Today is Friday, June 17, 2016

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

ondents.

estraining order. The petition seeks to compel the Public Estates Authority ("PEA" for brevity) to disclose all facts on PEA's then on-g
ith AMARI involving such reclamation.

The Facts

act with the Construction and Development Corporation of the Philippines ("CDCP" for brevity) to reclaim certain foreshore and offsho
he total reclaimed land.

PEA. PD No. 1084 tasked PEA "to reclaim land, including foreshore and submerged areas," and "to develop, improve, acquire, x x x
he Manila Bay"2 under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP).

act with CDCP, so that "[A]ll future works in MCCRRP x x x shall be funded and owned by PEA." Accordingly, PEA and CDCP execu

RRP 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 wo
ed by PEA.

ansfer 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 th
Four Hundred Seventy Three (99,473) square meters in the Financial Center Area covered by land pledge No. 5 and approximately
tside the Financial Center Area and the First Neighborhood Unit."3

ransferring to PEA "the parcels of land so reclaimed under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP) cont
ssued Transfer Certificates of Title Nos. 7309, 7311, and 7312, in the name of PEA, covering the three reclaimed islands known as t
Four Hundred and Forty One (1,578,441) square meters or 157.841 hectares.
corporation, to develop the Freedom Islands. The JVA also required the reclamation of an additional 250 hectares of submerged are
out public bidding.4 On April 28, 1995, the Board of Directors of PEA, in its Resolution No. 1245, confirmed the JVA.5On June 8, 1995

ate and denounced the JVA as the "grandmother of all scams." As a result, the Senate Committee on Government Corporations and
tee Report No. 560 dated September 16, 1997.7 Among the conclusions of their report are: (1) the reclaimed lands PEA seeks to tran
eedom Islands are thus void, and (3) the JVA itself is illegal.

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
onclusions reached by the Senate Committees.11

g renegotiations between PEA and AMARI under an order issued by then President Fidel V. Ramos. According to these reports, PEA

the Issuance of a Temporary Restraining Order and Preliminary Injunction docketed as G.R. No. 132994 seeking to nullify the JVA. T

ion for Mandamus with Prayer for the Issuance of a Writ of Preliminary Injunction and Temporary Restraining Order. Petitioner conten
, Article II, and Section 7, Article III, of the 1987 Constitution on the right of the people to information on matters of public concern. Pe
orporations. Finally, petitioner asserts that he seeks to enjoin the loss of billions of pesos in properties of the State that are of public d

and June 25, 1998, respectively. Meanwhile, on December 28, 1998, petitioner filed an Omnibus Motion: (a) to require PEA to subm
a TRO dated May 26, 1999, which the Court denied in a Resolution dated June 22, 1999.

to file their respective memoranda.

or brevity). On May 28, 1999, the Office of the President under the administration of then President Joseph E. Estrada approved the A

nstitutional and statutory grounds the renegotiated contract be declared null and void."14

The Issues

AND ACADEMIC BECAUSE OF SUBSEQUENT EVENTS;

PRINCIPLE GOVERNING THE HIERARCHY OF COURTS;

INISTRATIVE REMEDIES;

L INFORMATION ON ON-GOING NEGOTIATIONS BEFORE A FINAL AGREEMENT;

T FOR THE TRANSFER TO AMARI OF CERTAIN LANDS, RECLAIMED AND STILL TO BE RECLAIMED, VIOLATE THE 1987 CO

WHETHER THE AMENDED JOINT VENTURE AGREEMENT IS GROSSLY DISADVANTAGEOUS TO THE GOVERNMENT.

The Court's Ruling

First issue: whether the principal reliefs prayed for in the petition are moot and academic because of subsequent events.
 new agreement." The petition also prays that the Court enjoin PEA from "privately entering into, perfecting and/or executing any new

ne 21, 1999 a copy of the signed Amended JVA containing the terms and conditions agreed upon in the renegotiations. Thus, PEA h
e Amended JVA on March 30, 1999. Moreover, the Office of the President has approved the Amended JVA on May 28, 1999.

signing and approval of the Amended JVA before the Court could act on the issue. Presidential approval does not resolve the consti

ot operate to moot the petition and divest the Court of its jurisdiction. PEA and AMARI have still to implement the Amended JVA. The
nstitution. Petitioner's principal basis in assailing the renegotiation of the JVA is its violation of Section 3, Article XII of the Constitution
d if already implemented, to annul the effects of such unconstitutional contract.

nership to 367.5 hectares of reclaimed lands and submerged areas of Manila Bay to a single private corporation. It now becom
intended or accidental, cannot prevent the Court from rendering a decision if there is a grave violation of the Constitution. In the insta
upervening events had made the cases moot, the Court did not hesitate to resolve the legal or constitutional issues raised to formula

n 3, Article XII of the 1987 Constitution, or its counterpart provision in the 1973 Constitution,18 covered agricultural landssold to priva
monwealth Act. 141 ("CA No. 141" for brevity). In the instant case, AMARI seeks to acquire from PEA, a public corporation, reclaimed
he consideration for the purchase. Neither AMARI nor PEA can claim judicial confirmation of their titles because the lands covered b
for at least thirty years since June 12, 1945 or earlier. Besides, the deadline for filing applications for judicial confirmation of imperfec

e possible transfer at any time by PEA to AMARI of title and ownership to portions of the reclaimed lands. Under the Amended JVA, P
e entire reclaimed area to raise financing for the reclamation project.21

Second issue: whether the petition merits dismissal for failing to observe the principle governing the hierarchy of courts.

he principle of hierarchy of courts applies generally to cases involving factual questions. As it is not a trier of facts, the Court cannot e
al issue related to the case. Also, the instant case is a petition for mandamus which falls under the original jurisdiction of the Court un

Third issue: whether the petition merits dismissal for non-exhaustion of administrative remedies.

mation without first asking PEA the needed information. PEA claims petitioner's direct resort to the Court violates the principle of exhau

damus even if the petitioners there did not initially demand from the Office of the President the publication of the presidential decrees
rees. There was, therefore, no need for the petitioners in Taada to make an initial demand from the Office of the President. In the in
inistrative remedies to the instant case in view of the failure of petitioner here to demand initially from PEA the needed information.

r Section 79 of the Government Auditing Code,26 the disposition of government lands to private parties requires public bidding. PEA w
rom anyone. PEA failed to make this public disclosure because the original JVA, like the Amended JVA, was the result of a negotiat
intervention.

dies does not apply when the issue involved is a purely legal or constitutional question.27 The principal issue in the instant case is the
f administrative remedies does not apply in the instant case.

Fourth issue: whether petitioner has locus standi to bring this suit

nal right to information without a showing that PEA refused to perform an affirmative duty imposed on PEA by the Constitution. PEA a
ower of judicial review.

mply with its constitutional duties. There are two constitutional issues involved here. First is the right of citizens to information on matte
st issue is to compel PEA to disclose publicly information on the sale of government lands worth billions of pesos, information which th
titution, compelling PEA to comply with a constitutional duty to the nation.

he Court upheld the right of a citizen to bring a taxpayer's suit on matters of transcendental importance to the public, thus -

coses is an issue of 'transcendental importance to the public.' He asserts that ordinary taxpayers have a right to initiate and prosecute
economic and moral well being of the people.'

when the proceeding involves the assertion of a public right, such as in this case. He invokes several decisions of this Court which h

he object of mandamus is to obtain the enforcement of a public duty, the people are regarded as the real parties in interest; and beca
foresaid case, the petitioners sought to enforce their right to be informed on matters of public concern, a right then recognized in Sec
d. In ruling for the petitioners' legal standing, the Court declared that the right they sought to be enforced 'is a public right recognized

n a mandamus proceeding involves the assertion of a public right, the requirement of personal interest is satisfied by the mere fact th

been involved under the questioned contract for the development, management and operation of the Manila International Container T
eration involved.' We concluded that, as a consequence, the disclosure provision in the Constitution would constitute sufficient authori

ess to official records, documents and papers a right guaranteed under Section 7, Article III of the 1987 Constitution. Petitioner, a
public right (2) espoused by a Filipino citizen, we rule that the petition at bar should be allowed."

hts - to information and to the equitable diffusion of natural resources - matters of transcendental public importance, the petitioner has

sue: whether the constitutional right to information includes official information on on-going negotiations before a final agre

cern in this manner:

nized. Access to official records, and to documents, and papers pertaining to official acts, transactions, or decisions, as we

ht to information on matters of public concern. This State policy is expressed in Section 28, Article II of the Constitution, thus:

ments a policy of full public disclosure of all its transactions involving public interest." (Emphasis supplied)

ations of the government, as well as provide the people sufficient information to exercise effectively other constitutional rights. These
without any restraint, will be speculative and amount to nothing. These twin provisions are also essential to hold public officials "at all
public discussions leading to the formulation of government policies and their effective implementation. An informed citizenry is esse

s of communication between the government and the people. It is in the interest of the State that the channels for free political discus
nd thus able to formulate its will intelligently. Only when the participants in the discussion are aware of the issues and have access to

mited to "definite propositions of the government." PEA maintains the right does not include access to "intra-agency or inter-agency r

sing of the transaction. To support its contention, AMARI cites the following discussion in the 1986 Constitutional Commission:
 ts, agreements, or treaties or whatever, does the Gentleman refer to the steps leading to the consummation of the contract, or does h

over both steps leading to a contract and already a consummated contract, Mr. Presiding Officer.

ion of the transaction.

ng government officials to reveal their deliberations at the pre-decisional stage will degrade the quality of decision-making in governm
ore they decide.

, and information the constitutional right to information requires PEA to release to the public. Before the consummation of the contrac
ty being disposed of, the terms and conditions of the disposition, the parties qualified to bid, the minimum price and similar informatio
s public bidding. If PEA fails to make this disclosure, any citizen can demand from PEA this information at any time during the biddin

bidding or review committee is not immediately accessible under the right to information. While the evaluation or review is still on-goin
government. From this moment, the public's right to information attaches, and any citizen can access all the non-proprietary informat

upon the PCGG and its officers, as well as other government representatives, to disclose sufficient public information on any propose
necessarily to intra-agency or inter-agency recommendations or communications during the stage when common assertions are stil
r such as on matters involving national security, diplomatic or foreign relations, intelligence and other classified information." (Emph

hat the right to information "contemplates inclusion of negotiations leading to the consummation of the transaction." Certainly
y be too late for the public to expose its defects.
1wphi1.nt

ly disadvantageous to the government or even illegal, becomes a fait accompli. This negates the State policy of full transparency on
contract, effectively truncating a basic right enshrined in the Bill of Rights. We can allow neither an emasculation of a constitutional rig

l records; (2) documents and papers pertaining to official acts, transactions and decisions; and (3) government research data used in
ding, evidencing, establishing, confirming, supporting, justifying or explaining official acts, transactions or decisions of government ag

ecommendations, legal and expert opinions, minutes of meetings, terms of reference and other documents attached to such reports o
ccess to records, documents and papers, which means the opportunity to inspect and copy them. One who exercises the right must c
ment operations, like rules specifying when and how to conduct the inspection and copying.35

the separation of powers.36 The right does not also apply to information on military and diplomatic secrets, information affecting natio
ubject to other limitations that Congress may impose by law.

he separation of powers. The information does not cover Presidential conversations, correspondences, or discussions during closed
nformation cannot be pried open by a co-equal branch of government. A frank exchange of exploratory ideas and assessments, free
situation in the instant case.

gotiations before a final contract. The information, however, must constitute definite propositions by the government and should not
he right to information in several legislations.41

e: whether stipulations in the Amended JVA for the transfer to AMARI of lands, reclaimed or to be reclaimed, violate the Co
 e which holds that the State owns all lands and waters of the public domain. Upon the Spanish conquest of the Philippines, ownershi
he Philippines except those he disposed of by grant or sale to private individuals.

n 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-hono
Article 420 of the Civil Code of 1950, incorporated the Regalian doctrine.

of reclaimed lands in the Philippines. On May 18, 1907, the Philippine Commission enacted Act No. 1654 which provided for the leas
thorized the lease, but not the sale, of reclaimed lands of the government to corporations and individuals. On November 7, 19
s and individuals. CA No. 141 continues to this day as the general law governing the classification and disposition of lands of the pu

me zone of the Spanish territory belonged to the public domain for public use.44 The Spanish Law of Waters of 1866 allowed the recla

te, or by the provinces, pueblos or private persons, with proper permission, shall become the property of the party constructing such

clamation, provided the government issued the necessary permit and did not reserve ownership of the reclaimed land to the State.

onstructed by the State, riverbanks, shores, roadsteads, and that of a similar character;

mployed in some public service, or in the development of the national wealth, such as walls, fortresses, and other works for the defen

ed to public service referred to property used for some specific public service and open only to those authorized to use the property.

o used but employed to develop the national wealth. This class of property constituted property of public dominion although employ

vate property, to wit:

ense of the territory, shall become a part of the private property of the State."

o law, must declare the property no longer needed for public use or territorial defense before the government could lease or alienate t

d and foreshore lands. The salient provisions of this law were as follows:

d the title to all Government or public lands made or reclaimed by the Government by dredging or filling or otherwise througho

de or reclaimed by the Government by dredging or filling or otherwise to be divided into lots or blocks, with the necessary streets and
 the public that such parts of the lands so made or reclaimed as are not needed for public purposes will be leased for comm

er therefore, subject to such regulations and safeguards as the Governor-General may by executive order prescribe." (Emphasis sup

ment. The Act also vested in the government control and disposition of foreshore lands. Private parties could lease lands reclaimed b
eclaimed lands sui generis in that unlike other public lands which the government could sell to private parties, these reclaimed lands

not prohibit private parties from reclaiming parts of the sea under Section 5 of the Spanish Law of Waters. Lands reclaimed from the

ent provisions of Act No. 2874, on reclaimed lands, were as follows:

ulture and Natural Resources, shall from time to time classify the lands of the public domain into

blic lands, the Governor-General, upon recommendation by the Secretary of Agriculture and Natural Resources, shall from ti

h have been officially delimited or classified x x x.

nd, shall be classified as suitable for residential purposes or for commercial, industrial, or other productive purposes other th

s of navigable lakes or rivers;

disposed of to private parties by lease only and not otherwise, as soon as the Governor-General, upon recommendation by t
lands included in class (d) may be disposed of by sale or lease under the provisions of this Act." (Emphasis supplied)

x x alienable or disposable"47 lands. Section 7 of the Act empowered the Governor-General to "declare what lands are open to dispos
ent reclaimed, foreshore and marshy lands, as well as other lands. All these lands, however, must be suitable for residential, commer
e public domain. These provisions also empowered the Governor-General to classify further such disposable lands of the public dom

as government reclaimed, foreshore and marshy lands "shall be disposed of to private parties by lease only and not otherwise."
y to lease and not to sell government reclaimed, foreshore and marshy lands of the public domain, a policy first enunciated in 1907 in

nds for non-agricultural purposes retain their inherent potential as areas for public service. This is the reason the government prohibit

into other non-agricultural lands under Section 56 (d). Lands falling under Section 56 (d) were the only lands for non-agricultural pur
d a law allowing their sale.49

Spanish Law of Waters of 1866. Lands reclaimed from the sea by private parties with government permission remained private lands

Constitution, in adopting the Regalian doctrine, declared in Section 1, Article XIII, that

als, coal, petroleum, and other mineral oils, all forces of potential energy and other natural resources of the Philippines belong to the S
hich is owned by such citizens, subject to any existing right, grant, lease, or concession at the time of the inauguration of the Governm
evelopment, or utilization of any of the natural resources shall be granted for a period exceeding twenty-five years, renewable for ano
asure and limit of the grant." (Emphasis supplied)

h were the only natural resources the State could alienate. Thus, foreshore lands, considered part of the State's natural resources, be
ed as alienable agricultural lands of the public domain. Government reclaimed and marshy lands of the public domain, being neither t
uld only be leased and not sold to private parties because of Act No. 2874.

of the public domain was only a statutory prohibition and the legislature could therefore remove such prohibition. The 1935 Constitutio
Article XIII of the 1935 Constitution provided as follows:

agricultural lands in excess of one thousand and twenty four hectares, nor may any individual acquire such lands by purch
d to grazing, not exceeding two thousand hectares, may be leased to an individual, private corporation, or association." (Emphasis su

4 to open for sale to private parties government reclaimed and marshy lands of the public domain. On the contrary, the legislature con

Public Land Act, which compiled the then existing laws on lands of the public domain. CA No. 141, as amended, remains to this day

disposable"52 lands of the public domain, which prior to such classification are inalienable and outside the commerce of man. Section
cession only lands that are "officially delimited and classified." Sections 6, 7 and 8 of CA No. 141 read as follows:

nd Commerce, shall from time to time classify the lands of the public domain into
or the purpose of their administration and disposition.

public lands, the President, upon recommendation by the Secretary of Agriculture and Commerce, shall from time to time dec

h have been officially delimited and classified and, when practicable, surveyed, and which have not been reserved for public o
d law may be claimed, or which, having been reserved or appropriated, have ceased to be so. x x x."

first officially classify these lands as alienable or disposable, and then declare them open to disposition or concession. There must b

c domain, are as follows:

neral land, is intended to be used for residential purposes or for commercial, industrial, or other productive purposes other

s of navigable lakes or rivers;

ay be, to any person, corporation, or association authorized to purchase or lease public lands for agricultural purposes. x x x.

e disposed of to private parties by lease only and not otherwise, as soon as the President, upon recommendation by the Secret
ed of by sale or lease under the provisions of this Act." (Emphasis supplied)

2874 prohibiting the sale of government reclaimed, foreshore and marshy disposable lands of the public domain. All these lands are in
ands falling under Section 59 (d) of CA No. 141, or those lands for non-agricultural purposes not classified as government reclaimed
arties.

ntial, commercial, industrial or other productive purposes other than agricultural "shall be disposed of under the provisions of this
ultural purposes must comply with Chapter IX, Title III of CA No. 141,54 unless a subsequent law amended or repealed these provisio

ls,55Justice Reynato S. Puno summarized succinctly the law on this matter, as follows:

eclaimed by the government by dredging, filling, or other means. Act 1654 mandated that the control and disposition of the foreshore
and lands reclaimed by the government were to be "disposed of to private parties by lease only and not otherwise." Before leasing, h
c service. This requisite must have been met before the land could be disposed of. But even then, the foreshore and lands under

ect at present."

ienable lands of the public domain, first implemented in 1907 was thus reaffirmed in CA No. 141 after the 1935 Constitution took effe
 the government and classified as agricultural lands of the public domain, in which case they would fall under the classification of gov

public domain continued to be only leased and not sold to private parties.56 These lands remained sui generis, as the only alienable o

and marshy disposable lands of the public domain is for the legislature to pass a law authorizing such sale. CA No. 141 does not auth
nds for non-agricultural purposes that the government could sell to private parties.

tion 59 that the government previously transferred to government units or entities could be sold to private parties. Section 60 of CA N

ecretary of Agriculture and Natural Resources, be reasonably necessary for the purposes for which such sale or lease is requested,
subdivision of the Government for the purposes deemed by said entities conducive to the public interest;but the land so granted, do
its title, except when authorized by Congress: x x x." (Emphasis supplied)

d in Section 56 of Act No. 2874.

and entities from the maximum area of public lands that could be acquired from the State. These government units and entities shou
s could be used to circumvent constitutional limitations on ownership of alienable or disposable lands of the public domain. In the sam
No. 141 constitutes by operation of law a lien on these lands.57

Sections 63 and 67 require a public bidding. Sections 63 and 67 of CA No. 141 provide as follows:

ublic purposes, the Director of Lands shall ask the Secretary of Agriculture and Commerce (now the Secretary of Natural Resources)
gricultural public land, x x x.

made to the highest bidder. x x x." (Emphasis supplied)

sposable lands of the public domain.58

Waters of 1866. Private parties could still reclaim portions of the sea with government permission. However, thereclaimed land cou
except public agricultural lands.

Civil Code of 1889. Articles 420 and 422 of the Civil Code of 1950 state that

es constructed by the State, banks, shores, roadsteads, and others of similar character;

me public service or for the development of the national wealth.

service, shall form part of the patrimonial property of the State."

public use or public service, before the same could be classified as patrimonial property of the State.59 In the case of government rec

ies of the State which, without being for public use, are intended for public service or the "development of the national wealth." Thu
ection 8, Article XIV of the 1973 Constitution stated that

al oils, all forces of potential energy, fisheries, wildlife, and other natural resources of the Philippines belong to the State. With the ex
e for the exploration, development, exploitation, or utilization of any of the natural resources shall be granted for a period exceeding tw
which cases, beneficial use may be the measure and the limit of the grant." (Emphasis supplied)

industrial or commercial, residential, and resettlement lands of the public domain." In contrast, the 1935 Constitution barred the alien
of the public domain.60 If the land of public domain were neither timber nor mineral land, it would fall under the classification of agricult

ere citizens of the Philippines. Private corporations, even if wholly owned by Philippine citizens, were no longer allowed to acquire alie

velopment requirements of the natural resources, shall determine by law the size of land of the public domain which may be develope
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
permit, timber or forest lands and other timber or forest resources in excess of one hundred thousand hectares. However, such area

nly through lease. Only individuals could now acquire alienable lands of the public domain, and private corporations became abso
pplied only to government reclaimed, foreshore and marshy alienable lands of the public domain.

EA, a wholly government owned and controlled corporation with a special charter. Sections 4 and 8 of PD No. 1084, vests PEA with t

or other means, or to acquire reclaimed land;

any and all kinds of lands, buildings, estates and other forms of real property, owned, managed, controlled and/or operated by the g

nt, economical and beneficial utilization of the above properties.

poses for which it is created, have the following powers and functions:

ations by statute.

e, canal, ditch, flume x x x.

ment of the purposes and objectives herein specified." (Emphasis supplied)

shore areas are those covered and uncovered by the ebb and flow of the tide.61 Submerged areas are those permanently under wate
 nd further declared no longer needed for public service.

main did not apply to PEA since it was then, and until today, a fully owned government corporation. The constitutional ban applied then
orporations by statute." Thus, PEA can hold title to private lands, as well as title to lands of the public domain.

e must be legislative authority empowering PEA to sell these lands. This legislative authority is necessary in view of Section 60 of CA

, or branch or subdivision of the Government shall not be alienated, encumbered or otherwise disposed of in a manner affecting its ti

ed alienable lands of the public domain. Nevertheless, any legislative authority granted to PEA to sell its reclaimed alienable lands of
als.

