Chavez vs.

PEA-AMARI (2002)

Summary Cases:

● Chavez vs. Public Estate Authority (PEA-AMARI), 384 SCRA 152

Subject: Petition has not become moot as the court retains the jurisdiction to enjoin the implementation
of a government contract violative of the Constitution; No violation of the principle of judicial hierarchy;
Principle of exhaustion of administrative remedies does not apply when the issue involved is a purely
legal or constitutional question; Locus standi as taxpayer and citizen (when the object of mandamus is
the enforcement of a public duty, sufficient that petitioner is a citizen); Right to information on matters of
public concern; Right to information does not cover privileged or confidential information; Right to
information includes official information on on-going negotiations before a final agreement, provided the
information constitute definite propositions by the government and should not cover recognized
exceptions; Limitations on the exercise of the right to information; Regalian doctrine; Property of public
dominion; Re-classification of property of public dominion into private property (requires a positive act);
Before the government could dispose of lands of the public domain, the lands must first be officially
classified as alienable or disposable; Foreshore lands and reclaimed lands are lands of the pubic domain;
Private corporations may not acquire, and may only lease, alienable lands of the public domain;
Freedom Islands have been declared as alienable or disposable lands of the public domain; Submerged
areas, which still form part of the public domain, are inalienable and outside the commerce of man; For
reclaimed foreshore lands and submerged lands to be alienable, there must be be (1) official
classification as alienable and disposable by the President, upon recommendation of the DENR, and (2)
formal declaration that these lands are not needed for public service; PEA's Authority to Sell Reclaimed
Lands; The requirement of public auction in the sale of reclaimed foreshore and submerged lands;
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; The contractor or developer of a reclamataion project, if a
corporate entity, can only be paid with leaseholds on portions of the reclaimed land; Registration of lands
of the public domain under the Torrens system, by itself, cannot convert public lands into private lands;
Alienable lands of the public domain that are transferred to government units or entities remain public
lands and they cannot be alienated or encumbered unless Congress passes a law authorizing the same;
Lands of the public domain may be registered under the Torrens System without losing their character
as public lands
Facts:

In 1973, the government, through the Commissioner of Public Highways, signed a contract with the
Construction and Development Corporation of the Philippines ("CDCP") 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.

In 1977, then President Marcos issued Presidential Decree No. 1084 creating the Public Estates
Authority ("PEA") which was tasked 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." 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).

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 1,915,894 square meters." Subsequently, the Register of Deeds of
Parañaque issued Transfer Certificates of Title Nos. 7309, 7311, and 7312, in the name of PEA,
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covering the three reclaimed islands known as the "Freedom Islands" located at the southern portion of
the Manila-Cavite Coastal Road. The Freedom Islands have a total land area of 157.841 hectares.

1995, PEA entered into a Joint Venture Agreement ("JVA") with AMARI, a private corporation, to develop
the Freedom Islands. The JVA 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. The Board of Directors of PEA, in its Resolution No. 1245, confirmed the JVA.
President Fidel V. Ramos, through then Executive Secretary Ruben Torres, likewise approved the JVA.

In 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 Committees conducted a
joint investigation. Among the conclusions of the Senate Committee Report No. 560 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.

The JVA underwent renegotiaitions. 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. 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.

In 1998, petitioner Frank I. Chavez, 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 also 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.

Issues:

(1) whether the principal reliefs prayed for in the petition are moot and academic because of subsequent
events
(2) whether the petition merits dismissal for failing to observe the principle governing the hierarchy of
courts.
(3) whether the petition merits dismissal for non-exhaustion of administrative remedies.
(4) whether petitioner has locus standi to bring this suit
(5) whether the constitutional right to information includes official information on on-going negotiations
before a final agreement
(6) whether stipulations in the Amended JVA for the transfer to AMARI of lands, reclaimed or to be
reclaimed, violate the Constitution
Held:
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First issue:

Petition has not become moot as the court retains the jurisdiction to enjoin the implementation of
a government contract violative of the Constitution

1. 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.

2. 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.

3. 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.

Second issue:

No violation of the principle of judicial hierarchy

4. PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief directly from the
Supreme 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. 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:

Principle of exhaustion of administrative remedies does not apply when the issue involved is a
purely legal or constitutional question

5. PEA faults petitioner for seeking judicial intervention in compelling PEA to disclose publicly certain
information without first asking PEA the needed information.
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6. The original JVA sought to dispose to AMARI public lands held by PEA, a government corporation.
Under Section 79 of the Government Auditing Code, 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.

7. 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. 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. The
principle of exhaustion of administrative remedies does not apply in the instant case.

Fourth issue:

Locus standi as taxpayer and citizen (when the object of mandamus is the enforcement of a
public duty, sufficient that petitioner is a citizen)

8. 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.

9. The Court has upheld the right of a citizen to bring a taxpayer's suit on matters of transcendental
importance to the public (see Chavez v. PCGG)

10. 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. (see Tañada v. Tuvera; Legaspi v. Civil
Service Commission)

11. 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 should be allowed.
Fifth issue:

Right to information on matters of public concern

12. Section 7, Article III of the Constitution explains the people's right to information on matters of public
concern in this manner:

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 "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."

