NAT RES CASES
peoples over the ancestral lands;
[G.R. No. 135385. December 6, 2000]
CRUZ and CESAR EUROPA, petitioners, vs. SECRETARY OF
ENVIRONMENT AND NATURAL RESOURCES
RES OLUTIO N
PER CURIAM:
Petitioners Isagani Cruz and Cesar Europa brought this suit for
prohibition and mandamus as citizens and taxpayers, assailing the
constitutionality of certain provisions of Republic Act No. 8371 (R.A. 8371),
otherwise known as the Indigenous Peoples Rights Act of 1997 (IPRA), and
its Implementing Rules and Regulations (Implementing Rules).
In its resolution of September 29, 1998, the Court required respondents
to comment.[1] In compliance, respondents Chairperson and Commissioners of
the National Commission on Indigenous Peoples (NCIP), the government
agency created under the IPRA to implement its provisions, filed on October
13, 1998 their Comment to the Petition, in which they defend the
constitutionality of the IPRA and pray that the petition be dismissed for lack
of merit.
On October 19, 1998, respondents Secretary of the Department of
Environment and Natural Resources (DENR) and Secretary of the Department
of Budget and Management (DBM) filed through the Solicitor General a
consolidated Comment. The Solicitor General is of the view that the IPRA is
partly unconstitutional on the ground that it grants ownership over natural
resources to indigenous peoples and prays that the petition be granted in part.
On November 10, 1998, a group of intervenors, composed of Sen. Juan
Flavier, one of the authors of the IPRA, Mr. Ponciano Bennagen, a member of
the 1986 Constitutional Commission, and the leaders and members of 112
groups of indigenous peoples (Flavier, et. al), filed their Motion for Leave to
Intervene. They join the NCIP in defending the constitutionality of IPRA and
praying for the dismissal of the petition.
On March 22, 1999, the Commission on Human Rights (CHR) likewise
filed a Motion to Intervene and/or to Appear as Amicus Curiae. The CHR
asserts that IPRA is an expression of the principle of parens patriae and that
the State has the responsibility to protect and guarantee the rights of those
who are at a serious disadvantage like indigenous peoples. For this reason it
prays that the petition be dismissed.
On March 23, 1999, another group, composed of the Ikalahan
Indigenous People and the Haribon Foundation for the Conservation of
Natural Resources, Inc. (Haribon, et al.), filed a motion to Intervene with
attached Comment-in-Intervention. They agree with the NCIP and Flavier, et
al. that IPRA is consistent with the Constitution and pray that the petition for
prohibition and mandamus be dismissed.
The motions for intervention of the aforesaid groups and organizations
were granted.
Oral arguments were heard on April 13, 1999. Thereafter, the parties
and intervenors filed their respective memoranda in which they reiterate the
arguments adduced in their earlier pleadings and during the hearing.
Petitioners assail the constitutionality of the following provisions of the
IPRA and its Implementing Rules on the ground that they amount to an
unlawful deprivation of the States ownership over lands of the public domain
as well as minerals and other natural resources therein, in violation of the
regalian doctrine embodied in Section 2, Article XII of the Constitution:
(1) Section 3(a) which defines the extent and coverage of ancestral domains,
and Section 3(b) which, in turn, defines ancestral lands;
(2) Section 5, in relation to section 3(a), which provides that ancestral
domains including inalienable public lands, bodies of water, mineral and other
resources found within ancestral domains are private but community property
of the indigenous peoples;
(3) Section 6 in relation to section 3(a) and 3(b) which defines the
composition of ancestral domains and ancestral lands;
(4) Section 7 which recognizes and enumerates the rights of the indigenous
peoples over the ancestral domains;
(5) Section 8 which recognizes and enumerates the rights of the indigenous
(6) Section 57 which provides for priority rights of the indigenous peoples in
the harvesting, extraction, development or exploration of minerals and other
natural resources within the areas claimed to be their ancestral domains, and
the right to enter into agreements with nonindigenous peoples for the
development and utilization of natural resources therein for a period not
exceeding 25 years, renewable for not more than 25 years; and
(7) Section 58 which gives the indigenous peoples the responsibility to
maintain, develop, protect and conserve the ancestral domains and portions
thereof which are found to be necessary for critical watersheds, mangroves,
wildlife sanctuaries, wilderness, protected areas, forest cover or reforestation.
[2]
Petitioners also content that, by providing for an all-encompassing
definition of ancestral domains and ancestral lands which might even include
private lands found within said areas, Sections 3(a) and 3(b) violate the rights
of private landowners.[3]
In addition, petitioners question the provisions of the IPRA defining the
powers and jurisdiction of the NCIP and making customary law applicable to
the settlement of disputes involving ancestral domains and ancestral lands on
the ground that these provisions violate the due process clause of the
Constitution.[4]
These provisions are:
(1) sections 51 to 53 and 59 which detail the process of delineation and
recognition of ancestral domains and which vest on the NCIP the sole
authority to delineate ancestral domains and ancestral lands;
(2) Section 52[i] which provides that upon certification by the NCIP that a
particular area is an ancestral domain and upon notification to the following
officials, namely, the Secretary of Environment and Natural Resources,
Secretary of Interior and Local Governments, Secretary of Justice and
Commissioner of the National Development Corporation, the jurisdiction of
said officials over said area terminates;
(3) Section 63 which provides the customary law, traditions and practices of
indigenous peoples shall be applied first with respect to property rights,
claims of ownership, hereditary succession and settlement of land disputes,
and that any doubt or ambiguity in the interpretation thereof shall be resolved
in favor of the indigenous peoples;
(4) Section 65 which states that customary laws and practices shall be used to
resolve disputes involving indigenous peoples; and
(5) Section 66 which vests on the NCIP the jurisdiction over all claims and
disputes involving rights of the indigenous peoples.[5]
Finally, petitioners assail the validity of Rule VII, Part II, Section 1 of
the NCIP Administrative Order No. 1, series of 1998, which provides that the
administrative relationship of the NCIP to the Office of the President is
characterized as a lateral but autonomous relationship for purposes of policy
and program coordination. They contend that said Rule infringes upon the
Presidents power of control over executive departments under Section 17,
Article VII of the Constitution.[6]
Petitioners pray for the following:
(1) A declaration that Sections 3, 5, 6, 7, 8, 52[I], 57, 58, 59, 63, 65 and 66 and
other related provisions of R.A. 8371 are unconstitutional and invalid;
(2) The issuance of a writ of prohibition directing the Chairperson and
Commissioners of the NCIP to cease and desist from implementing the
assailed provisions of R.A. 8371 and its Implementing Rules;
(3) The issuance of a writ of prohibition directing the Secretary of the
Department of Environment and Natural Resources to cease and desist
from implementing Department of Environment and Natural Resources
Circular No. 2, series of 1998;
(4) The issuance of a writ of prohibition directing the Secretary of Budget and
Management to cease and desist from disbursing public funds for the
implementation of the assailed provisions of R.A. 8371; and
(5) The issuance of a writ of mandamus commanding the Secretary of
Environment and Natural Resources to comply with his duty of carrying
out the States constitutional mandate to control and supervise the
exploration, development, utilization and conservation of Philippine
natural resources.[7]

After due deliberation on the petition, the members of the Court voted
as follows:
Seven (7) voted to dismiss the petition. Justice Kapunan filed an
opinion, which the Chief Justice and Justices Bellosillo, Quisumbing, and
Santiago join, sustaining the validity of the challenged provisions of R.A.
8371.Justice Puno also filed a separate opinion sustaining all challenged
provisions of the law with the exception of Section 1, Part II, Rule III of NCIP
Administrative Order No. 1, series of 1998, the Rules and Regulations
Implementing the IPRA, and Section 57 of the IPRA which he contends
should be interpreted as dealing with the large-scale exploitation of natural
resources and should be read in conjunction with Section 2, Article XII of the
1987 Constitution. On the other hand, Justice Mendoza voted to dismiss the
petition solely on the ground that it does not raise a justiciable controversy
and petitioners do not have standing to question the constitutionality of R.A.
8371.
Seven (7) other members of the Court voted to grant the
petition. Justice Panganiban filed a separate opinion expressing the view that
Sections 3 (a)(b), 5, 6, 7 (a)(b), 8, and related provisions of R.A. 8371 are
unconstitutional. He reserves judgment on the constitutionality of Sections 58,
59, 65, and 66 of the law, which he believes must await the filing of specific
cases by those whose rights may have been violated by the IPRA.Justice Vitug
also filed a separate opinion expressing the view that Sections 3(a), 7, and 57
of R.A. 8371 are unconstitutional. Justices Melo, Pardo, Buena, Gonzaga-
Reyes, and De Leon join in the separate opinions of Justices Panganiban and
Vitug.
As the votes were equally divided (7 to 7) and the necessary majority
was not obtained, the case was redeliberated upon. However, after
redeliberation, the voting remained the same. Accordingly, pursuant to Rule
56, Section 7 of the Rules of Civil Procedure, the petition is DISMISSED.
Attached hereto and made integral parts thereof are the separate
opinions of Justices Puno, Vitug, Kapunan, Mendoza, and Panganiban.
SO ORDERED.
[G.R. No. 133250. July 9, 2002]
CHAVEZ, petitioner, vs. PUBLIC ESTATES AUTHORITY and AMARI
COASTAL BAY DEVELOPMENT CORPORATION
DECISION
CARPIO, J.:
This is an original Petition for Mandamus with prayer for a writ of
preliminary injunction and a temporary restraining order. The petition seeks to
compel the Public Estates Authority (PEA for brevity) to disclose all facts on
PEAs then on-going renegotiations with Amari Coastal Bay and Development
Corporation (AMARI for brevity) to reclaim portions of Manila Bay. The
petition further seeks to enjoin PEA from signing a new agreement with
AMARI involving such reclamation.
The Facts
On November 20, 1973, the government, through the Commissioner of
Public Highways, signed a contract with the Construction and Development
Corporation of the Philippines (CDCP for brevity) to reclaim certain foreshore
and offshore areas of Manila Bay. The contract also included the construction
of Phases I and II of the Manila-Cavite Coastal Road. CDCP obligated itself
to carry out all the works in consideration of fifty percent of the total
reclaimed land.
On February 4, 1977, then President Ferdinand E. Marcos issued
Presidential Decree No. 1084 creating PEA. PD No. 1084 tasked PEA to
reclaim land, including foreshore and submerged areas, and to develop,
improve, acquire, x x x lease and sell any and all kinds of lands. [1] On the
same date, then President Marcos issued Presidential Decree No. 1085
transferring to PEA the lands reclaimed in the foreshore and offshore of the
Manila Bay[2] under the Manila-Cavite Coastal Road and Reclamation Project
(MCCRRP).
On December 29, 1981, then President Marcos issued a memorandum
directing PEA to amend its contract with CDCP, so that [A]ll future works in
MCCRRP x x x shall be funded and owned by PEA. Accordingly, PEA and
CDCP executed a Memorandum of Agreement dated December 29, 1981,
which stated:
(i) CDCP shall undertake all reclamation, construction, and such other works
in the MCCRRP as may be agreed upon by the parties, to be paid according to
progress of works on a unit price/lump sum basis for items of work to be
agreed upon, subject to price escalation, retention and other terms and
conditions provided for in Presidential Decree No. 1594. All the financing
required for such works shall be provided by PEA.
xxx
(iii) x x x CDCP shall give up all its development rights and hereby agrees to
cede and transfer in favor of PEA, all of the rights, title, interest and
participation of CDCP in and to all the areas of land reclaimed by CDCP in
the MCCRRP as of December 30, 1981 which have not yet been sold,
transferred or otherwise disposed of by CDCP as of said date, which areas
consist of approximately Ninety-Nine Thousand Four Hundred Seventy Three
(99,473) square meters in the Financial Center Area covered by land pledge
No. 5 and approximately Three Million Three Hundred Eighty Two Thousand
Eight Hundred Eighty Eight (3,382,888) square meters of reclaimed areas at
varying elevations above Mean Low Water Level located outside the Financial
Center Area and the First Neighborhood Unit.[3]
On January 19, 1988, then President Corazon C. Aquino issued Special
Patent No. 3517, granting and transferring to PEA the parcels of land so
reclaimed under the Manila-Cavite Coastal Road and Reclamation Project
(MCCRRP) containing a total area of one million nine hundred fifteen
thousand eight hundred ninety four (1,915,894) square meters. Subsequently,
on April 9, 1988, the Register of Deeds of the Municipality of Paraaque issued
Transfer Certificates of Title Nos. 7309, 7311, and 7312, in the name of PEA,
covering the three reclaimed islands known as the Freedom Islands located at
the southern portion of the Manila-Cavite Coastal Road, Paraaque City. The
Freedom Islands have a total land area of One Million Five Hundred Seventy
Eight Thousand Four Hundred and Forty One (1,578,441) square meters or
157.841 hectares.
On April 25, 1995, PEA entered into a Joint Venture Agreement (JVA
for brevity) with AMARI, a private corporation, to develop the Freedom
Islands. The JVA also required the reclamation of an additional 250 hectares
of submerged areas surrounding these islands to complete the configuration in
the Master Development Plan of the Southern Reclamation Project-
MCCRRP. PEA and AMARI entered into the JVA through negotiation without
public bidding.[4] On April 28, 1995, the Board of Directors of PEA, in its
Resolution No. 1245, confirmed the JVA. [5] On June 8, 1995, then President
Fidel V. Ramos, through then Executive Secretary Ruben Torres, approved the
JVA.[6]
On November 29, 1996, then Senate President Ernesto Maceda
delivered a privilege speech in the Senate and denounced the JVA as the
grandmother of all scams. As a result, the Senate Committee on Government
Corporations and Public Enterprises, and the Committee on Accountability of
Public Officers and Investigations, conducted a joint investigation. The Senate
Committees reported the results of their investigation in Senate Committee
Report No. 560 dated September 16, 1997.[7] Among the conclusions of their
report are: (1) the reclaimed lands PEA seeks to transfer to AMARI under the
JVA are lands of the public domain which the government has not classified as
alienable lands and therefore PEA cannot alienate these lands; (2) the
certificates of title covering the Freedom Islands are thus void, and (3) the
JVA itself is illegal.
On December 5, 1997, then President Fidel V. Ramos issued
Presidential Administrative Order No. 365 creating a Legal Task Force to
conduct a study on the legality of the JVA in view of Senate Committee
Report No. 560. The members of the Legal Task Force were the Secretary of
Justice,[8] the Chief Presidential Legal Counsel,[9] and the Government
Corporate Counsel.[10] The Legal Task Force upheld the legality of the JVA,
contrary to the conclusions reached by the Senate Committees.[11]
On April 4 and 5, 1998, the Philippine Daily
Inquirer and Today published reports that there were on-going renegotiations
between PEA and AMARI under an order issued by then President Fidel V.
Ramos. According to these reports, PEA Director Nestor Kalaw, PEA
Chairman Arsenio Yulo and retired Navy Officer Sergio Cruz composed the
negotiating panel of PEA.
On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition
for Prohibition with Application for the Issuance of a Temporary Restraining
Order and Preliminary Injunction docketed as G.R. No. 132994 seeking to
nullify the JVA. The Court dismissed the petition for unwarranted disregard of
judicial hierarchy, without prejudice to the refiling of the case before the
proper court.[12]
 On April 27, 1998, petitioner Frank I. Chavez (Petitioner for brevity) as
a taxpayer, filed the instant Petition for Mandamus with Prayer for the
Issuance of a Writ of Preliminary Injunction and Temporary Restraining
Order. Petitioner contends the government stands to lose billions of pesos in
the sale by PEA of the reclaimed lands to AMARI. Petitioner prays that PEA
publicly disclose the terms of any renegotiation of the JVA, invoking Section
28, Article II, and Section 7, Article III, of the 1987 Constitution on the right
of the people to information on matters of public concern. Petitioner assails
the sale to AMARI of lands of the public domain as a blatant violation of
Section 3, Article XII of the 1987 Constitution prohibiting the sale of
alienable lands of the public domain to private corporations. Finally, petitioner
asserts that he seeks to enjoin the loss of billions of pesos in properties of the
State that are of public dominion.
After several motions for extension of time, [13] PEA and AMARI filed
their Comments on October 19, 1998 and June 25, 1998,
respectively. Meanwhile, on December 28, 1998, petitioner filed an Omnibus
Motion: (a) to require PEA to submit the terms of the renegotiated PEA-
AMARI contract; (b) for issuance of a temporary restraining order; and (c) to
set the case for hearing on oral argument. Petitioner filed a Reiterative Motion
for Issuance of a TRO dated May 26, 1999, which the Court denied in a
Resolution dated June 22, 1999.
In a Resolution dated March 23, 1999, the Court gave due course to the
petition and required the parties to file their respective memoranda.
On March 30, 1999, PEA and AMARI signed the Amended Joint
Venture Agreement (Amended JVA, for brevity). On May 28, 1999, the Office
of the President under the administration of then President Joseph E. Estrada
approved the Amended JVA.
Due to the approval of the Amended JVA by the Office of the President,
petitioner now prays that on constitutional and statutory grounds the
renegotiated contract be declared null and void.[14]
The Issues
The issues raised by petitioner, PEA[15] and AMARI[16] are as follows:
I. WHETHER THE PRINCIPAL RELIEFS PRAYED FOR IN THE PETITION
ARE MOOT AND ACADEMIC BECAUSE OF SUBSEQUENT EVENTS;
II. WHETHER THE PETITION MERITS DISMISSAL FOR FAILING TO
OBSERVE THE PRINCIPLE GOVERNING THE HIERARCHY OF
COURTS;
III. WHETHER THE PETITION MERITS DISMISSAL FOR NON-
EXHAUSTION OF ADMINISTRATIVE REMEDIES;
IV. WHETHER PETITIONER HAS LOCUS STANDI TO BRING THIS SUIT;
V. WHETHER THE CONSTITUTIONAL RIGHT TO INFORMATION
INCLUDES OFFICIAL INFORMATION ON ON-GOING NEGOTIATIONS
BEFORE A FINAL AGREEMENT;
VI. WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE
AGREEMENT FOR THE TRANSFER TO AMARI OF CERTAIN LANDS,
RECLAIMED AND STILL TO BE RECLAIMED, VIOLATE THE 1987
CONSTITUTION; AND
VII. WHETHER THE COURT IS THE PROPER FORUM FOR RAISING THE
ISSUE OF WHETHER THE AMENDED JOINT VENTURE AGREEMENT
IS GROSSLY DISADVANTAGEOUS TO THE GOVERNMENT.
The Courts Ruling
First issue: whether the principal reliefs prayed for in the petition are moot
and academic because of subsequent events.
The petition prays that PEA publicly disclose the terms and conditions
of the on-going negotiations for a new agreement. The petition also prays that
the Court enjoin PEA from privately entering into, perfecting and/or executing
any new agreement with AMARI.
PEA and AMARI claim the petition is now moot and academic because
AMARI furnished petitioner on June 21, 1999 a copy of the signed Amended
JVA containing the terms and conditions agreed upon in the
renegotiations. Thus, PEA has satisfied petitioners prayer for a public
disclosure of the renegotiations. Likewise, petitioners prayer to enjoin the
signing of the Amended JVA is now moot because PEA and AMARI have
already signed the Amended JVA on March 30, 1999. Moreover, the Office of
the President has approved the Amended JVA on May 28, 1999.
Petitioner counters that PEA and AMARI cannot avoid the
constitutional issue by simply fast-tracking the signing and approval of the
Amended JVA before the Court could act on the issue. Presidential approval
does not resolve the constitutional issue or remove it from the ambit of
judicial review.
We rule that the signing of the Amended JVA by PEA and AMARI and
its approval by the President cannot operate to moot the petition and divest the
Court of its jurisdiction. PEA and AMARI have still to implement the
Amended JVA. The prayer to enjoin the signing of the Amended JVA on
constitutional grounds necessarily includes preventing its implementation if in
the meantime PEA and AMARI have signed one in violation of the
Constitution. Petitioners principal basis in assailing the renegotiation of the
JVA is its violation of Section 3, Article XII of the Constitution, which
prohibits the government from alienating lands of the public domain to private
corporations. If the Amended JVA indeed violates the Constitution, it is the
duty of the Court to enjoin its implementation, and if already implemented, to
annul the effects of such unconstitutional contract.
The Amended JVA is not an ordinary commercial contract but one
which seeks to transfer title and ownership to 367.5 hectares of reclaimed
lands and submerged areas of Manila Bay to a single private corporation. It
now becomes more compelling for the Court to resolve the issue to insure the
government itself does not violate a provision of the Constitution intended to
safeguard the national patrimony. Supervening events, whether intended or
accidental, cannot prevent the Court from rendering a decision if there is a
grave violation of the Constitution. In the instant case, if the Amended JVA
runs counter to the Constitution, the Court can still prevent the transfer of title
and ownership of alienable lands of the public domain in the name of
AMARI. Even in cases where supervening events had made the cases moot,
the Court did not hesitate to resolve the legal or constitutional issues raised to
formulate controlling principles to guide the bench, bar, and the public.[17]
Also, the instant petition is a case of first impression. All previous
decisions of the Court involving Section 3, Article XII of the 1987
Constitution, or its counterpart provision in the 1973 Constitution,
[18]
covered agricultural lands sold to private corporations which acquired the
lands from private parties. The transferors of the private corporations claimed
or could claim the right to judicial confirmation of their imperfect
titles[19]under Title II of Commonwealth Act. 141 (CA No. 141 for brevity). In
the instant case, AMARI seeks to acquire from PEA, a public corporation,
reclaimed lands and submerged areas for non-agricultural purposes
by purchase under PD No. 1084 (charter of PEA) and Title III of CA No.
141. Certain undertakings by AMARI under the Amended JVA constitute the
consideration for the purchase. Neither AMARI nor PEA can claim judicial
confirmation of their titles because the lands covered by the Amended JVA are
newly reclaimed or still to be reclaimed. Judicial confirmation of imperfect
title requires open, continuous, exclusive and notorious occupation of
agricultural lands of the public domain for at least thirty years since June 12,
1945 or earlier. Besides, the deadline for filing applications for judicial
confirmation of imperfect title expired on December 31, 1987.[20]
Lastly, there is a need to resolve immediately the constitutional issue
raised in this petition because of the possible transfer at any time by PEA to
AMARI of title and ownership to portions of the reclaimed lands. Under the
Amended JVA, PEA is obligated to transfer to AMARI the latters seventy
percent proportionate share in the reclaimed areas as the reclamation
progresses. The Amended JVA even allows AMARI to mortgage at any time
the entire reclaimed area to raise financing for the reclamation project.[21]
Second issue: whether the petition merits dismissal for failing to observe the
principle governing the hierarchy of courts.
PEA and AMARI claim petitioner ignored the judicial hierarchy by
seeking relief directly from the Court. The principle of hierarchy of courts
applies generally to cases involving factual questions. As it is not a trier of
facts, the Court cannot entertain cases involving factual issues. The instant
case, however, raises constitutional issues of transcendental importance to the
public.[22] The Court can resolve this case without determining any factual
issue related to the case. Also, the instant case is a petition
for mandamus which falls under the original jurisdiction of the Court under
Section 5, Article VIII of the Constitution. We resolve to exercise primary
jurisdiction over the instant case.
Third issue: whether the petition merits dismissal for non-exhaustion of
administrative remedies.
PEA faults petitioner for seeking judicial intervention in compelling
PEA to disclose publicly certain information without first asking PEA the
needed information. PEA claims petitioners direct resort to the Court violates
the principle of exhaustion of administrative remedies. It also violates the rule
that mandamus may issue only if there is no other plain, speedy and adequate
remedy in the ordinary course of law.
PEA distinguishes the instant case from Taada v. Tuvera[23] where the
Court granted the petition for mandamus even if the petitioners there did not
initially demand from the Office of the President the publication of the
presidential decrees. PEA points out that in Taada, the Executive Department
had an affirmative statutory duty under Article 2 of the Civil Code [24] and
Section 1 of Commonwealth Act No. 638[25] to publish the presidential
decrees. There was, therefore, no need for the petitioners in Taada to make an
initial demand from the Office of the President. In the instant case, PEA
claims it has no affirmative statutory duty to disclose publicly information
about its renegotiation of the JVA. Thus, PEA asserts that the Court must
apply the principle of exhaustion of administrative remedies to the instant case
in view of the failure of petitioner here to demand initially from PEA the
needed information.
The original JVA sought to dispose to AMARI public lands held by
PEA, a government corporation. Under Section 79 of the Government
Auditing Code,[26]2 the disposition of government lands to private parties
requires public bidding. PEA was under a positive legal duty to disclose to
the public the terms and conditions for the sale of its lands. The law
obligated PEA to make this public disclosure even without demand from
petitioner or from anyone. PEA failed to make this public disclosure because
the original JVA, like the Amended JVA, was the result of a negotiated
contract, not of a public bidding. Considering that PEA had an affirmative
statutory duty to make the public disclosure, and was even in breach of this
legal duty, petitioner had the right to seek direct judicial intervention.
Moreover, and this alone is determinative of this issue, the principle of
exhaustion of administrative remedies does not apply when the issue involved
is a purely legal or constitutional question. [27] The principal issue in the instant
case is the capacity of AMARI to acquire lands held by PEA in view of the
constitutional ban prohibiting the alienation of lands of the public domain to
private corporations. We rule that the principle of exhaustion of administrative
remedies does not apply in the instant case.
Fourth issue: whether petitioner has locus standi to bring this suit
PEA argues that petitioner has no standing to
institute mandamus proceedings to enforce his constitutional right to
information without a showing that PEA refused to perform an affirmative
duty imposed on PEA by the Constitution. PEA also claims that petitioner has
not shown that he will suffer any concrete injury because of the signing or
implementation of the Amended JVA. Thus, there is no actual controversy
requiring the exercise of the power of judicial review.
The petitioner has standing to bring this taxpayers suit because the
petition seeks to compel PEA to comply with its constitutional duties. There
are two constitutional issues involved here. First is the right of citizens to
information on matters of public concern. Second is the application of a
constitutional provision intended to insure the equitable distribution of
alienable lands of the public domain among Filipino citizens. The thrust of the
first issue is to compel PEA to disclose publicly information on the sale of
government lands worth billions of pesos, information which the Constitution
and statutory law mandate PEA to disclose. The thrust of the second issue is to
prevent PEA from alienating hundreds of hectares of alienable lands of the
public domain in violation of the Constitution, compelling PEA to comply
with a constitutional duty to the nation.
Moreover, the petition raises matters of transcendental importance to
the public. In Chavez v. PCGG,[28] the Court upheld the right of a citizen to
bring a taxpayers suit on matters of transcendental importance to the public,
thus -
Besides, petitioner emphasizes, the matter of recovering the ill-gotten wealth
of the Marcoses is an issue of transcendental importance to the public. He
asserts that ordinary taxpayers have a right to initiate and prosecute actions
questioning the validity of acts or orders of government agencies or
instrumentalities, if the issues raised are of paramount public interest, and if
they immediately affect the social, economic and moral well being of the
people.