. The 1987 Constitution declares that all natural resources are "owned by the State," and except for alienable agricultural lands of th

neral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned
der the full control and supervision of the State. x x x.

eral lands, and national parks. Agricultural lands of the public domain may be further classified by law according to the uses which th
ic domain except by lease, for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and
mestead, or grant.

bject to the requirements of agrarian reform, the Congress shall determine, by law, the size of lands of the public domain which may

omacquiring any kind of alienable land of the public domain. Like the 1973 Constitution, the 1987 Constitution allows private cor
arshy alienable lands of the public domain is still CA No. 141.

le lands of the public domain is not well understood. During the deliberations of the 1986 Constitutional Commission, the commission

says:

ept by lease, not to exceed one thousand hectares in area.'

ed in the 1973 Constitution. In effect, it prohibits private corporations from acquiring alienable public lands. But it has not been very
tent of this provision?

here the Iglesia ni Cristo was not allowed to acquire a mere 313-square meter land where a chapel stood because the Supreme Cou

ural lands by private corporations is to equitably diffuse land ownership or to encourage 'owner-cultivatorship and the economic famil

mited the size of alienable lands of the public domain that corporations could acquire. The Constitution could have followed the limita
corporation would be more effective in preventing the break-up of farmlands. If the farmland is registered in the name of a corporation
r plots from one generation to the next.

iring more than the allowed area of alienable lands of the public domain. Without the constitutional ban, individuals who already acqu
allow him. An individual could even hide his ownership of a corporation by putting his nominees as stockholders of the corporation. Th

d area of alienable land of the public domain to a qualified individual. This constitutional intent is safeguarded by the provision prohibi
of an ever-growing population. The most effective way to insure faithful adherence to this constitutional intent is to grant or sell alien

erties, namely:

ulevard in Paranaque and Las Pinas, Metro Manila, with a combined titled area of 1,578,441 square meters;"

egularize the configuration of the reclaimed area."65

amation of about 250 hectares x x x," plus an option "granted to AMARI to subsequently reclaim another 350 hectares x x x."66

0-hectare reclamation project have been reclaimed, and the rest of the 592.15 hectares are still submerged areas forming pa

st" in partially reclaiming the Freedom Islands. AMARI will also complete, at its own expense, the reclamation of the Freedom Islands
vely, the total net usable area which is defined in the Amended JVA as the total reclaimed area less 30 percent earmarked for commo

r conveyance of the title pertaining to AMARI's Land share based on the Land Allocation Plan. PEA, when requested in writing by A
percent (70%) of the titled area at any given time pertains to AMARI, PEA shall deliver to AMARI only seventy percent (70%) of the ti

of reclaimed land which will be titled in its name.

statutory authority, rights and privileges to reclaim foreshore and submerged areas in Manila Bay. Section 3.2.a of the Amended JVA

Reclamation and Horizontal Development as well as own the Reclamation Area, thereby granting the Joint Venture the full and exclus

emental agreement dated August 9, 1995.

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 Co

ineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned b
 Private corporations or associations may not hold such alienable lands of the public domain except by lease, x x x."(Empha

ble or disposable lands of the public domain. In its Memorandum,67 PEA admits that

lienable and disposable lands of the public domain:

its Report and Recommendation to then President Fidel V. Ramos, "[R]eclaimed lands are classified as alienable and disposab

ts of ownership and disposition over reclaimed lands have been transferred to PEA, by virtue of which PEA, as owner, may validly co

ept by lease (Sec. 3, Art. XVII,70 1987 Constitution), does not apply to reclaimed lands whose ownership has passed on to PEA by sta

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
able natural resources of the State into alienable or disposable lands of the public domain. There must be a law or presidential procla
as reserved them for some public or quasi-public use.71

ion which have been officially delimited and classified."72 The President has the authority to classify inalienable lands of the public
which was acquired by the Philippine Government for use as the Chancery of the Philippine Embassy. Although the Chancery had tra
uled that

rvice does not automatically convert it to patrimonial property. Any such conversion happens only if the property is withdrawn from pu
until there is a formal declaration on the part of the government to withdraw it from being such'(Ignacio v. Director of Lands, 1

aimed by PEA from the foreshore or submerged areas of Manila Bay. On January 19, 1988 then President Corazon C. Aquino issued
issued TCT Nos. 7309, 7311 and 7312 in the name of PEA pursuant to Section 103 of PD No. 1529 authorizing the issuance of cert

m Islands, is equivalent to an official proclamation classifying the Freedom Islands as alienable or disposable lands of the public doma
disposable lands of the public domain, open to disposition or concession to qualified parties.

dom Islands although subsequently there were partial erosions on some areas. The government had also completed the necessary su
ultural, forest or timber, mineral lands, and national parks." Being neither timber, mineral, nor national park lands, the reclaimed Freed
ay alienate to qualified private parties. All other natural resources, such as the seas or bays, are "waters x x x owned by the State" fo

claimed the islands under a contract dated November 20, 1973 with the Commissioner of Public Highways. AMARI, citing Article 5 of
which the State may not alienate."75 Article 5 of the Spanish Law of Waters reads as follows:
te, or by the provinces, pueblos or private persons, with proper permission, shall become the property of the party constructing such

h "proper permission" from the State. Private parties could own the reclaimed land only if not "otherwise provided by the terms of the
hold ownership of the reclaimed land because any reclaimed land, like the sea from which it emerged, belonged to the State. Thus, a
he Spanish Law of Waters of 1866 adopted the time-honored principle of land ownership that "all lands that were not acquired from t

position of public lands. In particular, CA No. 141 requires that lands of the public domain must first be classified as alienable or dispo
fectivity of the 1973 Constitution which barred private corporations from acquiring any kind of alienable land of the public domain. Thi

f areas under water and revested solely in the National Government the power to reclaim lands. Section 1 of PD No. 3-A declared tha

under water, whether foreshore or inland, shall be limited to the National Government or any person authorized by it under a pr

er water could now be undertaken only by the National Government or by a person contracted by the National Government. Private p

mplementing arm to undertake "all reclamation projects of the government," which "shall be undertaken by the PEA or through a p
ash, or in kind consisting of portions of the reclaimed land, subject to the constitutional ban on private corporations from acquiring alie
o longer needed for public service.

e still submerged and forming part of Manila Bay. There is no legislative or Presidential act classifying these submerged areas
areas form part of the public domain, and in their present state are inalienable and outside the commerce of man. Until reclaimed
ea can these submerged areas be classified as public agricultural lands, which under the Constitution are the only natural resources
Thereafter, the government may declare these lands no longer needed for public service. Only then can these reclaimed lands be co

open to disposition is necessary because PEA is tasked under its charter to undertake public services that require the use of lands of
and operate such systems of sanitary sewers as may be necessary; [T]o construct, maintain and operate such storm drains as may b
erties and to impose or collect fees or tolls for their use." Thus, part of the reclaimed foreshore and submerged lands held by the PEA

egrating, directing, and coordinating all reclamation projects for and on behalf of the National Government." The same section also sta
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
um utilization in promoting public welfare and interests."79 Since large portions of these reclaimed lands would obviously be neede

e PEA," could not automatically operate to classify inalienable lands into alienable or disposable lands of the public domain. Otherwis

e Department of Environment and Natural Resources ("DENR" for brevity) the following powers and functions:

lic lands, mineral resources and, in the process of exercising such control, impose appropriate taxes, fees, charges, rentals and any
mits, concessions, lease agreements and such other privileges concerning the development, exploration and utilization of th
r cause to cancel such privileges upon failure, non-compliance or violations of any regulation, order, and for all other causes which a

s of the public domain and serve as the sole agency responsible for classification, sub-classification, surveying and titling of lan

on and control over alienable and disposable public lands." DENR also exercises "exclusive jurisdiction on the management and disp
n from DENR before PEA can undertake reclamation projects in Manila Bay, or in any part of the country.

DENR decides whether reclaimed lands of PEA should be classified as alienable under Sections 681 and 782 of CA No. 141. Once DE
en to disposition. We note that then DENR Secretary Fulgencio S. Factoran, Jr. countersigned Special Patent No. 3517 in complianc

vested with the power to undertake the physical reclamation of areas under water, whether directly or through private contractors. DE
d alienable lands of the public domain.

e reclaimed lands alienable or disposable lands of the public domain, much less patrimonial lands of PEA. Likewise, the mere transfe

ition and a declaration that these lands are not needed for public service, lands reclaimed by PEA remain inalienable lands of the pub
Title III83of CA No. 141 and other applicable laws.84

claimed lands shall be disposed of in accordance with CA No. 141, the Public Land Act. PEA, citing Section 60 of CA No. 141, admits
ess: x x x."85 (Emphasis by PEA)

tes that

vernment is authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by the follow

t. The Court declared that -

le will. Any such conveyance must be authorized and approved by a law enacted by the Congress. It requires executive and le

its reclaimed lands. PD No. 1085, issued on February 4, 1977, provides that

e contract for the reclamation and construction of the Manila-Cavite Coastal Road Project between the Republic of the Philippines and
yed and assigned to the ownership and administration of the Public Estates Authority established pursuant to PD No. 1084; Pr

ons of the Republic of the Philippines (Department of Public Highways) arising from, or incident to, the aforesaid contract between the

all issue in favor of the Republic of the Philippines the corresponding shares of stock in said entity with an issued value of said share

ity shall execute such contracts or agreements, including appropriate agreements with the Construction and Development Corporatio

n favor of the Public Estates Authority without prejudice to the subsequent transfer to the contractor or his assignees of su
on shall issue the corresponding certificate of title." (Emphasis supplied)
hall be responsible for its administration, development, utilization or disposition in accordance with the provisions of Presidential Decr

s. PD No. 1085 merely transferred "ownership and administration" of lands reclaimed from Manila Bay to PEA, while EO No. 525 decl
No. 1084," the charter of PEA.

e, dispose, lease and sell any and all kinds of lands x x x owned, managed, controlled and/or operated by the government."87 (Emp
roperties in accordance with the PEA charter free from constitutional limitations. The constitutional ban on private corporations from

with the legislative authority, there is no longer any statutory prohibition against such sales and the constitutional ban does not apply
he legislative authority benefits only individuals. Private corporations remain barred from acquiring any kind of alienable land of the p

the "contractor or his assignees" (Emphasis supplied) would not apply to private corporations but only to individuals because of the c

and further declared no longer needed for public service, PEA would have to conduct a public bidding in selling or leasing these land
states that the patent is issued by authority of the Constitution and PD No. 1084, "supplemented by Commonwealth Act No. 141, as a
54,89 which authorizes PEA "to determine the kind and manner of payment for the transfer" of its assets and properties, does not exem
on.

vernment is required to sell valuable government property through public bidding. Section 79 of PD No. 1445 mandates that

s no longer needed, it shall, upon application of the officer accountable therefor, be inspected by the head of the agency or his duly a
ld at public auction to the highest bidder under the supervision of the proper committee on award or similar body in the presence
any newspaper of general circulation, or where the value of the property does not warrant the expense of publication, by notices p
such price as may be fixed by the same committee or body concerned and approved by the Commission."

n Audit must approve the selling price.90 The Commission on Audit implements Section 79 of the Government Auditing Code through
of public auction."

submerged alienable lands of the public domain. Private corporations are barred from bidding at the auction sale of any kind of aliena

a condition that the winning bidder should reclaim another 250 hectares of submerged areas to regularize the shape of the Freedom
A it could sell the Freedom Islands through negotiation, without need of another public bidding, because of the failure of the public bid

250 hectares still to be reclaimed, it also granted an option to AMARI to reclaim another 350 hectares. The original JVA, a negotiated
s, almost double the area publicly auctioned. Besides, the failure of public bidding happened on December 10, 1991, more than three

ate corporations or associations may not hold such alienable lands of the public domain except by lease, x x x." Even Republic Act N

ce of any infrastructure projects undertaken through the build-operate-and-transfer arrangement or any of its variations pursuant to th
rant of a portion or percentage of the reclaimed land, subject to the constitutional requirements with respect to the ownership o
 annot acquire reclaimed alienable lands of the public domain in view of the constitutional ban.

nments in land reclamation projects to pay the contractor or developer in kind consisting of a percentage of the reclaimed land, to wit:

astructure Projects by the Private Sector. x x x

consist of the grant of a portion or percentage of the reclaimed land or the industrial estate constructed."

T Law, the constitutional restrictions on land ownership automatically apply even though not expressly mentioned in the Local Govern

te entity, can only be paid with leaseholds on portions of the reclaimed land. If the contractor or developer is an individual, portions o
sions of the BOT Law and the Local Government Code can avoid a direct collision with Section 3, Article XII of the 1987 Constitution.

nt PEA transformed such lands of the public domain to private lands." This theory is echoed by AMARI which maintains that the "issu
MARI contend that with the issuance of Special Patent No. 3517 and the corresponding certificates of titles, the 157.84 hectares com

nd ceased to be part of the public domain and became private property over which the Director of Lands has neither control nor jurisd

d on a public land patent, the land covered thereby automatically comes under the operation of Republic Act 496 subject to all the saf

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 regis

were issued covering the same in favor of the private respondents, the said lots ceased to be part of the public domain and, therefor

a land grant to the Mindanao Medical Center, Bureau of Medical Services, Department of Health, of the whole lot, validly sufficient for
t, which governs the registration of grants or patents involving public lands, provides that 'Whenever public lands in the Philippine Isla
shall be brought forthwith under the operation of this Act (Land Registration Act, Act 496) and shall become registered lands.'"

f titlesissued to private parties. These four cases uniformly hold that the Director of Lands has no jurisdiction over private lands or t
by the National Government to Mindanao Medical Center, a government unit under the Department of Health. The National Governm
on 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 ex

government owned corporation performing public as well as proprietary functions. No patent or certificate of title has been issued to a
d covered by these certificates, being alienable lands of the public domain, should not be sold to a private corporation.
wnership of the land. Registration is not a mode of acquiring ownership but is merely evidence of ownership previously conferred by a
n under the Torrens system, by itself, cannot convert public lands into private lands.103

land of the public domain automatically becomes private land cannot apply to government units and entities like PEA. The transfer of

and in conformity with the provisions of Presidential Decree No. 1084, supplemented by Commonwealth Act No. 141, as amended
our (1,915,894) square meters; the technical description of which are hereto attached and made an integral part hereof." (Emphasis

4. Section 60 of CA No. 141 prohibits, "except when authorized by Congress," the sale of alienable lands of the public domain that are
e of title.104 Alienable lands of the public domain held by government entities under Section 60 of CA No. 141 remain public lands beca
lands of the public domain because of the constitutional ban. Only individuals can benefit from such law.

ot automatically convert alienable lands of the public domain into private or patrimonial lands. The alienable lands of the public domai
an will become illusory if Congress can declare lands of the public domain as private or patrimonial lands in the hands of a governme

aim 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

be undertaken in various parts of the country which need to be evaluated for consistency with national programs;

d policy to provide for a coordinated, economical and efficient reclamation of lands;

ed to the National Government or any person authorized by it under proper contract;

which shall ensure a coordinated and integrated approach in the reclamation of lands;

overnment corporation to undertake reclamation of lands and ensure their maximum utilization in promoting public welfare a

o reorganize the national government including the transfer, abolition, or merger of functions and offices.

of the powers vested in me by the Constitution and pursuant to Presidential Decree No. 1416, do hereby order and direct the followin

grating, directing, and coordinating all reclamation projects for and on behalf of the National Government. All reclamation pr
hat, reclamation projects of any national government agency or entity authorized under its charter shall be undertaken in consultation

o sell reclaimed lands, PEA took the place of DENR as the government agency charged with leasing or selling reclaimed lands of the
able lands of the public domain. Only when qualified private parties acquire these lands will the lands become private lands. In the h

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 lan

sanction a gross violation of the constitutional ban on private corporations from acquiring any kind of alienable land of the public dom
ation in only one transaction. This scheme will effectively nullify the constitutional ban in Section 3, Article XII of the 1987 Constitution

EA can "acquire x x x any and all kinds of lands." This will open the floodgates to corporations and even individuals acquiring hundred
this country - creating the very evil that the constitutional ban was designed to prevent. This will completely reverse the clear directio
tions from acquiring any kind of public land, and the 1987 Constitution has unequivocally reiterated this prohibition.

automatically become private lands is contrary to existing laws. Several laws authorize lands of the public domain to be registered u

ment of the Philippine Islands are alienated, granted, or conveyed to persons or the public or private corporations, the same shall b

nated, granted or conveyed to any person, the same shall be brought forthwith under the operation of this Decree." (Emphasis supp

udes conveyances of public lands to public corporations.

ch or subdivision of the Government," as provided in Section 60 of CA No. 141, may be registered under the Torrens System pursua
a manner affecting its title, except when authorized by Congress." This provision refers to government reclaimed, foreshore and
of the public domain from becoming private land that can be disposed of to qualified private parties.

ered under the Torrens System. Section 48, Chapter 12, Book I of the Code states

vernment is authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following

of any political subdivision or of any corporate agency or instrumentality, by the executive head of the agency or instrumentali

ed in the name of a government corporation regulating port operations in the country. Private property purchased by the National Gov
site may likewise be titled in the name of the municipality.106 All these properties become properties of the public domain, and if alrea

stionably part of the public domain. Nevertheless, Section 85 of PD No. 1529 authorizes the Register of Deeds to issue in the name o

ein, is expropriated or taken by eminent domain, the National Government, province, city or municipality, or any other agency or instru
r interest expropriated, the number of the certificate of title, and the nature of the public use. A memorandum of the right or interest ta
ce, city, municipality, or any other agency or instrumentality exercising such right for the land so taken. The legal expenses incident

nial lands. Lands of the public domain may also be registered pursuant to existing laws.

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 v
Whether the Amended JVA is a sale or a joint venture, the fact remains that the Amended JVA requires PEA to "cause the issuance a

e corporations "shall not hold such alienable lands of the public domain except by lease." The transfer of title and ownership to AMAR
 A No. 141,108 the Government Auditing Code,109 and Section 3, Article XII of the 1987 Constitution.

rt of the public domain and are inalienable. Lands reclaimed from foreshore and submerged areas also form part of the public domain
private parties unlike other alienable public lands. Reclaimed lands retain their inherent potential as areas for public use or public ser
and 1987 Constitutions have barred private corporations from acquiring any kind of alienable land of the public domain. Those who a

by certificates of title in the name of PEA, are alienable lands of the public domain. PEA may lease these lands to private corpora
ution and existing laws.

ources of the public domain until classified as alienable or disposable lands open to disposition and declared no longer needed for pu
s of the public domain, which are the only natural resources the government can alienate. In their present state, the 592.15 hectares o

of 77.34 hectares110 of the Freedom Islands, such transfer is void for being contrary to Section 3, Article XII of the 1987 Constitution w

es111 of still submerged areas of Manila Bay, such transfer is void for being contrary to Section 2, Article XII of the 1987 Constitution w
med lands as alienable or disposable, and further declare them no longer needed for public service. Still, the transfer of such reclaime
of the public domain.

Article 1409112 of the Civil Code, contracts whose "object or purpose is contrary to law," or whose "object is outside the commerce of

ue: whether the Court is the proper forum to raise the issue of whether the Amended JVA is grossly disadvantageous to the

e. Besides, the Court is not a trier of facts, and this last issue involves a determination of factual matters.

ment Corporation are PERMANENTLY ENJOINED from implementing the Amended Joint Venture Agreement which is hereby declar

o, Sandoval-Gutierrez, Austria-Martinez, and Corona, JJ., concur.

Statement of Facts and the Case, the Statement of Facts in Senate Committee Report No. 560 dated September 16, 1997.

ng COA Audit Circular No. 89-296, advised PEA that PEA could negotiate the sale of the 157.84-hectare Freedom Islands in view of t
 of the Rules of Court which provides, "A court shall take judicial notice, without the introduction of evidence, of x x x the official acts o

um dated June 19, 1999.

while PEA filed nine motions for extension of time (Rollo, pp. 127, 139).

alvez, Assistant Solicitor General Azucena R. Balanon-Corpuz, and Associate Solicitor Raymund I. Rigodon signing PEA's Memorand

oc & De los Angeles Law Offices.

quino v. Enrile, 59 SCRA 183 (1974 ); Dela Camara v. Enage, 41 SCRA 1 (1971 ).

CA and Iglesia, and Republic v. Cendana and Iglesia ni Cristo, 119 SCRA 449 (1982); Republic v. Villanueva and Iglesia ni Cristo, 114
, 141 SCRA 21 (1986); Director of Lands v. IAC and Acme Plywood & Veneer Co., 146 SCRA 509 (1986); Republic v. IAC and Roma
2), the Court did not apply the constitutional ban in the 1973 Constitution because the applicant corporation, Bian Development Co.
onstitution took effect.

Amended JVA, pp. 16-17.

"Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is provided other

azette all important legislative acts and resolutions of the Congress of the Philippines; all executive and administrative orders and pro

t property has become unserviceable for any cause, or is no longer needed, it shall, upon application of the officer accountable the
their presence. If found to be valuable, it may be sold at public auction to the highest bidder under the supervision of the prope
azette, or for not less than three consecutive days in any newspaper of general circulation, or where the value of the property
on fails, the property may be sold at a private sale at such price as may be fixed by the same committee or body concerned

CRA 520 (1991); Valmonte v. Belmonte, Jr., 170 SCRA 256 (1989).
 trust. Public officers and employees must at all times be accountable to the people, serve them with utmost responsibility, integrity, lo

, En Banc Resolution dated April 13, 1988; Chavez v. PCGG, see note 22.

f the Bureau of Internal Revenue who divulges to any person, except as allowed by law, information regarding the business, income,
of which was acquired by him in the discharge of his official duties. Section 14 of R.A. No. 8800 (Safeguard Measures Act) prohibits t
confidential the medical records of HIV patients. Section 6 (j) of R.A. No. 8043 (Inter-Country Adoption Act) classifies as confidential
o maintain the confidentiality of confidential information supplied by contractors who are parties to mineral agreements or financial an

eignty over the Indies, and all lands, territories, and possessions not heretofore ceded away by our royal predecessors, or by us, or in
n order that after reserving before all what to us or to our viceroys, audiencias, and governors may seem necessary for public square
ting to the natives what may be necessary for tillage and pasturage, confirming them in what they now have and giving them more if
ration v. Court of Appeals, 299 SCRA 199 (1998).

referring to lands in the possession of an occupant and of his predecessors-in-interest, since time immemorial, is actually a species
ctober 15, 1754, cited in 3 Philippine, 546; 'Where such possessors shall not be able to produce title deeds, it shall be sufficient if the
even against the Crown lands, was recognized by the laws of Spain, we see no sufficient reason for hesitating to admit that it was re

134 (1953); Laurel v. Garcia, 187 SCRA 797 (1990). See concurring opinion of Justice Reynato S. Puno in Republic Real Estate Corp

however, did not cover reclaimed lands. Nevertheless, Section 23 of this Act provided as follows: "x x x In no case may lands leased
Bureau of Public Lands would be prejudicial to the interests of the public."

or "concession" as used in this Act, shall mean any of the methods authorized by this Act for the acquisition, lease, use, or benefit of t

urposes, while Title III of the same Act governed alienable lands of the public domain for non-agricultural purposes.
d, or transferred to a province, municipality, or branch or subdivision of the Government shall not be alienated, encumbered, or otherw

lands of the public domain; but timber and mineral lands shall be governed by special laws and nothing in this Act provided shall be u
he property of the Commonwealth of the Philippines, which administration and disposition shall be governed by the laws at present in

ition" as follows: "The words "alienation," "disposition," or "concession" as used in this Act, shall mean any of the methods authorized

ral lands into agricultural lands. Section 4 (a) of RA No. 6657 (Comprehensive Agrarian Reform Law of 1988) states, "No reclassifica
have delimited by law, the specific limits of the public domain."

ublic agricultural lands to Philippine citizens or to corporations at least sixty percent owned by Philippine citizens. This was, however,
he United States shall enjoy in the Commonwealth of the Philippines all the civil rights of the citizens and corporations, respectively, t

claims or rights arising or existing under the laws and the Constitution of the Philippines which are not by law required to appear of re

ots to actual occupants of public lands not needed for public service. Section 1 of RA No. 730 provided as follows: "Notwithstanding t
n which he resides and who had in good faith established his residence on a parcel of land of the Republic of the Philippines which is
price to be fixed by the Director of Lands with the approval of the Secretary of Agriculture and Natural Resources. x x x." In addition,
me as farms, fishponds or other similar purposes for at least five years from the date of the lease contract with the government. R.A. N
urposes.

112 (1929).
nger needed for public use or public service, shall form part of the patrimonial property of the State."

286 (1988).

d for "National Park purposes" 464.66 hectares of the public domain in Manila Bay "situated in the cities of Manila and Pasay and the
evard; and on the south and west, by Manila Bay." See concurring opinion of Justice Reynato S. Puno in Republic Real Estate Corpo

on of the Secretary of Agriculture and Commerce, shall from time to time classify the lands of the public domain into (a) Alienab

isposition of alienable or disposable public lands, the President, upon recommendation by the Secretary of Agriculture and Com

ain conditions. Section 1 of RA No. 293 provided as follows: "The provisions of section sixty-one of Commonwealth Act Numbered O
g leases or leases which may hereafter be duly granted under the provisions of the said Act and are already improved and have been
d Act as soon as the President, upon recommendation of the Secretary of Agriculture and Natural Resources, shall declare that the sa

ee note 63.

no showing that the Commission on Audit approved the price or consideration stipulated in the negotiated Amended JVA as required

sposal through negotiated sale may be resorted to if "[T]here was a failure of public auction."

ion No. 835, as appearing in the Minutes of the PEA Board of Directors Meeting held on May 30, 1991, per Certification of Jaime T. D
oard of Directors held on December 19, 1991.

Philippines may x x x acquire not more than twelve hectares thereof by purchase, homestead or grant." However, Section 6 of R.A. N

(1965).

ficate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land taking a certificate of title for
.Liens, claims or rights arising or existing under the laws and Constitution of the Philippines which are not by law required
plies to certificates of title issued pursuant to a land patent granted by the government.

JVA.

sition," or "concession" as used in this Act, shall mean any of the methods authorized by this Act for the acquisition, lease, use, or b

of government assets, includes all kinds of disposal or divestment of government assets. Thus, COA Audit Circular No. 86-264 dated
r subsidiaries." Likewise, COA Audit Circular No. 89-296 dated January 27, speaks of "guidelines (which) shall be observed and adhe
aking away, depriving, withdrawing of an authority, power or title." These COA Circulars implement Section 79 of the Government Au

he net usable area of 110.49 hectares. The net usable area is the total land area of the Freedom Islands less 30 percent allocated fo

ch is 70 percent of the net usable area of 414.47 hectares.

nt and void from the beginning: (1) Those whose cause, object or purpose is contrary to law; x x x; (4) Those whose object is outside
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

FRANCISCO I. CHAVEZ, G.R. No. 164527

Petitioner,
Present:

PUNO, CJ,
QUISUMBING,
YNARES-SANTIAGO,
SANDOVAL-GUTIERREZ,
- versus - CARPIO,
AUSTRIA-MARTINEZ,
CORONA,
CARPIO MORALES,
AZCUNA,
TINGA,
CHICO-NAZARIO,
GARCIA,
NATIONAL HOUSING VELASCO,
AUTHORITY, R-II BUILDERS, NACHURA, and
INC., R-II HOLDINGS, INC., REYES, JJ.
HARBOUR CENTRE PORT
TERMINAL, INC., and Promulgated:
MR. REGHIS ROMERO II,
Respondents. August 15, 2007
x-----------------------------------------------------------------------------------------x

DECISION
VELASCO, JR., J.:

In this Petition for Prohibition and Mandamus with Prayer for Temporary
Restraining Order and/or Writ of Preliminary Injunction under Rule 65, petitioner,
in his capacity as taxpayer, seeks:
 to declare NULL AND VOID the Joint Venture Agreement (JVA) dated March 9,
1993 between the National Housing Authority and R-II Builders, Inc. and the
Smokey Mountain Development and Reclamation Project embodied therein; the
subsequent amendments to the said JVA; and all other agreements signed and
executed in relation thereto including, but not limited to the Smokey Mountain
Asset Pool Agreement dated 26 September 1994 and the separate agreements for
Phase I and Phase II of the Projectas well as all other transactions which emanated
therefrom, for being UNCONSTITUTIONAL and INVALID;

to enjoin respondentsparticularly respondent NHAfrom further implementing

and/or enforcing the said project and other agreements related thereto, and from
further deriving and/or enjoying any rights, privileges and interest therefrom x x
x; and

to compel respondents to disclose all documents and information relating to the

projectincluding, but not limited to, any subsequent agreements with respect to
the different phases of the project, the revisions over the original plan, the
additional works incurred thereon, the current financial condition of respondent
R-II Builders, Inc., and the transactions made respecting the project.[1]

The Facts

On March 1, 1988, then President Corazon C. Aquino issued Memorandum Order

No. (MO) 161[2] approving and directing the implementation of the Comprehensive
and Integrated Metropolitan Manila Waste Management Plan (the Plan). The
Metro Manila Commission, in coordination with various government agencies, was
tasked as the lead agency to implement the Plan as formulated by the Presidential
Task Force on Waste Management created by Memorandum Circular No. 39. A
day after, on March 2, 1988, MO 161-A[3] was issued, containing the guidelines
which prescribed the functions and responsibilities of fifteen (15) various
government departments and offices tasked to implement the Plan,
namely: Department of Public Works and Highway (DPWH), Department of
Health (DOH), Department of Environment and Natural Resources (DENR),
Department of Transportation and Communication, Department of Budget and
Management, National Economic and Development Authority (NEDA), Philippine
Constabulary Integrated National Police, Philippine Information Agency and the
Local Government Unit (referring to the City of Manila), Department of Social
Welfare and Development, Presidential Commission for Urban Poor, National
Housing Authority (NHA), Department of Labor and Employment, Department of
Education, Culture and Sports (now Department of Education), and Presidential
Management Staff.

Specifically, respondent NHA was ordered to conduct feasibility studies and

develop low-cost housing projects at the dumpsite and absorb scavengers in NHA
resettlement/low-cost housing projects.[4] On the other hand, the DENR was tasked
to review and evaluate proposed projects under the Plan with regard to their
environmental impact, conduct regular monitoring of activities of the Plan to
ensure compliance with environmental standards and assist DOH in the conduct of
the study on hospital waste management.[5]

At the time MO 161-A was issued by President Aquino, Smokey Mountain was a
wasteland in Balut, Tondo, Manila, where numerous Filipinos resided in subhuman
conditions, collecting items that may have some monetary value from the
garbage. The Smokey Mountain dumpsite is bounded on the north by the Estero
Marala, on the south by the property of the National Government, on the east by
the property of B and I Realty Co., and on the west by Radial Road 10 (R-10).

Pursuant to MO 161-A, NHA prepared the feasibility studies of the Smokey

Mountain low-cost housing project which resulted in the formulation of the
Smokey Mountain Development Plan and Reclamation of the Area Across R-10 or
the Smokey Mountain Development and Reclamation Project (SMDRP; the
Project). The Project aimed to convert the Smokey Mountain dumpsite into a
habitable housing project, inclusive of the reclamation of the area across R-10,
adjacent to the Smokey Mountain as the enabling component of the project.[6] Once
finalized, the Plan was submitted to President Aquino for her approval.

On July 9, 1990, the Build-Operate-and-Transfer (BOT) Law (Republic Act No.

[RA] 6957) was enacted.[7] Its declared policy under Section 1 is [t]o recognize the
indispensable role of the private sector as the main engine for national growth and
development and provide the most appropriate favorable incentives to mobilize
private resources for the purpose. Sec. 3 authorized and empowered [a]ll
government infrastructure agencies, including government-owned and controlled
corporations and local government units x x x to enter into contract with any duly
pre-qualified private contractor for the financing, construction, operation and
maintenance of any financially viable infrastructure facilities through the build-
operate-transfer or build and transfer scheme.

RA 6957 defined build-and-transfer scheme as [a] contractual arrangement

whereby the contractor undertakes the construction, including financing, of a given
infrastructure facility, and its turnover after the completion to the government
agency or local government unit concerned which shall pay the contractor its total
investment expended on the project, plus reasonable rate of return thereon. The last
paragraph of Sec. 6 of the BOT Law provides that the repayment scheme in the
case of land reclamation or the building of industrial estates may consist of [t]he
grant of a portion or percentage of the reclaimed land or industrial estate built,
subject to the constitutional requirements with respect to the ownership of lands.

On February 10, 1992, Joint Resolution No. 03[8] was passed by both houses
of Congress. Sec. 1 of this resolution provided, among other things, that:

Section 1. There is hereby approved the following national infrastructure projects

for implementation under the provisions of Republic Act No. 6957 and its
implementing rules and regulations:

xxxx

(d) Port infrastructure like piers, wharves, quays, storage handling, ferry service
and related facilities;

xxxx

(k) Land reclamation, dredging and other related development facilities;

(l) Industrial estates, regional industrial centers and export processing zones
including steel mills, iron-making and petrochemical complexes and related
infrastructure and utilities;

xxxx

(p) Environmental and solid waste management-related facilities such as

collection equipment, composting plants, incinerators, landfill and tidal barriers,
among others; and

(q) Development of new townsites and communities and related facilities.

This resolution complied with and conformed to Sec. 4 of the BOT Law requiring
the approval of all national infrastructure projects by the Congress.

On January 17, 1992, President Aquino proclaimed MO 415[9] approving and

directing the implementation of the SMDRP. Secs. 3 and 4 of the Memorandum
Order stated:

Section 3. The National Housing Authority is hereby directed to implement the

Smokey Mountain Development Plan and Reclamation of the Area Across R-
10 through a private sector joint venture scheme at the least cost to the
government.

Section 4. The land area covered by the Smokey Mountain dumpsite is hereby
conveyed to the National Housing Authority as well as the area to be reclaimed
across R-10. (Emphasis supplied.)

In addition, the Public Estates Authority (PEA) was directed to assist in the
evaluation of proposals regarding the technical feasibility of reclamation, while the
DENR was directed to (1) facilitate titling of Smokey Mountain and of the area to
be reclaimed and (2) assist in the technical evaluation of proposals regarding
environmental impact statements.[10]

In the same MO 415, President Aquino created an Executive Committee

(EXECOM) to oversee the implementation of the Plan, chaired by the National
Capital Region-Cabinet Officer for Regional Development (NCR-CORD) with the
heads of the NHA, City of Manila, DPWH, PEA, Philippine Ports Authority
(PPA), DENR, and Development Bank of the Philippines (DBP) as
members.[11] The NEDA subsequently became a member of the
EXECOM. Notably, in a September 2, 1994 Letter,[12] PEA General Manager
Amado Lagdameo approved the plans for the reclamation project prepared by the
NHA.

In conformity with Sec. 5 of MO 415, an inter-agency technical committee

(TECHCOM) was created composed of the technical representatives of the
EXECOM [t]o assist the NHA in the evaluation of the project proposals, assist in
the resolution of all issues and problems in the project to ensure that all aspects of
the development from squatter relocation, waste management, reclamation,
environmental protection, land and house construction meet governing regulation
of the region and to facilitate the completion of the project.[13]

Subsequently, the TECHCOM put out the Public Notice and Notice to Pre-Qualify
and Bid for the right to become NHAs joint venture partner in the implementation
of the SMDRP. The notices were published in newspapers of general circulation on
January 23 and 26 and February 1, 14, 16, and 23, 1992, respectively. Out of the
thirteen (13) contractors who responded, only five (5) contractors fully complied
with the required pre-qualification documents. Based on the evaluation of the pre-
qualification documents, the EXECOM declared the New San Jose Builders, Inc.
and R-II Builders, Inc. (RBI) as the top two contractors.[14]

Thereafter, the TECHCOM evaluated the bids (which include the Pre-feasibility
Study and Financing Plan) of the top two (2) contractors in this manner:

(1) The DBP, as financial advisor to the Project, evaluated their Financial
Proposals;

(2) The DPWH, PPA, PEA and NHA evaluated the Technical Proposals for the
Housing Construction and Reclamation;

(3) The DENR evaluated Technical Proposals on Waste Management and Disposal
by conducting the Environmental Impact Analysis; and

(4) The NHA and the City of Manila evaluated the socio-economic benefits
presented by the proposals.

On June 30, 1992, Fidel V. Ramos assumed the Office of the President (OP) of
the Philippines.

On August 31, 1992, the TECHCOM submitted its recommendation to the

EXECOM to approve the R-II Builders, Inc. (RBI) proposal which garnered the
highest score of 88.475%.
 Subsequently, the EXECOM made a Project briefing to President Ramos. As
a result, President Ramos issued Proclamation No. 39[15] on September 9, 1992,
which reads:

WHEREAS, the National Housing Authority has presented a viable conceptual

plan to convert the Smokey Mountain dumpsite into a habitable housing project,
inclusive of the reclamation of the area across Road Radial 10 (R-10) adjacent to
the Smokey Mountain as the enabling component of the project;

xxxx
These parcels of land of public domain are hereby placed under the
administration and disposition of the National Housing Authority to develop,
subdivide and dispose to qualified beneficiaries, as well as its development
for mix land use (commercial/industrial) to provide employment
opportunities to on-site families and additional areas for port-related
activities.

In order to facilitate the early development of the area for disposition, the
Department of Environment and Natural Resources, through the Lands and
Management Bureau, is hereby directed to approve the boundary and subdivision
survey and to issue a special patent and title in the name of the National Housing
Authority, subject to final survey and private rights, if any there be.(Emphasis
supplied.)

On October 7, 1992, President Ramos authorized NHA to enter into a Joint

Venture Agreement with RBI [s]ubject to final review and approval of the Joint
Venture Agreement by the Office of the President.[16]

On March 19, 1993, the NHA and RBI entered into a Joint Venture
Agreement[17] (JVA) for the development of the Smokey Mountain dumpsite and
the reclamation of the area across R-10 based on Presidential Decree No. (PD)
757[18] which mandated NHA [t]o undertake the physical and socio-economic
upgrading and development of lands of the public domain identified for housing,
MO 161-A which required NHA to conduct the feasibility studies and develop a
low-cost housing project at the Smokey Mountain, and MO 415 as amended by
MO 415-A which approved the Conceptual Plan for Smokey Mountain and
creation of the EXECOM and TECHCOM. Under the JVA, the Project involves
the clearing of Smokey Mountain for eventual development into a low cost
medium rise housing complex and industrial/commercial site with the reclamation
of the area directly across [R-10] to act as the enabling component of the
Project.[19] The JVA covered a lot in Tondo, Manila with an area of two hundred
twelve thousand two hundred thirty-four (212,234) square meters and another lot
to be reclaimed also in Tondo with an area of four hundred thousand (400,000)
square meters.

The Scope of Work of RBI under Article II of the JVA is as follows:

a) To fully finance all aspects of development of Smokey Mountain and

reclamation of no more than 40 hectares of Manila Bay area across Radial Road
10.

b) To immediately commence on the preparation of feasibility report and detailed

engineering with emphasis to the expedient acquisition of the Environmental
Clearance Certificate (ECC) from the DENR.

c) The construction activities will only commence after the acquisition of the
ECC, and

d) Final details of the contract, including construction, duration and delivery

timetables, shall be based on the approved feasibility report and detailed
engineering.

Other obligations of RBI are as follows:

2.02 The [RBI] shall develop the PROJECT based on the Final Report and
Detailed Engineering as approved by the Office of the President. All costs and
expenses for hiring technical personnel, date gathering, permits, licenses,
appraisals, clearances, testing and similar undertaking shall be for the account of
the [RBI].

2.03 The [RBI] shall undertake the construction of 3,500 temporary housing units
complete with basic amenities such as plumbing, electrical and sewerage facilities
within the temporary housing project as staging area to temporarily house the
squatter families from the Smokey Mountain while development is being
undertaken. These temporary housing units shall be turned over to the [NHA] for
disposition.

2.04 The [RBI] shall construct 3,500 medium rise low cost permanent housing
units on the leveled Smokey Mountain complete with basic utilities and amenities,
in accordance with the plans and specifications set forth in the Final Report
 approved by the [NHA]. Completed units ready for mortgage take out shall be
turned over by the [RBI] to NHA on agreed schedule.

2.05 The [RBI] shall reclaim forty (40) hectares of Manila Bay area directly
across [R-10] as contained in Proclamation No. 39 as the enabling component of
the project and payment to the [RBI] as its asset share.

2.06 The [RBI] shall likewise furnish all labor materials and equipment necessary
to complete all herein development works to be undertaken on a phase to phase
basis in accordance with the work program stipulated therein.

The profit sharing shall be based on the approved pre-feasibility report submitted
to the EXECOM, viz:

For the developer (RBI):

1. To own the forty (40) hectares of reclaimed land.

2. To own the commercial area at the Smokey Mountain area composed of 1.3
hectares, and

3. To own all the constructed units of medium rise low cost permanent housing
units beyond the 3,500 units share of the [NHA].

For the NHA:

1. To own the temporary housing consisting of 3,500 units.

2. To own the cleared and fenced incinerator site consisting of 5 hectares situated
at the Smokey Mountain area.

3. To own the 3,500 units of permanent housing to be constructed by [RBI] at

the Smokey Mountain area to be awarded to qualified on site residents.

4. To own the Industrial Area site consisting of 3.2 hectares, and

5. To own the open spaces, roads and facilities within the Smokey Mountain area.

In the event of extraordinary increase in labor, materials, fuel and non-

recoverability of total project expenses,[20] the OP, upon recommendation of the
NHA, may approve a corresponding adjustment in the enabling component.
The functions and responsibilities of RBI and NHA are as follows:

For RBI:

4.01 Immediately commence on the preparation of the FINAL REPORT with

emphasis to the expedient acquisition, with the assistance of the [NHA] of
Environmental Compliance Certificate (ECC) from the Environmental
Management Bureau (EMB) of the [DENR]. Construction shall only commence
after the acquisition of the ECC. The Environment Compliance Certificate (ECC)
shall form part of the FINAL REPORT.

The FINAL REPORT shall provide the necessary subdivision and housing plans,
detailed engineering and architectural drawings, technical specifications and other
related and required documents relative to the Smokey Mountain area.

With respect to the 40-hectare reclamation area, the [RBI] shall have the
discretion to develop the same in a manner that it deems necessary to recover the
[RBIs] investment, subject to environmental and zoning rules.

4.02 Finance the total project cost for land development, housing construction and
reclamation of the PROJECT.

4.03 Warrant that all developments shall be in compliance with the requirements
of the FINAL REPORT.

4.04 Provide all administrative resources for the submission of project

accomplishment reports to the [NHA] for proper evaluation and supervision on
the actual implementation.

4.05 Negotiate and secure, with the assistance of the [NHA] the grant of rights of
way to the PROJECT, from the owners of the adjacent lots for access road, water,
electrical power connections and drainage facilities.

4.06 Provide temporary field office and transportation vehicles (2 units), one (1)
complete set of computer and one (1) unit electric typewriter for the [NHAs] field
personnel to be charged to the PROJECT.

