G.R. No. 133250 July 9, 2002 the southern portion of the Manila-Cavite Coastal Road, Paraaque City.
the southern portion of the Manila-Cavite Coastal Road, Paraaque City. The Freedom Islands have a
FRANCISCO I. CHAVEZ, petitioner,
vs.
PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT
CORPORATION, respondents.
CARPIO, J.:
This is an original Petition for Mandamus with prayer for a writ of preliminary injunction and a temporary
restraining order. The petition seeks to compel the Public Estates Authority ("PEA" for brevity) to
disclose all facts on PEA's then on-going renegotiations with Amari Coastal Bay and Development
Corporation ("AMARI" for brevity) to reclaim portions of Manila Bay. The petition further seeks to enjoin
PEA from signing a new agreement with AMARI involving such reclamation.
The Facts
On November 20, 1973, the government, through the Commissioner of Public Highways, signed a
contract with the Construction and Development Corporation of the Philippines ("CDCP" for brevity) to
reclaim certain foreshore and offshore areas of Manila Bay. The contract also included the construction
of Phases I and II of the Manila-Cavite Coastal Road. CDCP obligated itself to carry out all the works in
consideration of fifty percent of the total reclaimed land.
On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree No. 1084
creating PEA. PD No. 1084 tasked PEA "to reclaim land, including foreshore and submerged areas,"
and "to develop, improve, acquire, x x x lease and sell any and all kinds of lands." 1 On the same date,
then President Marcos issued Presidential Decree No. 1085 transferring to PEA the "lands reclaimed in
the foreshore and offshore of the Manila Bay"2 under the Manila-Cavite Coastal Road and Reclamation
Project (MCCRRP).
On December 29, 1981, then President Marcos issued a memorandum directing PEA to amend its
contract with CDCP, so that "[A]ll future works in MCCRRP x x x shall be funded and owned by PEA."
Accordingly, PEA and CDCP executed a Memorandum of Agreement dated December 29, 1981, which
stated:
"(i) CDCP shall undertake all reclamation, construction, and such other works in the
MCCRRP as may be agreed upon by the parties, to be paid according to progress of works
on a unit price/lump sum basis for items of work to be agreed upon, subject to price
escalation, retention and other terms and conditions provided for in Presidential Decree No.
1594. All the financing required for such works shall be provided by PEA.
xxx
(iii) x x x CDCP shall give up all its development rights and hereby agrees to cede and
transfer in favor of PEA, all of the rights, title, interest and participation of CDCP in and to all
the areas of land reclaimed by CDCP in the MCCRRP as of December 30, 1981 which have
not yet been sold, transferred or otherwise disposed of by CDCP as of said date, which areas
consist of approximately Ninety-Nine Thousand Four Hundred Seventy Three (99,473)
square meters in the Financial Center Area covered by land pledge No. 5 and approximately
Three Million Three Hundred Eighty Two Thousand Eight Hundred Eighty Eight (3,382,888)
square meters of reclaimed areas at varying elevations above Mean Low Water Level located
outside the Financial Center Area and the First Neighborhood Unit."3
On January 19, 1988, then President Corazon C. Aquino issued Special Patent No. 3517, granting and
transferring to PEA "the parcels of land so reclaimed under the Manila-Cavite Coastal Road and
Reclamation Project (MCCRRP) containing a total area of one million nine hundred fifteen thousand
eight hundred ninety four (1,915,894) square meters." Subsequently, on April 9, 1988, the Register of
Deeds of the Municipality of Paraaque issued Transfer Certificates of Title Nos. 7309, 7311, and 7312,
in the name of PEA, covering the three reclaimed islands known as the "Freedom Islands" located at
total land area of One Million Five Hundred Seventy Eight Thousand Four Hundred and Forty One
(1,578,441) square meters or 157.841 hectares.
On April 25, 1995, PEA entered into a Joint Venture Agreement ("JVA" for brevity) with AMARI, a private
corporation, to develop the Freedom Islands. The JVA also required the reclamation of an additional
250 hectares of submerged areas surrounding these islands to complete the configuration in the Master
Development Plan of the Southern Reclamation Project-MCCRRP. PEA and AMARI entered into the
JVA through negotiation without public bidding. 4 On April 28, 1995, the Board of Directors of PEA, in its
Resolution No. 1245, confirmed the JVA.5 On June 8, 1995, then President Fidel V. Ramos, through
then Executive Secretary Ruben Torres, approved the JVA.6
On November 29, 1996, then Senate President Ernesto Maceda delivered a privilege speech in the
Senate and denounced the JVA as the "grandmother of all scams." As a result, the Senate Committee
on Government Corporations and Public Enterprises, and the Committee on Accountability of Public
Officers and Investigations, conducted a joint investigation. The Senate Committees reported the
results of their investigation in Senate Committee Report No. 560 dated September 16, 1997. 7 Among
the conclusions of their report are: (1) the reclaimed lands PEA seeks to transfer to AMARI under the
JVA are lands of the public domain which the government has not classified as alienable lands and
therefore PEA cannot alienate these lands; (2) the certificates of title covering the Freedom Islands are
thus void, and (3) the JVA itself is illegal.
On December 5, 1997, then President Fidel V. Ramos issued Presidential Administrative Order No. 365
creating a Legal Task Force to conduct a study on the legality of the JVA in view of Senate Committee
Report No. 560. The members of the Legal Task Force were the Secretary of Justice, 8 the Chief
Presidential Legal Counsel,9 and the Government Corporate Counsel.10 The Legal Task Force upheld
the legality of the JVA, contrary to the conclusions reached by the Senate Committees.11
On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published reports that there were on-
going renegotiations between PEA and AMARI under an order issued by then President Fidel V.
Ramos. According to these reports, PEA Director Nestor Kalaw, PEA Chairman Arsenio Yulo and retired
Navy Officer Sergio Cruz composed the negotiating panel of PEA.
On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition for Prohibition with Application
for the Issuance of a Temporary Restraining Order and Preliminary Injunction docketed as G.R. No.
132994 seeking to nullify the JVA. The Court dismissed the petition "for unwarranted disregard of
judicial hierarchy, without prejudice to the refiling of the case before the proper court."12
On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" for brevity) as a taxpayer, filed the
instant Petition for Mandamus with Prayer for the Issuance of a Writ of Preliminary Injunction and
Temporary Restraining Order. Petitioner contends the government stands to lose billions of pesos in the
sale by PEA of the reclaimed lands to AMARI. Petitioner prays that PEA publicly disclose the terms of
any renegotiation of the JVA, invoking Section 28, Article II, and Section 7, Article III, of the 1987
Constitution on the right of the people to information on matters of public concern. Petitioner assails the
sale to AMARI of lands of the public domain as a blatant violation of Section 3, Article XII of the 1987
Constitution prohibiting the sale of alienable lands of the public domain to private corporations. Finally,
petitioner asserts that he seeks to enjoin the loss of billions of pesos in properties of the State that are
of public dominion.
After several motions for extension of time, 13 PEA and AMARI filed their Comments on October 19,
1998 and June 25, 1998, respectively. Meanwhile, on December 28, 1998, petitioner filed an Omnibus
Motion: (a) to require PEA to submit the terms of the renegotiated PEA-AMARI contract; (b) for
issuance of a temporary restraining order; and (c) to set the case for hearing on oral argument.
Petitioner filed a Reiterative Motion for Issuance of a TRO dated May 26, 1999, which the Court denied
in a Resolution dated June 22, 1999.
In a Resolution dated March 23, 1999, the Court gave due course to the petition and required the
parties to file their respective memoranda.
On March 30, 1999, PEA and AMARI signed the Amended Joint Venture Agreement ("Amended JVA,"
for brevity). On May 28, 1999, the Office of the President under the administration of then President
Joseph E. Estrada approved the Amended JVA.
Due to the approval of the Amended JVA by the Office of the President, petitioner now prays that on
"constitutional and statutory grounds the renegotiated contract be declared null and void."14
The Issues
The issues raised by petitioner, PEA15 and AMARI16 are as follows:
I. WHETHER THE PRINCIPAL RELIEFS PRAYED FOR IN THE PETITION ARE MOOT AND
ACADEMIC BECAUSE OF SUBSEQUENT EVENTS;
II. WHETHER THE PETITION MERITS DISMISSAL FOR FAILING TO OBSERVE THE
PRINCIPLE GOVERNING THE HIERARCHY OF COURTS;
III. WHETHER THE PETITION MERITS DISMISSAL FOR NON-EXHAUSTION OF
ADMINISTRATIVE REMEDIES;
IV. WHETHER PETITIONER HAS LOCUS STANDI TO BRING THIS SUIT;
V. WHETHER THE CONSTITUTIONAL RIGHT TO INFORMATION INCLUDES OFFICIAL
INFORMATION ON ON-GOING NEGOTIATIONS BEFORE A FINAL AGREEMENT;
VI. WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE AGREEMENT
FOR THE TRANSFER TO AMARI OF CERTAIN LANDS, RECLAIMED AND STILL TO BE
RECLAIMED, VIOLATE THE 1987 CONSTITUTION; AND
VII. WHETHER THE COURT IS THE PROPER FORUM FOR RAISING THE ISSUE OF
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.
The petition prays that PEA publicly disclose the "terms and conditions of the on-going negotiations for
a new agreement." The petition also prays that the Court enjoin PEA from "privately entering into,
perfecting and/or executing any new agreement with AMARI."
PEA and AMARI claim the petition is now moot and academic because AMARI furnished petitioner on
June 21, 1999 a copy of the signed Amended JVA containing the terms and conditions agreed upon in
the renegotiations. Thus, PEA has satisfied petitioner's prayer for a public disclosure of the
renegotiations. Likewise, petitioner's prayer to enjoin the signing of the Amended JVA is now moot
because PEA and AMARI have already signed the Amended JVA on March 30, 1999. Moreover, the
Office of the President has approved the Amended JVA on May 28, 1999.
Petitioner counters that PEA and AMARI cannot avoid the constitutional issue by simply fast-tracking
the signing and approval of the Amended JVA before the Court could act on the issue. Presidential
approval does not resolve the constitutional issue or remove it from the ambit of judicial review.
We rule that the signing of the Amended JVA by PEA and AMARI and its approval by the President
cannot operate to moot the petition and divest the Court of its jurisdiction. PEA and AMARI have still to
implement the Amended JVA. The prayer to enjoin the signing of the Amended JVA on constitutional
grounds necessarily includes preventing its implementation if in the meantime PEA and AMARI have
signed one in violation of the Constitution. Petitioner's principal basis in assailing the renegotiation of
the JVA is its violation of Section 3, Article XII of the Constitution, which prohibits the government from
alienating lands of the public domain to private corporations. If the Amended JVA indeed violates the
Constitution, it is the duty of the Court to enjoin its implementation, and if already implemented, to annul
the effects of such unconstitutional contract.
The Amended JVA is not an ordinary commercial contract but one which seeks to transfer title and
ownership to 367.5 hectares of reclaimed lands and submerged areas of Manila Bay to a single
private corporation. It now becomes more compelling for the Court to resolve the issue to insure the
government itself does not violate a provision of the Constitution intended to safeguard the national
patrimony. Supervening events, whether intended or accidental, cannot prevent the Court from
rendering a decision if there is a grave violation of the Constitution. In the instant case, if the Amended
JVA runs counter to the Constitution, the Court can still prevent the transfer of title and ownership of
alienable lands of the public domain in the name of AMARI. Even in cases where supervening events
had made the cases moot, the Court did not hesitate to resolve the legal or constitutional issues raised
to formulate controlling principles to guide the bench, bar, and the public.17
Also, the instant petition is a case of first impression. All previous decisions of the Court involving
Section 3, Article XII of the 1987 Constitution, or its counterpart provision in the 1973
Constitution,18 covered agricultural lands sold to private corporations which acquired the lands from
private parties. The transferors of the private corporations claimed or could claim the right to judicial
confirmation of their imperfect titles19 under Title II of Commonwealth Act. 141 ("CA No. 141" for
brevity). In the instant case, AMARI seeks to acquire from PEA, a public corporation, reclaimed lands
and submerged areas for non-agricultural purposes by purchase under PD No. 1084 (charter of PEA)
and Title III of CA No. 141. Certain undertakings by AMARI under the Amended JVA constitute the
consideration for the purchase. Neither AMARI nor PEA can claim judicial confirmation of their titles
because the lands covered by the Amended JVA are newly reclaimed or still to be reclaimed. Judicial
confirmation of imperfect title requires open, continuous, exclusive and notorious occupation of
agricultural lands of the public domain for at least thirty years since June 12, 1945 or earlier. Besides,
the deadline for filing applications for judicial confirmation of imperfect title expired on December 31,
1987.20
Lastly, there is a need to resolve immediately the constitutional issue raised in this petition because of
the possible transfer at any time by PEA to AMARI of title and ownership to portions of the reclaimed
lands. Under the Amended JVA, PEA is obligated to transfer to AMARI the latter's seventy percent
proportionate share in the reclaimed areas as the reclamation progresses. The Amended JVA even
allows AMARI to mortgage at any time the entire reclaimed area to raise financing for the reclamation
project.21
Second issue: whether the petition merits dismissal for failing to observe the principle
governing the hierarchy of courts.
PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief directly from the Court.