Moreover, the mere fact that he is a citizen satisfies the requirement of
personal interest, when the proceeding involves the assertion of a public right,
such as in this case. He invokes several decisions of this Court which have set
aside the procedural matter of locus standi, when the subject of the case
involved public interest.
xxx
In Taada v. Tuvera, the Court asserted that when the issue concerns a public
right and the object of mandamus is to obtain the enforcement of a public
duty, the people are regarded as the real parties in interest; and because it is
sufficient that petitioner is a citizen and as such is interested in the execution
of the laws, he need not show that he has any legal or special interest in the
result of the action. In the aforesaid case, the petitioners sought to enforce
their right to be informed on matters of public concern, a right then recognized
in Section 6, Article IV of the 1973 Constitution, in connection with the rule
that laws in order to be valid and enforceable must be published in the Official
Gazette or otherwise effectively promulgated. In ruling for the petitioners'
legal standing, the Court declared that the right they sought to be enforced is a
public right recognized by no less than the fundamental law of the land.
Legaspi v. Civil Service Commission, while reiterating Taada, further declared
that when a mandamus proceeding involves the assertion of a public right, the
requirement of personal interest is satisfied by the mere fact that petitioner is a
citizen and, therefore, part of the general 'public' which possesses the right.
Further, in Albano v. Reyes, we said that while expenditure of public funds
may not have been involved under the questioned contract for the
development, management and operation of the Manila International
Container Terminal, public interest [was] definitely involved considering the
important role [of the subject contract] . . . in the economic development of
the country and the magnitude of the financial consideration involved. We
concluded that, as a consequence, the disclosure provision in the Constitution
would constitute sufficient authority for upholding the petitioner's standing.
Similarly, the instant petition is anchored on the right of the people to
information and access to official records, documents and papers a right
guaranteed under Section 7, Article III of the 1987 Constitution. Petitioner, a
former solicitor general, is a Filipino citizen. Because of the satisfaction of the
two basic requisites laid down by decisional law to sustain petitioner's legal
standing, i.e. (1) the enforcement of a public right (2) espoused by a Filipino
citizen, we rule that the petition at bar should be allowed.
We rule that since the instant petition, brought by a citizen, involves the
enforcement of constitutional rights - to information and to the equitable
diffusion of natural resources - matters of transcendental public
importance, the petitioner has the requisite locus standi.
Fifth issue: whether the constitutional right to information includes official
information on on-going negotiations before a final agreement.
Section 7, Article III of the Constitution explains the peoples right to
information on matters of public concern in this manner:
Sec. 7. The right of the people to information on matters of public concern
shall be recognized. Access to official records, and to documents, and papers
pertaining to official acts, transactions, or decisions, as well as to
government research data used as basis for policy development, shall be
afforded the citizen, subject to such limitations as may be provided by
law. (Emphasis supplied)
The State policy of full transparency in all transactions involving public
interest reinforces the peoples right to information on matters of public
concern. This State policy is expressed in Section 28, Article II of the
Constitution, thus:
Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts
and implements a policy of full public disclosure of all its transactions
involving public interest. (Emphasis supplied)
These twin provisions of the Constitution seek to promote transparency
in policy-making and in the operations of the government, as well as provide
the people sufficient information to exercise effectively other constitutional
rights. These twin provisions are essential to the exercise of freedom of
expression. If the government does not disclose its official acts, transactions
and decisions to citizens, whatever citizens say, even if expressed without any
restraint, will be speculative and amount to nothing. These twin provisions are
also essential to hold public officials at all times x x x accountable to the
people,[29] for unless citizens have the proper information, they cannot hold
public officials accountable for anything. Armed with the right information,
citizens can participate in public discussions leading to the formulation of
government policies and their effective implementation. An informed
citizenry is essential to the existence and proper functioning of any
democracy. As explained by the Court in Valmonte v. Belmonte, Jr.[30]

An essential element of these freedoms is to keep open a continuing dialogue
or process of communication between the government and the people. It is in
the interest of the State that the channels for free political discussion be
maintained to the end that the government may perceive and be responsive to
the peoples will. Yet, this open dialogue can be effective only to the extent
that the citizenry is informed and thus able to formulate its will
intelligently. Only when the participants in the discussion are aware of the
issues and have access to information relating thereto can such bear fruit.
PEA asserts, citing Chavez v. PCGG,[31] that in cases of on-going
negotiations the right to information is limited to definite propositions of the
government. PEA maintains the right does not include access to intra-agency
or inter-agency recommendations or communications during the stage when
common assertions are still in the process of being formulated or are in the
exploratory stage.
Also, AMARI contends that petitioner cannot invoke the right at the
pre-decisional stage or before the closing of the transaction. To support its
contention, AMARI cites the following discussion in the 1986 Constitutional
Commission:
Mr. Suarez. And when we say transactions which should be distinguished
from contracts, agreements, or treaties or whatever, does the Gentleman refer
to the steps leading to the consummation of the contract, or does he refer to
the contract itself?
Mr. Ople: The transactions used here, I suppose is generic and therefore, it
can cover both steps leading to a contract and already a consummated
contract, Mr. Presiding Officer.
Mr. Suarez: This contemplates inclusion of negotiations leading to the
consummation of the transaction.
Mr. Ople: Yes, subject only to reasonable safeguards on the national
interest.
Mr. Suarez: Thank you.[32] (Emphasis supplied)
AMARI argues there must first be a consummated contract before petitioner
can invoke the right. Requiring government officials to reveal their
deliberations at the pre-decisional stage will degrade the quality of decision-
making in government agencies. Government officials will hesitate to express
their real sentiments during deliberations if there is immediate public
dissemination of their discussions, putting them under all kinds of pressure
before they decide.
We must first distinguish between information the law on public
bidding requires PEA to disclose publicly, and information the constitutional
right to information requires PEA to release to the public. Before the
consummation of the contract, PEA must, on its own and without demand
from anyone, disclose to the public matters relating to the disposition of its
property. These include the size, location, technical description and nature of
the property being disposed of, the terms and conditions of the disposition, the
parties qualified to bid, the minimum price and similar information. PEA must
prepare all these data and disclose them to the public at the start of the
disposition process, long before the consummation of the contract, because the
Government Auditing Code requires public bidding. If PEA fails to make this
disclosure, any citizen can demand from PEA this information at any time
during the bidding process.
Information, however, on on-going evaluation or review of bids or
proposals being undertaken by the bidding or review committee is not
immediately accessible under the right to information. While the evaluation or
review is still on-going, there are no official acts, transactions, or decisions on
the bids or proposals. However, once the committee makes its official
recommendation, there arises a definite proposition on the part of the
government. From this moment, the publics right to information attaches, and
any citizen can access all the non-proprietary information leading to such
definite proposition. In Chavez v. PCGG,[33] the Court ruled as follows:
Considering the intent of the framers of the Constitution, we believe that it is
incumbent upon the PCGG and its officers, as well as other government
representatives, to disclose sufficient public information on any proposed
settlement they have decided to take up with the ostensible owners and
holders of ill-gotten wealth. Such information, though, must pertain
to definite propositions of the government, not necessarily to intra-agency or
inter-agency recommendations or communications during the stage when
common assertions are still in the process of being formulated or are in the
exploratory stage. There is need, of course, to observe the same restrictions on
disclosure of information in general, as discussed earlier such as on matters
involving national security, diplomatic or foreign relations, intelligence and
other classified information. (Emphasis supplied)
Contrary to AMARIs contention, the commissioners of the 1986
Constitutional Commission understood that the right to
information contemplates inclusion of negotiations leading to the
consummation of the transaction. Certainly, a consummated contract is not a
requirement for the exercise of the right to information. Otherwise, the people
can never exercise the right if no contract is consummated, and if one is
consummated, it may be too late for the public to expose its defects.
Requiring a consummated contract will keep the public in the dark until
the contract, which may be grossly disadvantageous to the government or
even illegal, becomes a fait accompli. This negates the State policy of full
transparency on matters of public concern, a situation which the framers of the
Constitution could not have intended. Such a requirement will prevent the
citizenry from participating in the public discussion of any proposed contract,
effectively truncating a basic right enshrined in the Bill of Rights. We can
allow neither an emasculation of a constitutional right, nor a retreat by the
State of its avowed policy of full disclosure of all its transactions involving
public interest.
The right covers three categories of information which are matters of
public concern, namely: (1) official records; (2) documents and papers
pertaining to official acts, transactions and decisions; and (3) government
research data used in formulating policies. The first category refers to any
document that is part of the public records in the custody of government
agencies or officials. The second category refers to documents and papers
recording, evidencing, establishing, confirming, supporting, justifying or
explaining official acts, transactions or decisions of government agencies or
officials. The third category refers to research data, whether raw, collated or
processed, owned by the government and used in formulating government
policies.
The information that petitioner may access on the renegotiation of the
JVA includes evaluation reports, recommendations, legal and expert opinions,
minutes of meetings, terms of reference and other documents attached to such
reports or minutes, all relating to the JVA. However, the right to information
does not compel PEA to prepare lists, abstracts, summaries and the like
relating to the renegotiation of the JVA. [34] The right only affords access to
records, documents and papers, which means the opportunity to inspect and
copy them. One who exercises the right must copy the records, documents and
papers at his expense. The exercise of the right is also subject to reasonable
regulations to protect the integrity of the public records and to minimize
disruption to government operations, like rules specifying when and how to
conduct the inspection and copying.[35]
The right to information, however, does not extend to matters
recognized as privileged information under the separation of powers. [36] The
right does not also apply to information on military and diplomatic secrets,
information affecting national security, and information on investigations of
crimes by law enforcement agencies before the prosecution of the accused,
which courts have long recognized as confidential. [37] The right may also be
subject to other limitations that Congress may impose by law.
There is no claim by PEA that the information demanded by petitioner
is privileged information rooted in the separation of powers. The information
does not cover Presidential conversations, correspondences, or discussions
during closed-door Cabinet meetings which, like internal deliberations of the
Supreme Court and other collegiate courts, or executive sessions of either
house of Congress,[38] are recognized as confidential.This kind of information
cannot be pried open by a co-equal branch of government. A frank exchange
of exploratory ideas and assessments, free from the glare of publicity and
pressure by interested parties, is essential to protect the independence of
decision-making of those tasked to exercise Presidential, Legislative and
Judicial power.[39] This is not the situation in the instant case.
We rule, therefore, that the constitutional right to information includes
official information on on-going 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.[40] Congress has also prescribed other limitations on the right
to information in several legislations.[41]
 Sixth issue: whether stipulations in the Amended JVA for the transfer to
AMARI of lands, reclaimed or to be reclaimed, violate the Constitution.
The Regalian Doctrine
The ownership of lands reclaimed from foreshore and submerged areas
is rooted in the Regalian doctrine which holds that the State owns all lands
and waters of the public domain. Upon the Spanish conquest of the
Philippines, ownership of all lands, territories and possessions in the
Philippines passed to the Spanish Crown. [42] The King, as the sovereign ruler
and representative of the people, acquired and owned all lands and territories
in the Philippines except those he disposed of by grant or sale to private
individuals.
The 1935, 1973 and 1987 Constitutions adopted the Regalian doctrine
substituting, however, the State, in lieu of the King, as the owner of all lands
and waters of the public domain. The Regalian doctrine is the foundation of
the time-honored principle of land ownership that all lands that were not
acquired from the Government, either by purchase or by grant, belong to the
public domain.[43] Article 339 of the Civil Code of 1889, which is now Article
420 of the Civil Code of 1950, incorporated the Regalian doctrine.
Ownership and Disposition of Reclaimed Lands
The Spanish Law of Waters of 1866 was the first statutory law
governing the ownership and disposition of reclaimed lands in the
Philippines. On May 18, 1907, the Philippine Commission enacted Act No.
1654 which provided for the lease, but not the sale, of reclaimed lands of the
government to corporations and individuals. Later, on November 29, 1919,
the Philippine Legislature approved Act No. 2874, the Public Land Act, which
authorized the lease, but not the sale, of reclaimed lands of the government
to corporations and individuals. On November 7, 1936, the National
Assembly passed Commonwealth Act No. 141, also known as the Public Land
Act, which authorized the lease, but not the sale, of reclaimed lands of the
government to corporations and individuals. CA No. 141 continues to this
day as the general law governing the classification and disposition of lands of
the public domain.
The Spanish Law of Waters of 1866 and the Civil Code of 1889
Under the Spanish Law of Waters of 1866, the shores, bays, coves,
inlets and all waters within the maritime zone of the Spanish territory
belonged to the public domain for public use. [44] The Spanish Law of Waters
of 1866 allowed the reclamation of the sea under Article 5, which provided as
follows:
Article 5. Lands reclaimed from the sea in consequence of works constructed
by the State, or by the provinces, pueblos or private persons, with proper
permission, shall become the property of the party constructing such works,
unless otherwise provided by the terms of the grant of authority.
Under the Spanish Law of Waters, land reclaimed from the sea belonged to
the party undertaking the reclamation, provided the government issued the
necessary permit and did not reserve ownership of the reclaimed land to the
State.
Article 339 of the Civil Code of 1889 defined property of public
dominion as follows:
Art. 339. Property of public dominion is
1. That devoted to public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, riverbanks, shores, roadsteads, and that of a
similar character;
2. That belonging exclusively to the State which, without being of general
public use, is employed in some public service, or in the development of the
national wealth, such as walls, fortresses, and other works for the defense of
the territory, and mines, until granted to private individuals.
Property devoted to public use referred to property open for use by the
public. In contrast, property devoted to public service referred to property
used for some specific public service and open only to those authorized to use
the property.
Property of public dominion referred not only to property devoted to
public use, but also to property not so used but employed to develop the
national wealth. This class of property constituted property of public
dominion although employed for some economic or commercial activity to
increase the national wealth.
Article 341 of the Civil Code of 1889 governed the re-classification of
property of public dominion into private property, to wit:
Art. 341. Property of public dominion, when no longer devoted to public use
or to the defense of the territory, shall become a part of the private property of
the State.
This provision, however, was not self-executing. The legislature, or the
executive department pursuant to law, must declare the property no longer
needed for public use or territorial defense before the government could lease
or alienate the property to private parties.[45]
Act No. 1654 of the Philippine Commission
On May 8, 1907, the Philippine Commission enacted Act No. 1654
which regulated the lease of reclaimed and foreshore lands. The salient
provisions of this law were as follows:
Section 1. The control and disposition of the foreshore as defined in existing
law, and the title to all Government or public lands made or reclaimed by the
Government by dredging or filling or otherwise throughout the Philippine
Islands, shall be retained by the Government without prejudice to vested
rights and without prejudice to rights conceded to the City of Manila in the
Luneta Extension.
Section 2. (a) The Secretary of the Interior shall cause all Government or
public lands made or reclaimed by the Government by dredging or filling or
otherwise to be divided into lots or blocks, with the necessary streets and
alleyways located thereon, and shall cause plats and plans of such surveys to
be prepared and filed with the Bureau of Lands.
(b) Upon completion of such plats and plans the Governor-General shall give
notice to the public that such parts of the lands so made or reclaimed as are
not needed for public purposes will be leased for commercial and business
purposes, x x x.
xxx
(e) The leases above provided for shall be disposed of to the highest and best
bidder therefore, subject to such regulations and safeguards as the Governor-
General may by executive order prescribe. (Emphasis supplied)
Act No. 1654 mandated that the government should retain title to all
lands reclaimed by the government. The Act also vested in the government
control and disposition of foreshore lands. Private parties could lease lands
reclaimed by the government only if these lands were no longer needed for
public purpose. Act No. 1654 mandated public bidding in the lease of
government reclaimed lands. Act No. 1654 made government reclaimed
lands sui generis in that unlike other public lands which the government could
sell to private parties, these reclaimed lands were available only for lease to
private parties.
Act No. 1654, however, did not repeal Section 5 of the Spanish Law of
Waters of 1866. Act No. 1654 did not prohibit private parties from reclaiming
parts of the sea under Section 5 of the Spanish Law of Waters. Lands
reclaimed from the sea by private parties with government permission
remained private lands.
Act No. 2874 of the Philippine Legislature
On November 29, 1919, the Philippine Legislature enacted Act No.
2874, the Public Land Act.[46] The salient provisions of Act No. 2874, on
reclaimed lands, were as follows:
Sec. 6. The Governor-General, upon the recommendation of the Secretary
of Agriculture and Natural Resources, shall from time to time classify the
lands of the public domain into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands, x x x.
Sec. 7. For the purposes of the government and disposition of alienable or
disposable public lands, the Governor-General, upon recommendation by
the Secretary of Agriculture and Natural Resources, shall from time to time
declare what lands are open to disposition or concession under this Act.
Sec. 8. Only those lands shall be declared open to disposition or concession
which have been officially delimited or classified x x x.
xxx
Sec. 55. Any tract of land of the public domain which, being neither timber
nor mineral land, shall be classified as suitable for residential purposes or for
commercial, industrial, or other productive purposes other than agricultural
purposes, and shall be open to disposition or concession, shall be disposed of
under the provisions of this chapter, and not otherwise.
Sec. 56. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other
means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or
banks of navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
x x x.
Sec. 58. The lands comprised in classes (a), (b), and (c) of section fifty-six
shall be disposed of to private parties by lease only and not otherwise, as
soon as the Governor-General, upon recommendation by the Secretary of
Agriculture and Natural Resources, shall declare that the same are not
necessary for the public service and are open to disposition under this
chapter. The lands included in class (d) may be disposed of by sale or lease
under the provisions of this Act. (Emphasis supplied)
Section 6 of Act No. 2874 authorized the Governor-General to classify
lands of the public domain into x x x alienable or disposable [47] lands. Section
7 of the Act empowered the Governor-General to declare what lands are open
to disposition or concession. Section 8 of the Act limited alienable or
disposable lands only to those lands which have been officially delimited and
classified.
Section 56 of Act No. 2874 stated that lands disposable under this
title[48] shall be classified as government reclaimed, foreshore and marshy
lands, as well as other lands. All these lands, however, must be suitable for
residential, commercial, industrial or other productive non-
agricultural purposes. These provisions vested upon the Governor-General
the power to classify inalienable lands of the public domain into disposable
lands of the public domain. These provisions also empowered the Governor-
General to classify further such disposable lands of the public domain into
government reclaimed, foreshore or marshy lands of the public domain, as
well as other non-agricultural lands.
Section 58 of Act No. 2874 categorically mandated that disposable
lands of the public domain classified as government reclaimed, foreshore and
marshy lands shall be disposed of to private parties by lease only and not
otherwise. The Governor-General, before allowing the lease of these lands to
private parties, must formally declare that the lands were not necessary for the
public service. Act No. 2874 reiterated the State policy to lease and not to sell
government reclaimed, foreshore and marshy lands of the public domain, a
policy first enunciated in 1907 in Act No. 1654. Government reclaimed,
foreshore and marshy lands remained sui generis, as the only alienable or
disposable lands of the public domain that the government could not sell to
private parties.
The rationale behind this State policy is obvious. Government
reclaimed, foreshore and marshy public lands for non-agricultural purposes
retain their inherent potential as areas for public service. This is the reason the
government prohibited the sale, and only allowed the lease, of these lands to
private parties. The State always reserved these lands for some future public
service.
Act No. 2874 did not authorize the reclassification of government
reclaimed, foreshore and marshy lands into other non-agricultural lands under
Section 56 (d). Lands falling under Section 56 (d) were the only lands for non-
agricultural purposes the government could sell to private parties. Thus, under
Act No. 2874, the government could not sell government reclaimed, foreshore
and marshy lands to private parties, unless the legislature passed a law
allowing their sale.[49]
Act No. 2874 did not prohibit private parties from reclaiming parts of
the sea pursuant to Section 5 of the Spanish Law of Waters of 1866. Lands
reclaimed from the sea by private parties with government permission
remained private lands.
Dispositions under the 1935 Constitution
On May 14, 1935, the 1935 Constitution took effect upon its
ratification by the Filipino people. The 1935 Constitution, in adopting the
Regalian doctrine, declared in Section 1, Article XIII, that
Section 1. All agricultural, timber, and mineral lands of the public domain,
waters, minerals, coal, petroleum, and other mineral oils, all forces of
potential energy and other natural resources of the Philippines belong to the
State, and their disposition, exploitation, development, or utilization shall be
limited to citizens of the Philippines or to corporations or associations at least
sixty per centum of the capital of which is owned by such citizens, subject to
any existing right, grant, lease, or concession at the time of the inauguration of
the Government established under this Constitution. Natural resources, with
the exception of public agricultural land, shall not be alienated, and no
license, concession, or lease for the exploitation, development, or utilization
of any of the natural resources shall be granted for a period exceeding twenty-
five years, renewable for another twenty-five years, except as to water rights
for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, in which cases beneficial use may be the
measure and limit of the grant. (Emphasis supplied)
The 1935 Constitution barred the alienation of all natural resources
except public agricultural lands, which were the only natural resources the
State could alienate. Thus, foreshore lands, considered part of the States
natural resources, became inalienable by constitutional fiat, available only for
lease for 25 years, renewable for another 25 years. The government could
alienate foreshore lands only after these lands were reclaimed and classified as
alienable agricultural lands of the public domain. Government reclaimed and
marshy lands of the public domain, being neither timber nor mineral lands,
fell under the classification of public agricultural lands.[50]However,
government reclaimed and marshy lands, although subject to classification as
disposable public agricultural lands, could only be leased and not sold to
private parties because of Act No. 2874.
The prohibition on private parties from acquiring ownership of
government reclaimed and marshy lands of the public domain was only a
statutory prohibition and the legislature could therefore remove such
prohibition.The 1935 Constitution did not prohibit individuals and
corporations from acquiring government reclaimed and marshy lands of the
public domain that were classified as agricultural lands under existing public
land laws.Section 2, Article XIII of the 1935 Constitution provided as follows:
Section 2. No private corporation or association may acquire, lease, or hold
public agricultural lands in excess of one thousand and twenty four
hectares, nor may any individual acquire such lands by purchase in excess
of one hundred and forty hectares, or by lease in excess of one thousand and
twenty-four hectares, or by homestead in excess of twenty-four
hectares. Lands adapted to grazing, not exceeding two thousand hectares, may
be leased to an individual, private corporation, or association. (Emphasis
supplied)
Still, after the effectivity of the 1935 Constitution, the legislature did not
repeal Section 58 of Act No. 2874 to open for sale to private parties
government reclaimed and marshy lands of the public domain. On the
contrary, the legislature continued the long established State policy of
retaining for the government title and ownership of government reclaimed and
marshy lands of the public domain.
Commonwealth Act No. 141 of the Philippine National Assembly
On November 7, 1936, the National Assembly approved
Commonwealth Act No. 141, also known as the Public Land Act, which
compiled the then existing laws on lands of the public domain. CA No. 141, as
amended, remains to this day the existing general law governing the
classification and disposition of lands of the public domain other than timber
and mineral lands.[51]
Section 6 of CA No. 141 empowers the President to classify lands of
the public domain into alienable or disposable[52] lands of the public domain,
which prior to such classification are inalienable and outside the commerce of
man. Section 7 of CA No. 141 authorizes the President to declare what lands
are open to disposition or concession. Section 8 of CA No. 141 states that the
government can declare open for disposition or concession only lands that are
officially delimited and classified. Sections 6, 7 and 8 of CA No. 141 read as
follows:
Sec. 6. The President, upon the recommendation of the Secretary of
Agriculture and Commerce, shall from time to time classify the lands of the
public domain into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands,
and may at any time and in like manner transfer such lands from one class to
another,[53] for the purpose of their administration and disposition.
Sec. 7. For the purposes of the administration and disposition of alienable or
disposable public lands, the President, upon recommendation by the
Secretary of Agriculture and Commerce, shall from time to time declare
what lands are open to disposition or concession under this Act.
Sec. 8. Only those lands shall be declared open to disposition or concession
which have been officially delimited and classified and, when practicable,
surveyed, and which have not been reserved for public or quasi-public uses,
nor appropriated by the Government, nor in any manner become private
property, nor those on which a private right authorized and recognized by this
Act or any other valid law may be claimed, or which, having been reserved or
appropriated, have ceased to be so. x x x.
Thus, before the government could alienate or dispose of lands of the public
domain, the President must first officially classify these lands as alienable or
disposable, and then declare them open to disposition or concession. There
must be no law reserving these lands for public or quasi-public uses.
The salient provisions of CA No. 141, on government reclaimed,
foreshore and marshy lands of the public domain, are as follows:
Sec. 58. Any tract of land of the public domain which, being neither timber
nor mineral land, is intended to be used for residential purposes or for
commercial, industrial, or other productive purposes other than
agricultural, and is open to disposition or concession, shall be disposed of
under the provisions of this chapter and not otherwise.
Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other
means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or
banks of navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
Sec. 60. Any tract of land comprised under this title may be leased or sold, as
the case may be, to any person, corporation, or association authorized to
purchase or lease public lands for agricultural purposes. x x x.
Sec. 61. The lands comprised in classes (a), (b), and (c) of section fifty-nine
shall be disposed of to private parties by lease only and not otherwise, as
soon as the President, upon recommendation by the Secretary of
Agriculture, shall declare that the same are not necessary for the public
service and are open to disposition under this chapter. The lands included in
class (d) may be disposed of by sale or lease under the provisions of this
Act. (Emphasis supplied)
Section 61 of CA No. 141 readopted, after the effectivity of the 1935
Constitution, Section 58 of Act No. 2874 prohibiting the sale of government
reclaimed, foreshore and marshy disposable lands of the public domain.All
these lands are intended for residential, commercial, industrial or other non-
agricultural purposes. As before, Section 61 allowed only the lease of such
lands to private parties. The government could sell to private parties only
lands falling under Section 59 (d) of CA No. 141, or those lands for non-
agricultural purposes not classified as government reclaimed, foreshore and
marshy disposable lands of the public domain. Foreshore lands, however,
became inalienable under the 1935 Constitution which only allowed the lease
of these lands to qualified private parties.
Section 58 of CA No. 141 expressly states that disposable lands of the
public domain intended for residential, commercial, industrial or other
productive purposes other than agricultural shall be disposed of under the
provisions of this chapter and not otherwise. Under Section 10 of CA No.
141, the term disposition includes lease of the land. Any disposition of
government reclaimed, foreshore and marshy disposable lands for non-
agricultural purposes must comply with Chapter IX, Title III of CA No. 141,
[54]
unless a subsequent law amended or repealed these provisions.
