.
At the time then President Aquino issued Special Patent No. 3517, PEA had already reclaimed
the Freedom Islands although subsequently there were partial erosions on some areas. The
governmenthadalsocompletedthenecessarysurveysontheseislands.Thus,theFreedomIslands
were no longer part of Manila Bay but part of the land mass. Section 3, Article XII of the 1987
Constitutionclassifieslandsofthepublicdomainintoagricultural,forestortimber,minerallands,and
nationalparks.Beingneithertimber,mineral,nornationalparklands,thereclaimedFreedomIslands
necessarily fall under the classification of agricultural lands of the public domain. Under the 1987
Constitution,agriculturallandsofthepublicdomainaretheonlynaturalresourcesthattheStatemay
alienatetoqualifiedprivateparties.Allothernaturalresources,suchastheseasorbays,arewatersx
xxownedbytheStateformingpartofthepublicdomain,andareinalienablepursuanttoSection2,
ArticleXIIofthe1987Constitution.
AMARI claims that the Freedom Islands are private lands because CDCP, then a private
corporation,reclaimedtheislandsunderacontractdatedNovember20,1973withtheCommissioner
ofPublicHighways.AMARI,citingArticle5oftheSpanishLawofWatersof1866,arguesthatifthe
ownershipofreclaimedlandsmaybegiventothepartyconstructingtheworks,thenitcannotbesaid
thatreclaimedlandsarelandsofthepublicdomainwhichtheStatemaynotalienate.[75] Article 5 of
theSpanishLawofWatersreadsasfollows:
Article5.LandsreclaimedfromtheseainconsequenceofworksconstructedbytheState,orbythe
provinces,pueblosorprivatepersons,withproperpermission,shallbecomethepropertyofthe
partyconstructingsuchworks,unlessotherwiseprovidedbythetermsofthegrantofauthority.
(Emphasissupplied)
UnderArticle5oftheSpanishLawofWatersof1866,privatepartiescouldreclaimfromthesea
only with proper permission from the State.Private parties could own the reclaimed land only if not
otherwiseprovidedbythetermsofthegrantofauthority.Thisclearlymeantthatnoonecouldreclaim
fromtheseawithoutpermissionfromtheStatebecausetheseaispropertyofpublicdominion.Italso
meantthattheStatecouldgrantorwithholdownershipofthereclaimedlandbecauseanyreclaimed
land, like the sea from which it emerged, belonged to the State. Thus, a private person reclaiming
from the sea without permission from the State could not acquire ownership of the reclaimed land
which would remain property of public dominion like the sea it replaced.[76] Article 5 of the Spanish
LawofWatersof1866adoptedthetimehonoredprincipleoflandownershipthatalllandsthatwere
notacquiredfromthegovernment,eitherbypurchaseorbygrant,belongtothepublicdomain.[77]
Article5oftheSpanishLawofWatersmustbereadtogetherwithlawssubsequentlyenactedon
thedispositionofpubliclands.Inparticular,CANo.141requiresthatlandsofthepublicdomainmust
firstbeclassifiedasalienableordisposablebeforethegovernmentcanalienatethem. These lands
must not be reserved for public or quasipublic purposes.[78] Moreover, the contract between CDCP
andthegovernmentwasexecutedaftertheeffectivityofthe1973Constitutionwhichbarredprivate
corporations from acquiring any kind of alienable land of the public domain.This contract could not
haveconvertedtheFreedomIslandsintoprivatelandsofaprivatecorporation.
Presidential Decree No. 3A, issued on January 11, 1973, revoked all laws authorizing the
reclamation of areas under water and revested solely in the National Government the power to
reclaimlands.Section1ofPDNo.3Adeclaredthat
Theprovisionsofanylawtothecontrarynotwithstanding,thereclamationofareasunderwater,
whetherforeshoreorinland,shallbelimitedtotheNationalGovernmentoranyperson
authorizedbyitunderapropercontract.(Emphasissupplied)
xxx.
PDNo.3ArepealedSection5oftheSpanishLawofWatersof1866becausereclamationofareas
underwatercouldnowbeundertakenonlybytheNationalGovernmentorbyapersoncontractedby
the National Government. Private parties may reclaim from the sea only under a contract with the
NationalGovernment,andnolongerbygrantorpermissionasprovidedinSection5oftheSpanish
LawofWatersof1866.
Executive Order No. 525, issued on February 14, 1979, designated PEA as the National
Governmentsimplementingarmtoundertakeallreclamationprojectsofthegovernment,whichshall
be undertaken by the PEA or through a proper contract executed by it with any person or
entity.Undersuchcontract,aprivatepartyreceivescompensationforreclamationservicesrendered
toPEA.Paymenttothecontractormaybeincash,orinkindconsistingofportionsofthereclaimed
land, subject to the constitutional ban on private corporations from acquiring alienable lands of the
publicdomain.Thereclaimedlandcanbeusedaspaymentinkindonlyifthereclaimedlandisfirst
classifiedasalienableordisposablelandopentodisposition,andthendeclarednolongerneededfor
publicservice.
TheAmendedJVAcoversnotonlytheFreedomIslands,butalsoanadditional592.15hectares
whicharestillsubmergedandformingpartofManilaBay.ThereisnolegislativeorPresidentialact
classifyingthesesubmergedareasasalienableordisposablelandsofthepublicdomainopen
todisposition.Thesesubmergedareasarenotcoveredbyanypatentorcertificateoftitle.Therecan
benodisputethatthesesubmergedareasformpartofthepublicdomain,andintheirpresentstate
areinalienableandoutsidethecommerceofman.Untilreclaimedfromthesea,thesesubmerged
areasare,undertheConstitution,watersxxxownedbytheState,formingpartofthepublicdomain
andconsequentlyinalienable.Onlywhenactuallyreclaimedfromtheseacanthesesubmergedareas
beclassifiedaspublicagriculturallands,whichundertheConstitutionaretheonlynaturalresources
that the State may alienate. Once reclaimed and transformed into public agricultural lands, the
government may then officially classify these lands as alienable or disposable lands open to
disposition.Thereafter,thegovernmentmaydeclaretheselandsnolongerneededforpublicservice.
Onlythencanthesereclaimedlandsbeconsideredalienableordisposablelandsofthepublicdomain
andwithinthecommerceofman.
TheclassificationofPEAsreclaimedforeshoreandsubmergedlandsintoalienableordisposable
landsopentodisposition is necessary because PEA is tasked under itschartertoundertakepublic
services that require the use of lands of the public domain. Under Section 5 of PD No. 1084, the
functions of PEA include the following: [T]o own or operate railroads, tramways and other kinds of
land transportation, x x x [T]o construct, maintain and operate such systems of sanitary sewers as
maybenecessary[T]oconstruct,maintainandoperatesuchstormdrainsasmaybenecessary.PEA
is empowered to issue rules and regulations as may be necessary for the proper use by private
partiesofanyorallofthehighways,roads,utilities,buildingsand/oranyofitspropertiesandto
impose or collect fees or tolls for their use. Thus, part of the reclaimed foreshore and submerged
landsheldbythePEAwouldactuallybeneededforpublicuseorservicesincemanyofthefunctions
imposedonPEAbyitscharterconstituteessentialpublicservices.
Moreover,Section1ofExecutiveOrderNo.525providesthatPEAshallbeprimarilyresponsible
for integrating, directing, and coordinating all reclamation projects for and on behalf of the National
Government. The same section also states that [A]ll reclamation projects shall be approved by the
PresidentuponrecommendationofthePEA,andshallbeundertakenbythePEAorthroughaproper
contractexecutedbyitwithanypersonorentityxxx.Thus,underEONo.525,inrelationtoPDNo.
3AandPDNo.1084,PEAbecametheprimaryimplementingagencyoftheNationalGovernmentto
reclaim foreshore and submerged lands of the public domain. EO No. 525 recognized PEA as the
government entity to undertake the reclamation of lands and ensure their maximum utilization in
promoting public welfare and interests.[79] Since large portions of these reclaimed lands would
obviously be needed for public service, there must be a formal declaration segregating reclaimed
landsnolongerneededforpublicservicefromthosestillneededforpublicservice.
Section3ofEONo.525,bydeclaringthatalllandsreclaimedbyPEAshallbelongtoorbeowned
bythePEA,couldnotautomaticallyoperatetoclassifyinalienablelandsintoalienableordisposable
lands of the public domain. Otherwise, reclaimed foreshore and submerged lands of the public
domain would automatically become alienable once reclaimed by PEA, whether or not classified as
alienableordisposable.
