G.R. No.
179987 September 3, 2013 This is to certify that the parcel of land designated as
HEIRS OF MARIO MALABANAN, (Represented by
Sally A. Malabanan), Petitioners,
vs.
REPUBLIC OF THE PHILIPPINES, Respondent.
RESOLUTION
BERSAMIN, J.:
For our consideration and resolution are the motions
for reconsideration of the parties who both assail the
decision promulgated on April 29, 2009, whereby we
upheld the ruling of the Court of Appeals (CA) denying
the application of the petitioners for the registration of
a parcel of land situated in Barangay Tibig, Silang,
Cavite on the ground that they had not established by
sufficient evidence their right to the registration in
accordance with either Section 14(1) or Section 14(2)
of Presidential Decree No. 1529 (Property
Registration Decree).
Antecedents
The property subject of the application for registration
is a parcel of land situated in Barangay Tibig, Silang
Cavite, more particularly identified as Lot 9864-A,
Cad-452-D, with an area of 71,324-square meters. On
February 20, 1998, applicant Mario Malabanan, who
had purchased the property from Eduardo Velazco,
filed an application for land registration covering the
property in the Regional Trial Court (RTC) in Tagaytay
City, Cavite, claiming that the property formed part of
the alienable and disposable land of the public
domain, and that he and his predecessors-in-interest
had been in open, continuous, uninterrupted, public
and adverse possession and occupation of the land
for more than 30 years, thereby entitling him to the
judicial confirmation of his title.1
To prove that the property was an alienable and
disposable land of the public domain, Malabanan
presented during trial a certification dated June 11,
2001 issued by the Community Environment and
Natural Resources Office (CENRO) of the Department
of Environment and Natural Resources (DENR),
which reads:
disposable was inconsequential and should be
Lot No. 9864 Cad 452-D, Silang Cadastre as
surveyed for Mr. Virgilio Velasco located at Barangay
Tibig, Silang, Cavite containing an area of 249,734 sq.
meters as shown and described on the Plan Ap-04-
00952 is verified to be within the Alienable or
Disposable land per Land Classification Map No.
3013 established under Project No. 20-A and
approved as such under FAO 4-1656 on March 15,
1982.2
After trial, on December 3, 2002, the RTC rendered
judgment granting Malabanan’s application for land
registration, disposing thusly:
WHEREFORE, this Court hereby approves this
application for registration and thus places under the
operation of Act 141, Act 496 and/or P.D. 1529,
otherwise known as Property Registration Law, the
lands described in Plan Csd-04-0173123-D, Lot 9864-
A and containing an area of Seventy One Thousand
Three Hundred Twenty Four (71,324) Square Meters,
as supported by its technical description now forming
part of the record of this case, in addition to other
proofs adduced in the name of MARIO MALABANAN,
who is of legal age, Filipino, widower, and with
residence at Munting Ilog, Silang, Cavite.
Once this Decision becomes final and executory, the
corresponding decree of registration shall forthwith
issue.
SO ORDERED.3
The Office of the Solicitor General (OSG) appealed
the judgment to the CA, arguing that Malabanan had
failed to prove that the property belonged to the
alienable and disposable land of the public domain,
and that the RTC erred in finding that he had been in
possession of the property in the manner and for the
length of time required by law for confirmation of
imperfect title.
On February 23, 2007, the CA promulgated its
decision reversing the RTC and dismissing the
application for registration of Malabanan. Citing the
ruling in Republic v. Herbieto (Herbieto),4 the CA
declared that under Section 14(1) of the Property
Registration Decree, any period of possession prior to
the classification of the land as alienable and
excluded from the computation of the period of
possession. Noting that the CENRO-DENR
certification stated that the property had been
declared alienable and disposable only on March 15,
1982, Velazco’s possession prior to March 15, 1982
could not be tacked for purposes of computing
Malabanan’s period of possession.
Due to Malabanan’s intervening demise during the
appeal in the CA, his heirs elevated the CA’s decision
of February 23, 2007 to this Court through a petition
for review on certiorari.
The petitioners assert that the ruling in Republic v.
Court of Appeals and Corazon Naguit5 (Naguit)
remains the controlling doctrine especially if the
property involved is agricultural land. In this regard,
Naguit ruled that any possession of agricultural land
prior to its declaration as alienable and disposable
could be counted in the reckoning of the period of
possession to perfect title under the Public Land Act
(Commonwealth Act No. 141) and the Property
Registration Decree. They point out that the ruling in
Herbieto, to the effect that the declaration of the land
subject of the application for registration as alienable
and disposable should also date back to June 12,
1945 or earlier, was a mere obiter dictum considering
that the land registration proceedings therein were in
fact found and declared void ab initio for lack of
publication of the notice of initial hearing.
The petitioners also rely on the ruling in Republic v.
T.A.N. Properties, Inc.6 to support their argument that
the property had been ipso jure converted into private
property by reason of the open, continuous, exclusive
and notorious possession by their predecessors-in-
interest of an alienable land of the public domain for
more than 30 years. According to them, what was
essential was that the property had been "converted"
into private property through prescription at the time of
the application without regard to whether the property
sought to be registered was previously classified as
agricultural land of the public domain.
As earlier stated, we denied the petition for review on
certiorari because Malabanan failed to establish by
sufficient evidence possession and occupation of the
property on his part and on the part of his
predecessors-in interest since June 12, 1945, or
earlier.
Petitioners’ Motion for Reconsideration
In their motion for reconsideration, the petitioners
submit that the mere classification of the land as
alienable or disposable should be deemed sufficient
to convert it into patrimonial property of the State.
Relying on the rulings in Spouses De Ocampo v.
Arlos,7 Menguito v. Republic8 and Republic v. T.A.N.
Properties, Inc.,9 they argue that the reclassification of
the land as alienable or disposable opened it to
acquisitive prescription under the Civil Code; that
Malabanan had purchased the property from Eduardo
Velazco believing in good faith that Velazco and his
predecessors-in-interest had been the real owners of
the land with the right to validly transmit title and
ownership thereof; that consequently, the ten-year
period prescribed by Article 1134 of the Civil Code, in
relation to Section 14(2) of the Property Registration
Decree, applied in their favor; and that when
Malabanan filed the application for registration on
February 20, 1998, he had already been in
possession of the land for almost 16 years reckoned
from 1982, the time when the land was declared
alienable and disposable by the State.
The Republic’s Motion for Partial Reconsideration
The Republic seeks the partial reconsideration in
order to obtain a clarification with reference to the
application of the rulings in Naguit and Herbieto.
Chiefly citing the dissents, the Republic contends that
the decision has enlarged, by implication, the
interpretation of Section 14(1) of the Property
Registration Decree through judicial legislation. It
reiterates its view that an applicant is entitled to
registration only when the land subject of the
application had been declared alienable and
disposable since June 12, 1945 or earlier.
Ruling
We deny the motions for reconsideration.
In reviewing the assailed decision, we consider to be
imperative to discuss the different classifications of
land in relation to the existing applicable land
registration laws of the Philippines.
Classifications of land according to ownership
Land, which is an immovable property,10 may be
classified as either of public dominion or of private
ownership.11Land is considered of public dominion if it
either: (a) is intended for public use; or (b) belongs to
the State, without being for public use, and is intended
for some public service or for the development of the
national wealth.12 Land belonging to the State that is
not of such character, or although of such character
but no longer intended for public use or for public
service forms part of the patrimonial property of the
State.13 Land that is other than part of the patrimonial
property of the State, provinces, cities and
municipalities is of private ownership if it belongs to a
private individual.
Pursuant to the Regalian Doctrine (Jura Regalia), a
legal concept first introduced into the country from the
West by Spain through the Laws of the Indies and the
Royal Cedulas,14 all lands of the public domain belong
to the State.15This means that the State is the source
of any asserted right to ownership of land, and is
charged with the conservation of such patrimony.16
All lands not appearing to be clearly under private
ownership are presumed to belong to the State. Also,
public lands remain part of the inalienable land of the
public domain unless the State is shown to have
reclassified or alienated them to private persons.17
Classifications of public lands
according to alienability
Whether or not land of the public domain is alienable
and disposable primarily rests on the classification of
public lands made under the Constitution. Under the
1935 Constitution,18 lands of the public domain were
classified into three, namely, agricultural, timber and
mineral.19 Section 10, Article XIV of the 1973
Constitution classified lands of the public domain into
seven, specifically, agricultural, industrial or
commercial, residential, resettlement, mineral, timber
or forest, and grazing land, with the reservation that
the law might provide other classifications. The 1987
Constitution adopted the classification under the 1935
Constitution into agricultural, forest or timber, and
mineral, but added national parks.20 Agricultural lands
may be further classified by law according to the uses
to which they may be devoted.21 The identification of
lands according to their legal classification is done
exclusively by and through a positive act of the
Executive Department.22
Based on the foregoing, the Constitution places a limit
on the type of public land that may be alienated.
Under Section 2, Article XII of the 1987 Constitution,
only agricultural lands of the public domain may be
alienated; all other natural resources may not be.
Alienable and disposable lands of the State fall into
two categories, to wit: (a) patrimonial lands of the
State, or those classified as lands of private
ownership under Article 425 of the Civil
Code,23 without limitation; and (b) lands of the public
domain, or the public lands as provided by the
Constitution, but with the limitation that the lands must
only be agricultural. Consequently, lands classified as
forest or timber, mineral, or national parks are not
susceptible of alienation or disposition unless they are
reclassified as agricultural.24 A positive act of the
Government is necessary to enable such
reclassification,25 and the exclusive prerogative to
classify public lands under existing laws is vested in
the Executive Department, not in the courts. 26 If,
however, public land will be classified as neither
agricultural, forest or timber, mineral or national park,
or when public land is no longer intended for public
service or for the development of the national wealth,
thereby effectively removing the land from the ambit
of public dominion, a declaration of such conversion
must be made in the form of a law duly enacted by
Congress or by a Presidential proclamation in cases
where the President is duly authorized by law to that
effect.27 Thus, until the Executive Department
exercises its prerogative to classify or reclassify lands,
or until Congress or the President declares that the
State no longer intends the land to be used for public
service or for the development of national wealth, the
Regalian Doctrine is applicable.
Disposition of alienable public lands
Section 11 of the Public Land Act (CA No. 141)
provides the manner by which alienable and
disposable lands of the public domain, i.e., agricultural
lands, can be disposed of, to wit:
Section 11. Public lands suitable for agricultural
purposes can be disposed of only as follows, and not
otherwise:
(1) For homestead settlement;
(2) By sale;
(3) By lease; and
(4) By confirmation of imperfect or
incomplete titles;
(a) By judicial legalization; or
(b) By administrative legalization
(free patent).
The core of the controversy herein lies in the proper
interpretation of Section 11(4), in relation to Section
48(b) of the Public Land Act, which expressly requires
possession by a Filipino citizen of the land since June
12, 1945, or earlier, viz:
Section 48. The following-described citizens of the
Philippines, occupying lands of the public domain or
claiming to own any such lands or an interest therein,
but whose titles have not been perfected or
completed, may apply to the Court of First Instance of
the province where the land is located for confirmation
of their claims and the issuance of a certificate of title
thereafter, under the Land Registration Act, to wit:
xxxx
(b) Those who by themselves or through their
predecessors-in-interest have been in open,
continuous, exclusive, and notorious possession and
occupation of alienable and disposable lands of the
public domain, under a bona fide claim of acquisition
of ownership, since June 12, 1945, or earlier,
immediately preceding the filing of the applications for
confirmation of title, except when prevented by war or
force majeure. These shall be conclusively presumed
to have performed all the conditions essential to a
Government grant and shall be entitled to a certificate
of title under the provisions of this chapter. (Bold
emphasis supplied)
Note that Section 48(b) of the Public Land Act used
the words "lands of the public domain" or "alienable
and disposable lands of the public domain" to clearly
signify that lands otherwise classified, i.e., mineral,
forest or timber, or national parks, and lands of
patrimonial or private ownership, are outside the
coverage of the Public Land Act. What the law does
not include, it excludes. The use of the descriptive
phrase "alienable and disposable" further limits the
coverage of Section 48(b) to only the agricultural
lands of the public domain as set forth in Article XII,
Section 2 of the 1987 Constitution. Bearing in mind
such limitations under the Public Land Act, the
applicant must satisfy the following requirements in
order for his application to come under Section 14(1)
of the Property Registration Decree,28 to wit:
1. The applicant, by himself or through his
predecessor-in-interest, has been in
possession and occupation of the property
subject of the application;
2. The possession and occupation must be
open, continuous, exclusive, and notorious;
3. The possession and occupation must be
under a bona fide claim of acquisition of
ownership;
4. The possession and occupation must
have taken place since June 12, 1945, or
earlier; and
5. The property subject of the application
must be an agricultural land of the public
domain.
Taking into consideration that the Executive
Department is vested with the authority to classify
lands of the public domain, Section 48(b) of the Public
Land Act, in relation to Section 14(1) of the Property
Registration Decree, presupposes that the land
subject of the application for registration must have
been already classified as agricultural land of the
public domain in order for the provision to apply.
Thus, absent proof that the land is already classified
as agricultural land of the public domain, the Regalian
Doctrine applies, and overcomes the presumption that
the land is alienable and disposable as laid down in
Section 48(b) of the Public Land Act. However,
emphasis is placed on the requirement that the
classification required by Section 48(b) of the Public
Land Act is classification or reclassification of a public
land as agricultural.
The dissent stresses that the classification or
reclassification of the land as alienable and
disposable agricultural land should likewise have
been made on June 12, 1945 or earlier, because any
possession of the land prior to such classification or
reclassification produced no legal effects. It observes
that the fixed date of June 12, 1945 could not be
minimized or glossed over by mere judicial
interpretation or by judicial social policy concerns, and
insisted that the full legislative intent be respected.
We find, however, that the choice of June 12, 1945 as
the reckoning point of the requisite possession and
occupation was the sole prerogative of Congress, the
determination of which should best be left to the
wisdom of the lawmakers. Except that said date
qualified the period of possession and occupation, no
other legislative intent appears to be associated with
the fixing of the date of June 12, 1945. Accordingly,
the Court should interpret only the plain and literal
meaning of the law as written by the legislators.
Moreover, an examination of Section 48(b) of the
Public Land Act indicates that Congress prescribed no
requirement that the land subject of the registration
should have been classified as agricultural since June
12, 1945, or earlier. As such, the applicant’s imperfect
or incomplete title is derived only from possession and
occupation since June 12, 1945, or earlier. This
means that the character of the property subject of the
application as alienable and disposable agricultural
land of the public domain determines its eligibility for
land registration, not the ownership or title over it.
Alienable public land held by a possessor, either
personally or through his predecessors-in-interest,
openly, continuously and exclusively during the
prescribed statutory period is converted to private
property by the mere lapse or completion of the
period.29 In fact, by virtue of this doctrine, corporations
may now acquire lands of the public domain for as
long as the lands were already converted to private
ownership, by operation of law, as a result of
satisfying the requisite period of possession
prescribed by the Public Land Act. 30 It is for this
reason that the property subject of the application of
Malabanan need not be classified as alienable and
disposable agricultural land of the public domain for
the entire duration of the requisite period of
possession.
To be clear, then, the requirement that the land
should have been classified as alienable and
disposable agricultural land at the time of the
application for registration is necessary only to dispute
the presumption that the land is inalienable.
The declaration that land is alienable and disposable
also serves to determine the point at which
prescription may run against the State. The imperfect
or incomplete title being confirmed under Section
48(b) of the Public Land Act is title that is acquired by
reason of the applicant’s possession and occupation
of the alienable and disposable agricultural land of the
public domain. Where all the necessary requirements
for a grant by the Government are complied with
through actual physical, open, continuous, exclusive
and public possession of an alienable and disposable
land of the public domain, the possessor is deemed to
have acquired by operation of law not only a right to a
grant, but a grant by the Government, because it is
not necessary that a certificate of title be issued in
order that such a grant be sanctioned by the courts.31
If one follows the dissent, the clear objective of the
Public Land Act to adjudicate and quiet titles to
unregistered lands in favor of qualified Filipino citizens
by reason of their occupation and cultivation thereof
for the number of years prescribed by law32 will be
defeated. Indeed, we should always bear in mind that
such objective still prevails, as a fairly recent
legislative development bears out, when Congress
enacted legislation (Republic Act No. 10023)33in order
to liberalize stringent requirements and procedures in
the adjudication of alienable public land to qualified
applicants, particularly residential lands, subject to
area limitations.34
On the other hand, if a public land is classified as no
longer intended for public use or for the development
of national wealth by declaration of Congress or the
President, thereby converting such land into
patrimonial or private land of the State, the applicable
provision concerning disposition and registration is no
longer Section 48(b) of the Public Land Act but the
Civil Code, in conjunction with Section 14(2) of the
Property Registration Decree.35 As such, prescription
can now run against the State.
To sum up, we now observe the following rules
relative to the disposition of public land or lands of the
public domain, namely:
(1) As a general rule and pursuant to the Regalian
Doctrine, all lands of the public domain belong to the
State and are inalienable. Lands that are not clearly
under private ownership are also presumed to belong
to the State and, therefore, may not be alienated or
disposed;
(2) The following are excepted from the general rule,
to wit:
(a) Agricultural lands of the public domain are
rendered alienable and disposable through any of the
exclusive modes enumerated under Section 11 of the
Public Land Act. If the mode is judicial confirmation of
imperfect title under Section 48(b) of the Public Land
Act, the agricultural land subject of the application
needs only to be classified as alienable and
disposable as of the time of the application, provided
the applicant’s possession and occupation of the land
dated back to June 12, 1945, or earlier. Thereby, a
conclusive presumption that the applicant has
performed all the conditions essential to a government
grant arises,36 and the applicant becomes the owner
of the land by virtue of an imperfect or incomplete title.
By legal fiction, the land has already ceased to be part
of the public domain and has become private
property.37 (b) Lands of the public domain
subsequently classified or declared as no longer
intended for
public use or for the development of national wealth
are removed from the sphere of public dominion and
are considered converted into patrimonial lands or
lands of private ownership that may be alienated or
disposed through any of the modes of acquiring
ownership under the Civil Code. If the mode of
acquisition is prescription, whether ordinary or
extraordinary, proof that the land has been already
converted to private ownership prior to the requisite
acquisitive prescriptive period is a condition sine qua
non in observance of the law (Article 1113, Civil
Code) that property of the State not patrimonial in
character shall not be the object of prescription.
To reiterate, then, the petitioners failed to present
sufficient evidence to establish that they and their
predecessors-in-interest had been in possession of
the land since June 12, 1945. Without satisfying the
requisite character and period of possession -
possession and occupation that is open, continuous,
exclusive, and notorious since June 12, 1945, or
earlier - the land cannot be considered ipso jure
converted to private property even upon the
subsequent declaration of it as alienable and
disposable. Prescription never began to run against
the State, such that the land has remained ineligible
for registration under Section 14(1) of the Property
Registration Decree. Likewise, the land continues to
be ineligible for land registration under Section 14(2)
of the Property Registration Decree unless Congress
enacts a law or the President issues a proclamation
declaring the land as no longer intended for public
service or for the development of the national
wealth.1âwphi1
WHEREFORE, the Court DENIES the petitioners'
Motion for Reconsideration and the respondent's
Partial Motion for Reconsideration for their lack of
merit.
SO ORDERED.
Manila International Airport Authority vs. Court of
Appeals and City of Paranaque (2006)
Subject: MIAA is not a government-owned or
controlled corporation; MIAA is a government
instrumentality of the National Government vested
with corporate powers; A government instrumentality
like the MIAA is not subject to local taxation; Airport
Lands and Buildings of MIAA are of public dominion
and are thus owned by the State; Airport Lands and
Buildings, being outside the commerce of man,
cannot be the subject of an auction sale; MIAA is a
mere trustee of the Republic; Transfer to MIAA was
meant to implement a reorganization; Property owned
by the Republic is not subject to real property tax;
Portions of the Airport Lands and Buildings that MIAA
leases to private entities are not exempt from real
estate tax; Economic viability test applies only to
GOCCs, not to government instrumentalities like
MIAA;
Facts:
 Manila International Airport Authority (MIAA)
operates the Ninoy Aquino International Airport
(NAIA) Complex in Parañaque City under Executive
Order No. 903 (MIAA Charter). The MIAA Charter
transferred to MIAA approximately 600 hectares of
land, including the runways and buildings (Airport
Lands and Buildings) then under the Bureau of Air
Transportation. The MIAA Charter further provides
that no portion of the land transferred to MIAA shall be
disposed of through sale or any other mode unless
specifically approved by the President of the
Philippines.