The principle of hierarchy of courts applies generally to cases involving factual questions. As it is not a
trier of facts, the Court cannot entertain cases involving factual issues. The instant case, however,
raises constitutional issues of transcendental importance to the public. 22 The Court can resolve this
case without determining any factual issue related to the case. Also, the instant case is a petition for
mandamus which falls under the original jurisdiction of the Court under Section 5, Article VIII of the
Constitution. We resolve to exercise primary jurisdiction over the instant case.
Third issue: whether the petition merits dismissal for non-exhaustion of administrative
remedies.
PEA faults petitioner for seeking judicial intervention in compelling PEA to disclose publicly certain
information without first asking PEA the needed information. PEA claims petitioner's direct resort to the
Court violates the principle of exhaustion of administrative remedies. It also violates the rule that
mandamus may issue only if there is no other plain, speedy and adequate remedy in the ordinary
course of law.
PEA distinguishes the instant case from Taada v. Tuvera 23 where the Court granted the petition for
mandamus even if the petitioners there did not initially demand from the Office of the President the
publication of the presidential decrees. PEA points out that in Taada, the Executive Department had
an affirmative statutory duty under Article 2 of the Civil Code 24 and Section 1 of Commonwealth Act
No. 63825 to publish the presidential decrees. There was, therefore, no need for the petitioners in
Taada to make an initial demand from the Office of the President. In the instant case, PEA claims it
has no affirmative statutory duty to disclose publicly information about its renegotiation of the JVA.
Thus, PEA asserts that the Court must apply the principle of exhaustion of administrative remedies to
the instant case in view of the failure of petitioner here to demand initially from PEA the needed
information.
The original JVA sought to dispose to AMARI public lands held by PEA, a government corporation.
Under Section 79 of the Government Auditing Code,26 the disposition of government lands to private
parties requires public bidding. PEA was under a positive legal duty to disclose to the public the
terms and conditions for the sale of its lands. The law obligated PEA to make this public disclosure
even without demand from petitioner or from anyone. PEA failed to make this public disclosure because
the original JVA, like the Amended JVA, was the result of a negotiated contract, not of a public
bidding. Considering that PEA had an affirmative statutory duty to make the public disclosure, and was
even in breach of this legal duty, petitioner had the right to seek direct judicial intervention.
Moreover, and this alone is determinative of this issue, the principle of exhaustion of administrative
remedies does not apply when the issue involved is a purely legal or constitutional question. 27 The
principal issue in the instant case is the capacity of AMARI to acquire lands held by PEA in view of the
constitutional ban prohibiting the alienation of lands of the public domain to private corporations. We
rule that the principle of exhaustion of administrative remedies does not apply in the instant case.
Fourth issue: whether petitioner has locus standi to bring this suit
PEA argues that petitioner has no standing to institute mandamus proceedings to enforce his
constitutional right to information without a showing that PEA refused to perform an affirmative duty
imposed on PEA by the Constitution. PEA also claims that petitioner has not shown that he will suffer
any concrete injury because of the signing or implementation of the Amended JVA. Thus, there is no
actual controversy requiring the exercise of the power of judicial review.
The petitioner has standing to bring this taxpayer's suit because the petition seeks to compel PEA to
comply with its constitutional duties. There are two constitutional issues involved here. First is the right
of citizens to information on matters of public concern. Second is the application of a constitutional
provision intended to insure the equitable distribution of alienable lands of the public domain among
Filipino citizens. The thrust of the first issue is to compel PEA to disclose publicly information on the
sale of government lands worth billions of pesos, information which the Constitution and statutory law
mandate PEA to disclose. The thrust of the second issue is to prevent PEA from alienating hundreds of
hectares of alienable lands of the public domain in violation of the Constitution, compelling PEA to
comply with a constitutional duty to the nation.
Moreover, the petition raises matters of transcendental importance to the public. In Chavez v.
PCGG,28 the Court upheld the right of a citizen to bring a taxpayer's suit on matters of transcendental
importance to the public, thus -
"Besides, petitioner emphasizes, the matter of recovering the ill-gotten wealth of the
Marcoses is an issue of 'transcendental importance to the public.' He asserts that ordinary
taxpayers have a right to initiate and prosecute actions questioning the validity of acts or
orders of government agencies or instrumentalities, if the issues raised are of 'paramount
public interest,' and if they 'immediately affect the social, economic and moral well being of
the people.'
Moreover, the mere fact that he is a citizen satisfies the requirement of personal interest,
when the proceeding involves the assertion of a public right, such as in this case. He invokes
several decisions of this Court which have set aside the procedural matter of locus standi,
when the subject of the case involved public interest.
xxx
In Taada v. Tuvera, the Court asserted that when the issue concerns a public right and the
object of mandamus is to obtain the enforcement of a public duty, the people are regarded as
the real parties in interest; and because it is sufficient that petitioner is a citizen and as such
is interested in the execution of the laws, he need not show that he has any legal or special
interest in the result of the action. In the aforesaid case, the petitioners sought to enforce
their right to be informed on matters of public concern, a right then recognized in Section 6,
Article IV of the 1973 Constitution, in connection with the rule that laws in order to be valid
and enforceable must be published in the Official Gazette or otherwise effectively
promulgated. In ruling for the petitioners' legal standing, the Court declared that the right they
sought to be enforced 'is a public right recognized by no less than the fundamental law of the
land.'
Legaspi v. Civil Service Commission, while reiterating Taada, further declared that 'when a
mandamus proceeding involves the assertion of a public right, the requirement of personal
interest is satisfied by the mere fact that petitioner is a citizen and, therefore, part of the
general 'public' which possesses the right.'
Further, in Albano v. Reyes, we said that while expenditure of public funds may not have
been involved under the questioned contract for the development, management and
operation of the Manila International Container Terminal, 'public interest [was] definitely
involved considering the important role [of the subject contract] . . . in the economic
development of the country and the magnitude of the financial consideration involved.' We
concluded that, as a consequence, the disclosure provision in the Constitution would
constitute sufficient authority for upholding the petitioner's standing.
Similarly, the instant petition is anchored on the right of the people to information and access
to official records, documents and papers a right guaranteed under Section 7, Article III of
the 1987 Constitution. Petitioner, a former solicitor general, is a Filipino citizen. Because of
the satisfaction of the two basic requisites laid down by decisional law to sustain petitioner's
legal standing, i.e. (1) the enforcement of a public right (2) espoused by a Filipino citizen, we
rule that the petition at bar should be allowed."
We rule that since the instant petition, brought by a citizen, involves the enforcement of constitutional
rights - to information and to the equitable diffusion of natural resources - matters of transcendental
public importance, the petitioner has the requisite locus standi.
Fifth issue: whether the constitutional right to information includes official information on on-
going negotiations before a final agreement.
Section 7, Article III of the Constitution explains the people's right to information on matters of public
concern in this manner:
"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." (Emphasis supplied)
The State policy of full transparency in all transactions involving public interest reinforces the people's
right to information on matters of public concern. This State policy is expressed in Section 28, Article II
of the Constitution, thus:
"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." (Emphasis supplied)
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,"29 for unless citizens have the proper information, they cannot hold public officials accountable
for anything. Armed with the right information, citizens can participate in public discussions leading to
the formulation of government policies and their effective implementation. An informed citizenry is
essential to the existence and proper functioning of any democracy. As explained by the Court
in Valmonte v. Belmonte, Jr.30
"An 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 people's 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."
PEA asserts, citing Chavez v. PCGG,31 that in cases of on-going negotiations the right to information is
limited to "definite propositions of the government." PEA maintains the right does not include access to
"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'."
Also, AMARI contends that petitioner cannot invoke the right at the pre-decisional stage or before the
closing of the transaction. To support its contention, AMARI cites the following discussion in the 1986
Constitutional Commission:
"Mr. Suarez. And when we say 'transactions' which should be distinguished from contracts,
agreements, or treaties or whatever, does the Gentleman refer to the steps leading to the
consummation of the contract, or does he refer to the contract itself?
Mr. Ople: The 'transactions' used here, I suppose is generic and therefore, it can cover
both steps leading to a contract and already a consummated contract, Mr. Presiding
Officer.
Mr. Suarez: This contemplates inclusion of negotiations leading to the consummation
of the transaction.
Mr. Ople: Yes, subject only to reasonable safeguards on the national interest.
Mr. Suarez: Thank you."32 (Emphasis supplied)
AMARI argues there must first be a consummated contract before petitioner can invoke the right.
Requiring government officials to reveal their deliberations at the pre-decisional stage will degrade the
quality of decision-making in government agencies. Government officials will hesitate to express their
real sentiments during deliberations if there is immediate public dissemination of their discussions,
putting them under all kinds of pressure before they decide.
We must first distinguish between information the law on public bidding requires PEA to disclose
publicly, and information the constitutional right to information requires PEA to release to the public.
Before the consummation of the contract, PEA must, on its own and without demand from anyone,
disclose to the public matters relating to the disposition of its property. These include the size, location,
technical description and nature of the property being disposed of, the terms and conditions of the
disposition, the parties qualified to bid, the minimum price and similar information. PEA must prepare all
these data and disclose them to the public at the start of the disposition process, long before the
consummation of the contract, because the Government Auditing Code requires public bidding. If PEA
fails to make this disclosure, any citizen can demand from PEA this information at any time during the
bidding process.
Information, however, on on-going evaluation or review of bids or proposals being undertaken by the
bidding or review committee is not immediately accessible under the right to information. While the
evaluation or review is still on-going, there are no "official acts, transactions, or decisions" on the bids or
proposals. However, once the committee makes its official recommendation, there arises a "definite
proposition" on the part of the government. From this moment, the public's right to information
attaches, and any citizen can access all the non-proprietary information leading to such definite
proposition. In Chavez v. PCGG,33 the Court ruled as follows:
"Considering the intent of the framers of the Constitution, we believe that it is incumbent upon
the PCGG and its officers, as well as other government representatives, to disclose sufficient
public information on any proposed settlement they have decided to take up with the
ostensible owners and holders of ill-gotten wealth. Such information, though, must pertain
to definite propositions of the government, not necessarily to 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. There is need, of course, to
observe the same restrictions on disclosure of information in general, as discussed earlier
such as on matters involving national security, diplomatic or foreign relations, intelligence and
other classified information." (Emphasis supplied)
Contrary to AMARI's contention, the commissioners of the 1986 Constitutional Commission understood
that the right to information "contemplates inclusion of negotiations leading to the consummation
of the transaction."Certainly, a consummated contract is not a requirement for the exercise of the right
to information. Otherwise, the people can never exercise the right if no contract is consummated, and if
one is consummated, it may be too late for the public to expose its defects.1wphi1.nt
Requiring a consummated contract will keep the public in the dark until the contract, which may be
grossly disadvantageous to the government or even illegal, becomes a fait accompli. This negates the
State policy of full transparency on matters of public concern, a situation which the framers of the
Constitution could not have intended. Such a requirement will prevent the citizenry from participating in
the public discussion of any proposed contract, effectively truncating a basic right enshrined in the Bill
of Rights. We can allow neither an emasculation of a constitutional right, nor a retreat by the State of its
avowed "policy of full disclosure of all its transactions involving public interest."
The right covers three categories of information which are "matters of public concern," namely: (1)
official records; (2) documents and papers pertaining to official acts, transactions and decisions; and (3)
government research data used in formulating policies. The first category refers to any document that is
part of the public records in the custody of government agencies or officials. The second category
refers to documents and papers recording, evidencing, establishing, confirming, supporting, justifying or
explaining official acts, transactions or decisions of government agencies or officials. The third category
refers to research data, whether raw, collated or processed, owned by the government and used in
formulating government policies.
The information that petitioner may access on the renegotiation of the JVA includes evaluation reports,
recommendations, legal and expert opinions, minutes of meetings, terms of reference and other
documents attached to such reports or minutes, all relating to the JVA. However, the right to information
does not compel PEA to prepare lists, abstracts, summaries and the like relating to the renegotiation of
the JVA.34 The right only affords access to records, documents and papers, which means the
opportunity to inspect and copy them. One who exercises the right must copy the records, documents
and papers at his expense. The exercise of the right is also subject to reasonable regulations to protect
the integrity of the public records and to minimize disruption to government operations, like rules
specifying when and how to conduct the inspection and copying.35
The right to information, however, does not extend to matters recognized as privileged information
under the separation of powers.36 The right does not also apply to information on military and diplomatic
secrets, information affecting national security, and information on investigations of crimes by law
enforcement agencies before the prosecution of the accused, which courts have long recognized as
confidential.37 The right may also be subject to other limitations that Congress may impose by law.
There is no claim by PEA that the information demanded by petitioner is privileged information rooted in
the separation of powers. The information does not cover Presidential conversations, correspondences,
or discussions during closed-door Cabinet meetings which, like internal deliberations of the Supreme
Court and other collegiate courts, or executive sessions of either house of Congress, 38 are recognized
as confidential. This kind of information cannot be pried open by a co-equal branch of government. A
frank exchange of exploratory ideas and assessments, free from the glare of publicity and pressure by
interested parties, is essential to protect the independence of decision-making of those tasked to
exercise Presidential, Legislative and Judicial power. 39 This is not the situation in the instant case.
We rule, therefore, that the constitutional right to information includes official information on on-going
negotiationsbefore a final contract. The information, however, must constitute definite propositions by
the government and should not cover recognized exceptions like privileged information, military and
diplomatic secrets and similar matters affecting national security and public order. 40 Congress has also
prescribed other limitations on the right to information in several legislations.41
Sixth issue: whether stipulations in the Amended JVA for the transfer to AMARI of lands,
reclaimed or to be reclaimed, violate the Constitution.
