Chavez v PEA and AMARI G.R. No. 133250. July 9, 2002.

- Non a malum 7/23/19, 6*09 PM

Chavez v PEA and AMARI G.R. No.

133250. July 9, 2002.
7/7/2010

Facts: On February 4, 1977, then President Ferdinand E. Marcos issued

Presidential Decree 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, then President Marcos issued Presidential Decree 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 Manila-Cavite Coastal Road and Reclamation Project
(MCCRRP) containing a total area of one million nine hundred fifteen
thousand eight hundred ninety four (1,915,894) square meters."
Subsequently, on April 9, 1988, the Register of Deeds of the Municipality of
Parañaque 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 Manila-Cavite
Coastal Road, Parañaque City.

PEA and AMARI entered into the JVA through negotiation without public
bidding. On April 28, 1995, the Board of Directors of PEA, in its Resolution
No. 1245, confirmed the JVA. On June 8, 1995, then President Fidel V.
Ramos, through then Executive Secretary Ruben Torres, approved the JVA.

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The Senate Committees reported the results of their investigation in

Senate Committee Report No. 560 dated September 16, 1997. 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 lands and therefore PEA cannot
alienate these lands; (2) the certificates of title covering the Freedom
Islands are thus void, and (3) the JVA itself is illegal.

On December 5, 1997, then President Fidel V. Ramos issued Presidential

Administrative Order No. 365 creating a Legal Task Force to conduct a
study on the legality of the JVA in view of Senate Committee Report No.
560. The members of the Legal Task Force were the Secretary of Justice,
the Chief Presidential Legal Counsel, and the Government Corporate
Counsel. The Legal Task Force upheld the legality of the JVA, contrary to
the conclusions reached by the Senate Committees.

On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" for brevity) as a

taxpayer, filed the instant Petition for Mandamus with Prayer for the
Issuance of a Writ of Preliminary Injunction and Temporary Restraining
Order. Petitioner contends the government stands to lose billions of pesos
in the sale by 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 Constitution on
the right of the people to information on matters of public concern.

Due to the approval of the Amended JVA by the Office of the President,
petitioner now prays that on "constitutional and statutory grounds the
renegotiated contract be declared null and void."

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Chavez v PEA and AMARI G.R. No. 133250. July 9, 2002. - Non a malum 7/23/19, 6*09 PM

Issue: The issues raised by petitioner, PEA and AMARI are as follows:
1. Whether the reliefs prayed for are moot and academic because of
subsequent events;
2. Whether the petition should be dismissed for failing to observe the
principle of governing the heirarchy of courts;
3. Whether the petition should be dismissed for non-exhaustion of
administrative remedies;
4. Whether petitioner has locus standi;
5. Whether the constitutional right to information includes information on
on-going neogtiations BEFORE a final agreement;
6. Whether the stipulations in the amended joint venture agreement for
the transfer to AMARI of certain lands, reclaimed and still to be reclaimed
violate the 1987 Constitution; and
7. Whether the Court has jurisdiction over the issue whether the
amended JVA is grossly disadvantageous to the government

Held: 1. We rule that the signing and of the Amended JVA by PEA and
AMARI and its approval by the President cannot operate to moot the
petition and divest the Court of its jurisdiction.

PEA and AMARI have still to implement the Amended JVA. The prayer to
enjoin the signing of the Amended JVA on constitutional grounds
necessarily includes preventing its implementation if in the meantime PEA
and AMARI have signed one in violation of the Constitution. Petitioner's
principal basis in assailing the renegotiation of the JVA is its violation of the
Section 3, Article XII of the Constitution, which prohibits the government
from alienating lands of the public domain to private corporations. The
Amended JVA is not an ordinary commercial contract but one which seeks
to transfer title and ownership to 367.5 hectares of reclaimed lands and
submerged areas of Manila Bay to a single private corporation.

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Also, the instant petition is a case of first impression being a wholly

government owned corporation performing public as well as proprietary
functions. All previous decisions of the Court involving Section 3, Article XII
of the 1987 Constitution, or its counterpart provision in the 1973
Constitution, covered agricultural lands sold to private corporations which
acquired the lands from private parties.

Lastly, there is a need to resolve immediately the constitutional issue

raised in this petition because of the possible transfer at any time by PEA to
AMARI of title and ownership to portions of the reclaimed lands. Under the
Amended JVA, PEA is obligated to transfer to AMARI the latter's seventy
percent proportionate share in the reclaimed areas as the reclamation
progresses, The Amended JVA even allows AMARI to mortgage at any time
the entire reclaimed area to raise financing for the reclamation project.