In March 1997, the Office of the Government
Corporate Counsel (OGCC) issued Opinion No. 061
stating that the Local Government Code of 1991
(LGC) withdrew the exemption from real estate tax
granted to MIAA under Section 21 of the MIAA
Charter. Thus, MIAA negotiated with City of
Parañaque to pay the real estate tax imposed by the
City. MIAA then paid some of the real estate tax
already due.
In June 2001, MIAA received Final Notices of Real
Estate Tax Delinquency from the City of Parañaque
for the taxable years 1992 to 2001 in the amount of P
624,506,725.42 including penalties. In July 2001, the
City of Parañaque, through its City Treasurer, issued
notices of levy and warrants of levy on the MIAA
Airport Lands and Buildings. The Mayor of the City of
Parañaque threatened to sell at public auction the
Airport Lands and Buildings should MIAA fail to pay
the real estate tax delinquency.
The OGCC issued Opinion No. 147 clarifying OGCC
Opinion No. 061. The OGCC opined that Section 206
of the LGC requires persons exempt from real estate
tax to show proof of exemption and Section 21 of the
MIAA Charter is the proof that MIAA is exempt from
real estate tax.
In October 2001, MIAA filed with the Court of Appeals
an original petition for prohibition and injunction which
sought to restrain the City of Parañaque from
imposing real estate tax on, levying against, and
auctioning for public sale the Airport Lands and
Buildings.
The Court of Appeals dismissed the petition because
MIAA filed it beyond the 60-day reglementary period.
The motion for reconsideration was also denied.
Hence, the present petition for review. Meanwhile, in
January 2003, the City of Parañaque posted notices
of auction sale of the Airport Lands and Buildings
scheduled at February 7, 2003. A day before the
public auction, MIAA applied for a temporary
restraining order (TRO) with the Supreme Court (SC).
The SC issued the TRO on February 7, however,
respondents (City of Paranaque) received the TRO
only at 1:25 p.m. or three hours after the conclusion of
the public auction.
MIAA contends that since the Airport Lands and
Buildings are devoted to public use and public
service, the ownership of these properties remains
with the State (notwithstanding the transfer of title of
the properties to MIAA). The Airport Lands and
Buildings are thus inalienable and are not subject to
real estate tax by local governments. On the other
hand, the City of Paranaque cite ruling in Mactan
International Airport vs. Marcos (1996) where the
SC held that the Local Government Code has
withdrawn the exemption from real estate tax granted
to international airports. Respondents further argue
that since MIAA has already paid some of the real
estate tax assessments, it is now estopped from
claiming that the Airport Lands and Buildings are
exempt from real estate tax.
Held:
MIAA's Airport Lands and Buildings are exempt from
real estate tax imposed by local governments. MIAA
is not a government-owned or controlled corporation
but an instrumentality of the National Government and
thus exempt from local taxation. The real properties of
MIAA are owned by the Republic of the Philippines
and thus exempt from real estate tax.
MIAA is not a government-owned or controlled
corporation
1. A government-owned or controlled corporation
(GOCC) is not exempt from real estate tax. The
deletion of the phrase "any government-owned or
controlled so exempt by its charter" in Section 234(e)
of the Local Government Code withdrew the real
estate tax exemption of GOCCs.
2. A government-owned or controlled corporation
refers to any agency organized as a stock or non-
stock corporation, vested with functions relating to
public needs whether governmental or proprietary in
nature, and owned by the Government directly or
through its instrumentalities either wholly, or, where
applicable as in the case of stock corporations, to the
extent of at least fifty-one (51) percent of its capital
stock. (Section 2(13) of the Introductory Provisions of
the Administrative Code of 1987)
3. A government-owned or controlled corporation
must be "organized as a stock or non-stock
corporation." MIAA is not organized as a stock or non-
stock corporation.
(a) MIAA is not a stock corporation because it MIAA
has capital but it is not divided into shares of stock.
MIAA has no stockholders or voting shares.
(b) MIAA is also not a non-stock corporation because
it has no members. A non-stock corporation must
have members. Even if we assume that the
Government is considered as the sole member of
MIAA, this will not make MIAA a non-stock
corporation. Non-stock corporations cannot distribute
any part of their income to their members. Section 11
of the MIAA Charter mandates MIAA to remit 20% of
its annual gross operating income to the National
Treasury. This prevents MIAA from qualifying as a
non-stock corporation. Lastly, MIAA is not organized
for any of the purposes under Section 88 of the
Corporation Code. MIAA, a public utility, is organized
to operate an international and domestic airport for
public use.
MIAA is a government instrumentality of the
National Government vested with corporate
powers
4. MIAA is a government instrumentality vested with
corporate powers to perform efficiently its
governmental functions. MIAA is like any other
government instrumentality, the only difference is that
MIAA is vested with corporate powers.
5. A government "instrumentality" refers to any
agency of the National Government, not integrated
within the department framework, vested with special
functions or jurisdiction by law, endowed with some if
not all corporate powers, administering special funds,
and enjoying operational autonomy, usually through a
charter.(Section 2(10) of the Introductory Provisions of
the Administrative Code)
6. When the law vests in a government instrumentality
corporate powers, the instrumentality does not
become a corporation. Unless the government
instrumentality is organized as a stock or non-stock
corporation, it remains a government instrumentality
exercising not only governmental but also corporate
powers. Thus, MIAA exercises the governmental
powers of eminent domain, police authority and the
levying of fees and charges. At the same time, MIAA
exercises "all the powers of a corporation under the
Corporation Law, insofar as these powers are not
inconsistent with the provisions of this Executive
Order."
7. Many government instrumentalities are vested with
corporate powers but they do not become stock or
non-stock corporations, which is a necessary
condition before an agency or instrumentality is
deemed a government-owned or controlled
corporation. Examples are the Mactan International
Airport Authority, the Philippine Ports Authority, the
University of the Philippines and Bangko Sentral ng
Pilipinas. These government instrumentalities are
sometimes loosely called government corporate
entities. However, they are not government-owned or
controlled corporations in the strict sense as
understood under the Administrative Code, which is
the governing law defining the legal relationship and
status of government entities.
8. Likewise, when the law makes a government
instrumentality operationally autonomous, the
instrumentality remains part of the National
Government machinery although not integrated with
the department framework. The MIAA Charter
expressly states that transforming MIAA into a
"separate and autonomous body' will make its
operation more "financially viable."
A government instrumentality like the MIAA is not
subject to local taxation
9. Section 133(o) of the Local Government Code
recognizes the basic principle that local governments
cannot tax the national government, which historically
merely delegated to local governments the power to
tax. While the 1987 Constitution now includes taxation
as one of the powers of local governments, local
governments may only exercise such power "subject
to such guidelines and limitations as the Congress
may provide."
10. The rule is that a tax exemption is strictly
construed against the taxpayer claiming the
exemption. However, when Congress grants an
exemption to a national government instrumentality
from local taxation, such exemption is construed
liberally in favor of the national government
instrumentality. (see Maceda v. Macaraig, Jr.)
11. There must be express language in the law
empowering local governments to tax national
government instrumentalities. Any doubt whether
such power exists is resolved against local
governments. Thus, Section 133 of the Local
Government Code states that "unless otherwise
provided" in the Code, local governments cannot tax
national government instrumentalities.
Airport Lands and Buildings of MIAA are of public
dominion and are thus owned by the State
12. Properties of public dominion mentioned in Article
420 of the Civil Code, like "roads, canals, rivers,
torrents, ports and bridges constructed by the State,"
are owned by the State. The term "ports" includes
seaports and airports. The MIAA Airport Lands and
Buildings constitute a "port" constructed by the State.
Under Article 420 of the Civil Code, the MIAA Airport
Lands and Buildings are properties of public dominion
and thus owned by the State or the Republic of the
Philippines.
13. The Airport Lands and Buildings are devoted to
public use because they are used by the public for
international and domestic travel and transportation.
The fact that the MIAA collects terminal fees and
other charges from the public does not remove the
character of the Airport Lands and Buildings as
properties for public use. The operation by the
government of a tollway does not change the
character of the road as one for public use. The
collection of such fees does not change the character
of MIAA as an airport for public use. Such fees are
often termed user's tax. This means taxing those
among the public who actually use a public facility
instead of taxing all the public including those who
never use the particular public facility. A user's tax is
more equitable - a principle of taxation mandated in
the 1987 Constitution.
Airport Lands and Buildings , being outside the
commerce of man, cannot be the subject of an
auction sale
14. As properties of public dominion, the Airport
Lands and Buildings are outside the commerce of
man. (see Municipality of Cavite vs. Rojas; Espiritu vs.
Municipal Council)
15. Properties of public dominion, being for public
use, are not subject to levy, encumbrance or
disposition through public or private sale. Any
encumbrance, levy on execution or auction sale of
any property of public dominion is void for being
contrary to public policy. Essential public services will
stop if properties of public dominion are subject to
encumbrances, foreclosures and auction sale. This
will happen if the City of Parañaque can foreclose and
compel the auction sale of the 600-hectare runway of
the MIAA for non-payment of real estate tax.
16. Under Sections 83 and 88 of Commonwealth Act
No. 141 (Public Land Law), unless the President
issues a proclamation withdrawing the Airport Lands
and Buildings from public use, these properties
remain properties of public dominion and are
inalienable. Since the Airport Lands and Buildings are
inalienable in their present status as properties of
public dominion, they are not subject to levy on
execution or foreclosure sale. As long as the Airport
Lands and Buildings are reserved for public use, their
ownership remains with the State or the Republic of
the Philippines.
MIAA is a mere trustee of the Republic
17. MIAA is merely holding title to the Airport Lands
and Buildings in trust for the Republic. Section 48,
Chapter 12, Book I of the Administrative Code allows
instrumentalities like MIAA to hold title to real
properties owned by the Republic.
18. In MIAA's case, its status as a mere trustee of the
Airport Lands and Buildings is clearer because even
its executive head cannot sign the deed of
conveyance on behalf of the Republic. Only the
President of the Republic can sign such deed of
conveyance.
19. The MIAA Charter expressly provides that the
Airport Lands and Buildings "shall not be disposed
through sale or through any other mode unless
specifically approved by the President of the
Philippines." This only means that the Republic
retained the beneficial ownership of the Airport Lands
and Buildings because under Article 428 of the Civil
Code, only the "owner has the right to x x x dispose of
a thing." Since MIAA cannot dispose of the Airport
Lands and Buildings, MIAA does not own the Airport
Lands and Buildings.
Transfer to MIAA was meant to implement a
reorganization
20. The MIAA Charter, which is a law, transferred to
MIAA the title to the Airport Lands and Buildings from
the Bureau of Air Transportation of the Department of
Transportation and Communications. The MIAA
Charter transferred the Airport Lands and Buildings to
MIAA without the Republic receiving cash, promissory
notes or even stock since MIAA is not a stock
corporation.
21. The transfer of the Airport Lands and Buildings
from the Bureau of Air Transportation to MIAA was
not meant to transfer beneficial ownership of these
assets from the Republic to MIAA. The purpose was
merely to reorganize a division in the Bureau of Air
Transportation into a separate and autonomous body.
The Republic remains the beneficial owner of the
Airport Lands and Buildings. MIAA itself is owned
solely by the Republic. No party claims any ownership
rights over MIAA's assets adverse to the Republic.
Property owned by the Republic is not subject to
real property tax
22. Section 234(a) of the Local Government Code
exempts from real estate tax any "real property owned
by the Republic of the Philippines or any of its political
subdivisions except when the beneficial use thereof
has been granted, for consideration or otherwise, to a
taxable person”
23. This exemption should be read in relation with
Section 133(o) of the LGC, which prohibits local
governments from imposing "[t]axes, fees or charges
of any kind on the National Government, its agencies
and instrumentalities x x x." The Administrative Code
allows real property owned by the Republic to be titled
in the name of agencies or instrumentalities of the
national government. Such real properties remain
owned by the Republic and continue to be exempt
from real estate tax.
24. Section 234(a) of the LGC states that real
property owned by the Republic loses its tax
exemption only if the "beneficial use thereof has been
granted, for consideration or otherwise, to a taxable
person." MIAA, as a government instrumentality, is
not a taxable person under Section 133(o) of the
Local Government Code. Thus, even if we assume
that the Republic has granted to MIAA the beneficial
use of the Airport Lands and Buildings, such fact does
not make these real properties subject to real estate
tax.
Portions of the Airport Lands and Buildings that
MIAA leases to private entities are not exempt
from real estate tax
25. However, portions of the Airport Lands and
Buildings that MIAA leases to private entities are not
exempt from real estate tax. For example, the land
area occupied by hangars that MIAA leases to private
corporations is subject to real estate tax. In such a
case, MIAA has granted the beneficial use of such
land area for a consideration to a taxable person and
therefore such land area is subject to real estate tax.
Economic viability test applies only to GOCCs,
not to government instrumentalities like MIAA
26. Congress has no power to create government-
owned or controlled corporations with special charters
unless they meet the two conditions prescribed in
Section 16, Article XII of the Constitution. The first
condition is that the government-owned or controlled
corporation must be established for the common
good. The second condition is that the government-
owned or controlled corporation must meet the test of
economic viability.
27. In contrast, government instrumentalities vested
with corporate powers and performing governmental
or public functions need not meet the test of economic
viability. These instrumentalities perform essential
public services for the common good, services that
every modern State must provide its citizens. These
instrumentalities need not be economically viable
since the government may even subsidize their entire
operations.
28. Thus, the Constitution imposes no limitation when
the legislature creates government instrumentalities
vested with corporate powers but performing essential
governmental or public functions. However, when the
legislature creates through special charters
corporations that perform economic or
commercial activities, such entities - known as
"government-owned or controlled corporations" - must
meet the test of economic viability because they
compete in the market place.
29. The MIAA need not meet the test of economic
viability because the legislature did not create MIAA to
compete in the market place. MIAA does not compete
in the market place because there is no competing
international airport operated by the private sector.
MIAA performs an essential public service as the
primary domestic and international airport of the
Philippines.
G.R. No. 133250 July 9, 2002
FRANCISCO I. CHAVEZ, petitioner,
vs.
PUBLIC ESTATES AUTHORITY and AMARI
COASTAL BAY DEVELOPMENT
CORPORATION, respondents.
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
PEA's then on-going renegotiations with Amari
Coastal Bay and Development Corporation
("AMARI" for brevity) to reclaim portions of
Manila Bay. The petition further seeks to
enjoin PEA from signing a new agreement
with AMARI involving such reclamation.
The Facts
On November 20, 1973, the government,
through the Commissioner of Public
Highways, signed a contract with the
Construction and Development Corporation of
the Philippines ("CDCP" for brevity) to reclaim
certain foreshore and offshore areas of Manila
Bay. The contract also included the
construction of Phases I and II of the Manila-
Cavite Coastal Road. CDCP obligated itself to
carry out all the works in consideration of fifty
percent of the total reclaimed land.
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, x x x lease and sell
any and all kinds of lands."1 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"2 under the Manila-
Cavite Coastal Road and Reclamation Project
(MCCRRP).
On December 29, 1981, then President
Marcos issued a memorandum directing PEA
to amend 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, which
stated:
"(i) CDCP shall undertake all
reclamation, construction, and such
other works in the MCCRRP as may
be agreed upon by the parties, to be
paid according to progress of works on
a unit price/lump sum basis for items
of work to be agreed upon, subject to
price escalation, retention and other
terms and conditions provided for in
Presidential Decree No. 1594. All the
financing required for such works shall
be provided by PEA.
xxx
(iii) x x x CDCP shall give up all its
development rights and hereby agrees
to cede and transfer in favor of PEA,
all of the rights, title, interest and
participation of CDCP in and to all the
areas of land reclaimed by CDCP in
the MCCRRP as of December 30,
1981 which have not yet been sold,
transferred or otherwise disposed of
by CDCP as of said date, which areas
consist of approximately Ninety-Nine
Thousand Four Hundred Seventy
Three (99,473) square meters in the
Financial Center Area covered by land
pledge No. 5 and approximately Three
Million Three Hundred Eighty Two
Thousand Eight Hundred Eighty Eight
(3,382,888) square meters of
reclaimed areas at varying elevations
above Mean Low Water Level located
outside the Financial Center Area and
the First Neighborhood Unit."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 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. The Freedom
Islands have a total land area of One Million
Five Hundred Seventy Eight Thousand Four
Hundred and Forty One (1,578,441) square
meters or 157.841 hectares.
On April 25, 1995, PEA entered into a Joint
Venture Agreement ("JVA" for brevity) 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. PEA and
AMARI entered into the JVA through
negotiation without public bidding.4 On April
28, 1995, the Board of Directors of PEA, in its
Resolution No. 1245, confirmed the JVA.5 On
June 8, 1995, then President Fidel V. Ramos,
through then Executive Secretary Ruben
Torres, approved the JVA.6
On November 29, 1996, then Senate
President Ernesto Maceda delivered a
privilege speech in the Senate and denounced
the JVA as the "grandmother of all scams." As
a result, the Senate Committee on
Government Corporations and Public
Enterprises, and the Committee on
Accountability of Public Officers and
Investigations, conducted a joint investigation.
The Senate Committees reported 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 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,8 the Chief
Presidential Legal Counsel,9 and the
Government Corporate Counsel.10 The Legal
Task Force upheld the legality of the JVA,
contrary to the conclusions reached by the
Senate Committees.11
On April 4 and 5, 1998, the Philippine Daily
Inquirer and Today published reports that
there were on-going renegotiations between respectively. Meanwhile, on December 28, GOVERNING THE HIERARCHY OF
PEA and AMARI under an order issued by 1998, petitioner filed an Omnibus Motion: (a) COURTS;
then President Fidel V. Ramos. According to to require PEA to submit the terms of the
these reports, PEA Director Nestor Kalaw, renegotiated PEA-AMARI contract; (b) for III. WHETHER THE PETITION
PEA Chairman Arsenio Yulo and retired Navy issuance of a temporary restraining order; and MERITS DISMISSAL FOR NON-
Officer Sergio Cruz composed the negotiating (c) to set the case for hearing on oral EXHAUSTION OF ADMINISTRATIVE
panel of PEA. argument. Petitioner filed a Reiterative Motion REMEDIES;
for Issuance of a TRO dated May 26, 1999,
On April 13, 1998, Antonio M. Zulueta filed which the Court denied in a Resolution dated IV. WHETHER PETITIONER
before the Court a Petition for Prohibition with June 22, 1999. HAS LOCUS STANDI TO BRING
Application for the Issuance of a Temporary THIS SUIT;
Restraining Order and Preliminary In a Resolution dated March 23, 1999, the
Injunction docketed as G.R. No. 132994 Court gave due course to the petition and V. WHETHER THE
seeking to nullify the JVA. The Court required the parties to file their respective CONSTITUTIONAL RIGHT TO
dismissed the petition "for unwarranted memoranda. INFORMATION INCLUDES OFFICIAL
disregard of judicial hierarchy, without INFORMATION ON ON-GOING
prejudice to the refiling of the case before the On March 30, 1999, PEA and AMARI signed NEGOTIATIONS BEFORE A FINAL
proper court."12 the Amended Joint Venture Agreement AGREEMENT;
("Amended JVA," for brevity). On May 28,
On April 27, 1998, petitioner Frank I. Chavez 1999, the Office of the President under the VI. WHETHER THE STIPULATIONS
("Petitioner" for brevity) as a taxpayer, filed the administration of then President Joseph E. IN THE AMENDED JOINT VENTURE
instant Petition for Mandamus with Prayer for Estrada approved the Amended JVA. AGREEMENT FOR THE TRANSFER
the Issuance of a Writ of Preliminary TO AMARI OF CERTAIN LANDS,
Injunction and Temporary Restraining Order. Due to the approval of the Amended JVA by RECLAIMED AND STILL TO BE
Petitioner contends the government stands to the Office of the President, petitioner now RECLAIMED, VIOLATE THE 1987
lose billions of pesos in the sale by PEA of the prays that on "constitutional and statutory CONSTITUTION; AND
reclaimed lands to AMARI. Petitioner prays grounds the renegotiated contract be declared
that PEA publicly disclose the terms of any null and void."14 VII. WHETHER THE COURT IS THE
renegotiation of the JVA, invoking Section 28,
PROPER FORUM FOR RAISING
Article II, and Section 7, Article III, of the 1987 The Issues THE ISSUE OF WHETHER THE
Constitution on the right of the people to
AMENDED JOINT VENTURE
information on matters of public concern.