In his concurring opinion in the landmark case of Republic Real Estate
Corporation v. Court of Appeals,[55] Justice Reynato S. Puno summarized
succinctly the law on this matter, as follows:
Foreshore lands are lands of public dominion intended for public use. So too
are lands reclaimed by the government by dredging, filling, or other
means. Act 1654 mandated that the control and disposition of the foreshore
and lands under water remained in the national government. Said law allowed
only the leasing of reclaimed land. The Public Land Acts of 1919 and 1936
also declared that the foreshore and lands reclaimed by the government were
to be disposed of to private parties by lease only and not otherwise. Before
leasing, however, the Governor-General, upon recommendation of the
Secretary of Agriculture and Natural Resources, had first to determine that the
land reclaimed was not necessary for the public service. This requisite must
have been met before the land could be disposed of. But even then, the
foreshore and lands under water were not to be alienated and sold to private
parties. The disposition of the reclaimed land was only by lease. The land
remained property of the State. (Emphasis supplied)
As observed by Justice Puno in his concurring opinion, Commonwealth Act
No. 141 has remained in effect at present.
The State policy prohibiting the sale to private parties of government
reclaimed, foreshore and marshy alienable lands of the public domain, first
implemented in 1907 was thus reaffirmed in CA No. 141 after the 1935
Constitution took effect. The prohibition on the sale of foreshore lands,
however, became a constitutional edict under the 1935 Constitution. Foreshore
lands became inalienable as natural resources of the State, unless reclaimed by
the government and classified as agricultural lands of the public domain, in
which case they would fall under the classification of government reclaimed
lands.
After the effectivity of the 1935 Constitution, government reclaimed
and marshy disposable lands of the public domain continued to be only leased
and not sold to private parties.[56] These lands remained sui generis, as the
only alienable or disposable lands of the public domain the government could
not sell to private parties.
Since then and until now, the only way the government can sell to
private parties government reclaimed and marshy disposable lands of the
public domain is for the legislature to pass a law authorizing such sale. CA
No. 141 does not authorize the President to reclassify government reclaimed
and marshy lands into other non-agricultural lands under Section 59 (d).
Lands classified under Section 59 (d) are the only alienable or disposable
lands for non-agricultural purposes that the government could sell to private
parties.
Moreover, Section 60 of CA No. 141 expressly requires congressional
authority before lands under Section 59 that the government previously
transferred to government units or entities could be sold to private
parties.Section 60 of CA No. 141 declares that
Sec. 60. x x x The area so leased or sold shall be such as shall, in the judgment
of the Secretary of Agriculture and Natural Resources, be reasonably
necessary for the purposes for which such sale or lease is requested, and shall
not exceed one hundred and forty-four hectares: Provided, however, That this
limitation shall not apply to grants, donations, or transfers made to a province,
municipality or branch or subdivision of the Government for the purposes
deemed by said entities conducive to the public interest; but the land so
granted, donated, or transferred to a province, municipality or branch or
subdivision of the Government shall not be alienated, encumbered, or
otherwise disposed of in a manner affecting its title, except when authorized
by Congress: x x x. (Emphasis supplied)
The congressional authority required in Section 60 of CA No. 141 mirrors the
legislative authority required in Section 56 of Act No. 2874.
One reason for the congressional authority is that Section 60 of CA No.
141 exempted government units and entities from the maximum area of public
lands that could be acquired from the State. These government units and
entities should not just turn around and sell these lands to private parties in
violation of constitutional or statutory limitations. Otherwise, the transfer of
lands for non-agricultural purposes to government units and entities could be
used to circumvent constitutional limitations on ownership of alienable or
disposable lands of the public domain. In the same manner, such transfers
could also be used to evade the statutory prohibition in CA No. 141 on the sale
of government reclaimed and marshy lands of the public domain to private
parties. Section 60 of CA No. 141 constitutes by operation of law a lien on
these lands.[57]
In case of sale or lease of disposable lands of the public domain falling
under Section 59 of CA No. 141, Sections 63 and 67 require a public
bidding. Sections 63 and 67 of CA No. 141 provide as follows:
Sec. 63. Whenever it is decided that lands covered by this chapter are not
needed for public purposes, the Director of Lands shall ask the Secretary of
Agriculture and Commerce (now the Secretary of Natural Resources) for
authority to dispose of the same. Upon receipt of such authority, the Director
of Lands shall give notice by public advertisement in the same manner as in
the case of leases or sales of agricultural public land, x x x.
Sec. 67. The lease or sale shall be made by oral bidding; and adjudication
shall be made to the highest bidder. x x x. (Emphasis supplied)
Thus, CA No. 141 mandates the Government to put to public auction all leases
or sales of alienable or disposable lands of the public domain.[58]
Like Act No. 1654 and Act No. 2874 before it, CA No. 141 did not
repeal Section 5 of the Spanish Law of Waters of 1866. Private parties could
still reclaim portions of the sea with government permission. However,
the reclaimed land could become private land only if classified as alienable
agricultural land of the public domain open to disposition under CA No.
141. The 1935 Constitution prohibited the alienation of all natural resources
except public agricultural lands.
The Civil Code of 1950
The Civil Code of 1950 readopted substantially the definition of
property of public dominion found in the Civil Code of 1889. Articles 420 and
422 of the Civil Code of 1950 state that
Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports
and bridges constructed by the State, banks, shores, roadsteads, and others of
similar character;
(2) Those which belong to the State, without being for public use, and are
intended for some public service or for the development of the national
wealth.
x x x.
Art. 422. Property of public dominion, when no longer intended for public use
or for public service, shall form part of the patrimonial property of the State.
Again, the government must formally declare that the property of
public dominion is no longer needed for public use or public service, before
the same could be classified as patrimonial property of the State. [59] In the case
of government reclaimed and marshy lands of the public domain, the
declaration of their being disposable, as well as the manner of their
disposition, is governed by the applicable provisions of CA No. 141.
Like the Civil Code of 1889, the Civil Code of 1950 included as
property of public dominion those properties of the State which, without being
for public use, are intended for public service or the development of the
national wealth. Thus, government reclaimed and marshy lands of the State,
even if not employed for public use or public service, if developed to enhance
the national wealth, are classified as property of public dominion.
Dispositions under the 1973 Constitution
The 1973 Constitution, which took effect on January 17, 1973, likewise
adopted the Regalian doctrine. Section 8, Article XIV of the 1973 Constitution
stated that
Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and
other mineral oils, all forces of potential energy, fisheries, wildlife, and other
natural resources of the Philippines belong to the State. With the exception of
agricultural, industrial or commercial, residential, and resettlement lands of
the public domain, natural resources shall not be alienated, and no license,
concession, or lease for the exploration, development, exploitation, or
utilization of any of the natural resources shall be granted for a period
exceeding twenty-five years, renewable for not more than twenty-five years,
except as to water rights for irrigation, water supply, fisheries, or industrial
uses other than the development of water power, in which cases, beneficial
use may be the measure and the limit of the grant. (Emphasis supplied)
The 1973 Constitution prohibited the alienation of all natural resources
with the exception of agricultural, industrial or commercial, residential, and
resettlement lands of the public domain. In contrast, the 1935 Constitution
barred the alienation of all natural resources except public agricultural lands.
However, the term public agricultural lands in the 1935 Constitution
encompassed industrial, commercial, residential and resettlement lands of the
public domain.[60] If the land of public domain were neither timber nor mineral
land, it would fall under the classification of agricultural land of the public
domain. Both the 1935 and 1973 Constitutions, therefore, prohibited the
alienation of all natural resources except agricultural lands of the public
domain.
The 1973 Constitution, however, limited the alienation of lands of the
public domain to individuals who were citizens of the Philippines. Private
corporations, even if wholly owned by Philippine citizens, were no longer
allowed to acquire alienable lands of the public domain unlike in the 1935
Constitution. Section 11, Article XIV of the 1973 Constitution declared that
Sec. 11. The Batasang Pambansa, taking into account conservation,
ecological, and development requirements of the natural resources, shall
determine by law the size of land of the public domain which may be
developed, held or acquired by, or leased to, any qualified individual,
corporation, or association, and the conditions therefor. No private
corporation or association may hold alienable lands of the public domain
except by lease not to exceed one thousand hectares in area nor may any
citizen hold such lands by lease in excess of five hundred hectares or acquire
by purchase, homestead or grant, in excess of twenty-four hectares. No private
corporation or association may hold by lease, concession, license or permit,
timber or forest lands and other timber or forest resources in excess of one
hundred thousand hectares. However, such area may be increased by the
Batasang Pambansa upon recommendation of the National Economic and
Development Authority. (Emphasis supplied)
Thus, under the 1973 Constitution, private corporations could hold
alienable lands of the public domain only through lease. Only individuals
could now acquire alienable lands of the public domain, and private
corporations became absolutely barred from acquiring any kind of
alienable land of the public domain. The constitutional ban extended to all
kinds of alienable lands of the public domain, while the statutory ban under
CA No. 141 applied only to government reclaimed, foreshore and marshy
alienable lands of the public domain.
PD No. 1084 Creating the Public Estates Authority
On February 4, 1977, then President Ferdinand Marcos issued
Presidential Decree No. 1084 creating PEA, a wholly government owned and
controlled corporation with a special charter. Sections 4 and 8 of PD No.
1084, vests PEA with the following purposes and powers:
Sec. 4. Purpose. The Authority is hereby created for the following purposes:
(a) To reclaim land, including foreshore and submerged areas, by dredging,
filling or other means, or to acquire reclaimed land;
(b) To develop, improve, acquire, administer, deal in, subdivide,
dispose, lease and sell any and all kinds of lands, buildings, estates and other
forms of real property, owned, managed, controlled and/or operated by the
government;
(c) To provide for, operate or administer such service as may be necessary for
the efficient, economical and beneficial utilization of the above properties.
Sec. 5. Powers and functions of the Authority. The Authority shall, in carrying
out the purposes for which it is created, have the following powers and
functions:
(a)To prescribe its by-laws.
xxx
(i) To hold lands of the public domain in excess of the area permitted to
private corporations by statute.
(j) To reclaim lands and to construct work across, or otherwise, any stream,
watercourse, canal, ditch, flume x x x.
xxx
(o) To perform such acts and exercise such functions as may be necessary for
the attainment of the purposes and objectives herein specified. (Emphasis
supplied)
 PD No. 1084 authorizes PEA to reclaim both foreshore and submerged
areas of the public domain. Foreshore areas are those covered and uncovered
by the ebb and flow of the tide.[61] Submerged areas are those permanently
under water regardless of the ebb and flow of the tide. [62] Foreshore and
submerged areas indisputably belong to the public domain [63] and are
inalienable unless reclaimed, classified as alienable lands open to disposition,
and further declared no longer needed for public service.
The ban in the 1973 Constitution on private corporations from
acquiring alienable lands of the public domain did not apply to PEA since it
was then, and until today, a fully owned government corporation. The
constitutional ban applied then, as it still applies now, only to private
corporations and associations. PD No. 1084 expressly empowers PEA to hold
lands of the public domain even in excess of the area permitted to private
corporations by statute. Thus, PEA can hold title to private lands, as well as
title to lands of the public domain.
In order for PEA to sell its reclaimed foreshore and submerged
alienable lands of the public domain, there must be legislative authority
empowering PEA to sell these lands. This legislative authority is necessary in
view of Section 60 of CA No.141, which states
Sec. 60. x x x; but the land so granted, donated or transferred to a province,
municipality, or branch or subdivision of the Government shall not be
alienated, encumbered or otherwise disposed of in a manner affecting its
title, except when authorized by Congress; x x x. (Emphasis supplied)
Without such legislative authority, PEA could not sell but only lease its
reclaimed foreshore and submerged alienable lands of the public
domain. Nevertheless, any legislative authority granted to PEA to sell its
reclaimed alienable lands of the public domain would be subject to the
constitutional ban on private corporations from acquiring alienable lands of
the public domain. Hence, such legislative authority could only benefit private
individuals.
Dispositions under the 1987 Constitution
The 1987 Constitution, like the 1935 and 1973 Constitutions before it,
has adopted the Regalian doctrine. The 1987 Constitution declares that all
natural resources are owned by the State, and except for alienable agricultural
lands of the public domain, natural resources cannot be alienated. Sections 2
and 3, Article XII of the 1987 Constitution state that
Section 2. All lands of the public domain, waters, minerals, coal, petroleum
and other mineral oils, all forces of potential energy, fisheries, forests or
timber, wildlife, flora and fauna, and other natural resources are owned by the
State. With the exception of agricultural lands, all other natural resources
shall not be alienated. The exploration, development, and utilization of
natural resources shall be under the full control and supervision of the State. x
x x.
Section 3. Lands of the public domain are classified into agricultural, forest or
timber, mineral lands, and national parks. Agricultural lands of the public
domain may be further classified by law according to the uses which they may
be devoted. Alienable lands of the public domain shall be limited to
agricultural lands. Private corporations or associations may not hold such
alienable lands of the public domain except by lease, for a period not
exceeding twenty-five years, renewable for not more than twenty-five years,
and not to exceed one thousand hectares in area. Citizens of the Philippines
may lease not more than five hundred hectares, or acquire not more than
twelve hectares thereof by purchase, homestead, or grant.
Taking into account the requirements of conservation, ecology, and
development, and subject to the requirements of agrarian reform, the Congress
shall determine, by law, the size of lands of the public domain which may be
acquired, developed, held, or leased and the conditions therefor. (Emphasis
supplied)
The 1987 Constitution continues the State policy in the 1973
Constitution banning private corporations from acquiring any kind of
alienable land of the public domain. Like the 1973 Constitution, the 1987
Constitution allows private corporations to hold alienable lands of the public
domain only through lease. As in the 1935 and 1973 Constitutions, the
general law governing the lease to private corporations of reclaimed,
foreshore and marshy alienable lands of the public domain is still CA No. 141.
The Rationale behind the Constitutional Ban
The rationale behind the constitutional ban on corporations from
acquiring, except through lease, alienable lands of the public domain is not
well understood. During the deliberations of the 1986 Constitutional
Commission, the commissioners probed the rationale behind this ban, thus:
FR. BERNAS: Mr. Vice-President, my questions have reference to page 3,
line 5 which says:
`No private corporation or association may hold alienable lands of the public
domain except by lease, not to exceed one thousand hectares in area.
If we recall, this provision did not exist under the 1935 Constitution, but this
was introduced in the 1973 Constitution. In effect, it prohibits private
corporations from acquiring alienable public lands. But it has not been very
clear in jurisprudence what the reason for this is. In some of the cases
decided in 1982 and 1983, it was indicated that the purpose of this is to
prevent large landholdings. Is that the intent of this provision?
MR. VILLEGAS: I think that is the spirit of the provision.
FR. BERNAS: In existing decisions involving the Iglesia ni Cristo, there were
instances where the Iglesia ni Cristo was not allowed to acquire a mere 313-
square meter land where a chapel stood because the Supreme Court said it
would be in violation of this. (Emphasis supplied)
In Ayog v. Cusi,[64] the Court explained the rationale behind this
constitutional ban in this way:
Indeed, one purpose of the constitutional prohibition against purchases of
public agricultural lands by private corporations is to equitably diffuse land
ownership or to encourage owner-cultivatorship and the economic family-size
farm and to prevent a recurrence of cases like the instant case. Huge
landholdings by corporations or private persons had spawned social unrest.
However, if the constitutional intent is to prevent huge landholdings, the
Constitution could have simply limited the size of alienable lands of the
public domain that corporations could acquire. The Constitution could have
followed the limitations on individuals, who could acquire not more than 24
hectares of alienable lands of the public domain under the 1973 Constitution,
and not more than 12 hectares under the 1987 Constitution.
If the constitutional intent is to encourage economic family-size farms,
placing the land in the name of a corporation would be more effective in
preventing the break-up of farmlands. If the farmland is registered in the name
of a corporation, upon the death of the owner, his heirs would inherit shares in
the corporation instead of subdivided parcels of the farmland. This would
prevent the continuing break-up of farmlands into smaller and smaller plots
from one generation to the next.
In actual practice, the constitutional ban strengthens the constitutional
limitation on individuals from acquiring more than the allowed area of
alienable lands of the public domain. Without the constitutional ban,
individuals who already acquired the maximum area of alienable lands of the
public domain could easily set up corporations to acquire more alienable
public lands. An individual could own as many corporations as his means
would allow him. An individual could even hide his ownership of a
corporation by putting his nominees as stockholders of the corporation. The
corporation is a convenient vehicle to circumvent the constitutional limitation
on acquisition by individuals of alienable lands of the public domain.
The constitutional intent, under the 1973 and 1987 Constitutions, is to
transfer ownership of only a limited area of alienable land of the public
domain to a qualified individual. This constitutional intent is safeguarded by
the provision prohibiting corporations from acquiring alienable lands of the
public domain, since the vehicle to circumvent the constitutional intent is
removed. The available alienable public lands are gradually decreasing in the
face of an ever-growing population. The most effective way to insure faithful
adherence to this constitutional intent is to grant or sell alienable lands of the
public domain only to individuals. This, it would seem, is the practical benefit
arising from the constitutional ban.
The Amended Joint Venture Agreement
The subject matter of the Amended JVA, as stated in its second
Whereas clause, consists of three properties, namely:
1. [T]hree partially reclaimed and substantially eroded islands along Emilio
Aguinaldo Boulevard in Paranaque and Las Pinas, Metro Manila, with a
combined titled area of 1,578,441 square meters;
2. [A]nother area of 2,421,559 square meters contiguous to the three islands;
and
3. [A]t AMARIs option as approved by PEA, an additional 350 hectares more
or less to regularize the configuration of the reclaimed area.[65]
PEA confirms that the Amended JVA involves the development of the
Freedom Islands and further reclamation of about 250 hectares x x x, plus an
option granted to AMARI to subsequently reclaim another 350 hectares x x x.
[66]
In short, the Amended JVA covers a reclamation area of 750
hectares. Only 157.84 hectares of the 750-hectare reclamation project have
been reclaimed, and the rest of the 592.15 hectares are still submerged
areas forming part of Manila Bay.
Under the Amended JVA, AMARI will reimburse PEA the sum
of P1,894,129,200.00 for PEAs 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 AMARIs
share in the net usable area, totaling 367.5 hectares, will be issued in the name
of AMARI. Section 5.2 (c) of the Amended JVA provides that
x x x, PEA shall have the duty to execute without delay the necessary deed of
transfer or conveyance of the title pertaining to AMARIs Land share based on
the Land Allocation Plan. PEA, when requested in writing by AMARI, shall
then cause the issuance and delivery of the proper certificates of title
covering AMARIs Land Share in the name of AMARI, x x x; provided, that
if more than seventy percent (70%) of the titled area at any given time pertains
to AMARI, PEA shall deliver to AMARI only seventy percent (70%) of the
titles pertaining to AMARI, until such time when a corresponding
proportionate area of additional land pertaining to PEA has been
titled. (Emphasis supplied)
Indisputably, under the Amended JVA AMARI will acquire and own a
maximum of 367.5 hectares of reclaimed land which will be titled in its
name.
To implement the Amended JVA, PEA delegated to the unincorporated
PEA-AMARI joint venture PEAs statutory authority, rights and privileges to
reclaim foreshore and submerged areas in Manila Bay. Section 3.2.a of the
Amended JVA states that
PEA hereby contributes to the joint venture its rights and privileges to
perform Rawland Reclamation and Horizontal Development as well as own
the Reclamation Area, thereby granting the Joint Venture the full and
exclusive right, authority and privilege to undertake the Project in accordance
with the Master Development Plan.
The Amended JVA is the product of a renegotiation of the original JVA dated
April 25, 1995 and its supplemental agreement dated August 9, 1995.
The Threshold Issue
The threshold issue is whether AMARI, a private corporation, can
acquire and own under the Amended JVA 367.5 hectares of reclaimed
foreshore and submerged areas in Manila Bay in view of Sections 2 and 3,
Article XII of the 1987 Constitution which state that:
Section 2. All lands of the public domain, waters, minerals, coal, petroleum,
and other mineral oils, all forces of potential energy, fisheries, forests or
timber, wildlife, flora and fauna, and other natural resources are owned by the
State. With the exception of agricultural lands, all other natural resources
shall not be alienated. x x x.
xxx
Section 3. x x x Alienable lands of the public domain shall be limited to
agricultural lands. Private corporations or associations may not hold such
alienable lands of the public domain except by lease, x x x.(Emphasis
supplied)
Classification of Reclaimed Foreshore and Submerged Areas
PEA readily concedes that lands reclaimed from foreshore or
submerged areas of Manila Bay are alienable or disposable lands of the public
domain. In its Memorandum,[67] PEA admits that
Under the Public Land Act (CA 141, as amended), reclaimed lands are
classified as alienable and disposable lands of the public domain:
Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the government by dredging, filling, or other means;
x x x. (Emphasis supplied)
Likewise, the Legal Task Force [68] constituted under Presidential
Administrative Order No. 365 admitted in its Report and Recommendation to
then President Fidel V. Ramos, [R]eclaimed lands are classified as alienable
and disposable lands of the public domain.[69] The Legal Task Force
concluded that
D. Conclusion
Reclaimed lands are lands of the public domain. However, by statutory
authority, the rights of ownership and disposition over reclaimed lands have
been transferred to PEA, by virtue of which PEA, as owner, may validly
convey the same to any qualified person without violating the Constitution or
any statute.
The constitutional provision prohibiting private corporations from holding
public land, except by lease (Sec. 3, Art. XVII,[70] 1987 Constitution), does not
apply to reclaimed lands whose ownership has passed on to PEA by statutory
grant.
Under Section 2, Article XII of the 1987 Constitution, the foreshore
and submerged areas of Manila Bay are part of the lands of the public domain,
waters x x x and other natural resources and consequently owned by the State.
As such, foreshore and submerged areas shall not be alienated, unless they are
classified as agricultural lands of the public domain. The mere reclamation of
these areas by PEA does not convert these inalienable natural resources of the
State into alienable or disposable lands of the public domain. There must be a
law or presidential proclamation officially classifying these reclaimed lands as
alienable or disposable and open to disposition or concession. Moreover, these
reclaimed lands cannot be classified as alienable or disposable if the law has
reserved them for some public or quasi-public use.[71]
Section 8 of CA No. 141 provides that only those lands shall be
declared open to disposition or concession which have been officially
delimited and classified.[72] The President has the authority to classify
inalienable lands of the public domain into alienable or disposable lands of the
public domain, pursuant to Section 6 of CA No. 141. In Laurel vs. Garcia,
[73]
the Executive Department attempted to sell the Roppongi property in
Tokyo, Japan, which was acquired by the Philippine Government for use as
the Chancery of the Philippine Embassy. Although the Chancery had
transferred to another location thirteen years earlier, the Court still ruled that,
under Article 422[74] of the Civil Code, a property of public dominion retains
such character until formally declared otherwise. The Court ruled that
The fact that the Roppongi site has not been used for a long time for actual
Embassy service does not automatically convert it to patrimonial
property. Any such conversion happens only if the property is withdrawn from
public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA 481
[1975]. A property continues to be part of the public domain, not available
for private appropriation or ownership until there is a formal declaration on
the part of the government to withdraw it from being such (Ignacio v.
Director of Lands, 108 Phil. 335 [1960]. (Emphasis supplied)
PD No. 1085, issued on February 4, 1977, authorized the issuance of
special land patents for lands reclaimed by PEA from the foreshore or
submerged areas of Manila Bay. On January 19, 1988 then President Corazon
C. Aquino issued Special Patent No. 3517 in the name of PEA for the 157.84
hectares comprising the partially reclaimed Freedom Islands. Subsequently, on
April 9, 1999 the Register of Deeds of the Municipality of Paranaque issued
TCT Nos. 7309, 7311 and 7312 in the name of PEA pursuant to Section 103
of PD No. 1529 authorizing the issuance of certificates of title corresponding
to land patents. To this day, these certificates of title are still in the name of
PEA.
PD No. 1085, coupled with President Aquinos actual issuance of a
special patent covering the Freedom Islands, is equivalent to an official
proclamation classifying the Freedom Islands as alienable or disposable lands
of the public domain. PD No. 1085 and President Aquinos issuance of a land
patent also constitute a declaration that the Freedom Islands are no longer
needed for public service. The Freedom Islands are thus alienable or
disposable lands of the public domain, open to disposition or concession to
qualified parties.
At the time then President Aquino issued Special Patent No. 3517, PEA
had already reclaimed the Freedom Islands although subsequently there were
partial erosions on some areas. The government had also completed the
necessary surveys on these islands. Thus, the Freedom Islands were no longer
part of Manila Bay but part of the land mass. Section 3, Article XII of the
1987 Constitution classifies lands of the public domain into agricultural, forest
or timber, mineral lands, and national parks. Being neither timber, mineral,
nor national park lands, the reclaimed Freedom Islands necessarily fall under
the classification of agricultural lands of the public domain. Under the 1987
Constitution, agricultural lands of the public domain are the only natural
resources that the State may alienate to qualified private parties. All other
natural resources, such as the seas or bays, are waters x x x owned by the State
forming part of the public domain, and are inalienable pursuant to Section 2,
Article XII of the 1987 Constitution.
AMARI claims that the Freedom Islands are private lands because
CDCP, then a private corporation, reclaimed the islands under a contract dated
November 20, 1973 with the Commissioner of Public Highways.AMARI,
citing Article 5 of the Spanish Law of Waters of 1866, argues that if the
ownership of reclaimed lands may be given to the party constructing the
works, then it cannot be said that reclaimed lands are lands of the public
domain which the State may not alienate. [75] Article 5 of the Spanish Law of
Waters reads as follows:
Article 5. Lands reclaimed from the sea in consequence of works constructed
by the State, or by the provinces, pueblos or private persons, with proper
permission, shall become the property of the party constructing such
works, unless otherwise provided by the terms of the grant of authority.
(Emphasis supplied)
Under Article 5 of the Spanish Law of Waters of 1866, private parties
could reclaim from the sea only with proper permission from the State. Private
parties could own the reclaimed land only if not otherwise provided by the
terms of the grant of authority. This clearly meant that no one could reclaim
from the sea without permission from the State because the sea is property of
public dominion. It also meant that the State could grant or withhold
ownership of the reclaimed land because any reclaimed land, like the sea from
which it emerged, belonged to the State. Thus, a private person reclaiming
from the sea without permission from the State could not acquire ownership of
the reclaimed land which would remain property of public dominion like the
sea it replaced.[76] Article 5 of the Spanish Law of Waters of 1866 adopted the
time-honored principle of land ownership that all lands that were not acquired
from the government, either by purchase or by grant, belong to the public
domain.[77]
Article 5 of the Spanish Law of Waters must be read together with laws
subsequently enacted on the disposition of public lands. In particular, CA No.
