FRANCISCO I. CHAVEZ vs. PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT CORPORATION, G.R. No. 133250.

July 9, 2002; CARPIO, J.:

The Facts

The government signed a contract with the CDCP to reclaim certain foreshore and offshore areas of Manila Bay. Then President Ferdinand E.
Marcos issued PD No. 1084 creating PEA. PD No. 1084 tasked PEA to reclaim land, including foreshore and submerged areas, and to develop,
improve, acquire, lease and sell any and all kinds of lands. On the same date, He issued PD No. 1085 transferring to PEA the lands reclaimed in the
foreshore and offshore of the Manila Bay under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP).

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 MCCRRP. Subsequently, on April 9, 1988, Transfer Certificates of Titles were issued covering the three reclaimed islands
known as the Freedom Islands located at the southern portion of the Manila-Cavite Coastal Road, Paranaque City. PEA then entered into a Joint
Venture Agreement (JVA) with AMARI, a private corporation, to develop the Freedom Islands. The JVA also required the reclamation of an additional
250 hectares of submerged areas surrounding these islands to complete the configuration in the Master Development Plan of the Southern
Reclamation Project-MCCRRP. As a result of the conducted joint investigation, it was found out that 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 lands and therefore PEA cannot alienate
these lands

The Issues

Whether the stipulations in the Amended JVA for the transfer to AMARI of lands, reclaimed or to be reclaimed, violate the Constitution.

RULING: NO.

The Regalian Doctrine

The ownership of lands reclaimed from foreshore and submerged areas is rooted in the Regalian doctrine which holds that the State owns all lands
and waters of the public domain. The 1935, 1973 and 1987 Constitutions adopted the Regalian doctrine substituting, however, the State, in lieu of
the King, as the owner of all lands and waters of the public domain. The Regalian doctrine is the foundation of the time-honored principle of land
ownership that all lands that were not acquired from the Government, either by purchase or by grant, belong to the public domain. Article 339 of the
Civil Code of 1889, which is now Article 420 of the Civil Code of 1950, incorporated the Regalian doctrine.

Dispositions under the 1987 Constitution

The 1987 Constitution, like the 1935 and 1973 Constitutions before it, has adopted the Regalian 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.
Sections 2 and 3, Article XII of the 1987 Constitution state that:

Section 2. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all
other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full
control and supervision of the State.

Section 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands, and national parks. Agricultural lands
of the public domain may be further classified by law according to the uses which they may be devoted. Alienable lands of the public
domain shall be limited to agricultural lands. Private corporations or associations may not hold such alienable lands of the public domain
except by lease, for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and not to exceed one
thousand hectares in area. Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more than twelve
hectares thereof by purchase, homestead, or grant.

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 domain only
through lease. The Rationale behind the Constitutional Ban

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 constitutional ban, individuals who already acquired the maximum area of alienable lands of the public
domain could easily set up corporations to acquire more alienable public lands. An individual could own as many corporations as his means would
allow him. An individual could even hide his ownership of a corporation by putting his nominees as stockholders of the corporation. The corporation
is a convenient vehicle to circumvent the constitutional limitation on acquisition by individuals of alienable lands of the public domain.

Reclaimed lands are lands of the public domain. However, by statutory authority, the rights of ownership and disposition over reclaimed lands have
been transferred to PEA, by virtue of which PEA, as owner, may validly convey the same to any qualified person without violating the Constitution or
any statute.

The constitutional provision prohibiting private corporations from holding public land, except by lease (Sec. 3, Art. XVII, 1987 Constitution), does not
apply to reclaimed lands whose ownership has passed on to PEA by statutory grant.

Under Section 2, Article XII of the 1987 Constitution, the foreshore and submerged areas of Manila Bay are part of the lands of the public domain,
waters and other natural resources and consequently owned by the State. As such, foreshore and submerged areas shall not be alienated, unless
they are classified as agricultural lands of the public domain. 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 reserved them for some public or quasi-public use.

Section 8 of CA No. 141 provides that only those lands shall be declared open to disposition or concession which have been officially delimited and
classified. The President has the authority 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. PD No. 1085, coupled with President Aquinos actual issuance of a special patent covering the Freedom
Islands, is equivalent to an official proclamation classifying the Freedom Islands as alienable or disposable lands of the public domain. PD No. 1085
and President Aquinos issuance of a land patent also constitute a declaration that the Freedom Islands are no longer needed for public service. The
Freedom Islands are thus alienable or disposable lands of the public domain, open to disposition or concession to qualified parties.The government
had also completed the necessary surveys on these islands. Thus, the Freedom Islands were no longer part of Manila Bay but part of the land mass.
Section 3, Article XII of the 1987 Constitution classifies lands of the public domain into agricultural, forest or timber, mineral lands, and national
parks. Being neither timber, mineral, nor national park lands, the reclaimed Freedom Islands necessarily fall under the classification of agricultural
lands of the public domain. Under the 1987 Constitution, agricultural lands of the public domain are the only natural resources that the State may
alienate to qualified private parties. All other natural resources, such as the seas or bays, are waters x x x owned by the State forming part of the
public domain, and are inalienable pursuant to Section 2, Article XII of the 1987 Constitution.