The Regalian Doctrine
The ownership of lands reclaimed from foreshore and submerged areas is rooted in the Regalian
doctrine which holds that the State owns all lands and waters of the public domain. Upon the Spanish
conquest of the Philippines, ownership of all "lands, territories and possessions" in the Philippines
passed to the Spanish Crown.42 The King, as the sovereign ruler and representative of the people,
acquired and owned all lands and territories in the Philippines except those he disposed of by grant or
sale to private individuals.
The 1935, 1973 and 1987 Constitutions adopted the Regalian doctrine substituting, however, the State,
in lieu of the King, as the owner of all lands and waters of the public domain. The Regalian doctrine is
the foundation of the time-honored principle of land ownership that "all lands that were not acquired
from the Government, either by purchase or by grant, belong to the public domain." 43 Article 339 of the
Civil Code of 1889, which is now Article 420 of the Civil Code of 1950, incorporated the Regalian
doctrine.
Ownership and Disposition of Reclaimed Lands
The Spanish Law of Waters of 1866 was the first statutory law governing the ownership and disposition
of reclaimed lands in the Philippines. On May 18, 1907, the Philippine Commission enacted Act No.
1654 which provided for the lease, but not the sale, of reclaimed lands of the government to
corporations and individuals. Later, on November 29, 1919, the Philippine Legislature approved Act
No. 2874, the Public Land Act, which authorized the lease, but not the sale, of reclaimed lands of
the government to corporations and individuals. On November 7, 1936, the National Assembly
passed Commonwealth Act No. 141, also known as the Public Land Act, which authorized the lease,
but not the sale, of reclaimed lands of the government to corporations and individuals. CA No.
141 continues to this day as the general law governing the classification and disposition of lands of the
public domain.
The Spanish Law of Waters of 1866 and the Civil Code of 1889
Under the Spanish Law of Waters of 1866, the shores, bays, coves, inlets and all waters within the
maritime zone of the Spanish territory belonged to the public domain for public use. 44 The Spanish Law
of Waters of 1866 allowed the reclamation of the sea under Article 5, which provided as follows:
"Article 5. Lands reclaimed from the sea in consequence of works constructed by the State,
or by the provinces, pueblos or private persons, with proper permission, shall become the
property of the party constructing such works, unless otherwise provided by the terms of the
grant of authority."
Under the Spanish Law of Waters, land reclaimed from the sea belonged to the party undertaking the
reclamation, provided the government issued the necessary permit and did not reserve ownership of
the reclaimed land to the State.
Article 339 of the Civil Code of 1889 defined property of public dominion as follows:
"Art. 339. Property of public dominion is
1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, riverbanks, shores, roadsteads, and that of a similar character;
2. That belonging exclusively to the State which, without being of general public use, is
employed in some public service, or in the development of the national wealth, such as walls,
fortresses, and other works for the defense of the territory, and mines, until granted to private
individuals."
Property devoted to public use referred to property open for use by the public. In contrast, property
devoted to public service referred to property used for some specific public service and open only to
those authorized to use the property.
Property of public dominion referred not only to property devoted to public use, but also to property not
so used but employed to develop the national wealth. This class of property constituted property of
public dominion although employed for some economic or commercial activity to increase the national
wealth.
Article 341 of the Civil Code of 1889 governed the re-classification of property of public dominion into
private property, to wit:
"Art. 341. Property of public dominion, when no longer devoted to public use or to the
defense of the territory, shall become a part of the private property of the State."
This provision, however, was not self-executing. The legislature, or the executive department pursuant
to law, must declare the property no longer needed for public use or territorial defense before the
government could lease or alienate the property to private parties.45
Act No. 1654 of the Philippine Commission
On May 8, 1907, the Philippine Commission enacted Act No. 1654 which regulated the lease of
reclaimed and foreshore lands. The salient provisions of this law were as follows:
"Section 1. The control and disposition of the foreshore as defined in existing law, and
the title to all Government or public lands made or reclaimed by the Government by
dredging or filling or otherwise throughout the Philippine Islands, shall be retained by the
Government without prejudice to vested rights and without prejudice to rights conceded to
the City of Manila in the Luneta Extension.
Section 2. (a) The Secretary of the Interior shall cause all Government or public lands made
or reclaimed by the Government by dredging or filling or otherwise to be divided into lots or
blocks, with the necessary streets and alleyways located thereon, and shall cause plats and
plans of such surveys to be prepared and filed with the Bureau of Lands.
(b) Upon completion of such plats and plans the Governor-General shall give notice to the
public that such parts of the lands so made or reclaimed as are not needed for public
purposes will be leased for commercial and business purposes, x x x.
xxx
(e) The leases above provided for shall be disposed of to the highest and best
bidder therefore, subject to such regulations and safeguards as the Governor-General may
by executive order prescribe." (Emphasis supplied)
Act No. 1654 mandated that the government should retain title to all lands reclaimed by the
government. The Act also vested in the government control and disposition of foreshore lands. Private
parties could lease lands reclaimed by the government only if these lands were no longer needed for
public purpose. Act No. 1654 mandated public bidding in the lease of government reclaimed lands.
Act No. 1654 made government reclaimed lands sui generis in that unlike other public lands which the
government could sell to private parties, these reclaimed lands were available only for lease to private
parties.
Act No. 1654, however, did not repeal Section 5 of the Spanish Law of Waters of 1866. Act No. 1654
did not prohibit private parties from reclaiming parts of the sea under Section 5 of the Spanish Law of
Waters. Lands reclaimed from the sea by private parties with government permission remained private
lands.
Act No. 2874 of the Philippine Legislature
On November 29, 1919, the Philippine Legislature enacted Act No. 2874, the Public Land Act. 46 The
salient provisions of Act No. 2874, on reclaimed lands, were as follows:
"Sec. 6. The Governor-General, upon the recommendation of the Secretary of
Agriculture and Natural Resources, shall from time to time classify the lands of the
public domain into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands, x x x.
Sec. 7. For the purposes of the government and disposition of alienable or disposable public
lands, the Governor-General, upon recommendation by the Secretary of Agriculture
and Natural Resources, shall from time to time declare what lands are open to
disposition or concession under this Act."
Sec. 8. Only those lands shall be declared open to disposition or concession which
have been officially delimited or classified x x x.
xxx
Sec. 55. Any tract of land of the public domain which, being neither timber nor mineral land,
shall be classified as suitable for residential purposes or for commercial, industrial, or
other productive purposes other than agricultural purposes, and shall be open to
disposition or concession, shall be disposed of under the provisions of this chapter, and not
otherwise.
Sec. 56. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or banks
of navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
x x x.
Sec. 58. The lands comprised in classes (a), (b), and (c) of section fifty-six shall be
disposed of to private parties by lease only and not otherwise, as soon as the
Governor-General, upon recommendation by the Secretary of Agriculture and Natural
Resources, shall declare that the same are not necessary for the public service and
are open to disposition under this chapter. The lands included in class (d) may be
disposed of by sale or lease under the provisions of this Act." (Emphasis supplied)
Section 6 of Act No. 2874 authorized the Governor-General to "classify lands of the public domain into x
x x alienable or disposable" 47 lands. Section 7 of the Act empowered the Governor-General to "declare
what lands are open to disposition or concession." Section 8 of the Act limited alienable or disposable
lands only to those lands which have been "officially delimited and classified."
Section 56 of Act No. 2874 stated that lands "disposable under this title 48 shall be classified" as
government reclaimed, foreshore and marshy lands, as well as other lands. All these lands, however,
must be suitable for residential, commercial, industrial or other productive non-agricultural purposes.
These provisions vested upon the Governor-General the power to classify inalienable lands of the
public domain into disposable lands of the public domain. These provisions also empowered the
Governor-General to classify further such disposable lands of the public domain into government
reclaimed, foreshore or marshy lands of the public domain, as well as other non-agricultural lands.
Section 58 of Act No. 2874 categorically mandated that disposable lands of the public domain classified
as government reclaimed, foreshore and marshy lands "shall be disposed of to private parties by
lease only and not otherwise." The Governor-General, before allowing the lease of these lands to
private parties, must formally declare that the lands were "not necessary for the public service." Act No.
2874 reiterated the State policy to lease and not to sell government reclaimed, foreshore and marshy
lands of the public domain, a policy first enunciated in 1907 in Act No. 1654. Government reclaimed,
foreshore and marshy lands remained sui generis, as the only alienable or disposable lands of the
public domain that the government could not sell to private parties.
The rationale behind this State policy is obvious. Government reclaimed, foreshore and marshy public
lands for non-agricultural purposes retain their inherent potential as areas for public service. This is the
reason the government prohibited the sale, and only allowed the lease, of these lands to private parties.
The State always reserved these lands for some future public service.
Act No. 2874 did not authorize the reclassification of government reclaimed, foreshore and marshy
lands into other non-agricultural lands under Section 56 (d). Lands falling under Section 56 (d) were the
only lands for non-agricultural purposes the government could sell to private parties. Thus, under Act
No. 2874, the government could not sell government reclaimed, foreshore and marshy lands to private
parties, unless the legislature passed a law allowing their sale.49
Act No. 2874 did not prohibit private parties from reclaiming parts of the sea pursuant to Section 5 of
the Spanish Law of Waters of 1866. Lands reclaimed from the sea by private parties with government
permission remained private lands.
Dispositions under the 1935 Constitution
On May 14, 1935, the 1935 Constitution took effect upon its ratification by the Filipino people. The 1935
Constitution, in adopting the Regalian doctrine, declared in Section 1, Article XIII, that
"Section 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals,
coal, petroleum, and other mineral oils, all forces of potential energy and other natural
resources of the Philippines belong to the State, and their disposition, exploitation,
development, or utilization shall be limited to citizens of the Philippines or to corporations or
associations at least sixty per centum of the capital of which is owned by such citizens,
subject to any existing right, grant, lease, or concession at the time of the inauguration of the
Government established under this Constitution. Natural resources, with the exception of
public agricultural land, shall not be alienated, and no license, concession, or lease for
the exploitation, development, or utilization of any of the natural resources shall be granted
for a period exceeding twenty-five years, renewable for another twenty-five years, except as
to water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, in which cases beneficial use may be the measure and limit of
the grant." (Emphasis supplied)
The 1935 Constitution barred the alienation of all natural resources except public agricultural lands,
which were the only natural resources the State could alienate. Thus, foreshore lands, considered part
of the State's natural resources, became inalienable by constitutional fiat, available only for lease for 25
years, renewable for another 25 years. The government could alienate foreshore lands only after these
lands were reclaimed and classified as alienable agricultural lands of the public domain. Government
reclaimed and marshy lands of the public domain, being neither timber nor mineral lands, fell under the
classification of public agricultural lands.50 However, government reclaimed and marshy lands, although
subject to classification as disposable public agricultural lands, could only be leased and not sold to
private parties because of Act No. 2874.
The prohibition on private parties from acquiring ownership of government reclaimed and marshy lands
of the public domain was only a statutory prohibition and the legislature could therefore remove such
prohibition. The 1935 Constitution did not prohibit individuals and corporations from acquiring
government reclaimed and marshy lands of the public domain that were classified as agricultural lands
under existing public land laws. Section 2, Article XIII of the 1935 Constitution provided as follows:
"Section 2. No private corporation or association may acquire, lease, or hold public
agricultural lands in excess of one thousand and twenty four hectares, nor may any
individual acquire such lands by purchase in excess of one hundred and forty
hectares, or by lease in excess of one thousand and twenty-four hectares, or by
homestead in excess of twenty-four hectares. Lands adapted to grazing, not exceeding two
thousand hectares, may be leased to an individual, private corporation, or association."
(Emphasis supplied)
Still, after the effectivity of the 1935 Constitution, the legislature did not repeal Section 58 of Act No.
2874 to open for sale to private parties government reclaimed and marshy lands of the public domain.
On the contrary, the legislature continued the long established State policy of retaining for the
government title and ownership of government reclaimed and marshy lands of the public domain.
Commonwealth Act No. 141 of the Philippine National Assembly
On November 7, 1936, the National Assembly approved Commonwealth Act No. 141, also known as
the Public Land Act, which compiled the then existing laws on lands of the public domain. CA No. 141,
as amended, remains to this day the existing general law governing the classification and disposition
of lands of the public domain other than timber and mineral lands.51
Section 6 of CA No. 141 empowers the President to classify lands of the public domain into "alienable
or disposable"52 lands of the public domain, which prior to such classification are inalienable and
outside the commerce of man. Section 7 of CA No. 141 authorizes the President to "declare what lands
are open to disposition or concession." Section 8 of CA No. 141 states that the government can declare
open for disposition or concession only lands that are "officially delimited and classified." Sections 6, 7
and 8 of CA No. 141 read as follows:
"Sec. 6. The President, upon the recommendation of the Secretary of Agriculture and
Commerce, shall from time to time classify the lands of the public domain into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands,
and may at any time and in like manner transfer such lands from one class to another, 53 for
the purpose of their administration and disposition.
Sec. 7. For the purposes of the administration and disposition of alienable or disposable
public lands, the President, upon recommendation by the Secretary of Agriculture and
Commerce, shall from time to time declare what lands are open to disposition or
concession under this Act.
Sec. 8. Only those lands shall be declared open to disposition or concession which
have been officially delimited and classified and, when practicable, surveyed, and which
have not been reserved for public or quasi-public uses, nor appropriated by the
Government, nor in any manner become private property, nor those on which a private right
authorized and recognized by this Act or any other valid law may be claimed, or which,
having been reserved or appropriated, have ceased to be so. x x x."