141 requires that lands of the public domain must first be classified as
alienable or disposable before the government can alienate them. These lands
must not be reserved for public or quasi-public purposes.[78] Moreover, the
contract between CDCP and the government was executed after the effectivity
of the 1973 Constitution which barred private corporations from acquiring any
kind of alienable land of the public domain. This contract could not have
converted the Freedom Islands into private lands of a private corporation.
Presidential Decree No. 3-A, issued on January 11, 1973, revoked all
laws authorizing the reclamation of areas under water and revested solely in
the National Government the power to reclaim lands. Section 1 of PD No. 3-
A declared that
The provisions of any law to the contrary notwithstanding, the reclamation
of areas under water, whether foreshore or inland, shall be limited to the
National Government or any person authorized by it under a proper
contract. (Emphasis supplied)
x x x.
PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866 because
reclamation of areas under water could now be undertaken only by the
National Government or by a person contracted by the National
Government. Private parties may reclaim from the sea only under a contract
with the National Government, and no longer by grant or permission as
provided in Section 5 of the Spanish Law of Waters of 1866.
Executive Order No. 525, issued on February 14, 1979, designated PEA
as the National Governments implementing arm to undertake all reclamation
projects of the government, which shall be undertaken by the PEA or
through a proper contract executed by it with any person or entity. Under
such contract, a private party receives compensation for reclamation services
rendered to PEA. Payment to the contractor may be in cash, or in kind
consisting of portions of the reclaimed land, subject to the constitutional ban
on private corporations from acquiring alienable lands of the public
domain. The reclaimed land can be used as payment in kind only if the
reclaimed land is first classified as alienable or disposable land open to
disposition, and then declared no longer needed for public service.
The Amended JVA covers not only the Freedom Islands, but also an
additional 592.15 hectares which are still submerged and forming part of
Manila Bay. There is no legislative or Presidential act classifying these
submerged areas as alienable or disposable lands of the public domain open
to disposition. These submerged areas are not covered by any patent or
certificate of title. There can be no dispute that these submerged areas form
part of the public domain, and in their present state are inalienable and
outside the commerce of man. Until reclaimed from the sea, these submerged
areas are, under the Constitution, waters x x x owned by the State, forming
part of the public domain and consequently inalienable. Only when actually
reclaimed from the sea can these submerged areas be classified as public
agricultural lands, which under the Constitution are the only natural resources
that the State may alienate. Once reclaimed and transformed into public
agricultural lands, the government may then officially classify these lands as
alienable or disposable lands open to disposition. Thereafter, the government
may declare these lands no longer needed for public service. Only then can
these reclaimed lands be considered alienable or disposable lands of the public
domain and within the commerce of man.
The classification of PEAs reclaimed foreshore and submerged lands
into alienable or disposable lands open to disposition is necessary because
PEA is tasked under its charter to undertake public services that require the
use of lands of the public domain. Under Section 5 of PD No. 1084, the
functions of PEA include the following: [T]o own or operate railroads,
tramways and other kinds of land transportation, x x x; [T]o construct,
maintain and operate such systems of sanitary sewers as may be necessary;
[T]o construct, maintain and operate such storm drains as may be
necessary. PEA is empowered to issue rules and regulations as may be
necessary for the proper use by private parties of any or all of the highways,
roads, utilities, buildings and/or any of its properties and to impose or collect
fees or tolls for their use. Thus, part of the reclaimed foreshore and submerged
lands held by the PEA would actually be needed for public use or service
since many of the functions imposed on PEA by its charter constitute essential
public services.
Moreover, Section 1 of Executive Order No. 525 provides that PEA
shall be primarily responsible for integrating, directing, and coordinating all
reclamation projects for and on behalf of the National Government. The same
section also states that [A]ll reclamation projects shall be approved by the
President upon recommendation of the PEA, and shall be undertaken by the
PEA or through a proper contract executed by it with any person or entity; x x
x. Thus, under EO No. 525, in relation to PD No. 3-A and PD No.1084, PEA
became the primary implementing agency of the National Government to
reclaim foreshore and submerged lands of the public domain. EO No. 525
recognized PEA as the government entity to undertake the reclamation of
lands and ensure their maximum utilization in promoting public welfare and
interests.[79] Since large portions of these reclaimed lands would obviously be
needed for public service, there must be a formal declaration segregating
reclaimed lands no longer needed for public service from those still needed for
public service.
Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA
shall belong to or be owned by the PEA, could not automatically operate to
classify inalienable lands into alienable or disposable lands of the public
domain. Otherwise, reclaimed foreshore and submerged lands of the public
domain would automatically become alienable once reclaimed by PEA,
whether or not classified as alienable or disposable.
The Revised Administrative Code of 1987, a later law than either PD
No. 1084 or EO No. 525, vests in the Department of Environment and Natural
Resources (DENR for brevity) the following powers and functions:
Sec. 4. Powers and Functions. The Department shall:
(1) x x x
xxx
(4) Exercise supervision and control over forest lands, alienable and
disposable public lands, mineral resources and, in the process of exercising
such control, impose appropriate taxes, fees, charges, rentals and any such
form of levy and collect such revenues for the exploration, development,
utilization or gathering of such resources;
xxx
(14) Promulgate rules, regulations and guidelines on the issuance of
licenses, permits, concessions, lease agreements and such other privileges
concerning the development, exploration and utilization of the countrys
marine, freshwater, and brackish water and over all aquatic resources of
the country and shall continue to oversee, supervise and police our natural
resources; cancel or cause to cancel such privileges upon failure, non-
compliance or violations of any regulation, order, and for all other causes
which are in furtherance of the conservation of natural resources and
supportive of the national interest;
(15) Exercise exclusive jurisdiction on the management and disposition of
all lands of the public domain and serve as the sole agency responsible for
classification, sub-classification, surveying and titling of lands in consultation
with appropriate agencies.[80] (Emphasis supplied)
As manager, conservator and overseer of the natural resources of the
State, DENR exercises supervision and control over alienable and disposable
public lands. DENR also exercises exclusive jurisdiction on the management
and disposition of all lands of the public domain. Thus, DENR decides
whether areas under water, like foreshore or submerged areas of Manila Bay,
should be reclaimed or not. This means that PEA needs authorization from
DENR before PEA can undertake reclamation projects in Manila Bay, or in
any part of the country.
DENR also exercises exclusive jurisdiction over the disposition of all
lands of the public domain. Hence, DENR decides whether reclaimed lands of
PEA should be classified as alienable under Sections 6 [81] and 7[82] of CA No.
141. Once DENR decides that the reclaimed lands should be so classified, it
then recommends to the President the issuance of a proclamation classifying
the lands as alienable or disposable lands of the public domain open to
disposition. We note that then DENR Secretary Fulgencio S. Factoran, Jr.
countersigned Special Patent No. 3517 in compliance with the Revised
Administrative Code and Sections 6 and 7 of CA No. 141.
In short, DENR is vested with the power to authorize the reclamation
of areas under water, while PEA is vested with the power to undertake the
physical reclamation of areas under water, whether directly or through private
contractors. DENR is also empowered to classify lands of the public domain
into alienable or disposable lands subject to the approval of the President. On
the other hand, PEA is tasked to develop, sell or lease the reclaimed alienable
lands of the public domain.
Clearly, the mere physical act of reclamation by PEA of foreshore or
submerged areas does not make the reclaimed lands alienable or disposable
lands of the public domain, much less patrimonial lands of PEA.Likewise, the
mere transfer by the National Government of lands of the public domain to
PEA does not make the lands alienable or disposable lands of the public
domain, much less patrimonial lands of PEA.
Absent two official acts a classification that these lands are alienable or
disposable and open to disposition and a declaration that these lands are not
needed for public service, lands reclaimed by PEA remain inalienable lands of
the public domain. Only such an official classification and formal declaration
can convert reclaimed lands into alienable or disposable lands of the public
domain, open to disposition under the Constitution, Title I and Title III [83] of
CA No. 141 and other applicable laws.[84]
PEAs Authority to Sell Reclaimed Lands
PEA, like the Legal Task Force, argues that as alienable or disposable
lands of the public domain, the reclaimed lands shall be disposed of in
accordance with CA No. 141, the Public Land Act. PEA, citing Section 60 of
CA No. 141, admits that reclaimed lands transferred to a branch or subdivision
of the government shall not be alienated, encumbered, or otherwise disposed
of in a manner affecting its title, except when authorized by Congress: x x x.
[85]
(Emphasis by PEA)
In Laurel vs. Garcia,[86] the Court cited Section 48 of the Revised
Administrative Code of 1987, which states that
Sec. 48. Official Authorized to Convey Real Property. Whenever real property
of the Government is authorized by law to be conveyed, the deed of
conveyance shall be executed in behalf of the government by the following: x
x x.
Thus, the Court concluded that a law is needed to convey any real property
belonging to the Government. The Court declared that -
It is not for the President to convey real property of the government on his or
her own sole will. Any such conveyance must be authorized and approved
by a law enacted by the Congress. It requires executive and legislative
concurrence. (Emphasis supplied)
PEA contends that PD No. 1085 and EO No. 525 constitute the
legislative authority allowing PEA to sell its reclaimed lands. PD No. 1085,
issued on February 4, 1977, provides that
The land reclaimed in the foreshore and offshore area of Manila
Bay pursuant to the contract for the reclamation and construction of the
Manila-Cavite Coastal Road Project between the Republic of the Philippines
and the Construction and Development Corporation of the Philippines dated
November 20, 1973 and/or any other contract or reclamation covering the
same area is hereby transferred, conveyed and assigned to the ownership
and administration of the Public Estates Authority established pursuant to
PD No. 1084; Provided, however, That the rights and interests of the
Construction and Development Corporation of the Philippines pursuant to the
aforesaid contract shall be recognized and respected.
Henceforth, the Public Estates Authority shall exercise the rights and assume
the obligations of the Republic of the Philippines (Department of Public
Highways) arising from, or incident to, the aforesaid contract between the
Republic of the Philippines and the Construction and Development
Corporation of the Philippines.
In consideration of the foregoing transfer and assignment, the Public Estates
Authority shall issue in favor of the Republic of the Philippines the
corresponding shares of stock in said entity with an issued value of said shares
of stock (which) shall be deemed fully paid and non-assessable.
The Secretary of Public Highways and the General Manager of the Public
Estates Authority shall execute such contracts or agreements, including
appropriate agreements with the Construction and Development Corporation
of the Philippines, as may be necessary to implement the above.
Special land patent/patents shall be issued by the Secretary of Natural
Resources in favor of the Public Estates Authority without prejudice to the
subsequent transfer to the contractor or his assignees of such portion or
portions of the land reclaimed or to be reclaimed as provided for in the
above-mentioned contract. On the basis of such patents, the Land
Registration Commission shall issue the corresponding certificate of title.
(Emphasis supplied)
On the other hand, Section 3 of EO No. 525, issued on February 14,
1979, provides that -
Sec. 3. All lands reclaimed by PEA shall belong to or be owned by the
PEA which shall be responsible for its administration, development,
utilization or disposition in accordance with the provisions of Presidential
Decree No. 1084. Any and all income that the PEA may derive from the sale,
lease or use of reclaimed lands shall be used in accordance with the provisions
of Presidential Decree No. 1084.
There is no express authority under either PD No. 1085 or EO No. 525
for PEA to sell its reclaimed lands. PD No. 1085 merely transferred ownership
and administration of lands reclaimed from Manila Bay to PEA, while EO No.
525 declared that lands reclaimed by PEA shall belong to or be owned by
PEA. EO No. 525 expressly states that PEA should dispose of its reclaimed
lands in accordance with the provisions of Presidential Decree No. 1084, the
charter of PEA.
PEAs charter, however, expressly tasks PEA to develop, improve,
acquire, administer, deal in, subdivide, dispose, lease and sell any and all
kinds of lands x x x owned, managed, controlled and/or operated by the
government.[87] (Emphasis supplied) There is, therefore, legislative authority
granted to PEA to sell its lands, whether patrimonial or alienable lands of
the public domain. PEA may sell to private parties its patrimonial
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 PEAs
patrimonial lands.
PEA may also sell its alienable or disposable lands of the public
domain to private individuals since, with the legislative authority, there is no
longer any statutory prohibition against such sales and the constitutional ban
does not apply to individuals. PEA, however, cannot sell any of its alienable
or disposable lands of the public domain to private corporations since Section
3, Article XII of the 1987 Constitution expressly prohibits such sales. The
legislative authority benefits only individuals. Private corporations remain
barred from acquiring any kind of alienable land of the public domain,
including government reclaimed lands.
The provision in PD No. 1085 stating that portions of the reclaimed
lands could be transferred by PEA to the contractor or his assignees
(Emphasis supplied) would not apply to private corporations but only to
individuals because of the constitutional ban. Otherwise, the provisions of PD
No. 1085 would violate both the 1973 and 1987 Constitutions.
The requirement of public auction in the sale of reclaimed lands
Assuming the reclaimed lands of PEA are classified as alienable or
disposable lands open to disposition, and further declared no longer needed
for public service, PEA would have to conduct a public bidding in selling or
leasing these lands. PEA must observe the provisions of Sections 63 and 67 of
CA No. 141 requiring public auction, in the absence of a law exempting PEA
from holding a public auction. [88] Special Patent No. 3517 expressly states that
the patent is issued by authority of the Constitution and PD No. 1084,
supplemented by Commonwealth Act No. 141, as amended. This is an
acknowledgment that the provisions of CA No. 141 apply to the disposition of
reclaimed alienable lands of the public domain unless otherwise provided by
law. Executive Order No. 654,[89] which authorizes PEA to determine the kind
and manner of payment for the transfer of its assets and properties, does not
exempt PEA from the requirement of public auction. EO No. 654 merely
authorizes PEA to decide the mode of payment, whether in kind and in
installment, but does not authorize PEA to dispense with public auction.
Moreover, under Section 79 of PD No. 1445, otherwise known as the
Government Auditing Code, the government is required to sell valuable
government property through public bidding. Section 79 of PD No. 1445
mandates that
Section 79. When government property has become unserviceable for any
cause, or is no longer needed, it shall, upon application of the officer
accountable therefor, be inspected by the head of the agency or his duly
authorized representative in the presence of the auditor concerned and, if
found to be valueless or unsaleable, it may be destroyed in their presence. If
found to be valuable, it may be sold at public auction to the highest
bidder under the supervision of the proper committee on award or similar
body in the presence of the auditor concerned or other authorized
representative of the Commission, after advertising by printed notice in the
Official Gazette, or for not less than three consecutive days in any
newspaper of general circulation, or where the value of the property does not
warrant the expense of publication, by notices posted for a like period in at
least three public places in the locality where the property is to be sold. In the
event that the public auction fails, the property may be sold at a private sale
at such price as may be fixed by the same committee or body concerned and
approved by the Commission.
It is only when the public auction fails that a negotiated sale is allowed, in
which case the Commission on Audit must approve the selling price. [90] The
Commission on Audit implements Section 79 of the Government Auditing
Code through Circular No. 89-296[91] dated January 27, 1989. This circular
emphasizes that government assets must be disposed of only through public
auction, and a negotiated sale can be resorted to only in case of failure of
public auction.
At the public auction sale, only Philippine citizens are qualified to bid
for PEAs reclaimed foreshore and submerged alienable lands of the public
domain. Private corporations are barred from bidding at the auction sale of
any kind of alienable land of the public domain.
PEA originally scheduled a public bidding for the Freedom Islands on
December 10, 1991. PEA imposed a condition that the winning bidder should
reclaim another 250 hectares of submerged areas to regularize the shape of the
Freedom Islands, under a 60-40 sharing of the additional reclaimed areas in
favor of the winning bidder.[92] No one, however, submitted a bid. On
December 23, 1994, the Government Corporate Counsel advised PEA it could
sell the Freedom Islands through negotiation, without need of another public
bidding, because of the failure of the public bidding on December 10, 1991.[93]
However, the original JVA dated April 25, 1995 covered not only the
Freedom Islands and the additional 250 hectares still to be reclaimed, it also
granted an option to AMARI to reclaim another 350 hectares. The original
JVA, a negotiated contract, enlarged the reclamation area to 750 hectares.
[94]
The failure of public bidding on December 10, 1991, involving only 407.84
hectares,[95] is not a valid justification for a negotiated sale of 750 hectares,
almost double the area publicly auctioned. Besides, the failure of public
bidding happened on December 10, 1991, more than three years before the
signing of the original JVA on April 25, 1995. The economic situation in the
country had greatly improved during the intervening period.
Reclamation under the BOT Law and the Local Government Code
The constitutional prohibition in Section 3, Article XII of the 1987
Constitution is absolute and clear: Private corporations or associations may
not hold such alienable lands of the public domain except by lease, x x x.
Even Republic Act No. 6957 (BOT Law, for brevity), cited by PEA and
AMARI as legislative authority to sell reclaimed lands to private parties,
recognizes the constitutional ban. Section 6 of RA No. 6957 states
Sec. 6. Repayment Scheme. - For the financing, construction, operation and
maintenance of any infrastructure projects undertaken through the build-
operate-and-transfer arrangement or any of its variations pursuant to the
provisions of this Act, the project proponent x x x may likewise be repaid in
the form of a share in the revenue of the project or other non-monetary
payments, such as, but not limited to, the grant of a portion or percentage of
the reclaimed land, subject to the constitutional requirements with respect to
the ownership of the land: x x x. (Emphasis supplied)
A private corporation, even one that undertakes the physical reclamation of a
government BOT project, cannot acquire reclaimed alienable lands of the
public domain in view of the constitutional ban.
Section 302 of the Local Government Code, also mentioned by PEA
and AMARI, authorizes local governments in land reclamation projects to pay
the contractor or developer in kind consisting of a percentage of the reclaimed
land, to wit:
Section 302. Financing, Construction, Maintenance, Operation, and
Management of Infrastructure Projects by the Private Sector. x x x
xxx
In case of land reclamation or construction of industrial estates, the repayment
plan may consist of the grant of a portion or percentage of the reclaimed land
or the industrial estate constructed.
Although Section 302 of the Local Government Code does not contain a
proviso similar to that of the BOT Law, the constitutional restrictions on land
ownership automatically apply even though not expressly mentioned in the
Local Government Code.
Thus, under either the BOT Law or the Local Government Code, the
contractor or developer, if a corporate entity, can only be paid with leaseholds
on portions of the reclaimed land. If the contractor or developer is an
individual, portions of the reclaimed land, not exceeding 12 hectares [96] of
non-agricultural lands, may be conveyed to him in ownership in view of the
legislative authority allowing such conveyance. This is the only way these
provisions of the BOT Law and the Local Government Code can avoid a
direct collision with Section 3, Article XII of the 1987 Constitution.
Registration of lands of the public domain
Finally, PEA theorizes that the act of conveying the ownership of the
reclaimed lands to public respondent PEA transformed such lands of the
public domain to private lands. This theory is echoed by AMARI which
maintains that the issuance of the special patent leading to the eventual
issuance of title takes the subject land away from the land of public domain
and converts the property into patrimonial or private property. In short, PEA
and AMARI contend that with the issuance of Special Patent No. 3517 and the
corresponding certificates of titles, the 157.84 hectares comprising the
Freedom Islands have become private lands of PEA. In support of their theory,
PEA and AMARI cite the following rulings of the Court:
1. Sumail v. Judge of CFI of Cotabato,[97] where the Court held
Once the patent was granted and the corresponding certificate of title was
issued, the land ceased to be part of the public domain and became private
property over which the Director of Lands has neither control nor jurisdiction.
2. Lee Hong Hok v. David,[98] where the Court declared -
After the registration and issuance of the certificate and duplicate certificate of
title based on a public land patent, the land covered thereby automatically
comes under the operation of Republic Act 496 subject to all the safeguards
provided therein.
3. Heirs of Gregorio Tengco v. Heirs of Jose Aliwalas,[99] where the Court
ruled -
While the Director of Lands has the power to review homestead patents, he
may do so only so long as the land remains part of the public domain and
continues to be under his exclusive control; but once the patent is registered
and a certificate of title is issued, the land ceases to be part of the public
domain and becomes private property over which the Director of Lands has
neither control nor jurisdiction.
4. Manalo v. Intermediate Appellate Court,[100] where the Court held
When the lots in dispute were certified as disposable on May 19, 1971, and
free patents were issued covering the same in favor of the private respondents,
the said lots ceased to be part of the public domain and, therefore, the Director
of Lands lost jurisdiction over the same.
5.Republic v. Court of Appeals,[101] where the Court stated
Proclamation No. 350, dated October 9, 1956, of President Magsaysay legally
effected a land grant to the Mindanao Medical Center, Bureau of Medical
Services, Department of Health, of the whole lot, validly sufficient for initial
registration under the Land Registration Act. Such land grant is constitutive of
a fee simple title or absolute title in favor of petitioner Mindanao Medical
Center. Thus, Section 122 of the Act, which governs the registration of grants
or patents involving public lands, provides that Whenever public lands in the
Philippine Islands belonging to the Government of the United States or to the
Government of the Philippines are alienated, granted or conveyed to persons
or to public or private corporations, the same shall be brought forthwith under
the operation of this Act (Land Registration Act, Act 496) and shall become
registered lands.
The first four cases cited involve petitions to cancel the land patents
and the corresponding certificates of titles issued to private parties. These
four cases uniformly hold that the Director of Lands has no jurisdiction over
private lands or that upon issuance of the certificate of title the land
automatically comes under the Torrens System. The fifth case cited involves
the registration under the Torrens System of a 12.8-hectare public land granted
by the National Government to Mindanao Medical Center, a government unit
under the Department of Health. The National Government transferred the
12.8-hectare public land to serve as the site for the hospital buildings and
other facilities of Mindanao Medical Center, which performed a public
service. The Court affirmed the registration of the 12.8-hectare public land in
the name of Mindanao Medical Center under Section 122 of Act No. 496. This
fifth case is an example of a public land being registered under Act No. 496
without the land losing its character as a property of public dominion.
In the instant case, the only patent and certificates of title issued are
those in the name of PEA, a wholly government owned corporation
performing public as well as proprietary functions. No patent or certificate of
title has been issued to any private party. No one is asking the Director of
Lands to cancel PEAs patent or certificates of title. In fact, the thrust of the
instant petition is that PEAs certificates of title should remain with PEA, and
the land covered by these certificates, being alienable lands of the public
domain, should not be sold to a private corporation.
Registration of land under Act No. 496 or PD No. 1529 does not vest in
the registrant private or public ownership of the land. Registration is not a
mode of acquiring ownership but is merely evidence of ownership previously
conferred by any of the recognized modes of acquiring
ownership. Registration does not give the registrant a better right than what
the registrant had prior to the registration. [102] The registration of lands of the
public domain under the Torrens system, by itself, cannot convert public lands
into private lands.[103]
Jurisprudence holding that upon the grant of the patent or issuance of
the certificate of title the alienable land of the public domain automatically
becomes private land cannot apply to government units and entities like
PEA. The transfer of the Freedom Islands to PEA was made subject to the
provisions of CA No. 141 as expressly stated in Special Patent No. 3517
issued by then President Aquino, to wit:
NOW, THEREFORE, KNOW YE, that by authority of the Constitution of the
Philippines and in conformity with the provisions of Presidential Decree No.
1084, supplemented by Commonwealth Act No. 141, as amended, there are
hereby granted and conveyed unto the Public Estates Authority the aforesaid
tracts of land containing a total area of one million nine hundred fifteen
thousand eight hundred ninety four (1,915,894) square meters; the technical
description of which are hereto attached and made an integral part
hereof. (Emphasis supplied)
Thus, the provisions of CA No. 141 apply to the Freedom Islands on
matters not covered by PD No. 1084. Section 60 of CA No. 141 prohibits,
except when authorized by Congress, the sale of alienable lands of the public
domain that are transferred to government units or entities. Section 60 of CA
No. 141 constitutes, under Section 44 of PD No. 1529, a statutory lien
affecting title of the registered land even if not annotated on the certificate of
title.[104] 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. Otherwise, the constitutional ban
will become illusory if Congress can declare lands of the public domain as
private or patrimonial lands in the hands of a government agency tasked to
dispose of public lands. This will allow private corporations to acquire
directly from government agencies limitless areas of lands which, prior to
such law, are concededly public lands.
Under EO No. 525, PEA became the central implementing agency of
the National Government to reclaim foreshore and submerged areas of the
public domain. Thus, EO No. 525 declares that
EXECUTIVE ORDER NO. 525
Designating the Public Estates Authority as the Agency Primarily Responsible
for all Reclamation Projects
Whereas, there are several reclamation projects which are ongoing or being
proposed to be undertaken in various parts of the country which need to be
evaluated for consistency with national programs;
Whereas, there is a need to give further institutional support to the
Governments declared policy to provide for a coordinated, economical and
efficient reclamation of lands;
Whereas, Presidential Decree No. 3-A requires that all reclamation of areas
shall be limited to the National Government or any person authorized by it
under proper contract;
Whereas, a central authority is needed to act on behalf of the National
Government which shall ensure a coordinated and integrated approach in
the reclamation of lands;
Whereas, Presidential Decree No. 1084 creates the Public Estates Authority
as a government corporation to undertake reclamation of lands and ensure
their maximum utilization in promoting public welfare and interests; and
Whereas, Presidential Decree No. 1416 provides the President with
continuing authority to reorganize the national government including the
transfer, abolition, or merger of functions and offices.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers vested in me by the Constitution and
pursuant to Presidential Decree No. 1416, do hereby order and direct the
following:
Section 1. The Public Estates Authority (PEA) shall be primarily
responsible for integrating, directing, and coordinating all reclamation
projects for and on behalf of the National Government. All reclamation
projects shall be approved by the President upon recommendation of the PEA,
and shall be undertaken by the PEA or through a proper contract executed by
it with any person or entity; Provided, that, reclamation projects of any
national government agency or entity authorized under its charter shall be
undertaken in consultation with the PEA upon approval of the President.
xxx.
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, PEAs 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 PEAs name does not
automatically make such lands private.
To allow vast areas of reclaimed lands of the public domain to be
transferred to PEA as private lands will sanction a gross violation of the
constitutional ban on private corporations from acquiring any kind of
alienable land of the public domain. PEA will simply turn around, as PEA has
now done under the Amended JVA, and transfer several hundreds of hectares
of these reclaimed and still to be reclaimed lands to a single private
corporation in only one transaction. This scheme will effectively nullify the
constitutional ban in Section 3, Article XII of the 1987 Constitution which
was intended to diffuse equitably the ownership of alienable lands of the
public domain among Filipinos, now numbering over 80 million strong.
This scheme, if allowed, can even be applied to alienable agricultural
lands of the public domain since PEA can acquire x x x any and all kinds of
lands. This will open the floodgates to corporations and even individuals
acquiring hundreds of hectares of alienable lands of the public domain under
the guise that in the hands of PEA these lands are private lands. This will
result in corporations amassing huge landholdings never before seen in this
country - creating the very evil that the constitutional ban was designed to
prevent. This will completely reverse the clear direction of constitutional
development in this country. The 1935 Constitution allowed private
corporations to acquire not more than 1,024 hectares of public lands. [105] The
1973 Constitution prohibited private corporations from acquiring any kind of
public land, and the 1987 Constitution has unequivocally reiterated this
prohibition.