The issues raised by petitioner, PEA15 and AGREEMENT IS GROSSLY
Petitioner assails the sale to AMARI of lands
AMARI16 are as follows: DISADVANTAGEOUS TO THE
of the public domain as a blatant violation of
GOVERNMENT.
Section 3, Article XII of the 1987 Constitution
prohibiting the sale of alienable lands of the I. WHETHER THE PRINCIPAL
public domain to private corporations. Finally, RELIEFS PRAYED FOR IN THE Sixth issue: whether stipulations in the
petitioner asserts that he seeks to enjoin the PETITION ARE MOOT AND Amended JVA for the transfer to AMARI of
loss of billions of pesos in properties of the ACADEMIC BECAUSE OF lands, reclaimed or to be reclaimed, violate
State that are of public dominion. SUBSEQUENT EVENTS; the Constitution.

After several motions for extension of II. WHETHER THE PETITION The Regalian Doctrine
time,13 PEA and AMARI filed their Comments MERITS DISMISSAL FOR FAILING
on October 19, 1998 and June 25, 1998, TO OBSERVE THE PRINCIPLE
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. Upon the Spanish conquest of the
Philippines, ownership of all "lands, territories
and possessions" in the Philippines passed to
the Spanish Crown.42 The King, as the
sovereign ruler and representative of the
people, acquired and owned all lands and
territories in the Philippines except those he
disposed of by grant or sale to private
individuals.
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."43 Article 339 of the Civil Code of
1889, which is now Article 420 of the Civil
Code of 1950, incorporated the Regalian
doctrine.
Ownership and Disposition of Reclaimed
Lands
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, the National Assembly passed
Commonwealth Act No. 141, also known as
the Public Land Act, 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 classification
and disposition of lands of the public domain.
The Spanish Law of Waters of 1866 and the
Civil Code of 1889
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 Spanish Law of Waters of
1866 allowed the reclamation of the sea under
Article 5, which provided as follows:
"Article 5. Lands reclaimed from the
sea in consequence of works
constructed by the State, or by the
provinces, pueblos or private persons,
with proper permission, shall become
the property of the party constructing
such works, unless otherwise provided
by the terms of the grant of authority."
Under the Spanish Law of Waters, land
reclaimed from the sea belonged to the party
undertaking the reclamation, provided the
government issued the necessary permit and
did not reserve ownership of the reclaimed
land to the State.
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.
Article 341 of the Civil Code of 1889 governed
the re-classification of property of public
dominion into private property, to wit:
"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.45
Act No. 1654 of the Philippine Commission
On May 8, 1907, the Philippine Commission
enacted Act No. 1654 which regulated the
lease of reclaimed and foreshore lands. The
salient provisions of this law were as follows:
"Section 1. The control and
disposition of the foreshore as
defined in existing law, and the title to
all Government or public lands
made or reclaimed by the
Government by dredging or
filling or otherwise throughout the
Philippine Islands, shall be retained
by the Government without prejudice
to vested rights and without prejudice
to rights conceded to the City of
Manila in the Luneta Extension.
Section 2. (a) The Secretary of the
Interior shall cause all Government or
public lands made or reclaimed by the
Government by dredging or filling or
otherwise to be divided into lots or
blocks, with the necessary streets and
alleyways located thereon, and shall
cause plats and plans of such surveys
to be prepared and filed with the
Bureau of Lands.
(b) Upon completion of such plats and
plans the Governor-General shall
give notice to the public that such
parts of the lands so made or
reclaimed as are not needed for
public purposes will be leased for
commercial and business
purposes, x x x.
xxx
(e) The leases above provided for
shall be disposed of to the highest
and best bidder therefore, subject to
such regulations and safeguards as
the Governor-General may by
executive order prescribe." (Emphasis
supplied)
Act No. 1654 mandated that the government
should retain title to all lands reclaimed by
the 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 public lands which the government could
sell to private parties, these reclaimed lands
were available only for lease to private parties.
Act No. 1654, however, did not repeal Section
5 of the Spanish Law of Waters of 1866. Act
No. 1654 did not prohibit private parties from
reclaiming parts of the sea under Section 5 of
the Spanish Law of Waters. Lands reclaimed
from the sea by private parties with
government permission remained private
lands.
Act No. 2874 of the Philippine Legislature
On November 29, 1919, the Philippine
Legislature enacted Act No. 2874, the Public
Land Act.46 The salient provisions of Act No.
2874, on reclaimed lands, were as follows:
"Sec. 6. The Governor-General,
upon the recommendation of the
Secretary of Agriculture and Natural
Resources, shall from time to time
classify the lands of the public
domain into –
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands, x x x.
Sec. 7. For the purposes of the
government and disposition of
alienable or disposable public
lands, the Governor-General, upon
recommendation by the Secretary
of Agriculture and Natural
Resources, shall from time to time
declare what lands are open to
disposition or concession under
this Act."
Sec. 8. Only those lands shall be
declared open to disposition or
concession which have been
officially delimited or classified x x
x.
xxx
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.
 Sec. 56. The lands disposable
under this title shall be classified as
follows:
(a) Lands reclaimed by the
Government by dredging,
filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands
covered with water bordering
upon the shores or banks of
navigable lakes or rivers;
(d) Lands not included in any
of the foregoing classes.
x x x.
Sec. 58. The lands comprised in
classes (a), (b), and (c) of section
fifty-six shall be disposed of to
private parties by lease only and
not otherwise, as soon as the
Governor-General, upon
recommendation by the Secretary
of Agriculture and Natural
Resources, shall declare that the
same are not necessary for the
public service and are open to
disposition under this chapter. The
lands included in class (d) may be
disposed of by sale or lease under
the provisions of this Act."
(Emphasis supplied)
Section 6 of Act No. 2874 authorized the
Governor-General to "classify lands of the
public domain into x x x alienable or
disposable"47 lands. Section 7 of the Act
empowered the Governor-General to "declare
what lands are open to disposition or
concession." Section 8 of the Act limited
alienable or disposable lands only to those
lands which have been "officially delimited and
classified."
Section 56 of Act No. 2874 stated that lands
"disposable under this title48 shall be
classified" as government reclaimed,
foreshore and marshy lands, as well as other
lands. All these lands, however, must be
suitable for residential, commercial, industrial
or other productive non-
agricultural purposes. These provisions
vested upon the Governor-General the power
to classify inalienable lands of the public
domain into disposable lands of the public
domain. These provisions also empowered
the Governor-General to classify further such
disposable lands of the public domain into
government reclaimed, foreshore or marshy
lands of the public domain, as well as other
non-agricultural lands.
Section 58 of Act 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 parties by lease only
and not otherwise." The Governor-General,
before allowing the lease of these lands to
private parties, must formally declare that the
lands were "not necessary for the public
service." Act No. 2874 reiterated the State
policy to lease and not to sell government
reclaimed, foreshore and 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
lands of the public domain that the
government could not sell to private parties.
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.
Act No. 2874 did not authorize the
reclassification of government reclaimed,
foreshore and marshy lands into other non-
agricultural lands under Section 56 (d). Lands
falling under Section 56 (d) were the only
lands for non-agricultural purposes the
government could sell to private parties. Thus,
under Act No. 2874, the government could not
sell government reclaimed, foreshore and
marshy lands to private parties, unless the
legislature passed a law allowing their
sale.49
Act No. 2874 did not prohibit private parties
from reclaiming parts of the sea pursuant to
Section 5 of the Spanish Law of Waters of
1866. Lands reclaimed from the sea by private
parties with government permission remained
private lands.
Dispositions under the 1935 Constitution
On May 14, 1935, the 1935 Constitution took
effect upon its ratification by the Filipino
people. The 1935 Constitution, in adopting the
Regalian doctrine, declared in Section 1,
Article XIII, that –
"Section 1. All agricultural, timber, and
mineral lands of the public domain,
waters, minerals, coal, petroleum, and
other mineral oils, all forces of
potential energy and other natural
resources of the Philippines belong to
the State, and their disposition,
 exploitation, development, or
utilization shall be limited to citizens of
the Philippines or to corporations or
associations at least sixty per centum
of the capital of which is owned by
such citizens, subject to any existing
right, grant, lease, or concession at
the time of the inauguration of the
Government established under this
Constitution. Natural resources, with
the exception of public agricultural
land, shall not be alienated, and no
license, concession, or lease for the
exploitation, development, or
utilization of any of the natural
resources shall be granted for a period
exceeding twenty-five years,
renewable for another twenty-five
years, except as to water rights for
irrigation, water supply, fisheries, or
industrial uses other than the
development of water power, in which
cases beneficial use may be the
measure and limit of the grant."
(Emphasis supplied)
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 State's natural
resources, became inalienable by
constitutional fiat, available only for lease for
25 years, renewable for another 25 years. The
government could alienate foreshore lands
only after these lands were reclaimed and
classified as alienable agricultural lands of the
public 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 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 prohibition on private parties from
acquiring ownership of government reclaimed
and marshy lands of the public domain was
only a statutory prohibition and the legislature
could therefore remove 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:
"Section 2. No private corporation
or association may acquire, lease,
or hold public agricultural lands in
excess of one thousand and twenty
four hectares, nor may any
individual acquire such lands by
purchase in excess of one hundred
and forty hectares, or by lease in
excess of one thousand and
twenty-four hectares, or by
homestead in excess of twenty-four
hectares. Lands adapted to grazing,
not exceeding two thousand hectares,
may be leased to an individual, private
corporation, or association."
(Emphasis supplied)
Still, after the effectivity of the 1935
Constitution, the legislature did not repeal
Section 58 of Act No. 2874 to open for sale to
private parties government reclaimed and
marshy lands of the public domain. On the
contrary, the legislature continued the long
established State policy of retaining for the
government title and ownership of government
reclaimed and marshy lands of the public
domain.
Commonwealth Act No. 141 of the
Philippine National Assembly
On November 7, 1936, the National Assembly
approved Commonwealth Act No. 141, also
known as the Public Land Act, which compiled
the then existing laws on lands of the public
domain. CA No. 141, as amended, remains to
this day the existing general law governing
the classification and disposition of lands of
the public domain other than timber and
mineral lands.51
Section 6 of CA No. 141 empowers the
President to classify lands of the public
domain into "alienable or disposable"52 lands
of the public domain, which prior to such
classification are inalienable and outside the
commerce of man. Section 7 of CA No. 141
authorizes the President to "declare what
lands are open to disposition or concession."
Section 8 of CA No. 141 states that the
government can declare open for disposition
or concession only lands that are "officially
delimited and classified." Sections 6, 7 and 8
of CA No. 141 read as follows:
"Sec. 6. The President, upon the
recommendation of the Secretary of
Agriculture and Commerce, shall
from time to time classify the lands
of the public domain into –
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands,
and may at any time and in like
manner transfer such lands from one
class to another,53 for the purpose of
their administration and disposition.
 Sec. 7. For the purposes of the
administration and disposition of
alienable or disposable public
lands, the President, upon
recommendation by the Secretary
of Agriculture and Commerce, shall
from time to time declare what
lands are open to disposition or
concession under this Act.
Sec. 8. Only those lands shall be
declared open to disposition or
concession which have been
officially delimited and
classified and, when practicable,
surveyed, and which have not been
reserved for public or quasi-public
uses, nor appropriated by the
Government, nor in any manner
become private property, nor those on
which a private right authorized and
recognized by this Act or any other
valid law may be claimed, or which,
having been reserved or appropriated,
have ceased to be so. x x x."
Thus, before the government could alienate or
dispose of lands of the public domain, the
President must first officially classify these
lands as alienable or disposable, and then
declare them open to disposition or
concession. There must be no law reserving
these lands for public or quasi-public uses.
The salient provisions of CA No. 141, on
government reclaimed, foreshore and marshy
lands of the public domain, are as follows:
"Sec. 58. Any tract of land of the
public domain which, being neither
timber nor mineral land, is intended
to be used for residential purposes
or for commercial, industrial, or
other productive purposes other
than agricultural, and is open to
disposition or concession, shall be
disposed of under the provisions of
this chapter and not otherwise.
Sec. 59. The lands disposable
under this title shall be classified as
follows:
(a) Lands reclaimed by the
Government by dredging,
filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands
covered with water bordering
upon the shores or banks of
navigable lakes or rivers;
(d) Lands not included in any
of the foregoing classes.
Sec. 60. Any tract of land comprised
under this title may be leased or sold,
as the case may be, to any person,
corporation, or association authorized
to purchase or lease public lands for
agricultural purposes. x x x.
Sec. 61. The lands comprised in
classes (a), (b), and (c) of section
fifty-nine shall be disposed of to
private parties by lease only and
not otherwise, as soon as the
President, upon recommendation by
the Secretary of Agriculture, shall
declare that the same are not
necessary for the public service and
are open to disposition under this
chapter. The lands included in class
(d) may be disposed of by sale or
lease under the provisions of this
Act." (Emphasis supplied)
Section 61 of CA No. 141 readopted, after the
effectivity of the 1935 Constitution, Section 58
of Act No. 2874 prohibiting the sale of
government reclaimed, foreshore and marshy
disposable lands of the public domain. All
these lands are intended for residential,
commercial, industrial or other non-agricultural
purposes. As before, Section 61 allowed only
the lease of such lands to private parties. The
government could sell to private parties only
lands falling under Section 59 (d) of CA No.
141, or those lands for non-agricultural
purposes not classified as government
reclaimed, foreshore and marshy disposable
lands of the public domain. Foreshore lands,
however, became inalienable under the 1935
Constitution which only allowed the lease of
these lands to qualified private parties.
Section 58 of CA No. 141 expressly states
that disposable lands of the public domain
intended for residential, commercial, industrial
or other productive purposes other than
agricultural "shall be disposed of under the
provisions of this chapter and not
otherwise." Under Section 10 of CA No. 141,
the term "disposition" includes lease of the
land. Any disposition of government
reclaimed, foreshore and marshy disposable
lands for non-agricultural purposes must
comply with Chapter IX, Title III of CA No.
141,54 unless a subsequent law amended or
repealed these provisions.
In his concurring opinion in the landmark case
of Republic Real Estate Corporation v.
Court of Appeals,55Justice Reynato S. Puno
summarized succinctly the law on this matter,
as follows:
 "Foreshore lands are lands of public
dominion intended for public use. So
too are lands reclaimed by the
government by dredging, filling, or
other means. Act 1654 mandated that
the control and disposition of the
foreshore and lands under water
remained in the national government.
Said law allowed only the 'leasing' of
reclaimed land. The Public Land Acts
of 1919 and 1936 also declared that
the foreshore and lands reclaimed by
the government were to be "disposed
of to private parties by lease only and
not otherwise." Before leasing,
however, the Governor-General, upon
recommendation of the Secretary of
Agriculture and Natural Resources,
had first to determine that the land
reclaimed was not necessary for the
public service. This requisite must
have been met before the land could
be disposed of. But even then, the
foreshore and lands under water
were not to be alienated and sold to
private parties. The disposition of
the reclaimed land was only by
lease. The land remained property
of the State." (Emphasis supplied)
As observed by Justice Puno in his concurring
opinion, "Commonwealth Act No. 141 has
remained in effect at present."
The State policy prohibiting the sale to private
parties of government reclaimed, foreshore
and marshy alienable lands of the public
domain, first implemented in 1907 was thus
reaffirmed in CA No. 141 after the 1935
Constitution took effect. 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 reclaimed
lands.
After the effectivity of the 1935 Constitution,
government reclaimed and marshy disposable
lands of the public domain continued to be
only leased and not sold to private
parties.56 These lands remained sui generis,
as the only alienable or disposable lands of
the public domain the government could not
sell to private parties.
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 non-agricultural lands under
Section 59 (d). Lands classified under Section
59 (d) are the only alienable or disposable
lands for non-agricultural purposes that the
government could sell to private parties.
Moreover, Section 60 of CA No.
141 expressly requires congressional
authority before lands under Section 59 that
the government previously transferred to
government units or entities could be sold to
private parties. Section 60 of CA No. 141
declares that –
"Sec. 60. x x x The area so leased or
sold shall be such as shall, in the
judgment of the Secretary of
Agriculture and Natural Resources, be
reasonably necessary for the
purposes for which such sale or lease
is requested, and shall not exceed one
hundred and forty-four hectares:
Provided, however, That this limitation
shall not apply to grants, donations, or
transfers made to a province,
municipality or branch or subdivision
of the Government for the purposes
deemed by said entities conducive to
the public interest; but the land so
granted, donated, or transferred to
a province, municipality or branch
or subdivision of the Government
shall not be alienated, encumbered,
or otherwise disposed of in a
manner affecting its title, except
when authorized by Congress: x x
x." (Emphasis supplied)
The congressional authority required in
Section 60 of CA No. 141 mirrors the
legislative authority required in Section 56 of
Act No. 2874.
One reason for the congressional authority is
that Section 60 of CA No. 141 exempted
government units and entities from the
maximum area of public lands that could be
acquired from the State. These government
units and entities should not just turn around
and sell these lands to private 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 limitations on ownership of
alienable or disposable lands of the public
domain. In the same manner, such transfers
could also be used to evade the statutory
prohibition in CA No. 141 on the sale of
government reclaimed and marshy lands of
the public domain to private parties. Section
60 of CA No. 141 constitutes by operation of
law a lien on these lands.57
In case of sale or lease of disposable lands of
the public domain falling under Section 59 of
CA No. 141, Sections 63 and 67 require a
public bidding. Sections 63 and 67 of CA No.
141 provide as follows:
"Sec. 63. Whenever it is decided that
lands covered by this chapter are not
needed for public purposes, the
Director of Lands shall ask the
Secretary of Agriculture and
Commerce (now the Secretary of
Natural Resources) for authority to
dispose of the same. Upon receipt of
such authority, the Director of Lands
shall give notice by public
advertisement in the same manner as
in the case of leases or sales of
agricultural public land, x x x.
Sec. 67. The lease or sale shall be
made by oral bidding; and
adjudication shall be made to the
highest bidder. x x x." (Emphasis
supplied)
Thus, CA No. 141 mandates the Government
to put to public auction all leases or sales of
alienable or disposable lands of the public
domain.58
Like Act No. 1654 and Act No. 2874 before it,
CA No. 141 did not repeal Section 5 of the
Spanish 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 alienable
agricultural land of the public domain open
to disposition under CA No. 141. The 1935
Constitution prohibited the alienation of all
natural resources except public agricultural
lands.
The Civil Code of 1950
The Civil Code of 1950 readopted
substantially the definition of property of public
dominion found in the Civil Code of 1889.
Articles 420 and 422 of the Civil Code of 1950
state that –
"Art. 420. The following things are
property of public dominion:
(1) Those intended for public use,
such as roads, canals, rivers, torrents,
ports and bridges constructed by the
State, banks, shores, roadsteads, and
others of similar character;
(2) Those which belong to the State,
without being for public use, and are
intended for some public service or for
the development of the national
wealth.
x x x.
Art. 422. Property of public dominion,
when no longer intended for public use
or for public service, shall form part of
the patrimonial property of the State."
Again, the government must formally declare
that the property of public dominion is no
longer needed for public use or public service,
before the same could be classified as
patrimonial property of 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 applicable
provisions of CA No. 141.
Like the Civil Code of 1889, the Civil Code of
1950 included as property of public dominion
those 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, even if not
employed for public use or public service, if
developed to enhance the national wealth, are
classified as property of public dominion.
Dispositions under the 1973 Constitution
The 1973 Constitution, which took effect on
January 17, 1973, likewise adopted the
Regalian doctrine. Section 8, Article XIV of the
1973 Constitution stated that –
"Sec. 8. All lands of the public domain,
waters, minerals, coal, petroleum and
other mineral oils, all forces of
potential energy, fisheries, wildlife, and
other natural resources of the
Philippines belong to the State. With
the exception of agricultural,
industrial or commercial,
residential, and resettlement lands
of the public domain, natural
resources shall not be alienated,
and no license, concession, or lease
for the exploration, development,
exploitation, or utilization of any of the
natural resources shall be granted for
a period exceeding twenty-five years,
renewable for not more than twenty-
five years, except as to water rights for
irrigation, water supply, fisheries, or
industrial uses other than the
development of water power, in which
cases, beneficial use may be the
measure and the limit of the grant."
(Emphasis supplied)
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, the
1935 Constitution barred the alienation of all
natural resources except "public agricultural
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 public
domain. Both the 1935 and 1973
Constitutions, therefore, prohibited the
alienation of all natural resources except
agricultural lands of the public domain.