The RevisedAdministrative Code of 1987, a later law than either PD No. 1084 or EO No. 525,
vests in the Department of Environment and Natural Resources (DENR for brevity) the following
powersandfunctions:
Sec.4.PowersandFunctions.TheDepartmentshall:
(1)xxx
xxx
(4)Exercisesupervisionandcontroloverforestlands,alienableanddisposablepubliclands,
mineralresourcesand,intheprocessofexercisingsuchcontrol,imposeappropriatetaxes,fees,
charges,rentalsandanysuchformoflevyandcollectsuchrevenuesfortheexploration,
development,utilizationorgatheringofsuchresources
xxx
(14)Promulgaterules,regulationsandguidelinesontheissuanceoflicenses,permits,
concessions,leaseagreementsandsuchotherprivilegesconcerningthedevelopment,
explorationandutilizationofthecountrysmarine,freshwater,andbrackishwaterandoverall
aquaticresourcesofthecountryandshallcontinuetooversee,superviseandpoliceour
naturalresourcescancelorcausetocancelsuchprivilegesuponfailure,noncomplianceor
violationsofanyregulation,order,andforallothercauseswhichareinfurtheranceofthe
conservationofnaturalresourcesandsupportiveofthenationalinterest
(15)Exerciseexclusivejurisdictiononthemanagementanddispositionofalllandsofthe
publicdomainandserveasthesoleagencyresponsibleforclassification,subclassification,
surveyingandtitlingoflandsinconsultationwithappropriateagencies.[80](Emphasissupplied)
As manager, conservator and overseer of the natural resources of the State, DENR exercises
supervision and control over alienable and disposable public lands. DENR also exercises exclusive
jurisdictiononthemanagementanddispositionofalllandsofthepublicdomain.Thus,DENRdecides
whetherareasunderwater,likeforeshoreorsubmergedareasofManilaBay,shouldbereclaimedor
not. This means that PEA needs authorization from DENR before PEA can undertake reclamation
projectsinManilaBay,orinanypartofthecountry.
DENRalsoexercisesexclusivejurisdictionoverthedispositionofalllandsofthepublicdomain.
Hence, DENR decides whether reclaimed lands of PEA should be classified as alienable under
Sections 6[81] and 7[82] of CA No. 141. Once DENR decides that the reclaimed lands should be so
classified,itthenrecommendstothePresidenttheissuanceofaproclamationclassifyingthelandsas
alienable or disposable lands of the public domain open to disposition. We note that then DENR
Secretary Fulgencio S. Factoran, Jr. countersigned Special Patent No. 3517 in compliance with the
RevisedAdministrativeCodeandSections6and7ofCANo.141.
Inshort,DENRisvestedwiththepowertoauthorizethereclamationofareasunderwater,while
PEA is vested with the power to undertake the physical reclamation of areas under water, whether
directlyorthroughprivatecontractors.DENRisalsoempoweredtoclassifylandsofthepublicdomain
intoalienableordisposablelandssubjecttotheapprovalofthePresident.Ontheotherhand,PEAis
taskedtodevelop,sellorleasethereclaimedalienablelandsofthepublicdomain.
Clearly,themerephysicalactofreclamationbyPEAofforeshoreorsubmergedareasdoesnot
makethereclaimedlandsalienableordisposablelandsofthepublicdomain,muchlesspatrimonial
landsofPEA.Likewise,themeretransferbytheNationalGovernmentoflandsofthepublicdomain
to PEA does not make the lands alienable or disposable lands of the public domain, much less
patrimoniallandsofPEA.
Absenttwoofficialactsaclassificationthattheselandsarealienableordisposableandopento
dispositionandadeclarationthattheselandsarenotneededforpublicservice,landsreclaimedby
PEA remain inalienable lands of the public domain. Only such an official classification and formal
declarationcanconvertreclaimedlandsintoalienableordisposablelandsofthepublicdomain,open
todispositionundertheConstitution,TitleIandTitleIII[83]ofCANo.141andotherapplicablelaws.[84]
PEAsAuthoritytoSellReclaimedLands
PEA,liketheLegalTaskForce,arguesthatasalienableordisposablelandsofthepublicdomain,
thereclaimedlandsshallbedisposedofinaccordancewithCANo.141,thePublicLandAct. PEA,
citingSection60ofCANo.141,admitsthatreclaimedlandstransferredtoabranchorsubdivisionof
thegovernmentshallnotbealienated,encumbered,orotherwisedisposedofinamanneraffectingits
title,exceptwhenauthorizedbyCongress:xxx.[85](EmphasisbyPEA)
InLaurelvs.Garcia,[86] theCourtcitedSection48oftheRevisedAdministrativeCodeof1987,
whichstatesthat
Sec.48.OfficialAuthorizedtoConveyRealProperty.WheneverrealpropertyoftheGovernmentis
authorizedbylawtobeconveyed,thedeedofconveyanceshallbeexecutedinbehalfofthe
governmentbythefollowing:xxx.
Thus, the Court concluded that a law is needed to convey any real property belonging to the
Government.TheCourtdeclaredthat
ItisnotforthePresidenttoconveyrealpropertyofthegovernmentonhisorherownsolewill.Any
suchconveyancemustbeauthorizedandapprovedbyalawenactedbytheCongress.It
requiresexecutiveandlegislativeconcurrence.(Emphasissupplied)
PEAcontendsthatPDNo.1085andEONo.525constitutethelegislativeauthorityallowingPEA
tosellitsreclaimedlands.PDNo.1085,issuedonFebruary4,1977,providesthat
ThelandreclaimedintheforeshoreandoffshoreareaofManilaBaypursuanttothecontractfor
thereclamationandconstructionoftheManilaCaviteCoastalRoadProjectbetweentheRepublicof
thePhilippinesandtheConstructionandDevelopmentCorporationofthePhilippinesdated
November20,1973and/oranyothercontractorreclamationcoveringthesameareaishereby
transferred,conveyedandassignedtotheownershipandadministrationofthePublicEstates
AuthorityestablishedpursuanttoPDNo.1084Provided,however,Thattherightsandinterestsof
theConstructionandDevelopmentCorporationofthePhilippinespursuanttotheaforesaidcontract
shallberecognizedandrespected.
Henceforth,thePublicEstatesAuthorityshallexercisetherightsandassumetheobligationsofthe
RepublicofthePhilippines(DepartmentofPublicHighways)arisingfrom,orincidentto,theaforesaid
contractbetweentheRepublicofthePhilippinesandtheConstructionandDevelopmentCorporation
ofthePhilippines.
Inconsiderationoftheforegoingtransferandassignment,thePublicEstatesAuthorityshallissuein
favoroftheRepublicofthePhilippinesthecorrespondingsharesofstockinsaidentitywithanissued
valueofsaidsharesofstock(which)shallbedeemedfullypaidandnonassessable.
TheSecretaryofPublicHighwaysandtheGeneralManagerofthePublicEstatesAuthorityshall
executesuchcontractsoragreements,includingappropriateagreementswiththeConstructionand
DevelopmentCorporationofthePhilippines,asmaybenecessarytoimplementtheabove.
Speciallandpatent/patentsshallbeissuedbytheSecretaryofNaturalResourcesinfavorof
thePublicEstatesAuthoritywithoutprejudicetothesubsequenttransfertothecontractoror
hisassigneesofsuchportionorportionsofthelandreclaimedortobereclaimedasprovided
forintheabovementionedcontract.Onthebasisofsuchpatents,theLandRegistration
Commissionshallissuethecorrespondingcertificateoftitle.(Emphasissupplied)
Ontheotherhand,Section3ofEONo.525,issuedonFebruary14,1979,providesthat
Sec.3.AlllandsreclaimedbyPEAshallbelongtoorbeownedbythePEAwhichshallbe
responsibleforitsadministration,development,utilizationordispositioninaccordancewiththe
provisionsofPresidentialDecreeNo.1084.AnyandallincomethatthePEAmayderivefromthe
sale,leaseoruseofreclaimedlandsshallbeusedinaccordancewiththeprovisionsofPresidential
DecreeNo.1084.
There is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell its
reclaimed lands. PD No. 1085 merely transferred ownership and administration of lands reclaimed
fromManilaBaytoPEA,whileEONo.525declaredthatlandsreclaimedbyPEAshallbelongtoor
be owned by PEA. EO No. 525 expressly states that PEA should dispose of its reclaimed lands in
accordancewiththeprovisionsofPresidentialDecreeNo.1084,thecharterofPEA.
PEAs charter, however, expressly tasks PEA to develop, improve, acquire, administer, deal in,
subdivide, dispose, lease and sell any and all kinds of lands x x x owned, managed, controlled
and/or operated by the government.[87] (Emphasis supplied) There is, therefore, legislative
authoritygrantedtoPEAtosellitslands,whetherpatrimonialoralienablelandsofthepublic
domain. PEA may sell to private parties its patrimonial properties in accordance with the PEA
charter free from constitutional limitations. The constitutional ban on private corporations from
acquiringalienablelandsofthepublicdomaindoesnotapplytothesaleofPEAspatrimoniallands.
PEAmayalsosellitsalienableordisposablelandsofthepublicdomaintoprivateindividuals
since,withthelegislativeauthority,thereisnolongeranystatutoryprohibitionagainstsuchsalesand
theconstitutionalbandoesnotapplytoindividuals.PEA,however,cannotsellanyofitsalienableor
disposablelandsofthepublicdomaintoprivatecorporationssinceSection3,ArticleXIIofthe1987
Constitutionexpresslyprohibitssuchsales.Thelegislativeauthoritybenefitsonlyindividuals.Private
corporationsremainbarredfromacquiringanykindofalienablelandofthepublicdomain,including
governmentreclaimedlands.
