FRANCISCO I. CHAVEZ v. PUBLIC ESTATES AUTHORITY and AMARI COASTALBAY DEVELOPMENT CORPORATION

G.R. No. 133250, O6 May 2003, En Banc (Carpio, J.)

Doctrine: Absent two official acts – lands reclaimed by PEA remain inalienable lands of the public domain.a) a classification that these lands are alienable or disposable and open to disposition and b) a declaration that these lands are not needed for public serviceOnly 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 of CA No. 141 and other applicable laws.

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. [Chavez vs. Public Estates Authority, 384 SCRA 152(2002)]

QUICK DIGEST: The July 9, 2002 decision on the instant case held that 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. The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural resources of the public domain. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of 77.34 hectares of 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. Furthermore, since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 hectares 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.

FACTS:

1. 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.

2. The contract also included the construction of Phases I and II of the Manila-Cavite Coastal Road .3. CDCP obligated itself to carry out all the works in consideration of fifty percent of the total reclaimed land.4. 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" 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."

5. 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) covering the three reclaimed islands known as the "Freedom Islands"

6. 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. On June 8, 1995, then President Fidel V. Ramos, through then Executive Secretary Ruben Torres, approved

the JVA.7. 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." 8. 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 xx The Legal Task Force upheld the legality of the JVA, contrary to the conclusions reached by the Senate Committees.

9. 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.

ISSUE: Sixth issue: whether stipulations in the Amended JVA for the transfer to AMARI of lands, reclaimed or to be reclaimed, violate the Constitution.

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

HELD:

We can now summarize our conclusions as follows:

1. 157.84 hectares of reclaimed lands comprising the Freedom Islands, now covered by certificates of title in the name of PEA, are alienable lands of the public domain. PEA may lease these lands to private corporations but may not sell or transfer ownership of these lands to private corporations. PEA may only sell these lands to Philippine citizens, subject to the ownership limitations in the 1987 Constitution and existing laws.

2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural resources of the public domain until classified as alienable or disposable lands open to disposition and declared no longer needed for

public service. The government can make such classification and declaration only after PEA has reclaimed these submerged areas. Only then can these lands qualify as agricultural lands of the public domain, which are the only natural resources the government can alienate. In their present state, the 592.15 hectares of submerged areas are inalienable and outside the commerce of man.

3. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of 77.34 hectares of 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 hectares 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 1409 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.

SUBSTANTIVE DISCUSSION OF THE ISSUE

□ 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.

□ 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.

□ 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.

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.

Dispositions under the 1987 Constitution

□ 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

□ 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.

□ 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. xxxxThe 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 Amended Joint Venture Agreement□ 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.

□ 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.

IMPORTANT THINGS STARTS HERE

The Threshold Issue

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, 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

□ Likewise, the Legal Task Force 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."

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□ Section 8 of CA No. 141 provides that "only those lands shall be declared open to disposition or concession

which have been officially delimited and classified ."□ The President has the authority to classify inalienable lands of the public domain into alienable or disposable

lands of the public domain, pursuant to Section 6 of CA No. 141. In Laurel vs. Garcia,

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.

"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.

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'

□ 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. the Freedom Islands were no longer part of Manila Bay but part of the land mass. Being neither timber, mineral, nor national park lands, the reclaimed Freedom Islands necessarily fall

under the classification of agricultural lands of the public domain.

AMARI claims that the Freedom Islands are private lands because CDCP, xxx 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."□ 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. □ 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.□ 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.

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. □ 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.

Absent two official acts – lands reclaimed by PEA remain inalienable lands of the public domain.a) a classification that these lands are alienable or disposable and open to disposition and b) a declaration that these lands are not needed for public service

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 of CA No. 141 and other applicable laws.

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." (Emphasis by PEA)

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 –

□ 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."

□ There is, therefore, legislative authority granted to PEA to sell its lands, whether patrimonial or alienable lands of the public domain.

□ PEA may sell to private parties its patrimonial properties in accordance with the PEA charter free from constitutional limitations. The constitutional ban on private corporations from acquiring alienable lands of the public domain does not apply to the sale of PEA's patrimonial lands.

□ 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 requirement of public auction in the sale of reclaimed lands

□ 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.□ 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,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. 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. 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.