Thus, before the government could alienate or dispose of lands of the public domain, the President
must first officially classify these lands as alienable or disposable, and then declare them open to
disposition or concession. There must be no law reserving these lands for public or quasi-public uses.
The salient provisions of CA No. 141, on government reclaimed, foreshore and marshy lands of the
public domain, are as follows:
"Sec. 58. Any tract of land of the public domain which, being neither timber nor
mineral land, is intended to be used for residential purposes or for commercial,
industrial, or other productive purposes other than agricultural, and is open to
disposition or concession, shall be disposed of under the provisions of this chapter
and not otherwise.
Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or banks
of navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
Sec. 60. Any tract of land comprised under this title may be leased or sold, as the case may
be, to any person, corporation, or association authorized to purchase or lease public lands for
agricultural purposes. x x x.
Sec. 61. The lands comprised in classes (a), (b), and (c) of section fifty-nine shall be
disposed of to private parties by lease only and not otherwise, as soon as the
President, upon recommendation by the Secretary of Agriculture, shall declare that the
same are not necessary for the public service and are open to disposition under this
chapter. The lands included in class (d) may be disposed of by sale or lease under the
provisions of this Act." (Emphasis supplied)
Section 61 of CA No. 141 readopted, after the effectivity of the 1935 Constitution, Section 58 of Act No.
2874 prohibiting the sale of government reclaimed, foreshore and marshy disposable lands of the
public domain. All these lands are intended for residential, commercial, industrial or other non-
agricultural purposes. As before, Section 61 allowed only the lease of such lands to private parties. The
government could sell to private parties only lands falling under Section 59 (d) of CA No. 141, or those
lands for non-agricultural purposes not classified as government reclaimed, foreshore and marshy
disposable lands of the public domain. Foreshore lands, however, became inalienable under the 1935
Constitution which only allowed the lease of these lands to qualified private parties.
Section 58 of CA No. 141 expressly states that disposable lands of the public domain intended for
residential, commercial, industrial or other productive purposes other than agricultural "shall be
disposed of under the provisions of this chapter and not otherwise." Under Section 10 of CA No.
141, the term "disposition" includes lease of the land. Any disposition of government reclaimed,
foreshore and marshy disposable lands for non-agricultural purposes must comply with Chapter IX,
Title III of CA No. 141,54 unless a subsequent law amended or repealed these provisions.
In his concurring opinion in the landmark case of Republic Real Estate Corporation v. Court of
Appeals,55Justice Reynato S. Puno summarized succinctly the law on this matter, as follows:
"Foreshore lands are lands of public dominion intended for public use. So too are lands
reclaimed by the government by dredging, filling, or other means. Act 1654 mandated that the
control and disposition of the foreshore and lands under water remained in the national
government. Said law allowed only the 'leasing' of reclaimed land. The Public Land Acts of
1919 and 1936 also declared that the foreshore and lands reclaimed by the government were
to be "disposed of to private parties by lease only and not otherwise." Before leasing,
however, the Governor-General, upon recommendation of the Secretary of Agriculture and
Natural Resources, had first to determine that the land reclaimed was not necessary for the
public service. This requisite must have been met before the land could be disposed of. But
even then, the foreshore and lands under water were not to be alienated and sold to
 private parties. The disposition of the reclaimed land was only by lease. The land
remained property of the State." (Emphasis supplied)
As observed by Justice Puno in his concurring opinion, "Commonwealth Act No. 141 has remained in
effect at present."
The State policy prohibiting the sale to private parties of government reclaimed, foreshore and marshy
alienable lands of the public domain, first implemented in 1907 was thus reaffirmed in CA No. 141 after
the 1935 Constitution took effect. The prohibition on the sale of foreshore lands, however, became a
constitutional edict under the 1935 Constitution. Foreshore lands became inalienable as natural
resources of the State, unless reclaimed by the government and classified as agricultural lands of the
public domain, in which case they would fall under the classification of government reclaimed lands.
After the effectivity of the 1935 Constitution, government reclaimed and marshy disposable lands of the
public domain continued to be only leased and not sold to private parties. 56 These lands remained sui
generis, as the only alienable or disposable lands of the public domain the government could not sell to
private parties.
Since then and until now, the only way the government can sell to private parties government reclaimed
and marshy disposable lands of the public domain is for the legislature to pass a law authorizing such
sale. CA No. 141 does not authorize the President to reclassify government reclaimed and marshy
lands into other non-agricultural lands under Section 59 (d). Lands classified under Section 59 (d) are
the only alienable or disposable lands for non-agricultural purposes that the government could sell to
private parties.
Moreover, Section 60 of CA No. 141 expressly requires congressional authority before lands under
Section 59 that the government previously transferred to government units or entities could be sold to
private parties. Section 60 of CA No. 141 declares that
"Sec. 60. x x x The area so leased or sold shall be such as shall, in the judgment of the
Secretary of Agriculture and Natural Resources, be reasonably necessary for the purposes
for which such sale or lease is requested, and shall not exceed one hundred and forty-four
hectares: Provided, however, That this limitation shall not apply to grants, donations, or
transfers made to a province, municipality or branch or subdivision of the Government for the
purposes deemed by said entities conducive to the public interest; but the land so granted,
donated, or transferred to a province, municipality or branch or subdivision of the
Government shall not be alienated, encumbered, or otherwise disposed of in a manner
affecting its title, except when authorized by Congress: x x x." (Emphasis supplied)
The congressional authority required in Section 60 of CA No. 141 mirrors the legislative authority
required in Section 56 of Act No. 2874.
One reason for the congressional authority is that Section 60 of CA No. 141 exempted government
units and entities from the maximum area of public lands that could be acquired from the State. These
government units and entities should not just turn around and sell these lands to private parties in
violation of constitutional or statutory limitations. Otherwise, the transfer of lands for non-agricultural
purposes to government units and entities could be used to circumvent constitutional limitations on
ownership of alienable or disposable lands of the public domain. In the same manner, such transfers
could also be used to evade the statutory prohibition in CA No. 141 on the sale of government
reclaimed and marshy lands of the public domain to private parties. Section 60 of CA No. 141
constitutes by operation of law a lien on these lands.57
In case of sale or lease of disposable lands of the public domain falling under Section 59 of CA No.
141, Sections 63 and 67 require a public bidding. Sections 63 and 67 of CA No. 141 provide as follows:
"Sec. 63. Whenever it is decided that lands covered by this chapter are not needed for public
purposes, the Director of Lands shall ask the Secretary of Agriculture and Commerce (now
the Secretary of Natural Resources) for authority to dispose of the same. Upon receipt of
such authority, the Director of Lands shall give notice by public advertisement in the same
manner as in the case of leases or sales of agricultural public land, x x x.
Sec. 67. The lease or sale shall be made by oral bidding; and adjudication shall be
made to the highest bidder. x x x." (Emphasis supplied)
Thus, CA No. 141 mandates the Government to put to public auction all leases or sales of alienable or
disposable lands of the public domain.58
Like Act No. 1654 and Act No. 2874 before it, CA No. 141 did not repeal Section 5 of the Spanish Law
of Waters of 1866. Private parties could still reclaim portions of the sea with government permission.
However, the reclaimed land could become private land only if classified as alienable agricultural
land of the public domain open to disposition under CA No. 141. The 1935 Constitution prohibited the
alienation of all natural resources except public agricultural lands.
The Civil Code of 1950
The Civil Code of 1950 readopted substantially the definition of property of public dominion found in the
Civil Code of 1889. Articles 420 and 422 of the Civil Code of 1950 state that
"Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and others of similar character;
(2) Those which belong to the State, without being for public use, and are intended for some
public service or for the development of the national wealth.
x x x.
Art. 422. Property of public dominion, when no longer intended for public use or for public
service, shall form part of the patrimonial property of the State."
Again, the government must formally declare that the property of public dominion is no longer needed
for public use or public service, before the same could be classified as patrimonial property of the
State.59 In the case of government reclaimed and marshy lands of the public domain, the declaration of
their being disposable, as well as the manner of their disposition, is governed by the applicable
provisions of CA No. 141.
Like the Civil Code of 1889, the Civil Code of 1950 included as property of public dominion those
properties of the State which, without being for public use, are intended for public service or the
"development of the national wealth." Thus, government reclaimed and marshy lands of the State,
even if not employed for public use or public service, if developed to enhance the national wealth, are
classified as property of public dominion.
Dispositions under the 1973 Constitution
The 1973 Constitution, which took effect on January 17, 1973, likewise adopted the Regalian doctrine.
Section 8, Article XIV of the 1973 Constitution stated that
"Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral
oils, all forces of potential energy, fisheries, wildlife, and other natural resources of the
Philippines belong to the State. With the exception of agricultural, industrial or
commercial, residential, and resettlement lands of the public domain, natural
resources shall not be alienated, and no license, concession, or lease for the exploration,
development, exploitation, or utilization of any of the natural resources shall be granted for a
period exceeding twenty-five years, renewable for not more than twenty-five years, except as
to water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, in which cases, beneficial use may be the measure and the limit
of the grant." (Emphasis supplied)
The 1973 Constitution prohibited the alienation of all natural resources with the exception of
"agricultural, industrial or commercial, residential, and resettlement lands of the public domain." In
contrast, the 1935 Constitution barred the alienation of all natural resources except "public agricultural
lands." However, the term "public agricultural lands" in the 1935 Constitution encompassed industrial,
commercial, residential and resettlement lands of the public domain. 60 If the land of public domain were
neither timber nor mineral land, it would fall under the classification of agricultural land of the public
domain. Both the 1935 and 1973 Constitutions, therefore, prohibited the alienation of all natural
resources except agricultural lands of the public domain.
The 1973 Constitution, however, limited the alienation of lands of the public domain to individuals who
were citizens of the Philippines. Private corporations, even if wholly owned by Philippine citizens, were
no longer allowed to acquire alienable lands of the public domain unlike in the 1935 Constitution.
Section 11, Article XIV of the 1973 Constitution declared that
"Sec. 11. The Batasang Pambansa, taking into account conservation, ecological, and
development requirements of the natural resources, shall determine by law the size of land of
the public domain which may be developed, held or acquired by, or leased to, any qualified
individual, corporation, or association, and the conditions therefor. No private corporation
or association may hold alienable lands of the public domain except by lease not to
exceed one thousand hectares in area nor may any citizen hold such lands by lease in
excess of five hundred hectares or acquire by purchase, homestead or grant, in excess of
twenty-four hectares. No private corporation or association may hold by lease, concession,
license or permit, timber or forest lands and other timber or forest resources in excess of one
hundred thousand hectares. However, such area may be increased by the Batasang
Pambansa upon recommendation of the National Economic and Development Authority."
(Emphasis supplied)
Thus, under the 1973 Constitution, private corporations could hold alienable lands of the public domain
only through lease. Only individuals could now acquire alienable lands of the public domain,
and private corporations became absolutely barred from acquiring any kind of alienable land of
the public domain. The constitutional ban extended to all kinds of alienable lands of the public
domain, while the statutory ban under CA No. 141 applied only to government reclaimed, foreshore and
marshy alienable lands of the public domain.
PD No. 1084 Creating the Public Estates Authority
On February 4, 1977, then President Ferdinand Marcos issued Presidential Decree No. 1084 creating
PEA, a wholly government owned and controlled corporation with a special charter. Sections 4 and 8 of
PD No. 1084, vests PEA with the following purposes and powers:
"Sec. 4. Purpose. The Authority is hereby created for the following purposes:
(a) To reclaim land, including foreshore and submerged areas, by dredging, filling or
other means, or to acquire reclaimed land;
(b) To develop, improve, acquire, administer, deal in, subdivide, dispose, lease and sell any
and all kinds of lands, buildings, estates and other forms of real property, owned, managed,
controlled and/or operated by the government;
(c) To provide for, operate or administer such service as may be necessary for the efficient,
economical and beneficial utilization of the above properties.
Sec. 5. Powers and functions of the Authority. The Authority shall, in carrying out the
purposes for which it is created, have the following powers and functions:
(a)To prescribe its by-laws.
xxx
(i) To hold lands of the public domain in excess of the area permitted to private
corporations by statute.
(j) To reclaim lands and to construct work across, or otherwise, any stream, watercourse,
canal, ditch, flume x x x.
xxx
(o) To perform such acts and exercise such functions as may be necessary for the attainment
of the purposes and objectives herein specified." (Emphasis supplied)
PD No. 1084 authorizes PEA to reclaim both foreshore and submerged areas of the public domain.
Foreshore areas are those covered and uncovered by the ebb and flow of the tide. 61 Submerged areas
are those permanently under water regardless of the ebb and flow of the tide. 62 Foreshore and
submerged areas indisputably belong to the public domain 63 and are inalienable unless reclaimed,
classified as alienable lands open to disposition, and further declared no longer needed for public
service.
The ban in the 1973 Constitution on private corporations from acquiring alienable lands of the public
domain did not apply to PEA since it was then, and until today, a fully owned government corporation.
The constitutional ban applied then, as it still applies now, only to "private corporations and
associations." PD No. 1084 expressly empowers PEA "to hold lands of the public domain" even "in
excess of the area permitted to private corporations by statute." Thus, PEA can hold title to private
lands, as well as title to lands of the public domain.