13. The State policy of full transparency in all transactions involving public interest 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."

14. The right covers three categories of information which are "matters of public concern," namely:

(a) official records— refers to any document that is part of the public records in the custody of
government agencies or officials

(b) documents and papers pertaining to official acts, transactions and decisions - refers to
documents and papers recording, evidencing, establishing, confirming, supporting, justifying or
explaining official acts, transactions or decisions of government agencies or officials

(c) government research data used in formulating policies- refers to research data, whether raw,
collated or processed, owned by the government and used in formulating government policies.

Right to information does not cover privileged or confidential information

15. The right to information, however, does not extend to matters recognized as privileged information
under the separation of powers.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. The right may also be subject to other limitations that Congress may impose by law.

16. 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, 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. This is not the situation in the instant
case.

Right to information includes official information on on-going negotiations before a final

agreement, provided the information constitute definite propositions by the government and
should not cover recognized exceptions

17. 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
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fails to make this disclosure, any citizen can demand from PEA this information at any time during the
bidding process.

18. However, information 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.

19. Nevertheless, , 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. The commissioners of the 1986
Constitutional Commission understood that the right to information "contemplates inclusion of
negotiations leading to the consummation of the transaction.”

20. 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. 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.

21. 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.

Limitations on the exercise of the right to information

22. 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. 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.

23. 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.
Sixth issue:

Regalian Doctrine

24. 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 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.

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25. 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.

Property of public dominion

26. 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."

27. 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.

28. 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.
Re-classification of property of public dominion into private property (requires a positive act)

29. 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."

30. 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.

Before the government could dispose of lands of the public domain, the lands must first be
officially classified as alienable or disposable

31. Commonwealth Act No. 141 (CA No.141) or the Public Land Act, 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. 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 8 of CA No. 141 states that the
government can declare open for disposition or concession only lands that are "officially delimited and
classified."

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32. 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.

Foreshore lands and reclaimed lands are lands of the pubic domain

33. 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. (see
concurring opinion of Justice Puno in Republic Real Estate Corporation v. Court of Appeals)

34. 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.
Private corporations may not acquire, and may only lease, alienable lands of the public domain

35. 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. 14.

36. 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. (i.e., 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.) 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.

37. AMARI contends that the Amended JVA "is not a sale but a joint venture." 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.

Freedom Islands have been declared as alienable or disposable lands of the public domain

38. PD No. 1085, coupled with President Aquino's actual issuance of a special patent covering the
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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.

Submerged areas, which still form part of the public domain, are inalienable and outside the
commerce of man.

39. However, 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. 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.

40. 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.
For reclaimed foreshore lands and submerged lands to be alienable, there must be be (1) official
classification as alienable and disposable by the President, upon recommendation of the DENR,
and (2) formal declaration that these lands are not needed for public service

41. 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. 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.

42. 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.

43. The Revised Administrative Code of 1987 vests in the Department of Environment and Natural
Resources (DENR) the "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.

44. 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
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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.

45. 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.

46. Absent two official acts - (1) a classification that these lands are alienable or disposable and open to
disposition and (2) 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.

PEA's Authority to Sell Reclaimed Lands

47. A law is needed to convey any real property belonging to the Government. (see Laurel vs. Garcia)

48. While there is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell its
reclaimed lands, Presidential Decree No. 1084, the charter of PEA 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.

(a) PEA may sell its patrimonial properties to both private individual or private corporations. 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.

(b) PEA may also sell its alienable or disposable lands of the public domain to private
individuals only. 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.

49. The provision in PD No. 1085 stating that portions of the reclaimed lands could be transferred by
PEA to the "contractor or his assignees"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 foreshore and submerged lands

50. 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. 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
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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.

51. 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. (see COA Circular No. 89-296 dated January 27, 1989)

52. 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.

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

53. 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.

54. 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. 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.

The contractor or developer of a reclamataion project, if a corporate entity, can only be paid with
leaseholds on portions of the reclaimed land

55. A private corporation, even one that undertakes the physical reclamation of a government
build-operate-and-transfer (BOT) project, cannot acquire reclaimed alienable lands of the public domain
in view of the constitutional ban. Republic Act No. 6957 (BOT Law) recognizes the constitutional ban on
private corporations from holding alienable lands of the public domain except by lease.

56. Section 302 of the Local Government Code (LGC) authorizes local governments in land reclamation
projects to pay the contractor or developer in kind consisting of a percentage of the reclaimed land.
Notwithstanding, the constitutional restrictions on land ownership automatically apply even though not
expressly mentioned in the Local Government Code.

57. 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 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.
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Registration of lands of the public domain under the Torrens system, by itself, cannot convert
public lands into private lands

58. PEA and AMARI theorize that the "act of conveying the ownership of the reclaimed lands to PEA
transformed such lands of the public domain to private lands." They 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.

59. 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.

Alienable lands of the public domain that are transferred to government units or entities remain
public lands and they cannot be alienated or encumbered unless Congress passes a law
authorizing the same

60. 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.

61. 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. 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.

62. 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.

63. 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.

64. 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
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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.

Lands of the public domain may be registered under the Torrens System without losing their
character as public lands

65. 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.

66. 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.

67. Also, 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. 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.

68. 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.

69. 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.

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