The contention of PEA and AMARI that public lands, once registered
under Act No. 496 or PD No. 1529, automatically become private lands is
contrary to existing laws. Several laws authorize lands of the public domain to
be registered under the Torrens System or Act No. 496, now PD No. 1529,
without losing their character as public lands. Section 122 of Act No. 496, and
Section 103 of PD No. 1529, respectively, provide as follows:
Act No. 496
Sec. 122. Whenever public lands in the Philippine Islands belonging to the x x
x Government of the Philippine Islands are alienated, granted, or conveyed to
persons or the public or private corporations, the same shall be brought
forthwith under the operation of this Act and shall become registered lands.
PD No. 1529
Sec. 103. Certificate of Title to Patents. Whenever public land is by the
Government alienated, granted or conveyed to any person, the same shall be
brought forthwith under the operation of this Decree. (Emphasis supplied)
Based on its legislative history, the phrase conveyed to any person in Section
103 of PD No. 1529 includes conveyances of public lands to public
corporations.
Alienable lands of the public domain granted, donated, or transferred to
a province, municipality, or branch or subdivision of the Government, as
provided in Section 60 of CA No. 141, may be registered under the Torrens
System pursuant to Section 103 of PD No. 1529. Such registration, however,
is expressly subject to the condition in Section 60 of CA No. 141 that the land
shall not be alienated, encumbered or otherwise disposed of in a manner
affecting its title, except when authorized by Congress. This provision refers
to government reclaimed, foreshore and marshy lands of the public domain
that have been titled but still cannot be alienated or encumbered unless
expressly authorized by Congress. The need for legislative authority prevents
the registered land of the public domain from becoming private land that can
be disposed of to qualified private parties.
The Revised Administrative Code of 1987 also recognizes that lands of
the public domain may be registered under the Torrens System. Section 48,
Chapter 12, Book I of the Code states
Sec. 48. Official Authorized to Convey Real Property. Whenever real property
of the Government is authorized by law to be conveyed, the deed of
conveyance shall be executed in behalf of the government by the following:
(1) x x x
(2) For property belonging to the Republic of the Philippines, but titled in
the name of any political subdivision or of any corporate agency or
instrumentality, by the executive head of the agency or
instrumentality. (Emphasis supplied)
Thus, private property purchased by the National Government for expansion
of a public wharf may be titled in the name of a government corporation
regulating port operations in the country. Private property purchased by the
National Government for expansion of an airport may also be titled in the
name of the government agency tasked to administer the airport. Private
property donated to a municipality for use as a town plaza or public school
site may likewise be titled in the name of the municipality. [106] All these
properties become properties of the public domain, and if already registered
under Act No. 496 or PD No. 1529, remain registered land. There is no
requirement or provision in any existing law for the de-registration of land
from the Torrens System.
Private lands taken by the Government for public use under its power
of eminent domain become unquestionably part of the public
domain. Nevertheless, Section 85 of PD No. 1529 authorizes the Register of
Deeds to issue in the name of the National Government new certificates of
title covering such expropriated lands. Section 85 of PD No. 1529 states
Sec. 85. Land taken by eminent domain. Whenever any registered land, or
interest therein, is expropriated or taken by eminent domain, the National
Government, province, city or municipality, or any other agency or
instrumentality exercising such right shall file for registration in the proper
Registry a certified copy of the judgment which shall state definitely by an
adequate description, the particular property or interest expropriated, the
number of the certificate of title, and the nature of the public use. A
memorandum of the right or interest taken shall be made on each certificate of
title by the Register of Deeds, and where the fee simple is taken, a new
certificate shall be issued in favor of the National Government, province,
city, municipality, or any other agency or instrumentality exercising such right
for the land so taken. The legal expenses incident to the memorandum of
registration or issuance of a new certificate of title shall be for the account of
the authority taking the land or interest therein. (Emphasis supplied)
Consequently, lands registered under Act No. 496 or PD No. 1529 are not
exclusively private or patrimonial lands. Lands of the public domain may also
be registered pursuant to existing laws.
AMARI makes a parting shot that the Amended JVA is not a sale to
AMARI of the Freedom Islands or of the lands to be reclaimed from
 submerged areas of Manila Bay. In the words of AMARI, the Amended JVA is
not a sale but a joint venture with a stipulation for reimbursement of the
original cost incurred by PEA for the earlier reclamation and construction
works performed by the CDCP under its 1973 contract with the
Republic.Whether the Amended JVA is a sale or a joint venture, the fact
remains that the Amended JVA requires PEA to cause the issuance and
delivery of the certificates of title conveying AMARIs Land Share in the name
of AMARI.[107]
This stipulation still contravenes Section 3, Article XII of the 1987
Constitution which provides that private corporations shall not hold such
alienable lands of the public domain except by lease. The transfer of title and
ownership to AMARI clearly means that AMARI will hold the reclaimed
lands other than by lease. The transfer of title and ownership is a disposition
of the reclaimed lands, a transaction considered a sale or alienation under CA
No. 141,[108] the Government Auditing Code,[109] and Section 3, Article XII of
the 1987 Constitution.
The Regalian doctrine is deeply implanted in our legal system.
Foreshore and submerged areas form part of the public domain and are
inalienable. Lands reclaimed from foreshore and submerged areas also form
part of the public domain and are also inalienable, unless converted pursuant
to law into alienable or disposable lands of the public domain. Historically,
lands reclaimed by the government are sui generis, not available for sale to
private parties unlike other alienable public lands. Reclaimed lands retain their
inherent potential as areas for public use or public service. Alienable lands of
the public domain, increasingly becoming scarce natural resources, are to be
distributed equitably among our ever-growing population. To insure such
equitable distribution, the 1973 and 1987 Constitutions have barred private
corporations from acquiring any kind of alienable land of the public
domain. Those who attempt to dispose of inalienable natural resources of the
State, or seek to circumvent the constitutional ban on alienation of lands of the
public domain to private corporations, do so at their own risk.
We can now summarize our conclusions as follows:
1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now
covered by certificates of title in the name of PEA, are alienable lands of the
public domain. PEA may lease these lands to private corporations but may not
sell or transfer ownership of these lands to private corporations. PEA may
only sell these lands to Philippine citizens, subject to the ownership
limitations in the 1987 Constitution and existing laws.
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[110] 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[111] 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[112] of the Civil Code, contracts
whose object or purpose is contrary to law, or whose object is outside the
commerce of men, are inexistent and void from the beginning. The Court must
perform its duty to defend and uphold the Constitution, and therefore declares
the Amended JVA null and void ab initio.
Seventh issue: whether the Court is the proper forum to raise the issue of
whether the Amended JVA is grossly disadvantageous to the government.
Considering that the Amended JVA is null and void ab initio, there is
no necessity to rule on this last issue. Besides, the Court is not a trier of facts,
and this last issue involves a determination of factual matters.
WHEREFORE, the petition is GRANTED. The Public Estates
Authority and Amari Coastal Bay Development Corporation are
PERMANENTLY ENJOINED from implementing the Amended Joint Venture
Agreement which is hereby declared NULL and VOID ab initio.
SO ORDERED.
G.R. No. 164527 August 15, 2007
CHAVEZ vs NATIONAL HOUSING AUTHORITY
DECISION
VELASCO, JR., J.:
In this Petition for Prohibition and Mandamus with Prayer for Temporary
Restraining Order and/or Writ of Preliminary Injunction under Rule 65,
petitioner, in his capacity as taxpayer, seeks:
to declare NULL AND VOID the Joint Venture Agreement (JVA) dated March
9, 1993 between the National Housing Authority and R-II Builders, Inc. and
the Smokey Mountain Development and Reclamation Project embodied
therein; the subsequent amendments to the said JVA; and all other agreements
signed and executed in relation thereto including, but not limited to the
Smokey Mountain Asset Pool Agreement dated 26 September 1994 and the
separate agreements for Phase I and Phase II of the Projectas well as all other
transactions which emanated therefrom, for
being UNCONSTITUTIONAL and INVALID;
to enjoin respondentsparticularly respondent NHAfrom further implementing
and/or enforcing the said project and other agreements related thereto, and
from further deriving and/or enjoying any rights, privileges and interest
therefrom x x x; and
to compel respondents to disclose all documents and information relating to
the projectincluding, but not limited to, any subsequent agreements with
respect to the different phases of the project, the revisions over the original
plan, the additional works incurred thereon, the current financial condition of
respondent R-II Builders, Inc., and the transactions made respecting the
project.[1]
The Facts
On March 1, 1988, then President Corazon C. Aquino issued Memorandum
Order No. (MO) 161[2] approving and directing the implementation of the
Comprehensive and Integrated Metropolitan Manila Waste Management Plan
(the Plan). The Metro Manila Commission, in coordination with various
government agencies, was tasked as the lead agency to implement the Plan as
formulated by the Presidential Task Force on Waste Management created by
Memorandum Circular No. 39. A day after, on March 2, 1988, MO 161-
A[3] was issued, containing the guidelines which prescribed the functions and
responsibilities of fifteen (15) various government departments and offices
tasked to implement the Plan, namely: Department of Public Works and
Highway (DPWH), Department of Health (DOH), Department of
Environment and Natural Resources (DENR), Department of Transportation
and Communication, Department of Budget and Management, National
Economic and Development Authority (NEDA), Philippine Constabulary
Integrated National Police, Philippine Information Agency and the Local
Government Unit (referring to the City of Manila), Department of Social
Welfare and Development, Presidential Commission for Urban Poor, National
Housing Authority (NHA), Department of Labor and Employment,
Department of Education, Culture and Sports (now Department of Education),
and Presidential Management Staff.
Specifically, respondent NHA was ordered to conduct feasibility studies and
develop low-cost housing projects at the dumpsite and absorb scavengers in
NHA resettlement/low-cost housing projects. [4] On the other hand, the DENR
was tasked to review and evaluate proposed projects under the Plan with
regard to their environmental impact, conduct regular monitoring of activities
of the Plan to ensure compliance with environmental standards and assist
DOH in the conduct of the study on hospital waste management.[5]

At the time MO 161-A was issued by President
Aquino, Smokey Mountain was a wasteland in Balut, Tondo, Manila, where
numerous Filipinos resided in subhuman conditions, collecting items that may
have some monetary value from the garbage. The Smokey Mountain dumpsite
is bounded on the north by the Estero Marala, on the south by the property of
the National Government, on the east by the property of B and I Realty Co.,
and on the west by Radial Road 10 (R-10).
Pursuant to MO 161-A, NHA prepared the feasibility studies of the Smokey
Mountain low-cost housing project which resulted in the formulation of the
Smokey Mountain Development Plan and Reclamation of the Area Across R-
10 or the Smokey Mountain Development and Reclamation Project (SMDRP;
the Project). The Project aimed to convert the Smokey Mountain dumpsite
into a habitable housing project, inclusive of the reclamation of the area across
R-10, adjacent to the Smokey Mountain as the enabling component of the
project.[6] Once finalized, the Plan was submitted to President Aquino for her
approval.
On July 9, 1990, the Build-Operate-and-Transfer (BOT) Law (Republic Act
No. [RA] 6957) was enacted.[7] Its declared policy under Section 1 is [t]o
recognize the indispensable role of the private sector as the main engine for
national growth and development and provide the most appropriate favorable
incentives to mobilize private resources for the purpose. Sec. 3 authorized and
empowered [a]ll government infrastructure agencies, including government-
owned and controlled corporations and local government units x x x to enter
into contract with any duly pre-qualified private contractor for the financing,
construction, operation and maintenance of any financially viable
infrastructure facilities through the build-operate-transfer or build and transfer
scheme.
RA 6957 defined build-and-transfer scheme as [a] contractual arrangement
whereby the contractor undertakes the construction, including financing, of a
given infrastructure facility, and its turnover after the completion to the
government agency or local government unit concerned which shall pay the
contractor its total investment expended on the project, plus reasonable rate of
return thereon. The last paragraph of Sec. 6 of the BOT Law provides that the
repayment scheme in the case of land reclamation or the building of industrial
estates may consist of [t]he grant of a portion or percentage of the reclaimed
land or industrial estate built, subject to the constitutional requirements with
respect to the ownership of lands.
On February 10, 1992, Joint Resolution No. 03 [8] was passed by
both houses of Congress. Sec. 1 of this resolution provided, among other
things, that:
Section 1. There is hereby approved the following national infrastructure
projects for implementation under the provisions of Republic Act No. 6957
and its implementing rules and regulations:
xxxx
(d) Port infrastructure like piers, wharves, quays, storage handling, ferry
service and related facilities;
xxxx
(k) Land reclamation, dredging and other related development facilities;
(l) Industrial estates, regional industrial centers and export processing zones
including steel mills, iron-making and petrochemical complexes and related
infrastructure and utilities;
xxxx
(p) Environmental and solid waste management-related facilities such as
collection equipment, composting plants, incinerators, landfill and tidal
barriers, among others; and
(q) Development of new townsites and communities and related facilities.
This resolution complied with and conformed to Sec. 4 of the BOT Law
requiring the approval of all national infrastructure projects by the Congress.
On January 17, 1992, President Aquino proclaimed MO 415 [9] approving and
directing the implementation of the SMDRP. Secs. 3 and 4 of the
Memorandum Order stated:
Section 3. The National Housing Authority is hereby directed to implement
the Smokey Mountain Development Plan and Reclamation of the Area Across
R-10 through a private sector joint venture scheme at the least cost to the
government.
Section 4. The land area covered by the Smokey Mountain dumpsite is hereby
conveyed to the National Housing Authority as well as the area to be
reclaimed across R-10. (Emphasis supplied.)
In addition, the Public Estates Authority (PEA) was directed to assist in the
evaluation of proposals regarding the technical feasibility of reclamation,
while the DENR was directed to (1) facilitate titling of Smokey Mountain and
of the area to be reclaimed and (2) assist in the technical evaluation of
proposals regarding environmental impact statements.[10]
In the same MO 415, President Aquino created an Executive Committee
(EXECOM) to oversee the implementation of the Plan, chaired by the
National Capital Region-Cabinet Officer for Regional Development (NCR-
CORD) with the heads of the NHA, City of Manila, DPWH, PEA, Philippine
Ports Authority (PPA), DENR, and Development Bank of the Philippines
(DBP) as members.[11] The NEDA subsequently became a member of the
EXECOM. Notably, in a September 2, 1994 Letter,[12] PEA General Manager
Amado Lagdameo approved the plans for the reclamation project prepared by
the NHA.
In conformity with Sec. 5 of MO 415, an inter-agency technical committee
(TECHCOM) was created composed of the technical representatives of the
EXECOM [t]o assist the NHA in the evaluation of the project proposals, assist
in the resolution of all issues and problems in the project to ensure that all
aspects of the development from squatter relocation, waste management,
reclamation, environmental protection, land and house construction meet
governing regulation of the region and to facilitate the completion of the
project.[13]
Subsequently, the TECHCOM put out the Public Notice and Notice to Pre-
Qualify and Bid for the right to become NHAs joint venture partner in the
implementation of the SMDRP. The notices were published in newspapers of
general circulation on January 23 and 26 and February 1, 14, 16, and 23,
1992, respectively. Out of the thirteen (13) contractors who responded, only
five (5) contractors fully complied with the required pre-qualification
documents. Based on the evaluation of the pre-qualification documents, the
EXECOM declared the New San Jose Builders, Inc. and R-II Builders, Inc.
(RBI) as the top two contractors.[14]
Thereafter, the TECHCOM evaluated the bids (which include the Pre-
feasibility Study and Financing Plan) of the top two (2) contractors in this
manner:
(1) The DBP, as financial advisor to the Project, evaluated their Financial
Proposals;
(2) The DPWH, PPA, PEA and NHA evaluated the Technical Proposals for the
Housing Construction and Reclamation;
(3) The DENR evaluated Technical Proposals on Waste Management and
Disposal by conducting the Environmental Impact Analysis; and
(4) The NHA and the City of Manila evaluated the socio-economic benefits
presented by the proposals.
On June 30, 1992, Fidel V. Ramos assumed the Office of the President (OP) of
the Philippines.
On August 31, 1992, the TECHCOM submitted its recommendation to the
EXECOM to approve the R-II Builders, Inc. (RBI) proposal which garnered
the highest score of 88.475%.
Subsequently, the EXECOM made a Project briefing to President
Ramos. As a result, President Ramos issued Proclamation No.
39[15] on September 9, 1992, which reads:
WHEREAS, the National Housing Authority has presented a viable
conceptual plan to convert the Smokey Mountain dumpsite into a habitable
housing project, inclusive of the reclamation of the area across Road Radial
10 (R-10) adjacent to the Smokey Mountain as the enabling component of the
project;
xxxx
These parcels of land of public domain are hereby placed under the
administration and disposition of the National Housing Authority to
develop, subdivide and dispose to qualified beneficiaries, as well as its
development for mix land use (commercial/industrial) to provide
employment opportunities to on-site families and additional areas for
port-related activities.
In order to facilitate the early development of the area for disposition, the
Department of Environment and Natural Resources, through the Lands and
Management Bureau, is hereby directed to approve the boundary and
subdivision survey and to issue a special patent and title in the name of the
National Housing Authority, subject to final survey and private rights, if any
there be. (Emphasis supplied.)
On October 7, 1992, President Ramos authorized NHA to enter into a Joint
Venture Agreement with RBI [s]ubject to final review and approval of the
Joint Venture Agreement by the Office of the President.[16]
On March 19, 1993, the NHA and RBI entered into a Joint Venture
Agreement[17] (JVA) for the development of the Smokey Mountain dumpsite
and the reclamation of the area across R-10 based on Presidential Decree No.
(PD) 757[18] which mandated NHA [t]o undertake the physical and socio-
economic upgrading and development of lands of the public domain identified
for housing, MO 161-A which required NHA to conduct the feasibility studies
and develop a low-cost housing project at the Smokey Mountain, and MO 415
as amended by MO 415-A which approved the Conceptual Plan for Smokey
Mountain and creation of the EXECOM and TECHCOM. Under the JVA, the
Project involves the clearing of Smokey Mountain for eventual development
into a low cost medium rise housing complex and industrial/commercial site
with the reclamation of the area directly across [R-10] to act as the enabling
component of the Project.[19] The JVA covered a lot in Tondo, Manila with an
area of two hundred twelve thousand two hundred thirty-four (212,234)
square meters and another lot to be reclaimed also in Tondo with an area of
four hundred thousand (400,000) square meters.
The Scope of Work of RBI under Article II of the JVA is as follows:
a) To fully finance all aspects of development of Smokey Mountain and
reclamation of no more than 40 hectares of Manila Bay area across Radial
Road 10.
b) To immediately commence on the preparation of feasibility report and
detailed engineering with emphasis to the expedient acquisition of the
Environmental Clearance Certificate (ECC) from the DENR.
c) The construction activities will only commence after the acquisition of the
ECC, and
d) Final details of the contract, including construction, duration and delivery
timetables, shall be based on the approved feasibility report and detailed
engineering.
Other obligations of RBI are as follows:
2.02 The [RBI] shall develop the PROJECT based on the Final Report and
Detailed Engineering as approved by the Office of the President. All costs and
expenses for hiring technical personnel, date gathering, permits, licenses,
appraisals, clearances, testing and similar undertaking shall be for the account
of the [RBI].
2.03 The [RBI] shall undertake the construction of 3,500 temporary housing
units complete with basic amenities such as plumbing, electrical and sewerage
facilities within the temporary housing project as staging area to temporarily
house the squatter families from the Smokey Mountain while development is
being undertaken. These temporary housing units shall be turned over to the
[NHA] for disposition.
2.04 The [RBI] shall construct 3,500 medium rise low cost permanent housing
units on the leveled Smokey Mountain complete with basic utilities and
amenities, in accordance with the plans and specifications set forth in the
Final Report approved by the [NHA]. Completed units ready for mortgage
take out shall be turned over by the [RBI] to NHA on agreed schedule.
2.05 The [RBI] shall reclaim forty (40) hectares of Manila Bay area directly
across [R-10] as contained in Proclamation No. 39 as the enabling component
of the project and payment to the [RBI] as its asset share.
2.06 The [RBI] shall likewise furnish all labor materials and equipment
necessary to complete all herein development works to be undertaken on a
phase to phase basis in accordance with the work program stipulated therein.
The profit sharing shall be based on the approved pre-feasibility report
submitted to the EXECOM, viz:
For the developer (RBI):
1. To own the forty (40) hectares of reclaimed land.
2. To own the commercial area at the Smokey Mountain area composed of 1.3
hectares, and
3. To own all the constructed units of medium rise low cost permanent
housing units beyond the 3,500 units share of the [NHA].
For the NHA:
1. To own the temporary housing consisting of 3,500 units.
2. To own the cleared and fenced incinerator site consisting of 5 hectares
situated at the Smokey Mountain area.
3. To own the 3,500 units of permanent housing to be constructed by [RBI] at
the Smokey Mountain area to be awarded to qualified on site residents.
4. To own the Industrial Area site consisting of 3.2 hectares, and
5. To own the open spaces, roads and facilities within
the Smokey Mountain area.
In the event of extraordinary increase in labor, materials, fuel and non-
recoverability of total project expenses,[20] the OP, upon recommendation of
the NHA, may approve a corresponding adjustment in the enabling
component.
The functions and responsibilities of RBI and NHA are as follows:
For RBI:
4.01 Immediately commence on the preparation of the FINAL REPORT with
emphasis to the expedient acquisition, with the assistance of the [NHA] of
Environmental Compliance Certificate (ECC) from the Environmental
Management Bureau (EMB) of the [DENR]. Construction shall only
commence after the acquisition of the ECC. The Environment Compliance
Certificate (ECC) shall form part of the FINAL REPORT.
The FINAL REPORT shall provide the necessary subdivision and housing
plans, detailed engineering and architectural drawings, technical specifications
and other related and required documents relative to
the Smokey Mountainarea.
With respect to the 40-hectare reclamation area, the [RBI] shall have the
discretion to develop the same in a manner that it deems necessary to recover
the [RBIs] investment, subject to environmental and zoning rules.
4.02 Finance the total project cost for land development, housing construction
and reclamation of the PROJECT.
4.03 Warrant that all developments shall be in compliance with the
requirements of the FINAL REPORT.
4.04 Provide all administrative resources for the submission of project
accomplishment reports to the [NHA] for proper evaluation and supervision
on the actual implementation.
4.05 Negotiate and secure, with the assistance of the [NHA] the grant of rights from other government agencies, it was discovered that design changes and
of way to the PROJECT, from the owners of the adjacent lots for access road, additional work have to be undertaken to successfully implement the Project.
[21]
water, electrical power connections and drainage facilities.

4.06 Provide temporary field office and transportation vehicles (2 units), one
(1) complete set of computer and one (1) unit electric typewriter for the
[NHAs] field personnel to be charged to the PROJECT.
For the NHA:
4.07 The [NHA] shall be responsible for the removal and relocation of all
squatters within Smokey Mountain to the Temporary Housing Complex or to
other areas prepared as relocation areas with the assistance of the [RBI]. The
[RBI] shall be responsible in releasing the funds allocated and committed for
relocation as detailed in the FINAL REPORT.
4.08 Assist the [RBI] and shall endorse granting of exemption fees in the
acquisition of all necessary permits, licenses, appraisals, clearances and
accreditations for the PROJECT subject to existing laws, rules and
regulations.
Thus, on February 21, 1994, the parties entered into another agreement
denominated as the Amended and Restated Joint Venture
Agreement[22] (ARJVA) which delineated the different phases of the
Project.Phase I of the Project involves the construction of temporary housing
units for the current residents of the Smokey Mountain dumpsite, the clearing
and leveling-off of the dumpsite, and the construction of medium-rise low-
cost housing units at the cleared and leveled dumpsite.[23] Phase II of the
Project involves the construction of an incineration area for the on-site
disposal of the garbage at the dumpsite.[24]The enabling component or
consideration for Phase I of the Project was increased from 40 hectares of
reclaimed lands across R-10 to 79 hectares.[25] The revision also provided for
the enabling component for Phase II of 119 hectares of reclaimed lands
contiguous to the 79 hectares of reclaimed lands for Phase I.[26] Furthermore,
the amended contract delineated the scope of works and the terms and
conditions of Phases I and II, thus:
The PROJECT shall consist of Phase I and Phase II.

4.09 The [NHA] shall inspect, evaluate and monitor all works at Phase I shall involve the following:
the Smokey Mountain and Reclamation Area while the land development and
construction of housing units are in progress to determine whether the a. the construction of 2,992 units of temporary housing for
development and construction works are undertaken in accordance with the the affected residents while clearing and development of Smokey Mountain
FINAL REPORT. If in its judgment, the PROJECT is not pursued in [are] being undertaken
accordance with the FINAL REPORT, the [NHA] shall require the [RBI] to
undertake necessary remedial works. All expenses, charges and penalties b. the clearing of Smokey Mountain and the
incurred for such remedial, if any, shall be for the account of the [RBI]. subsequent construction of 3,520 units of medium rise housing and
the development of the industrial/commercial site within
4.10 The [NHA] shall assist the [RBI] in the complete electrification of the the Smokey Mountain area
PROJECT. x x x
c. the reclamation and development of a 79 hectare area
4.11 Handle the processing and documentation of all sales transactions related directly across Radial Road 10 to serve as the enabling component of Phase I
to its assets shares from the venture such as the 3,500 units of permanent
housing and the allotted industrial area of 3.2 hectares. Phase II shall involve the following:

4.12 All advances outside of project costs made by the [RBI] to the [NHA] a. the construction and operation of an incinerator plant that
shall be deducted from the proceeds due to the [NHA]. will conform to the emission standards of the DENR

4.13 The [NHA] shall be responsible for the acquisition of the Mother Title
for the Smokey Mountain and Reclamation Area within 90 days upon
submission of Survey returns to the Land Management Sector. The land titles
to the 40-hectare reclaimed land, the 1.3 hectare commercial area at
the Smokey Mountain area and the constructed units of medium-rise
permanent housing units beyond the 3,500 units share of the [NHA] shall be
issued in the name of the [RBI] upon completion of the project. However, the
[RBI] shall have the authority to pre-sell its share as indicated in this
agreement.
b. the reclamation and development of 119-hectare area contiguous to that to
be reclaimed under Phase I to serve as the enabling component of Phase II.