TheprovisioninPDNo.1085statingthatportionsofthereclaimedlandscouldbetransferredby
PEAtothecontractororhisassignees(Emphasissupplied)wouldnotapplytoprivatecorporations
but only to individuals because of the constitutional ban. Otherwise, the provisions of PD No. 1085
wouldviolateboththe1973and1987Constitutions.
Therequirementofpublicauctioninthesaleofreclaimedlands
Assuming the reclaimed lands of PEA are classified as alienable or disposable lands open to
disposition,andfurtherdeclarednolongerneededforpublicservice,PEAwouldhavetoconducta
publicbiddinginsellingorleasingtheselands.PEAmustobservetheprovisionsofSections63and
67 of CA No. 141 requiring public auction, in the absence of a law exempting PEA from holding a
publicauction.[88]SpecialPatentNo.3517expresslystatesthatthepatentisissuedbyauthorityofthe
ConstitutionandPDNo.1084,supplementedbyCommonwealthActNo.141,asamended.Thisisan
acknowledgment that the provisions of CA No. 141 apply to the disposition of reclaimed alienable
lands of the public domain unless otherwise provided by law. Executive Order No. 654,[89] which
authorizes PEA to determine the kind and manner of payment for the transfer of its assets and
properties, does not exempt PEA from the requirement of public auction. EO No. 654 merely
authorizes PEA to decide the mode of payment, whether in kind and in installment, but does not
authorizePEAtodispensewithpublicauction.
Moreover,underSection79ofPDNo.1445,otherwiseknownastheGovernmentAuditingCode,
thegovernmentisrequiredtosellvaluablegovernmentpropertythroughpublicbidding.Section79of
PDNo.1445mandatesthat
Section79.Whengovernmentpropertyhasbecomeunserviceableforanycause,orisnolonger
needed,itshall,uponapplicationoftheofficeraccountabletherefor,beinspectedbytheheadofthe
agencyorhisdulyauthorizedrepresentativeinthepresenceoftheauditorconcernedand,iffoundto
bevaluelessorunsaleable,itmaybedestroyedintheirpresence.Iffoundtobevaluable,itmaybe
soldatpublicauctiontothehighestbidderunderthesupervisionofthepropercommitteeon
awardorsimilarbodyinthepresenceoftheauditorconcernedorotherauthorizedrepresentativeof
theCommission,afteradvertisingbyprintednoticeintheOfficialGazette,orfornotlessthan
threeconsecutivedaysinanynewspaperofgeneralcirculation,orwherethevalueofthe
propertydoesnotwarranttheexpenseofpublication,bynoticespostedforalikeperiodinatleast
threepublicplacesinthelocalitywherethepropertyistobesold.Intheeventthatthepublic
auctionfails,thepropertymaybesoldataprivatesaleatsuchpriceasmaybefixedbythe
samecommitteeorbodyconcernedandapprovedbytheCommission.
Itisonlywhenthepublicauctionfailsthatanegotiatedsaleisallowed,inwhichcasetheCommission
on Audit must approve the selling price.[90] The Commission on Audit implements Section 79 of the
Government Auditing Code through Circular No. 89296[91] dated January 27, 1989. This circular
emphasizes that government assets must be disposed of only through public auction, and a
negotiatedsalecanberesortedtoonlyincaseoffailureofpublicauction.
At the public auction sale, only Philippine citizens are qualified to bid for PEAs reclaimed
foreshoreandsubmergedalienablelandsofthepublicdomain.Privatecorporationsarebarredfrom
biddingattheauctionsaleofanykindofalienablelandofthepublicdomain.
PEAoriginallyscheduledapublicbiddingfortheFreedomIslandsonDecember10,1991. PEA
imposedaconditionthatthewinningbiddershouldreclaimanother250hectaresofsubmergedareas
to regularize the shape of the Freedom Islands, under a 6040 sharing of the additional reclaimed
areasinfavorofthewinningbidder.[92]Noone,however,submittedabid.OnDecember23,1994,the
Government Corporate Counsel advised PEA it could sell the Freedom Islands through negotiation,
withoutneedofanotherpublicbidding,becauseofthefailureofthepublicbiddingonDecember10,
1991.[93]
However, the original JVA dated April 25, 1995 covered not only the Freedom Islands and the
additional250hectaresstilltobereclaimed,italsograntedanoptiontoAMARItoreclaimanother350
hectares.TheoriginalJVA,anegotiatedcontract,enlargedthereclamationareato750 hectares.[94]
ThefailureofpublicbiddingonDecember10,1991,involvingonly407.84hectares,[95] isnotavalid
justificationforanegotiatedsaleof750hectares,almostdoubletheareapubliclyauctioned.Besides,
the failure of public bidding happened on December 10, 1991, more than three years before the
signing of the original JVA on April 25, 1995. The economic situation in the country had greatly
improvedduringtheinterveningperiod.
ReclamationundertheBOTLawandtheLocalGovernmentCode
The 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
exceptbylease,xxx.EvenRepublicActNo.6957(BOTLaw,forbrevity),citedbyPEAandAMARI
as legislative authority to sell reclaimed lands to private parties, recognizes the constitutional ban.
Section6ofRANo.6957states
Sec.6.RepaymentScheme.Forthefinancing,construction,operationandmaintenanceofany
infrastructureprojectsundertakenthroughthebuildoperateandtransferarrangementoranyofits
variationspursuanttotheprovisionsofthisAct,theprojectproponentxxxmaylikewiseberepaidin
theformofashareintherevenueoftheprojectorothernonmonetarypayments,suchas,butnot
limitedto,thegrantofaportionorpercentageofthereclaimedland,subjecttotheconstitutional
requirementswithrespecttotheownershipoftheland:xxx.(Emphasissupplied)
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.
Section302oftheLocalGovernmentCode,alsomentionedbyPEAandAMARI,authorizeslocal
governments in land reclamation projects to pay the contractor or developer in kind consisting of a
percentageofthereclaimedland,towit:
Section302.Financing,Construction,Maintenance,Operation,andManagementofInfrastructure
ProjectsbythePrivateSector.xxx
xxx
Incaseoflandreclamationorconstructionofindustrialestates,therepaymentplanmayconsistofthe
grantofaportionorpercentageofthereclaimedlandortheindustrialestateconstructed.
AlthoughSection302oftheLocalGovernmentCodedoesnotcontainaprovisosimilartothatofthe
BOT Law, the constitutional restrictions on land ownership automatically apply even though not
expresslymentionedintheLocalGovernmentCode.
Thus,undereithertheBOTLawortheLocalGovernmentCode,thecontractorordeveloper,ifa
corporateentity,canonlybepaidwithleaseholdsonportionsofthereclaimedland.Ifthecontractor
or developer is an individual, portions of the reclaimed land, not exceeding 12 hectares[96] of non
agriculturallands,may be conveyed to him in ownership in view of thelegislativeauthorityallowing
suchconveyance.ThisistheonlywaytheseprovisionsoftheBOTLawandtheLocalGovernment
CodecanavoidadirectcollisionwithSection3,ArticleXIIofthe1987Constitution.
Registrationoflandsofthepublicdomain
Finally, PEA theorizes that the act of conveying the ownership of the reclaimed lands to public
respondentPEAtransformedsuchlandsofthepublicdomaintoprivatelands.Thistheoryisechoed
byAMARIwhichmaintainsthattheissuanceofthespecialpatentleadingtotheeventualissuanceof
title takes the subject land away from the land of public domain and converts the property into
patrimonial or private property.In short, PEA andAMARI contend that with the issuance of Special
Patent No. 3517 and the corresponding certificates of titles, the 157.84 hectares comprising the
FreedomIslandshavebecomeprivatelandsofPEA.Insupportoftheirtheory,PEAandAMARIcite
thefollowingrulingsoftheCourt:
1.Sumailv.JudgeofCFIofCotabato,[97]wheretheCourtheld
Oncethepatentwasgrantedandthecorrespondingcertificateoftitlewasissued,thelandceasedto
be part of the public domain and became private property over which the Director of Lands has
neithercontrolnorjurisdiction.
2.LeeHongHokv.David,[98]wheretheCourtdeclared
Aftertheregistrationandissuanceofthecertificateandduplicatecertificateoftitlebasedonapublic
landpatent,thelandcoveredtherebyautomaticallycomesundertheoperationofRepublicAct496
subjecttoallthesafeguardsprovidedtherein.
3.HeirsofGregorioTengcov.HeirsofJoseAliwalas,[99]wheretheCourtruled
WhiletheDirectorofLandshasthepowertoreviewhomesteadpatents,hemaydosoonlysolong
as the land remains part of the public domain and continues to be under his exclusive control but
oncethepatentisregisteredandacertificateoftitleisissued,thelandceasestobepartofthepublic
domain and becomes private property over which the Director of Lands has neither control nor
jurisdiction.