The 1973 Constitution, however, limited the
alienation of lands of the public domain to
individuals who were citizens of the
Philippines. Private corporations, even if
wholly owned by Philippine citizens, were no
longer allowed to acquire alienable lands of
the public domain unlike in the 1935
Constitution. Section 11, Article XIV of the
1973 Constitution declared that –
"Sec. 11. The Batasang Pambansa,
taking into account conservation,
ecological, and development
requirements of the natural resources,
shall determine by law the size of land
of the public domain which may be
developed, held or acquired by, or
leased to, any qualified individual,
corporation, or association, and the
conditions therefor. No private
corporation or association may
hold alienable lands of the public
domain except by lease not to
exceed one thousand hectares in area
nor may any citizen hold such lands by
lease in excess of five hundred
hectares or acquire by purchase,
homestead or grant, in excess of
twenty-four hectares. No private
corporation or association may hold by
lease, concession, license or permit,
timber or forest lands and other timber
or forest resources in excess of one
hundred thousand hectares. However,
such area may be increased by the
Batasang Pambansa upon
recommendation of the National
Economic and Development
Authority." (Emphasis supplied)
Thus, under the 1973 Constitution, private
corporations could hold alienable lands of the
public domain only through lease. Only
individuals could now acquire alienable lands
of the public domain, and private
corporations became absolutely barred
from acquiring any kind of alienable land
of the public domain. The constitutional ban
extended to all kinds of alienable lands of the
public domain, while the statutory ban under
CA No. 141 applied only to government
reclaimed, foreshore and marshy alienable
lands of the public domain.
PD No. 1084 Creating the Public Estates
Authority
On February 4, 1977, then President
Ferdinand Marcos issued Presidential Decree
No. 1084 creating PEA, a wholly government
owned and controlled corporation with a
special charter. Sections 4 and 8 of PD No.
1084, vests PEA with the following purposes
and powers:
"Sec. 4. Purpose. The Authority is
hereby created for the following
purposes:
(a) To reclaim land, including
foreshore and submerged areas, by
dredging, filling or other means, or
PD No. 1084 authorizes PEA to reclaim both
to acquire reclaimed land;
foreshore and submerged areas of the public
(b) To develop, improve, acquire,
administer, deal in, subdivide,
dispose, lease and sell any and all
kinds of lands, buildings, estates and
other forms of real property, owned,
managed, controlled and/or operated
by the government;
(c) To provide for, operate or
administer such service as may be
necessary for the efficient, economical
and beneficial utilization of the above
properties.
Sec. 5. Powers and functions of the
Authority. The Authority shall, in
carrying out the purposes for which it
is created, have the following powers
and functions:
(a)To prescribe its by-laws.
xxx
(i) To hold lands of the public
domain in excess of the area
permitted to private corporations by
statute.
(j) To reclaim lands and to construct
work across, or otherwise, any stream,
watercourse, canal, ditch, flume x x x.
xxx
(o) To perform such acts and exercise
such functions as may be necessary
for the attainment of the purposes and
objectives herein specified."
(Emphasis supplied)
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 domain63 and are inalienable unless
reclaimed, classified as alienable lands open
to disposition, and further declared no longer
needed for public service.
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 and associations." PD
No. 1084 expressly empowers PEA "to hold
lands of the public domain" even "in excess
of the area permitted to private corporations
by statute." Thus, PEA can hold title to
private lands, as well as title to lands of the
public domain.
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 authority is necessary in view of
Section 60 of CA No.141, which states –
"Sec. 60. x x x; but the land so
granted, donated or transferred to a
province, municipality, or branch or
subdivision of the Government shall
not be alienated, encumbered or
otherwise disposed of in a manner
affecting its title, except when
authorized by Congress; x x x."
(Emphasis supplied)
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 PEA to sell its reclaimed
alienable lands of the public domain would be
subject to the constitutional ban on private
corporations from acquiring alienable lands of
the public domain. Hence, such legislative
authority could only benefit private individuals.
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. x
x x.
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.
Taking into account the requirements
of conservation, ecology, and
development, and subject to the
requirements of agrarian reform, the
Congress shall determine, by law, the
size of lands of the public domain
which may be acquired, developed,
held, or leased and the conditions
therefor." (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 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.
The Rationale behind the Constitutional
Ban
The rationale behind the constitutional ban on
corporations from acquiring, except through
lease, alienable lands of the public domain is
not well understood. During the deliberations
of the 1986 Constitutional Commission, the
commissioners probed the rationale behind
this ban, thus:
"FR. BERNAS: Mr. Vice-President, my
questions have reference to page 3,
line 5 which says:
`No private corporation or association
may hold alienable lands of the public
domain except by lease, not to exceed
one thousand hectares in area.'
If we recall, this provision did not exist
under the 1935 Constitution, but this
was introduced in the 1973
Constitution. In effect, it prohibits
private corporations from acquiring
alienable public lands. But it has not
been very clear in jurisprudence
what the reason for this is. In some
of the cases decided in 1982 and
1983, it was indicated that the
purpose of this is to prevent large
landholdings. Is that the intent of this
provision?
MR. VILLEGAS: I think that is the spirit of the
provision.
FR. BERNAS: In existing decisions
involving the Iglesia ni Cristo, there
were instances where the Iglesia ni
Cristo was not allowed to acquire a
mere 313-square meter land where a
chapel stood because the Supreme
Court said it would be in violation of
this." (Emphasis supplied)
In Ayog v. Cusi,64 the Court explained the
rationale behind this constitutional ban in this
way:
"Indeed, one purpose of the
constitutional prohibition against
purchases of public agricultural lands
by private corporations is to equitably
diffuse land ownership or to
encourage 'owner-cultivatorship and
the economic family-size farm' and to
prevent a recurrence of cases like the
instant case. Huge landholdings by
corporations or private persons had
spawned social unrest."
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 hectares of
alienable lands of the public domain under the
1973 Constitution, and not more than 12
hectares under the 1987 Constitution.
If the constitutional intent is to encourage
economic family-size farms, placing the land
in the name of a corporation would be more
effective in preventing the break-up of
farmlands. If the farmland is registered in the
name of a corporation, upon the death of the
owner, his heirs would inherit shares in the
corporation instead of subdivided parcels of
the farmland. This would prevent the
continuing break-up of farmlands into smaller
and smaller plots from one generation to the
next.
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.
The constitutional intent, under the 1973 and
1987 Constitutions, is to transfer ownership of
only a limited area of alienable land of the
public domain to a qualified individual. This
constitutional intent is safeguarded by the
provision prohibiting corporations from
acquiring alienable lands of the public domain,
since the vehicle to circumvent the
constitutional intent is removed. The available
alienable public lands are gradually
decreasing in the face of an ever-growing
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
constitutional ban.
The Amended Joint Venture Agreement
The subject matter of the Amended JVA, as
stated in its second Whereas clause, consists
of three properties, namely:
1. "[T]hree partially reclaimed and
substantially eroded islands along
Emilio Aguinaldo Boulevard in
Paranaque and Las Pinas, Metro
Manila, with a combined titled area of
1,578,441 square meters;"
 2. "[A]nother area of 2,421,559 square
meters contiguous to the three
islands;" and
3. "[A]t AMARI's option as approved
by PEA, an additional 350 hectares
more or less to regularize the
configuration of the reclaimed area."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 another 350 hectares x
x x."66
In short, the Amended JVA covers a
reclamation area of 750 hectares. Only
157.84 hectares of the 750-hectare
reclamation project have been reclaimed,
and the rest of the 592.15 hectares are still
submerged areas forming part of Manila
Bay.
Under the Amended JVA, AMARI will
reimburse PEA the sum of P1,894,129,200.00
for PEA's "actual cost" in partially reclaiming
the Freedom Islands. AMARI will also
complete, at its own expense, the reclamation
of the Freedom Islands. AMARI will further
shoulder all the reclamation costs of all the
other areas, totaling 592.15 hectares, still to
be reclaimed. AMARI and PEA will share, in
the proportion of 70 percent and 30 percent,
respectively, the total net usable area which is
defined in the Amended JVA as the total
reclaimed area less 30 percent earmarked for
common areas. Title to AMARI's share in the
net usable area, totaling 367.5 hectares, will
be issued in the name of AMARI. Section 5.2
(c) of the Amended JVA provides that –
"x x x, PEA shall have the duty to
execute without delay the necessary
deed of transfer or conveyance of the
title pertaining to AMARI's Land share
based on the Land Allocation
Plan. PEA, when requested in
writing by AMARI, shall then cause
the issuance and delivery of the
proper certificates of title covering
AMARI's Land Share in the name of
AMARI, x x x; provided, that if more
than seventy percent (70%) of the
titled area at any given time pertains to
AMARI, PEA shall deliver to AMARI
only seventy percent (70%) of the
titles pertaining to AMARI, until such
time when a corresponding
proportionate area of additional land
pertaining to PEA has been titled."
(Emphasis supplied)
Indisputably, under the Amended JVA
AMARI will acquire and own a maximum of
367.5 hectares of reclaimed land which will
be titled in its name.
To implement the Amended JVA, PEA
delegated to the unincorporated PEA-AMARI
joint venture PEA's statutory authority, rights
and privileges to reclaim foreshore and
submerged areas in Manila Bay. Section 3.2.a
of the Amended JVA states that –
"PEA hereby contributes to the joint
venture its rights and privileges to
perform Rawland Reclamation and
Horizontal Development as well as
own the Reclamation Area, thereby
granting the Joint Venture the full and
exclusive right, authority and privilege
to undertake the Project in accordance
with the Master Development Plan."
The Amended JVA is the product of a
renegotiation of the original JVA dated April
25, 1995 and its supplemental agreement
dated August 9, 1995.
The Threshold Issue
The threshold issue is whether AMARI, a
private corporation, can acquire and own
under the Amended JVA 367.5 hectares of
reclaimed foreshore and submerged areas in
Manila Bay in view of Sections 2 and 3, Article
XII of the 1987 Constitution which 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. x x x.
xxx
Section 3. x x x 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, x x
x."(Emphasis supplied)
Classification of Reclaimed Foreshore and
Submerged Areas
PEA readily concedes that lands reclaimed
from foreshore or submerged areas of Manila
Bay are alienable or disposable lands of the
public domain. In its Memorandum,67 PEA
admits that –
 "Under the Public Land Act (CA 141,
as amended), reclaimed lands are
classified as alienable and
disposable lands of the public
domain:
'Sec. 59. The lands disposable
under this title shall be
classified as follows:
(a) Lands reclaimed by the
government by dredging,
filling, or other means;
x x x.'" (Emphasis supplied)
Likewise, the Legal Task Force68 constituted
under Presidential Administrative Order No.
365 admitted in its Report and
Recommendation to then President Fidel V.
Ramos, "[R]eclaimed lands are classified
as alienable and disposable lands of the
public domain."69 The Legal Task Force
concluded that –
"D. Conclusion
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,70 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 x x x 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.71
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."72 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. 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
transferred to another location thirteen years
earlier, the Court still ruled that, under Article
42274 of the Civil Code, a property of public
dominion retains such character until formally
declared otherwise. The Court ruled that –
"The fact that the Roppongi site has
not been used for a long time for
actual Embassy service does not
automatically convert it to patrimonial
property. Any such conversion
happens only if the property is
withdrawn from public use (Cebu
Oxygen and Acetylene Co. v.
Bercilles, 66 SCRA 481 [1975]. A
property continues to be part of the
public domain, not available for
private appropriation or ownership
'until there is a formal declaration
on the part of the government to
withdraw it from being
such' (Ignacio v. Director of Lands,
108 Phil. 335 [1960]." (Emphasis
supplied)
PD No. 1085, issued on February 4, 1977,
authorized the issuance of special land
patents for lands reclaimed by PEA from the
foreshore or submerged areas of Manila Bay.
On January 19, 1988 then President Corazon
C. Aquino issued Special Patent No. 3517 in
the name of PEA for the 157.84 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 name of PEA pursuant to Section
103 of PD No. 1529 authorizing the issuance
of certificates of title corresponding to land
patents. To this day, these certificates of title
are still in the name of PEA.
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. PD No. 1085 and
President Aquino's 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.
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 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.
AMARI claims that the Freedom Islands are
private lands because CDCP, then a private
corporation, reclaimed the islands under a
contract dated November 20, 1973 with the
Commissioner of Public Highways. AMARI,
citing Article 5 of the Spanish Law of Waters
of 1866, argues that "if the ownership of
reclaimed lands may be given to the party
constructing the works, then it cannot be said
that reclaimed lands are lands of the public
domain which the State may not
alienate."75 Article 5 of the Spanish Law of
Waters reads as follows:
"Article 5. Lands reclaimed from the
sea in consequence of works
constructed by the State, or by the
provinces, pueblos or private
persons, with proper permission, shall
become the property of the party
constructing such works, unless
otherwise provided by the terms of
the grant of authority." (Emphasis
supplied)
Under Article 5 of the Spanish Law of Waters
of 1866, private parties could reclaim from the
sea only with "proper permission" from the
State. Private parties could own the reclaimed
land only if not "otherwise provided by the
terms of the grant of authority." This clearly
meant that no one could reclaim from the sea
without permission from the State because the
sea is property of public dominion. It also
meant that the State could grant or withhold
ownership of the reclaimed land because any
reclaimed 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 Law
of Waters of 1866 adopted 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."77
Article 5 of the Spanish Law of Waters must
be read together with laws subsequently
enacted on the disposition of public lands. In
particular, CA No. 141 requires that lands of
the public domain must first be classified as
alienable or disposable before the government
can alienate them. These lands must not be
reserved for public or quasi-public
purposes.78 Moreover, the contract between
CDCP and the government was
executed after the effectivity of the 1973
Constitution which barred private corporations
from acquiring any kind of alienable land of
the public domain. This contract could not
have converted the Freedom Islands into
private lands of a private corporation.
Presidential Decree No. 3-A, 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 reclaim lands. Section 1 of PD
No. 3-A declared that –
"The provisions of any law to the
contrary notwithstanding, the
reclamation of areas under water,
whether foreshore or inland, shall
be limited to the National
Government or any person
authorized by it under a proper
contract. (Emphasis supplied)
x x x."
PD No. 3-A repealed Section 5 of the Spanish
Law of Waters of 1866 because reclamation
of areas under water could now be
undertaken only by the National Government
or by a person contracted by the National
Government. Private parties may reclaim from
the sea only under a contract with the National
Government, and no longer by grant or
permission as provided in Section 5 of the
Spanish Law of Waters of 1866.
Executive Order No. 525, issued on February
14, 1979, designated PEA as the National
Government's implementing arm to undertake
"all reclamation projects of the government,"
which "shall be undertaken by the PEA or
through a proper contract executed by it
with any person or entity." Under such
contract, a private party receives
compensation for reclamation services
rendered to PEA. Payment to the contractor
may be in cash, or in kind consisting of
portions of the reclaimed land, subject to the
constitutional ban on private corporations from
acquiring alienable lands of the public domain.
The reclaimed land can be used as payment
in kind only if the reclaimed land is first
classified as alienable or disposable land
open to disposition, and then declared no
longer needed for public service.
The Amended JVA covers not only the
Freedom Islands, but also an additional
592.15 hectares which are still submerged
and forming part of Manila Bay. There is no
legislative or Presidential act classifying
these submerged areas as alienable or
disposable lands of the public domain
open to disposition. These submerged
areas are not covered by any patent or
certificate of title. There can be no dispute that
these submerged areas form part of the public
domain, and in their present state
are inalienable and outside the commerce
of man. Until reclaimed from the sea, these
submerged areas are, under the Constitution,
"waters x x x owned by the State," forming
part of the public domain and consequently
inalienable. Only when actually reclaimed
from the sea can these submerged areas be
classified as public agricultural lands, which
under the Constitution are the only natural
resources 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, the government may declare these
lands no longer needed for public service.
Only then can these reclaimed lands be
considered alienable or disposable lands of
the public domain and within the commerce of
man.
The classification of PEA's reclaimed
foreshore and submerged lands into alienable
or disposable lands open to disposition is
necessary because PEA is tasked under its
charter to undertake public 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 may be necessary; [T]o
construct, maintain and operate such storm
drains as may be necessary." PEA is
empowered to issue "rules and regulations as
may be necessary for the proper use by
private parties of any or all of the highways,
roads, utilities, buildings and/or any of its
properties and to impose or collect fees or
tolls for their use." Thus, part of the reclaimed
foreshore and submerged lands held by the
PEA would actually be needed for public use
or service since many of the functions
imposed on PEA by its charter constitute
essential public services.
Moreover, Section 1 of Executive Order No.
525 provides that PEA "shall be primarily
responsible 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
President upon recommendation of the PEA,
and shall be undertaken by the PEA or
through a proper contract executed by it with
any person or entity; x x x." Thus, under EO
No. 525, in relation to PD No. 3-A and PD
No.1084, PEA became the primary
implementing agency of the National
Government to 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 lands no
longer needed for public service from those
still needed for public service.
1âwphi1.nêt
Section 3 of EO No. 525, by declaring that all
lands reclaimed by PEA "shall belong to or be
owned by the PEA," could not automatically
operate to classify inalienable lands into
alienable or disposable 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 alienable or disposable.
The Revised Administrative 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 powers and functions:
"Sec. 4. Powers and Functions. The
Department shall:
(1) x x x
xxx
(4) Exercise supervision and
control over forest lands, alienable
and disposable public lands,
mineral resources and, in the process
of exercising such control, impose
appropriate taxes, fees, charges,
rentals and any such form of levy and
 collect such revenues for the
exploration, development, utilization or
gathering of such resources;
xxx
(14) Promulgate rules, regulations
and guidelines on the issuance of
licenses, permits, concessions,
lease agreements and such other
privileges concerning the
development, exploration and
utilization of the country's marine,
freshwater, and brackish water and
over all aquatic resources of the
country and shall continue to
oversee, supervise and police our
natural resources; cancel or cause to
cancel such privileges upon failure,
non-compliance or violations of any
regulation, order, and for all other
causes which are in furtherance of the
conservation of natural resources and
supportive of the national interest;
(15) Exercise exclusive jurisdiction
on the management and disposition
of all lands of the public domain
and serve as the sole agency
responsible for classification, sub-
classification, surveying and titling of
lands in consultation with appropriate
agencies."80 (Emphasis supplied)
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 jurisdiction on the
management and disposition of all lands of
the public domain." Thus, DENR decides
whether areas under water, like foreshore or
submerged areas of Manila Bay, should be
reclaimed or not. This means that PEA needs
authorization from DENR before PEA can
undertake reclamation projects in Manila Bay,
or in any part of the country.
DENR also exercises exclusive jurisdiction
over the disposition of all lands of the public
domain. Hence, DENR decides whether
reclaimed lands of PEA should be classified
as alienable under Sections 681 and 782 of CA
No. 141. Once DENR decides that the
reclaimed lands should be so classified, it
then recommends to the President the
issuance of a proclamation classifying the
lands as 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 Revised
Administrative Code and Sections 6 and 7 of
CA No. 141.
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.
Absent two official acts – a classification that
these lands are alienable or disposable and
open to disposition and a declaration that
these lands are not needed for public service,
lands reclaimed by PEA remain inalienable
lands of the public domain. Only such an
official classification and formal declaration
can convert reclaimed lands into alienable or
disposable lands of the public domain, open to
disposition under the Constitution, Title I and
Title III83 of CA No. 141 and other applicable
laws.84
PEA's Authority to Sell Reclaimed Lands
PEA, like the Legal Task Force, argues that
as alienable or disposable lands of the public
domain, the reclaimed lands shall be disposed
of in accordance with CA No. 141, the Public
Land Act. PEA, citing Section 60 of CA No.
141, admits that reclaimed lands transferred
to a branch or subdivision of the government
"shall not be alienated, encumbered, or
otherwise disposed of in a manner affecting its
title, except when authorized by Congress:
x x x."85 (Emphasis by PEA)
In Laurel vs. Garcia,86 the Court cited Section
48 of the Revised Administrative Code of
1987, which states that –
"Sec. 48. Official Authorized to
Convey Real Property. Whenever real
property of the Government is
authorized by law to be conveyed,
the deed of conveyance shall be
executed in behalf of the government
by the following: x x x."
Thus, the Court concluded that a law is
needed to convey any real property belonging
to the Government. The Court declared that -
 "It is not for the President to convey
real property of the government on his
or her own sole will. Any such
conveyance must be authorized
and approved by a law enacted by
the Congress. It requires executive
and legislative concurrence."
(Emphasis supplied)
PEA contends that PD No. 1085 and EO No.