Under the ARJVA, RBI shall construct 2,992 temporary housing units, a
reduction from 3,500 units under the JVA.[27] However, it was required to
construct 3,520 medium-rise low-cost permanent housing units instead of
3,500 units under the JVA. There was a substantial change in the design of the
permanent housing units such that a loft shall be incorporated in each unit so
as to increase the living space from 20 to 32 square meters. The additions and
changes in the Original Project Component are as follows:

ORIGINAL CHANGES/REVISIONS
The final details of the JVA, which will include the construction duration,
1. TEMPORARY HOUSING
costs, extent of reclamation, and delivery timetables, shall be based on the
FINAL REPORT which will be contained in a Supplemental Agreement to be
Wood/Plywood, ga. 31 G.I. Concrete/Steel Frame Structure Sheet usable life
executed later by the parties.
of 3 years, gauge 26 G.I. roofing sheets future 12 SM floor area. use as
permanent structures for factory and warehouses mixed 17 sm & 12 sm floor
The JVA may be modified or revised by written agreement between the NHA
area.
and RBI specifying the clauses to be revised or modified and the
corresponding amendments.
2. MEDIUM RISE MASS
HOUSING
If the Project is revoked or terminated by the Government through no fault of
RBI or by mutual agreement, the Government shall compensate RBI for its
Box type precast Shelter Conventional and precast component 20 square
actual expenses incurred in the Project plus a reasonable rate of return not
meter concrete structures, 32 square floor area with 2.4 meter meter floor area
exceeding that stated in the feasibility study and in the contract as of the date
with loft floor height; bare type, 160 units/ (sleeping quarter) 3.6 m. floor
of such revocation, cancellation, or termination on a schedule to be agreed
building. height, painted and improved
upon by both parties.
architectural faade, 80 units/
building.
As a preliminary step in the project implementation, consultations and
3. MITIGATING MEASURES
dialogues were conducted with the settlers of the Smokey Mountain Dumpsite
Area. At the same time, DENR started processing the application for the
Use of clean dredgefill material below the MLLW and SM material mixed with dredgefill above
Environmental Clearance Certificate (ECC) of the SMDRP. As a result
MLLW.
however of the consultative dialogues, public hearings, the report on the on-
site field conditions, the Environmental Impact Statement (EIS) published on
a. 100% use of Smokey
April 29 and May 12, 1993 as required by the Environmental Management
Mountain material as
Bureau of DENR, the evaluation of the DENR, and the recommendations
dredgefill Use of Steel Sheet Piles needed
 for longer depth of embedment.
b. Concrete Sheet Piles
short depth of
embedment
c. Silt removal approximately Need to remove more than 3.0
These material and substantial modifications served as
justifications for the increase in the share of RBI from 40 hectares to 79
hectares of reclaimed land.
JVA, the specific costs of the Project were not stipulated but under the ARJVA, the
stipulated cost for Phase I was pegged at six billion six hundred ninety-three
million three hundred eighty-seven thousand three hundred sixty-four pesos
(PhP 6,693,387,364).
In his February 10, 1994 Memorandum, the Chairperson of the
SMDRP EXECOM submitted the ARJVA for approval by the OP. After
review of said agreement, the OP directed that certain terms and conditions of
the ARJVA be further clarified or amended preparatory to its
approval. Pursuant to the Presidents directive, the parties reached an
agreement on the clarifications and amendments required to be made on the
ARJVA.
On August 11, 1994, the NHA and RBI executed an Amendment To the
Amended and Restated Joint Venture Agreement (AARJVA) [29] clarifying
certain terms and condition of the ARJVA, which was submitted to President
Ramos for approval, to wit:
Phase II shall involve the following:
a. the construction and operation of an incinerator plant that will conform to
the emission standards of the DENR
b. the reclamation and development of 119-hectare area contiguous to that to
be reclaimed under Phase I to serve as the enabling component of Phase
II, the exact size and configuration of which shall be approved by the
SMDRP Committee[30]
Other substantial amendments are the following:
4. Paragraph 2.05 of Article II of the ARJVA is hereby amended to read as
follows:
2.05. The DEVELOPER shall reclaim seventy nine (79) hectares of the
Manila Bay area directly across Radial Road 10 (R-10) to serve as payment to
the DEVELOPER as its asset share for Phase I and to develop such land into
commercial area with port facilities; provided, that the port plan shall be
integrated with the Philippine Port Authoritys North Harbor plan for the
Manila Bay area and provided further, that the final reclamation and port plan
for said reclaimed area shall be submitted for approval by the Public Estates
Authority and the Philippine Ports Authority, respectively: provided finally,
that subject to par. 2.02 above, actual reclamation work may commence upon
approval of the final reclamation plan by the Public Estates Authority.
xxxx
9. A new paragraph to be numbered 5.05 shall be added to Article V of the
ARJVA, and shall read as follows:
5.05. In the event this Agreement is revoked, cancelled or terminated
by the AUTHORITY through no fault of the DEVELOPER, the AUTHORITY
shall compensate the DEVELOPER for the value of the completed portions
of, and actual expenditures on the PROJECT plus a reasonable rate of return
thereon, not exceeding that stated in the Cost Estimates of Items of Work
previously approved by the SMDRP Executive Committee and the
AUTHORITY and stated in this Agreement, as of the date of such revocation,
cancellation, or termination, on a schedule to be agreed upon by the parties,
provided that said completed portions of Phase I are in accordance with the
approved FINAL REPORT.
Afterwards, President Ramos issued Proclamation No. 465
dated August 31, 1994[31] increasing the proposed area for reclamation across
R-10 from 40 hectares to 79 hectares,[32] to wit:
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic
of the Philippines, by virtue of the powers vested in me by the law, and as
recommended by the SMDRP Executive Committee, do hereby authorize the
increase of the area of foreshore or submerged lands of Manila Bay to be
reclaimed, as previously authorized under Proclamation No. 39 (s. 1992) and
Memorandum Order No. 415 (s. 1992), from Four Hundred Thousand
(400,000) square meters, more or less, to Seven Hundred Ninety Thousand
(790,000) square meters, more or less.
On September 1, 1994, pursuant to Proclamation No. 39, the
DENR issued Special Patent No. 3591 conveying in favor of NHA an area of
211,975 square meters covering the Smokey Mountain Dumpsite.
In its September 7, 1994 letter to the EXECOM, the OP through
then Executive Secretary Teofisto T. Guingona, Jr., approved the ARJVA as
amended by the AARJVA.
On September 8, 1994, the DENR issued Special Patent 3592
pursuant to Proclamation No. 39, conveying in favor of NHA a 401,485-
square meter area.
On September 26, 1994, the NHA, RBI, Home Insurance and
Guaranty Corporation (HIGC), now known as the Home Guaranty
Corporation, and the Philippine National Bank (PNB) [33] executed the Smokey
Mountain Asset Pool Formation Trust Agreement (Asset Pool Agreement).
[34]
Thereafter, a Guaranty Contract was entered into by NHA, RBI, and HIGC.
On June 23, 1994, the Legislature passed the Clean Air Act. [35] The
Act made the establishment of an incinerator illegal and effectively barred the
implementation of the planned incinerator project under Phase II. Thus, the
off-site disposal of the garbage at the Smokey Mountain became necessary.[36]
The land reclamation was completed in August 1996.[37]
Sometime later in 1996, pursuant likewise to Proclamation No. 39,
the DENR issued Special Patent No. 3598 conveying in favor of NHA an
additional 390,000 square meter area.
During the actual construction and implementation of Phase I of
the SMDRP, the Inter-Agency Technical Committee found and recommended
to the EXECOM on December 17, 1997 that additional works were necessary
for the completion and viability of the Project. The EXECOM approved the
recommendation and so, NHA instructed RBI to implement the change orders
or necessary works.[38]
Such necessary works comprised more than 25% of the original
contract price and as a result, the Asset Pool incurred direct and indirect
costs. Based on C1 12 A of the Implementing Rules and Regulations of PD
1594, a supplemental agreement is required for all change orders and extra
work orders, the total aggregate cost of which being more than twenty-five
(25%) of the escalated original contract price.
The EXECOM requested an opinion from the Department of
Justice (DOJ) to determine whether a bidding was required for the change
orders and/or necessary works. The DOJ, through DOJ Opinion Nos. 119 and
155 dated August 26, 1993 and November 12, 1993, opined that a rebidding,
pursuant to the aforequoted provisions of the implementing rules (referring to
PD 1594) would not be necessary where the change orders inseparable from
the original scope of the project, in which case, a negotiation with the
incumbent contractor may be allowed.
Thus, on February 19, 1998, the EXECOM issued a resolution
directing NHA to enter into a supplemental agreement covering said necessary
works.
On March 20, 1998, the NHA and RBI entered into a Supplemental
Agreement covering the aforementioned necessary works and submitted it to
the President on March 24, 1998 for approval.
Outgoing President Ramos decided to endorse the consideration of
the Supplemental Agreement to incoming President Joseph E.
Estrada. On June 30, 1998, Estrada became the 13th Philippine President.
However, the approval of the Supplemental Agreement was
unacted upon for five months. As a result, the utilities and the road networks
were constructed to cover only the 79-hectare original enabling component
granted under the ARJVA. The 220-hectare extension of the 79-hectare area
was no longer technically feasible. Moreover, the financial crises and
unreliable real estate situation made it difficult to sell the remaining reclaimed
lots. The devaluation of the peso and the increase in interest cost led to the
substantial increase in the cost of reclamation.
On August 1, 1998, the NHA granted RBIs request to suspend
work on the SMDRP due to the delay in the approval of the Supplemental
Agreement, the consequent absence of an enabling component to cover the
cost of the necessary works for the project, and the resulting inability to
replenish the Asset Pool funds partially used for the completion of the
necessary works.[39]
As of August 1, 1998 when the project was suspended, RBI had
already accomplished a portion of the necessary works and change orders
which resulted in [RBI] and the Asset Pool incurring advances for direct and
indirect cost which amount can no longer be covered by the 79-hectare
enabling component under the ARJVA.[40]
Repeated demands were made by RBI in its own capacity and on
behalf of the asset pool on NHA for payment for the advances for direct and
indirect costs subject to NHA validation.
In November 1998, President Estrada issued Memorandum Order
No. 33 reconstituting the SMDRP EXECOM and further directed it to review
the Supplemental Agreement and submit its recommendation on the
completion of the SMDRP.
The reconstituted EXECOM conducted a review of the project and
recommended the amendment of the March 20, 1998 Supplemental
Agreement to make it more feasible and to identify and provide new sources
of funds for the project and provide for a new enabling component to cover
the payment for the necessary works that cannot be covered by the 79-hectare
enabling component under the ARJVA.[41] Joint Venture Agreement (JVA) dated 19 March 1993
Amended and Restated Joint Venture Agreement (ARJVA) dated 21 February 1994
The EXECOM passed Resolution Nos. 99-16-01 and 99-16- Amendment and Restated Joint Venture Agreement dated 11 August 1994
02[42] which approved the modification of the Supplemental Agreement, to wit:
Amended Supplemental Agreement (ASA) dated 19 November 2001.
a) Approval of 150 hectares additional reclamation in order to make thex x x x
reclamation feasible as part of the enabling component.
b) The conveyance of the 15-hectare NHA Vitas property (actually 17 hectares
based on surveys) to the SMDRP Asset Pool.
c) The inclusion in the total development cost of other additional, necessary
and indispensable infrastructure works and the revision of the original cost a. Direct payment to DEVELOPER of the amounts herein listed in the following
stated in the Supplemental Agreement dated March 20, 1998 from PhP
2,953,984,941.40 to PhP 2,969,134,053.13. P250 Million in cash from the escrow account in accordance with Section 2 herewith;
d) Revision in the sharing agreement between the parties.
In the March 23, 2000 OP Memorandum, the EXECOM was
authorized to proceed and complete the SMDRP subject to certain guidelines
and directives.
After the parties in the case at bar had complied with the March 23,
2000 Memorandum, the NHA November 9, 2000 Resolution No. 4323
approved the conveyance of the 17-hectare Vitas property in favor of the
existing or a newly created Asset Pool of the project to be developed into a
mixed commercial-industrial area, subject to certain conditions.
On January 20, 2001, then President Estrada was considered
resigned. On the same day, President Gloria M. Arroyo took her oath as the
14th President of the Philippines.
As of February 28, 2001, the estimated total project cost of the
SMDRP has reached P8.65 billion comprising of P4.78 billion in direct cost
and P3.87 billion in indirect cost,[43] subject to validation by the NHA.
On August 28, 2001, NHA issued Resolution No. 4436 to pay for
the various necessary works/change orders to SMDRP, to effect the
corresponding enabling component consisting of the conveyance of the NHAs
Vitas Property and an additional 150-hectare reclamation area and to authorize
the release by NHA of PhP 480 million as advance to the project to make the
Permanent Housing habitable, subject to reimbursement from the proceeds of
the expanded enabling component.[44]
On November 19, 2001, the Amended Supplemental Agreement
(ASA) was signed by the parties, and on February 28, 2002, the Housing and
Urban Development Coordinating Council (HUDCC) submitted the
agreement to the OP for approval.
In the July 20, 2002 Cabinet Meeting, HUDCC was directed to
submit the works covered by the PhP 480 million [advance to the Project] and
the ASA to public bidding.[45] On August 28, 2002, the HUDCC informed RBI
of the decision of the Cabinet.
In its September 2, 2002 letter to the HUDCC Chairman, RBI
lamented the decision of the government to bid out the remaining works under
the ASA thereby unilaterally terminating the Project with RBI and all the
agreements related thereto. RBI demanded the payment of just compensation
for all accomplishments and costs incurred in developing the SMDRP plus a
reasonable rate of return thereon pursuant to Section 5.05 of the ARJVA and
Section 6.2 of the ASA.[46]
Consequently, the parties negotiated the terms of the termination of
the JVA and other subsequent agreements.
On August 27, 2003, the NHA and RBI executed a Memorandum
of Agreement (MOA) whereby both parties agreed to terminate the JVA and
other subsequent agreements, thus:
1. TERMINATION
In compliance with the Cabinet directive dated 30 July 2002 to submit the works
covered by the P480 Million and the ASA to public bidding, the following
agreements executed by and between the NHA and the DEVELOPER are
hereby terminated, to wit:
d. Supplemental Agreement dated 24 March 1998
5. SETTLEMENT OF CLAIMS
Subject to the validation of the DEVELOPERs claims, the NHA hereby agrees to
initially compensate the Developer for the abovementioned costs as follows:
manner:
a.2 Conveyance of a 3 hectare portion of the Vitas Industrial area immediately after
joint determination of the appraised value of the said property in accordance
with the procedure herein set forth in the last paragraph of Section 5.3. For
purposes of all payments to be made through conveyance of real properties,
the parties shall secure from the NHA Board of Directors all documents
necessary and sufficient to effect the transfer of title over the properties to be
conveyed to RBI, which documents shall be issued within a reasonable period.
Any unpaid balance of the DEVELOPERS claims determined after the validation
process referred to in Section 4 hereof, may be paid in cash, bonds or through
the conveyance of properties or any combination thereof. The manner, terms
and conditions of payment of the balance shall be specified and agreed upon
later within a period of three months from the time a substantial amount
representing the unpaid balance has been validated pursuant hereto including,
but not limited to the programming of quarterly cash payments to be sourced
by the NHA from its budget for debt servicing, from its income or from any
other sources.
In any case the unpaid balance is agreed to be paid, either partially or totally through
conveyance of properties, the parties shall agree on which properties shall be
subject to conveyance. The NHA and DEVELOPER hereby agree to
determine the valuation of the properties to be conveyed by getting the
average of the appraisals to be made by two (2) mutually acceptable
independent appraisers.
Meanwhile, respondent Harbour Centre Port Terminal, Inc. (HCPTI) entered
into an agreement with the asset pool for the development and operations of a
port in the Smokey Mountain Area which is a major component of SMDRP to
provide a source of livelihood and employment
 for Smokey Mountain residents and spur economic growth. A Subscription
Agreement was executed between the Asset Pool and HCPTI whereby the
asset pool subscribed to 607 million common shares and 1,143 million
preferred shares of HCPTI. The HCPTI preferred shares had a premium and
penalty interest of 7.5% per annum and a mandatory redemption feature. The
asset pool paid the subscription by conveying to HCPTI a 10-hectare land
which it acquired from the NHA being a portion of the reclaimed land of the
SMDRP.Corresponding certificates of titles were issued to HCPTI, namely:
TCT Nos. 251355, 251356, 251357, and 251358.
Due to HCPTIs failure to obtain a license to handle foreign containerized
cargo from PPA, it suffered a net income loss of PhP 132,621,548 in 2002 and
a net loss of PhP 15,540,063 in 2003. The Project Governing Board of the
Asset Pool later conveyed by way of dacion en pago a number of HCPTI
shares to RBI in lieu of cash payment for the latters work in SMDRP.
On August 5, 2004, former Solicitor General Francisco I. Chavez, filed the
instant petition which impleaded as respondents the NHA, RBI, R-II
Holdings, Inc. (RHI), HCPTI, and Mr. Reghis Romero II, raising
constitutional issues.
The NHA reported that thirty-four (34) temporary housing structures and
twenty-one (21) permanent housing structures had been turned over by
respondent RBI. It claimed that 2,510 beneficiary-families belonging to the
poorest of the poor had been transferred to their permanent homes and
benefited from the Project.
The Issues
The grounds presented in the instant petition are:
I execution and enforcement of the assailed contracts or agreements.
NEITHER RESPONDENT NHA NOR RESPONDENT R-II BUILDERS
MAY VALIDLY RECLAIM FORESHORE AND SUBMERGED LAND
BECAUSE:
1. RESPONDENT NHA AND R-II BUILDERS WERE NEVER GRANTED
ANY POWER AND AUTHORITY TO RECLAIM LANDS OF THE
PUBLIC DOMAIN AS THIS POWER IS VESTED EXCLUSIVELY WITH
THE PEA.
2. EVEN ASSUMING THAT RESPONDENTS NHA AND R-II BUILDERS
WERE GIVEN THE POWER AND AUTHORITY TO RECLAIM
FORESHORE AND SUBMERGED LAND, THEY WERE NEVER GIVEN
THE AUTHORITY BY THE DENR TO DO SO.
II
RESPONDENT R-II BUILDERS CANNOT ACQUIRE THE RECLAIMED
FORESHORE AND SUBMERGED LAND AREAS BECAUSE:
1. THE RECLAIMED FORESHORE AND SUBMERGED PARCELS OF
LAND ARE INALIENABLE PUBLIC LANDS WHICH ARE BEYOND
THE COMMERCE OF MAN.
2. ASSUMING ARGUENDO THAT THE SUBJECT RECLAIMED FORESHORE AND
SUBMERGED PARCELS OF LAND WERE ALREADY DECLARED
ALIENABLE LANDS OF THE PUBLIC DOMAIN, RESPONDENT R-II
BUILDERS STILL COULD NOT ACQUIRE THE SAME BECAUSE
THERE WAS NEVER ANY DECLARATION THAT THE SAID LANDS
WERE NO LONGER NEEDED FOR PUBLIC USE.
3. EVEN ASSUMING THAT THE SUBJECT RECLAIMED LANDS ARE
ALIENABLE AND NO LONGER NEEDED FOR PUBLIC USE,
RESPONDENT R-II BUILDERS STILL CANNOT ACQUIRE THE SAME
BECAUSE THERE WAS NEVER ANY LAW AUTHORIZING THE SALE
THEREOF.
4. THERE WAS NEVER ANY PUBLIC BIDDING
AWARDING OWNERSHIP OF THE SUBJECT LAND TO
RESPONDENT R-II BUILDERS.
5. ASSUMING THAT ALL THE REQUIREMENTS FOR A VALID TRANSFER OF
ALIENABLE PUBLIC HAD BEEN PERFORMED, RESPONDENT R-II
BUILDERS, BEING PRIVATE CORPORATION IS NONETHELESS
EXPRESSLYPROHIBITED BY THE PHILIPPINE CONSTITUTION TO
ACQUIRE LANDS OF THE PUBLIC DOMAIN.
III
RESPONDENT HARBOUR, BEING A PRIVATE CORPORATION WHOSE
MAJORITY STOCKS ARE OWNED AND CONTROLLED BY
RESPONDENT ROMEROS CORPORATIONS R-II BUILDERS AND R-II
HOLDINGS IS DISQUALIFIED FROM BEING A TRANSFEREE
OF PUBLIC LAND.
IV
RESPONDENTS MUST BE COMPELLED TO DISCLOSE ALL
INFORMATION RELATED TO THE SMOKEY MOUNTAIN
DEVELOPMENT AND RECLAMATION PROJECT.
The Courts Ruling
Before we delve into the substantive issues raised in this petition, we will first
deal with several procedural matters raised by respondents.
Whether petitioner has the requisite locus standi to file this case
Respondents argue that petitioner Chavez has no legal standing to file the
petition.
Only a person who stands to be benefited or injured by the
judgment in the suit or entitled to the avails of the suit can file a complaint or
petition.[47] Respondents claim that petitioner is not a proper party-in-interest
as he was unable to show that he has sustained or is in immediate or imminent
danger of sustaining some direct and personal injury as a result of the
[48]
Moreover, they assert that not all government contracts can justify a
taxpayers suit especially when no public funds were utilized in contravention
of the Constitution or a law.
We explicated in Chavez v. PCGG[49] that in cases where issues of
transcendental public importance are presented, there is no necessity to show
that petitioner has experienced or is in actual danger of suffering direct and
personal injury as the requisite injury is assumed. We find our ruling
in Chavez v. PEA[50] as conclusive authority on locus standi in the case at bar
since the issues raised in this petition are averred to be in breach of the fair
diffusion of the countrys natural resources and the constitutional right of a
citizen to information which have been declared to be matters of
transcendental public importance.Moreover, the pleadings especially those of
respondents readily reveal that public funds have been indirectly utilized in
the Project by means of Smokey Mountain Project Participation Certificates
(SMPPCs) bought by some government agencies.
Hence, petitioner, as a taxpayer, is a proper party to the instant petition before
the court.
Whether petitioners direct recourse to this Court was proper
Respondents are one in asserting that petitioner circumvents the principle of
hierarchy of courts in his petition. Judicial hierarchy was made clear in the
case of People v. Cuaresma, thus:
There is after all a hierarchy of courts. That hierarchy is determinative of the
venue of appeals, and should also serve as a general determinant of the
appropriate forum for petitions for the extraordinary writs. A becoming regard
for that judicial hierarchy most certainly indicates that petitions for the
issuance of extraordinary writs against first level (inferior) courts should be
filed with the Regional Trial Court, and those against the latter, with the Court
of Appeals. A direct invocation of the Supreme Courts original jurisdiction to
issue these writs should be allowed only when there are special and important
reasons therefor, clearly and specifically set out in the petition. This is
established policy. It is a policy that is necessary to prevent inordinate
demands upon the Courts time and attention which are better devoted to those
matters within its exclusive jurisdiction, and to prevent further over-crowding
of the Courts docket.[51] x x x
The OSG claims that the jurisdiction over petitions for prohibition
and mandamus is concurrent with other lower courts like the Regional Trial
Courts and the Court of Appeals. Respondent NHA argues that the instant
petition is misfiled because it does not introduce special and important reasons
or exceptional and compelling circumstances to warrant direct recourse to this
Court and that the lower courts are more equipped for factual issues since this
Court is not a trier of facts. Respondents RBI and RHI question the filing of
the petition as this Court should not be unduly burdened with repetitions,
invocation of jurisdiction over constitutional questions it had previously
resolved and settled.
In the light of existing jurisprudence, we find paucity of merit in respondents
postulation.
While direct recourse to this Court is generally frowned upon and
discouraged, we have however ruled in Santiago v. Vasquez that such resort to
us may be allowed in certain situations, wherein this Court ruled that petitions
for certiorari, prohibition, or mandamus, though cognizable by other courts,
may directly be filed with us if the redress desired cannot be obtained in the
appropriate courts or where exceptional compelling circumstances justify
availment of a remedy within and calling for the exercise of [this Courts]
primary jurisdiction.[52]
The instant petition challenges the constitutionality and legality of the
SMDRP involving several hectares of government land and hundreds of
millions of funds of several government agencies. Moreover, serious
constitutional challenges are made on the different aspects of the Project
which allegedly affect the right of Filipinos to the distribution of natural
resources in the country and the right to information of a citizenmatters which
have been considered to be of extraordinary significance and grave
consequence to the public in general. These concerns in the instant action
compel us to turn a blind eye to the judicial structure meant to provide an
orderly dispensation of justice and consider the instant petition as a justified
deviation from an established precept.
Core factual matters undisputed
Respondents next challenge the projected review by this Court of the alleged
factual issues intertwined in the issues propounded by petitioner. They listed a
copious number of questions seemingly factual in nature which would make
this Court a trier of facts.[53]
We find the position of respondents bereft of merit.
For one, we already gave due course to the instant petition in our January 18,
2005 Resolution.[54] In said issuance, the parties were required to make clear
and concise statements of established facts upon which our decision will be
based.
Secondly, we agree with petitioner that there is no necessity for us to make
any factual findings since the facts needed to decide the instant petition are
well established from the admissions of the parties in their pleadings [55] and
those derived from the documents appended to said submissions. Indeed, the
core facts which are the subject matter of the numerous issues raised in this
petition are undisputed.
Now we will tackle the issues that prop up the instant petition.
Since petitioner has cited our decision in PEA as basis for his
postulations in a number of issues, we first resolve the queryis PEA applicable
to the case at bar?
A juxtaposition of the facts in the two cases constrains the Court to rule in the
negative.
The Court finds that PEA is not a binding precedent to the instant petition
because the facts in said case are substantially different from the facts and
circumstances in the case at bar, thus:
(1) The reclamation project in PEA was undertaken through a JVA entered
into between PEA and AMARI. The reclamation project in the instant NHA
case was undertaken by the NHA, a national government agency in
consultation with PEA and with the approval of two Philippine Presidents;
(2) In PEA, AMARI and PEA executed a JVA to develop
the Freedom Islands and reclaim submerged areas without public bidding
on April 25, 1995. In the instant NHA case, the NHA and RBI executed a JVA
after RBI was declared the winning bidder on August 31, 1992 as the JVA
partner of the NHA in the SMDRP after compliance with the requisite public
bidding.