4.Manalov.IntermediateAppellateCourt,[100]wheretheCourtheld
WhenthelotsindisputewerecertifiedasdisposableonMay19,1971,andfreepatentswereissued
covering the same in favor of the private respondents, the said lots ceased to be part of the public
domainand,therefore,theDirectorofLandslostjurisdictionoverthesame.
5.Republicv.CourtofAppeals,[101]wheretheCourtstated
ProclamationNo.350,datedOctober9,1956,ofPresidentMagsaysaylegallyeffectedalandgrantto
theMindanaoMedicalCenter,BureauofMedicalServices,DepartmentofHealth,ofthewholelot,
validlysufficientforinitialregistrationundertheLandRegistrationAct.Suchlandgrantisconstitutive
ofafeesimpletitleorabsolutetitleinfavorofpetitionerMindanaoMedicalCenter.Thus,Section122
of the Act, which governs the registration of grants or patents involving public lands, provides that
WheneverpubliclandsinthePhilippineIslandsbelongingtotheGovernmentoftheUnitedStatesor
to the Government of the Philippines are alienated, granted or conveyed to persons or to public or
private corporations, the same shall be brought forthwith under the operation of this Act (Land
RegistrationAct,Act496)andshallbecomeregisteredlands.
The first four cases cited involve petitions to cancel the land patents and the corresponding
certificates of titles issued to private parties. These four cases uniformly hold that the Director of
Lands has no jurisdiction over private lands or that upon issuance of the certificate of title the land
automaticallycomesundertheTorrensSystem.Thefifthcasecitedinvolvestheregistrationunderthe
Torrens System of a 12.8hectare public land granted by the National Government to Mindanao
Medical Center, a government unit under the Department of Health. The National Government
transferred the 12.8hectare public land to serve as the site for the hospital buildings and other
facilities of Mindanao Medical Center, which performed a public service. The Court affirmed the
registration of the 12.8hectare public land in the name of Mindanao Medical Center under Section
122ofActNo.496.ThisfifthcaseisanexampleofapubliclandbeingregisteredunderActNo.496
withoutthelandlosingitscharacterasapropertyofpublicdominion.
Intheinstantcase,theonlypatentandcertificatesoftitleissuedarethoseinthenameofPEA,a
whollygovernmentownedcorporationperformingpublicaswellasproprietaryfunctions.Nopatentor
certificate of title has been issued to any private party. No one is asking the Director of Lands to
cancel PEAs patent or certificates of title. In fact, the thrust of the instant petition is that PEAs
certificatesoftitleshouldremainwithPEA,andthelandcoveredbythesecertificates,beingalienable
landsofthepublicdomain,shouldnotbesoldtoaprivatecorporation.
RegistrationoflandunderActNo.496orPDNo.1529doesnotvestintheregistrantprivateor
publicownershipoftheland.Registrationisnotamodeofacquiringownershipbutismerelyevidence
of ownership previously conferred by any of the recognized modes of acquiring ownership.
Registration does not give the registrant a better right than what the registrant had prior to the
registration.[102] The registration of lands of the public domain under the Torrens system, by itself,
cannotconvertpubliclandsintoprivatelands.[103]
Jurisprudence holding that upon the grant of the patent or issuance of the certificate of title the
alienablelandofthepublicdomainautomaticallybecomesprivatelandcannotapplytogovernment
units and entities like PEA. The transfer of the Freedom Islands to PEA was made subject to the
provisions of CA No. 141 as expressly stated in Special Patent No. 3517 issued by then President
Aquino,towit:
NOW,THEREFORE,KNOWYE,thatbyauthorityoftheConstitutionofthePhilippinesandin
conformitywiththeprovisionsofPresidentialDecreeNo.1084,supplementedbyCommonwealth
ActNo.141,asamended,thereareherebygrantedandconveyeduntothePublicEstatesAuthority
theaforesaidtractsoflandcontainingatotalareaofonemillionninehundredfifteenthousandeight
hundredninetyfour(1,915,894)squaremetersthetechnicaldescriptionofwhichareheretoattached
andmadeanintegralparthereof.(Emphasissupplied)
Thus,theprovisionsofCANo.141applytotheFreedomIslandsonmattersnotcoveredbyPD
No. 1084. Section 60 of CA No. 141 prohibits, except when authorized by Congress, the sale of
alienablelandsofthepublicdomainthataretransferredtogovernmentunitsorentities.Section60of
CA No. 141 constitutes, under Section 44 of PD No. 1529, a statutory lien affecting title of the
registeredlandevenifnotannotatedonthecertificateoftitle.[104]Alienablelandsofthepublicdomain
heldbygovernmententitiesunderSection60ofCANo.141remainpubliclandsbecausetheycannot
be alienated or encumbered unless Congress passes a law authorizing their disposition. Congress,
however,cannotauthorizethesaletoprivatecorporationsofreclaimedalienablelandsofthepublic
domainbecauseoftheconstitutionalban.Onlyindividualscanbenefitfromsuchlaw.
ThegrantoflegislativeauthoritytosellpubliclandsinaccordancewithSection60ofCANo.141
doesnotautomaticallyconvertalienablelandsofthepublicdomainintoprivateorpatrimoniallands.
The alienable lands of the public domain must be transferred to qualified private parties, or to
governmententitiesnottaskedtodisposeofpubliclands,beforetheselandscanbecomeprivateor
patrimoniallands.Otherwise,theconstitutionalbanwillbecomeillusoryifCongresscandeclarelands
ofthepublicdomainasprivateorpatrimoniallandsinthehandsofagovernmentagencytaskedto
dispose of public lands. This will allow private corporations to acquire directly from government
agencieslimitlessareasoflandswhich,priortosuchlaw,areconcededlypubliclands.
UnderEONo.525,PEAbecamethecentralimplementingagencyoftheNationalGovernment
toreclaimforeshoreandsubmergedareasofthepublicdomain.Thus,EONo.525declaresthat
EXECUTIVEORDERNO.525
DesignatingthePublicEstatesAuthorityastheAgencyPrimarilyResponsibleforallReclamation
Projects
Whereas,thereareseveralreclamationprojectswhichareongoingorbeingproposedtobe
undertakeninvariouspartsofthecountrywhichneedtobeevaluatedforconsistencywithnational
programs
Whereas,thereisaneedtogivefurtherinstitutionalsupporttotheGovernmentsdeclaredpolicyto
provideforacoordinated,economicalandefficientreclamationoflands
Whereas,PresidentialDecreeNo.3Arequiresthatallreclamationofareasshallbelimitedtothe
NationalGovernmentoranypersonauthorizedbyitunderpropercontract
Whereas,acentralauthorityisneededtoactonbehalfoftheNationalGovernmentwhichshall
ensureacoordinatedandintegratedapproachinthereclamationoflands
Whereas,PresidentialDecreeNo.1084createsthePublicEstatesAuthorityasagovernment
corporationtoundertakereclamationoflandsandensuretheirmaximumutilizationin
promotingpublicwelfareandinterestsand
Whereas,PresidentialDecreeNo.1416providesthePresidentwithcontinuingauthoritytoreorganize
thenationalgovernmentincludingthetransfer,abolition,ormergeroffunctionsandoffices.
NOW,THEREFORE,I,FERDINANDE.MARCOS,PresidentofthePhilippines,byvirtueofthe
powersvestedinmebytheConstitutionandpursuanttoPresidentialDecreeNo.1416,dohereby
orderanddirectthefollowing:
Section1.ThePublicEstatesAuthority(PEA)shallbeprimarilyresponsibleforintegrating,
directing,andcoordinatingallreclamationprojectsforandonbehalfoftheNational
Government.AllreclamationprojectsshallbeapprovedbythePresidentuponrecommendationof
thePEA,andshallbeundertakenbythePEAorthroughapropercontractexecutedbyitwithany
personorentityProvided,that,reclamationprojectsofanynationalgovernmentagencyorentity
authorizedunderitschartershallbeundertakeninconsultationwiththePEAuponapprovalofthe
President.
xxx.
As the central implementing agency tasked to undertake reclamation projects nationwide, with
authority to sell reclaimed lands, PEA took the place of DENR as the government agency charged
withleasingorsellingreclaimedlandsofthepublicdomain.Thereclaimedlandsbeingleasedorsold
by PEA are not private lands, in the same manner that DENR, when it disposes of other alienable
lands,doesnotdisposeofprivatelandsbutalienablelandsofthepublicdomain.Onlywhenqualified
private parties acquire these lands will the lands become private lands. In the hands of the
governmentagencytaskedandauthorizedtodisposeofalienableofdisposablelandsofthe
publicdomain,theselandsarestillpublic,notprivatelands.
Furthermore,PEAscharterexpresslystatesthatPEAshallholdlandsofthepublicdomainas
wellasanyandallkindsoflands.PEAcanholdbothlandsofthepublicdomainandprivatelands.