525 constitute the legislative authority allowing
PEA to sell its reclaimed lands. PD No. 1085,
issued on February 4, 1977, provides that –
"The land reclaimed in the
foreshore and offshore area of
Manila Bay pursuant to the contract
for the reclamation and construction of
the Manila-Cavite Coastal Road
Project between the Republic of the
Philippines and the Construction and
Development Corporation of the
Philippines dated November 20, 1973
and/or any other contract or
reclamation covering the same area is
hereby transferred, conveyed and
assigned to the ownership and
administration of the Public Estates
Authority established pursuant to PD
No. 1084; Provided, however, That the
rights and interests of the Construction
and Development Corporation of the
Philippines pursuant to the aforesaid
contract shall be recognized and
respected.
Henceforth, the Public Estates
Authority shall exercise the rights and
assume the obligations of the Republic
of the Philippines (Department of
Public Highways) arising from, or
incident to, the aforesaid contract
between the Republic of the
Philippines and the Construction and
Development Corporation of the
Philippines.
In consideration of the foregoing
transfer and assignment, the Public
Estates Authority shall issue in favor of
the Republic of the Philippines the
corresponding shares of stock in said
entity with an issued value of said
shares of stock (which) shall be
deemed fully paid and non-
assessable.
The Secretary of Public Highways and
the General Manager of the Public
Estates Authority shall execute such
contracts or agreements, including
appropriate agreements with the
Construction and Development
Corporation of the Philippines, as may
be necessary to implement the above.
Special land patent/patents shall be
issued by the Secretary of Natural
Resources in favor of the Public
Estates Authority without prejudice
to the subsequent transfer to the
contractor or his assignees of such
portion or portions of the land
reclaimed or to be reclaimed as
provided for in the above-
mentioned contract. On the basis of
such patents, the Land Registration
Commission shall issue the
corresponding certificate of title."
(Emphasis supplied)
On the other hand, Section 3 of EO No. 525,
issued on February 14, 1979, provides that -
"Sec. 3. All lands reclaimed by PEA
shall belong to or be owned by the
PEA which shall be responsible for its
administration, development,
utilization or disposition in accordance
with the provisions of Presidential
Decree No. 1084. Any and all income
that the PEA may derive from the sale,
lease or use of reclaimed lands shall
be used in accordance with the
provisions of Presidential Decree No.
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 from Manila Bay to PEA,
while EO No. 525 declared that lands
reclaimed by PEA "shall belong to or be
owned by PEA." EO No. 525 expressly states
that PEA should dispose of its reclaimed lands
"in accordance with the provisions of
Presidential Decree No. 1084," the charter of
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 x x x 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
propertiesin 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.
PEA may also sell its alienable or
disposable lands of the public domain to
private individuals since, with the legislative
authority, there is no longer any statutory
prohibition against such sales and the
constitutional ban does not apply to
individuals. PEA, however, cannot sell any of
its alienable or disposable lands of the public
domain to private corporations since Section
3, Article XII of the 1987 Constitution
expressly prohibits such sales. The legislative
authority benefits only individuals. Private
corporations remain barred from acquiring any
kind of alienable land of the public domain,
including government reclaimed lands.
The provision in PD No. 1085 stating that
portions of the reclaimed lands could be
transferred by PEA to the "contractor or his
assignees" (Emphasis supplied) would not
apply to private corporations but only to
individuals because of the constitutional ban.
Otherwise, the provisions of PD No. 1085
would violate both the 1973 and 1987
Constitutions.
The requirement of public auction in the
sale of reclaimed lands
Assuming the reclaimed lands of PEA are
classified as alienable or disposable lands
open to disposition, and further declared no
longer needed for public service, PEA would
have to conduct a public bidding in selling or
leasing these lands. PEA must observe the
provisions of Sections 63 and 67 of CA No.
141 requiring public auction, in the absence of
a law exempting PEA from holding a public
auction.88 Special Patent No. 3517 expressly
states that the patent is issued by authority of
the Constitution and PD No. 1084,
"supplemented by Commonwealth Act No.
141, as amended." This is an
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
authorize PEA to dispense with public auction.
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 –
"Section 79. 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 notice in the Official
Gazette, or for not less than three
consecutive days in any newspaper
of general circulation, or where the
value of the property does not warrant
the expense of publication, by notices
posted for a like period in at least
three public places in the locality
where the property is to be sold. 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."
It is only when the public auction fails that a
negotiated sale is allowed, in which case the
Commission on Audit must approve the selling
price.90 The Commission on Audit implements
Section 79 of the Government Auditing Code
through Circular No. 89-29691 dated January
27, 1989. This circular emphasizes that
government assets must be disposed of only
through public auction, and a negotiated sale
can be resorted to only in case of "failure of
public auction."
At the public auction sale, only Philippine
citizens are qualified to bid for PEA's
reclaimed foreshore and submerged alienable
lands of the public domain. Private
corporations are barred from bidding at the
auction sale of any kind of alienable land of
the public domain.
PEA originally scheduled a public bidding for
the Freedom Islands on December 10, 1991.
PEA imposed a condition that the winning
bidder should reclaim another 250 hectares of
submerged areas to regularize the shape of
the Freedom Islands, under a 60-40 sharing of
the additional reclaimed areas in favor of the
winning bidder.92 No one, however, submitted
a bid. On December 23, 1994, the
Government Corporate Counsel advised PEA
it could sell the Freedom Islands through
negotiation, without need of another public
bidding, because of the failure of the public
bidding on December 10, 1991.93
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.94 The
failure of public bidding on December 10,
1991, involving only 407.84 hectares,95 is not
a valid justification for a negotiated sale of 750
hectares, almost double the area publicly
auctioned. 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
improved during the intervening period.
Reclamation under the BOT Law and the
Local Government Code
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 except by lease, x
x x." Even Republic Act No. 6957 ("BOT Law,"
for brevity), cited by PEA and AMARI as
legislative authority to sell reclaimed lands to
private parties, recognizes the constitutional
ban. Section 6 of RA No. 6957 states –
"Sec. 6. Repayment Scheme. - For the
financing, construction, operation and
maintenance of any infrastructure
projects undertaken through the build-
operate-and-transfer arrangement or
any of its variations pursuant to the
provisions of this Act, the project
proponent x x x may likewise be
repaid in the form of a share in the
revenue of the project or other non-
monetary payments, such as, but not
limited to, the grant of a portion or
percentage of the reclaimed
land, subject to the constitutional
requirements with respect to the
ownership of the land: x x x."
(Emphasis supplied)
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.
Section 302 of the Local Government Code,
also mentioned by PEA and AMARI,
authorizes local governments in land
reclamation projects to pay the contractor or
developer in kind consisting of a percentage
of the reclaimed land, to wit:
"Section 302. Financing, Construction,
Maintenance, Operation, and
Management of Infrastructure Projects
by the Private Sector. x x x
xxx
In case of land reclamation or
construction of industrial estates, the
repayment plan may consist of the
grant of a portion or percentage of the
reclaimed land or the industrial estate
constructed."
Although Section 302 of the Local
Government Code does not contain a proviso
similar to that of the BOT Law, the
constitutional restrictions on land ownership
automatically apply even though not expressly
mentioned in the Local Government Code.
Thus, under either the BOT Law or the Local
Government Code, the contractor or
developer, if a corporate entity, can only be
paid with leaseholds on portions of the
reclaimed land. If the contractor or developer
is an individual, portions of the reclaimed land,
not exceeding 12 hectares96 of non-
agricultural lands, may be conveyed to him in
ownership in view of the legislative authority
allowing such conveyance. This is the only
way these provisions of the BOT Law and the
Local Government Code can avoid a direct
collision with Section 3, Article XII of the 1987
Constitution.
Registration of lands of the public domain
Finally, PEA theorizes that the "act of
conveying the ownership of the reclaimed
lands to public respondent PEA transformed
such lands of the public domain to private
lands." This theory is echoed by AMARI which
maintains that the "issuance of the special
patent leading to the eventual issuance of title
takes the subject land away from the land of
public domain and converts the property into
patrimonial or private property." In short, PEA
and AMARI contend that with the issuance of
Special Patent No. 3517 and the
corresponding certificates of titles, the 157.84
hectares comprising the Freedom Islands
have become private lands of PEA. In support
of their theory, PEA and AMARI cite the
following rulings of the Court:
1. Sumail v. Judge of CFI of
Cotabato,97 where the Court held –
"Once the patent was granted and the
corresponding certificate of title was
issued, the land ceased to be part of
the public domain and became private
property over which the Director of
Lands has neither control nor
jurisdiction."
2. Lee Hong Hok v. David,98 where the
Court declared -
"After the registration and issuance of
the certificate and duplicate certificate
of title based on a public land patent,
the land covered thereby automatically
comes under the operation of Republic
Act 496 subject to all the safeguards
provided therein."3. Heirs of Gregorio
Tengco v. Heirs of Jose
Aliwalas,99 where the Court ruled -
"While the Director of Lands has the
power to review homestead patents,
he may do so only so long as the land
remains part of the public domain and
continues to be under his exclusive
control; but once the patent is
registered and a certificate of title is
issued, the land ceases to be part of
the public domain and becomes
private property over which the
Director of Lands has neither control
nor jurisdiction."
4. Manalo v. Intermediate Appellate
Court,100 where the Court held –
"When the lots in dispute were
certified as disposable on May 19,
1971, and free patents were issued
covering the same in favor of the
private respondents, the said lots
ceased to be part of the public domain
and, therefore, the Director of Lands
lost jurisdiction over the same."
5.Republic v. Court of
Appeals,101 where the Court stated –
"Proclamation No. 350, dated October
9, 1956, of President Magsaysay
legally effected a land grant to the
Mindanao Medical Center, Bureau of
Medical Services, Department of
Health, of the whole lot, validly
sufficient for initial registration under
the Land Registration Act. Such land
grant is constitutive of a 'fee simple'
title or absolute title in favor of
petitioner Mindanao Medical Center.
Thus, Section 122 of the Act, which
governs the registration of grants or
patents involving public lands,
provides that 'Whenever public lands
in the Philippine Islands belonging to
the Government of the United States
or 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 Registration Act, Act
496) and shall become registered
lands.'"
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 automatically comes
under the Torrens System. The fifth case cited
involves the registration under the Torrens
System of a 12.8-hectare public land granted
by the National Government to Mindanao
Medical Center, a government unit under the
Department of Health. The National
Government transferred the 12.8-hectare
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 12.8-hectare public land in the name of
Mindanao Medical Center under Section 122
of Act No. 496. This fifth case is an example
of a public land being registered under Act No.
496 without the land losing its character as a
property of public dominion.
In the instant case, the only patent and
certificates of title issued are those in the
name of PEA, a wholly government owned
corporation performing public as well as
proprietary functions. No patent or certificate
of title has been issued to any private party.
No one is asking the Director of Lands to
cancel PEA's patent or certificates of title. In
fact, the thrust of the instant petition is that
PEA's certificates of title should remain with
PEA, and the land covered by these
certificates, being alienable lands of the public
domain, should not be sold to a private
corporation.
Registration of land under Act No. 496 or PD
No. 1529 does not vest in the registrant
private or public ownership of the land.
Registration is not a mode of acquiring
ownership but is merely evidence 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, cannot convert public lands
into private lands.103
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 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, to wit:
 "NOW, THEREFORE, KNOW YE, that
by authority of the Constitution of the
Philippines and in conformity with the
provisions of Presidential Decree No.
1084, supplemented by
Commonwealth Act No. 141, as
amended, there are hereby granted
and conveyed unto the Public Estates
Authority the aforesaid tracts of land
containing a total area of one million
nine hundred fifteen thousand eight
hundred ninety four (1,915,894)
square meters; the technical
description of which are hereto
attached and made an integral part
hereof." (Emphasis supplied)
Thus, the provisions of CA No. 141 apply to
the Freedom Islands on matters not covered
by PD No. 1084. Section 60 of CA No. 141
prohibits, "except when authorized by
Congress," the sale of alienable lands of the
public domain that are transferred to
government units or entities. Section 60 of CA
No. 141 constitutes, under Section 44 of PD
No. 1529, a "statutory lien affecting title" of the
registered land even if not annotated on the
certificate of title.104Alienable lands of the
public domain held by government entities
under Section 60 of CA No. 141 remain public
lands because they cannot be alienated or
encumbered unless Congress passes a law
authorizing their disposition. Congress,
however, cannot authorize the sale to private
corporations of reclaimed alienable lands of
the public domain because of the
constitutional ban. Only individuals can benefit
from such law.
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. This will
allow private corporations to acquire directly
from government agencies limitless areas of
lands which, prior to such law, are concededly
public lands.
Under EO No. 525, PEA became the central
implementing agency of the National
Government to reclaim foreshore and
submerged areas of the public domain. Thus,
EO No. 525 declares that –
"EXECUTIVE ORDER NO. 525
Designating the Public Estates
Authority as the Agency Primarily
Responsible for all Reclamation
Projects
Whereas, there are several
reclamation projects which are
ongoing or being proposed to be
undertaken in various parts of the
country which need to be evaluated for
consistency with national programs;
Whereas, there is a need to give
further institutional support to the
Government's declared policy to
provide for a coordinated, economical
and efficient reclamation of lands;
Whereas, Presidential Decree No. 3-A
requires that all reclamation of areas
shall be limited to the National
Government or any person authorized
by it under proper contract;
Whereas, a central authority is
needed to act on behalf of the
National Government which shall
ensure a coordinated and
integrated approach in the
reclamation of lands;
Whereas, Presidential Decree No.
1084 creates the Public Estates
Authority as a government
corporation to undertake
reclamation of lands and ensure
their maximum utilization in
promoting public welfare and
interests; and
Whereas, Presidential Decree No.
1416 provides the President with
continuing authority to reorganize the
national government including the
transfer, abolition, or merger of
functions and offices.
NOW, THEREFORE, I, FERDINAND
E. MARCOS, President of the
Philippines, by virtue of the powers
vested in me by the Constitution and
pursuant to Presidential Decree No.
1416, do hereby order and direct the
following:
Section 1. The Public Estates
Authority (PEA) shall be primarily
responsible for integrating,
directing, and coordinating all
reclamation projects for and on
behalf of the National Government.
All reclamation projects shall be
approved by the President upon
recommendation of the PEA, and shall
 be undertaken by the PEA or through
a proper contract executed by it with
any person or entity; Provided, that,
reclamation projects of any national
government agency or entity
authorized under its charter shall be
undertaken in consultation with the
PEA upon approval of the President.
x x x ."
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 with leasing or selling
reclaimed lands of the public domain. The
reclaimed lands being leased or sold by PEA
are not private lands, in the same manner that
DENR, when it disposes of other alienable
lands, does not dispose of private lands but
alienable lands of the public domain. Only
when qualified private parties acquire these
lands will the lands become private lands. In
the hands of the government agency
tasked and authorized to dispose of
alienable of disposable lands of the public
domain, these lands are still public, not
private lands.
Furthermore, PEA's charter expressly states
that PEA "shall hold lands of the public
domain" as well as "any and all kinds of
lands." PEA can hold both lands of the public
domain and private lands. Thus, the mere fact
that alienable lands of the public domain like
the Freedom Islands are transferred to PEA
and issued land patents or certificates of title
in PEA's name does not automatically make
such lands private.
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. PEA will simply turn
around, as PEA has now done under the
Amended JVA, and transfer several
hundreds of hectares of these reclaimed and
still to be reclaimed lands to a single private
corporation in only one transaction. This
scheme will effectively nullify the constitutional
ban in Section 3, Article XII of the 1987
Constitution which was intended to diffuse
equitably the ownership of alienable lands of
the public domain among Filipinos, now
numbering over 80 million strong.
This scheme, if allowed, can even be applied
to alienable agricultural lands of the public
domain since PEA can "acquire x x x any and
all kinds of lands." This will open the
floodgates to corporations and even
individuals acquiring hundreds of hectares of
alienable lands of the public domain under the
guise that in the hands of PEA these lands are
private lands. This will result in corporations
amassing huge landholdings never before
seen in this country - creating the very evil
that the constitutional ban was designed to
prevent. This will completely reverse the clear
direction of constitutional development in this
country. The 1935 Constitution allowed private
corporations to acquire not more than 1,024
hectares of public lands.105 The 1973
Constitution prohibited private corporations
from acquiring any kind of public land, and the
1987 Constitution has unequivocally reiterated
this prohibition.
The contention of PEA and AMARI that public
lands, once registered under Act No. 496 or
PD No. 1529, automatically become private
lands is contrary to existing laws. Several laws
authorize lands of the public domain to be
registered under the Torrens System or Act
No. 496, now PD No. 1529, without losing
their character as public lands. Section 122 of
Act No. 496, and Section 103 of PD No. 1529,
respectively, provide as follows:
Act No. 496
"Sec. 122. Whenever public lands in
the Philippine Islands belonging to the
x x x Government of the Philippine
Islands are alienated, granted, or
conveyed to persons or the public or
private corporations, the same shall
be brought forthwith under the
operation of this Act and shall become
registered lands."
PD No. 1529
"Sec. 103. Certificate of Title to
Patents. Whenever public land is by
the Government alienated, granted or
conveyed to any person, the same
shall be brought forthwith under the
operation of this Decree." (Emphasis
supplied)
Based on its legislative history, the phrase
"conveyed to any person" in Section 103 of
PD No. 1529 includes conveyances of public
lands to public corporations.
Alienable lands of the public domain "granted,
donated, or transferred to a province,
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, is expressly
subject to the condition in Section 60 of CA
No. 141 that the land "shall not be alienated,
encumbered or otherwise disposed of in a
manner affecting its title, except when
authorized by Congress." This provision
refers to government reclaimed, foreshore and
marshy lands 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 the public
domain from becoming private land that can
be disposed of to qualified private parties.
The Revised Administrative Code of 1987 also
recognizes that lands of the public domain
may be registered under the Torrens System.
Section 48, Chapter 12, Book I of the Code
states –
"Sec. 48. Official Authorized to
Convey Real Property. Whenever real
property of the Government is
authorized by law to be conveyed, the
deed of conveyance shall be executed
in behalf of the government by the
following:
(1) x x x
(2) For property belonging to the
Republic of the Philippines, but
titled in the name of any political
subdivision or of any corporate
agency or instrumentality, by the
executive head of the agency or
instrumentality." (Emphasis supplied)
Thus, private property purchased by the
National Government for expansion of a public
wharf may be titled in the name of a
government corporation regulating port
operations in the country. Private property
purchased by the National Government for
expansion of an airport may also be titled in
the 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 All
these properties become properties of the
public domain, and if already registered under
Act No. 496 or PD No. 1529, remain
registered land. There is no requirement or
provision in any existing law for the de-
registration of land from the Torrens System.
Private lands taken by the Government for
public use under its power of eminent domain
become unquestionably part of the public
domain. Nevertheless, Section 85 of PD No.
1529 authorizes the Register of Deeds to
issue in the name of the National Government
new certificates of title covering such
expropriated lands. Section 85 of PD No.
1529 states –
"Sec. 85. Land taken by eminent
domain. Whenever any registered
land, or interest therein, is
expropriated or taken by eminent
domain, the National Government,
province, city or municipality, or any
other agency or instrumentality
exercising such right shall file for
registration in the proper Registry a
certified copy of the judgment which
shall state definitely by an adequate
description, the particular property or
interest expropriated, the number of
the certificate of title, and the nature of
the public use. A memorandum of the
right or interest taken shall be made
on each certificate of title by the
Register of Deeds, and where the fee
simple is taken, a new certificate
shall be issued in favor of the
National Government, province,
city, municipality, or any other
agency or instrumentality exercising
such right for the land so taken. The
legal expenses incident to the
memorandum of registration or
issuance of a new certificate of title
shall be for the account of the
authority taking the land or interest
therein." (Emphasis supplied)
Consequently, lands registered under Act No.
496 or PD No. 1529 are not exclusively
private or patrimonial lands. Lands of the
public domain may also be registered
pursuant to existing laws.
AMARI makes a parting shot that the
Amended JVA is not a sale to AMARI of the
Freedom Islands or of the lands to be
reclaimed from submerged areas of Manila
Bay. In the words of AMARI, the Amended
JVA "is not a sale but a joint venture with a
stipulation for reimbursement of the original
cost incurred by PEA for the earlier
reclamation and construction works performed
by the CDCP under its 1973 contract with the
Republic." Whether the Amended JVA is a
sale or a joint venture, the fact remains that
the Amended JVA requires PEA to "cause the
issuance and delivery of the certificates of title
conveying AMARI's Land Share in the name
of AMARI."107
This stipulation still contravenes Section 3,
Article XII of the 1987 Constitution which
provides that private corporations "shall not
hold such alienable lands of the public domain
except by lease." The transfer of title and
ownership to AMARI clearly means that
AMARI will "hold" the reclaimed lands other
than by lease. The transfer of title and
ownership is a "disposition" of the reclaimed
lands, a transaction considered a sale or
alienation under CA No. 141,108 the
Government Auditing Code, and Section 3,
109
Article XII of the 1987 Constitution.
