CHAVEZ V.

PEA-AMARI

FACTS:

In 1973, the Commissioner on Public Highways entered into a contract to reclaim areas of Manila Bay
with the Construction and Development Corporation of the Philippines (CDCP).

PEA (Public Estates Authority) was created by President Marcos under P.D. 1084, tasked with developing
and leasing reclaimed lands. These lands were transferred to the care of PEA under P.D. 1085 as part of
the Manila Cavite Road and Reclamation Project (MCRRP). CDCP and PEA entered into an agreement
that all future projects under the MCRRP would be funded and owned by PEA.

By 1988, President Aquino issued Special Patent No. 3517 transferring lands to PEA. It was followed by
the transfer of three Titles (7309, 7311 and 7312) by the Register of Deeds of Paranaque to PEA covering
the three reclaimed islands known as the FREEDOM ISLANDS.

Subsequently, PEA entered into a joint venture agreement (JVA) with AMARI, a Thai-Philippine
corporation to develop the Freedom Islands. Along withanother 250 hectares, PEA and AMARI entered
the JVA which would later transfer said lands to AMARI.

This caused a stir especially when Sen. Maceda assailed the agreement, claiming that such lands were
part of public domain (famously known as the “grandmother of all scams”).

Petitioner Frank J. Chavez filed case as a taxpayer praying for mandamus, a writ of preliminary injunction
and a TRO against the sale of reclaimed lands by PEA to AMARI and from implementing the JVA.
Following these events, under President Estrada’s admin, PEA and AMARI entered into an Amended JVA
and Mr. Chavez claim that the contract is null and void.

ISSUE:
1.) Whether or not the FREEDOM ISLANDS are alienable and disposable public lands? YES.

2.) Whether or not the Special Patent granted to PEA converted the land to private land, as such, may be
disposed to private corporations? NO.

3.) Whether or AMARI, a private corporation, can acquire and own under the Amended JVA 367.5
hectares of reclaimed foreshore and submerged areas in Manila Bay? NO.

HELD:

I. GOVERNMENT ACTS DECLARED THE LAND ALIENABLE AND DISPOSABLE.

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 of CA No. 141 and other applicable laws.

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. 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.

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.

II. LANDS REGISTERED UNDER THE TORRENS SYSTEM DOES NOT AUTOMATICALLY CONVERT
IT INTO PRIVATE LAND.
PEA contends that PD No. 1085 and EO No. 525 constitute the legislative authority allowing PEA to sell
its reclaimed lands. 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. 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.

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.

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 own 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. 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.

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. Alienable lands
of the public domain held by government entitles 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.
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.

This scheme, if allowed, can even be applied to alienable agricultural lands of the public domain since
PEA can "acquire . . . 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.

III. AMARI, AS A PRIVATE CORPORATION, CANNOT ACQUIRE THE FREEDOM ISLANDS

WITHOUT VIOLATING THE MANDATE 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 conditional ban on alienation of
lands of the public domain to private corporations, do so at their own risks.

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.

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.

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.

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.