In order for PEA to sell its reclaimed foreshore and submerged alienable lands of the public domain,
there must be legislative authority empowering PEA to sell these lands. This legislative authority is
necessary in view of Section 60 of CA No.141, which states
"Sec. 60. x x x; but the land so granted, donated or transferred to a province, municipality, or
branch or subdivision of the Government shall not be alienated, encumbered or otherwise
disposed of in a manner affecting its title, except when authorized by Congress; x x x."
(Emphasis supplied)
Without such legislative authority, PEA could not sell but only lease its reclaimed foreshore and
submerged alienable lands of the public domain. Nevertheless, any legislative authority granted to PEA
to sell its reclaimed alienable lands of the public domain would be subject to the constitutional ban on
private corporations from acquiring alienable lands of the public domain. Hence, such legislative
authority could only benefit private individuals.
Dispositions under the 1987 Constitution
The 1987 Constitution, like the 1935 and 1973 Constitutions before it, has adopted the Regalian
doctrine. The 1987 Constitution declares that all natural resources are "owned by the State," and
except for alienable agricultural lands of the public domain, natural resources cannot be alienated.
Sections 2 and 3, Article XII of the 1987 Constitution state that
"Section 2. All lands of the public domain, waters, minerals, coal, petroleum and other mineral
oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and
other natural resources are owned by the State. With the exception of agricultural
lands, all other natural resources shall not be alienated. The exploration, development,
and utilization of natural resources shall be under the full control and supervision of the State.
x x x.
Section 3. Lands of the public domain are classified into agricultural, forest or timber, mineral
lands, and national parks. Agricultural lands of the public domain may be further classified by
law according to the uses which they may be devoted. Alienable lands of the public
domain shall be limited to agricultural lands. Private corporations or associations may
not hold such alienable lands of the public domain except by lease, for a period not
exceeding twenty-five years, renewable for not more than twenty-five years, and not to
exceed one thousand hectares in area. Citizens of the Philippines may lease not more
than five hundred hectares, or acquire not more than twelve hectares thereof by purchase,
homestead, or grant.
Taking into account the requirements of conservation, ecology, and development, and subject
to the requirements of agrarian reform, the Congress shall determine, by law, the size of
lands of the public domain which may be acquired, developed, held, or leased and the
conditions therefor." (Emphasis supplied)
The 1987 Constitution continues the State policy in the 1973 Constitution banning private corporations
from acquiring any kind of alienable land of the public domain. Like the 1973 Constitution, the
1987 Constitution allows private corporations to hold alienable lands of the public domain only
through lease. As in the 1935 and 1973 Constitutions, the general law governing the lease to private
corporations of reclaimed, foreshore and marshy alienable lands of the public domain is still CA No.
141.
The Rationale behind the Constitutional Ban
The rationale behind the constitutional ban on corporations from acquiring, except through lease,
alienable lands of the public domain is not well understood. During the deliberations of the 1986
Constitutional Commission, the commissioners probed the rationale behind this ban, thus:
"FR. BERNAS: Mr. Vice-President, my questions have reference to page 3, line 5 which says:
`No private corporation or association may hold alienable lands of the public domain except
by lease, not to exceed one thousand hectares in area.'
If we recall, this provision did not exist under the 1935 Constitution, but this was introduced in
the 1973 Constitution. In effect, it prohibits private corporations from acquiring alienable
public lands. But it has not been very clear in jurisprudence what the reason for this is.
In some of the cases decided in 1982 and 1983, it was indicated that the purpose of this
is to prevent large landholdings. Is that the intent of this provision?
MR. VILLEGAS: I think that is the spirit of the provision.
FR. BERNAS: In existing decisions involving the Iglesia ni Cristo, there were instances where
the Iglesia ni Cristo was not allowed to acquire a mere 313-square meter land where a
chapel stood because the Supreme Court said it would be in violation of this." (Emphasis
supplied)
In Ayog v. Cusi,64 the Court explained the rationale behind this constitutional ban in this way:
"Indeed, one purpose of the constitutional prohibition against purchases of public agricultural
lands by private corporations is to equitably diffuse land ownership or to encourage 'owner-
cultivatorship and the economic family-size farm' and to prevent a recurrence of cases like
the instant case. Huge landholdings by corporations or private persons had spawned social
unrest."
However, if the constitutional intent is to prevent huge landholdings, the Constitution could have simply
limited the size of alienable lands of the public domain that corporations could acquire. The Constitution
could have followed the limitations on individuals, who could acquire not more than 24 hectares of
alienable lands of the public domain under the 1973 Constitution, and not more than 12 hectares under
the 1987 Constitution.
If the constitutional intent is to encourage economic family-size farms, placing the land in the name of a
corporation would be more effective in preventing the break-up of farmlands. If the farmland is
registered in the name of a corporation, upon the death of the owner, his heirs would inherit shares in
the corporation instead of subdivided parcels of the farmland. This would prevent the continuing break-
up of farmlands into smaller and smaller plots from one generation to the next.
In actual practice, the constitutional ban strengthens the constitutional limitation on individuals from
acquiring more than the allowed area of alienable lands of the public domain. Without the constitutional
ban, individuals who already acquired the maximum area of alienable lands of the public domain could
easily set up corporations to acquire more alienable public lands. An individual could own as many
corporations as his means would allow him. An individual could even hide his ownership of a
corporation by putting his nominees as stockholders of the corporation. The corporation is a convenient
vehicle to circumvent the constitutional limitation on acquisition by individuals of alienable lands of the
public domain.
The constitutional intent, under the 1973 and 1987 Constitutions, is to transfer ownership of only a
limited area of alienable land of the public domain to a qualified individual. This constitutional intent is
safeguarded by the provision prohibiting corporations from acquiring alienable lands of the public
domain, since the vehicle to circumvent the constitutional intent is removed. The available alienable
public lands are gradually decreasing in the face of an ever-growing population. The most effective way
to insure faithful adherence to this constitutional intent is to grant or sell alienable lands of the public
domain only to individuals. This, it would seem, is the practical benefit arising from the constitutional
ban.
The Amended Joint Venture Agreement
The subject matter of the Amended JVA, as stated in its second Whereas clause, consists of three
properties, namely:
1. "[T]hree partially reclaimed and substantially eroded islands along Emilio Aguinaldo
Boulevard in Paranaque and Las Pinas, Metro Manila, with a combined titled area of
1,578,441 square meters;"
2. "[A]nother area of 2,421,559 square meters contiguous to the three islands;" and
3. "[A]t AMARI's option as approved by PEA, an additional 350 hectares more or less to
regularize the configuration of the reclaimed area."65
PEA confirms that the Amended JVA involves "the development of the Freedom Islands and further
reclamation of about 250 hectares x x x," plus an option "granted to AMARI to subsequently reclaim
another 350 hectares x x x."66
In short, the Amended JVA covers a reclamation area of 750 hectares. Only 157.84 hectares of the
750-hectare reclamation project have been reclaimed, and the rest of the 592.15 hectares are
still submerged areas forming part of Manila Bay.
Under the Amended JVA, AMARI will reimburse PEA the sum of P1,894,129,200.00 for PEA's "actual
cost" in partially reclaiming the Freedom Islands. AMARI will also complete, at its own expense, the
reclamation of the Freedom Islands. AMARI will further shoulder all the reclamation costs of all the
other areas, totaling 592.15 hectares, still to be reclaimed. AMARI and PEA will share, in the proportion
of 70 percent and 30 percent, respectively, the total net usable area which is defined in the Amended
JVA as the total reclaimed area less 30 percent earmarked for common areas. Title to AMARI's share in
the net usable area, totaling 367.5 hectares, will be issued in the name of AMARI. Section 5.2 (c) of the
Amended JVA provides that
"x x x, PEA shall have the duty to execute without delay the necessary deed of transfer or
conveyance of the title pertaining to AMARI's Land share based on the Land Allocation
Plan. PEA, when requested in writing by AMARI, shall then cause the issuance and
delivery of the proper certificates of title covering AMARI's Land Share in the name of
AMARI, x x x; provided, that if more than seventy percent (70%) of the titled area at any
given time pertains to AMARI, PEA shall deliver to AMARI only seventy percent (70%) of the
titles pertaining to AMARI, until such time when a corresponding proportionate area of
additional land pertaining to PEA has been titled." (Emphasis supplied)
Indisputably, under the Amended JVA AMARI will acquire and own a maximum of 367.5 hectares
of reclaimed land which will be titled in its name.
To implement the Amended JVA, PEA delegated to the unincorporated PEA-AMARI joint venture PEA's
statutory authority, rights and privileges to reclaim foreshore and submerged areas in Manila Bay.
Section 3.2.a of the Amended JVA states that
"PEA hereby contributes to the joint venture its rights and privileges to perform Rawland
Reclamation and Horizontal Development as well as own the Reclamation Area, thereby
granting the Joint Venture the full and exclusive right, authority and privilege to undertake the
Project in accordance with the Master Development Plan."
The Amended JVA is the product of a renegotiation of the original JVA dated April 25, 1995 and its
supplemental agreement dated August 9, 1995.
The Threshold Issue
The threshold issue is whether AMARI, a private corporation, can acquire and own under the Amended
JVA 367.5 hectares of reclaimed foreshore and submerged areas in Manila Bay in view of Sections 2
and 3, Article XII of the 1987 Constitution which state that:
"Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna,
and other natural resources are owned by the State. With the exception of agricultural
lands, all other natural resources shall not be alienated. x x x.
xxx
Section 3. x x x Alienable lands of the public domain shall be limited to agricultural
lands. Private corporations or associations may not hold such alienable lands of the
public domain except by lease, x x x."(Emphasis supplied)
Classification of Reclaimed Foreshore and Submerged Areas
PEA readily concedes that lands reclaimed from foreshore or submerged areas of Manila Bay are
alienable or disposable lands of the public domain. In its Memorandum,67 PEA admits that
"Under the Public Land Act (CA 141, as amended), reclaimed lands are classified as
alienable and disposable lands of the public domain:
'Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the government by dredging, filling, or other means;
x x x.'" (Emphasis supplied)
Likewise, the Legal Task Force68 constituted under Presidential Administrative Order No. 365 admitted
in its Report and Recommendation to then President Fidel V. Ramos, "[R]eclaimed lands are
classified as alienable and disposable lands of the public domain."69 The Legal Task Force
concluded that
"D. Conclusion
Reclaimed lands are lands of the public domain. However, by statutory authority, the rights of
ownership and disposition over reclaimed lands have been transferred to PEA, by virtue of
which PEA, as owner, may validly convey the same to any qualified person without violating
the Constitution or any statute.
The constitutional provision prohibiting private corporations from holding public land, except
by lease (Sec. 3, Art. XVII, 70 1987 Constitution), does not apply to reclaimed lands whose
ownership has passed on to PEA by statutory grant."
Under Section 2, Article XII of the 1987 Constitution, the foreshore and submerged areas of Manila Bay
are part of the "lands of the public domain, waters x x x and other natural resources" and consequently
"owned by the State." As such, foreshore and submerged areas "shall not be alienated," unless they
are classified as "agricultural lands" of the public domain. The mere reclamation of these areas by PEA
does not convert these inalienable natural resources of the State into alienable or disposable lands of
the public domain. There must be a law or presidential proclamation officially classifying these
reclaimed lands as alienable or disposable and open to disposition or concession. Moreover, these
reclaimed lands cannot be classified as alienable or disposable if the law has reserved them for some
public or quasi-public use.71
Section 8 of CA No. 141 provides that "only those lands shall be declared open to disposition or
concession which have been officially delimited and classified."72 The President has the authority to
classify inalienable lands of the public domain into alienable or disposable lands of the public domain,
pursuant to Section 6 of CA No. 141. In Laurel vs. Garcia, 73 the Executive Department attempted to sell
the Roppongi property in Tokyo, Japan, which was acquired by the Philippine Government for use as
the Chancery of the Philippine Embassy. Although the Chancery had transferred to another location
thirteen years earlier, the Court still ruled that, under Article 422 74 of the Civil Code, a property of public
dominion retains such character until formally declared otherwise. The Court ruled that
"The fact that the Roppongi site has not been used for a long time for actual Embassy service
does not automatically convert it to patrimonial property. Any such conversion happens only if
the property is withdrawn from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66
SCRA 481 [1975]. A property continues to be part of the public domain, not available
for private appropriation or ownership 'until there is a formal declaration on the part of
the government to withdraw it from being such' (Ignacio v. Director of Lands, 108 Phil.
335 [1960]." (Emphasis supplied)
PD No. 1085, issued on February 4, 1977, authorized the issuance of special land patents for lands
reclaimed by PEA from the foreshore or submerged areas of Manila Bay. On January 19, 1988 then
President Corazon C. Aquino issued Special Patent No. 3517 in the name of PEA for the 157.84
hectares comprising the partially reclaimed Freedom Islands. Subsequently, on April 9, 1999 the
Register of Deeds of the Municipality of Paranaque issued TCT Nos. 7309, 7311 and 7312 in the name
of PEA pursuant to Section 103 of PD No. 1529 authorizing the issuance of certificates of title
corresponding to land patents. To this day, these certificates of title are still in the name of PEA.
PD No. 1085, coupled with President Aquino's actual issuance of a special patent covering the
Freedom Islands, is equivalent to an official proclamation classifying the Freedom Islands as alienable
or disposable lands of the public domain. PD No. 1085 and President Aquino's issuance of a land
patent also constitute a declaration that the Freedom Islands are no longer needed for public
service. The Freedom Islands are thus alienable or disposable lands of the public domain, open
to disposition or concession to qualified parties.