The Regalian doctrine is deeply implanted in
our legal system. Foreshore and submerged
areas form part of the public domain and are
inalienable. Lands reclaimed from foreshore
and submerged areas also form part of the
public domain and are also inalienable, unless
converted pursuant to law 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 ever-growing population. To insure
such equitable distribution, the 1973 and 1987
Constitutions have barred private corporations
from acquiring any kind of alienable land of
the public domain. Those who attempt to
dispose of inalienable natural resources of the
State, or seek to circumvent the constitutional
ban on alienation of lands of the public
domain to private corporations, do so at their
own risk.
We can now summarize our conclusions as
follows:
1. 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.
PEA may only sell these lands to
Philippine citizens, subject to the
ownership limitations in the 1987
Constitution and existing laws.
2. The 592.15 hectares of submerged
areas of Manila Bay remain
inalienable natural resources of the
public domain until classified as
alienable or disposable lands open to
disposition and declared no longer
needed for public service. The
government can make such
classification and declaration only after
PEA has reclaimed these submerged
areas. Only then can these lands
qualify as agricultural lands of the
public domain, which are the only
natural resources the government can
alienate. In their present state, the
592.15 hectares of submerged
areas are inalienable and outside
the commerce of man.
3. Since the Amended JVA seeks to
transfer to AMARI, a private
corporation, ownership of 77.34
hectares110of the Freedom Islands,
such transfer is void for being contrary
to Section 3, Article XII of the 1987
Constitution which prohibits private
corporations from acquiring any kind
of alienable land of the public domain.
4. Since the Amended JVA also seeks
to transfer to AMARI ownership of
290.156 hectares111 of still submerged
areas of Manila Bay, such transfer is
void for being contrary to Section 2,
Article XII of the 1987 Constitution
which prohibits the alienation of
natural resources other than
agricultural lands of the public domain.
PEA may reclaim these submerged
areas. Thereafter, the government can
classify the reclaimed lands as
alienable or disposable, and further
declare them no longer needed for
public service. Still, the transfer of
such reclaimed alienable lands of the
public domain to AMARI will be void in
view of Section 3, Article XII of the
1987 Constitution which prohibits
private corporations from acquiring
any kind of alienable land of the public
domain.
Clearly, the Amended JVA violates glaringly
Sections 2 and 3, Article XII of the 1987
Constitution. Under Article 1409112 of the Civil
Code, contracts whose "object or purpose is
contrary to law," or whose "object is outside
the commerce of men," are "inexistent and
void from the beginning." The Court must
perform its duty to defend and uphold the
Constitution, and therefore declares the
Amended JVA null and void ab initio.
G.R. No. 92013 July 25, 1990
SALVADOR H. LAUREL, petitioner,
vs.
RAMON GARCIA, as head of the Asset
Privatization Trust, RAUL MANGLAPUS, as
Secretary of Foreign Affairs, and
CATALINO MACARAIG, as Executive
Secretary, respondents.
G.R. No. 92047 July 25, 1990
DIONISIO S. OJEDA, petitioner,
vs.
EXECUTIVE SECRETARY MACARAIG, JR.,
ASSETS PRIVATIZATION TRUST
CHAIRMAN RAMON T. GARCIA,
AMBASSADOR RAMON DEL ROSARIO, et
al., as members of the PRINCIPAL AND
BIDDING COMMITTEES ON THE
UTILIZATION/DISPOSITION PETITION OF
PHILIPPINE GOVERNMENT PROPERTIES
IN JAPAN, respondents.
Arturo M. Tolentino for petitioner in 92013.
GUTIERREZ, JR., J.:
These are two petitions for prohibition seeking
to enjoin respondents, their representatives
and agents from proceeding with the bidding
for the sale of the 3,179 square meters of land
at 306 Roppongi, 5-Chome Minato-ku Tokyo,
Japan scheduled on February 21, 1990. We
granted the prayer for a temporary restraining
order effective February 20, 1990. One of the
petitioners (in G.R. No. 92047) likewise
prayes for a writ of mandamus to compel the
respondents to fully disclose to the public the
basis of their decision to push through with the
sale of the Roppongi property inspire of strong
public opposition and to explain the
proceedings which effectively prevent the
participation of Filipino citizens and entities in
the bidding process.
The oral arguments in G.R. No. 92013, Laurel
v. Garcia, et al. were heard by the Court on
March 13, 1990. After G.R. No. 92047, Ojeda
v. Secretary Macaraig, et al. was filed, the
respondents were required to file a comment
by the Court's resolution dated February 22,
1990. The two petitions were consolidated on
March 27, 1990 when the memoranda of the
parties in the Laurel case were deliberated
upon.
The Court could not act on these cases
immediately because the respondents filed a
motion for an extension of thirty (30) days to
file comment in G.R. No. 92047, followed by a
second motion for an extension of another
thirty (30) days which we granted on May 8,
1990, a third motion for extension of time
granted on May 24, 1990 and a fourth motion
for extension of time which we granted on
June 5, 1990 but calling the attention of the
respondents to the length of time the petitions
have been pending. After the comment was
filed, the petitioner in G.R. No. 92047 asked
for thirty (30) days to file a reply. We noted his
motion and resolved to decide the two (2)
cases.
I the government sector and those for private
The subject property in this case is one of the
four (4) properties in Japan acquired by the
Philippine government under the Reparations
Agreement entered into with Japan on May 9,
1956, the other lots being:
(1) The Nampeidai Property at 11-24
Nampeidai-machi, Shibuya-ku, Tokyo which
has an area of approximately 2,489.96 square
meters, and is at present the site of the
Philippine Embassy Chancery;
(2) The Kobe Commercial Property at 63
Naniwa-cho, Kobe, with an area of around
764.72 square meters and categorized as a
commercial lot now being used as a
warehouse and parking lot for the consulate
staff; and
(3) The Kobe Residential Property at 1-980-2
Obanoyama-cho, Shinohara, Nada-ku, Kobe,
a residential lot which is now vacant.
The properties and the capital goods and
services procured from the Japanese
government for national development projects
are part of the indemnification to the Filipino
people for their losses in life and property and
their suffering during World War II.
The Reparations Agreement provides that
reparations valued at $550 million would be
payable in twenty (20) years in accordance
with annual schedules of procurements to be
fixed by the Philippine and Japanese
governments (Article 2, Reparations
Agreement). Rep. Act No. 1789, the
Reparations Law, prescribes the national
policy on procurement and utilization of
reparations and development loans. The
procurements are divided into those for use by
parties in projects as the then National
Economic Council shall determine. Those
intended for the private sector shall be made
available by sale to Filipino citizens or to one
hundred (100%) percent Filipino-owned
entities in national development projects.
The Roppongi property was acquired from the
Japanese government under the Second Year
Schedule and listed under the heading
"Government Sector", through Reparations
Contract No. 300 dated June 27, 1958. The
Roppongi property consists of the land and
building "for the Chancery of the Philippine
Embassy" (Annex M-D to Memorandum for
Petitioner, p. 503). As intended, it became the
site of the Philippine Embassy until the latter
was transferred to Nampeidai on July 22,
1976 when the Roppongi building needed
major repairs. Due to the failure of our
government to provide necessary funds, the
Roppongi property has remained undeveloped
since that time.
A proposal was presented to President
Corazon C. Aquino by former Philippine
Ambassador to Japan, Carlos J. Valdez, to
make the property the subject of a lease
agreement with a Japanese firm - Kajima
Corporation — which shall construct two (2)
buildings in Roppongi and one (1) building in
Nampeidai and renovate the present
Philippine Chancery in Nampeidai. The
consideration of the construction would be the
lease to the foreign corporation of one (1) of
the buildings to be constructed in Roppongi
and the two (2) buildings in Nampeidai. The
other building in Roppongi shall then be used
as the Philippine Embassy Chancery. At the
end of the lease period, all the three leased
buildings shall be occupied and used by the
Philippine government. No change of
ownership or title shall occur. (See Annex "B"
to Reply to Comment) The Philippine
government retains the title all throughout the
lease period and thereafter. However, the
government has not acted favorably on this
proposal which is pending approval and
ratification between the parties. Instead, on
August 11, 1986, President Aquino created a
committee to study the disposition/utilization
of Philippine government properties in Tokyo
and Kobe, Japan through Administrative
Order No. 3, followed by Administrative
Orders Numbered 3-A, B, C and D.
On July 25, 1987, the President issued
Executive Order No. 296 entitling non-Filipino
citizens or entities to avail of separations'
capital goods and services in the event of
sale, lease or disposition. The four properties
in Japan including the Roppongi were
specifically mentioned in the first "Whereas"
clause.
Amidst opposition by various sectors, the
Executive branch of the government has been
pushing, with great vigor, its decision to sell
the reparations properties starting with the
Roppongi lot. The property has twice been set
for bidding at a minimum floor price of $225
million. The first bidding was a failure since
only one bidder qualified. The second one,
after postponements, has not yet materialized.
The last scheduled bidding on February 21,
1990 was restrained by his Court. Later, the
rules on bidding were changed such that the
$225 million floor price became merely a
suggested floor price.
The Court finds that each of the herein
petitions raises distinct issues. The petitioner
in G.R. No. 92013 objects to the alienation of
the Roppongi property to anyone while the
petitioner in G.R. No. 92047 adds as a
principal objection the alleged unjustified bias
of the Philippine government in favor of selling
the property to non-Filipino citizens and
entities. These petitions have been
consolidated and are resolved at the same
time for the objective is the same - to stop the
sale of the Roppongi property.
The petitioner in G.R. No. 92013 raises the
following issues:
(1) Can the Roppongi property and others of
its kind be alienated by the Philippine
Government?; and
(2) Does the Chief Executive, her officers and
agents, have the authority and jurisdiction, to
sell the Roppongi property?
Petitioner Dionisio Ojeda in G.R. No. 92047,
apart from questioning the authority of the
government to alienate the Roppongi property
assails the constitutionality of Executive Order
No. 296 in making the property available for
sale to non-Filipino citizens and entities. He
also questions the bidding procedures of the
Committee on the Utilization or Disposition of
Philippine Government Properties in Japan for
being discriminatory against Filipino citizens
and Filipino-owned entities by denying them
the right to be informed about the bidding
requirements.
II
In G.R. No. 92013, petitioner Laurel asserts
that the Roppongi property and the related
lots were acquired as part of the reparations
from the Japanese government for diplomatic
and consular use by the Philippine
government. Vice-President Laurel states that
the Roppongi property is classified as one of
public dominion, and not of private ownership
under Article 420 of the Civil Code (See
infra).
The petitioner submits that the Roppongi
property comes under "property intended for
public service" in paragraph 2 of the above
provision. He states that being one of public
dominion, no ownership by any one can
attach to it, not even by the State. The
Roppongi and related properties were
acquired for "sites for chancery, diplomatic,
and consular quarters, buildings and other
improvements" (Second Year Reparations
Schedule). The petitioner states that they
continue to be intended for a necessary
service. They are held by the State in
anticipation of an opportune use. (Citing 3
Manresa 65-66). Hence, it cannot be
appropriated, is outside the commerce of
man, or to put it in more simple terms, it
cannot be alienated nor be the subject matter
of contracts (Citing Municipality of Cavite v.
Rojas, 30 Phil. 20 [1915]). Noting the non-use
of the Roppongi property at the moment, the
petitioner avers that the same remains
property of public dominion so long as the
government has not used it for other purposes
nor adopted any measure constituting a
removal of its original purpose or use.
The respondents, for their part, refute the
petitioner's contention by saying that the
subject property is not governed by our Civil
Code but by the laws of Japan where the
property is located. They rely upon the rule
of lex situs which is used in determining the
applicable law regarding the acquisition,
transfer and devolution of the title to a
property. They also invoke Opinion No. 21,
Series of 1988, dated January 27, 1988 of the
Secretary of Justice which used the lex
situs in explaining the inapplicability of
Philippine law regarding a property situated in
Japan.
The respondents add that even assuming for
the sake of argument that the Civil Code is
applicable, the Roppongi property has ceased
to become property of public dominion. It has
become patrimonial property because it has
not been used for public service or for
diplomatic purposes for over thirteen (13)
years now (Citing Article 422, Civil Code) and
because the intention by the Executive
Department and the Congress to convert it to
private use has been manifested by overt
acts, such as, among others: (1) the transfer
of the Philippine Embassy to Nampeidai (2)
the issuance of administrative orders for the
possibility of alienating the four government
properties in Japan; (3) the issuance of
Executive Order No. 296; (4) the enactment
by the Congress of Rep. Act No. 6657 [the
Comprehensive Agrarian Reform Law] on
June 10, 1988 which contains a provision
stating that funds may be taken from the sale
of Philippine properties in foreign countries;
(5) the holding of the public bidding of the
Roppongi property but which failed; (6) the
deferment by the Senate in Resolution No. 55
of the bidding to a future date; thus an
acknowledgment by the Senate of the
government's intention to remove the
Roppongi property from the public service
purpose; and (7) the resolution of this Court
dismissing the petition in Ojeda v. Bidding
Committee, et al., G.R. No. 87478 which
sought to enjoin the second bidding of the
Roppongi property scheduled on March 30,
1989.
III
In G.R. No. 94047, petitioner Ojeda once
more asks this Court to rule on the
constitutionality of Executive Order No. 296.
He had earlier filed a petition in G.R. No.
87478 which the Court dismissed on August
1, 1989. He now avers that the executive
order contravenes the constitutional mandate
to conserve and develop the national
patrimony stated in the Preamble of the 1987
Constitution. It also allegedly violates:
(1) The reservation of the ownership and
acquisition of alienable lands of the public
domain to Filipino citizens. (Sections 2 and 3,
Article XII, Constitution; Sections 22 and 23 of
Commonwealth Act 141).i•t•c-aüsl
(2) The preference for Filipino citizens in the
grant of rights, privileges and concessions
covering the national economy and patrimony
(Section 10, Article VI, Constitution);
(3) The protection given to Filipino enterprises
against unfair competition and trade
practices;
(4) The guarantee of the right of the people to
information on all matters of public concern
(Section 7, Article III, Constitution);
(5) The prohibition against the sale to non-
Filipino citizens or entities not wholly owned
by Filipino citizens of capital goods received
by the Philippines under the Reparations Act
(Sections 2 and 12 of Rep. Act No. 1789);
and
(6) The declaration of the state policy of full
public disclosure of all transactions involving
public interest (Section 28, Article III,
Constitution).
Petitioner Ojeda warns that the use of public
funds in the execution of an unconstitutional
executive order is a misapplication of public
funds He states that since the details of the
bidding for the Roppongi property were never
publicly disclosed until February 15, 1990 (or
a few days before the scheduled bidding), the
bidding guidelines are available only in Tokyo,
and the accomplishment of requirements and
the selection of qualified bidders should be
done in Tokyo, interested Filipino citizens or
entities owned by them did not have the
chance to comply with Purchase Offer
Requirements on the Roppongi. Worse, the
Roppongi shall be sold for a minimum price of
$225 million from which price capital gains tax
under Japanese law of about 50 to 70% of the
floor price would still be deducted.
IV
The petitioners and respondents in both cases
do not dispute the fact that the Roppongi site
and the three related properties were through
reparations agreements, that these were
assigned to the government sector and that
the Roppongi property itself was specifically
designated under the Reparations Agreement
to house the Philippine Embassy.
The nature of the Roppongi lot as property for
public service is expressly spelled out. It is
dictated by the terms of the Reparations
Agreement and the corresponding contract of
procurement which bind both the Philippine
government and the Japanese government.
There can be no doubt that it is of public
dominion unless it is convincingly shown that
the property has become patrimonial. This,
the respondents have failed to do.
As property of public dominion, the Roppongi
lot is outside the commerce of man. It cannot
be alienated. Its ownership is a special
collective ownership for general use and
enjoyment, an application to the satisfaction of
collective needs, and resides in the social
group. The purpose is not to serve the State
as a juridical person, but the citizens; it is
intended for the common and public welfare
and cannot be the object of appropration.
(Taken from 3 Manresa, 66-69; cited in
Tolentino, Commentaries on the Civil Code of
the Philippines, 1963 Edition, Vol. II, p. 26).
The applicable provisions of the Civil Code
are:
ART. 419. Property is either of public
dominion or of private ownership.
ART. 420. The following things are property of
public dominion
(1) Those intended for public use, such as
roads, canals, rivers, torrents, ports and
bridges constructed by the State, banks
shores roadsteads, and others of similar
character;
(2) Those which belong to the State, without
being for public use, and are intended for
some public service or for the development of
the national wealth.
ART. 421. All other property of the State,
which is not of the character stated in the
preceding article, is patrimonial property.
The Roppongi property is correctly classified
under paragraph 2 of Article 420 of the Civil
Code as property belonging to the State and
intended for some public service.
Has the intention of the government regarding
the use of the property been changed
because the lot has been Idle for some years?
Has it become patrimonial?
The fact that the Roppongi site has not been
used for a long time for actual Embassy
service does not automatically convert it to
patrimonial property. Any such conversion
happens only if the property is withdrawn from
public use (Cebu Oxygen and Acetylene Co.
v. Bercilles, 66 SCRA 481 [1975]). A property
continues to be part of the public domain, not
available for private appropriation or
ownership until there is a formal declaration
on the part of the government to withdraw it
from being such (Ignacio v. Director of Lands,
108 Phil. 335 [1960]).
The respondents enumerate various
pronouncements by concerned public officials
insinuating a change of intention. We
emphasize, however, that an abandonment of
the intention to use the Roppongi property for
public service and to make it patrimonial
property under Article 422 of the Civil
Code must be definiteAbandonment cannot
be inferred from the non-use alone specially if
the non-use was attributable not to the
government's own deliberate and indubitable
will but to a lack of financial support to repair
and improve the property (See Heirs of Felino
Santiago v. Lazaro, 166 SCRA 368 [1988]).
Abandonment must be a certain and positive
act based on correct legal premises.
A mere transfer of the Philippine Embassy to
Nampeidai in 1976 is not relinquishment of the
Roppongi property's original purpose. Even
the failure by the government to repair the
building in Roppongi is not abandonment
since as earlier stated, there simply was a
shortage of government funds. The recent
Administrative Orders authorizing a study of
the status and conditions of government
properties in Japan were merely directives for
investigation but did not in any way signify a
clear intention to dispose of the properties.
Executive Order No. 296, though its title
declares an "authority to sell", does not have a
provision in its text expressly authorizing the
sale of the four properties procured from
Japan for the government sector. The
executive order does not declare that the
properties lost their public character. It merely
intends to make the properties available to
foreigners and not to Filipinos alone in case of
a sale, lease or other disposition. It merely
eliminates the restriction under Rep. Act No.
1789 that reparations goods may be sold only
to Filipino citizens and one hundred (100%)
percent Filipino-owned entities. The text of
Executive Order No. 296 provides:
Section 1. The provisions of Republic Act No.
1789, as amended, and of other laws to the
contrary notwithstanding, the above-
mentioned properties can be made available
for sale, lease or any other manner of
disposition to non-Filipino citizens or to
entities owned by non-Filipino citizens.
Executive Order No. 296 is based on the
wrong premise or assumption that the
Roppongi and the three other properties were
earlier converted into alienable real properties.
As earlier stated, Rep. Act No. 1789
differentiates the procurements for the
government sector and the private sector
(Sections 2 and 12, Rep. Act No. 1789). Only
the private sector properties can be sold to
end-users who must be Filipinos or entities
owned by Filipinos. It is this nationality
provision which was amended by Executive
Order No. 296.
Section 63 (c) of Rep. Act No. 6657 (the
CARP Law) which provides as one of the
sources of funds for its implementation, the
proceeds of the disposition of the properties of
the Government in foreign countries, did not
withdraw the Roppongi property from being
classified as one of public dominion when it
mentions Philippine properties abroad.
Section 63 (c) refers to properties which are
alienable and not to those reserved for public
use or service. Rep Act No. 6657, therefore,
does not authorize the Executive Department
to sell the Roppongi property. It merely
enumerates possible sources of future funding
to augment (as and when needed) the
Agrarian Reform Fund created under
Executive Order No. 299. Obviously any
property outside of the commerce of man
cannot be tapped as a source of funds.