For the NHA:

4.07 The [NHA] shall be responsible for the removal and relocation of all
squatters within Smokey Mountain to the Temporary Housing Complex or to
other areas prepared as relocation areas with the assistance of the [RBI]. The
[RBI] shall be responsible in releasing the funds allocated and committed for
relocation as detailed in the FINAL REPORT.
 4.08 Assist the [RBI] and shall endorse granting of exemption fees in the
acquisition of all necessary permits, licenses, appraisals, clearances and
accreditations for the PROJECT subject to existing laws, rules and regulations.

4.09 The [NHA] shall inspect, evaluate and monitor all works at
the Smokey Mountain and Reclamation Area while the land development and
construction of housing units are in progress to determine whether the
development and construction works are undertaken in accordance with the
FINAL REPORT. If in its judgment, the PROJECT is not pursued in accordance
with the FINAL REPORT, the [NHA] shall require the [RBI] to undertake
necessary remedial works. All expenses, charges and penalties incurred for such
remedial, if any, shall be for the account of the [RBI].

4.10 The [NHA] shall assist the [RBI] in the complete electrification of the
PROJECT. x x x

4.11 Handle the processing and documentation of all sales transactions related to
its assets shares from the venture such as the 3,500 units of permanent housing
and the allotted industrial area of 3.2 hectares.

4.12 All advances outside of project costs made by the [RBI] to the [NHA] shall
be deducted from the proceeds due to the [NHA].

4.13 The [NHA] shall be responsible for the acquisition of the Mother Title for
the Smokey Mountain and Reclamation Area within 90 days upon submission of
Survey returns to the Land Management Sector. The land titles to the 40-hectare
reclaimed land, the 1.3 hectare commercial area at the Smokey Mountain area and
the constructed units of medium-rise permanent housing units beyond the 3,500
units share of the [NHA] shall be issued in the name of the [RBI] upon
completion of the project. However, the [RBI] shall have the authority to pre-sell
its share as indicated in this agreement.

The final details of the JVA, which will include the construction duration, costs,
extent of reclamation, and delivery timetables, shall be based on the FINAL
REPORT which will be contained in a Supplemental Agreement to be executed
later by the parties.

The JVA may be modified or revised by written agreement between the NHA and
RBI specifying the clauses to be revised or modified and the corresponding
amendments.
If the Project is revoked or terminated by the Government through no fault of RBI
or by mutual agreement, the Government shall compensate RBI for its actual
expenses incurred in the Project plus a reasonable rate of return not exceeding that
stated in the feasibility study and in the contract as of the date of such revocation,
cancellation, or termination on a schedule to be agreed upon by both parties.

As a preliminary step in the project implementation, consultations and dialogues

were conducted with the settlers of the Smokey Mountain Dumpsite Area. At the
same time, DENR started processing the application for the Environmental
Clearance Certificate (ECC) of the SMDRP. As a result however of the
consultative dialogues, public hearings, the report on the on-site field conditions,
the Environmental Impact Statement (EIS) published on April 29 and May 12,
1993 as required by the Environmental Management Bureau of DENR, the
evaluation of the DENR, and the recommendations from other government
agencies, it was discovered that design changes and additional work have to be
undertaken to successfully implement the Project.[21]

Thus, on February 21, 1994, the parties entered into another agreement
denominated as the Amended and Restated Joint Venture Agreement [22] (ARJVA)
which delineated the different phases of the Project. Phase I of the Project involves
the construction of temporary housing units for the current residents of
the Smokey Mountain dumpsite, the clearing and leveling-off of the dumpsite, and
the construction of medium-rise low-cost housing units at the cleared and leveled
dumpsite.[23] Phase II of the Project involves the construction of an incineration
area for the on-site disposal of the garbage at the dumpsite.[24] The enabling
component or consideration for Phase I of the Project was increased from 40
hectares of reclaimed lands across R-10 to 79 hectares.[25] The revision also
provided for the enabling component for Phase II of 119 hectares of reclaimed
lands contiguous to the 79 hectares of reclaimed lands for Phase I.[26] Furthermore,
the amended contract delineated the scope of works and the terms and conditions
of Phases I and II, thus:

The PROJECT shall consist of Phase I and Phase II.

Phase I shall involve the following:

 a. the construction of 2,992 units of temporary housing for the affected
residents while clearing and development of Smokey Mountain [are] being
undertaken

b. the clearing of Smokey Mountain and the subsequent construction of

3,520 units of medium rise housing and the development of the
industrial/commercial site within the SmokeyMountain area

c. the reclamation and development of a 79 hectare area directly across

Radial Road 10 to serve as the enabling component of Phase I

Phase II shall involve the following:

a. the construction and operation of an incinerator plant that will conform to

the emission standards of the DENR

b. the reclamation and development of 119-hectare area contiguous to that to be

reclaimed under Phase I to serve as the enabling component of Phase II.

Under the ARJVA, RBI shall construct 2,992 temporary housing units, a reduction
from 3,500 units under the JVA.[27] However, it was required to construct 3,520
medium-rise low-cost permanent housing units instead of 3,500 units under the
JVA. There was a substantial change in the design of the permanent housing units
such that a loft shall be incorporated in each unit so as to increase the living space
from 20 to 32 square meters. The additions and changes in the Original Project
Component are as follows:
ORIGINAL CHANGES/REVISIONS

1. TEMPORARY HOUSING

Wood/Plywood, ga. 31 G.I. Concrete/Steel Frame Structure Sheet usable

life of 3 years, gauge 26 G.I. roofing sheets future 12 SM floor area. use
as permanent structures for factory and warehouses mixed 17 sm & 12
sm floor area.

2. MEDIUM RISE MASS

HOUSING

Box type precast Shelter Conventional and precast component 20 square

meter concrete structures, 32 square floor area with 2.4 meter meter
floor area with loft floor height; bare type, 160 units/ (sleeping quarter)
3.6 m. floor building. height, painted and improved
architectural faade, 80 units/
 building.
3. MITIGATING MEASURES

3.1 For reclamation work Use of clean dredgefill material below the
MLLW and SM material mixed with
dredgefill above MLLW.

a. 100% use of Smokey

Mountain material as
dredgefill Use of Steel Sheet Piles needed
for longer depth of embedment.
b. Concrete Sheet Piles
short depth of
embedment

c. Silt removal approximately Need to remove more than 3.0

1.0 meter only meters of silt after sub-soil investigation.[28]
These material and substantial modifications served as justifications for the
increase in the share of RBI from 40 hectares to 79 hectares of reclaimed land.

Under the JVA, the specific costs of the Project were not stipulated but under the
ARJVA, the stipulated cost for Phase I was pegged at six billion six
hundred ninety-three million three hundred eighty-seven thousand
three hundred sixty-four pesos (PhP 6,693,387,364).

In his February 10, 1994 Memorandum, the Chairperson of the SMDRP

EXECOM submitted the ARJVA for approval by the OP. After review of said
agreement, the OP directed that certain terms and conditions of the ARJVA be
further clarified or amended preparatory to its approval. Pursuant to the Presidents
directive, the parties reached an agreement on the clarifications and amendments
required to be made on the ARJVA.

On August 11, 1994, the NHA and RBI executed an Amendment To the Amended
and Restated Joint Venture Agreement (AARJVA)[29] clarifying certain terms and
condition of the ARJVA, which was submitted to President Ramos for approval, to
wit:

Phase II shall involve the following:

 a. the construction and operation of an incinerator plant that will conform to the
emission standards of the DENR

b. the reclamation and development of 119-hectare area contiguous to that to be

reclaimed under Phase I to serve as the enabling component of Phase II, the
exact size and configuration of which shall be approved by the SMDRP
Committee[30]

Other substantial amendments are the following:

4. Paragraph 2.05 of Article II of the ARJVA is hereby amended to read as
follows:

2.05. The DEVELOPER shall reclaim seventy nine (79) hectares of the
Manila Bay area directly across Radial Road 10 (R-10) to serve as
payment to the DEVELOPER as its asset share for Phase I and to develop
such land into commercial area with port facilities; provided, that the port
plan shall be integrated with the Philippine Port Authoritys North Harbor
plan for the Manila Bay area and provided further, that the final
reclamation and port plan for said reclaimed area shall be submitted for
approval by the Public Estates Authority and the Philippine Ports
Authority, respectively: provided finally, that subject to par. 2.02 above,
actual reclamation work may commence upon approval of the final
reclamation plan by the Public Estates Authority.

xxxx

9. A new paragraph to be numbered 5.05 shall be added to Article V of the

ARJVA, and shall read as follows:

5.05. In the event this Agreement is revoked, cancelled or terminated

by the AUTHORITY through no fault of the DEVELOPER, the
AUTHORITY shall compensate the DEVELOPER for the value of the
completed portions of, and actual expenditures on the PROJECT plus a
reasonable rate of return thereon, not exceeding that stated in the Cost
Estimates of Items of Work previously approved by the SMDRP
Executive Committee and the AUTHORITY and stated in this Agreement,
as of the date of such revocation, cancellation, or termination, on a
schedule to be agreed upon by the parties, provided that said completed
portions of Phase I are in accordance with the approved FINAL REPORT.
 Afterwards, President Ramos issued Proclamation No. 465 dated August 31,
[31]
1994 increasing the proposed area for reclamation across R-10 from 40 hectares
to 79 hectares,[32] to wit:

NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the

Philippines, by virtue of the powers vested in me by the law, and as recommended
by the SMDRP Executive Committee, do hereby authorize the increase of the area
of foreshore or submerged lands of Manila Bay to be reclaimed, as previously
authorized under Proclamation No. 39 (s. 1992) and Memorandum Order No. 415
(s. 1992), from Four Hundred Thousand (400,000) square meters, more or less, to
Seven Hundred Ninety Thousand (790,000) square meters, more or less.

On September 1, 1994, pursuant to Proclamation No. 39, the DENR issued

Special Patent No. 3591 conveying in favor of NHA an area of 211,975 square
meters covering the Smokey Mountain Dumpsite.

In its September 7, 1994 letter to the EXECOM, the OP through then

Executive Secretary Teofisto T. Guingona, Jr., approved the ARJVA as amended
by the AARJVA.

On September 8, 1994, the DENR issued Special Patent 3592 pursuant to

Proclamation No. 39, conveying in favor of NHA a 401,485-square meter area.

On September 26, 1994, the NHA, RBI, Home Insurance and Guaranty
Corporation (HIGC), now known as the Home Guaranty Corporation, and the
Philippine National Bank (PNB)[33] executed the Smokey Mountain Asset Pool
Formation Trust Agreement (Asset Pool Agreement).[34] Thereafter, a Guaranty
Contract was entered into by NHA, RBI, and HIGC.

On June 23, 1994, the Legislature passed the Clean Air Act.[35] The Act
made the establishment of an incinerator illegal and effectively barred the
implementation of the planned incinerator project under Phase II. Thus, the off-site
disposal of the garbage at the Smokey Mountain became necessary.[36]

The land reclamation was completed in August 1996.[37]

 Sometime later in 1996, pursuant likewise to Proclamation No. 39, the
DENR issued Special Patent No. 3598 conveying in favor of NHA an additional
390,000 square meter area.

During the actual construction and implementation of Phase I of the

SMDRP, the Inter-Agency Technical Committee found and recommended to the
EXECOM onDecember 17, 1997 that additional works were necessary for the
completion and viability of the Project. The EXECOM approved the
recommendation and so, NHA instructed RBI to implement the change orders or
necessary works.[38]

Such necessary works comprised more than 25% of the original contract
price and as a result, the Asset Pool incurred direct and indirect costs. Based on C1
12 A of the Implementing Rules and Regulations of PD 1594, a supplemental
agreement is required for all change orders and extra work orders, the total
aggregate cost of which being more than twenty-five (25%) of the escalated
original contract price.

The EXECOM requested an opinion from the Department of Justice (DOJ)

to determine whether a bidding was required for the change orders and/or
necessary works. The DOJ, through DOJ Opinion Nos. 119 and 155 dated August
26, 1993 and November 12, 1993, opined that a rebidding, pursuant to the
aforequoted provisions of the implementing rules (referring to PD 1594) would not
be necessary where the change orders inseparable from the original scope of the
project, in which case, a negotiation with the incumbent contractor may be
allowed.

Thus, on February 19, 1998, the EXECOM issued a resolution directing

NHA to enter into a supplemental agreement covering said necessary works.

On March 20, 1998, the NHA and RBI entered into a Supplemental
Agreement covering the aforementioned necessary works and submitted it to the
President on March 24, 1998 for approval.
 Outgoing President Ramos decided to endorse the consideration of the
Supplemental Agreement to incoming President Joseph E. Estrada. On June 30,
1998, Estrada became the 13th Philippine President.

However, the approval of the Supplemental Agreement was unacted upon

for five months. As a result, the utilities and the road networks were constructed to
cover only the 79-hectare original enabling component granted under the
ARJVA. The 220-hectare extension of the 79-hectare area was no longer
technically feasible. Moreover, the financial crises and unreliable real estate
situation made it difficult to sell the remaining reclaimed lots. The devaluation of
the peso and the increase in interest cost led to the substantial increase in the cost
of reclamation.

On August 1, 1998, the NHA granted RBIs request to suspend work on the
SMDRP due to the delay in the approval of the Supplemental Agreement, the
consequent absence of an enabling component to cover the cost of the necessary
works for the project, and the resulting inability to replenish the Asset Pool funds
partially used for the completion of the necessary works.[39]

As of August 1, 1998 when the project was suspended, RBI had already
accomplished a portion of the necessary works and change orders which resulted in
[RBI] and the Asset Pool incurring advances for direct and indirect cost which
amount can no longer be covered by the 79-hectare enabling component under the
ARJVA.[40]

Repeated demands were made by RBI in its own capacity and on behalf of
the asset pool on NHA for payment for the advances for direct and indirect costs
subject to NHA validation.

In November 1998, President Estrada issued Memorandum Order No. 33

reconstituting the SMDRP EXECOM and further directed it to review the
Supplemental Agreement and submit its recommendation on the completion of the
SMDRP.

The reconstituted EXECOM conducted a review of the project and

recommended the amendment of the March 20, 1998 Supplemental Agreement to
make it more feasible and to identify and provide new sources of funds for the
project and provide for a new enabling component to cover the payment for the
necessary works that cannot be covered by the 79-hectare enabling component
under the ARJVA.[41]

The EXECOM passed Resolution Nos. 99-16-01 and 99-16-02[42] which

approved the modification of the Supplemental Agreement, to wit:

a) Approval of 150 hectares additional reclamation in order to make the

reclamation feasible as part of the enabling component.

b) The conveyance of the 15-hectare NHA Vitas property (actually 17 hectares

based on surveys) to the SMDRP Asset Pool.

c) The inclusion in the total development cost of other additional, necessary and
indispensable infrastructure works and the revision of the original cost stated in
the Supplemental Agreement dated March 20, 1998 from PhP
2,953,984,941.40 to PhP 2,969,134,053.13.

d) Revision in the sharing agreement between the parties.

In the March 23, 2000 OP Memorandum, the EXECOM was authorized to

proceed and complete the SMDRP subject to certain guidelines and directives.

After the parties in the case at bar had complied with the March 23, 2000
Memorandum, the NHA November 9, 2000 Resolution No. 4323 approved the
conveyance of the 17-hectare Vitas property in favor of the existing or a newly
created Asset Pool of the project to be developed into a mixed commercial-
industrial area, subject to certain conditions.

On January 20, 2001, then President Estrada was considered resigned. On

the same day, President Gloria M. Arroyo took her oath as the 14th President of
the Philippines.

As of February 28, 2001, the estimated total project cost of the SMDRP has
reached P8.65 billion comprising of P4.78 billion in direct cost and P3.87 billion in
indirect cost,[43] subject to validation by the NHA.
 On August 28, 2001, NHA issued Resolution No. 4436 to pay for the
various necessary works/change orders to SMDRP, to effect the corresponding
enabling component consisting of the conveyance of the NHAs Vitas Property and
an additional 150-hectare reclamation area and to authorize the release by NHA of
PhP 480 million as advance to the project to make the Permanent Housing
habitable, subject to reimbursement from the proceeds of the expanded enabling
component.[44]

On November 19, 2001, the Amended Supplemental Agreement (ASA) was

signed by the parties, and on February 28, 2002, the Housing and Urban
Development Coordinating Council (HUDCC) submitted the agreement to the OP
for approval.
In the July 20, 2002 Cabinet Meeting, HUDCC was directed to submit the
works covered by the PhP 480 million [advance to the Project] and the ASA to
public bidding.[45] On August 28, 2002, the HUDCC informed RBI of the decision
of the Cabinet.

In its September 2, 2002 letter to the HUDCC Chairman, RBI lamented the
decision of the government to bid out the remaining works under the ASA thereby
unilaterally terminating the Project with RBI and all the agreements related
thereto. RBI demanded the payment of just compensation for all accomplishments
and costs incurred in developing the SMDRP plus a reasonable rate of return
thereon pursuant to Section 5.05 of the ARJVA and Section 6.2 of the ASA.[46]

Consequently, the parties negotiated the terms of the termination of the JVA
and other subsequent agreements.

On August 27, 2003, the NHA and RBI executed a Memorandum of

Agreement (MOA) whereby both parties agreed to terminate the JVA and other
subsequent agreements, thus:

1. TERMINATION

1.1 In compliance with the Cabinet directive dated 30 July 2002 to

submit the works covered by the P480 Million and the ASA to
public bidding, the following agreements executed by and
 between the NHA and the DEVELOPER are hereby terminated,
to wit:

a. Joint Venture Agreement (JVA) dated 19 March 1993

b. Amended and Restated Joint Venture Agreement (ARJVA)
dated 21 February 1994
c. Amendment and Restated Joint Venture Agreement dated 11
August 1994
d. Supplemental Agreement dated 24 March 1998
e. Amended Supplemental Agreement (ASA) dated 19
November 2001.
xxxx

5. SETTLEMENT OF CLAIMS

5.1 Subject to the validation of the DEVELOPERs claims, the NHA

hereby agrees to initially compensate the Developer for the
abovementioned costs as follows:

a. Direct payment to DEVELOPER of the amounts herein listed

in the following manner:
a.1 P250 Million in cash from the escrow account in accordance
with Section 2 herewith;

a.2 Conveyance of a 3 hectare portion of the Vitas

Industrial area immediately after joint determination
of the appraised value of the said property in
accordance with the procedure herein set forth in the
last paragraph of Section 5.3. For purposes of all
payments to be made through conveyance of real
properties, the parties shall secure from the NHA
Board of Directors all documents necessary and
sufficient to effect the transfer of title over the
properties to be conveyed to RBI, which documents
shall be issued within a reasonable period.

5.2 Any unpaid balance of the DEVELOPERS claims determined after

the validation process referred to in Section 4 hereof, may be
paid in cash, bonds or through the conveyance of properties or
any combination thereof. The manner, terms and conditions of
payment of the balance shall be specified and agreed upon later
within a period of three months from the time a substantial
amount representing the unpaid balance has been validated
pursuant hereto including, but not limited to the programming
of quarterly cash payments to be sourced by the NHA from its
 budget for debt servicing, from its income or from any other
sources.

5.3 In any case the unpaid balance is agreed to be paid, either partially
or totally through conveyance of properties, the parties shall
agree on which properties shall be subject to conveyance. The
NHA and DEVELOPER hereby agree to determine the
valuation of the properties to be conveyed by getting the
average of the appraisals to be made by two (2) mutually
acceptable independent appraisers.

Meanwhile, respondent Harbour Centre Port Terminal, Inc. (HCPTI) entered into
an agreement with the asset pool for the development and operations of a port in
the Smokey Mountain Area which is a major component of SMDRP to provide a
source of livelihood and employment for Smokey Mountain residents and spur
economic growth. A Subscription Agreement was executed between the Asset Pool
and HCPTI whereby the asset pool subscribed to 607 million common shares and
1,143 million preferred shares of HCPTI. The HCPTI preferred shares had a
premium and penalty interest of 7.5% per annum and a mandatory redemption
feature. The asset pool paid the subscription by conveying to HCPTI a 10-hectare
land which it acquired from the NHA being a portion of the reclaimed land of the
SMDRP. Corresponding certificates of titles were issued to HCPTI, namely: TCT
Nos. 251355, 251356, 251357, and 251358.

Due to HCPTIs failure to obtain a license to handle foreign containerized cargo

from PPA, it suffered a net income loss of PhP 132,621,548 in 2002 and a net loss
of PhP 15,540,063 in 2003. The Project Governing Board of the Asset Pool later
conveyed by way of dacion en pago a number of HCPTI shares to RBI in lieu of
cash payment for the latters work in SMDRP.

On August 5, 2004, former Solicitor General Francisco I. Chavez, filed the instant
petition which impleaded as respondents the NHA, RBI, R-II Holdings, Inc. (RHI),
HCPTI, and Mr. Reghis Romero II, raising constitutional issues.

The NHA reported that thirty-four (34) temporary housing structures and twenty-
one (21) permanent housing structures had been turned over by respondent RBI. It
claimed that 2,510 beneficiary-families belonging to the poorest of the poor had
been transferred to their permanent homes and benefited from the Project.

The Issues

The grounds presented in the instant petition are:

I

NEITHER RESPONDENT NHA NOR RESPONDENT R-II BUILDERS MAY

VALIDLY RECLAIM FORESHORE AND SUBMERGED LAND BECAUSE:

1. RESPONDENT NHA AND R-II BUILDERS WERE NEVER GRANTED

ANY POWER AND AUTHORITY TO RECLAIM LANDS OF THE PUBLIC
DOMAIN AS THIS POWER ISVESTED EXCLUSIVELY WITH THE PEA.

2. EVEN ASSUMING THAT RESPONDENTS NHA AND R-II BUILDERS

WERE GIVEN THE POWER AND AUTHORITY TO RECLAIM
FORESHORE AND SUBMERGED LAND,THEY WERE NEVER GIVEN THE
AUTHORITY BY THE DENR TO DO SO.