Thus,themerefactthatalienablelandsofthepublicdomainliketheFreedomIslandsaretransferred
toPEAandissuedlandpatentsorcertificatesoftitleinPEAsnamedoesnotautomaticallymakesuch
landsprivate.
ToallowvastareasofreclaimedlandsofthepublicdomaintobetransferredtoPEAasprivate
lands will sanction a gross violation of the constitutional ban on private corporations from acquiring
anykindofalienablelandofthepublicdomain.PEAwillsimplyturnaround,asPEAhasnowdone
undertheAmendedJVA,andtransferseveralhundredsofhectaresofthesereclaimedandstillto
bereclaimedlandstoasingleprivatecorporationinonlyonetransaction.Thisschemewilleffectively
nullifytheconstitutionalbaninSection3,ArticleXIIofthe1987Constitutionwhichwasintendedto
diffuse equitably the ownership of alienable lands of the public domain among Filipinos, now
numberingover80millionstrong.
Thisscheme,ifallowed,canevenbeappliedtoalienableagriculturallandsofthepublicdomain
sincePEAcanacquirexxxanyandallkindsoflands.Thiswillopenthefloodgatestocorporations
andevenindividualsacquiringhundredsofhectaresofalienablelandsofthepublicdomainunderthe
guisethatinthehandsofPEAtheselandsareprivatelands.Thiswillresultincorporationsamassing
hugelandholdingsneverbeforeseeninthiscountrycreatingtheveryevilthattheconstitutionalban
wasdesignedtoprevent.Thiswillcompletelyreversethecleardirectionofconstitutionaldevelopment
in this country. The 1935 Constitution allowed private corporations to acquire not more than 1,024
hectaresofpubliclands.[105]The1973Constitutionprohibitedprivatecorporationsfromacquiringany
kindofpublicland,andthe1987Constitutionhasunequivocallyreiteratedthisprohibition.
ThecontentionofPEAandAMARIthatpubliclands,onceregisteredunderActNo.496orPDNo.
1529,automaticallybecomeprivatelandsiscontrarytoexistinglaws.Severallawsauthorizelandsof
the public domain to be registered under the Torrens System or Act No. 496, now PD No. 1529,
withoutlosingtheircharacteraspubliclands.Section122ofActNo.496,andSection103ofPDNo.
1529,respectively,provideasfollows:
ActNo.496
Sec.122.WheneverpubliclandsinthePhilippineIslandsbelongingtothexxxGovernmentofthe
PhilippineIslandsarealienated,granted,orconveyedtopersonsorthepublicorprivate
corporations,thesameshallbebroughtforthwithundertheoperationofthisActandshallbecome
registeredlands.
PDNo.1529
Sec.103.CertificateofTitletoPatents.WheneverpubliclandisbytheGovernmentalienated,
grantedorconveyedtoanyperson,thesameshallbebroughtforthwithundertheoperationofthis
Decree.(Emphasissupplied)
Based on its legislative history, the phrase conveyed to any person in Section 103 of PD No. 1529
includesconveyancesofpubliclandstopubliccorporations.
Alienablelandsofthepublicdomaingranted,donated,ortransferredtoaprovince,municipality,
or branch or subdivision of the Government, as provided in Section 60 of CA No. 141, may be
registered under the Torrens System pursuant to Section 103 of PD No. 1529. Such registration,
however,isexpresslysubjecttotheconditioninSection60ofCANo.141thatthelandshallnotbe
alienated, encumbered or otherwise disposed of in a manner affecting its title, except when
authorizedbyCongress.Thisprovisionreferstogovernmentreclaimed,foreshoreandmarshylands
of the public domain that have been titled but still cannot be alienated or encumbered unless
expressly authorized by Congress. The need for legislative authority prevents the registered land of
thepublicdomainfrombecomingprivatelandthatcanbedisposedoftoqualifiedprivateparties.
TheRevisedAdministrativeCodeof1987alsorecognizesthatlandsofthepublicdomainmaybe
registeredundertheTorrensSystem.Section48,Chapter12,BookIoftheCodestates
Sec.48.OfficialAuthorizedtoConveyRealProperty.WheneverrealpropertyoftheGovernmentis
authorizedbylawtobeconveyed,thedeedofconveyanceshallbeexecutedinbehalfofthe
governmentbythefollowing:
(1)xxx
(2)ForpropertybelongingtotheRepublicofthePhilippines,buttitledinthenameofany
politicalsubdivisionorofanycorporateagencyorinstrumentality,bytheexecutiveheadofthe
agencyorinstrumentality.(Emphasissupplied)
Thus,privatepropertypurchasedbytheNationalGovernmentforexpansionofapublicwharfmaybe
titled in the name of a government corporation regulating port operations in the country. Private
propertypurchasedbytheNationalGovernmentforexpansionofanairportmayalsobetitledinthe
name of the government agency tasked to administer the airport. Private property donated to a
municipality for use as a town plaza or public school site may likewise be titled in the name of the
municipality.[106]Allthesepropertiesbecomepropertiesofthepublicdomain,andifalreadyregistered
under Act No. 496 or PD No. 1529, remain registered land. There is no requirement or provision in
anyexistinglawforthederegistrationoflandfromtheTorrensSystem.
PrivatelandstakenbytheGovernmentforpublicuseunderitspowerofeminentdomainbecome
unquestionably part of the public domain. Nevertheless, Section 85 of PD No. 1529 authorizes the
RegisterofDeedstoissueinthenameoftheNationalGovernmentnewcertificatesoftitlecovering
suchexpropriatedlands.Section85ofPDNo.1529states
Sec.85.Landtakenbyeminentdomain.Wheneveranyregisteredland,orinteresttherein,is
expropriatedortakenbyeminentdomain,theNationalGovernment,province,cityormunicipality,or
anyotheragencyorinstrumentalityexercisingsuchrightshallfileforregistrationintheproper
Registryacertifiedcopyofthejudgmentwhichshallstatedefinitelybyanadequatedescription,the
particularpropertyorinterestexpropriated,thenumberofthecertificateoftitle,andthenatureofthe
publicuse.Amemorandumoftherightorinteresttakenshallbemadeoneachcertificateoftitleby
theRegisterofDeeds,andwherethefeesimpleistaken,anewcertificateshallbeissuedinfavor
oftheNationalGovernment,province,city,municipality,oranyotheragencyorinstrumentality
exercisingsuchrightforthelandsotaken.Thelegalexpensesincidenttothememorandumof
registrationorissuanceofanewcertificateoftitleshallbefortheaccountoftheauthoritytakingthe
landorinteresttherein.(Emphasissupplied)
Consequently, lands registered under Act No. 496 or PD No. 1529 are not exclusively private or
patrimoniallands.Landsofthepublicdomainmayalsoberegisteredpursuanttoexistinglaws.
AMARI makes a parting shot that the Amended JVA is not a sale to AMARI of the Freedom
IslandsorofthelandstobereclaimedfromsubmergedareasofManilaBay.InthewordsofAMARI,
theAmendedJVAisnotasalebutajointventurewithastipulationforreimbursementoftheoriginal
cost incurred by PEA for the earlier reclamation and construction works performed by the CDCP
underits1973contractwiththeRepublic.WhethertheAmendedJVAisasaleorajointventure,the
fact remains that the Amended JVA requires PEA to cause the issuance and delivery of the
certificatesoftitleconveyingAMARIsLandShareinthenameofAMARI.[107]
ThisstipulationstillcontravenesSection3,ArticleXIIofthe1987Constitutionwhichprovidesthat
private corporations shall not hold such alienable lands of the public domain except by lease. The
transferoftitleandownershiptoAMARIclearlymeansthatAMARIwillholdthereclaimedlandsother
thanbylease.Thetransferoftitleandownershipisadispositionofthereclaimedlands,atransaction
consideredasaleoralienationunderCANo.141,[108]theGovernmentAuditingCode,[109]andSection
3,ArticleXIIofthe1987Constitution.
TheRegaliandoctrineisdeeplyimplantedinourlegalsystem.Foreshoreandsubmergedareas
formpartofthepublicdomainandareinalienable.Landsreclaimedfrom foreshore and submerged
areasalsoformpartofthepublicdomainandarealsoinalienable,unlessconvertedpursuanttolaw
into alienable or disposable lands of the public domain. Historically, lands reclaimed by the
government are sui generis, not available for sale to private parties unlike other alienable public
lands. Reclaimed lands retain their inherent potential as areas for public use or public service.
Alienable lands of the public domain, increasingly becoming scarce natural resources, are to be
distributed equitably among our evergrowing population. To insure such equitable distribution, the
1973 and 1987 Constitutions have barred private corporations from acquiring any kind of alienable
landofthepublicdomain.ThosewhoattempttodisposeofinalienablenaturalresourcesoftheState,
or seek to circumvent the constitutional ban on alienation of lands of the public domain to private
corporations,dosoattheirownrisk.