(3) In PEA, there was no law or presidential proclamation classifying the
lands to be reclaimed as alienable and disposal lands of public domain. In this
RBI case, MO 415 of former President Aquino and Proclamation No. 39 of
then President Ramos, coupled with Special Patents Nos. 3591, 3592, and
3598, classified the reclaimed lands as alienable and disposable;
(4) In PEA, the Chavez petition was filed before the amended JVA was
executed by PEA and AMARI. In this NHA case, the JVA and subsequent
amendments were already substantially implemented.Subsequently, the
Project was terminated through a MOA signed on August 27, 2003. Almost
one year later on August 5, 2004, the Chavez petition was filed;
(5) In PEA, AMARI was considered to be in bad faith as it signed the
amended JVA after the Chavez petition was filed with the Court and after
Senate Committee Report No. 560 was issued finding that the subject lands
are inalienable lands of public domain. In the instant petition, RBI and other
respondents are considered to have signed the agreements in good faith as the
Project was terminated even before the Chavez petition was filed;
(6) The PEA-AMARI JVA was executed as a result of direct negotiation
between the parties and not in accordance with the BOT Law. The NHA-RBI
JVA and subsequent amendments constitute a BOT contract governed by the
BOT Law; and
(7) In PEA, the lands to be reclaimed or already reclaimed were transferred to
PEA, a government entity tasked to dispose of public lands under Executive
Order No. (EO) 525.[56] In the NHA case, the reclaimed lands were transferred
to NHA, a government entity NOT tasked to dispose of public land and
therefore said alienable lands were converted to patrimonial lands upon their
transfer to NHA.[57]
Thus the PEA Decision[58] cannot be considered an authority or
precedent to the instant case. The principle of stare decisis[59] has no
application to the different factual setting of the instant case.
We will now dwell on the substantive issues raised by
petitioner. After a perusal of the grounds raised in this petition, we find that
most of these issues are moored on our PEA Decision which, as earlier
discussed, has no application to the instant petition. For this reason alone, the
petition can already be rejected. Nevertheless, on the premise of the
applicability of said decision to the case at bar, we will proceed to resolve said
issues.
First Issue: Whether respondents NHA and RBI have been granted
the power and authority to reclaim lands of the public domain as
this power is vested exclusively in PEA as claimed by petitioner
Petitioner contends that neither respondent NHA nor respondent RBI may
validly reclaim foreshore and submerged land because they were not given
any power and authority to reclaim lands of the public domain as this power
was delegated by law to PEA.
Asserting that existing laws did not empower the NHA and RBI to reclaim
lands of public domain, the Public Estates Authority (PEA), petitioner claims,
is the primary authority for the reclamation of all foreshore and submerged
lands of public domain, and relies on PEA where this Court held:
Moreover, Section 1 of Executive Order No. 525 provides that PEA shall be
primarily responsible for integrating, directing, and coordinating all
reclamation projects for and on behalf of the National Government. The same
section also states that [A]ll reclamation projects shall be approved by the
President upon recommendation of the PEA, and shall be undertaken by the
PEA or through a proper contract executed by it with any person or entity; x x
x. Thus, under EO No. 525, in relation to PD No. 3-A and PD No. 1084, PEA
became the primary implementing agency of the National Government to
reclaim foreshore and submerged lands of the public domain. EO No. 525
recognized PEA as the government entity to undertake the reclamation of
lands and ensure their maximum utilization in promoting public welfare and
interests. Since large portions of these reclaimed lands would obviously be
needed for public service, there must be a formal declaration segregating
reclaimed lands no longer needed for public service from those still needed for
public service.[60]
In the Smokey Mountain Project, petitioner clarifies that the
reclamation was not done by PEA or through a contract executed by PEA with
another person or entity but by the NHA through an agreement with
respondent RBI. Therefore, he concludes that the reclamation is null and void.
Petitioners contention has no merit.
EO 525 reads:
Section 1. The Public Estates Authority (PEA) shall be primarily
responsible for integrating, directing, and coordinating all reclamation
projects for and on behalf of the National Government. All reclamation
projects shall be approved by the President upon recommendation of the PEA,
and shall be undertaken by the PEA or through a proper contract executed by
it with any person or entity; Provided, that, reclamation projects of any
national government agency or entity authorized under its charter shall
be undertaken in consultation with the PEA upon approval of the
President. (Emphasis supplied.)
The aforequoted provision points to three (3) requisites for a legal and valid
reclamation project, viz:
(1) approval by the President;
(2) favorable recommendation of PEA; and
(3) undertaken by any of the following:
a. by PEA
b. by any person or entity pursuant to a contract it executed with PEA
c. by the National Government agency or entity authorized under its charter to
reclaim lands subject to consultation with PEA
Without doubt, PEA under EO 525 was designated as the agency primarily
responsible for integrating, directing, and coordinating all reclamation
projects. Primarily means mainly, principally, mostly, generally. Thus, not all
reclamation projects fall under PEAs authority of supervision, integration, and
coordination. The very charter of PEA, PD 1084, [61] does not mention that
PEA has the exclusive and sole power and authority to reclaim lands of public
domain. EO 525 even reveals the exceptionreclamation projects by a national
government agency or entity authorized by its charter to reclaim land. One
example is EO 405 which authorized the Philippine Ports Authority (PPA) to
reclaim and develop submerged areas for port related purposes. Under its
charter, PD 857, PPA has the power to reclaim, excavate, enclose or raise any
of the lands vested in it.
Thus, while PEA under PD 1084 has the power to reclaim land and under EO
525 is primarily responsible for integrating, directing and coordinating
reclamation projects, such authority is NOT exclusive and such power to
reclaim may be granted or delegated to another government agency or entity
or may even be undertaken by the National Government itself, PEA being
only an agency and a part of the National Government.
Let us apply the legal parameters of Sec. 1, EO 525 to the reclamation phase
of SMDRP. After a scrutiny of the facts culled from the records, we find that
the project met all the three (3) requirements, thus:
1. There was ample approval by the President of the Philippines; as a matter
of fact, two Philippine Presidents approved the same, namely: Presidents
Aquino and Ramos. President Aquino sanctioned the reclamation of both the
SMDRP housing and commercial-industrial sites through MO 415 (s. 1992)
which approved the SMDRP under Sec. 1 and directed NHA x x x to
implement the Smokey Mountain Development Plan and Reclamation of the
Area across R-10 through a private sector joint venture scheme at the least
cost to government under Section 3.
For his part, then President Ramos issued Proclamation No. 39 (s. 1992)
which expressly reserved the Smokey Mountain Area and the Reclamation
Area for a housing project and related commercial/industrial
development.
Moreover, President Ramos issued Proclamation No. 465 (s. 1994)
which authorized the increase of the Reclamation Area from 40 hectares of
foreshore and submerged land of the Manila Bay to 79 hectares. It speaks
of the reclamation of 400,000 square meters, more or less, of the foreshore
and submerged lands of Manila Bay adjoining R-10 as an enabling
component of the SMDRP.
As a result of Proclamations Nos. 39 and 465, Special Patent No. 3591
covering 211,975 square meters of Smokey Mountain, Special Patent No.
3592 covering 401,485 square meters of reclaimed land, and Special Patent
No. 3598 covering another 390,000 square meters of reclaimed land were
issued by the DENR.
Thus, the first requirement of presidential imprimatur on the SMDRP has been
satisfied.
2. The requisite favorable endorsement of the reclamation phase was
impliedly granted by PEA. President Aquino saw to it that there was
coordination of the project with PEA by designating its general manager as
member of the EXECOM tasked to supervise the project implementation. The
assignment was made in Sec. 2 of MO 415 which provides:
Section 2. An Executive Committee is hereby created to oversee the
implementation of the Plan, chaired by the NCR-CORD, with the heads of the
following agencies as members: The National Housing Authority, the City of
Manila, the Department of Public Works and Highways, the Public Estates
Authority, the Philippine Ports Authority, the Department of Environment
and Natural Resources and the Development Bank of the Philippines.
(Emphasis supplied.)
The favorable recommendation by PEA of the JVA and subsequent
amendments were incorporated as part of the recommendations of the
EXECOM created under MO 415. While there was no specific
recommendation on the SMDRP emanating solely from PEA, we find that the
approbation of the Project and the land reclamation as an essential component
by the EXECOM of which PEA is a member, and its submission of the
SMDRP and the agreements on the Project to the President for approval
amply met the second requirement of EO 525.
3. The third element was also presentthe reclamation was undertaken either by
PEA or any person or entity under contract with PEA or by the National
Government agency or entity authorized under its charter to reclaim lands
subject to consultation with PEA. It cannot be disputed that the reclamation
phase was not done by PEA or any person or entity under contract with
PEA. However, the reclamation was implemented by the NHA, a national
government agency whose authority to reclaim lands under consultation with
PEA is derived from its charterPD 727 and other pertinent lawsRA
7279[62] and RA 6957 as amended by RA 7718.
While the authority of NHA to reclaim lands is challenged by petitioner, we
find that the NHA had more than enough authority to do so under existing
laws. While PD 757, the charter of NHA, does not explicitly mention
reclamation in any of the listed powers of the agency, we rule that the NHA
has an implied power to reclaim land as this is vital or incidental to
effectively, logically, and successfully implement an urban land reform and
housing program enunciated in Sec. 9 of Article XIII of the 1987 Constitution.
Basic in administrative law is the doctrine that a government agency or office
has express and implied powers based on its charter and other pertinent
statutes. Express powers are those powers granted, allocated, and delegated to
a government agency or office by express provisions of law. On the other
hand, implied powers are those that can be inferred or are implicit in the
wordings of the law[63] or conferred by necessary or fair implication in the
enabling act.[64] In Angara v. Electoral Commission, the Court clarified and
stressed that when a general grant of power is conferred or duty enjoined,
every particular power necessary for the exercise of the one or the
performance of the other is also conferred by necessary implication. [65] It was
also explicated that when the statute does not specify the particular method to
be followed or used by a government agency in the exercise of the power
vested in it by law, said agency has the authority to adopt any reasonable
method to carry out its functions.[66]
The power to reclaim on the part of the NHA is implicit from PD 757, RA
7279, MO 415, RA 6957, and PD 3-A,[67] viz:
1. NHAs power to reclaim derived from PD 757 provisions:
a. Sec. 3 of PD 757 implies that reclamation may be resorted to in order to
attain the goals of NHA:
Section 3. Progress and Objectives. The Authority shall have the following
purposes and objectives:
xxxx
To undertake housing, development, resettlement or other activities as
would enhance the provision of housing to every Filipino;
To harness and promote private participation in housing ventures in terms of
capital expenditures, land, expertise, financing and other facilities for the
sustained growth of the housing industry. (Emphasis supplied.)

Land reclamation is an integral part of the development of resources for some
of the housing requirements of the NHA. Private participation in housing
projects may also take the form of land reclamation.
b. Sec. 5 of PD 757 serves as proof that the NHA, as successor of the Tondo
Foreshore Development Authority (TFDA), has the power to reclaim, thus:
Section 5. Dissolution of Existing Housing Agencies. The People's
Homesite and Housing Corporation (PHHC), the Presidential Assistant on
Housing Resettlement Agency (PAHRA), the Tondo Foreshore
Development Authority (TFDA), the Central Institute for the Training and
Relocation of Urban Squatters (CITRUS), the Presidential Committee for
Housing and Urban Resettlement (PRECHUR), Sapang Palay Development
Committee, Inter-Agency Task Force to Undertake the Relocation of Families
in Barrio Nabacaan, Villanueva, Misamis Oriental and all other existing
government housing and resettlement agencies, task forces and ad-hoc
committees, are hereby dissolved. Their powers and functions, balance of
appropriations, records, assets, rights, and choses in action, are
transferred to, vested in, and assumed by the Authority. x x x (Emphasis
supplied.)
PD 570 dated October 30, 1974 created the TFDA, which defined
its objectives, powers, and functions. Sec. 2 provides:
Section 2. Objectives and Purposes. The Authority shall have the following
purposes and objectives:
a) To undertake all manner of activity, business or development projects for
the establishment of harmonious, comprehensive, integrated and healthy
living community in the Tondo Foreshoreland and its resettlement site;
b) To undertake and promote the physical and socio-economic amelioration of
the Tondo Foreshore residents in particular and the nation in general
(Emphasis supplied.)
The powers and functions are contained in Sec. 3, to wit:
a) To develop and implement comprehensive and integrated urban renewal
programs for the Tondo Foreshore and Dagat-dagatan lagoon and/or any
other additional/alternative resettlement site and to formulate and enforce
general and specific policies for its development which shall ensure
reasonable degree of compliance with environmental standards.
b) To prescribe guidelines and standards for the reservation, conservation
and utilization of public lands covering the Tondo Foreshore land and its
resettlement sites;
c) To construct, acquire, own, lease, operate and maintain infrastructure
facilities, housing complex, sites and services;
d) To determine, regulate and supervise the establishment and operation of
housing, sites, services and commercial and industrial complexes and any
other enterprises to be constructed or established within the Tondo
Foreshore and its resettlement sites;
e) To undertake and develop, by itself or through joint ventures with other
public or private entities, all or any of the different phases of development of
the Tondo Foreshore land and its resettlement sites;
f) To acquire and own property, property-rights and interests, and encumber or
otherwise dispose of the same as it may deem appropriate (Emphasis
supplied.)
From the foregoing provisions, it is readily apparent that the TFDA has the
explicit power to develop public lands covering the Tondo foreshore land and
any other additional and alternative resettlement sites under letter b, Sec. 3 of
PD 570. Since the additional and/or alternative sites adjacent to Tondo
foreshore land cover foreshore and submerged areas, the reclamation of said
areas is necessary in order to convert them into a comprehensive and
integrated resettlement housing project for the slum dwellers and squatters of
Tondo. Since the powers of TFDA were assumed by the NHA, then the NHA
has the power to reclaim lands in the Tondo foreshore area which covers the
79-hectare land subject of Proclamations Nos. 39 and 465 and Special Patents
Nos. 3592 and 3598.
c. Sec. 6 of PD 757 delineates the functions and powers of the NHA which
embrace the authority to reclaim land, thus:
Sec. 6. Powers and functions of the Authority.The Authority shall have the
following powers and functions to be exercised by the Board in accordance
with its established national human settlements plan prepared by the Human
Settlements Commission:
(a) Develop and implement the comprehensive and integrated housing
program provided for in Section hereof;
xxxx
(c) Prescribe guidelines and standards for the reservation, conservation
and utilization of public lands identified for housing and resettlement;
xxxx
(e) Develop and undertake housing development and/or resettlement
projects through joint ventures or other arrangements with public and
private entities;
xxxx
(k) Enter into contracts whenever necessary under such terms and conditions
as it may deem proper and reasonable;
(l) Acquire property rights and interests and encumber or otherwise dispose
the same as it may deem appropriate;
xxxx
(s) Perform such other acts not inconsistent with this Decree, as may be
necessary to effect the policies and objectives herein declared. (Emphasis
supplied.)
The NHAs authority to reclaim land can be inferred from the
aforequoted provisions. It can make use of public lands under letter (c) of Sec.
6 which includes reclaimed land as site for its comprehensive and integrated
housing projects under letter (a) which can be undertaken through joint
ventures with private entities under letter (e). Taken together with letter (s)
which authorizes NHA to perform such other activities necessary to effect the
policies and objectives of PD 757, it is safe to conclude that the NHAs power
to reclaim lands is a power that is implied from the exercise of its explicit
powers under Sec. 6 in order to effectively accomplish its policies and
objectives under Sec. 3 of its charter. Thus, the reclamation of land is an
indispensable component for the development and construction of the SMDRP
housing facilities.
2. NHAs implied power to reclaim land is enhanced by RA 7279.
PD 757 identifies NHAs mandate to [d]evelop and undertake housing
development and/or resettlement projects through joint ventures or other
arrangements with public and private entities.
The power of the NHA to undertake reclamation of land can be inferred from
Secs. 12 and 29 of RA 7279, which provide:
Section 12. Disposition of Lands for Socialized Housing.The National
Housing Authority, with respect to lands belonging to the National
Government, and the local government units with respect to other lands
within their respective localities, shall coordinate with each other to formulate
and make available various alternative schemes for the disposition of lands
to the beneficiaries of the Program. These schemes shall not be limited to
those involving transfer of ownership in fee simple but shall include lease,
with option to purchase, usufruct or such other variations as the local
government units or the National Housing Authority may deem most
expedient in carrying out the purposes of this Act.
xxxx
Section 29. Resettlement.With two (2) years from the effectivity of this Act,
the local government units, in coordination with the National Housing
Authority, shall implement the relocation and resettlement of persons living
in danger areas such as esteros, railroad tracks, garbage dumps, riverbanks,
shorelines, waterways, and in other public places as sidewalks, roads, parks,
and playgrounds. The local government unit, in coordination with the National
Housing Authority, shall provide relocation or resettlement sites with basic
services and facilities and access to employment and livelihood opportunities
sufficient to meet the basic needs of the affected families.(Emphasis supplied.)
Lands belonging to the National Government include foreshore and
submerged lands which can be reclaimed to undertake housing development
and resettlement projects.
3. MO 415 explains the undertaking of the NHA in SMDRP:
WHEREAS, Memorandum Order No. 161-A mandated the National Housing
Authority to conduct feasibility studies and develop low-cost housing
projects at the dumpsites of Metro Manila;
WHEREAS, the National Housing Authority has presented a viable
Conceptual Plan to convert the Smokey Mountain dumpsite into a habitable
housing project inclusive of the reclamation area across R-10 as enabling
component of the Project;
WHEREAS, the said Plan requires the coordinated and synchronized efforts
of the City of Manila and other government agencies and instrumentalities to
ensure effective and efficient implementation;
WHEREAS, the government encourages private sector initiative in the
implementation of its projects. (Emphasis supplied.)
Proceeding from these whereas clauses, it is unequivocal that
reclamation of land in the Smokey Mountain area is an essential and vital
power of the NHA to effectively implement its avowed goal of developing
low-cost housing units at the Smokey Mountain dumpsites. The interpretation
made by no less than the President of the Philippines as Chief of the Executive
Branch, of which the NHA is a part, must necessarily command respect and
much weight and credit.
4. RA 6957 as amended by RA 7718the BOT Lawserves as an exception to
PD 1084 and EO 525.
Based on the provisions of the BOT Law and Implementing Rules
and Regulations, it is unequivocal that all government infrastructure agencies
like the NHA can undertake infrastructure or development projects using the
contractual arrangements prescribed by the law, and land reclamation is one of
the projects that can be resorted to in the BOT project implementation under
the February 10, 1992 Joint Resolution No. 3 of the 8th Congress.
From the foregoing considerations, we find that the NHA has ample implied
authority to undertake reclamation projects.
Even without an implied power to reclaim lands under NHAs charter, we rule
that the authority granted to NHA, a national government agency, by the
President under PD 3-A reinforced by EO 525 is more than sufficient statutory
basis for the reclamation of lands under the SMDRP.
PD 3-A is a law issued by then President Ferdinand E. Marcos under his
martial law powers on September 23, 1972. It provided that [t]he provisions
of any law to the contrary notwithstanding, the reclamation of areas,
underwater, whether foreshore or inland, shall be limited to the National
Government or any person authorized by it under the proper contract. It
repealed, in effect, RA 1899 which previously delegated the right to reclaim
lands to municipalities and chartered cities and revested it to the National
Government.[68] Under PD 3-A, national government can only mean the
Executive Branch headed by the President. It cannot refer to Congress as it
was dissolved and abolished at the time of the issuance of PD 3-A
on September 23, 1972. Moreover, the Executive Branch is the only
implementing arm in the government with the equipment, manpower,
expertise, and capability by the very nature of its assigned powers and
functions to undertake reclamation projects. Thus, under PD 3-A, the
Executive Branch through the President can implement reclamation of lands
through any of its departments, agencies, or offices.
Subsequently, on February 4, 1977, President Marcos issued PD 1084 creating
the PEA, which was granted, among others, the power to reclaim land,
including foreshore and submerged areas by dredging, filling or other means
or to acquire reclaimed lands. The PEAs power to reclaim is not however
exclusive as can be gleaned from its charter, as the President retained his
power under PD 3-A to designate another agency to reclaim lands.
On February 14, 1979, EO 525 was issued. It granted PEA primary
responsibility for integrating, directing, and coordinating reclamation projects
for and on behalf of the National Government although other national
government agencies can be designated by the President to reclaim lands in
coordination with the PEA. Despite the issuance of EO 525, PD 3-A remained
valid and subsisting. Thus, the National Government through the President
still retained the power and control over all reclamation projects in the
country.
The power of the National Government through the President over
reclamation of areas, that is, underwater whether foreshore or inland, was
made clear in EO 543[69] which took effect on June 24, 2006.Under EO 543,
PEA was renamed the Philippine Reclamation Authority (PRA) and was
granted the authority to approve reclamation projects, a power previously
reposed in the President under EO 525. EO 543 reads:
Section 1. The power of the President to approve reclamation projects is
hereby delegated to the Philippine Reclamation Authority [formerly PEA],
through its governing board, subject to compliance with existing laws and
rules and subject to the condition that reclamation contracts to be executed
with any person or entity go through public bidding.
Section 2. Nothing in the Order shall be construed as diminishing the
Presidents authority to modify, amend or nullify PRAs action.
Section 3. All executive issuances inconsistent with this Executive Order are
hereby repealed or amended accordingly. (Emphasis supplied.)
Sec. 2 of EO 543 strengthened the power of control and
supervision of the President over reclamation of lands as s/he can modify,
amend, or nullify the action of PEA (now PRA).
From the foregoing issuances, we conclude that the Presidents
delegation to NHA, a national government agency, to reclaim lands under the
SMDRP, is legal and valid, firmly anchored on PD 3-A buttressed by EO 525
notwithstanding the absence of any specific grant of power under its charter,
PD 757.
Second Issue: Whether respondents NHA and RBI were given the
power and authority by DENR to reclaim foreshore and submerged lands
Petitioner Chavez puts forth the view that even if the NHA and RBI were
granted the authority to reclaim, they were not authorized to do so by the
DENR.
Again, reliance is made on our ruling in PEA where it was held
that the DENRs authority is necessary in order for the government to validly
reclaim foreshore and submerged lands. In PEA, we expounded in this
manner:
As manager, conservator and overseer of the natural resources of the State,
DENR exercises supervision and control over alienable and disposable public
lands. DENR also exercises exclusive jurisdiction on the management and
disposition of all lands of the public domain. Thus, DENR decides whether
areas under water, like foreshore or submerged areas of Manila Bay, should be
reclaimed or not. This means that PEA needs authorization from DENR before
PEA can undertake reclamation projects in Manila Bay, or in any part of the
country.
DENR also exercises exclusive jurisdiction over the disposition of all lands of
the public domain. Hence, DENR decides whether reclaimed lands of PEA
should be classified as alienable under Sections 6 and 7 of CA No. 141.Once
DENR decides that the reclaimed lands should be so classified, it then
recommends to the President the issuance of a proclamation classifying the
lands as alienable or disposable lands of the public domain open to
disposition. We note that then DENR Secretary Fulgencio S. Factoran, Jr.
countersigned Special Patent No. 3517 in compliance with the Revised
Administrative Code and Sections 6 and 7 of CA No. 141.
In short, DENR is vested with the power to authorize the reclamation of areas
under water, while PEA is vested with the power to undertake the physical
reclamation of areas under water, whether directly or through private
contractors. DENR is also empowered to classify lands of the public domain
into alienable or disposable lands subject to the approval of the President. On
the other hand, PEA is tasked to develop, sell or lease the reclaimed alienable
lands of the public domain.[70]
Despite our finding that PEA is not a precedent to the case at bar,
we find after all that under existing laws, the NHA is still required to procure
DENRs authorization before a reclamation project in Manila Bay or in any
part of the Philippines can be undertaken. The requirement applies to PEA,
NHA, or any other government agency or office granted with such power
under the law.
Notwithstanding the need for DENR permission, we nevertheless
find petitioners position bereft of merit.
The DENR is deemed to have granted the authority to reclaim in the Smokey
Mountain Project for the following reasons:
1. Sec. 17, Art. VII of the Constitution provides that the President shall have
control of all executive departments, bureaus and offices. The President is
assigned the task of seeing to it that all laws are faithfully executed. Control,
in administrative law, means the power of an officer to alter, modify, nullify or
set aside what a subordinate officer has done in the performance of his duties
and to substitute the judgment of the former for that of the latter.[71]
As such, the President can exercise executive power motu proprio and can
supplant the act or decision of a subordinate with the Presidents own. The
DENR is a department in the executive branch under the President, and it is
only an alter ego of the latter. Ordinarily the proposed action and the staff
work are initially done by a department like the DENR and then submitted to
the President for approval. However, there is nothing infirm or
unconstitutional if the President decides on the implementation of a certain
project or activity and requires said department to implement it. Such is a
presidential prerogative as long as it involves the department or office
authorized by law to supervise or execute the Project. Thus, as in this case,
when the President approved and ordered the development of a housing
project with the corresponding reclamation work, making DENR a member of
the committee tasked to implement the project, the required authorization
from the DENR to reclaim land can be deemed satisfied. It cannot be disputed
that the ultimate power over alienable and disposable public lands is reposed
in the President of the Philippines and not the DENR Secretary. To still
require a DENR authorization on the SmokeyMountain when the President
has already authorized and ordered the implementation of the Project would
be a derogation of the powers of the President as the head of the executive
branch. Otherwise, any department head can defy or oppose the
implementation of a project approved by the head of the executive branch,
which is patently illegal and unconstitutional.
In Chavez v. Romulo, we stated that when a statute imposes a
specific duty on the executive department, the President may act directly or
order the said department to undertake an activity, thus:
[A]t the apex of the entire executive officialdom is the President. Section 17,
Article VII of the Constitution specifies [her] power as Chief executive
departments, bureaus and offices. [She] shall ensure that the laws be faithfully
executed. As Chief Executive, President Arroyo holds the steering wheel that
controls the course of her government. She lays down policies in the
execution of her plans and programs. Whatever policy she chooses, she has
her subordinates to implement them. In short, she has the power of
control. Whenever a specific function is entrusted by law or regulation to
her subordinate, she may act directly or merely direct the performance of
a duty x x x. Such act is well within the prerogative of her office (emphasis
supplied).[72]
Moreover, the power to order the reclamation of lands of public domain is
reposed first in the Philippine President. The Revised Administrative Code of
1987 grants authority to the President to reserve lands of public domain for
settlement for any specific purpose, thus:
Section 14. Power to Reserve Lands of the Public and Private Domain of the
Government.(1) The President shall have the power to reserve for
settlement or public use, and for specific public purposes, any of the lands
of the public domain, the use of which is not otherwise directed by law. The
reserved land shall thereafter remain subject to the specific public purpose
indicated until otherwise provided by law or proclamation. (Emphasis
supplied.)
President Aquino reserved the area of
the Smokey Mountain dumpsite for settlement and issued MO 415 authorizing
the implementation of the Smokey Mountain Development Project plus the
reclamation of the area across R-10. Then President Ramos issued
Proclamation No. 39 covering the 21-hectare dumpsite and the 40-hectare
commercial/industrial area, and Proclamation No. 465 and MO 415 increasing
the area of foreshore and submerged lands of Manila Bay to be reclaimed
from 40 to 79 hectares. Having supervision and control over the DENR, both
Presidents directly assumed and exercised the power granted by the Revised
Administrative Code to the DENR Secretary to authorize the NHA to reclaim
said lands. What can be done indirectly by the DENR can be done directly by
the President. It would be absurd if the power of the President cannot be
exercised simply because the head of a department in the executive branch has
not acted favorably on a project already approved by the President. If such
arrangement is allowed then the department head will become more powerful
than the President.