II

RESPONDENT R-II BUILDERS CANNOT ACQUIRE THE RECLAIMED

FORESHORE AND SUBMERGED LAND AREAS BECAUSE:

1. THE RECLAIMED FORESHORE AND SUBMERGED PARCELS OF

LAND ARE INALIENABLE PUBLIC LANDS WHICH ARE BEYOND THE
COMMERCE OF MAN.

2. ASSUMING ARGUENDO THAT THE SUBJECT RECLAIMED

FORESHORE AND SUBMERGED PARCELS OF LAND WERE
ALREADY DECLARED ALIENABLE LANDS OF THE PUBLIC
DOMAIN, RESPONDENT R-II BUILDERS STILL COULD NOT
ACQUIRE THE SAME BECAUSE THERE WAS NEVER ANY
DECLARATION THAT THE SAID LANDS WERE NO LONGER
NEEDED FOR PUBLIC USE.

3. EVEN ASSUMING THAT THE SUBJECT RECLAIMED LANDS ARE

ALIENABLE AND NO LONGER NEEDED FOR PUBLIC USE,
RESPONDENT R-II BUILDERS STILLCANNOT ACQUIRE THE SAME
BECAUSE THERE WAS NEVER ANY LAW AUTHORIZING THE SALE
THEREOF.
 4. THERE WAS NEVER ANY PUBLIC BIDDING AWARDING OWNERSHIP
OF THE SUBJECT LAND TO RESPONDENT R-II BUILDERS.

5. ASSUMING THAT ALL THE REQUIREMENTS FOR A VALID

TRANSFER OF ALIENABLE PUBLIC HAD BEEN PERFORMED,
RESPONDENT R-II BUILDERS, BEING PRIVATE CORPORATION
IS NONETHELESS EXPRESSLYPROHIBITED BY THE PHILIPPINE
CONSTITUTION TO ACQUIRE LANDS OF THE PUBLIC DOMAIN.

III

RESPONDENT HARBOUR, BEING A PRIVATE CORPORATION WHOSE

MAJORITY STOCKS ARE OWNED AND CONTROLLED BY
RESPONDENT ROMEROS CORPORATIONS R-II BUILDERS AND R-II
HOLDINGS IS DISQUALIFIED FROM BEING A TRANSFEREE
OF PUBLIC LAND.

IV

RESPONDENTS MUST BE COMPELLED TO DISCLOSE ALL

INFORMATION RELATED TO THE SMOKEY MOUNTAIN
DEVELOPMENT AND RECLAMATION PROJECT.

The Courts Ruling

Before we delve into the substantive issues raised in this petition, we will first deal
with several procedural matters raised by respondents.

Whether petitioner has the requisite locus standi to file this case

Respondents argue that petitioner Chavez has no legal standing to file the petition.

Only a person who stands to be benefited or injured by the judgment in the

suit or entitled to the avails of the suit can file a complaint or
petition.[47] Respondents claim that petitioner is not a proper party-in-interest as he
was unable to show that he has sustained or is in immediate or imminent danger of
sustaining some direct and personal injury as a result of the execution and
enforcement of the assailed contracts or agreements.[48] Moreover, they assert that
not all government contracts can justify a taxpayers suit especially when no public
funds were utilized in contravention of the Constitution or a law.
We explicated in Chavez v. PCGG[49] that in cases where issues of
transcendental public importance are presented, there is no necessity to show that
petitioner has experienced or is in actual danger of suffering direct and personal
injury as the requisite injury is assumed. We find our ruling in Chavez v. PEA[50] as
conclusive authority onlocus standi in the case at bar since the issues raised in this
petition are averred to be in breach of the fair diffusion of the countrys natural
resources and the constitutional right of a citizen to information which have been
declared to be matters of transcendental public importance. Moreover, the
pleadings especially those of respondents readily reveal that public funds have
been indirectly utilized in the Project by means of Smokey Mountain Project
Participation Certificates (SMPPCs) bought by some government agencies.
Hence, petitioner, as a taxpayer, is a proper party to the instant petition before the
court.

Whether petitioners direct recourse to this Court was proper

Respondents are one in asserting that petitioner circumvents the principle of

hierarchy of courts in his petition. Judicial hierarchy was made clear in the case
of People v. Cuaresma, thus:

There is after all a hierarchy of courts. That hierarchy is determinative of the

venue of appeals, and should also serve as a general determinant of the
appropriate forum for petitions for the extraordinary writs. A becoming regard for
that judicial hierarchy most certainly indicates that petitions for the issuance of
extraordinary writs against first level (inferior) courts should be filed with the
Regional Trial Court, and those against the latter, with the Court of Appeals. A
direct invocation of the Supreme Courts original jurisdiction to issue these writs
should be allowed only when there are special and important reasons therefor,
clearly and specifically set out in the petition. This is established policy. It is a
policy that is necessary to prevent inordinate demands upon the Courts time and
attention which are better devoted to those matters within its exclusive
jurisdiction, and to prevent further over-crowding of the Courts docket.[51] x x x

The OSG claims that the jurisdiction over petitions for prohibition and
mandamus is concurrent with other lower courts like the Regional Trial Courts and
the Court of Appeals. Respondent NHA argues that the instant petition is misfiled
because it does not introduce special and important reasons or exceptional and
compelling circumstances to warrant direct recourse to this Court and that the
lower courts are more equipped for factual issues since this Court is not a trier of
facts. Respondents RBI and RHI question the filing of the petition as this Court
should not be unduly burdened with repetitions, invocation of jurisdiction over
constitutional questions it had previously resolved and settled.

In the light of existing jurisprudence, we find paucity of merit in respondents

postulation.

While direct recourse to this Court is generally frowned upon and discouraged, we
have however ruled in Santiago v. Vasquez that such resort to us may be allowed in
certain situations, wherein this Court ruled that petitions for certiorari, prohibition,
or mandamus, though cognizable by other courts, may directly be filed with us if
the redress desired cannot be obtained in the appropriate courts or where
exceptional compelling circumstances justify availment of a remedy within and
calling for the exercise of [this Courts] primary jurisdiction.[52]

The instant petition challenges the constitutionality and legality of the SMDRP
involving several hectares of government land and hundreds of millions of funds of
several government agencies. Moreover, serious constitutional challenges are made
on the different aspects of the Project which allegedly affect the right of Filipinos
to the distribution of natural resources in the country and the right to information
of a citizenmatters which have been considered to be of extraordinary significance
and grave consequence to the public in general. These concerns in the instant
action compel us to turn a blind eye to the judicial structure meant to provide an
orderly dispensation of justice and consider the instant petition as a justified
deviation from an established precept.

Core factual matters undisputed

Respondents next challenge the projected review by this Court of the alleged
factual issues intertwined in the issues propounded by petitioner. They listed a
copious number of questions seemingly factual in nature which would make this
Court a trier of facts.[53]
We find the position of respondents bereft of merit.
For one, we already gave due course to the instant petition in our January 18,
2005 Resolution.[54] In said issuance, the parties were required to make clear and
concise statements of established facts upon which our decision will be based.

Secondly, we agree with petitioner that there is no necessity for us to make any
factual findings since the facts needed to decide the instant petition are well
established from the admissions of the parties in their pleadings [55] and those
derived from the documents appended to said submissions. Indeed, the core facts
which are the subject matter of the numerous issues raised in this petition are
undisputed.

Now we will tackle the issues that prop up the instant petition.

Since petitioner has cited our decision in PEA as basis for his postulations in
a number of issues, we first resolve the queryis PEA applicable to the case at bar?

A juxtaposition of the facts in the two cases constrains the Court to rule in the
negative.

The Court finds that PEA is not a binding precedent to the instant petition because
the facts in said case are substantially different from the facts and circumstances in
the case at bar, thus:

(1) The reclamation project in PEA was undertaken through a JVA entered into
between PEA and AMARI. The reclamation project in the instant NHA case was
undertaken by the NHA, a national government agency in consultation with PEA
and with the approval of two Philippine Presidents;

(2) In PEA, AMARI and PEA executed a JVA to develop the Freedom Islands and
reclaim submerged areas without public bidding on April 25, 1995. In the instant
NHA case, the NHA and RBI executed a JVA after RBI was declared the winning
bidder on August 31, 1992 as the JVA partner of the NHA in the SMDRP after
compliance with the requisite public bidding.
(3) In PEA, there was no law or presidential proclamation classifying the lands to
be reclaimed as alienable and disposal lands of public domain. In this RBI case,
MO 415 of former President Aquino and Proclamation No. 39 of then President
Ramos, coupled with Special Patents Nos. 3591, 3592, and 3598, classified the
reclaimed lands as alienable and disposable;

(4) In PEA, the Chavez petition was filed before the amended JVA was executed
by PEA and AMARI. In this NHA case, the JVA and subsequent amendments
were already substantially implemented. Subsequently, the Project was terminated
through a MOA signed on August 27, 2003. Almost one year later on August 5,
2004, the Chavez petition was filed;

(5) In PEA, AMARI was considered to be in bad faith as it signed the amended
JVA after the Chavez petition was filed with the Court and after Senate Committee
Report No. 560 was issued finding that the subject lands are inalienable lands of
public domain. In the instant petition, RBI and other respondents are considered to
have signed the agreements in good faith as the Project was terminated even before
the Chavez petition was filed;

(6) The PEA-AMARI JVA was executed as a result of direct negotiation between
the parties and not in accordance with the BOT Law. The NHA-RBI JVA and
subsequent amendments constitute a BOT contract governed by the BOT Law; and

(7) In PEA, the lands to be reclaimed or already reclaimed were transferred to

PEA, a government entity tasked to dispose of public lands under Executive Order
No. (EO) 525.[56] In the NHA case, the reclaimed lands were transferred to NHA, a
government entity NOT tasked to dispose of public land and therefore said
alienable lands were converted to patrimonial lands upon their transfer to NHA. [57]
Thus the PEA Decision[58] cannot be considered an authority or precedent to
the instant case. The principle of stare decisis[59] has no application to the different
factual setting of the instant case.

We will now dwell on the substantive issues raised by petitioner. After a

perusal of the grounds raised in this petition, we find that most of these issues are
moored on ourPEA Decision which, as earlier discussed, has no application to the
instant petition. For this reason alone, the petition can already be
rejected. Nevertheless, on the premise of the applicability of said decision to the
case at bar, we will proceed to resolve said issues.

First Issue: Whether respondents NHA and RBI have been granted
the power and authority to reclaim lands of the public domain as
this power is vested exclusively in PEA as claimed by petitioner

Petitioner contends that neither respondent NHA nor respondent RBI may validly
reclaim foreshore and submerged land because they were not given any power and
authority to reclaim lands of the public domain as this power was delegated by law
to PEA.

Asserting that existing laws did not empower the NHA and RBI to reclaim lands of
public domain, the Public Estates Authority (PEA), petitioner claims, is the
primary authority for the reclamation of all foreshore and submerged lands of
public domain, and relies on PEA where this Court held:

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. 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.[60]

In the Smokey Mountain Project, petitioner clarifies that the reclamation was
not done by PEA or through a contract executed by PEA with another person or
entity but by the NHA through an agreement with respondent RBI. Therefore, he
concludes that the reclamation is null and void.
 Petitioners contention has no merit.

EO 525 reads:

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. (Emphasis supplied.)

The aforequoted provision points to three (3) requisites for a legal and valid
reclamation project, viz:

(1) approval by the President;

(2) favorable recommendation of PEA; and
(3) undertaken by any of the following:

a. by PEA
b. by any person or entity pursuant to a contract it executed with PEA
c. by the National Government agency or entity authorized under its charter to
reclaim lands subject to consultation with PEA

Without doubt, PEA under EO 525 was designated as the agency primarily
responsible for integrating, directing, and coordinating all reclamation projects.
Primarily means mainly, principally, mostly, generally. Thus, not all reclamation
projects fall under PEAs authority of supervision, integration, and
coordination. The very charter of PEA, PD 1084,[61] does not mention that PEA has
the exclusive and sole power and authority to reclaim lands of public domain. EO
525 even reveals the exceptionreclamation projects by a national government
agency or entity authorized by its charter to reclaim land. One example is EO 405
which authorized the Philippine Ports Authority (PPA) to reclaim and develop
submerged areas for port related purposes. Under its charter, PD 857, PPA has the
power to reclaim, excavate, enclose or raise any of the lands vested in it.

Thus, while PEA under PD 1084 has the power to reclaim land and under EO 525
is primarily responsible for integrating, directing and coordinating reclamation
projects, such authority is NOT exclusive and such power to reclaim may be
granted or delegated to another government agency or entity or may even be
undertaken by the National Government itself, PEA being only an agency and a
part of the National Government.

Let us apply the legal parameters of Sec. 1, EO 525 to the reclamation phase of
SMDRP. After a scrutiny of the facts culled from the records, we find that the
project met all the three (3) requirements, thus:

1. There was ample approval by the President of the Philippines; as a matter of

fact, two Philippine Presidents approved the same, namely: Presidents Aquino and
Ramos.President Aquino sanctioned the reclamation of both the SMDRP housing
and commercial-industrial sites through MO 415 (s. 1992) which approved the
SMDRP under Sec. 1 and directed NHA x x x to implement the Smokey Mountain
Development Plan and Reclamation of the Area across R-10 through a private
sector joint venture scheme at the least cost to government under Section 3.

For his part, then President Ramos issued Proclamation No. 39 (s. 1992) which
expressly reserved the Smokey Mountain Area and the Reclamation Area for a
housing project and related commercial/industrial development.

Moreover, President Ramos issued Proclamation No. 465 (s. 1994) which
authorized the increase of the Reclamation Area from 40 hectares of foreshore
and submerged land of the Manila Bay to 79 hectares. It speaks of the
reclamation of 400,000 square meters, more or less, of the foreshore and
submerged lands of Manila Bayadjoining R-10 as an enabling component of the
SMDRP.

As a result of Proclamations Nos. 39 and 465, Special Patent No. 3591 covering
211,975 square meters of Smokey Mountain, Special Patent No. 3592 covering
401,485 square meters of reclaimed land, and Special Patent No. 3598 covering
another 390,000 square meters of reclaimed land were issued by the DENR.

Thus, the first requirement of presidential imprimatur on the SMDRP has been
satisfied.

2. The requisite favorable endorsement of the reclamation phase was impliedly

granted by PEA. President Aquino saw to it that there was coordination of the
project with PEA by designating its general manager as member of the EXECOM
tasked to supervise the project implementation. The assignment was made in Sec. 2
of MO 415 which provides:

Section 2. An Executive Committee is hereby created to oversee the

implementation of the Plan, chaired by the NCR-CORD, with the heads of the
following agencies as members: The National Housing Authority, the City of
Manila, the Department of Public Works and Highways, the Public Estates
Authority, the Philippine Ports Authority, the Department of Environment and
Natural Resources and the Development Bank of the Philippines. (Emphasis
supplied.)

The favorable recommendation by PEA of the JVA and subsequent amendments

were incorporated as part of the recommendations of the EXECOM created under
MO 415. While there was no specific recommendation on the SMDRP emanating
solely from PEA, we find that the approbation of the Project and the land
reclamation as an essential component by the EXECOM of which PEA is a
member, and its submission of the SMDRP and the agreements on the Project to
the President for approval amply met the second requirement of EO 525.
3. The third element was also presentthe reclamation was undertaken either by
PEA or any person or entity under contract with PEA or by the National
Government agency or entity authorized under its charter to reclaim lands subject
to consultation with PEA. It cannot be disputed that the reclamation phase was not
done by PEA or any person or entity under contract with PEA. However, the
reclamation was implemented by the NHA, a national government agency whose
authority to reclaim lands under consultation with PEA is derived from its
charterPD 727 and other pertinent lawsRA 7279[62] and RA 6957 as amended by
RA 7718.
While the authority of NHA to reclaim lands is challenged by petitioner, we find
that the NHA had more than enough authority to do so under existing laws. While
PD 757, the charter of NHA, does not explicitly mention reclamation in any of the
listed powers of the agency, we rule that the NHA has an implied power to reclaim
land as this is vital or incidental to effectively, logically, and successfully
implement an urban land reform and housing program enunciated in Sec. 9 of
Article XIII of the 1987 Constitution.

Basic in administrative law is the doctrine that a government agency or office has
express and implied powers based on its charter and other pertinent
statutes. Express powers are those powers granted, allocated, and delegated to a
government agency or office by express provisions of law. On the other hand,
implied powers are those that can be inferred or are implicit in the wordings of the
law[63] or conferred by necessary or fair implication in the enabling
act.[64] In Angara v. Electoral Commission, the Court clarified and stressed that
when a general grant of power is conferred or duty enjoined, every particular
power necessary for the exercise of the one or the performance of the other is also
conferred by necessary implication.[65] It was also explicated that when the statute
does not specify the particular method to be followed or used by a government
agency in the exercise of the power vested in it by law, said agency has the
authority to adopt any reasonable method to carry out its functions.[66]

The power to reclaim on the part of the NHA is implicit from PD 757, RA 7279,
MO 415, RA 6957, and PD 3-A,[67] viz:

1. NHAs power to reclaim derived from PD 757 provisions:

a. Sec. 3 of PD 757 implies that reclamation may be resorted to in order to attain

the goals of NHA:
Section 3. Progress and Objectives. The Authority shall have the following
purposes and objectives:

xxxx
 b) To undertake housing, development, resettlement or other activities as
would enhance the provision of housing to every Filipino;

c) To harness and promote private participation in housing ventures in terms

of capital expenditures, land, expertise, financing and other facilities for
the sustained growth of the housing industry. (Emphasis supplied.)

Land reclamation is an integral part of the development of resources for some of

the housing requirements of the NHA. Private participation in housing projects
may also take the form of land reclamation.

b. Sec. 5 of PD 757 serves as proof that the NHA, as successor of the Tondo
Foreshore Development Authority (TFDA), has the power to reclaim, thus:
Section 5. Dissolution of Existing Housing Agencies. The People's
Homesite and Housing Corporation (PHHC), the Presidential Assistant on
Housing Resettlement Agency (PAHRA),the Tondo Foreshore Development
Authority (TFDA), the Central Institute for the Training and Relocation of Urban
Squatters (CITRUS), the Presidential Committee for Housing and Urban
Resettlement (PRECHUR), Sapang Palay Development Committee, Inter-Agency
Task Force to Undertake the Relocation of Families in Barrio Nabacaan,
Villanueva, Misamis Oriental and all other existing government housing and
resettlement agencies, task forces and ad-hoc committees, are hereby
dissolved. Their powers and functions, balance of appropriations, records,
assets, rights, and choses in action, are transferred to, vested in, and assumed
by the Authority. x x x (Emphasis supplied.)
PD 570 dated October 30, 1974 created the TFDA, which defined its
objectives, powers, and functions. Sec. 2 provides:

Section 2. Objectives and Purposes. The Authority shall have the following
purposes and objectives:

a) To undertake all manner of activity, business or development projects for the

establishment of harmonious, comprehensive, integrated and healthy living
community in the Tondo Foreshoreland and its resettlement site;

b) To undertake and promote the physical and socio-economic amelioration of

the Tondo Foreshore residents in particular and the nation in general (Emphasis
supplied.)
The powers and functions are contained in Sec. 3, to wit:

a) To develop and implement comprehensive and integrated urban renewal

programs for the Tondo Foreshore and Dagat-dagatan lagoon and/or any other
additional/alternative resettlement site and to formulate and enforce general
and specific policies for its development which shall ensure reasonable degree of
compliance with environmental standards.

b) To prescribe guidelines and standards for the reservation, conservation

and utilization of public lands covering the Tondo Foreshore land and its
resettlement sites;

c) To construct, acquire, own, lease, operate and maintain infrastructure facilities,

housing complex, sites and services;

d) To determine, regulate and supervise the establishment and operation of

housing, sites, services and commercial and industrial complexes and any other
enterprises to be constructed or established within the Tondo Foreshore and its
resettlement sites;

e) To undertake and develop, by itself or through joint ventures with other public
or private entities, all or any of the different phases of development of the Tondo
Foreshore land and its resettlement sites;

f) To acquire and own property, property-rights and interests, and encumber or

otherwise dispose of the same as it may deem appropriate (Emphasis supplied.)

From the foregoing provisions, it is readily apparent that the TFDA has the explicit
power to develop public lands covering the Tondo foreshore land and any other
additional and alternative resettlement sites under letter b, Sec. 3 of PD 570. Since
the additional and/or alternative sites adjacent to Tondo foreshore land cover
foreshore and submerged areas, the reclamation of said areas is necessary in order
to convert them into a comprehensive and integrated resettlement housing project
for the slum dwellers and squatters of Tondo.Since the powers of TFDA were
assumed by the NHA, then the NHA has the power to reclaim lands in the Tondo
foreshore area which covers the 79-hectare land subject of Proclamations Nos. 39
and 465 and Special Patents Nos. 3592 and 3598.

c. Sec. 6 of PD 757 delineates the functions and powers of the NHA which
embrace the authority to reclaim land, thus:
 Sec. 6. Powers and functions of the Authority.The Authority shall have the
following powers and functions to be exercised by the Board in accordance with
its established national human settlements plan prepared by the Human
Settlements Commission:

(a) Develop and implement the comprehensive and integrated housing

program provided for in Section hereof;

xxxx

(c) Prescribe guidelines and standards for the reservation, conservation

and utilization of public lands identified for housing and resettlement;

xxxx

(e) Develop and undertake housing development and/or resettlement

projects through joint ventures or other arrangements with public and private
entities;
xxxx

(k) Enter into contracts whenever necessary under such terms and conditions as it
may deem proper and reasonable;

(l) Acquire property rights and interests and encumber or otherwise dispose the
same as it may deem appropriate;

xxxx

(s) Perform such other acts not inconsistent with this Decree, as may be
necessary to effect the policies and objectives herein declared. (Emphasis
supplied.)

