Chavez vs.

Public Estates Authority

G.R. No. 133250. November 11, 2003.

Facts:

The Court was asked to legitimize a government contract that conveyed to a private entity
(Amari Coastal Bay Development Corp.) by the Public Estates Authority 157.84 hectares of
reclaimed public lands along Roxas Boulevard, in Metro Manila at the negotiated price of P1,200
per square meter. However, published reports place the market price of land near that area at that
time at a high of P90,000 per square meter. The difference in price is a staggering P140.16
billion.

the Senate Blue Ribbon Committee and the Committee on Accountability of Public Officers
conducted extensive public hearings to determine the actual market value of the public lands sold
to the private entity.

The private entity that purchased the reclaimed lands for P1.894 billion expressly admitted
before the Senate Committees that it spent P1.754 billion in commissions to pay various
individuals for “professional efforts and services in successfully negotiating and securing” the
contract. By any legal or moral yardstick, the P1.754 billion in commissions obviously
constitutes bribe money.

Issue: ISSUE:

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.

Held. Yes. the Amended JVA “violates glaringly Sections 2 and 3, Article XII of the 1987
Constitution.”

Ruling:

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. 
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.

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.

In Ayog v. Cusi, 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."