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.

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, 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. 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: Although Section 302 of the Local Government Code does not contain a proviso similar to that of the BOT

Law, the constitutional restrictions on land ownership automatically apply even though not expressly mentioned in the Local Government Code.

Thus, under either the BOT Law or the Local Government Code, the contractor or developer, if a corporate entity, can only be paid with leaseholds on portions of the reclaimed land. If the contractor or developer is an individual, portions of the reclaimed land, not exceeding 12 hectares96 of non-agricultural lands, may be conveyed to him in ownership in view of the legislative authority allowing such conveyance. This is the only way these provisions of the BOT Law and the Local Government Code can avoid a direct collision with Section 3, Article XII of the 1987 Constitution.

LTD DISCUSSIONRegistration 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 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.□ n 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. The registration of lands of the public domain under the Torrens system, by itself, cannot convert public

lands into private lands.□ 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:xxxxx supplemented by Commonwealth Act No. 141, as amended,

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.

Alienable 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.

□ Under EO No. 525, PEA became the central implementing agency of the National Government to reclaim foreshore and submerged areas of the public domain. 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.

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. □ 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.

□ 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. 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."

□ 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, the Government Auditing Code, and Section 3, Article XII of the 1987 Constitution.

HISTORY AND OTHER NOTES

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.

□ The 1935, 1973 and 1987 Constitutions adopted the Regalian doctrine substituting, however, the State, in lieu of the King, as the owner of all lands and waters of the public domain.

□ The Regalian doctrine is the foundation of the time-honored principle of land ownership that "all lands that were not acquired from the Government, either by purchase or by grant, belong to the public domain."

□ Article 339 of the Civil Code of 1889, which is now Article 420 of the Civil Code of 1950, incorporated the Regalian doctrine.

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.

□ 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.

□ 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.

Act No. 1654 of the Philippine Commission

□ 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

□ Section 6 of Act No. 2874 authorized the Governor-General to "classify lands of the public domain into x x x alienable or disposable" 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 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." Xxxx 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 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

□ Xxxx 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 xxxx

□ 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 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.

□ 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

□ 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” 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."

□ 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.

□ 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.

□ 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. □ 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. xxxx 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."

□ 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.

□ These lands remained sui generis , as the only alienable or disposable lands of the public domain the government could not sell to private parties.

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 –

□ 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.

□ 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

□ With the exception of agricultural, industrial or commercial, residential, and resettlement lands of the public domain, natural resources shall not be alienated, xxx

□ 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.

□ 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.

□ 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.

PD No. 1084 Creating the Public Estates Authority

□ 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.□ Submerged areas are those permanently under water regardless of the ebb and flow of the tide.□ Foreshore and submerged areas indisputably belong to the public domain 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.

□ 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.

Classification of Reclaimed Foreshore and Submerged Areas□ 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.

OTHER ISSUES (NET DIGEST)(a) Whether principal relief prayed for in the petition are moot and academic because of subsequent events;(b) Whether the petition merits dismissal for failing to observe the principle governing the hierarchy of court;(c) Whether the petition merits dismissal for non-exhaustion of administrative remedies;(d) Whether petitioner has locus standi to bring this suit;(e) Whether the constitutional right to information includes official information on on-going negotiations before a

final agreement;(f) 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(g) Whether the court is the proper forum for raising the issue of whether the amended joint venture agreement

is grossly disadvantageous to the government.

Held:

On the first issue, □ the Court has ruled 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.

On the second issue, □ the Court cannot entertain cases involving factual issues. □ The instant case, however, raises constitutional issues of transcendental importance to the public.□ The Court can resolve this case without determining any factual issue related to the case. Also, the instant

case is a petition for mandamus which falls under the original jurisdiction of the Court under Section 5, Article VIII of the Constitution. We resolve to exercise primary jurisdiction over the instant case.

On the third issue, □ 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. □ Hence, 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.

On the fourth issue, the 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.

On the fifth issue, Section 7, Article III of the Constitution explains the people's right to information on matters of public concern. The court has held that the constitutional right to information includes official information on on-going negotiations before 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.Congress has also prescribed other limitations on the right to information in several legislations.