The NHAs authority to reclaim land can be inferred from the aforequoted
provisions. It can make use of public lands under letter (c) of Sec. 6 which includes
reclaimed land as site for its comprehensive and integrated housing projects under
letter (a) which can be undertaken through joint ventures with private entities
under letter (e). Taken together with letter (s) which authorizes NHA to perform
such other activities necessary to effect the policies and objectives of PD 757, it is
safe to conclude that the NHAs power to reclaim lands is a power that is implied
from the exercise of its explicit powers under Sec. 6 in order to effectively
accomplish its policies and objectives under Sec. 3 of its charter. Thus, the
reclamation of land is an indispensable component for the development and
construction of the SMDRP housing facilities.

2. NHAs implied power to reclaim land is enhanced by RA 7279.

PD 757 identifies NHAs mandate to [d]evelop and undertake housing development

and/or resettlement projects through joint ventures or other arrangements with
public and private entities.

The power of the NHA to undertake reclamation of land can be inferred from Secs.
12 and 29 of RA 7279, which provide:

Section 12. Disposition of Lands for Socialized Housing.The National Housing

Authority, with respect to lands belonging to the National Government, and
the local government units with respect to other lands within their respective
localities, shall coordinate with each other to formulate and make
available various alternative schemes for the disposition of lands to the
beneficiaries of the Program. These schemes shall not be limited to those
involving transfer of ownership in fee simple but shall include lease, with option
to purchase, usufruct or such other variations as the local government units or the
National Housing Authority may deem most expedient in carrying out the
purposes of this Act.

xxxx

Section 29. Resettlement.With two (2) years from the effectivity of this Act, the
local government units, in coordination with the National Housing Authority,
shall implement the relocation and resettlement of persons living in danger
areas such as esteros, railroad tracks, garbage dumps, riverbanks, shorelines,
waterways, and in other public places as sidewalks, roads, parks, and
playgrounds. The local government unit, in coordination with the National
Housing Authority, shall provide relocation or resettlement sites with basic
services and facilities and access to employment and livelihood opportunities
sufficient to meet the basic needs of the affected families. (Emphasis supplied.)

Lands belonging to the National Government include foreshore and submerged

lands which can be reclaimed to undertake housing development and resettlement
projects.
3. MO 415 explains the undertaking of the NHA in SMDRP:

WHEREAS, Memorandum Order No. 161-A mandated the National Housing

Authority to conduct feasibility studies and develop low-cost housing projects
at the dumpsites of Metro Manila;

WHEREAS, the National Housing Authority has presented a viable Conceptual

Plan to convert the Smokey Mountain dumpsite into a habitable housing
project inclusive of the reclamation area across R-10 as enabling component
of the Project;

WHEREAS, the said Plan requires the coordinated and synchronized efforts of
the City of Manila and other government agencies and instrumentalities to ensure
effective and efficient implementation;

WHEREAS, the government encourages private sector initiative in the

implementation of its projects. (Emphasis supplied.)

Proceeding from these whereas clauses, it is unequivocal that reclamation of

land in the Smokey Mountain area is an essential and vital power of the NHA to
effectively implement its avowed goal of developing low-cost housing units at
the Smokey Mountain dumpsites. The interpretation made by no less than the
President of the Philippines as Chief of the Executive Branch, of which the NHA is
a part, must necessarily command respect and much weight and credit.

4. RA 6957 as amended by RA 7718the BOT Lawserves as an exception to PD

1084 and EO 525.
Based on the provisions of the BOT Law and Implementing Rules and
Regulations, it is unequivocal that all government infrastructure agencies like the
NHA can undertake infrastructure or development projects using the contractual
arrangements prescribed by the law, and land reclamation is one of the projects
that can be resorted to in the BOT project implementation under the February 10,
1992 Joint Resolution No. 3 of the 8th Congress.

From the foregoing considerations, we find that the NHA has ample implied
authority to undertake reclamation projects.
Even without an implied power to reclaim lands under NHAs charter, we rule that
the authority granted to NHA, a national government agency, by the President
under PD 3-A reinforced by EO 525 is more than sufficient statutory basis for the
reclamation of lands under the SMDRP.

PD 3-A is a law issued by then President Ferdinand E. Marcos under his martial
law powers on September 23, 1972. It provided that [t]he provisions of any law to
the contrary notwithstanding, the reclamation of areas, underwater, whether
foreshore or inland, shall be limited to the National Government or any person
authorized by it under the proper contract. It repealed, in effect, RA 1899 which
previously delegated the right to reclaim lands to municipalities and chartered
cities and revested it to the National Government.[68] Under PD 3-A, national
government can only mean the Executive Branch headed by the President. It
cannot refer to Congress as it was dissolved and abolished at the time of the
issuance of PD 3-A on September 23, 1972. Moreover, the Executive Branch is the
only implementing arm in the government with the equipment, manpower,
expertise, and capability by the very nature of its assigned powers and functions to
undertake reclamation projects. Thus, under PD 3-A, the Executive Branch through
the President can implement reclamation of lands through any of its departments,
agencies, or offices.

Subsequently, on February 4, 1977, President Marcos issued PD 1084 creating the

PEA, which was granted, among others, the power to reclaim land, including
foreshore and submerged areas by dredging, filling or other means or to acquire
reclaimed lands. The PEAs power to reclaim is not however exclusive as can be
gleaned from its charter, as the President retained his power under PD 3-A to
designate another agency to reclaim lands.

On February 14, 1979, EO 525 was issued. It granted PEA primary responsibility
for integrating, directing, and coordinating reclamation projects for and on behalf
of the National Government although other national government agencies can be
designated by the President to reclaim lands in coordination with the PEA. Despite
the issuance of EO 525, PD 3-A remained valid and subsisting. Thus, the National
Government through the President still retained the power and control over all
reclamation projects in the country.
The power of the National Government through the President over reclamation of
areas, that is, underwater whether foreshore or inland, was made clear in EO
543[69] which took effect on June 24, 2006. Under EO 543, PEA was renamed the
Philippine Reclamation Authority (PRA) and was granted the authority to approve
reclamation projects, a power previously reposed in the President under EO
525. EO 543 reads:

Section 1. The power of the President to approve reclamation projects is

hereby delegated to the Philippine Reclamation Authority [formerly PEA],
through its governing board, subject to compliance with existing laws and rules
and subject to the condition that reclamation contracts to be executed with any
person or entity go through public bidding.

Section 2. Nothing in the Order shall be construed as diminishing the

Presidents authority to modify, amend or nullify PRAs action.

Section 3. All executive issuances inconsistent with this Executive Order are
hereby repealed or amended accordingly. (Emphasis supplied.)

Sec. 2 of EO 543 strengthened the power of control and supervision of the

President over reclamation of lands as s/he can modify, amend, or nullify the
action of PEA (now PRA).

From the foregoing issuances, we conclude that the Presidents delegation to

NHA, a national government agency, to reclaim lands under the SMDRP, is legal
and valid, firmly anchored on PD 3-A buttressed by EO 525 notwithstanding the
absence of any specific grant of power under its charter, PD 757.

Second Issue: Whether respondents NHA and RBI were given the
power and authority by DENR to reclaim foreshore and submerged
lands

Petitioner Chavez puts forth the view that even if the NHA and RBI were granted
the authority to reclaim, they were not authorized to do so by the DENR.
 Again, reliance is made on our ruling in PEA where it was held that the
DENRs authority is necessary in order for the government to validly reclaim
foreshore and submerged lands. In PEA, we expounded in this manner:

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 6 and 7 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.[70]

Despite our finding that PEA is not a precedent to the case at bar, we find
after all that under existing laws, the NHA is still required to procure DENRs
authorization before a reclamation project in Manila Bay or in any part of
the Philippines can be undertaken. The requirement applies to PEA, NHA, or any
other government agency or office granted with such power under the law.

Notwithstanding the need for DENR permission, we nevertheless find

petitioners position bereft of merit.
The DENR is deemed to have granted the authority to reclaim in the Smokey
Mountain Project for the following reasons:

1. Sec. 17, Art. VII of the Constitution provides that the President shall have
control of all executive departments, bureaus and offices. The President is assigned
the task of seeing to it that all laws are faithfully executed. Control, in
administrative law, means the power of an officer to alter, modify, nullify or set
aside what a subordinate officer has done in the performance of his duties and to
substitute the judgment of the former for that of the latter.[71]

As such, the President can exercise executive power motu proprio and can supplant
the act or decision of a subordinate with the Presidents own. The DENR is a
department in the executive branch under the President, and it is only an alter ego
of the latter. Ordinarily the proposed action and the staff work are initially done by
a department like the DENR and then submitted to the President for
approval. However, there is nothing infirm or unconstitutional if the President
decides on the implementation of a certain project or activity and requires said
department to implement it. Such is a presidential prerogative as long as it involves
the department or office authorized by law to supervise or execute the
Project. Thus, as in this case, when the President approved and ordered the
development of a housing project with the corresponding reclamation work,
making DENR a member of the committee tasked to implement the project, the
required authorization from the DENR to reclaim land can be deemed satisfied. It
cannot be disputed that the ultimate power over alienable and disposable public
lands is reposed in the President of the Philippines and not the DENR
Secretary. To still require a DENR authorization on theSmokey Mountain when
the President has already authorized and ordered the implementation of the Project
would be a derogation of the powers of the President as the head of the executive
branch. Otherwise, any department head can defy or oppose the implementation of
a project approved by the head of the executive branch, which is patently illegal
and unconstitutional.

In Chavez v. Romulo, we stated that when a statute imposes a specific duty

on the executive department, the President may act directly or order the said
department to undertake an activity, thus:
 [A]t the apex of the entire executive officialdom is the President. Section 17,
Article VII of the Constitution specifies [her] power as Chief executive
departments, bureaus and offices. [She] shall ensure that the laws be faithfully
executed. As Chief Executive, President Arroyo holds the steering wheel that
controls the course of her government. She lays down policies in the execution of
her plans and programs. Whatever policy she chooses, she has her subordinates to
implement them. In short, she has the power of control. Whenever a specific
function is entrusted by law or regulation to her subordinate, she may act
directly or merely direct the performance of a duty x x x. Such act is well
within the prerogative of her office (emphasis supplied).[72]

Moreover, the power to order the reclamation of lands of public domain is reposed
first in the Philippine President. The Revised Administrative Code of 1987 grants
authority to the President to reserve lands of public domain for settlement for any
specific purpose, thus:
Section 14. Power to Reserve Lands of the Public and Private Domain of the
Government.(1) The President shall have the power to reserve for settlement or
public use, and for specific public purposes, any of the lands of the public
domain, the use of which is not otherwise directed by law. The reserved land
shall thereafter remain subject to the specific public purpose indicated until
otherwise provided by law or proclamation. (Emphasis supplied.)

President Aquino reserved the area of the Smokey Mountain dumpsite for
settlement and issued MO 415 authorizing the implementation of the Smokey
Mountain Development Project plus the reclamation of the area across R-10. Then
President Ramos issued Proclamation No. 39 covering the 21-hectare dumpsite and
the 40-hectare commercial/industrial area, and Proclamation No. 465 and MO 415
increasing the area of foreshore and submerged lands of Manila Bay to be
reclaimed from 40 to 79 hectares.Having supervision and control over the DENR,
both Presidents directly assumed and exercised the power granted by the Revised
Administrative Code to the DENR Secretary to authorize the NHA to reclaim said
lands. What can be done indirectly by the DENR can be done directly by the
President. It would be absurd if the power of the President cannot be exercised
simply because the head of a department in the executive branch has not acted
favorably on a project already approved by the President. If such arrangement is
allowed then the department head will become more powerful than the President.
2. Under Sec. 2 of MO 415, the DENR is one of the members of the EXECOM
chaired by the NCR-CORD to oversee the implementation of the Project. The
EXECOM was the one which recommended approval of the project plan and the
joint venture agreements. Clearly, the DENR retained its power of supervision and
control over the laws affected by the Project since it was tasked to facilitate the
titling of the Smokey Mountain and of the area to be reclaimed, which shows that
it had tacitly given its authority to the NHA to undertake the reclamation.

3. Former DENR Secretary Angel C. Alcala issued Special Patents Nos. 3591 and
3592 while then Secretary Victor O. Ramos issued Special Patent No. 3598 that
embraced the areas covered by the reclamation. These patents conveyed the lands
to be reclaimed to the NHA and granted to said agency the administration and
disposition of said lands for subdivision and disposition to qualified beneficiaries
and for development for mix land use (commercial/industrial) to provide
employment opportunities to on-site families and additional areas for port related
activities. Such grant of authority to administer and dispose of lands of public
domain under the SMDRP is of course subject to the powers of the EXECOM of
SMDRP, of which the DENR is a member.

4. The issuance of ECCs by the DENR for SMDRP is but an exercise of its power
of supervision and control over the lands of public domain covered by the Project.

Based on these reasons, it is clear that the DENR, through its acts and issuances,
has ratified and confirmed the reclamation of the subject lands for the purposes laid
down in Proclamations Nos. 39 and 465.

Third Issue: Whether respondent RBI can acquire reclaimed

foreshore and submerged lands considered as inalienable and
outside the commerce of man

Petitioner postulates that respondent RBI cannot acquire the reclaimed foreshore
and submerged areas as these are inalienable public lands beyond the commerce of
man based on Art. 1409 of the Civil Code which provides:
 Article 1409. The following contracts are inexistent and void from the beginning:

(1) Those whose cause, object or purpose is contrary to law, morals, good
customs, public order or public policy;

xxxx

(7) Those expressly prohibited or declared void by law.

These contracts cannot be ratified. Neither can the right to set up the defense of
illegality be waived.

Secs. 2 and 3, Art. XII of the Constitution declare that all natural resources are
owned by the State and they cannot be alienated except for alienable agricultural
lands of the public domain. One of the States natural resources are lands of public
domain which include reclaimed lands.
Petitioner contends that for these reclaimed lands to be alienable, there must
be a law or presidential proclamation officially classifying these reclaimed lands as
alienable and disposable and open to disposition or concession. Absent such law or
proclamation, the reclaimed lands cannot be the enabling component or
consideration to be paid to RBI as these are beyond the commerce of man.

We are not convinced of petitioners postulation.

The reclaimed lands across R-10 were classified alienable and disposable lands of
public domain of the State for the following reasons, viz:

First, there were three (3) presidential proclamations classifying the reclaimed
lands across R-10 as alienable or disposable hence open to disposition or
concession, to wit:

(1) MO 415 issued by President Aquino, of which Sec. 4 states that [t]he land
covered by the Smokey Mountain Dumpsite is hereby conveyed to the National
Housing Authority as well as the area to be reclaimed across R-10.
The directive to transfer the lands once reclaimed to the NHA implicitly carries
with it the declaration that said lands are alienable and disposable. Otherwise, the
NHA cannot effectively use them in its housing and resettlement project.
(2) Proclamation No. 39 issued by then President Ramos by which the reclaimed
lands were conveyed to NHA for subdivision and disposition to qualified
beneficiaries and for development into a mixed land use (commercial/industrial) to
provide employment opportunities to on-site families and additional areas for port-
related activities. Said directive carries with it the pronouncement that said lands
have been transformed to alienable and disposable lands. Otherwise, there is no
legal way to convey it to the beneficiaries.

(3) Proclamation No. 465 likewise issued by President Ramos enlarged the
reclaimed area to 79 hectares to be developed and disposed of in the
implementation of the SMDRP.The authority put into the hands of the NHA to
dispose of the reclaimed lands tacitly sustains the conversion to alienable and
disposable lands.
Secondly, Special Patents Nos. 3591, 3592, and 3598 issued by the DENR
anchored on Proclamations Nos. 39 and 465 issued by President Ramos, without
doubt, classified the reclaimed areas as alienable and disposable.

Admittedly, it cannot be said that MO 415, Proclamations Nos. 39 and 465 are
explicit declarations that the lands to be reclaimed are classified as alienable and
disposable. We find however that such conclusion is derived and implicit from the
authority given to the NHA to transfer the reclaimed lands to qualified
beneficiaries.

The query is, when did the declaration take effect? It did so only after the special
patents covering the reclaimed areas were issued. It is only on such date that the
reclaimed lands became alienable and disposable lands of the public domain. This
is in line with the ruling in PEA where said issue was clarified and stressed:

PD No. 1085, coupled with President Aquinos actual issuance of a special

patent covering the Freedom Islands, is equivalent to an official
proclamation classifying the FreedomIslands as alienable or disposable lands
of the public domain. PD No. 1085 and President Aquinos issuance of a land
patent also constitute a declaration that the Freedom Islands are no longer
needed for public service. The Freedom Islands are thus alienable or disposable
 lands of the public domain, open to disposition or concession to qualified
parties.[73] (Emphasis supplied.)

Thus, MO 415 and Proclamations Nos. 39 and 465 cumulatively and jointly
taken together with Special Patent Nos. 3591, 3592, and 3598 more than satisfy the
requirement in PEA that [t]here must be a law or presidential
proclamation officially classifying these reclaimed lands as alienable or
disposable and open to disposition or concession (emphasis supplied).[74]
Apropos the requisite law categorizing reclaimed land as alienable or disposable,
we find that RA 6957 as amended by RA 7718 provides ample authority for the
classification of reclaimed land in the SMDRP for the repayment scheme of the
BOT project as alienable and disposable lands of public domain. Sec. 6 of RA
6957 as amended by RA 7718 provides:

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. (Emphasis supplied.)

While RA 6957 as modified by RA 7718 does not expressly declare that the
reclaimed lands that shall serve as payment to the project proponent have become
alienable and disposable lands and opened for disposition; nonetheless, this
conclusion is necessarily implied, for how else can the land be used as the enabling
component for the Project if such classification is not deemed made?

It may be argued that the grant of authority to sell public lands, pursuant to PEA,
does not convert alienable lands of public domain into private or patrimonial
lands. We ruled inPEA that alienable lands of 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 (emphasis supplied).[75] To lands reclaimed by PEA or through
a contract with a private person or entity, such reclaimed lands still remain
alienable lands of public domain which can be transferred only to Filipino citizens
but not to a private corporation. This is because PEA under PD 1084 and EO 525 is
tasked to hold and dispose of alienable lands of public domain and it is only when
it is transferred to Filipino citizens that it becomes patrimonial property. On the
other hand, the NHA is a government agency not tasked to dispose of public lands
under its charterThe Revised Administrative Code of 1987. The NHA is an end-
user agency authorized by law to administer and dispose of reclaimed lands. The
moment titles over reclaimed lands based on the special patents are transferred to
the NHA by the Register of Deeds, they are automatically converted to patrimonial
properties of the State which can be sold to Filipino citizens and private
corporations, 60% of which are owned by Filipinos. The reason is obvious: if the
reclaimed land is not converted to patrimonial land once transferred to NHA, then
it would be useless to transfer it to the NHA since it cannot legally transfer or
alienate lands of public domain. More importantly, it cannot attain its avowed
purposes and goals since it can only transfer patrimonial lands to qualified
beneficiaries and prospective buyers to raise funds for the SMDRP.

From the foregoing considerations, we find that the 79-hectare reclaimed land has
been declared alienable and disposable land of the public domain; and in the hands
of NHA, it has been reclassified as patrimonial property.

Petitioner, however, contends that the reclaimed lands were inexistent prior to the
three (3) Presidential Acts (MO 415 and Proclamations Nos. 39 and 465) and
hence, the declaration that such areas are alienable and disposable land of the
public domain, citing PEA, has no legal basis.

Petitioners contention is not well-taken.

Petitioners sole reliance on Proclamations Nos. 39 and 465 without taking into
consideration the special patents issued by the DENR demonstrates the inherent
weakness of his proposition. As was ruled in PEA cited by petitioner himself, PD
No. 1085, coupled with President Aquinos actual issuance of a special patent
covering the Freedom Islands is equivalent to an official proclamation classifying
the Freedom islands as alienable or disposable lands of public domain. In a similar
vein, the combined and collective effect of Proclamations Nos. 39 and 465 with
Special Patents Nos. 3592 and 3598 is tantamount to and can be considered to be
an official declaration that the reclaimed lots are alienable or disposable lands of
the public domain.

The reclaimed lands covered by Special Patents Nos. 3591, 3592, and 3598,
which evidence transfer of ownership of reclaimed lands to the NHA, are official
acts of the DENR Secretary in the exercise of his power of supervision and control
over alienable and disposable public lands and his exclusive jurisdiction over the
management and disposition of all lands of public domain under the Revised
Administrative Code of 1987. Special Patent No. 3592 speaks of the transfer of
Lots 1 and 2, and RI-003901-000012-D with an area of 401,485 square meters
based on the survey and technical description approved by the Bureau of
Lands. Lastly, Special Patent No. 3598 was issued in favor of the NHA
transferring to said agency a tract of land described in Plan RL-00-000013 with an
area of 390,000 square meters based on the survey and technical descriptions
approved by the Bureau of Lands.

The conduct of the survey, the preparation of the survey plan, the computation of
the technical description, and the processing and preparation of the special patent
are matters within the technical area of expertise of administrative agencies like the
DENR and the Land Management Bureau and are generally accorded not only
respect but at times even finality.[76] Preparation of special patents calls for
technical examination and a specialized review of calculations and specific details
which the courts are ill-equipped to undertake; hence, the latter defer to the
administrative agency which is trained and knowledgeable on such matters.[77]

Subsequently, the special patents in the name of the NHA were submitted to the
Register of Deeds of the City of Manila for registration, and corresponding
certificates of titles over the reclaimed lots were issued based on said special
patents. The issuance of certificates of titles in NHAs name automatically converts
the reclaimed lands to patrimonial properties of the NHA. Otherwise, the lots
would not be of use to the NHAs housing projects or as payment to the BOT
contractor as the enabling component of the BOT contract. The laws of the land
have to be applied and interpreted depending on the changing conditions and
times. Tempora mutantur et legis mutantur in illis (time changes and laws change
with it). One such law that should be treated differently is the BOT Law (RA 6957)
which brought about a novel way of implementing government contracts by
allowing reclaimed land as part or full payment to the contractor of a government
project to satisfy the huge financial requirements of the undertaking. The NHA
holds the lands covered by Special Patents Nos. 3592 and 3598 solely for the
purpose of the SMDRP undertaken by authority of the BOT Law and for
disposition in accordance with said special law. The lands become alienable and
disposable lands of public domain upon issuance of the special patents and become
patrimonial properties of the Government from the time the titles are issued to the
NHA.
As early as 1999, this Court in Baguio v. Republic laid down the jurisprudence
that:

It is true that, once a patent is registered and the corresponding certificate of title
is issued, the land covered by them ceases to be part of the public domain and
becomes private property, and the Torrens Title issued pursuant to the patent
becomes indefeasible upon the expiration of one year from the date of issuance of
such patent.[78]

The doctrine was reiterated in Republic v. Heirs of Felipe Alijaga, Sr.,[79] Heirs of
Carlos Alcaraz v. Republic,[80] and the more recent case of Doris Chiongbian-Oliva
v. Republic of the Philippines.[81] Thus, the 79-hectare reclaimed land became
patrimonial property after the issuance of certificates of titles to the NHA based on
Special Patents Nos. 3592 and 3598.