2. The instant case, however, raises constitutional issues of

transcendental importance to the public. The Court can resolve this case
without determining any factual issue related to the case. Also, the instant
case is a petition for mandamus which falls under the original jurisdiction of
the Court under Section 5, Article VIII of the Constitution. We resolve to
exercise primary jurisdiction over the instant case.

3. PEA was under a positive legal duty to disclose to the public the terms
and conditions for the sale of its lands. The law obligated PEA make this
public disclosure even without demand from petitioner or from anyone. PEA
failed to make this public disclosure because the original JVA, like the
Amended JVA, was the result of a negotiated contract, 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

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Chavez v PEA and AMARI G.R. No. 133250. July 9, 2002. - Non a malum 7/23/19, 6*09 PM

the right to seek direct judicial intervention.

The principle of exhaustion of administrative remedies does not apply

when the issue involved is a purely legal or constitutional question. The
principal issue in the instant case is the capacity of AMARI to acquire lands
held by PEA in view of the constitutional ban prohibiting the alienation of
lands of the public domain to private corporations. We rule that the principle
of exhaustion of administrative remedies does not apply in the instant case.

The petitioner has standing to bring this taxpayer's suit because the
petition seeks to compel PEA to comply with its constitutional duties. There
are two constitutional issues involved here. First is the 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 second issue is to prevent PEA from alienating hundreds
of hectares of alienable lands of the public domain in violation of the
Constitution, compelling PEA to comply with a constitutional duty to the
nation.

4. Ordinary taxpayers have a right to initiate and prosecute actions

questioning the validity of acts or orders of government agencies or
instrumentalities, if the issues raised are of 'paramount public interest,' and
if they 'immediately affect the social, economic and moral well being of the
people.'

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 transcendental public
importance, the petitioner has the requisite locus standi.

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5. The State policy of full transparency in all transactions involving public

interest reinforces the people's right to information on matters of public
concern. This State policy is expressed in Section 28, Article II of the
Constitution, thus: “Subject to reasonable conditions prescribed by law, the
State adopts and implements a policy of full public disclosure of all its
transactions involving public interest."

Contrary to AMARI's contention, the commissioners of the 1986

Constitutional Commission understood that the right to information
"contemplates inclusion of negotiations leading to the consummation of the
transaction." Certainly, a consummated contract is not a requirement for the
exercise of the right to information. Otherwise, the people can never
exercise the right if no contract is consummated, and if one is
consummated, it may be too late for the public to expose its defects.

Requiring a consummated contract will keep the public in the dark until
the contract, which may be grossly disadvantageous to the government or
even illegal, becomes a fait accompli.

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
means the opportunity to inspect and copy them. One who exercises the
right must copy the records, 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, like rules specifying when and how to conduct the inspection
and copying.

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6. Article 339 of the Civil Code of 1889 defined property of public

dominion as follows:
"Art. 339. Property of public dominion is —
1. That devoted to public use, such as roads, canals, rivers, torrents,
ports and bridges constructed by the State, riverbanks, shores, roadsteads,
and that of a similar character;
2. That belonging exclusively to the State which, without being of
general public use, is employed in some public service, or in the
development of the national wealth, such as walls, fortresses, and other
works for the defense of the territory, and mines, until granted to private
individuals.

Property devoted to public use referred to property open for use by the
public. In contrast, property devoted to public service referred to property
used for some specific public service and open only to those authorized to
use the property.Property of public dominion referred not only to property
devoted to public use, but also to property not so used but employed to
develop the national wealth. This class of property constituted property of
public dominion although employed for some economic or commercial
activity to increase the national wealth.

"Art. 341. Property of public dominion, when no longer devoted to

public use or to the defense of the territory, shall become a part of the
private property of the State." This provision, however, was not self-
executing. The legislature, or the executive department pursuant to law,
must declare the property no longer needed for public use or territorial
defense before the government could lease or alienate the property to
private parties.

Act No. 2874 of the Philippine Legislature

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Sec. 55. Any tract of land of the public domain which, being neither
timber nor mineral land, shall be classified as suitable for residential
purposes or for commercial, industrial, or other productive purposes other
than agricultural purposes, and shall be open to disposition or concession,
shall be disposed of under the provisions of this chapter, and not otherwise.