At the time then President Aquino issued Special Patent No. 3517, PEA had already reclaimed the
Freedom Islands although subsequently there were partial erosions on some areas. The government
had also completed the necessary surveys on these islands. Thus, the Freedom Islands were no longer
part of Manila Bay but part of the land mass. Section 3, Article XII of the 1987 Constitution classifies
lands of the public domain into "agricultural, forest or timber, mineral lands, and national parks." Being
neither timber, mineral, nor national park lands, the reclaimed Freedom Islands necessarily fall under
the classification of agricultural lands of the public domain. Under the 1987 Constitution, agricultural
lands of the public domain are the only natural resources that the State may alienate to qualified private
parties. All other natural resources, such as the seas or bays, are "waters x x x owned by the State"
forming part of the public domain, and are inalienable pursuant to Section 2, Article XII of the 1987
Constitution.
AMARI claims that the Freedom Islands are private lands because CDCP, then a private corporation,
reclaimed the islands under a contract dated November 20, 1973 with the Commissioner of Public
Highways. AMARI, citing Article 5 of the Spanish Law of Waters of 1866, argues that "if the ownership
of reclaimed lands may be given to the party constructing the works, then it cannot be said that
reclaimed lands are lands of the public domain which the State may not alienate." 75 Article 5 of the
Spanish Law of Waters reads as follows:
"Article 5. Lands reclaimed from the sea in consequence of works constructed by the State,
or by the provinces, pueblos or private persons, with proper permission, shall become the
property of the party constructing such works, unless otherwise provided by the terms of
the grant of authority." (Emphasis supplied)
Under Article 5 of the Spanish Law of Waters of 1866, private parties could reclaim from the sea only
with "proper permission" from the State. Private parties could own the reclaimed land only if not
"otherwise provided by the terms of the grant of authority." This clearly meant that no one could reclaim
from the sea without permission from the State because the sea is property of public dominion. It also
meant that the State could grant or withhold ownership of the reclaimed land because any reclaimed
land, like the sea from which it emerged, belonged to the State. Thus, a private person reclaiming from
the sea without permission from the State could not acquire ownership of the reclaimed land which
would remain property of public dominion like the sea it replaced. 76 Article 5 of the Spanish Law of
Waters of 1866 adopted the time-honored principle of land ownership that "all lands that were not
acquired from the government, either by purchase or by grant, belong to the public domain."77
Article 5 of the Spanish Law of Waters must be read together with laws subsequently enacted on the
disposition of public lands. In particular, CA No. 141 requires that lands of the public domain must first
be classified as alienable or disposable before the government can alienate them. These lands must
not be reserved for public or quasi-public purposes. 78 Moreover, the contract between CDCP and the
government was executed after the effectivity of the 1973 Constitution which barred private
corporations from acquiring any kind of alienable land of the public domain. This contract could not
have converted the Freedom Islands into private lands of a private corporation.
Presidential Decree No. 3-A, issued on January 11, 1973, revoked all laws authorizing the reclamation
of areas under water and revested solely in the National Government the power to reclaim lands.
Section 1 of PD No. 3-A declared that
"The provisions of any law to the contrary notwithstanding, the reclamation of areas
under water, whether foreshore or inland, shall be limited to the National Government or
any person authorized by it under a proper contract. (Emphasis supplied)
x x x."
PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866 because reclamation of areas
under water could now be undertaken only by the National Government or by a person contracted by
the National Government. Private parties may reclaim from the sea only under a contract with the
National Government, and no longer by grant or permission as provided in Section 5 of the Spanish
Law of Waters of 1866.
Executive Order No. 525, issued on February 14, 1979, designated PEA as the National Government's
implementing arm to undertake "all reclamation projects of the government," which "shall be
undertaken by the PEA or through a proper contract executed by it with any person or entity."
Under such contract, a private party receives compensation for reclamation services rendered to PEA.
Payment to the contractor may be in cash, or in kind consisting of portions of the reclaimed land,
subject to the constitutional ban on private corporations from acquiring alienable lands of the public
domain. The reclaimed land can be used as payment in kind only if the reclaimed land is first classified
as alienable or disposable land open to disposition, and then declared no longer needed for public
service.
The Amended JVA covers not only the Freedom Islands, but also an additional 592.15 hectares which
are still submerged and forming part of Manila Bay. There is no legislative or Presidential act
classifying these submerged areas as alienable or disposable lands of the public domain open
to disposition. These submerged areas are not covered by any patent or certificate of title. There can
be no dispute that these submerged areas form part of the public domain, and in their present state
are inalienable and outside the commerce of man. Until reclaimed from the sea, these submerged
areas are, under the Constitution, "waters x x x owned by the State," forming part of the public domain
and consequently inalienable. Only when actually reclaimed from the sea can these submerged areas
be classified as public agricultural lands, which under the Constitution are the only natural resources
that the State may alienate. Once reclaimed and transformed into public agricultural lands, the
government may then officially classify these lands as alienable or disposable lands open to
disposition. Thereafter, the government may declare these lands no longer needed for public service.
Only then can these reclaimed lands be considered alienable or disposable lands of the public domain
and within the commerce of man.
The classification of PEA's reclaimed foreshore and submerged lands into alienable or disposable lands
open to disposition is necessary because PEA is tasked under its charter to undertake public services
that require the use of lands of the public domain. Under Section 5 of PD No. 1084, the functions of
PEA include the following: "[T]o own or operate railroads, tramways and other kinds of land
transportation, x x x; [T]o construct, maintain and operate such systems of sanitary sewers as may be
necessary; [T]o construct, maintain and operate such storm drains as may be necessary." PEA is
empowered to issue "rules and regulations as may be necessary for the proper use by private parties
of any or all of the highways, roads, utilities, buildings and/or any of its properties and to impose
or collect fees or tolls for their use." Thus, part of the reclaimed foreshore and submerged lands held by
the PEA would actually be needed for public use or service since many of the functions imposed on
PEA by its charter constitute essential public services.
Moreover, Section 1 of Executive Order No. 525 provides that PEA "shall be primarily responsible for
integrating, directing, and coordinating all reclamation projects for and on behalf of the National
Government." The same section also states that "[A]ll reclamation projects shall be approved by the
President upon recommendation of the PEA, and shall be undertaken by the PEA or through a proper
contract executed by it with any person or entity; x x x." Thus, under EO No. 525, in relation to PD No.
3-A and PD No.1084, PEA became the primary implementing agency of the National Government to
reclaim foreshore and submerged lands of the public domain. EO No. 525 recognized PEA as the
government entity "to undertake the reclamation of lands and ensure their maximum utilization
in promoting public welfare and interests."79 Since large portions of these reclaimed lands would
obviously be needed for public service, there must be a formal declaration segregating reclaimed lands
no longer needed for public service from those still needed for public service.1wphi1.nt
Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA "shall belong to or be owned by
the PEA," could not automatically operate to classify inalienable lands into alienable or disposable
lands of the public domain. Otherwise, reclaimed foreshore and submerged lands of the public domain
would automatically become alienable once reclaimed by PEA, whether or not classified as alienable or
disposable.
The Revised Administrative Code of 1987, a later law than either PD No. 1084 or EO No. 525, vests in
the Department of Environment and Natural Resources ("DENR" for brevity) the following powers and
functions:
"Sec. 4. Powers and Functions. The Department shall:
(1) x x x
xxx
(4) Exercise supervision and control over forest lands, alienable and disposable public
lands, mineral resources and, in the process of exercising such control, impose appropriate
taxes, fees, charges, rentals and any such form of levy and collect such revenues for the
exploration, development, utilization or gathering of such resources;
xxx
(14) Promulgate rules, regulations and guidelines on the issuance of licenses, permits,
concessions, lease agreements and such other privileges concerning the
development, exploration and utilization of the country's marine, freshwater, and
brackish water and over all aquatic resources of the country and shall continue to
oversee, supervise and police our natural resources; cancel or cause to cancel such
privileges upon failure, non-compliance or violations of any regulation, order, and for all other
causes which are in furtherance of the conservation of natural resources and supportive of
the national interest;
(15) Exercise exclusive jurisdiction on the management and disposition of all lands of
the public domain and serve as the sole agency responsible for classification, sub-
classification, surveying and titling of lands in consultation with appropriate
agencies."80 (Emphasis supplied)
As manager, conservator and overseer of the natural resources of the State, DENR exercises
"supervision and control over alienable and disposable public lands." DENR also exercises "exclusive
jurisdiction on the management and disposition of all lands of the public domain." Thus, DENR decides
whether areas under water, like foreshore or submerged areas of Manila Bay, should be reclaimed or
not. This means that PEA needs authorization from DENR before PEA can undertake reclamation
projects in Manila Bay, or in any part of the country.
DENR also exercises exclusive jurisdiction over the disposition of all lands of the public domain. Hence,
DENR decides whether reclaimed lands of PEA should be classified as alienable under Sections
681 and 782 of CA No. 141. Once DENR decides that the reclaimed lands should be so classified, it then
recommends to the President the issuance of a proclamation classifying the lands as alienable or
disposable lands of the public domain open to disposition. We note that then DENR Secretary
Fulgencio S. Factoran, Jr. countersigned Special Patent No. 3517 in compliance with the Revised
Administrative Code and Sections 6 and 7 of CA No. 141.
In short, DENR is vested with the power to authorize the reclamation of areas under water, while PEA is
vested with the power to undertake the physical reclamation of areas under water, whether directly or
through private contractors. DENR is also empowered to classify lands of the public domain into
alienable or disposable lands subject to the approval of the President. On the other hand, PEA is
tasked to develop, sell or lease the reclaimed alienable lands of the public domain.
Clearly, the mere physical act of reclamation by PEA of foreshore or submerged areas does not make
the reclaimed lands alienable or disposable lands of the public domain, much less patrimonial lands of
PEA. Likewise, the mere transfer by the National Government of lands of the public domain to PEA
does not make the lands alienable or disposable lands of the public domain, much less patrimonial
lands of PEA.
Absent two official acts a classification that these lands are alienable or disposable and open to
disposition and a declaration that these lands are not needed for public service, lands reclaimed by
PEA remain inalienable lands of the public domain. Only such an official classification and formal
declaration can convert reclaimed lands into alienable or disposable lands of the public domain, open to
disposition under the Constitution, Title I and Title III 83 of CA No. 141 and other applicable laws.84
PEA's Authority to Sell Reclaimed Lands
PEA, like the Legal Task Force, argues that as alienable or disposable lands of the public domain, the
reclaimed lands shall be disposed of in accordance with CA No. 141, the Public Land Act. PEA, citing
Section 60 of CA No. 141, admits that reclaimed lands transferred to a branch or subdivision of the
government "shall not be alienated, encumbered, or otherwise disposed of in a manner affecting its
title, except when authorized by Congress: x x x."85 (Emphasis by PEA)
In Laurel vs. Garcia,86 the Court cited Section 48 of the Revised Administrative Code of 1987, which
states that
"Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the
Government is authorized by law to be conveyed, the deed of conveyance shall be
executed in behalf of the government by the following: x x x."
Thus, the Court concluded that a law is needed to convey any real property belonging to the
Government. The Court declared that -
"It is not for the President to convey real property of the government on his or her own sole
will. Any such conveyance must be authorized and approved by a law enacted by the
Congress. It requires executive and legislative concurrence." (Emphasis supplied)
PEA contends that PD No. 1085 and EO No. 525 constitute the legislative authority allowing PEA to sell
its reclaimed lands. PD No. 1085, issued on February 4, 1977, provides that
"The land reclaimed in the foreshore and offshore area of Manila Bay pursuant to the
contract for the reclamation and construction of the Manila-Cavite Coastal Road Project
between the Republic of the Philippines and the Construction and Development Corporation
of the Philippines dated November 20, 1973 and/or any other contract or reclamation
covering the same area is hereby transferred, conveyed and assigned to the ownership
and administration of the Public Estates Authority established pursuant to PD No. 1084;
Provided, however, That the rights and interests of the Construction and Development
Corporation of the Philippines pursuant to the aforesaid contract shall be recognized and
respected.
Henceforth, the Public Estates Authority shall exercise the rights and assume the obligations
of the Republic of the Philippines (Department of Public Highways) arising from, or incident
to, the aforesaid contract between the Republic of the Philippines and the Construction and
Development Corporation of the Philippines.
In consideration of the foregoing transfer and assignment, the Public Estates Authority shall
issue in favor of the Republic of the Philippines the corresponding shares of stock in said
entity with an issued value of said shares of stock (which) shall be deemed fully paid and
non-assessable.
The Secretary of Public Highways and the General Manager of the Public Estates Authority
shall execute such contracts or agreements, including appropriate agreements with the
Construction and Development Corporation of the Philippines, as may be necessary to
implement the above.
Special land patent/patents shall be issued by the Secretary of Natural Resources in
favor of the Public Estates Authority without prejudice to the subsequent transfer to
the contractor or his assignees of such portion or portions of the land reclaimed or to
be reclaimed as provided for in the above-mentioned contract. On the basis of such
patents, the Land Registration Commission shall issue the corresponding certificate
of title." (Emphasis supplied)
On the other hand, Section 3 of EO No. 525, issued on February 14, 1979, provides that -
"Sec. 3. All lands reclaimed by PEA shall belong to or be owned by the PEA which shall
be responsible for its administration, development, utilization or disposition in accordance
with the provisions of Presidential Decree No. 1084. Any and all income that the PEA may
derive from the sale, lease or use of reclaimed lands shall be used in accordance with the
provisions of Presidential Decree No. 1084."