One last point. The ruling in PEA cannot even be applied retroactively to the lots
covered by Special Patents Nos. 3592 (40 hectare reclaimed land) and 3598 (39-
hectare reclaimed land). The reclamation of the land under SMDRP was completed
in August 1996 while the PEA decision was rendered on July 9, 2002. In the
meantime, subdivided lots forming parts of the reclaimed land were already sold to
private corporations for value and separate titles issued to the buyers. The Project
was terminated through a Memorandum of Agreement signed on August 27,
2003. The PEA decision became final through the November 11,
2003 Resolution. It is a settled precept that decisions of the Supreme Court can
only be applied prospectively as they may prejudice vested rights if applied
retroactively.
In Benzonan v. Court of Appeals, the Court trenchantly elucidated the prospective
application of its decisions based on considerations of equity and fair play, thus:
At that time, the prevailing jurisprudence interpreting section 119 of R.A.
141 as amended was that enunciated in Monge and Tupas cited above. The
petitioners Benzonan and respondent Pe and the DBP are bound by these
decisions for pursuant to Article 8 of the Civil Code judicial decisions applying or
interpreting the laws of the Constitution shall form a part of the legal system of
the Philippines. But while our decisions form part of the law of the land, they are
also subject to Article 4 of the Civil Code which provides that laws shall have no
retroactive effect unless the contrary is provided. This is expressed in the familiar
legal maxim lex prospicit, non respicit, the law looks forward not backward. The
rationale against retroactivity is easy to perceive. The retroactive application of a
law usually divests rights that have already become vested or impairs the
obligations of contract and hence, is unconstitutional.

The same consideration underlies our rulings giving only prospective effect to
decisions enunciating new doctrines. Thus, we emphasized in People v. Jabinal,
55 SCRA 607 [1974] x x x when a doctrine of this Court is overruled and a
different view is adopted, the new doctrine should be applied prospectively and
should not apply to parties who had relied on the old doctrine and acted on the
faith thereof.[82]

Fourth Issue: Whether respondent RBI can acquire reclaimed

lands when there was no declaration that said lands are no
longer needed for public use

Petitioner Chavez avers that despite the declaration that the reclaimed areas are
alienable lands of the public domain, still, the reclamation is flawed for there was
never any declaration that said lands are no longer needed for public use.

We are not moved by petitioners submission.

Even if it is conceded that there was no explicit declaration that the lands are no
longer needed for public use or public service, there was however an implicit
executive declaration that the reclaimed areas R-10 are not necessary anymore for
public use or public service when President Aquino through MO 415 conveyed the
same to the NHA partly for housing project and related commercial/industrial
development intended for disposition to and enjoyment of certain beneficiaries and
not the public in general and partly as enabling component to finance the project.
 President Ramos, in issuing Proclamation No. 39, declared, though
indirectly, that the reclaimed lands of the Smokey Mountain project are no longer
required for public use or service, thus:

These parcels of land of public domain are hereby placed under the administration
and disposition of the National Housing Authority to develop, subdivide
and dispose to qualified beneficiaries, as well as its development for mix land
use (commercial/industrial) to provide employment opportunities to on-site
families and additional areas for port related activities.(Emphasis supplied.)

While numerical count of the persons to be benefited is not the determinant

whether the property is to be devoted to public use, the declaration in Proclamation
No. 39 undeniably identifies only particular individuals as beneficiaries to whom
the reclaimed lands can be sold, namelythe Smokey Mountain dwellers. The rest of
the Filipinos are not qualified; hence, said lands are no longer essential for the use
of the public in general.

In addition, President Ramos issued on August 31, 1994 Proclamation No.

465 increasing the area to be reclaimed from forty (40) hectares to seventy-nine
(79) hectares, elucidating that said lands are undoubtedly set aside for the
beneficiaries of SMDRP and not the publicdeclaring the power of NHA to dispose
of land to be reclaimed, thus: The authority to administer, develop, or dispose
lands identified and reserved by this Proclamation and Proclamation No. 39
(s.1992), in accordance with the SMDRP, as enhance, is vested with the NHA,
subject to the provisions of existing laws. (Emphasis supplied.)

MO 415 and Proclamations Nos. 39 and 465 are declarations that proclaimed the
non-use of the reclaimed areas for public use or service as the Project cannot be
successfully implemented without the withdrawal of said lands from public use or
service. Certainly, the devotion of the reclaimed land to public use or service
conflicts with the intended use of the Smokey Mountain areas for housing and
employment of the Smokey Mountain scavengers and for financing the Project
because the latter cannot be accomplished without abandoning the public use of the
subject land. Without doubt, the presidential proclamations on SMDRP together
with the issuance of the special patents had effectively removed the reclaimed
lands from public use.

More decisive and not in so many words is the ruling in PEA which we earlier
cited, that PD No. 1085 and President Aquinos issuance of a land patent also
constitute a declaration that the Freedom Islands are no longer needed for public
service. Consequently, we ruled in that case that the reclaimed lands are open to
disposition or concession to qualified parties.[83]

In a similar vein, presidential Proclamations Nos. 39 and 465 jointly with the
special patents have classified the reclaimed lands as alienable and disposable and
open to disposition or concession as they would be devoted to units
for Smokey Mountain beneficiaries. Hence, said lands are no longer intended for
public use or service and shall form part of the patrimonial properties of the State
under Art. 422 of the Civil Code.[84] As discussed a priori, the lands were classified
as patrimonial properties of the NHA ready for disposition when the titles were
registered in its name by the Register of Deeds.

Moreover, reclaimed lands that are made the enabling components of a BOT
infrastructure project are necessarily reclassified as alienable and disposable lands
under the BOT Law; otherwise, absurd and illogical consequences would naturally
result. Undoubtedly, the BOT contract will not be accepted by the BOT contractor
since there will be no consideration for its contractual obligations. Since reclaimed
land will be conveyed to the contractor pursuant to the BOT Law, then there is an
implied declaration that such land is no longer intended for public use or public
service and, hence, considered patrimonial property of the State.

Fifth Issue: Whether there is a law authorizing sale of

reclaimed lands

Petitioner next claims that RBI cannot acquire the reclaimed lands because there
was no law authorizing their sale. He argues that unlike PEA, no legislative
authority was granted to the NHA to sell reclaimed land.

This position is misplaced.

Petitioner relies on Sec. 60 of Commonwealth Act (CA) 141 to support his view
that the NHA is not empowered by any law to sell reclaimed land, thus:

Section 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. The area of the land 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 if requested and shall in no case exceed one hundred and forty-four
hectares: Provided, however, That this limitation shall not apply to grants,
donations, 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; Provided, further, That any person,
corporation, association or partnership disqualified from purchasing public land
for agricultural purposes under the provisions of this Act, may lease land included
under this title suitable for industrial or residential purposes, but the lease granted
shall only be valid while such land is used for the purposes referred to. (Emphasis
supplied.)

Reliance on said provision is incorrect as the same applies only to a province,

municipality or branch or subdivision of the Government. The NHA is not a
government unit but a government corporation performing governmental and
proprietary functions.

In addition, PD 757 is clear that the NHA is empowered by law to transfer

properties acquired by it under the law to other parties, thus:

Section 6. Powers and functions of the Authority. The Authority shall have the
following powers and functions to be exercised by the Boards in accordance with
the established national human settlements plan prepared by the Human
Settlements Commission:

xxxx

(k) Enter into contracts whenever necessary under such terms and conditions as it
may deem proper and reasonable;
 (l) Acquire property rights and interests, and encumber or otherwise dispose the
same as it may deem appropriate (Emphasis supplied.)

Letter (l) is emphatic that the NHA can acquire property rights and interests and
encumber or otherwise dispose of them as it may deem appropriate. The transfer of
the reclaimed lands by the National Government to the NHA for housing,
commercial, and industrial purposes transformed them into patrimonial lands
which are of course owned by the State in its private or proprietary
capacity. Perforce, the NHA can sell the reclaimed lands to any Filipino citizen or
qualified corporation.

Sixth Issue: Whether the transfer of reclaimed lands to RBI

was done by public bidding

Petitioner also contends that there was no public bidding but an awarding of
ownership of said reclaimed lands to RBI. Public bidding, he says, is required
under Secs. 63 and 67 of CA 141 which read:
Section 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 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, that
the Government will lease or sell, as the case may be, the lots or blocks specified
in the advertisement, for the purpose stated in the notice and subject to the
conditions specified in this chapter.

xxxx

Section 67. The lease or sale shall be made through oral bidding; and adjudication
shall be made to the highest bidder. However, where an applicant has made
improvements on the land by virtue of a permit issued to him by competent
authority, the sale or lease shall be made by sealed bidding as prescribed in
section twenty-six of this Act, the provisions of which shall be applied whenever
applicable. If all or part of the lots remain unleased or unsold, the Director of
Lands shall from time to time announce in the Official Gazette or in any other
newspapers of general circulation, the lease of sale of those lots, if necessary.
He finds that the NHA and RBI violated Secs. 63 and 67 of CA 141, as the
reclaimed lands were conveyed to RBI by negotiated contract and not by public
bidding as required by law.

This stand is devoid of merit.

There is no doubt that respondent NHA conducted a public bidding of the right to
become its joint venture partner in the Smokey Mountain Project. Notices or
Invitations to Bid were published in the national dailies on January 23 and 26,
1992 and February 1, 14, 16, and 23, 1992. The bidding proper was done by the
Bids and Awards Committee (BAC) on May 18, 1992. On August 31, 1992, the
Inter-Agency Techcom made up of the NHA, PEA, DPWH, PPA, DBP, and
DENR opened the bids and evaluated them, resulting in the award of the contract
to respondent RBI on October 7, 1992.

On March 19, 1993, respondents NHA and RBI signed the JVA. On February 23,
1994, said JVA was amended and restated into the ARJVA. On August 11, 1994,
the ARJVA was again amended. On September 7, 1994, the OP approved the
ARJVA and the amendments to the ARJVA. From these factual settings, it cannot
be gainsaid that there was full compliance with the laws and regulations governing
public biddings involving a right, concession, or property of the government.

Petitioner concedes that he does not question the public bidding on the right to be a
joint venture partner of the NHA, but the absence of bidding in the sale of
alienable and disposable lands of public domain pursuant to CA 141 as amended.

Petitioners theory is incorrect.

Secs. 63 and 67 of CA 141, as amended, are in point as they refer to government

sale by the Director of Lands of alienable and disposable lands of public
domain. This is not present in the case at bar. The lands reclaimed by and
conveyed to the NHA are no longer lands of public domain. These lands became
proprietary lands or patrimonial properties of the State upon transfer of the titles
over the reclaimed lands to the NHA and hence outside the ambit of CA 141. The
NHA can therefore legally transfer patrimonial land to RBI or to any other
interested qualified buyer without any bidding conducted by the Director of Lands
because the NHA, unlike PEA, is a government agency not tasked to sell lands of
public domain. Hence, it can only hold patrimonial lands and can dispose of such
lands by sale without need of public bidding.
Petitioner likewise relies on Sec. 79 of PD 1445 which requires public
bidding when government property has become unserviceable for any cause or is
no longer needed.It appears from the Handbook on Property and Supply
Management System, Chapter 6, that reclaimed lands which have become
patrimonial properties of the State, whose titles are conveyed to government
agencies like the NHA, which it will use for its projects or programs, are not within
the ambit of Sec. 79. We quote the determining factors in the Disposal of
Unserviceable Property, thus:

Determining Factors in the Disposal of Unserviceable Property

Property, which can no longer be repaired or reconditioned;

Property whose maintenance costs of repair more than outweigh the benefits
and services that will be derived from its continued use;

Property that has become obsolete or outmoded because of changes in

technology;

Serviceable property that has been rendered unnecessary due to change in the
agencys function or mandate;

Unused supplies, materials and spare parts that were procured in excess of
requirements; and

Unused supplies and materials that [have] become dangerous to use because of
long storage or use of which is determined to be hazardous.[85]

Reclaimed lands cannot be considered unserviceable properties. The

reclaimed lands in question are very much needed by the NHA for the Smokey
Mountain Project because without it, then the projects will not be successfully
implemented. Since the reclaimed lands are not unserviceable properties and are
very much needed by NHA, then Sec. 79 of PD 1445 does not apply.
More importantly, Sec. 79 of PD 1445 cannot be applied to patrimonial properties
like reclaimed lands transferred to a government agency like the NHA which has
entered into a BOT contract with a private firm. The reason is obvious. If the
patrimonial property will be subject to public bidding as the only way of disposing
of said property, then Sec. 6 of RA 6957 on the repayment scheme is almost
impossible or extremely difficult to implement considering the uncertainty of a
winning bid during public auction. Moreover, the repayment scheme of a BOT
contract may be in the form of non-monetary payment like the grant of a portion or
percentage of reclaimed land. Even if the BOT partner participates in the public
bidding, there is no assurance that he will win the bid and therefore the payment in
kind as agreed to by the parties cannot be performed or the winning bid prize might
be below the estimated valuation of the land. The only way to harmonize Sec. 79
of PD 1445 with Sec. 6 of RA 6957 is to consider Sec. 79 of PD 1445 as
inapplicable to BOT contracts involving patrimonial lands. The law does not
intend anything impossible (lex non intendit aliquid impossibile).

Seventh Issue: Whether RBI, being a private corporation,

is barred by the Constitution to acquire lands of public domain

Petitioner maintains that RBI, being a private corporation, is expressly

prohibited by the 1987 Constitution from acquiring lands of public domain.

Petitioners proposition has no legal mooring for the following reasons:

1. RA 6957 as amended by RA 7718 explicitly states that a contractor can be paid

a portion as percentage of the reclaimed land subject to the constitutional
requirement that only Filipino citizens or corporations with at least 60% Filipino
equity can acquire the same. It cannot be denied that RBI is a private corporation,
where Filipino citizens own at least 60% of the stocks. Thus, the transfer to RBI is
valid and constitutional.
2. When Proclamations Nos. 39 and 465 were issued, inalienable lands
covered by said proclamations were converted to alienable and disposable lands of
public domain.When the titles to the reclaimed lands were transferred to the NHA,
said alienable and disposable lands of public domain were automatically classified
as lands of the private domain or patrimonial properties of the State because the
NHA is an agency NOT tasked to dispose of alienable or disposable lands of
public domain. The only way it can transfer the reclaimed land in conjunction with
its projects and to attain its goals is when it is automatically converted to
patrimonial properties of the State. Being patrimonial or private properties of the
State, then it has the power to sell the same to any qualified personunder the
Constitution, Filipino citizens as private corporations, 60% of which is owned by
Filipino citizens like RBI.

3. The NHA is an end-user entity such that when alienable lands of public domain
are transferred to said agency, they are automatically classified as patrimonial
properties. The NHA is similarly situated as BCDA which was granted the
authority to dispose of patrimonial lands of the government under RA 7227. The
nature of the property holdings conveyed to BCDA is elucidated and stressed in
the May 6, 2003 Resolution in Chavez v. PEA, thus:

BCDA is an entirely different government entity. BCDA is authorized by

law to sell specific government lands that have long been declared by
presidential proclamations as military reservations for use by the different
services of the armed forces under the Department of National
Defense. BCDAs mandate is specific and limited in area, while PEAs
mandate is general and national. BCDA holds government lands that have
been granted to end-user government entitiesthe military services of the
armed forces. In contrast, under Executive Order No. 525, PEA holds the
reclaimed public lands, not as an end-user entity, but as the government
agency primarily responsible for integrating, directing, and coordinating all
reclamation projects for and on behalf of the National Government.

x x x Well-settled is the doctrine that public land granted to an end-user

government agency for a specific public use may subsequently be withdrawn by
Congress from public use and declared patrimonial property to be sold to private
parties. R.A. No. 7227 creating the BCDA is a law that declares specific
military reservations no longer needed for defense or military purposes and
reclassifies such lands as patrimonial property for sale to private parties.

Government owned lands, as long as they are patrimonial property, can be

sold to private parties, whether Filipino citizens or qualified private
corporations. Thus, the so-called Friar Lands acquired by the government under
Act No. 1120 are patrimonial property which even private corporations can
acquire by purchase. Likewise, reclaimed alienable lands of the public domain if
sold or transferred to a public or municipal corporation for a monetary
 consideration become patrimonial property in the hands of the public or municipal
corporation. Once converted to patrimonial property, the land may be sold by the
public or municipal corporation to private parties, whether Filipino citizens or
qualified private corporations.[86] (Emphasis supplied.)

The foregoing Resolution makes it clear that the SMDRP was a program adopted
by the Government under Republic Act No. 6957 (An Act Authorizing the
Financing, Construction, Operation and Maintenance of Infrastructure Projects by
the Private Sector, and For Other Purposes), as amended by RA 7718, which is a
special law similar to RA 7227. Moreover, since the implementation was assigned
to the NHA, an end-user agency under PD 757 and RA 7279, the reclaimed lands
registered under the NHA are automatically classified as patrimonial lands ready
for disposition to qualified beneficiaries.

The foregoing reasons likewise apply to the contention of petitioner that HCPTI,
being a private corporation, is disqualified from being a transferee of public
land. What was transferred to HCPTI is a 10-hectare lot which is already classified
as patrimonial property in the hands of the NHA. HCPTI, being a qualified
corporation under the 1987 Constitution, the transfer of the subject lot to it is valid
and constitutional.

Eighth Issue: Whether respondents can be compelled to disclose

all information related to the SMDRP

Petitioner asserts his right to information on all documents such as contracts,

reports, memoranda, and the like relative to SMDRP.

Petitioner asserts that matters relative to the SMDRP have not been disclosed to the
public like the current stage of the Project, the present financial capacity of RBI,
the complete list of investors in the asset pool, the exact amount of investments in
the asset pool and other similar important information regarding the Project.

He prays that respondents be compelled to disclose all information regarding

the SMDRP and furnish him with originals or at least certified true copies of all
relevant documents relating to the said project including, but not limited to, the
original JVA, ARJVA, AARJVA, and the Asset Pool Agreement.

This relief must be granted.

The right of the Filipino people to information on matters of public concern

is enshrined in the 1987 Constitution, thus:

ARTICLE II

xxxx

SEC. 28. Subject to reasonable conditions prescribed by law, the State adopts and
implements a policy of full public disclosure of all its transactions involving
public interest.

ARTICLE III

SEC. 7. The right of the people to information on matters of public concern shall
be recognized. Access to official records, and to documents, and papers pertaining
to official acts, transactions, or decisions, as well as to government research data
used as basis for policy development, shall be afforded the citizen, subject to such
limitations as may be provided by law.

In Valmonte v. Belmonte, Jr., this Court explicated this way:

[A]n essential element of these freedoms is to keep open a continuing dialogue or
process of communication between the government and the people. It is in the
interest of the State that the channels for free political discussion be maintained to
the end that the government may perceive and be responsive to the peoples
will. Yet, this open dialogue can be effective only to the extent that the citizenry
is informed and thus able to formulate its will intelligently. Only when the
participants in the discussion are aware of the issues and have access to
information relating thereto can such bear fruit.[87]

In PEA, this Court elucidated the rationale behind the right to information:

These twin provisions of the Constitution seek to promote transparency in policy-

making and in the operations of the government, as well as provide the people
 sufficient information to exercise effectively other constitutional rights. These
twin provisions are essential to the exercise of freedom of expression. If the
government does not disclose its official acts, transactions and decisions to
citizens, whatever citizens say, even if expressed without any restraint, will be
speculative and amount to nothing. These twin provisions are also essential to
hold public officials at all times x x x accountable to the people, for unless
citizens have the proper information, they cannot hold public officials accountable
for anything. Armed with the right information, citizens can participate in public
discussions leading to the formulation of government policies and their effective
implementation. An informed citizenry is essential to the existence and proper
functioning of any democracy.[88]

Sec. 28, Art. II compels the State and its agencies to fully disclose all of its
transactions involving public interest. Thus, the government agencies, without
need of demand from anyone, must bring into public view all the steps and
negotiations leading to the consummation of the transaction and the contents of the
perfected contract.[89] Such information must pertain to definite propositions of the
government, meaning official recommendations or final positions reached on the
different matters subject of negotiation.The government agency, however, need not
disclose intra-agency or inter-agency recommendations or communications during
the stage when common assertions are still in the process of being formulated or
are in the exploratory stage. The limitation also covers privileged communication
like information on military and diplomatic secrets; information affecting national
security; information on investigations of crimes by law enforcement agencies
before the prosecution of the accused; information on foreign relations,
intelligence, and other classified information.

It is unfortunate, however, that after almost twenty (20) years from birth of
the 1987 Constitution, there is still no enabling law that provides the mechanics for
the compulsory duty of government agencies to disclose information on
government transactions. Hopefully, the desired enabling law will finally see the
light of day if and when Congress decides to approve the proposed Freedom of
Access to Information Act. In the meantime, it would suffice that government
agencies post on their bulletin boards the documents incorporating the information
on the steps and negotiations that produced the agreements and the agreements
themselves, and if finances permit, to upload said information on their respective
websites for easy access by interested parties. Without any law or regulation
governing the right to disclose information, the NHA or any of the respondents
cannot be faulted if they were not able to disclose information relative to the
SMDRP to the public in general.