The rationale behind this State policy is obvious. Government reclaimed,

foreshore and marshy public lands for non-agricultural purposes retain their
inherent potential as areas for public service. This is the reason the
government prohibited the sale, and only allowed the lease, of these lands
to private parties. The State always reserved these lands for some future
public service.

However, government reclaimed and marshy lands, although subject to

classification as disposable public agricultural lands, could only be leased
and not sold to private parties because of Act No. 2874.

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. As in the 1935 and 1973 Constitutions, the general law
governing the lease to private corporations of reclaimed, foreshore and
marshy alienable lands of the public domain is still CA No. 141.

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

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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.

PD No. 1085, coupled with President Aquino's 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. 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 . . . owned by the
State" forming part of the public domain, and are inalienable pursuant to
Section 2, Article XII of the 1987 Constitution.

In short, DENR is vested with the power to authorize the reclamation of

areas under water, while PEA is vested with the power to undertake the
physical reclamation of areas under water whether directly or through
private contractors. DENR is also empowered to classify lands of the public
domain into alienable or disposable lands subject to the approval of the
President. On the other hand, PEA is tasked to develop, sell or lease the
reclaimed alienable lands of the public domain.

Clearly, the mere physical act of reclamation by PEA of foreshore or

submerged areas does not make the reclaimed lands alienable or
disposable lands of the public domain, much less patrimonial lands of PEA.
Likewise, the mere transfer by the National Government of lands of the
public domain to PEA does not make the lands alienable or disposable lands
of the public domain, much less patrimonial lands of PEA.

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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 from Manila Bay to PEA, while EO
No. 525 declared that lands reclaimed by PEA "shall belong to or be owned
by PEA." PEA's charter, however, expressly tasks PEA "to develop, improve,
acquire, administer, deal in, subdivide, dispose, lease and sell any and all
kinds of lands . . . owned, managed, controlled and/or operated by the
government." 87 (Emphasis supplied) There is, therefore, legislative
authority granted to PEA to sell its lands, whether patrimonial or alienable
lands of the public 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 acquiring
alienable lands of the public domain does not apply to the sale of PEA's
patrimonial lands.

Moreover, under Section 79 of PD No. 1445, otherwise known as the

Government Auditing Code, the government is required to sell valuable
government property through public bidding. Section 79 of PD No. 1445
mandates that:... "In the event that the public auction fails, the property
may be sold at a private sale at such price as may be fixed by the same
committee or body concerned and approved by the Commission."

However, the original JVA dated April 25, 1995 covered not only the
Freedom Islands and the additional 250 hectares still to be reclaimed, it also
granted an option to AMARI to reclaim another 350 hectares. The original
JVA, a negotiated contract, enlarged the reclamation area to 750 hectares.
The failure of public bidding on December 10, 1991, involving only 407.84
hectares, is not a valid justification for a negotiated sale of 750 hectares,
almost double the area publicly auctioned.

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Jurisprudence holding that upon the grant of the patent or issuance of

the certificate of title the alienable land of the public domain automatically
becomes private land cannot apply to government units and entities like
PEA.

The grant of legislative authority to sell public lands in accordance with

Section 60 of CA No. 141 does not automatically convert alienable lands of
the public domain into private or patrimonial lands. The alienable lands of
the public domain must be transferred to qualified private parties, or to
government entities not tasked to dispose of public lands, before these
lands can become private or patrimonial lands. Otherwise, the constitutional
ban will become illusory if Congress can declare lands of the public domain
as private or patrimonial lands in the hands of a government agency tasked
to dispose of public lands.

To allow vast areas of reclaimed lands of the public domain to be

transferred to PEA as private lands will sanction a gross violation of the
constitutional ban on private corporations from acquiring any kind of
alienable land of the public domain. This scheme can even be applied to
alienable agricultural lands of the public domain since PEA can "acquire . . .
any and all kinds of lands."

The 157.84 hectares of reclaimed lands comprising the Freedom Islands,

now covered by certificates of title in the name of PEA, are alienable lands
of the public domain. PEA may lease these lands to private corporations but
may not sell or transfer ownership of these lands to private corporations.

7. Considering that the Amended JVA is null and void ab initio, there is no
necessity to rule on this last issue. Besides, the Court is not the trier of

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facts, and this last issue involves a determination of factual matters.

WHEREFORE, the petition is GRANTED. The Public Estates Authority

and Amari Coastal Bay Development Corporation are PERMANENTLY
ENJOINED from implementing the Amended Joint Venture Agreement
which is hereby declared NULL and VOID ab initio.

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