There is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell its reclaimed
lands. PD No. 1085 merely transferred "ownership and administration" of lands reclaimed from Manila
Bay to PEA, while EO No. 525 declared that lands reclaimed by PEA "shall belong to or be owned by
PEA." EO No. 525 expressly states that PEA should dispose of its reclaimed lands "in accordance with
the provisions of Presidential Decree No. 1084," the charter of PEA.
PEA's charter, however, expressly tasks PEA "to develop, improve, acquire, administer, deal in,
subdivide, dispose, lease and sell any and all kinds of lands x x x owned, managed, controlled and/or
operated by the government."87(Emphasis supplied) There is, therefore, legislative authority granted
to PEA to sell its lands, whether patrimonial or alienable lands of the public domain . PEA may
sell to private parties its patrimonial propertiesin accordance with the PEA charter free from
constitutional limitations. The constitutional ban on private corporations from acquiring alienable lands
of the public domain does not apply to the sale of PEA's patrimonial lands.
PEA may also sell its alienable or disposable lands of the public domain to private individuals since,
with the legislative authority, there is no longer any statutory prohibition against such sales and the
constitutional ban does not apply to individuals. PEA, however, cannot sell any of its alienable or
disposable lands of the public domain to private corporations since Section 3, Article XII of the 1987
Constitution expressly prohibits such sales. The legislative authority benefits only individuals. Private
corporations remain barred from acquiring any kind of alienable land of the public domain, including
government reclaimed lands.
The provision in PD No. 1085 stating that portions of the reclaimed lands could be transferred by PEA
to the "contractor or his assignees" (Emphasis supplied) would not apply to private corporations but
only to individuals because of the constitutional ban. Otherwise, the provisions of PD No. 1085 would
violate both the 1973 and 1987 Constitutions.
The requirement of public auction in the sale of reclaimed lands
Assuming the reclaimed lands of PEA are classified as alienable or disposable lands open to
disposition, and further declared no longer needed for public service, PEA would have to conduct a
public bidding in selling or leasing these lands. PEA must observe the provisions of Sections 63 and 67
of CA No. 141 requiring public auction, in the absence of a law exempting PEA from holding a public
auction.88 Special Patent No. 3517 expressly states that the patent is issued by authority of the
Constitution and PD No. 1084, "supplemented by Commonwealth Act No. 141, as amended." This is an
acknowledgment that the provisions of CA No. 141 apply to the disposition of reclaimed alienable lands
of the public domain unless otherwise provided by law. Executive Order No. 654, 89 which authorizes
PEA "to determine the kind and manner of payment for the transfer" of its assets and properties, does
not exempt PEA from the requirement of public auction. EO No. 654 merely authorizes PEA to decide
the mode of payment, whether in kind and in installment, but does not authorize PEA to dispense with
public auction.
Moreover, under Section 79 of PD No. 1445, otherwise known as the Government Auditing Code, the
government is required to sell valuable government property through public bidding. Section 79 of PD
No. 1445 mandates that
"Section 79. When government property has become unserviceable for any cause, or is no
longer needed, it shall, upon application of the officer accountable therefor, be inspected by
the head of the agency or his duly authorized representative in the presence of the auditor
concerned and, if found to be valueless or unsaleable, it may be destroyed in their
presence. If found to be valuable, it may be sold at public auction to the highest
bidder under the supervision of the proper committee on award or similar body in the
presence of the auditor concerned or other authorized representative of the
Commission, after advertising by printed notice in the Official Gazette, or for not less
than three consecutive days in any newspaper of general circulation, or where the value
of the property does not warrant the expense of publication, by notices posted for a like
period in at least three public places in the locality where the property is to be sold. In the
event that the public auction fails, the property may be sold at a private sale at such
price as may be fixed by the same committee or body concerned and approved by the
Commission."
It is only when the public auction fails that a negotiated sale is allowed, in which case the Commission
on Audit must approve the selling price.90 The Commission on Audit implements Section 79 of the
Government Auditing Code through Circular No. 89-29691 dated January 27, 1989. This circular
emphasizes that government assets must be disposed of only through public auction, and a negotiated
sale can be resorted to only in case of "failure of public auction."
At the public auction sale, only Philippine citizens are qualified to bid for PEA's reclaimed foreshore and
submerged alienable lands of the public domain. Private corporations are barred from bidding at the
auction sale of any kind of alienable land of the public domain.
PEA originally scheduled a public bidding for the Freedom Islands on December 10, 1991. PEA
imposed a condition that the winning bidder should reclaim another 250 hectares of submerged areas
to regularize the shape of the Freedom Islands, under a 60-40 sharing of the additional reclaimed areas
in favor of the winning bidder.92 No one, however, submitted a bid. On December 23, 1994, the
Government Corporate Counsel advised PEA it could sell the Freedom Islands through negotiation,
without need of another public bidding, because of the failure of the public bidding on December 10,
1991.93
However, the original JVA dated April 25, 1995 covered not only the Freedom Islands and the additional
250 hectares still to be reclaimed, it also granted an option to AMARI to reclaim another 350 hectares.
The original JVA, a negotiated contract, enlarged the reclamation area to 750 hectares.94 The failure of
public bidding on December 10, 1991, involving only 407.84 hectares, 95 is not a valid justification for a
negotiated sale of 750 hectares, almost double the area publicly auctioned. Besides, the failure of
public bidding happened on December 10, 1991, more than three years before the signing of the
original JVA on April 25, 1995. The economic situation in the country had greatly improved during the
intervening period.
Reclamation under the BOT Law and the Local Government Code
The constitutional prohibition in Section 3, Article XII of the 1987 Constitution is absolute and clear:
"Private corporations or associations may not hold such alienable lands of the public domain except by
lease, x x x." Even Republic Act No. 6957 ("BOT Law," for brevity), cited by PEA and AMARI as
legislative authority to sell reclaimed lands to private parties, recognizes the constitutional ban. Section
6 of RA No. 6957 states
"Sec. 6. Repayment Scheme. - For the financing, construction, operation and maintenance of
any infrastructure projects undertaken through the build-operate-and-transfer arrangement or
any of its variations pursuant to the provisions of this Act, the project proponent x x x may
likewise be repaid in the form of a share in the revenue of the project or other non-monetary
payments, such as, but not limited to, the grant of a portion or percentage of the reclaimed
land, subject to the constitutional requirements with respect to the ownership of the
land: x x x." (Emphasis supplied)
A private corporation, even one that undertakes the physical reclamation of a government BOT project,
cannot acquire reclaimed alienable lands of the public domain in view of the constitutional ban.
Section 302 of the Local Government Code, also mentioned by PEA and AMARI, authorizes local
governments in land reclamation projects to pay the contractor or developer in kind consisting of a
percentage of the reclaimed land, to wit:
"Section 302. Financing, Construction, Maintenance, Operation, and Management of
Infrastructure Projects by the Private Sector. x x x
xxx
In case of land reclamation or construction of industrial estates, the repayment plan may
consist of the grant of a portion or percentage of the reclaimed land or the industrial estate
constructed."
Although Section 302 of the Local Government Code does not contain a proviso similar to that of the
BOT Law, the constitutional restrictions on land ownership automatically apply even though not
expressly mentioned in the Local Government Code.
Thus, under either the BOT Law or the Local Government Code, the contractor or developer, if a
corporate entity, can only be paid with leaseholds on portions of the reclaimed land. If the contractor or
developer is an individual, portions of the reclaimed land, not exceeding 12 hectares 96 of non-
agricultural lands, may be conveyed to him in ownership in view of the legislative authority allowing
such conveyance. This is the only way these provisions of the BOT Law and the Local Government
Code can avoid a direct collision with Section 3, Article XII of the 1987 Constitution.
Registration of lands of the public domain
Finally, PEA theorizes that the "act of conveying the ownership of the reclaimed lands to public
respondent PEA transformed such lands of the public domain to private lands." This theory is echoed
by AMARI which maintains that the "issuance of the special patent leading to the eventual issuance of
title takes the subject land away from the land of public domain and converts the property into
patrimonial or private property." In short, PEA and AMARI contend that with the issuance of Special
Patent No. 3517 and the corresponding certificates of titles, the 157.84 hectares comprising the
Freedom Islands have become private lands of PEA. In support of their theory, PEA and AMARI cite the
following rulings of the Court:
1. Sumail v. Judge of CFI of Cotabato,97 where the Court held
 "Once the patent was granted and the corresponding certificate of title was issued, the land
ceased to be part of the public domain and became private property over which the Director
of Lands has neither control nor jurisdiction."
2. Lee Hong Hok v. David,98 where the Court declared -
"After the registration and issuance of the certificate and duplicate certificate of title based on
a public land patent, the land covered thereby automatically comes under the operation of
Republic Act 496 subject to all the safeguards provided therein."3. Heirs of Gregorio Tengco
v. Heirs of Jose Aliwalas,99 where the Court ruled -
"While the Director of Lands has the power to review homestead patents, he may do so only
so long as the land remains part of the public domain and continues to be under his exclusive
control; but once the patent is registered and a certificate of title is issued, the land ceases to
be part of the public domain and becomes private property over which the Director of Lands
has neither control nor jurisdiction."
4. Manalo v. Intermediate Appellate Court,100 where the Court held
"When the lots in dispute were certified as disposable on May 19, 1971, and free patents
were issued covering the same in favor of the private respondents, the said lots ceased to be
part of the public domain and, therefore, the Director of Lands lost jurisdiction over the
same."
5.Republic v. Court of Appeals,101 where the Court stated
"Proclamation No. 350, dated October 9, 1956, of President Magsaysay legally effected a
land grant to the Mindanao Medical Center, Bureau of Medical Services, Department of
Health, of the whole lot, validly sufficient for initial registration under the Land Registration
Act. Such land grant is constitutive of a 'fee simple' title or absolute title in favor of petitioner
Mindanao Medical Center. Thus, Section 122 of the Act, which governs the registration of
grants or patents involving public lands, provides that 'Whenever public lands in the
Philippine Islands belonging to the Government of the United States or to the Government of
the Philippines are alienated, granted or conveyed to persons or to public or private
corporations, the same shall be brought forthwith under the operation of this Act (Land
Registration Act, Act 496) and shall become registered lands.'"
The first four cases cited involve petitions to cancel the land patents and the corresponding certificates
of titles issued to private parties. These four cases uniformly hold that the Director of Lands has no
jurisdiction over private lands or that upon issuance of the certificate of title the land automatically
comes under the Torrens System. The fifth case cited involves the registration under the Torrens
System of a 12.8-hectare public land granted by the National Government to Mindanao Medical Center,
a government unit under the Department of Health. The National Government transferred the 12.8-
hectare public land to serve as the site for the hospital buildings and other facilities of Mindanao
Medical Center, which performed a public service. The Court affirmed the registration of the 12.8-
hectare public land in the name of Mindanao Medical Center under Section 122 of Act No. 496. This
fifth case is an example of a public land being registered under Act No. 496 without the land losing its
character as a property of public dominion.
In the instant case, the only patent and certificates of title issued are those in the name of PEA, a
wholly government owned corporation performing public as well as proprietary functions. No patent or
certificate of title has been issued to any private party. No one is asking the Director of Lands to cancel
PEA's patent or certificates of title. In fact, the thrust of the instant petition is that PEA's certificates of
title should remain with PEA, and the land covered by these certificates, being alienable lands of the
public domain, should not be sold to a private corporation.
Registration of land under Act No. 496 or PD No. 1529 does not vest in the registrant private or public
ownership of the land. Registration is not a mode of acquiring ownership but is merely evidence of
ownership previously conferred by any of the recognized modes of acquiring ownership. Registration
does not give the registrant a better right than what the registrant had prior to the registration. 102 The
registration of lands of the public domain under the Torrens system, by itself, cannot convert public
lands into private lands.103
Jurisprudence holding that upon the grant of the patent or issuance of the certificate of title the
alienable land of the public domain automatically becomes private land cannot apply to government
units and entities like PEA. The transfer of the Freedom Islands to PEA was made subject to the
provisions of CA No. 141 as expressly stated in Special Patent No. 3517 issued by then President
Aquino, to wit:
"NOW, THEREFORE, KNOW YE, that by authority of the Constitution of the Philippines and
in conformity with the provisions of Presidential Decree No. 1084, supplemented by
Commonwealth Act No. 141, as amended, there are hereby granted and conveyed unto
the Public Estates Authority the aforesaid tracts of land containing a total area of one million
nine hundred fifteen thousand eight hundred ninety four (1,915,894) square meters; the
technical description of which are hereto attached and made an integral part hereof."
(Emphasis supplied)
Thus, the provisions of CA No. 141 apply to the Freedom Islands on matters not covered by PD No.
1084. Section 60 of CA No. 141 prohibits, "except when authorized by Congress," the sale of alienable
lands of the public domain that are transferred to government units or entities. Section 60 of CA No.
141 constitutes, under Section 44 of PD No. 1529, a "statutory lien affecting title" of the registered land
even if not annotated on the certificate of title. 104Alienable lands of the public domain held by
government entities under Section 60 of CA No. 141 remain public lands because they cannot be
alienated or encumbered unless Congress passes a law authorizing their disposition. Congress,
however, cannot authorize the sale to private corporations of reclaimed alienable lands of the public
domain because of the constitutional ban. Only individuals can benefit from such law.