Wecannowsummarizeourconclusionsasfollows:
1.The157.84hectaresofreclaimedlandscomprisingtheFreedomIslands,nowcoveredbycertificates
oftitleinthenameofPEA,arealienablelandsofthepublicdomain.PEAmayleasetheselands
toprivatecorporationsbutmaynotsellortransferownershipoftheselandstoprivatecorporations.
PEAmayonlyselltheselandstoPhilippinecitizens,subjecttotheownershiplimitationsinthe1987
Constitutionandexistinglaws.
2.The592.15hectaresofsubmergedareasofManilaBayremaininalienablenaturalresourcesofthe
public domain until classified as alienable or disposable lands open to disposition and declared no
longerneededforpublicservice.Thegovernmentcanmakesuchclassificationanddeclarationonly
after PEA has reclaimed these submerged areas.Only then can these lands qualify as agricultural
landsofthepublicdomain,whicharetheonlynaturalresourcesthegovernmentcanalienate.Intheir
presentstate,the592.15hectaresofsubmergedareasareinalienableandoutsidethecommerce
ofman.
3. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of 77.34
hectares[110]oftheFreedomIslands,suchtransferisvoidforbeingcontrarytoSection3,ArticleXIIof
the1987Constitutionwhichprohibitsprivatecorporationsfromacquiringanykindofalienablelandof
thepublicdomain.
4.SincetheAmendedJVAalsoseekstotransfertoAMARIownershipof290.156hectares[111]of still
submergedareasofManilaBay,suchtransferisvoidforbeingcontrarytoSection2,ArticleXIIofthe
1987Constitutionwhichprohibitsthealienationofnaturalresourcesotherthanagriculturallandsof
thepublicdomain.PEAmayreclaimthesesubmergedareas.Thereafter,thegovernmentcanclassify
thereclaimedlandsasalienableordisposable,andfurtherdeclarethemnolongerneededforpublic
service.Still,thetransferofsuchreclaimedalienablelandsofthepublicdomaintoAMARIwillbevoid
in view of Section 3, Article XII of the 1987 Constitution which prohibits private corporations from
acquiringanykindofalienablelandofthepublicdomain.
Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987 Constitution.
Under Article 1409[112] of the Civil Code, contracts whose object or purpose is contrary to law, or
whoseobjectisoutsidethecommerceofmen,areinexistentandvoidfromthebeginning.TheCourt
mustperformitsdutytodefendandupholdtheConstitution,andthereforedeclarestheAmendedJVA
nullandvoidabinitio.
Seventhissue:whethertheCourtistheproperforumtoraisetheissueofwhetherthe
AmendedJVAisgrosslydisadvantageoustothegovernment.
ConsideringthattheAmendedJVAisnullandvoidabinitio,thereisnonecessitytoruleonthis
last issue. Besides, the Court is not a trier of facts, and this last issue involves a determination of
factualmatters.
WHEREFORE, the petition is GRANTED. The Public Estates Authority and Amari Coastal Bay
Development Corporation are PERMANENTLY ENJOINED from implementing the Amended Joint
VentureAgreementwhichisherebydeclaredNULLandVOIDabinitio.
SOORDERED.
Davide,Jr.,C.J.,Bellosillo, Puno, Vitug, Kapunan, Mendoza, Panganiban,Quisumbing,Ynares
Santiago,SandovalGutierrez,AustriaMartinez,andCorona,JJ.,concur.
[1]Section4ofPDNo.1084.
[2]PEAsMemorandumdatedAugust4,1999,p.3.
[3]PEAsMemorandum,supranote2at7.PEAsMemorandumquotedextensively,initsStatementofFactsandtheCase,
theStatementofFactsinSenateCommitteeReportNo.560datedSeptember16,1997.
[4]InOpinionNo.330datedDecember23,1994,theGovernmentCorporateCounsel,citingCOAAuditCircularNo.89296,
advised PEA that PEA could negotiate the sale of the 157.84hectare Freedom Islands in view of the failure of the public
biddingheldonDecember10,1991wheretherewasnotasinglebidder.SeealsoSenateCommitteeReportNo.560,p.12.
[5]PEAsMemorandum,supranote2at9.
[6]Ibid.
[7]The existence of this report is a matter of judicial notice pursuant to Section 1, Rule 129 of the Rules of Court which
provides,Acourtshalltakejudicialnotice,withouttheintroductionofevidence,ofxxxtheofficialactsofthelegislaturexx
x.
[8]TeofistoGuingona,Jr.
[9]RenatoCayetano.
[10]VirgilioC.Abejo.
[11]ReportandRecommendationoftheLegalTaskForce,AnnexC,AMARIsMemorandumdatedJune19,1999.
[12]AMARIsCommentdatedJune24,1998,p.3Rollo,p.68.
[13]AMARIfiledthreemotionsforextensionoftimetofilecomment(Rollo,pp.32,38,48),whilePEAfiledninemotionsfor
extensionoftime(Rollo,pp.127,139).
[14]PetitionersMemorandumdatedJuly6,1999,p.42.
[15]RepresentedbytheOfficeoftheSolicitorGeneral,withSolicitorGeneralRicardoP.Galvez,AssistantSolicitorGeneral
AzucenaR.BalanonCorpuz,andAssociateSolicitorRaymundI.RigodonsigningPEAsMemorandum.
[16]RepresentedbyAzcunaYoracArroyo&ChuaLawOffices,andRomuloMabantaSayoc&DelosAngelesLawOffices.
[17]Salongav. Pao, 134 SCRA 438 (1985) Gonzales v. Marcos, 65 SCRA 624 (1975 ) Aquinov. Enrile, 59 SCRA 183
(1974)DelaCamarav.Enage,41SCRA1(1971).
[18]Section11,ArticleXIV.
[19]ManilaElectricCo.v.JudgeF.CastroBartolome,114SCRA799(1982)Republicv.CAandIglesia,andRepublicv.
CendanaandIglesianiCristo,119SCRA449(1982)Republicv.VillanuevaandIglesianiCristo,114 SCRA 875 (1982)
DirectorofLandsv.Lood,124SCRA460(1983)Republicv.IglesianiCristo,128SCRA44(1984)DirectorofLandsv.
HermanosyHermanasdeSta.CruzdeMayo,Inc.,141SCRA21(1986)DirectorofLandsv.IACandAcmePlywood&
Veneer Co., 146 SCRA 509 (1986) Republic v. IAC and Roman Catholic Bishop of Lucena, 168 SCRA 165 (1988)
Natividadv.CA,202SCRA493(1991)Villaflorv.CAandNasipitLumberCo.,280SCRA297(1997).InAyogv.Cusi,118
SCRA492(1982),theCourtdidnotapplytheconstitutionalbaninthe1973Constitutionbecausetheapplicantcorporation,
Bian Development Co., Inc., had fully complied with all its obligations and even paid the full purchase price before the
effectivityofthe1973Constitution,althoughthesalespatentwasissuedafterthe1973Constitutiontookeffect.
[20]PDNo.1073.
[21]AnnexB,AMARIsMemorandumdatedJune19,1999,Section5.2(c)and(e)oftheAmendedJVA,pp.1617.
[22]Chavezv.PCGG,299SCRA744(1998).
[23]136SCRA27(1985).
[24]Article 2 of the Civil Code (prior to its amendment by EO No. 200) provided as follows: Laws shall take effect after
fifteendaysfollowingthecompletionoftheirpublicationintheOfficialGazette,unlessitisprovidedotherwise,xxx.
[25]Section 1 of CA No. 638 provides as follows: There shall be published in the Official Gazette all important legislative
acts and resolutions of the Congress of the Philippines all executive and administrative orders and proclamations, except
suchashavenogeneralapplicabilityxxx.
[26]Section 79 of the Government Auditing Codes provides as follows: When government property has become
unserviceable for any cause, or is no longer needed, it shall, upon application of the officer accountable therefor, be
inspected by the head of the agency or his duly authorized representative in the presence of the auditor concerned and, if
found to be valueless or unsaleable, it may be destroyed in their presence.If found to be valuable, it may be sold at
public auction to the highest bidder under the supervision of the proper committee on award or similar body in the
presence of the auditor concerned or other authorized representative of the Commission, after advertising by printed
noticeintheOfficialGazette,orfornotlessthanthreeconsecutivedaysinanynewspaperofgeneralcirculation,or
wherethevalueofthepropertydoesnotwarranttheexpenseofpublication,bynoticespostedforalikeperiodinatleast
threepublicplacesinthelocalitywherethepropertyistobesold.Intheeventthatthepublicauctionfails,theproperty
maybesoldataprivatesaleatsuchpriceasmaybefixedbythesamecommitteeorbodyconcernedandapproved
bytheCommission.
[27]Paatv. Court of Appeals, 266 SCRA 167 (1997) Quisumbing v. Judge Gumban, 193 SCRA 520 (1991) Valmonte v.
Belmonte,Jr.,170SCRA256(1989).
[28]Seenote22.