The other aspect of the peoples right to know apart from the duty to disclose
is the duty to allow access to information on matters of public concern under Sec.
7, Art. III of the Constitution. The gateway to information opens to the public the
following: (1) official records; (2) documents and papers pertaining to official acts,
transactions, or decisions; and (3) government research data used as a basis for
policy development.

Thus, the duty to disclose information should be differentiated from the duty to
permit access to information. There is no need to demand from the government
agency disclosure of information as this is mandatory under the Constitution;
failing that, legal remedies are available. On the other hand, the interested party
must first request or even demand that he be allowed access to documents and
papers in the particular agency. A request or demand is required; otherwise, the
government office or agency will not know of the desire of the interested party to
gain access to such papers and what papers are needed. The duty to disclose covers
only transactions involving public interest, while the duty to allow access has a
broader scope of information which embraces not only transactions involving
public interest, but any matter contained in official communications and public
documents of the government agency.

We find that although petitioner did not make any demand on the NHA to allow
access to information, we treat the petition as a written request or demand. We
order the NHA to allow petitioner access to its official records, documents, and
papers relating to official acts, transactions, and decisions that are relevant to the
said JVA and subsequent agreements relative to the SMDRP.

Ninth Issue: Whether the operative fact doctrine applies to the

instant petition
Petitioner postulates that the operative fact doctrine is inapplicable to the present
case because it is an equitable doctrine which could not be used to countenance an
inequitable result that is contrary to its proper office.

On the other hand, the petitioner Solicitor General argues that the existence of the
various agreements implementing the SMDRP is an operative fact that can no
longer be disturbed or simply ignored, citing Rieta v. People of the Philippines.[90]

The argument of the Solicitor General is meritorious.

The operative fact doctrine is embodied in De Agbayani v. Court of Appeals,

wherein it is stated that a legislative or executive act, prior to its being declared as
unconstitutional by the courts, is valid and must be complied with, thus:

As the new Civil Code puts it: When the courts declare a law to be inconsistent
with the Constitution, the former shall be void and the latter shall govern.
Administrative or executive acts, orders and regulations shall be valid only when
they are not contrary to the laws of the Constitution. It is understandable why it
should be so, the Constitution being supreme and paramount. Any legislative or
executive act contrary to its terms cannot survive.

Such a view has support in logic and possesses the merit of simplicity. It may not
however be sufficiently realistic. It does not admit of doubt that prior to the
declaration of nullity such challenged legislative or executive act must have
been in force and had to be complied with. This is so as until after the judiciary,
in an appropriate case, declares its invalidity, it is entitled to obedience and
respect. Parties may have acted under it and may have changed their
positions. What could be more fitting than that in a subsequent litigation regard be
had to what has been done while such legislative or executive act was in operation
and presumed to be valid in all respects. It is now accepted as a doctrine that prior
to its being nullified, its existence as a fact must be reckoned with. This is merely
to reflect awareness that precisely because the judiciary is the governmental organ
which has the final say on whether or not a legislative or executive measure is
valid, a period of time may have elapsed before it can exercise the power of
judicial review that may lead to a declaration of nullity. It would be to deprive the
law of its quality of fairness and justice then, if there be no recognition of what
had transpired prior to such adjudication.

In the language of an American Supreme Court decision: The actual existence of

a statute, prior to such a determination [of unconstitutionality], is an
operative fact and may have consequences which cannot justly be
ignored. The past cannot always be erased by a new judicial declaration. The
 effect of the subsequent ruling as to invalidity may have to be considered in
various aspects, with respect to particular relations, individual and corporate, and
particular conduct, private and official. This language has been quoted with
approval in a resolution in Araneta v. Hill and the decision in Manila Motor Co.,
Inc. v. Flores. An even more recent instance is the opinion of Justice Zaldivar
speaking for the Court in Fernandez v. Cuerva and Co.[91] (Emphasis supplied.)

This doctrine was reiterated in the more recent case of City of Makati v. Civil
Service Commission, wherein we ruled that:

Moreover, we certainly cannot nullify the City Governments order of suspension,

as we have no reason to do so, much less retroactively apply such nullification to
deprive private respondent of a compelling and valid reason for not filing the
leave application. For as we have held, a void act though in law a mere scrap
of paper nonetheless confers legitimacy upon past acts or omissions done in
reliance thereof. Consequently, the existence of a statute or executive order
prior to its being adjudged void is an operative fact to which legal
consequences are attached. It would indeed be ghastly unfair to prevent private
respondent from relying upon the order of suspension in lieu of a formal leave
application.[92] (Emphasis supplied.)

The principle was further explicated in the case of Rieta v. People of

the Philippines, thus:

In similar situations in the past this Court had taken the pragmatic and realistic
course set forth in Chicot County Drainage District vs. Baxter Bank to wit:

The courts below have proceeded on the theory that the Act of Congress,
having been found to be unconstitutional, was not a law; that it was
inoperative, conferring no rights and imposing no duties, and hence
affording no basis for the challenged decree. x x x It is quite clear,
however, that such broad statements as to the effect of a determination of
unconstitutionality must be taken with qualifications. The actual existence
of a statute, prior to [the determination of its invalidity], is an operative
fact and may have consequences which cannot justly be ignored. The past
cannot always be erased by a new judicial declaration. The effect of the
subsequent ruling as to invalidity may have to be considered in various
aspects with respect to particular conduct, private and official. Questions
of rights claimed to have become vested, of status, of prior determinations
deemed to have finality and acted upon accordingly, of public policy in
the light of the nature both of the statute and of its previous application,
demand examination. These questions are among the most difficult of
 those which have engaged the attention of courts, state and federal, and it
is manifest from numerous decisions that an all-inclusive statement of a
principle of absolute retroactive invalidity cannot be justified.

In the May 6, 2003 Resolution in Chavez v. PEA,[93] we ruled that De

Agbayani[94] is not applicable to the case considering that the prevailing law did not
authorize private corporations from owning land. The prevailing law at the time
was the 1935 Constitution as no statute dealt with the same issue.

In the instant case, RA 6957 was the prevailing law at the time that the joint
venture agreement was signed. RA 6957, entitled An Act Authorizing The
Financing, Construction, Operation And Maintenance Of Infrastructure Projects
By The Private Sector And For Other Purposes, which was passed by Congress
on July 24, 1989, allows repayment to the private contractor of reclaimed
lands.[95] Such law was relied upon by respondents, along with the above-
mentioned executive issuances in pushing through with the Project. The existence
of such law and issuances is an operative fact to which legal consequences have
attached. This Court is constrained to give legal effect to the acts done in
consonance with such executive and legislative acts; to do otherwise would work
patent injustice on respondents.

Further, in the May 6, 2003 Resolution in Chavez v. PEA, we ruled that in certain
cases, the transfer of land, although illegal or unconstitutional, will not be
invalidated on considerations of equity and social justice. However, in that case,
we did not apply the same considering that PEA, respondent in said case, was not
entitled to equity principles there being bad faith on its part, thus:

There are, moreover, special circumstances that disqualify Amari from invoking
equity principles. Amari cannot claim good faith because even before Amari
signed the Amended JVA onMarch 30, 1999, petitioner had already filed the
instant case on April 27, 1998 questioning precisely the qualification of Amari to
acquire the Freedom Islands. Even before the filing of this petition, two Senate
Committees had already approved on September 16, 1997 Senate Committee
Report No. 560. This Report concluded, after a well-publicized investigation into
PEAs sale of the Freedom Islands to Amari, that the Freedom Islands are
inalienable lands of the public domain. Thus, Amari signed the Amended JVA
 knowing and assuming all the attendant risks, including the annulment of the
Amended JVA.[96]

Such indicia of bad faith are not present in the instant case. When the ruling
in PEA was rendered by this Court on July 9, 2002, the JVAs were all
executed. Furthermore, when petitioner filed the instant case against respondents
on August 5, 2004, the JVAs were already terminated by virtue of the MOA
between the NHA and RBI. The respondents had no reason to think that their
agreements were unconstitutional or even questionable, as in fact, the concurrent
acts of the executive department lent validity to the implementation of the
Project. The SMDRP agreements have produced vested rights in favor of the slum
dwellers, the buyers of reclaimed land who were issued titles over said land, and
the agencies and investors who made investments in the project or who bought
SMPPCs. These properties and rights cannot be disturbed or questioned after the
passage of around ten (10) years from the start of the SMDRP implementation.
Evidently, the operative fact principle has set in. The titles to the lands in the hands
of the buyers can no longer be invalidated.
The Courts Dispositions

Based on the issues raised in this petition, we find that the March 19, 1993 JVA
between NHA and RBI and the SMDRP embodied in the JVA, the subsequent
amendments to the JVA and all other agreements signed and executed in relation to
it, including, but not limited to, the September 26, 1994 Smokey Mountain Asset
Pool Agreement and the agreement on Phase I of the Project as well as all other
transactions which emanated from the Project, have been shown to be valid, legal,
and constitutional. Phase II has been struck down by the Clean Air Act.

With regard to the prayer for prohibition, enjoining respondents particularly

respondent NHA from further implementing and/or enforcing the said Project and
other agreements related to it, and from further deriving and/or enjoying any rights,
privileges and interest from the Project, we find the same prayer meritless.

Sec. 2 of Rule 65 of the 1997 Rules of Civil Procedure provides:

Sec. 2. Petition for prohibition.When the proceedings of any tribunal, corporation,

board, officer or person, whether exercising judicial, quasi-judicial or ministerial
 functions, are without or in excess of its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, and there is no appeal or
any other plain, speedy, and adequate remedy in the ordinary course of law, a
person aggrieved thereby may file a verified petition in the proper court, alleging
the facts with certainty and praying that judgment be rendered commanding the
respondent to desist from further proceedings in the action or matter specified
therein, or otherwise granting such incidental reliefs as law and justice may
require.

It has not been shown that the NHA exercised judicial or quasi-judicial
functions in relation to the SMDRP and the agreements relative to it. Likewise, it
has not been shown what ministerial functions the NHA has with regard to the
SMDRP.
A ministerial duty is one which is so clear and specific as to leave no room for the
exercise of discretion in its performance. It is a duty which an officer performs in a
given state of facts in a prescribed manner in obedience to the mandate of legal
authority, without regard to the exercise of his/her own judgment upon the
propriety of the act done.[97]
Whatever is left to be done in relation to the August 27, 2003 MOA, terminating
the JVA and other related agreements, certainly does not involve ministerial
functions of the NHA but instead requires exercise of judgment. In fact, Item No. 4
of the MOA terminating the JVAs provides for validation of the developers (RBIs)
claims arising from the termination of the SMDRP through the various government
agencies.[98] Such validation requires the exercise of discretion.

In addition, prohibition does not lie against the NHA in view of petitioners failure
to avail and exhaust all administrative remedies. Clear is the rule that prohibition is
only available when there is no adequate remedy in the ordinary course of law.

More importantly, prohibition does not lie to restrain an act which is already a fait
accompli. The operative fact doctrine protecting vested rights bars the grant of the
writ of prohibition to the case at bar. It should be remembered that petitioner was
the Solicitor General at the time SMDRP was formulated and implemented. He had
the opportunity to question the SMDRP and the agreements on it, but he did
not. The moment to challenge the Project had passed.
 On the prayer for a writ of mandamus, petitioner asks the Court to compel
respondents to disclose all documents and information relating to the project,
including, but not limited to, any subsequent agreements with respect to the
different phases of the Project, the revisions of the original plan, the additional
works incurred on the Project, the current financial condition of respondent RBI,
and the transactions made with respect to the project. We earlier ruled that
petitioner will be allowed access to official records relative to the SMDRP. That
would be adequate relief to satisfy petitioners right to the information gateway.

WHEREFORE, the petition is PARTIALLY GRANTED.

The prayer for a writ of prohibition is DENIED for lack of merit.

The prayer for a writ of mandamus is GRANTED. Respondent NHA is ordered to

allow access to petitioner to all public documents and official records relative to
the SMDRPincluding, but not limited to, the March 19, 1993 JVA between the
NHA and RBI and subsequent agreements related to the JVA, the revisions over
the original plan, and the additional works incurred on and the transactions made
with respect to the Project.

No costs.

SO ORDERED.

PRESBITERO J. VELASCO, JR.

Associate Justice
WE CONCUR:

REYNATO S. PUNO
Chief Justice

LEONARDO A. QUISUMBING CONSUELO YNARES-SANTIAGO

Associate Justice Associate Justice

ANGELINA SANDOVAL-GUTIERREZ ANTONIO T. CARPIO

Associate Justice Associate Justice

MA. ALICIA AUSTRIA-MARTINEZ RENATO C. CORONA Associate

Justice Associate Justice

CONCHITA CARPIO MORALES ADOLFO S. AZCUNA

Associate Justice Associate Justice

DANTE O. TINGA MINITA V. CHICO-NAZARIO

Associate Justice Associate Justice

CANCIO C. GARCIA ANTONIO EDUARDO B. NACHURA

Associate Justice Associate Justice
 RUBEN T. REYES
Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that
the conclusions in the above Decision were reached in consultation before the case
was assigned to the writer of the opinion of the Court.

REYNATO S. PUNO
Chief Justice

[1]
Rollo, pp. 3-4.
[2]
Id. at 513.
[3]
Id. at 513-514.
[4]
Id. at 515.
[5]
Id. at 513.
[6]
Id. at 297; Proclamation No. 39 dated September 9, 1992.
[7]
RA 7718 was later enacted on May 5, 1994, amending certain sections of the BOT Law.
[8]
Joint Resolution Approving the List of National Projects to be Undertaken by the Private Sector Pursuant to
Republic Act No. 6957.
[9]
Rollo, pp. 519-521.
[10]
Id. at 296.
[11]
Id. at 295.
[12]
Id. at 436.
[13]
Id. at 476.
[14]
Id. at 477.
[15]
Id. at 297-298.
[16]
Id. at 479.
[17]
Id. at 69-79.
[18]
Creating the National Housing Authority and Dissolving the Existing Housing Agencies, Defining its
Powers and Functions, Providing Funds Therefor, and for Other Purposes (1975).
[19]
Rollo, p. 70.
[20]
Id. at 73.
[21]
Id. at 479.
[22]
Id. at 80-94.
[23]
Id. at 83.
[24]
Id.
[25]
Id.
[26]
Id.
[27]
Id. at 84.
[28]
Id. at 93.
[29]
Id. at 95-104.
[30]
Id. at 98.
[31]
Id. at 526-533.
[32]
Id. at 435.
[33]
The PNB was later replaced by the Planters Development Bank.
[34]
Rollo, p. 105.
[35]
Id. at 18. RA 8749, The Clean Air Act of 1999.
[36]
Id.
[37]
Id. at 244.
[38]
Id. at 747-751.
[39]
Id. at 858.
[40]
Id. at 860.
[41]
Id. at 859.
[42]
Id.
[43]
Id. at 860.
[44]
Id.
[45]
Id. at 861.
[46]
Id.
[47]
1997 RULES OF CIVIL PROCEDURE, Rule 3, Sec. 2.
[48]
Bayan (Bagong Alyansang Makabayan) v. Zamora, G.R. Nos. 138570, 138572, 138587, 138680 & 138698,
October 10, 2000, 342 SCRA 449, 478.
[49]
G.R. No. 130716, December 9, 1998, 299 SCRA 744.
[50]
G.R. No. 133250, July 9, 2002, 384 SCRA 152.
[51]
G.R. No. 67787, April 18, 1989, 172 SCRA 415, 424.
[52]
G.R. Nos. 99289-90, January 27, 1993, 217 SCRA 633, 652.
[53]
1. Petitioner claimed that NHA awarded the Smokey Mountain project to R-II Builders through contract
negotiations and that there was no public bidding awarding ownership of the subject land to respondent R-
II Builders, while respondents alleged that NHA publicly bidded out the right to become NHAs joint
venture partner in the prosecution of the SMDRP;
2. Petitioner averred that PEA had no participation whatsoever in the reclamation of the subject lands while
respondents stated PEA had a name therein;
3. Petitioner alleged that neither respondent NHA nor respondent R-II Builders was given the authority [by DENR]
to reclaim the subject lands while respondents claimed such authority was granted;
4. Mr. Chavez claimed that there is no legislative or Presidential act classifying the submerged areas around Smokey
Mountain as alienable or disposable lands of the public domain open to disposition while respondents said that
Presidents Aquino and Ramos made the classification;
5. Whether respondent R-II Builders complied with its obligation to fully finance the Project;
6. Whether the Project has been terminated by agreements of the parties;
7. Whether respondents Harbour Centre and Romero fraudulently caused the dilution of the Asset Pools Holdings in
HCPTI;
8. Whether Harbour Centre contracts attached to the Petition are genuine.
[54]
Rollo, p. 871.
[55]
Petition, Comments, Reply, and Memoranda.
[56]
Designating the Public Estates Authority as the Agency Primarily Responsible for All Reclamation
Projects (1979).
[57]
Rollo, p. 235.
[58]
The July 9, 2002 Decision entitled Chavez v. PEA was concurred in by 13 members of this Court who
voted to grant the petition. However, in the May 6, 2003 Resolution, the Court was divided when it voted 8-5 to
affirm the Decision. And in the most recent November 11, 2003 Resolution of this Court, a 7-7 vote was arrived at.
Thus, the July 9, 2002 Decision is still the valid case law.
[59]
The doctrine of stare decisis provides that a conclusion reached in one case should, for the sake of
certainty, be applied to those which follow if the facts are substantially the same even though the parties may be
different.
[60]
Supra note 50, at 221.
[61]
Creating the Public Estates Authority, Defining its Power and Functions, Providing Funds Therefor and
for Other Purposes (1977).
[62]
An Act to Provide for a Comprehensive and Continuing Urban Development and Housing Program,
Establish the Mechanism for its Implementation, and for Other Purposes (1992).
[63]
Radio Communications of the Philippines, Inc. v. Santiago, Nos. L-29236 & L-29247, 58 SCRA 493, August 21,
1974, 58 SCRA 493, 497.
[64]
Azarcon v. Sandiganbayan, G.R. No. 116033, February 26, 1997, 268 SCRA 747, 761.
[65]
63 Phil. 139, 177 (1936).
[66]
Provident Tree Farms, Inc. v. Batario, Jr., G.R. No. 92285, March 28, 1994, 231 SCRA 463, 469; cited in
Agpalo, ADMINISTRATIVE CODE 14.
[67]
Amending Section 7 of Presidential Decree No. 3 dated September 26, 1972, by Providing for the
Exclusive Prosecution by Administration or by Contract of Reclamation Projects (2005).
[68]
Republic v. Court of Appeals, G.R. No. 103882, November 25, 1998, 299 SCRA 199, 303.
[69]
Delegating to the Philippine Reclamation Authority the Power to Approve Reclamation Projects (2006).
[70]
Supra note 50, at 222-223.
[71]
Taule v. Santos, G.R. No. 90336, August 12, 1991, 200 SCRA 512, 521-522.
[72]
G.R. No. 157036, June 9, 2004, 431 SCRA 534, 555; citing EO 292, Book IV, Chapter 7.
[73]
Supra note 50, at 217.
[74]
Id. at 216.
[75]
Id. at 235.
[76]
Republic of the Philippines v. Manila Electric Company, G.R. No. 141314, April 9, 2003, 401 SCRA 130, 141.
[77]
Id. at 142.
[78]
G.R. No. 119682, January 21, 1999, 301 SCRA 450, 454-455.
[79]
G.R. No. 146030, December 3, 2002, 393 SCRA 361, 373.
[80]
G.R. No. 131667, July 28, 2005, 464 SCRA 280, 291.
[81]
G.R. No. 163118, April 27, 2007.
[82]
G.R. No. 97973, January 27, 1992, 205 SCRA 515, 527.
[83]
Supra note 73.
[84]
Article 422. Property of public dominion, when no longer intended for public use or public service, shall form
part of the patrimonial property of the State.
[85]
Commission on Audit, Professional Development Center, HANDBOOK ON PROPERTY & SUPPLY
MANAGEMENT SYSTEM 91-92 (2003).
[86]
G.R. No. 133250, May 6, 2003, 403 SCRA 1, 31-32.
[87]
G.R. No. 74930, February 13, 1989, 170 SCRA 256, 265.
[88]
Supra note 50, at 184.
[89]
Id. at 185; citing V RECORD OF THE CONSTITUTIONAL COMMISSION 24-25 (1986).
[90]
G.R. No. 147817, August 12, 2004, 436 SCRA 273, 291-292.
[91]
No. L-23127, April 29, 1971, 38 SCRA 429, 434-435.
[92]
G.R. No. 131392, February 6, 2002, 376 SCRA 248, 257.
[93]
Supra note 86, at 26.
[94]
Supra note 91.
[95]
RA 6957, Sec. 6 provides:

Section 6. Repayment Scheme.For the financing, construction, operation, and maintenance of any infrastructure
project undertaken pursuant to the provisions of this Act, the constructor shall be entitled to a reasonable return of its
investment and operating and maintenance costs in accordance with its bid proposal as accepted by the concerned
contracting infrastructure agency or local government unit and incorporated in the contracts terms and conditions. In
the case of a build-operate-and-transfer arrangement, this repayment scheme is to be affected by authorizing the
contractor to charge for the use of the project facility not exceeding those proposed in the bid and incorporated in the
contract: Provided, That the government infrastructure agency or local government unit concerned shall approve the
fairness and equity of the tolls, fees, rentals and charges except in case of tolls for national highways, roads, bridges
and public thoroughfares which shall be approved by the Toll Regulatory Board: Provided, further, That the
imposition and collection of tolls, fees, rentals and charges shall be for a fixed term as proposed in the bid
and incorporated in the contract but in no case shall this term exceed fifty (50) years:Provided, finally, That during
the lifetime of the franchise, the contractor shall undertake the necessary maintenance and repair o