The grant of legislative authority to sell public lands in accordance with Section 60 of CA No. 141 does
not automatically convert alienable lands of the public domain into private or patrimonial lands. The
alienable lands of the public domain must be transferred to qualified private parties, or to government
entities not tasked to dispose of public lands, before these lands can become private or patrimonial
lands. Otherwise, the constitutional ban will become illusory if Congress can declare lands of the public
domain as private or patrimonial lands in the hands of a government agency tasked to dispose of public
lands. This will allow private corporations to acquire directly from government agencies limitless areas
of lands which, prior to such law, are concededly public lands.
Under EO No. 525, PEA became the central implementing agency of the National Government to
reclaim foreshore and submerged areas of the public domain. Thus, EO No. 525 declares that
"EXECUTIVE ORDER NO. 525
Designating the Public Estates Authority as the Agency Primarily Responsible for all
Reclamation Projects
Whereas, there are several reclamation projects which are ongoing or being proposed to be
undertaken in various parts of the country which need to be evaluated for consistency with
national programs;
Whereas, there is a need to give further institutional support to the Government's declared
policy to provide for a coordinated, economical and efficient reclamation of lands;
Whereas, Presidential Decree No. 3-A requires that all reclamation of areas shall be limited
to the National Government or any person authorized by it under proper contract;
Whereas, a central authority is needed to act on behalf of the National Government
which shall ensure a coordinated and integrated approach in the reclamation of lands;
Whereas, Presidential Decree No. 1084 creates the Public Estates Authority as a
government corporation to undertake reclamation of lands and ensure their maximum
utilization in promoting public welfare and interests; and
 Whereas, Presidential Decree No. 1416 provides the President with continuing authority to
reorganize the national government including the transfer, abolition, or merger of functions
and offices.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of
the powers vested in me by the Constitution and pursuant to Presidential Decree No. 1416,
do hereby order and direct the following:
Section 1. The Public Estates Authority (PEA) shall be primarily responsible for
integrating, directing, and coordinating all reclamation projects for and on behalf of
the National Government. All reclamation projects shall be approved by the President upon
recommendation of the PEA, and shall be undertaken by the PEA or through a proper
contract executed by it with any person or entity; Provided, that, reclamation projects of any
national government agency or entity authorized under its charter shall be undertaken in
consultation with the PEA upon approval of the President.
x x x ."
As the central implementing agency tasked to undertake reclamation projects nationwide, with authority
to sell reclaimed lands, PEA took the place of DENR as the government agency charged with leasing or
selling reclaimed lands of the public domain. The reclaimed lands being leased or sold by PEA are not
private lands, in the same manner that DENR, when it disposes of other alienable lands, does not
dispose of private lands but alienable lands of the public domain. Only when qualified private parties
acquire these lands will the lands become private lands. In the hands of the government agency
tasked and authorized to dispose of alienable of disposable lands of the public domain, these
lands are still public, not private lands.
Furthermore, PEA's charter expressly states that PEA "shall hold lands of the public domain" as well
as "any and all kinds of lands." PEA can hold both lands of the public domain and private lands. Thus,
the mere fact that alienable lands of the public domain like the Freedom Islands are transferred to PEA
and issued land patents or certificates of title in PEA's name does not automatically make such lands
private.
To allow vast areas of reclaimed lands of the public domain to be transferred to PEA as private lands
will sanction a gross violation of the constitutional ban on private corporations from acquiring any kind
of alienable land of the public domain. PEA will simply turn around, as PEA has now done under the
Amended JVA, and transfer several hundreds of hectares of these reclaimed and still to be reclaimed
lands to a single private corporation in only one transaction. This scheme will effectively nullify the
constitutional ban in Section 3, Article XII of the 1987 Constitution which was intended to diffuse
equitably the ownership of alienable lands of the public domain among Filipinos, now numbering over
80 million strong.
This scheme, if allowed, can even be applied to alienable agricultural lands of the public domain since
PEA can "acquire x x x any and all kinds of lands." This will open the floodgates to corporations and
even individuals acquiring hundreds of hectares of alienable lands of the public domain under the guise
that in the hands of PEA these lands are private lands. This will result in corporations amassing huge
landholdings never before seen in this country - creating the very evil that the constitutional ban was
designed to prevent. This will completely reverse the clear direction of constitutional development in
this country. The 1935 Constitution allowed private corporations to acquire not more than 1,024
hectares of public lands.105 The 1973 Constitution prohibited private corporations from acquiring any
kind of public land, and the 1987 Constitution has unequivocally reiterated this prohibition.
The contention of PEA and AMARI that public lands, once registered under Act No. 496 or PD No.
1529, automatically become private lands is contrary to existing laws. Several laws authorize lands of
the public domain to be registered under the Torrens System or Act No. 496, now PD No. 1529, without
losing their character as public lands. Section 122 of Act No. 496, and Section 103 of PD No. 1529,
respectively, provide as follows:
Act No. 496
"Sec. 122. Whenever public lands in the Philippine Islands belonging to the x x x Government
of the Philippine Islands are alienated, granted, or conveyed to persons or the public or
private corporations, the same shall be brought forthwith under the operation of this Act and
shall become registered lands."
PD No. 1529
"Sec. 103. Certificate of Title to Patents. Whenever public land is by the Government
alienated, granted or conveyed to any person, the same shall be brought forthwith under the
operation of this Decree." (Emphasis supplied)
Based on its legislative history, the phrase "conveyed to any person" in Section 103 of PD No. 1529
includes conveyances of public lands to public corporations.
Alienable lands of the public domain "granted, donated, or transferred to a province, municipality, or
branch or subdivision of the Government," as provided in Section 60 of CA No. 141, may be registered
under the Torrens System pursuant to Section 103 of PD No. 1529. Such registration, however, is
expressly subject to the condition in Section 60 of CA No. 141 that the land "shall not be alienated,
encumbered or otherwise disposed of in a manner affecting its title, except when authorized by
Congress." This provision refers to government reclaimed, foreshore and marshy lands of the public
domain that have been titled but still cannot be alienated or encumbered unless expressly authorized
by Congress. The need for legislative authority prevents the registered land of the public domain from
becoming private land that can be disposed of to qualified private parties.
The Revised Administrative Code of 1987 also recognizes that lands of the public domain may be
registered under the Torrens System. Section 48, Chapter 12, Book I of the Code states
"Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the
Government is authorized by law to be conveyed, the deed of conveyance shall be executed
in behalf of the government by the following:
(1) x x x
(2) For property belonging to the Republic of the Philippines, but titled in the name of
any political subdivision or of any corporate agency or instrumentality, by the executive
head of the agency or instrumentality." (Emphasis supplied)
Thus, private property purchased by the National Government for expansion of a public wharf may be
titled in the name of a government corporation regulating port operations in the country. Private
property purchased by the National Government for expansion of an airport may also be titled in the
name of the government agency tasked to administer the airport. Private property donated to a
municipality for use as a town plaza or public school site may likewise be titled in the name of the
municipality.106 All these properties become properties of the public domain, and if already registered
under Act No. 496 or PD No. 1529, remain registered land. There is no requirement or provision in any
existing law for the de-registration of land from the Torrens System.
Private lands taken by the Government for public use under its power of eminent domain become
unquestionably part of the public domain. Nevertheless, Section 85 of PD No. 1529 authorizes the
Register of Deeds to issue in the name of the National Government new certificates of title covering
such expropriated lands. Section 85 of PD No. 1529 states
"Sec. 85. Land taken by eminent domain. Whenever any registered land, or interest therein,
is expropriated or taken by eminent domain, the National Government, province, city or
municipality, or any other agency or instrumentality exercising such right shall file for
registration in the proper Registry a certified copy of the judgment which shall state definitely
by an adequate description, the particular property or interest expropriated, the number of the
certificate of title, and the nature of the public use. A memorandum of the right or interest
taken shall be made on each certificate of title by the Register of Deeds, and where the fee
simple is taken, a new certificate shall be issued in favor of the National Government,
province, city, municipality, or any other agency or instrumentality exercising such right for
 the land so taken. The legal expenses incident to the memorandum of registration or
issuance of a new certificate of title shall be for the account of the authority taking the land or
interest therein." (Emphasis supplied)
Consequently, lands registered under Act No. 496 or PD No. 1529 are not exclusively private or
patrimonial lands. Lands of the public domain may also be registered pursuant to existing laws.
AMARI makes a parting shot that the Amended JVA is not a sale to AMARI of the Freedom Islands or of
the lands to be reclaimed from submerged areas of Manila Bay. In the words of AMARI, the Amended
JVA "is not a sale but a joint venture with a stipulation for reimbursement of the original cost incurred by
PEA for the earlier reclamation and construction works performed by the CDCP under its 1973 contract
with the Republic." Whether the Amended JVA is a sale or a joint venture, the fact remains that the
Amended JVA requires PEA to "cause the issuance and delivery of the certificates of title conveying
AMARI's Land Share in the name of AMARI."107
This stipulation still contravenes Section 3, Article XII of the 1987 Constitution which provides that
private corporations "shall not hold such alienable lands of the public domain except by lease." The
transfer of title and ownership to AMARI clearly means that AMARI will "hold" the reclaimed lands other
than by lease. The transfer of title and ownership is a "disposition" of the reclaimed lands, a transaction
considered a sale or alienation under CA No. 141, 108 the Government Auditing Code,109 and Section 3,
Article XII of the 1987 Constitution.
The Regalian doctrine is deeply implanted in our legal system. Foreshore and submerged areas form
part of the public domain and are inalienable. Lands reclaimed from foreshore and submerged areas
also form part of the public domain and are also inalienable, unless converted pursuant to law into
alienable or disposable lands of the public domain. Historically, lands reclaimed by the government
are sui generis, not available for sale to private parties unlike other alienable public lands. Reclaimed
lands retain their inherent potential as areas for public use or public service. Alienable lands of the
public domain, increasingly becoming scarce natural resources, are to be distributed equitably among
our ever-growing population. To insure such equitable distribution, the 1973 and 1987 Constitutions
have barred private corporations from acquiring any kind of alienable land of the public domain. Those
who attempt to dispose of inalienable natural resources of the State, or seek to circumvent the
constitutional ban on alienation of lands of the public domain to private corporations, do so at their own
risk.
We can now summarize our conclusions as follows:
1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now covered by
certificates of title in the name of PEA, are alienable lands of the public domain. PEA may
lease these lands to private corporations but may not sell or transfer ownership of these
lands to private corporations. PEA may only sell these lands to Philippine citizens, subject to
the ownership limitations in the 1987 Constitution and existing laws.
G.R. No. 164527 August 15, 2007
FRANCISCO I. CHAVEZ, Petitioner,
vs.
NATIONAL HOUSING AUTHORITY, R-II BUILDERS, INC., R-II HOLDINGS, INC., HARBOUR
CENTRE PORT TERMINAL, INC., and MR. REGHIS ROMERO II, Respondents.
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
2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural
resources of the public domain until classified as alienable or disposable lands open to
disposition and declared no longer needed for public service. The government can make
such classification and declaration only after PEA has reclaimed these submerged areas.
Only then can these lands qualify as agricultural lands of the public domain, which are the
only natural resources the government can alienate. In their present state, the 592.15
hectares of submerged areas are inalienable and outside the commerce of man.
3. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of
77.34 hectares110of the Freedom Islands, such transfer is void for being contrary to Section 3,
Article XII of the 1987 Constitution which prohibits private corporations from acquiring any
kind of alienable land of the public domain.
4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156
hectares111 of still submerged areas of Manila Bay, such transfer is void for being contrary to
Section 2, Article XII of the 1987 Constitution which prohibits the alienation of natural
resources other than agricultural lands of the public domain. PEA may reclaim these
submerged areas. Thereafter, the government can classify the reclaimed lands as alienable
or disposable, and further declare them no longer needed for public service. Still, the transfer
of such reclaimed alienable lands of the public domain to AMARI will be void in view of
Section 3, Article XII of the 1987 Constitution which prohibits private corporations from
acquiring any kind of alienable land of the public domain.
Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987 Constitution. Under
Article 1409112 of the Civil Code, contracts whose "object or purpose is contrary to law," or whose
"object is outside the commerce of men," are "inexistent and void from the beginning." The Court must
perform its duty to defend and uphold the Constitution, and therefore declares the Amended JVA null
and void ab initio.
Seventh issue: whether the Court is the proper forum to raise the issue of whether the Amended
JVA is grossly disadvantageous to the government.
Considering that the Amended JVA is null and void ab initio, there is no necessity to rule on this last
issue. Besides, the Court is not a trier of facts, and this last issue involves a determination of factual
matters.
WHEREFORE, the petition is GRANTED. The Public Estates Authority and Amari Coastal Bay
Development Corporation are PERMANENTLY ENJOINED from implementing the Amended Joint
Venture Agreement which is hereby declared NULL and VOID ab initio.
SO ORDERED.
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)
1612 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-A3 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. 3915 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,"20the 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 Agreement22 (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
Smokey Mountain 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.27However, 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, 199431 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 on December 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 99-16-0242 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 is vested 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 still cannot 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. PCGG49 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.
PEA50 as conclusive authority on locus 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."521avvphi1
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 pleadings55 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.1avvphi1 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 Decision58 cannot be considered an authority or precedent to the instant case. The
principle of stare decisis59 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 our PEA 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 exception
reclamation 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 Bay adjoining 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 the Smokey 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 Freedom Islands as alienable
or disposable lands of the public domain. PD No. 1085 and President Aquinos issuance of a land
patent also constitute a declaration that the Freedom Islands are no longer needed for public service.
The Freedom Islands are thus alienable or disposable lands of the public domain, open to disposition or
concession to qualified parties.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 in PEA 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 on March 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.