[29] Section 1, Article XI of the 1987 Constitution states as follows: Public office is a public trust. Public officers and
employees must at all times be accountable to the people, serve them with utmost responsibility, integrity, loyalty, and
efficiency,actwithpatriotismandjustice,andleadmodestlives.
[30]170SCRA256(1989).
[31]Seenote22.
[32]RecordoftheConstitutionalCommission,Vol.V,pp.2425,(1986).
[33]Supra,Note22.
[34]Ibid.
[35]Legaspiv.CivilServiceCommission,150SCRA530(1987).
[36]Almontev.Vasquez,244SCRA286(1995).
[37]SeeNote22.
[38]Chavezv.PCGG,seenote22AquinoSarmientov.Morato,203SCRA515(1991).
[39]Almontev.Vasquez,seenote36.
[40]PeoplesMovementforPressFreedom,etal.v.Hon.RaulManglapus,G.R.No.84642,EnBancResolutiondatedApril
13,1988Chavezv.PCGG,seenote22.
[41]Section270oftheNationalInternalRevenueCodepunishesanyofficeroremployeeoftheBureauofInternalRevenue
who divulges to any person, except as allowed by law, information regarding the business, income, or estate of any
taxpayer, the secrets, operation, style of work, or apparatus of any manufacturer or producer, or confidential information
regarding the business of any taxpayer, knowledge of which was acquired by him in the discharge of his official duties.
Section 14 of R.A. No. 8800 (Safeguard Measures Act) prohibits the release to the public of confidential information
submitted in evidence to the Tariff Commission.Section 3 (n) of R.A. No. 8504 (Philippine AIDS Prevention and Control
Act) classifies as confidential the medical records of HIV patients.Section 6 (j) of R.A. No. 8043 (InterCountry Adoption
Act)classifiesasconfidentialtherecordsoftheadoptedchild,adoptingparents,andnaturalparents.Section94(f)ofR.A.
No. 7942 (Philippine Mining Act) requires the Department of Environment and Natural Resources to maintain the
confidentiality of confidential information supplied by contractors who are parties to mineral agreements or financial and
technicalassistanceagreements.
[42]TheRecopilacion de Leyes de las Indias declared that: We, having acquired full sovereignty over the Indies, and all
lands, territories, and possessions not heretofore ceded away by our royal predecessors, or by us, or in our name, still
pertainingtotheroyalcrownandpatrimony,itisourwillthatalllandswhichareheldwithoutproperandtruedeedsofgrant
be restored to us according as they belong to us, in order that after reserving before all what to us or to our viceroys,
audiencias, and governors may seem necessary for public squares, ways, pastures, and commons in those places which
arepeopled,takingintoconsiderationnotonlytheirpresentcondition,butalsotheirfutureandtheirprobableincrease,and
afterdistributingtothenativeswhatmaybenecessaryfortillageandpasturage,confirmingtheminwhattheynowhaveand
givingthemmoreifnecessary,alltherestofsaidlandsmayremainfreeandunencumberedforustodisposeofaswemay
wish.See concurring opinion of Justice Reynato S. Puno in Republic Real Estate Corporation v. Court of Appeals, 299
SCRA199(1998).
[43]Cariov.InsularGovernment,41Phil.935(1909).TheexceptionmentionedinCario,referringtolandsinthepossession
ofanoccupantandofhispredecessorsininterest,sincetimeimmemorial,isactuallyaspeciesofagrantbytheState.The
United States Supreme Court, speaking through Justice Oliver Wendell Holmes, Jr., declared in Cario: Prescription is
mentionedagainintheroyalcedulaofOctober15,1754,citedin3Philippine,546Wheresuchpossessorsshallnotbeable
toproducetitledeeds,itshallbesufficientiftheyshallshowthatancientpossession,asavalidtitlebyprescription.Itmay
bethatthismeanspossessionfrombefore1700but,atallevents,theprincipleisadmitted.Asprescription,evenagainst
the Crown lands, was recognized by the laws of Spain, we see no sufficient reason for hesitating to admit that it was
recognized in the Philippines in regard to lands over which Spain had only a paper sovereignty.SeealsoRepublicv. Lee,
197SCRA13(1991).
[44]Article1oftheSpanishLawofWatersof1866.
[45]Ignaciov.DirectorofLands,108Phil.335(1960)Jovenv.DirectorofLands,93Phil.134(1953)Laurelv.Garcia,187
SCRA 797 (1990). See concurring opinion of Justice Reynato S. Puno in Republic Real Estate Corporation v. Court of
Appeals,299SCRA199(1998).
[46] Act No. 926, enacted on October 7, 1903, was also titled the Public Land Act. This Act, however, did not cover
reclaimedlands.Nevertheless, Section 23 of this Act provided as follows: x x xIn no case may lands leased under the
provisionsofthischapterbetakensoastogaincontrolofadjacentland,water,stream,shoreline,way,roadstead,orother
valuable right which in the opinion of the Chief of the Bureau of Public Lands would be prejudicial to the interests of the
public.
[47]Section 10 of Act No. 2874 provided as follows: The words alienation, disposition, or concession as used in this Act,
shall mean any of the methods authorized by this Act for the acquisition, lease, use, or benefit of the lands of the public
domainotherthantimberorminerallands.
[48]TitleIIofActNo.2874governedalienablelandsofthepublicdomainforagriculturalpurposes,whileTitleIIIofthesame
Actgovernedalienablelandsofthepublicdomainfornonagriculturalpurposes.
[49]Section57ofActNo.2874provided as follows: x x x but the land so granted, donated, or transferred to a province,
municipality,orbranchorsubdivisionoftheGovernmentshallnotbealienated,encumbered,orotherwisedisposedofina
manneraffectingitstitle,exceptwhenauthorizedbythelegislaturexxx.
[50]Krivenkov.RegisterofDeeds,79Phil.461(1947).5
[51]Section2ofCANo.141statesasfollows:TheprovisionsofthisActshallapplytothelandsofthepublicdomainbut
timberandminerallandsshallbegovernedbyspeciallawsandnothinginthisActprovidedshallbeunderstoodorconstrued
to change or modify the administration and disposition of the lands commonly called friar lands and those which, being
privatelyowned,haverevertedtoorbecomethepropertyoftheCommonwealthofthePhilippines,whichadministrationand
dispositionshallbegovernedbythelawsatpresentinforceorwhichmayhereafterbeenacted.
[52] Like Act No. 2874, Section 10 of CA No. 141 defined the terms alienation and disposition as follows: The words
alienation, disposition, or concession as used in this Act, shall mean any of the methods authorized by this Act for the
acquisition,lease,use,orbenefitofthelandsofthepublicdomainotherthantimberorminerallands.
[53]R.A.No.6657hassuspendedtheauthorityofthePresidenttoreclassifyforestorminerallandsintoagriculturallands.
Section4(a)ofRANo.6657(ComprehensiveAgrarianReformLawof1988)states,Noreclassificationofforestormineral
landstoagriculturallandsshallbeundertakenaftertheapprovalofthisActuntilCongress,takingintoaccountecological,
developmentalandequityconsiderations,shallhavedelimitedbylaw,thespecificlimitsofthepublicdomain.
[54]CoveringSections58to68ofCANo.141.
[55]299SCRA199(1998).
[56] Section 1, Article XIII of the 1935 Constitution limited the disposition and utilization of public agricultural lands to
PhilippinecitizensortocorporationsatleastsixtypercentownedbyPhilippinecitizens.Thiswas,however,subjecttothe
original Ordinance appended to the 1935 Constitution stating, among others, that until the withdrawal of United States
sovereignty in the Philippines, Citizens and corporations of the United States shall enjoy in the Commonwealth of the
Philippinesallthecivilrightsofthecitizensandcorporations,respectively,thereof.
[57]Section44ofPDNo.1529(previouslySection39ofActNo.496)providesthatliens,claimsorrightsarisingorexisting
underthelawsandtheConstitutionofthePhilippineswhicharenotbylawrequiredtoappearofrecordintheRegistryof
Deedsinordertobevalidagainstsubsequentpurchasersorencumbrancersofrecordconstitutestatutoryliensaffectingthe
title.
[58]RANo.730,whichtookeffectonJune18,1952,authorizedtheprivatesaleofhomelotstoactualoccupantsofpublic
lands not needed for public service. Section 1 of RA No. 730 provided as follows: Notwithstanding the provisions of
Sections61and67ofCommonwealthActNo.141,asamendedbyRANo.293,anyFilipinocitizenoflegalagewhoisnot
theownerofahomelotinthemunicipalityorcityinwhichheresidesandwhohadingoodfaithestablishedhisresidence
on a parcel of land of the Republic of the Philippines which is not needed for public service, shall be given preference to
purchaseataprivatesaleofwhichreasonablenoticeshallbegiventohim,notmorethanonethousandsquaremetersata
pricetobefixedbytheDirectorofLandswiththeapprovaloftheSecretaryofAgricultureandNaturalResources.xxx.In
addition, on June 16, 1948, Congress enacted R.A. No. 293 allowing the privatesale of marshy alienable or disposable
lands of the public domain to lessees who have improved and utilized the same as farms, fishponds or other similar
purposes for at least five years from the date of the lease contract with the government.R.A. No. 293, however, did not
apply to marshy lands under Section 56 (c), Title III of CA No. 141 which refers to marshy lands leased for residential,
commercial,industrialorothernonagriculturalpurposes.