The respondents try to get around the public
dominion character of the Roppongi property
by insisting that Japanese law and not our
Civil Code should apply.
It is exceedingly strange why our top
government officials, of all people, should be
the ones to insist that in the sale of extremely
valuable government property, Japanese law
and not Philippine law should prevail. The
Japanese law - its coverage and effects, when
enacted, and exceptions to its provision — is
not presented to the Court It is simply
asserted that the lex loci rei sitae or Japanese
law should apply without stating what that law
provides. It is a ed on faith that Japanese law
would allow the sale.
We see no reason why a conflict of law rule
should apply when no conflict of law situation
exists. A conflict of law situation arises only
when: (1) There is a dispute over the title or
ownership of an immovable, such that the
capacity to take and transfer immovables, the
formalities of conveyance, the essential
validity and effect of the transfer, or the
interpretation and effect of a conveyance, are
to be determined (See Salonga, Private
International Law, 1981 ed., pp. 377-383); and
(2) A foreign law on land ownership and its
conveyance is asserted to conflict with a
domestic law on the same matters. Hence, the
need to determine which law should apply.
In the instant case, none of the above
elements exists.
The issues are not concerned with validity of
ownership or title. There is no question that
the property belongs to the Philippines. The
issue is the authority of the respondent
officials to validly dispose of property
belonging to the State. And the validity of the
procedures adopted to effect its sale. This is
governed by Philippine Law. The rule of lex
situs does not apply.
The assertion that the opinion of the Secretary
of Justice sheds light on the relevance of
the lex situs rule is misplaced. The opinion
does not tackle the alienability of the real
properties procured through reparations nor
the existence in what body of the authority to
sell them. In discussing who are capable of
acquiring the lots, the Secretary merely
explains that it is the foreign law which should
determine who can acquire the properties so
that the constitutional limitation on acquisition
of lands of the public domain to Filipino
citizens and entities wholly owned by Filipinos
is inapplicable. We see no point in belaboring
whether or not this opinion is correct. Why
should we discuss who can acquire the
Roppongi lot when there is no showing that it
can be sold?
The subsequent approval on October 4, 1988
by President Aquino of the recommendation
by the investigating committee to sell the
Roppongi property was premature or, at the
very least, conditioned on a valid change in
the public character of the Roppongi property.
Moreover, the approval does not have the
force and effect of law since the President
already lost her legislative powers. The
Congress had already convened for more
than a year.
Assuming for the sake of argument, however,
that the Roppongi property is no longer of
public dominion, there is another obstacle to
its sale by the respondents.
There is no law authorizing its conveyance.
Section 79 (f) of the Revised Administrative
Code of 1917 provides
Section 79 (f ) Conveyances and contracts to
which the Government is a party. — In cases
in which the Government of the Republic of
the Philippines is a party to any deed or other
instrument conveying the title to real estate or
to any other property the value of which is in
excess of one hundred thousand pesos, the
respective Department Secretary shall
prepare the necessary papers which, together
with the proper recommendations, shall be
submitted to the Congress of the Philippines
for approval by the same. Such deed,
instrument, or contract shall be executed and
signed by the President of the Philippines on
behalf of the Government of the Philippines
unless the Government of the Philippines
unless the authority therefor be expressly
vested by law in another officer. (Emphasis
supplied)
The requirement has been retained in Section
48, Book I of the Administrative Code of 1987
(Executive Order No. 292).
SEC. 48. Official Authorized to Convey Real
Property. — Whenever real property of the
Government is authorized by law to be
conveyed, the deed of conveyance shall be
executed in behalf of the government by the
following:
(1) For property belonging to and titled in the
name of the Republic of the Philippines, by
the President, unless the authority therefor is
expressly vested by law in another officer.
(2) For property belonging to the Republic of
the Philippines but titled in the name of any
political subdivision or of any corporate
agency or instrumentality, by the executive
head of the agency or instrumentality.
(Emphasis supplied)
It is not for the President to convey valuable
real property of the government on his or her
own sole will. Any such conveyance must be
authorized and approved by a law enacted by
the Congress. It requires executive and
legislative concurrence.
Resolution No. 55 of the Senate dated June 8,
1989, asking for the deferment of the sale of
the Roppongi property does not withdraw the
property from public domain much less
authorize its sale. It is a mere resolution; it is
not a formal declaration abandoning the public
character of the Roppongi property. In fact,
the Senate Committee on Foreign Relations is
conducting hearings on Senate Resolution
No. 734 which raises serious policy
considerations and calls for a fact-finding
investigation of the circumstances behind the
decision to sell the Philippine government
properties in Japan.
The resolution of this Court in Ojeda v.
Bidding Committee, et al., supra, did not pass
upon the constitutionality of Executive Order
No. 296. Contrary to respondents' assertion,
we did not uphold the authority of the
President to sell the Roppongi property. The
Court stated that the constitutionality of the
executive order was not the real issue and
that resolving the constitutional question was
"neither necessary nor finally determinative of
the case." The Court noted that "[W]hat
petitioner ultimately questions is the use of the
proceeds of the disposition of the Roppongi
property." In emphasizing that "the decision of
the Executive to dispose of the Roppongi
property to finance the CARP ... cannot be
questioned" in view of Section 63 (c) of Rep.
Act No. 6657, the Court did not acknowledge
the fact that the property became alienable
nor did it indicate that the President was
authorized to dispose of the Roppongi
property. The resolution should be read to
mean that in case the Roppongi property is re-
classified to be patrimonial and alienable by
authority of law, the proceeds of a sale may
be used for national economic development
projects including the CARP.
Moreover, the sale in 1989 did not materialize.
The petitions before us question the proposed
1990 sale of the Roppongi property. We are
resolving the issues raised in these petitions,
not the issues raised in 1989.
Having declared a need for a law or formal
declaration to withdraw the Roppongi property
from public domain to make it alienable and a
need for legislative authority to allow the sale
of the property, we see no compelling reason
to tackle the constitutional issues raised by
petitioner Ojeda.
The Court does not ordinarily pass upon
constitutional questions unless these
questions are properly raised in appropriate
cases and their resolution is necessary for the
determination of the case (People v. Vera, 65
Phil. 56 [1937]). The Court will not pass upon
a constitutional question although properly
presented by the record if the case can be
disposed of on some other ground such as the
application of a statute or general law (Siler v.
Louisville and Nashville R. Co., 213 U.S. 175,
[1909], Railroad Commission v. Pullman Co.,
312 U.S. 496 [1941]).
The petitioner in G.R. No. 92013 states why
the Roppongi property should not be sold:
The Roppongi property is not just like any
piece of property. It was given to the Filipino
people in reparation for the lives and blood of
Filipinos who died and suffered during the
Japanese military occupation, for the suffering
of widows and orphans who lost their loved
ones and kindred, for the homes and other
properties lost by countless Filipinos during
the war. The Tokyo properties are a
monument to the bravery and sacrifice of the
Filipino people in the face of an invader; like
the monuments of Rizal, Quezon, and other
Filipino heroes, we do not expect economic or
financial benefits from them. But who would
think of selling these monuments? Filipino
honor and national dignity dictate that we
keep our properties in Japan as memorials to
the countless Filipinos who died and suffered.
Even if we should become paupers we should
not think of selling them. For it would be as if
we sold the lives and blood and tears of our
countrymen. (Rollo- G.R. No. 92013, p.147)
The petitioner in G.R. No. 92047 also states:
Roppongi is no ordinary property. It is one
ceded by the Japanese government in
atonement for its past belligerence for the
valiant sacrifice of life and limb and for deaths,
physical dislocation and economic devastation
the whole Filipino people endured in World
War II.
It is for what it stands for, and for what it could
never bring back to life, that its significance
today remains undimmed, inspire of the lapse
of 45 years since the war ended, inspire of the
passage of 32 years since the property
passed on to the Philippine government.
Roppongi is a reminder that cannot — should
not — be dissipated ... (Rollo-92047, p. 9)
It is indeed true that the Roppongi property is
valuable not so much because of the inflated
prices fetched by real property in Tokyo but
more so because of its symbolic value to all
Filipinos — veterans and civilians alike.
Whether or not the Roppongi and related
properties will eventually be sold is a policy
determination where both the President and
Congress must concur. Considering the
properties' importance and value, the laws on
conversion and disposition of property of
public dominion must be faithfully followed.
WHEREFORE, IN VIEW OF THE
FOREGOING, the petitions are GRANTED. A
writ of prohibition is issued enjoining the
respondents from proceeding with the sale of
the Roppongi property in Tokyo, Japan. The
February 20, 1990 Temporary Restraining
Order is made PERMANENT.
SO ORDERED.
G.R. No. 174964, October 05, 2016
SANGGUNIANG PANLALAWIGAN OF
BATAAN, Petitioner, v. CONGRESSMAN
ENRIQUE T. GARCIA, JR., MEMBERS OF
THE FACULTY, CONCERNED STUDENTS
AND THE BOARD OF TRUSTEES OF THE
BATAAN POLYTECHNIC STATE
COLLEGE, Respondents.
DECISION
REYES, J.:
Before this Court is a Petition for Review
on Certiorart1 of the Decision2 dated February
7, 2006 of the Court of Appeals (CA) in CA-
G.R. SP No. 85902 upholding the Decision
dated November 29, 2002 of the Regional
Trial Court (RTC) of Bataan which granted the
petition for a writ of mandamus in Special Civil
Action No. 7043.
Antecedent Facts
Lot Nos. 2193 and 2194 of the Bataan
Cadastre, containing 1,222 square meters and
10,598 sq m, respectively, were registered in
the name of the Province of Bataan. Both lots
were embraced in Original Certificate of Title
(OCT) No. N-182, and occupied by the Bataan
Community Colleges (BCC) and the Medina
Lacson de Leon School of Arts and Trades
(MLLSAT), both State-run schools.3
On February 26, 1998, the Congress of the
Philippines passed Republic Act (R.A.) No.
8562, authored by Congressman Enrique T.
Garcia, Jr. (Cong. Garcia), converting the
MLLSAT into a polytechnic college, to be
known as the Bataan Polytechnic State
College (BPSC), and integrating thereto the
BCC.4 Section 24 of R.A. No. 8562 provides
that:
All parcels of land belonging to the
government occupied by the Medina Lacson
de Leon School of Arts and Trades and the
Bataan Community Colleges are hereby
declared to be the property of the Bataan
Polytechnic State College and shall be titled
under that name: Provided, That should the
State College cease to exist or be abolished
or should such parcels of land aforementioned
be no longer needed by the State College, the
same shall revert to the Province of Bataan.
On the basis of the above provision, Cong.
Garcia wrote to then Governor of Bataan
Leonardo Roman, and the Sangguniang
Panlalawigan of Bataan (petitioner),
requesting them to cause the transfer of the
title of the aforesaid lots to BPSC. No transfer
was effected.5
Thus, Cong. Garcia, along with the faculty
members and some concerned students of
BPSC (collectively, the respondents) filed a
Special Civil Action for Mandamus with the
RTC of Balanga, Bataan against the Governor
and the petitioner. Initially, the Board of
Trustees of the BPSC was impleaded as an
unwilling plaintiff but was eventually included
as co-petitioner in the civil suit pursuant to
Resolution No. 14, Series of 2000 of the
BPSC.6
In their Comment, the Governor and the
petitioner took issue with the standing of the
respondents, arguing that they were not the
real parties in interest who would be benefited
or injured by the judgment, or the party
entitled to the avails of the suit. They asserted
that the subject properties were owned by the
Province of Bataan and not the State, for them
to be simply transferred to the BPSC by virtue
of the law.7
In its Decision dated November 29, 2002, the
RTC granted the writ of mandamus.
The fallo of the RTC decision reads:
WHEREFORE, a writ of mandamus is hereby
issued, ordering respondents to forthwith:
1. Deliver the owner's duplicate copy of [OCX]
No. N-182 to the Register of Deeds of Bataan,
free from any hen or
encumbrance;ChanRoblesVirtualawlibrary
2. Execute the corresponding deed of
conveyance of the parcels of land in issue in
favor of the [BPSC]; and
3. Cause the transfer and registration of the
title to and in the name of the [BPSC].
SO ORDERED.8
The Governor and the petitioner appealed to
the CA alleging that the subject lots were the
patrimonial properties of the Province of
Bataan, and as such they cannot be taken by
the National Government without due process
of law and without just compensation. They
also pointed out that certain loan obligations
of the Province of Bataan to the Land Bank of
the Philippines (LBP) were secured with a
mortgage on the lots; and since the mortgage
lien was duly annotated on its title, OCT No.
N-182, the writ of mandamus violated the non-
impairment clause of the Constitution. The
Governor and the petitioner reiterated that the
respondents had no legal standing since they
were not the real parties in interest.9
In the Decision10 dated February 7, 2006, the
CA affirmed the RTC.
The CA rejected the claim that the subject lots
were the patrimonial properties of the
Province of Bataan, declaring that the
petitioner failed to provide proof that the
Province of Bataan acquired them with its own
private or corporate funds, and for this reason
the lots must be presumed to belong to the
State, citing Salas, etc., et al. v. Hon.
Jarencio, etc., et al.11 Concerning the
mortgage to the LBP, the appellate court
agreed with the RTC that the consent of the
LBP to the transfer of title to BPSC must be
obtained, and the mortgage lien must be
carried over to the new title. The CA also held
that BPSC is a real party in interest on the
basis of Section 24 of R.A. No. 8562, and was
correctly impleaded as a co-petitioner. The
subsequent motion for reconsideration was
denied in the CA Resolution12 dated
September 20, 2006; hence, this petition.
Issues
I Article XI, 1973 Constitution) and now fleshed
WHETHER OR NOT THE SUBJECT
PARCELS OF LAND ARE PATRIMONIAL
PROPERTIES OF THE PROVINCE OF
BATAAN WHICH CANNOT BE TAKEN
WITHOUT DUE PROCESS OF LAW AND
WITHOUT JUST COMPENSATION.
II
WHETHER OR NOT A WRIT OF
MANDAMUS MAY BE ISSUED AGAINST
THE PETITIONER TO COMPEL THE
TRANSFER OF THE SUBJECT
PROPERTIES WITHOUT DUE PROCESS
OF LAW AND WITHOUT JUST
COMPENSATION.13
The petitioner insists that the subject lots are
not communal lands, or legua comunal as
they were known under the laws of colonial
Spain, but are the patrimonial properties of the
Province of Bataan, which were issued a
Torrens title by the Cadastral Court on August
11, 1969 in Cadastral Case No. 5;14 that while
in Salas,15 the title of the State over the
disputed lot was expressly recognized by the
City of Manila, this is not so in the case at
bar;16 that in the exercise of its proprietary
rights over the subject lots, the Province of
Bataan has used them as collateral for its loan
obligations with the LBP;17 that in its
Manifestation and Motion dated February 24,
2000, the Board of Trustees of BPSC even
acknowledged the titles of the Province of
Bataan over the subject properties.18
In addition to the above contentions, the
petitioner proffers an alleged novel argument
that R.A. No. 8562 infringes on the State's
underlying policy of local autonomy for its
territorial and political subdivisions, found in
Article X of the 1987 Constitution (formerly
out in a landmark legislation, R.A. No. 7160,
better known as the Local Government Code
of 1991 (LGC). Thus, for this Court to still
sustain its ruling in Salas would render the
State's policy of local autonomy purely
illusory.19
Ruling of the Court
The decision of the CA is affirmed.
A. Under the well-entrenched and time-
honored Regalian Doctrine, all
lands of the public domain are
under the absolute control and
ownership of the State.
The State's ownership of and control over all
lands and resources of the public domain are
beyond dispute. Reproducing almost verbatim
from the 1973 Constitution,20 Section 2, Article
XII of the 1987 Constitution provides that "[a]ll
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, x x
x." In Section 1, Article XIII of the Amended
1935 Constitution, it was also provided that
"[a]ll agricultural timber, and mineral lands of
the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of
potential energy and other natural resources
of the Philippines belong to the State x x x."
Thus, in Cariño v. Insular Government,21 a
case of Philippine origin, the Supreme Court
of the United States of America acknowledged
that "Spain in its earlier decrees embodied the
universal feudal theory that all lands were held
from the Crown x x x." In Hong Hok v.
David,22 citing Cariño, the Court likewise said
that the theory is a manifestation of the
concept of the Regalian Doctrine, or jura
regalia,23 which is enshrined in our 1935,
1973, and 1987 Constitutions. As adopted in
our republican system, this medieval concept
is stripped of royal overtones; and ownership
of all lands belonging to the public domain is
vested in the State.24 Under this well-
entrenched and time-honored Regalian
Doctrine, all lands of the public domain are
under the absolute control and ownership of
the State.
B. Local government property
devoted to governmental purposes, such
as local administration, public
education, and public health, as may be
provided under special laws, is classified
as public.
In The Province of Zamboanga del Norte v.
City of Zamboanga, et al.25 cited by the CA,
the Province of Zamboanga del Norte sought
to declare unconstitutional R.A. No. 3039,
which ordered the transfer of properties
belonging to the Province of Zamboanga
located within the territory of the City of
Zamboanga to the said City, for depriving the
province of property without due process and
just compensation. In said case, the Court
classified properties of local governments as
either (a) properties for public use, or (b)
patrimonial properties, and held that the
capacity in which the property is held by a
local government is dependent on the use to
which it is intended and for which it is devoted.
If the property is owned by the municipal
corporation in its public and governmental
capacity, it is public and Congress has
absolute control over it; but if the property is
owned in its private or proprietary capacity,
then it is patrimonial and Congress has no
absolute control, in which case, the
municipality cannot be deprived of it without
due process and payment of just
compensation.26 In upholding the validity of
R.A. No. 3 039, the Court noted that it
affected "lots used as capitol site, school sites
and its grounds, hospital and leprosarium
sites and the high school playground sites - a
total of 24 lots - since these were held by the
former Zamboanga province in its
governmental capacity and therefore are
subject to the absolute control of Congress." 27
According to the Court, there are two
established norms to determine the
classification of the properties: that of the Civil
Code, particularly Articles 423 and 424
thereof, and that obtaining under the law of
Municipal Corporations. Articles 423 and 424
of the Civil Code provide, as follows:
Art. 423. The property of provinces, cities and
municipalities is divided into property for
public use and patrimonial property.
Art. 424. Property for public use, in the
provinces, cities, and municipalities, consists
of the provincial roads, city streets, municipal
streets, the squares, fountains, public waters,
promenades, and public works for public
service paid for by said provinces, cities, or
municipalities.
All other property possessed by any of them is
patrimonial and shall be governed by this
Code, without prejudice to the provisions of
special laws.
In Province of Zamboanga del
Norte,28 properties for the free and
indiscriminate use of everyone are classified
under the Civil Code norm as for public use,
while all other properties are patrimonial in
nature. In contrast, under the Municipal
Corporations Law norm, to be considered
public property, it is 'enough that a property is
held and devoted to a governmental purpose,
such as local administration, public education,
and public health.29 Nonetheless, the Court
clarified that the classification of properties in
the municipalities, other than those for public
use, as patrimonial under Article 424 of the
Civil Code, is "without prejudice to the
provisions of special laws,"30 holding that the
principles obtaining under the Law of
Municipal Corporations can be considered as
"special laws"31
Moreover, in the 2009 case of Heirs of Mario
Malabanan v. Republic of the
Philippines,32 the Court reiterated that Article
420(2) of the Civil Code makes clear that
properties "which belong to the State, without
being for public use, and are intended for
some public service or for the development of
the national wealth," are public dominion
property. For as long as the property belongs
to the State, although already classified as
alienable or disposable, it remains property of
the public dominion when it is "intended for
some public service or for the development of
the national wealth."33

C. Property registered in the name of the
municipal corporation but
without proof that it was acquired with its
corporate funds is deemed
held by it in trust for the State.
The Court takes instructions from the case,
of Salas as to properties belonging to the
municipal government. In Salas, at issue was
the constitutionality of R.A. No. 4118 passed
on June 20, 1964,34 whereby Congress
reserved a lot, long titled in the name of the
City of Manila, as communal property, and
converted it into disposable land of the State
for resale in small lots to its bona fide
occupants. On February 24, 1919, Lot No. 1,
Block 557 of the Cadastre of the City of
Manila, containing 9,689.80 sq m, was
declared by the Court of First Instance of
Manila, Branch 4, acting as a land registration
court in Case No. 18, G.L.R.O. Record No.