[59]Seenote49.
[60]Seenote60.
[61]RepublicRealEstateCorporationv.CourtofAppeals,seenote56.
[62]Ibid.
[63]InsularGovernmentv.Aldecoa,19Phil.505(1911)Governmentv.Cabangis,53Phil.112(1929).
[64]118SCRA492(1982).
[65]AnnexB,AMARIsMemorandum,seenote2at1&2.
[66]PEAsMemorandum,seenote6.
[67]Ibid.,p.44.
[68]Seenotes9,10&11.
[69]AnnexC,p.3,AMARIsMemorandum,seenote12at3.
[70]ThisshouldreadArticleXII.
[71]Section8ofCANo.141.
[72]Emphasissupplied.
[73]187SCRA797(1990).
[74]Article 422 of the Civil Code states as follows: Property of public dominion, when no longer needed for public use or
publicservice,shallformpartofthepatrimonialpropertyoftheState.
[75]AMARIsCommentdatedJune24,1998,p.20Rollo,p.85.
[76]Dizonv.Rodriguez,13SCRA705(1965)Republicv.LatVda.deCastillo,163SCRA286(1988).
[77]Cariov.InsularGovernment,41Phil.935(1909).
[78]Proclamation No. 41, issued by President Ramon Magsaysay on July 5, 1954, reserved for National Park purposes
464.66 hectares of the public domain in Manila Bay situated in the cities of Manila and Pasay and the municipality of
Paranaque,ProvinceofRizal,IslandofLuzon,whicharea,asdescribedindetailintheProclamation,is[B]oundedonthe
North,byManilaBayontheEast,byDeweyBoulevardandonthesouthandwest,byManilaBay.Seeconcurringopinion
of Justice Reynato S. Puno in Republic Real Estate Corporation v. Court of Appeals, 299 SCRA 1999 (1998). Under
Sections2and3,ArticleXIIofthe1987Constitution,nationalparksareinalienablenaturalresourcesoftheState.
[79]FifthWhereasclauseofEONo.525.
[80]Section4,ChapterI,TitleXIV,BookIV.
[81]
Section 6 of CA No 141 provides as follows: The President, upon the recommendation of the Secretary of
AgricultureandCommerce,shallfromtimetotimeclassifythelandsofthepublicdomaininto(a)Alienableordisposable,
xxx.
[82]
Section 7 of CA No. 141 provides as follows: For purposes of the administration and disposition of alienable or
disposable public lands, the President, upon recommendation by the Secretary of Agriculture and Commerce, shall
fromtimetotimedeclarewhatlandsareopentodispositionorconcessionunderthisAct.
[83]OnLandsforResidential,Commercial,orIndustrialandotherSimilarPurposes.
[84]RANo.293,enactedonJune16,1948,authorizedthesaleofmarshylandsundercertainconditions.Section1ofRA
No.293providedasfollows:TheprovisionsofsectionsixtyoneofCommonwealthActNumberedOnehundredandforty
onetothecontrarynotwithstanding,marshylandsandlandsunderwaterborderingonshoresorbanksornavigablelakesor
riverswhicharecoveredbysubsistingleasesorleaseswhichmayhereafterbedulygrantedundertheprovisionsofthesaid
Act and are already improved and have been utilized for farming, fishpond, or similar purposes for at least five years from
thedateofthecontractoflease,maybesoldtothelesseesthereofundertheprovisionsofChapterFiveofthesaidActas
soonasthePresident,uponrecommendationoftheSecretaryofAgricultureandNaturalResources,shalldeclarethatthe
samearenotnecessaryforthepublicservice.
[85]PEAsMemorandum,seenote2at45.
[86]Seenote73.
[87]Section4(b)ofPDNo.1084
[88]R.A.No.730allowstheprivatesaleofhomelotstoactualoccupantsofpubliclands.Seenote63.
[89]IssuedonFebruary26,1981.
[90]WhilePEAclaimstherewasafailureofpublicbiddingonDecember10,1991,thereisnoshowingthattheCommission
on Audit approved the price or consideration stipulated in the negotiated Amended JVA as required by Section 79 of the
GovernmentAuditingCode.SenateCommitteeReportNo.560didnotdiscussthisissue.
[91]Paragraph2(a)ofCOACircularNo.89296,onSaleThruNegotiation,statesthatdisposalthroughnegotiatedsalemay
beresortedtoif[T]herewasafailureofpublicauction.
[92]SenateCommitteeReportNo.560,StatementofFacts,p.7,citingPEABoardResolutionNo.835,asappearinginthe
Minutes of the PEA Board of Directors Meeting held on May 30, 1991, per Certification of Jaime T. De Veyra, Corporate
Secretary,datedJune11,1991.
[93]OpinionNo.330,citingCOAAuditCircularNo.89296.Seenote5.
[94]PEAsMemorandum,seenote2.
[95] Senate Committee Report No. 560, pp. 78, citing the Minutes of Meeting of the PEA Board of Directors held on
December19,1991.
[96]Section3,ArticleXIIofthe1987Constitutionprovidesasfollows:xxxCitizensofthePhilippinesmayxxxacquire
not more than twelve hectares thereof by purchase, homestead or grant. However, Section 6 of R.A. No. 6657
(Comprehensive Agrarian Reform Law) limits the ownership of public or private agricultural land to a maximum of five
hectaresperperson.
[97]96Phil.946(1955).
[98]48SCRA372(1977).
[99]168SCRA198(1988).
[100]172SCRA795(1989).
[101]73SCRA146(1976).
[102]Avilav.Tapucar,201SCRA148(1991).
[103]Republicv.AyalaCia,etal.,14SCRA259(1965)Dizonv.Rodriguez,13SCRA705(1965).
[104]Section44ofPDNo.1529statesasfollows:Everyregisteredownerreceivingacertificateoftitleinpursuanceofa
decree of registration, and every subsequent purchaser of registered land taking a certificate of title for value and in good
faith, shall hold the same free from all encumbrances except those noted on said certificate and any of the following
encumbranceswhichmaybesubsisting,namely:First.Liens, claims or rights arising or existing under the laws and
ConstitutionofthePhilippineswhicharenotbylawrequiredtoappearofrecordintheRegistryofDeedsinorder
to be valid against subsequent purchasers or encumbrancers of record. x x x.Under Section 103 of PD No. 1529,
Section44appliestocertificatesoftitleissuedpursuanttoalandpatentgrantedbythegovernment.
[105]Section2,ArticleXIIIofthe1935Constitution.
[106]Hartyv.MunicipalityofVictoria,13Phil.152(1909).
[107]AnnexB,AMARIsMemorandum,seenote21at16,Section5.2(c)oftheAmendedJVA.
[108]Section10ofCANo.141providesasfollows:Sec.10.Thewordsalienation,disposition,orconcessionasusedinthis
Act, shall mean any of the methods authorized by this Act for the acquisition,lease,use,orbenefit of the lands of the
publicdomainotherthantimberorminerallands.
[109]Section79oftheGovernmentAuditingCode,whichrequirespublicauctioninthesaleofgovernmentassets,includes
all kinds of disposal or divestment of government assets.Thus, COA Audit Circular No. 86264 dated October 16, 1986
speaksofguidelines(which)shallgovernthegeneralproceduresonthedivestmentordisposalofassetsofgovernment
ownedand/orcontrolledcorporationsandtheirsubsidiaries.Likewise,COAAuditCircularNo.89296datedJanuary27,
speaksofguidelines(which)shallbeobservedandadheredtointhedivestmentordisposalofpropertyandotherassets
of all government entities/instrumentalities and that divestment shall refer to the manner or scheme of taking away,
depriving, withdrawing of an authority, power or title. These COA Circulars implement Section 79 of the Government
AuditingCode.
[110]The share of AMARI in the Freedom Islands is 77.34 hectares, which is 70 percent of the net usable area of 110.49
hectares.ThenetusableareaisthetotallandareaoftheFreedomIslandsless30percentallocatedforcommonareas.
[111]TheshareofAMARIinthesubmergedareasforreclamationis290.129hectares,whichis70percentofthenetusable
areaof414.47hectares.
[112]Article1409oftheCivilCodeprovidesasfollows:Thefollowingcontractsareinexistentandvoidfromthebeginning:
(1) Those whose cause, object or purpose is contrary to law x x x (4) Those whose object is outside the commerce of
menxxx.

Chavez Vs Public Estates Authority - 133250 - July 9, 2002 - J

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Contrary to AMARIs contention, the commissioners of the 1986 Constitutional Commission

Thus,beforethegovernment could alienate or dispose of lands of thepublicdomain,thePresident

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