111, as owned by the City of Manila in fee
simple. On August 21, 1920, OCT No. 4329
was issued in the name of the City of Manila
over the said lot. On various dates in 1924,
the City of Manila sold portions of Lot No. 1,
Block 557 to a certain Pura Villanueva
(Villanueva). OCT No. 4329 was cancelled,
and transfer certificates of title (TCT) were
issued to Villanueva for the portions sold to
her, while TCT No. 22547 was issued to the
City of Manila for the remainder of Lot No. 1
containing 7,490.10 sq m, now designated, as
Lot No. 1-B-2-B of Block 557.35
On September 21, 1960, the local board of the
City of Manila wrote to the President of the
Philippines seeking assistance in declaring
the aforesaid lot as patrimonial property of the
city for the purpose of reselling the same in
small lots to the actual occupants thereof.
R.A. No. 4118 was passed by Congress on
June 20, 1964 for this purpose.36 On February
18, 1965, Manila Mayor Antonio Villegas
(Mayor Villegas) was furnished a copy of a
subdivision plan for TCT No. 22547. He
interposed no objection to the implementation
of R.A. No. 4118, and TCT No. 22547 was
duly surrendered to the Land Authority.37
Inexplicably, now claiming that R.A. No. 4118
was unconstitutional, Mayor Villegas brought
on December 20, 1966 an action for injunction
and/or prohibition with preliminary injunction,
to restrain, prohibit and enjoin the Land
Authority and the Register of Deeds of Manila
from implementing R.A. No. 4118. On
September 23, 1968, the RTC declared the
said law unconstitutional for depriving the City
of Manila of its property without due process
and just compensation.38
Acting on the petition for review, the Court
declared that Lot 1-B-2-B of Block 557 was a
communal property held in trust by the City of
Manila for the State, and therefore subject to
the paramount power of Congress to dispose
of. Thus:
[T]he City of Manila, although declared by the
Cadastral Court as owner in fee simple, has
not shown by any shred of evidence in what
manner it acquired said land as its private or
patrimonial property. It is true that the City of
Manila as well as its predecessor, the
Ayuntamiento de Manila, could validly acquire
property in its corporate or private capacity,
following the accepted doctrine on the dual
character - public and private - of a municipal
corporation. And when it acquires property in
its private capacity, it acts like an ordinary
person capable of entering into contracts or
making transactions for the transmission of
title or other real rights. When it comes to
acquisition of land, it must have done so
under any of the modes established by law for
the acquisition of ownership and other real
rights. In the absence of a title deed to any
land claimed by the City of Manila as its own,
showing that it was acquired with its private or
corporate funds, the presumption is that such
land came from the State upon the creation of
the municipality (Unson vs. Lacson, et al., 100
Phil. 695). Originally the municipality owned
no patrimonial property except those that were
granted by the State not for its public but for
private use. Other properties it owns are
acquired in the course of the exercise of its
corporate powers as a juridical entity to which
category a municipal corporation pertains.
Communal lands or "legua comunal" came
into existence when a town or pueblo was
established in this country under the laws of
Spain (Law VII, Title III, Book VI, Recopilacion
de las Leyes de Indios). The municipalities of
the Philippines were not entitled, as a matter
of right, to any part of the public domain for
use as communal lands. The Spanish law
provided that the usufruct of a portion of the
public domain adjoining municipal territory
might be granted by the Government for
communal purposes, upon proper petition,
but, until granted, no rights therein passed to
the municipalities, and, in any event, the
ultimate title remained in the sovereign (City of
Manila vs. Insular Government, 10 Phil. 327).
x x x x
It may, therefore, be laid down as a general
rule that regardless of the source or
classification of land in the possession of a
municipality, excepting those acquired with its
own funds in its private or corporate capacity,
such property is held in trust for the State for
the benefit of its inhabitants, whether it be for
governmental or proprietary purposes. It holds
such lands subject to the paramount power of
the legislature to dispose of the same, for after
all it owes its creation to it as an agent for the
performance of a part of its public work, the
municipality being but a subdivision or
instrumentality thereof for purposes of local
administration. Accordingly, the legal situation
is the same as if the State itself holds the
property and puts it to a different use (2 Mc
Quilin, Municipal Corporations, 3rd Ed. p. 197,
citing Monagham vs. Armatage, 218 Minn. 27,
15 N. W. 2nd 241).
True it is that the legislative control over a
municipal corporation is not absolute even
when it comes to its property devoted to public
use, for such control must not be exercised to
the extent of depriving persons of their
property or rights without due process of law,
or in a manner impairing the obligations of
contracts. Nevertheless, when it comes to
property of the municipality which it did not
acquire in its private or corporate capacity with
its own funds, the legislature can transfer its
administration and disposition to an agency of
the National Government to be exposed of
according to its discretion. Here it did so in
obedience to the constitutional mandate of
promoting social justice to insure the well-
being and economic security of the
people.39 (Underscoring ours)
D. R.A. No. 8562 was not intended to
expropriate the subject lots titled
in the name of the Province of
Bataan, but to confirm their
character as communal land of the State
and to make them available for disposition
by the National Government.
The case of Rabuco v. Hon.
Villegas,40 decided in 1974, is a virtual reprise
of the 1968 case of Salas. In Rabuco, the
constitutionality of R.A. No. 312041 was
challenged, which provided for the subdivision
of Lot No. 21-B, Block 610 of the Cadastre of
the City of Manila, containing about 10,198 sq
m into residential lots, and the sale thereof to
the tenants and bona fide occupants. The law
declared Lot No. 21-B "reserved as communal
property" and then ordered it converted into
"disposable and alienable lands of the
State."42
The Court ruled that, like R.A. No. 4118
in Salas, R.A. No. 3120 was intended to
implement the social justice policy of the
Constitution and the government's program of
land for the landless. Thus, the sale of the
subdivided lots to the bona fide occupants by
authority of Congress was not an exercise of
eminent domain or expropriation without just
compensation, which would have been in
violation of Section 1(2),43 Article III of the
1935 Constitution, but simply a manifestation
of its right and power to deal with State
property.44 "It is established doctrine that the
act of classifying State property calls for the
exercise of wide discretionary legislative
power which will not be interfered with by the
courts."45 In Rabuco, the rule in Salas was
reiterated that property of the public domain,
although titled to the local government, is held
by it in trust for the State. It stated:
The Court [in Salas] reaffirmed the
established general rule that "regardless of
the source or classification of land in the
possession of a municipality, excepting those
acquired with its own funds in its private or
corporate capacity, such property is held in
trust for the State for the benefit of its
inhabitants, whether it be for governmental or
proprietary purposes. It holds such lands
subject to the paramount power of the
legislature to dispose of the same, for after all
it owes its creation to it as an agent for the
performance of a part of its public work, the
municipality being but a subdivision or
instrumentality thereof for purposes of local
administration. Accordingly, the legal situation
is the same as if the State itself holds the
property and puts it to a different use" and
stressed that "the property, as has been
previously shown, was not acquired by the
City of Manila with its own funds in its private
or proprietary capacity. That it has in its name
a registered title is not questioned, but this title
should be deemed to be held in trust for the
State as the land covered thereby was part of
the territory of the City of Manila granted by
the sovereign upon its creation."46
E. The State's policy to promote local
autonomy and to devolve the powers of
the National Government
to its political subdivisions has for its
purpose to improve the quality of local
governance.
Sections 2 and 3, Article X of the 1987
Constitution, relied upon by the petitioner,
provide:
Sec. 2. The territorial and political subdivisions
shall enjoy local autonomy.
Sec. 3. The Congress shall enact a local
government code which shall provide for a
more responsive and accountable local
government structure instituted through a
system of decentralization with effective
mechanisms of recall, initiative, and
referendum, allocate among the different local
government units their powers,
responsibilities, and resources, and provide
for the qualifications, election, appointment
and removal, term, salaries, powers and
functions and duties of local officials, and all
other matters relating to the organization and
operation of the local units.

Pursuant to its mandate, the Congress passed
the LGC in 1991 to spell out the above-
declared policy of the State, which is now
amplified in Section 2 of R.A. No. 7160. It
states, as follows:
Sec. 2. Declaration of Policy. - (a) It is hereby
declared the policy of the State that the
territorial and political subdivisions of the State
shall enjoy genuine and meaningful local
autonomy to enable them to attain their fullest
development as self-reliant communities and
make them more effective partners in the
attainment of national goals. Toward this end,
the State shall provide for a more responsive
and accountable local government structure
instituted through a system of decentralization
whereby local government units shall be given
more powers, authority, responsibilities, and
resources. The process of decentralization
shall proceed from the National Government
to the local government units.
xxxx
Also invoked by the petitioners are Sections
18 and 22 of the LGC, which state as follows:
Sec. 18. Power to Generate and Apply
Resources. — Local government units shall
have the power and authority to establish an
organization that shall be responsible for the
efficient and effective implementation of their
development plans, program objectives and
priorities; to create their own sources of
revenues and to levy taxes, fees, and charges
which shall accrue exclusively for their use
and disposition and which shall be retained by
them; to have a just share in national taxes
which shall be automatically and directly
released to them without need of any further
action; to have an equitable share
in the, proceeds from the utilization and
development of the national wealth and
resources within their respective territorial
jurisdictions including sharing the same with
the inhabitants by way of direct benefits; to
acquire, develop, lease, encumber, alienate,
or otherwise dispose of real or personal
property held by them in their proprietary
capacity and to apply their resources and
assets for productive, developmental, or
welfare purposes, in the exercise or
furtherance of their governmental or
proprietary powers and functions and thereby
ensure their development into self-reliant
communities and active participants in the
attainment of national goals.
Sec. 22. Corporate Powers. - x x x Under our present system of government,
x x x x
(d) Local government units shall enjoy full
autonomy in the exercise of their proprietary
functions and in the management of their
economic enterprises, subject to the
limitations provided in this Code and other
applicable laws.
In the instant petition, it is essentially the
petitioner's assertion that the State's policy of
local autonomy and decentralization endows
the Province of Bataan with patrimonial rights
to use or dispose of the subject lots according
to its own development plans, program
objectives and priorities.
The Court disagrees.
Local autonomy and decentralization of State
powers to the local political subdivisions are
the results of putting restraints upon the
exercise by the Presidents of executive
powers over local governments. Section 4,
Article X of the 1987 Constitution reads in
part: "The President of the Philippines shall
exercise general supervision over local
governments." As with the counterpart
provisions of our earlier Constitutions, the
aforesaid provision has been interpreted to
exclude the President's power of control over
local governments.47 The Constitutions of
1935, 1973 and 1987 have uniformly
differentiated the President's power of
supervision over local governments and his
power of control of the executive departments,
bureaus and offices.48 In Pimentel, Jr. v. Hon.
Aguirre,49 it was held that Section 4 confines
the President's power over local governments
to one of general supervision, thus:
executive power is vested in the President.
The members of the Cabinet and other
executive officials are merely alter egos. As
such, they are subject to the power of control
of the President, at whose will and behest
they can be removed from office; or their
actions and decisions changed, suspended or
reversed. In contrast, the heads of political
subdivisions are elected by the people. Their
sovereign powers emanate from the
electorate, to whom they are directly
accountable. By constitutional fiat, they are
subject to the President's supervision only, not
control, so long as their acts are exercised
within the sphere of their legitimate powers.
By the same token, the President may not
withhold or alter any authority or power given
them by the Constitution and the law.50
On the other hand, local autonomy and
decentralization of State powers to the local
political subdivisions have for their object to
make governance directly responsive at the
local levels by giving them a free hand to chart
their own destiny and shape their future with
minimum intervention from central authorities,
thereby rendering them accountable to their
local constituencies.51 Thus, [h]and in hand
with the constitutional restraint on the
President's power over local governments is
the state policy of ensuring local
autonomy"52 As farther explained in Pimentel,
Jr.:
Under the Philippine concept of local
autonomy, the national government has not
completely relinquished all its powers over
local governments, including autonomous
regions. Only administrative powers over local
affairs are delegated to political subdivisions.
The purpose of the delegation is to make
governance more directly responsive and
effective at the local levels. In turn, economic,
political and social development at the smaller
political units are expected to propel social
and economic growth and development. But
to enable the country to develop as a whole,
the programs and policies effected locally
must be integrated and coordinated towards a
common national goal. Thus, policy-setting for
the entire country still lies in the President and
Congress. As we stated in Magtajas v. Pryce
Properties Corp., Inc., municipal governments
are still agents of the national
government.53 (Citation omitted)
It is clear, then, that local autonomy and
decentralization do not deal directly with
Issues concerning ownership, classification,
use or control of properties of the public
domain held by local governments. The State
retains power over property of the public
domain, exercised through Congress.
F. The grant of autonomy to local
governments, although a radical policy
change under the 1973 and
1987 Constitutions, does not affect the
settled rule that they possess property of
the public domain in trust for the State.
The 1973 Constitution devoted an entire
Article, Article XI, consisting of five sections,
to laying down its policy for the empowerment
of the local governments. The 1987
Constitution, in turn, fully devotes all 21
sections of its Article X for local government. It
introduces significant new provisions, such as
the establishment of autonomous regions
(Section 18) and the guarantee of just share
of the local governments in the national taxes
and equitable share in the proceeds from the
utilization of the national wealth (Sections 6
and 7). It was unlike in the 1935 Constitution,
which simply provided in Section 10 of Article
VII, dealing with the Executive Department,
that "[t]he President shall have control of all
executive departments, bureaus or offices,
exercise general provision over all local
governments as may be provided by law, and
take care that the laws be faithfully executed."
The erudite Justice Enrique Fernando (Justice
Fernando), in his highly instructive separate
concurring opinion in Rabuco,54 did at first
admit to doubts as to the continuing
authoritativeness of Province of Zamboanga
del Norte and Salas, both promulgated before
the effectivity of the 1973 Constitution, in view
of the significant innovations introduced
therein pertaining to the autonomy of local
governments. He stated that the goal of the
1973 Constitution was "the fullest autonomy to
local government units consistent with the
basic theory of a unitary, not a federal,
polity,"55 hoping thereby to attain "their fullest
development as self-reliant
communities."56 According to him, under the
1973 Constitution, "[tjhings have changed
radically,"57 noting that under the 1935
Constitution, "[i]t could hardly be assumed x x
x that x x x the [local governments] could
justifiably lay claim to real autonomy."58 He
observed thus:
We start with the declared principle of the
State guaranteeing and promoting the
autonomy of local government units. We have
likewise noted the earnestness of the framers
as to the attainment of such declared
objective as set forth in the specific article on
the matter. It is made obligatory on the
National Assembly to enact a local
government code. What is more, unlike the
general run of statutes, it cannot be amended
except by a majority vote of all its members. It
is made to include "a more responsive and
accountable local government structure with
an effective system of recall," with an
expressed reference to "qualifications,
election and removal, term, salaries, powers,
functions, and duties of local officials, [as well
as] all other matters relating to the
organization and operation of the local units."
Mention is likewise made of the "powers,
responsibilities, and resources," items that are
identified with local autonomy. As if that were
not enough, the last sentence of this particular
provision reads: "However, any change in the
existing form of local government shall not
take effect until ratified by a majority of the
votes cast in a plebiscite called for the
purpose." To the extent that the last section
requires that the creation, division, merger,
abolition or alteration of a boundary of a
province, city, municipality, or barrio, must be
in accordance with the criteria established in
the local government code and subject to the
approval by a majority of the votes cast in a
plebiscite in such unit or units, the adherence
to the basic principle of local self government
is quite clear. Equally significant is the stress
on the competence of a province, city,
municipality or barrio "to create its own
sources of revenue and to levy taxes subject
to such limitations as may be provided by
law." The care and circumspection with which
the framers saw to the enjoyment of real local
self-government not only in terms of
administration but also in terms of resources
is thus manifest. Their intent is unmistakable.
Unlike the case under the 1935 Constitution,
there is thus a clear manifestation of the
presumption now in favor of a local
government unit. It is a well-nigh complete
departure from what was. Nor should it be
ignored that a highly urbanized city "shall be
independent" not only of the national
government but also of a province. Would it
not follow then that under the present
dispensation, the moment property is
transferred to it by the national government,
its control over the same should be as
extensive and as broad as possible, x x
x.59 (Citations omitted)
Up to that point, it could almost be presumed
that Justice Fernando would dissent from the
lucid ponencia of Justice Claudio Teehankee
(Justice Teehankee), borne of logical doubts
as to whether Province of Zamboanga del
Norte and Salas still retained their unimpaired
doctrinal force under the then new 1973
Constitution. But two considerations kept him
reined in, so to speak. One was Justice
Teehankee's "reference to the ratio
decidendi of [Salas] as to the trust character
impressed on communal property of a
municipal corporation, even if already
titled,"60 "regardless of the source of
classification of land in the possession of a
municipality, excepting those acquired with its
own funds in its private or corporate
capacity."61 Justice Fernando acknowledged
that the local government "holds such
[communal property] subject to the paramount
power of the legislature to dispose of the
same, for after all it owes its creation to it as
an agent for the performance of a part of its
public work, the municipality being but a
subdivision or instrumentality thereof for
purposes of local administration."62
Rabuco stressed that the properties in
controversy were not acquired by the City of
Manila with its own private funds. Thus,
according to Justice Fernando, "That [the City
of Manila] has in its name a registered title is
not questioned, but this title should be
deemed to be held in trust for the State as the
land covered thereby was part of the territory
of the City of Manila granted by the sovereign
upon its creation."63 This doctrine, according
to Justice Fernando, has its basis in the
Regalian Doctrine and is unaffected by the
grant of extensive local autonomy under the
1973 Constitution. "It is my view that under the
[1973] Constitution, as was the case under the
1935 charter, the holding of a municipal
corporation as a unit of state does not impair
the plenary power of the national government
exercising dominical rights to dispose of it in a
manner it sees fit, subject to applicable
constitutional limitations as to the citizenship
of the grantee."64
The other consideration noted by Justice
Fernando in the ponencia of Justice
Teehankee in Rabuco he found further
compelling was "the even more fundamental
principle of social justice, which was given
further stress and a wider scope in the present
Constitution."65 He concluded that R.A. No.
3120, like R.A. No. 4118, was intended to
implement the social justice policy of the
Constitution and the government program of
land for the landless, and was not "intended to
expropriate the property involved but merely
to confirm its character as communal land of
the State and to make it available for
disposition by the National Government."66
G. The Province of Bataan has the duty to
provide an adequate security for its loans
with the LBP, without defeating BPSC's
right to hold title to the contested lots.
The RTC ordered the Province of Bataan to
deliver the owner's duplicate copy of OCT No.
N-182 to the Register of Deeds of Bataan,
free from any lien or encumbrance, to execute
the corresponding deed of conveyance in
favor of BPSC, and to cause the transfer and
registration of the title to and in the name of
the said college. The Province of Bataan
erroneously believed that it could mortgage
the subject lots, notwithstanding that it held
the same in trust for the State and despite the
fact that the said lots were actually being
occupied by two government schools. As the
RTC urged, then, the Province of Bataan must
address this issue of security for its loans with
LBP. It cannot complain that its compliance
with the order of the RTC might violate the
non-impairment clause of the Constitution,
since its duty to provide a replacement
security for its loans with LBP is clear.
H. BPSC is entitled to a writ of
mandamus.
Section 3, Rule 65 of the 1997 Rules of Civil
Procedure provides that a writ of mandamus
shall issue where a tribunal, corporation,
board, officer or person unlawfully neglects
the performance of an act which the law
specifically enjoins as a duty, to command the
respondent to do the act required to be done
to protect the rights of the petitioner. Herein
petitioner has argued that the mandamus
applicants are not entitled thereto because
they are not real parties in interest. It is a rule
re-echoed in a long line of cases that every
action must be prosecuted or defended in the
name of the real party in interest, meaning
"the party who stands to be benefited or
injured by the judgment in the suit, or the party
entitled to the avails of the suit."67

At issue in this petition is Section 24 of R.A.

No. 8562, which directs that "[a]ll parcels of
land belonging to the government occupied by
the [MLLSAT] and the [BCC] are hereby
declared to be the property of the [BPSC] and
shall be titled under that name." There is no
dispute that the Congress has expressly
intended to entrust to BPSC the titles to the
subject lots. Being the sole beneficiary of
Section 24 of R.A. No. 8562, BPSC is the real
party in interest, and is entitled to mandamus
to enforce its right thereunder.68

WHEREFORE, in view of the foregoing, the

petition for review
on certiorari is DENIED. The Decision of the
Court of Appeals dated February 7, 2006 in
CA-G.R. SP No. 85902 is AFFIRMED.

SO ORDERED.ChanRoblesVirtualawlibrary