2. Under Sec. 2 of MO 415, the DENR is one of the members of the
EXECOM chaired by the NCR-CORD to oversee the implementation of the
Project. The EXECOM was the one which recommended approval of the
project plan and the joint venture agreements. Clearly, the DENR retained its
power of supervision and control over the laws affected by the Project since it
was tasked to facilitate the titling of the Smokey Mountain and of the area to
be reclaimed, which shows that it had tacitly given its authority to the NHA to
undertake the reclamation.
3. Former DENR Secretary Angel C. Alcala issued Special Patents Nos. 3591
and 3592 while then Secretary Victor O. Ramos issued Special Patent No.
3598 that embraced the areas covered by the reclamation. These patents
conveyed the lands to be reclaimed to the NHA and granted to said agency the
administration and disposition of said lands for subdivision and disposition to
qualified beneficiaries and for development for mix land use
(commercial/industrial) to provide employment opportunities to on-site
families and additional areas for port related activities. Such grant of authority
to administer and dispose of lands of public domain under the SMDRP is of
course subject to the powers of the EXECOM of SMDRP, of which the DENR
is a member.
4. The issuance of ECCs by the DENR for SMDRP is but an exercise of its
power of supervision and control over the lands of public domain covered by
the Project.
Based on these reasons, it is clear that the DENR, through its acts and
issuances, has ratified and confirmed the reclamation of the subject lands for
the purposes laid down in Proclamations Nos. 39 and 465.
Third Issue: Whether respondent RBI can acquire reclaimed
foreshore and submerged lands considered as inalienable and
outside the commerce of man
Petitioner postulates that respondent RBI cannot acquire the reclaimed
foreshore and submerged areas as these are inalienable public lands beyond
the commerce of man based on Art. 1409 of the Civil Code which provides:
Article 1409. The following contracts are inexistent and void from the
beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good
customs, public order or public policy;
xxxx
(7) Those expressly prohibited or declared void by law.
These contracts cannot be ratified. Neither can the right to set up the defense
of illegality be waived.
Secs. 2 and 3, Art. XII of the Constitution declare that all natural resources are
owned by the State and they cannot be alienated except for alienable
agricultural lands of the public domain. One of the States natural resources are
lands of public domain which include reclaimed lands.
Petitioner contends that for these reclaimed lands to be alienable,
there must be a law or presidential proclamation officially classifying these
reclaimed lands as alienable and disposable and open to disposition or
concession. Absent such law or proclamation, the reclaimed lands cannot be
the enabling component or consideration to be paid to RBI as these are
beyond the commerce of man.
We are not convinced of petitioners postulation.
The reclaimed lands across R-10 were classified alienable and disposable
lands of public domain of the State for the following reasons, viz:
First, there were three (3) presidential proclamations classifying the reclaimed
lands across R-10 as alienable or disposable hence open to disposition or
concession, to wit:
(1) MO 415 issued by President Aquino, of which Sec. 4 states that [t]he land
covered by the Smokey Mountain Dumpsite is hereby conveyed to the
National Housing Authority as well as the area to be reclaimed across R-10.
The directive to transfer the lands once reclaimed to the NHA implicitly
carries with it the declaration that said lands are alienable and
disposable. Otherwise, the NHA cannot effectively use them in its housing
and resettlement project.
(2) Proclamation No. 39 issued by then President Ramos by which the
reclaimed lands were conveyed to NHA for subdivision and disposition to
qualified beneficiaries and for development into a mixed land use
(commercial/industrial) to provide employment opportunities to on-site
families and additional areas for port-related activities. Said directive carries
with it the pronouncement that said lands have been transformed to alienable
and disposable lands. Otherwise, there is no legal way to convey it to the
beneficiaries.
(3) Proclamation No. 465 likewise issued by President Ramos enlarged the
reclaimed area to 79 hectares to be developed and disposed of in the
implementation of the SMDRP. The authority put into the hands of the NHA
to dispose of the reclaimed lands tacitly sustains the conversion to alienable
and disposable lands.
Secondly, Special Patents Nos. 3591, 3592, and 3598 issued by the DENR
anchored on Proclamations Nos. 39 and 465 issued by President Ramos,
without doubt, classified the reclaimed areas as alienable and disposable.
Admittedly, it cannot be said that MO 415, Proclamations Nos. 39 and 465 are
explicit declarations that the lands to be reclaimed are classified as alienable
and disposable. We find however that such conclusion is derived and implicit
from the authority given to the NHA to transfer the reclaimed lands to
qualified beneficiaries.
The query is, when did the declaration take effect? It did so only after the
special patents covering the reclaimed areas were issued. It is only on such
date that the reclaimed lands became alienable and disposable lands of the
public domain. This is in line with the ruling in PEA where said issue was
clarified and stressed:
PD No. 1085, coupled with President Aquinos actual issuance of a special
patent covering the Freedom Islands, is equivalent to an official
proclamation classifying the Freedom Islands as alienable or disposable
lands of the public domain. PD No. 1085 and President Aquinos issuance of
a land patent also constitute a declaration that the Freedom Islands are no
longer needed for public service. The Freedom Islands are thus alienable or
disposable lands of the public domain, open to disposition or concession to
qualified parties.[73] (Emphasis supplied.)
Thus, MO 415 and Proclamations Nos. 39 and 465 cumulatively
and jointly taken together with Special Patent Nos. 3591, 3592, and 3598
more than satisfy the requirement in PEA that [t]here must be a law
or presidential proclamation officially classifying these reclaimed lands as
alienable or disposable and open to disposition or concession (emphasis
supplied).[74]
Apropos the requisite law categorizing reclaimed land as alienable or
disposable, we find that RA 6957 as amended by RA 7718 provides ample
authority for the classification of reclaimed land in the SMDRP for the
repayment scheme of the BOT project as alienable and disposable lands of
public domain. Sec. 6 of RA 6957 as amended by RA 7718 provides:
For the financing, construction, operation and maintenance of any
infrastructure projects undertaken through the build-operate-and transfer
arrangement or any of its variations pursuant to the provisions of this Act, the
project proponent x x x may likewise be repaid in the form of a share in the
revenue of the project or other non-monetary payments, such as, but not
limited to, the grant of a portion or percentage of the reclaimed land,
subject to the constitutional requirements with respect to the ownership of the
land. (Emphasis supplied.)
While RA 6957 as modified by RA 7718 does not expressly declare that the
reclaimed lands that shall serve as payment to the project proponent have
become alienable and disposable lands and opened for disposition;
nonetheless, this conclusion is necessarily implied, for how else can the land
be used as the enabling component for the Project if such classification is not
deemed made?
It may be argued that the grant of authority to sell public lands, pursuant
to PEA, does not convert alienable lands of public domain into private or
patrimonial lands. We ruled in PEA that alienable lands of public domain
must be transferred to qualified private parties, or to government entities
not tasked to dispose of public lands, before these lands can become
private or patrimonial lands (emphasis supplied).[75] To lands reclaimed by
PEA or through a contract with a private person or entity, such reclaimed
lands still remain alienable lands of public domain which can be transferred
only to Filipino citizens but not to a private corporation. This is because PEA
under PD 1084 and EO 525 is tasked to hold and dispose of alienable lands of
public domain and it is only when it is transferred to Filipino citizens that it
becomes patrimonial property. On the other hand, the NHA is a government
agency not tasked to dispose of public lands under its charterThe Revised
Administrative Code of 1987. The NHA is an end-user agency authorized by
law to administer and dispose of reclaimed lands. The moment titles over
reclaimed lands based on the special patents are transferred to the NHA by the
Register of Deeds, they are automatically converted to patrimonial properties
of the State which can be sold to Filipino citizens and private corporations,
60% of which are owned by Filipinos. The reason is obvious: if the reclaimed
land is not converted to patrimonial land once transferred to NHA, then it
would be useless to transfer it to the NHA since it cannot legally transfer or
alienate lands of public domain. More importantly, it cannot attain its avowed
purposes and goals since it can only transfer patrimonial lands to qualified
beneficiaries and prospective buyers to raise funds for the SMDRP.
From the foregoing considerations, we find that the 79-hectare reclaimed land
has been declared alienable and disposable land of the public domain; and in
the hands of NHA, it has been reclassified as patrimonial property.
Petitioner, however, contends that the reclaimed lands were inexistent prior to
the three (3) Presidential Acts (MO 415 and Proclamations Nos. 39 and 465)
and hence, the declaration that such areas are alienable and disposable land of
the public domain, citing PEA, has no legal basis.
Petitioners contention is not well-taken.
Petitioners sole reliance on Proclamations Nos. 39 and 465 without taking into
consideration the special patents issued by the DENR demonstrates the
inherent weakness of his proposition. As was ruled in PEAcited by petitioner
himself, PD No. 1085, coupled with President Aquinos actual issuance of a
special patent covering the Freedom Islands is equivalent to an official
proclamation classifying the Freedom islands as alienable or disposable lands
of public domain. In a similar vein, the combined and collective effect of
Proclamations Nos. 39 and 465 with Special Patents Nos. 3592 and 3598 is
tantamount to and can be considered to be an official declaration that the
reclaimed lots are alienable or disposable lands of the public domain.
The reclaimed lands covered by Special Patents Nos. 3591, 3592,
and 3598, which evidence transfer of ownership of reclaimed lands to the
NHA, are official acts of the DENR Secretary in the exercise of his power of
supervision and control over alienable and disposable public lands and his
exclusive jurisdiction over the management and disposition of all lands of
public domain under the Revised Administrative Code of 1987. Special Patent
No. 3592 speaks of the transfer of Lots 1 and 2, and RI-003901-000012-D
with an area of 401,485 square meters based on the survey and technical
description approved by the Bureau of Lands. Lastly, Special Patent No. 3598
was issued in favor of the NHA transferring to said agency a tract of land
described in Plan RL-00-000013 with an area of 390,000 square meters based
on the survey and technical descriptions approved by the Bureau of Lands.
The conduct of the survey, the preparation of the survey plan, the computation
of the technical description, and the processing and preparation of the special
patent are matters within the technical area of expertise of administrative
agencies like the DENR and the Land Management Bureau and are generally
accorded not only respect but at times even finality. [76] Preparation of special
patents calls for technical examination and a specialized review of
calculations and specific details which the courts are ill-equipped to
undertake; hence, the latter defer to the administrative agency which is trained
and knowledgeable on such matters.[77]
Subsequently, the special patents in the name of the NHA were submitted to
the Register of Deeds of the City of Manila for registration, and corresponding
certificates of titles over the reclaimed lots were issued based on said special
patents. The issuance of certificates of titles in NHAs name automatically
converts the reclaimed lands to patrimonial properties of the NHA. Otherwise,
the lots would not be of use to the NHAs housing projects or as payment to
the BOT contractor as the enabling component of the BOT contract. The laws
of the land have to be applied and interpreted depending on the changing
conditions and times. Tempora mutantur et legis mutantur in illis (time
changes and laws change with it). One such law that should be treated
differently is the BOT Law (RA 6957) which brought about a novel way of
implementing government contracts by allowing reclaimed land as part or full
payment to the contractor of a government project to satisfy the huge financial
requirements of the undertaking. The NHA holds the lands covered by Special
Patents Nos. 3592 and 3598 solely for the purpose of the SMDRP undertaken
by authority of the BOT Law and for disposition in accordance with said
special law. The lands become alienable and disposable lands of public
domain upon issuance of the special patents and become patrimonial
properties of the Government from the time the titles are issued to the NHA.
As early as 1999, this Court in Baguio v. Republic laid down the jurisprudence
that:
It is true that, once a patent is registered and the corresponding certificate of
title is issued, the land covered by them ceases to be part of the public domain
and becomes private property, and the Torrens Title issued pursuant to the
patent becomes indefeasible upon the expiration of one year from the date of
issuance of such patent.[78]
The doctrine was reiterated in Republic v. Heirs of Felipe Alijaga, Sr.,[79] Heirs
of Carlos Alcaraz v. Republic,[80] and the more recent case of Doris
Chiongbian-Oliva v. Republic of the Philippines.[81] Thus, the 79-hectare
reclaimed land became patrimonial property after the issuance of certificates
of titles to the NHA based on Special Patents Nos. 3592 and 3598.
One last point. The ruling in PEA cannot even be applied retroactively to the
lots covered by Special Patents Nos. 3592 (40 hectare reclaimed land) and
3598 (39-hectare reclaimed land). The reclamation of the land under SMDRP
was completed in August 1996 while the PEA decision was rendered on July
9, 2002. In the meantime, subdivided lots forming parts of the reclaimed land
were already sold to private corporations for value and separate titles issued to
the buyers. The Project was terminated through a Memorandum of Agreement
signed on August 27, 2003. The PEA decision became final through
the November 11, 2003 Resolution. It is a settled precept that decisions of the
Supreme Court can only be applied prospectively as they may prejudice
vested rights if applied retroactively.
In Benzonan v. Court of Appeals, the Court trenchantly elucidated the
prospective application of its decisions based on considerations of equity and
fair play, thus:
At that time, the prevailing jurisprudence interpreting section 119
of R.A. 141 as amended was that enunciated in Monge and Tupas cited
above. The petitioners Benzonan and respondent Pe and the DBP are bound
by these decisions for pursuant to Article 8 of the Civil Code judicial
decisions applying or interpreting the laws of the Constitution shall form a
part of the legal system of the Philippines. But while our decisions form part
of the law of the land, they are also subject to Article 4 of the Civil Code
which provides that laws shall have no retroactive effect unless the contrary is
provided. This is expressed in the familiar legal maxim lex prospicit, non
respicit, the law looks forward not backward. The rationale against
retroactivity is easy to perceive. The retroactive application of a law usually
divests rights that have already become vested or impairs the obligations of
contract and hence, is unconstitutional.
The same consideration underlies our rulings giving only prospective effect to
decisions enunciating new doctrines. Thus, we emphasized in People v.
Jabinal, 55 SCRA 607 [1974] x x x when a doctrine of this Court is overruled
and a different view is adopted, the new doctrine should be applied
prospectively and should not apply to parties who had relied on the old
doctrine and acted on the faith thereof.[82]
Fourth Issue: Whether respondent RBI can acquire reclaimed
lands when there was no declaration that said lands are no
longer needed for public use
Petitioner Chavez avers that despite the declaration that the reclaimed areas
are alienable lands of the public domain, still, the reclamation is flawed for
there was never any declaration that said lands are no longer needed for public
use.
We are not moved by petitioners submission.
Even if it is conceded that there was no explicit declaration that the lands are
no longer needed for public use or public service, there was however an
implicit executive declaration that the reclaimed areas R-10 are not necessary
anymore for public use or public service when President Aquino through MO
415 conveyed the same to the NHA partly for housing project and related
commercial/industrial development intended for disposition to and enjoyment
of certain beneficiaries and not the public in general and partly as enabling
component to finance the project.
President Ramos, in issuing Proclamation No. 39, declared, though
indirectly, that the reclaimed lands of the Smokey Mountain project are no
longer required for public use or service, thus:
These parcels of land of public domain are hereby placed under the
administration and disposition of the National Housing Authority to develop,
subdivide and dispose to qualified beneficiaries, as well as its development
for mix land use (commercial/industrial) to provide employment opportunities
to on-site families and additional areas for port related activities. (Emphasis
supplied.)
While numerical count of the persons to be benefited is not the determinant
whether the property is to be devoted to public use, the declaration in
Proclamation No. 39 undeniably identifies only particular individuals as
beneficiaries to whom the reclaimed lands can be sold,
namelythe Smokey Mountain dwellers. The rest of the Filipinos are not
qualified; hence, said lands are no longer essential for the use of the public in
general.
In addition, President Ramos issued on August 31, 1994
Proclamation No. 465 increasing the area to be reclaimed from forty (40)
hectares to seventy-nine (79) hectares, elucidating that said lands are
undoubtedly set aside for the beneficiaries of SMDRP and not the
publicdeclaring the power of NHA to dispose of land to be reclaimed,
thus: The authority to administer, develop, or dispose lands identified and
reserved by this Proclamation and Proclamation No. 39 (s.1992), in
accordance with the SMDRP, as enhance, is vested with the NHA, subject to
the provisions of existing laws. (Emphasis supplied.)
MO 415 and Proclamations Nos. 39 and 465 are declarations that proclaimed
the non-use of the reclaimed areas for public use or service as the Project
cannot be successfully implemented without the withdrawal of said lands from
public use or service. Certainly, the devotion of the reclaimed land to public
use or service conflicts with the intended use of the Smokey Mountain areas
for housing and employment of the Smokey Mountain scavengers and for
financing the Project because the latter cannot be accomplished without
abandoning the public use of the subject land. Without doubt, the presidential
proclamations on SMDRP together with the issuance of the special patents
had effectively removed the reclaimed lands from public use.
More decisive and not in so many words is the ruling in PEA which we earlier
cited, that PD No. 1085 and President Aquinos issuance of a land patent also
constitute a declaration that the Freedom Islands are no longer needed for
public service. Consequently, we ruled in that case that the reclaimed lands are
open to disposition or concession to qualified parties.[83]
In a similar vein, presidential Proclamations Nos. 39 and 465 jointly with the
special patents have classified the reclaimed lands as alienable and disposable
and open to disposition or concession as they would be devoted to units
for Smokey Mountain beneficiaries. Hence, said lands are no longer intended
for public use or service and shall form part of the patrimonial properties of
the State under Art. 422 of the Civil Code. [84] As discussed a priori, the lands
were classified as patrimonial properties of the NHA ready for disposition
when the titles were registered in its name by the Register of Deeds.
Moreover, reclaimed lands that are made the enabling components of a BOT
infrastructure project are necessarily reclassified as alienable and disposable
lands under the BOT Law; otherwise, absurd and illogical consequences
would naturally result. Undoubtedly, the BOT contract will not be accepted by
the BOT contractor since there will be no consideration for its contractual
obligations. Since reclaimed land will be conveyed to the contractor pursuant
to the BOT Law, then there is an implied declaration that such land is no
longer intended for public use or public service and, hence, considered
patrimonial property of the State.
Fifth Issue: Whether there is a law authorizing sale of
reclaimed lands
Petitioner next claims that RBI cannot acquire the reclaimed lands because
there was no law authorizing their sale. He argues that unlike PEA, no
legislative authority was granted to the NHA to sell reclaimed land.
This position is misplaced.
Petitioner relies on Sec. 60 of Commonwealth Act (CA) 141 to support his
view that the NHA is not empowered by any law to sell reclaimed land, thus:
Section 60. Any tract of land comprised under this title may be leased or sold,
as the case may be, to any person, corporation or association authorized to
purchase or lease public lands for agricultural purposes. The area of the land
so leased or sold shall be such as shall, in the judgment of the Secretary of
Agriculture and Natural Resources, be reasonably necessary for the purposes
for which such sale or lease if requested and shall in no case exceed one
hundred and forty-four hectares: Provided, however, That this limitation shall
not apply to grants, donations, transfers, made to a province, municipality or
branch or subdivision of the Government for the purposes deemed by said
entities conducive to the public interest; but the land so granted donated or
transferred to a province, municipality, or branch or subdivision of the
Government shall not be alienated, encumbered, or otherwise disposed of
in a manner affecting its title, except when authorized by
Congress; Provided, further, That any person, corporation, association or
partnership disqualified from purchasing public land for agricultural purposes
under the provisions of this Act, may lease land included under this title
suitable for industrial or residential purposes, but the lease granted shall only
be valid while such land is used for the purposes referred to. (Emphasis
supplied.)
Reliance on said provision is incorrect as the same applies only to a province,
municipality or branch or subdivision of the Government. The NHA is not a
government unit but a government corporation performing governmental and
proprietary functions.
In addition, PD 757 is clear that the NHA is empowered by law to transfer
properties acquired by it under the law to other parties, thus:
Section 6. Powers and functions of the Authority. The Authority shall have the
following powers and functions to be exercised by the Boards in accordance
with the established national human settlements plan prepared by the Human
Settlements Commission:
xxxx
(k) Enter into contracts whenever necessary under such terms and conditions
as it may deem proper and reasonable;
(l) Acquire property rights and interests, and encumber or otherwise dispose
the same as it may deem appropriate (Emphasis supplied.)
Letter (l) is emphatic that the NHA can acquire property rights and interests
and encumber or otherwise dispose of them as it may deem appropriate. The
transfer of the reclaimed lands by the National Government to the NHA for
housing, commercial, and industrial purposes transformed them into
patrimonial lands which are of course owned by the State in its private or
proprietary capacity. Perforce, the NHA can sell the reclaimed lands to any
Filipino citizen or qualified corporation.
Sixth Issue: Whether the transfer of reclaimed lands to RBI
was done by public bidding
Petitioner also contends that there was no public bidding but an awarding of
ownership of said reclaimed lands to RBI. Public bidding, he says, is required
under Secs. 63 and 67 of CA 141 which read:
Section 63. Whenever it is decided that lands covered by this
chapter are not needed for public purposes, the Director of Lands shall ask the
Secretary of Agriculture and Commerce for authority to dispose of the
same.Upon receipt of such authority, the Director of Lands shall give notice
by public advertisement in the same manner as in the case of leases or sales of
agricultural public land, that the Government will lease or sell, as the case
may be, the lots or blocks specified in the advertisement, for the purpose
stated in the notice and subject to the conditions specified in this chapter.
xxxx
Section 67. The lease or sale shall be made through oral bidding; and
adjudication shall be made to the highest bidder. However, where an applicant
has made improvements on the land by virtue of a permit issued to him by
competent authority, the sale or lease shall be made by sealed bidding as
prescribed in section twenty-six of this Act, the provisions of which shall be
applied whenever applicable. If all or part of the lots remain unleased or
unsold, the Director of Lands shall from time to time announce in the Official
Gazette or in any other newspapers of general circulation, the lease of sale of
those lots, if necessary.
He finds that the NHA and RBI violated Secs. 63 and 67 of CA 141, as the
reclaimed lands were conveyed to RBI by negotiated contract and not by
public bidding as required by law.
This stand is devoid of merit.
There is no doubt that respondent NHA conducted a public bidding of the
right to become its joint venture partner in the Smokey Mountain
Project. Notices or Invitations to Bid were published in the national dailies on
January 23 and 26, 1992 and February 1, 14, 16, and 23, 1992. The bidding
proper was done by the Bids and Awards Committee (BAC) on May 18,
1992. On August 31, 1992, the Inter-Agency Techcom made up of the NHA,
PEA, DPWH, PPA, DBP, and DENR opened the bids and evaluated them,
resulting in the award of the contract to respondent RBI on October 7, 1992.
On March 19, 1993, respondents NHA and RBI signed the JVA. On February
23, 1994, said JVA was amended and restated into the ARJVA. On August 11,
1994, the ARJVA was again amended. On September 7, 1994, the OP
approved the ARJVA and the amendments to the ARJVA. From these factual
settings, it cannot be gainsaid that there was full compliance with the laws and
regulations governing public biddings involving a right, concession, or
property of the government.
Petitioner concedes that he does not question the public bidding on the right to
be a joint venture partner of the NHA, but the absence of bidding in the sale of
alienable and disposable lands of public domain pursuant to CA 141 as
amended.
Petitioners theory is incorrect.
Secs. 63 and 67 of CA 141, as amended, are in point as they refer to
government sale by the Director of Lands of alienable and disposable lands
of public domain. This is not present in the case at bar. The lands reclaimed
by and conveyed to the NHA are no longer lands of public domain. These
lands became proprietary lands or patrimonial properties of the State upon
transfer of the titles over the reclaimed lands to the NHA and hence outside
the ambit of CA 141. The NHA can therefore legally transfer patrimonial land
to RBI or to any other interested qualified buyer without any bidding
conducted by the Director of Lands because the NHA, unlike PEA, is a
government agency not tasked to sell lands of public domain. Hence, it can
only hold patrimonial lands and can dispose of such lands by sale without
need of public bidding.
Petitioner likewise relies on Sec. 79 of PD 1445 which requires
public bidding when government property has become unserviceable for any
cause or is no longer needed. It appears from the Handbook on Property and
Supply Management System, Chapter 6, that reclaimed lands which have
become patrimonial properties of the State, whose titles are conveyed to
government agencies like the NHA, which it will use for its projects or
programs, are not within the ambit of Sec. 79. We quote the determining
factors in the Disposal of Unserviceable Property, thus:
Determining Factors in the Disposal of Unserviceable Property
Property, which can no longer be repaired or reconditioned;
Property whose maintenance costs of repair more than outweigh the benefits
and services that will be derived from its continued use;
Property that has become obsolete or outmoded because of changes in
technology;
Serviceable property that has been rendered unnecessary due to change in the
agencys function or mandate;
Unused supplies, materials and spare parts that were procured in excess of
requirements; and
Unused supplies and materials that [have] become dangerous to use because of
long storage or use of which is determined to be hazardous.[85]
Reclaimed lands cannot be considered unserviceable
properties. The reclaimed lands in question are very much needed by the NHA
for the Smokey Mountain Project because without it, then the projects will not
be successfully implemented. Since the reclaimed lands are not unserviceable
properties and are very much needed by NHA, then Sec. 79 of PD 1445 does
not apply.
More importantly, Sec. 79 of PD 1445 cannot be applied to patrimonial
properties like reclaimed lands transferred to a government agency like the
NHA which has entered into a BOT contract with a private firm. The reason is
obvious. If the patrimonial property will be subject to public bidding as the
only way of disposing of said property, then Sec. 6 of RA 6957 on the
repayment scheme is almost impossible or extremely difficult to implement
considering the uncertainty of a winning bid during public auction. Moreover,
the repayment scheme of a BOT contract may be in the form of non-monetary
payment like the grant of a portion or percentage of reclaimed land. Even if
the BOT partner participates in the public bidding, there is no assurance that
he will win the bid and therefore the payment in kind as agreed to by the
parties cannot be performed or the winning bid prize might be below the
estimated valuation of the land. The only way to harmonize Sec. 79 of PD
1445 with Sec. 6 of RA 6957 is to consider Sec. 79 of PD 1445 as inapplicable
to BOT contracts involving patrimonial lands. The law does not intend
anything impossible (lex non intendit aliquid impossibile).
Seventh Issue: Whether RBI, being a private corporation,
is barred by the Constitution to acquire lands of public domain
Petitioner maintains that RBI, being a private corporation, is
expressly prohibited by the 1987 Constitution from acquiring lands of public
domain.
Petitioners proposition has no legal mooring for the following reasons:
1. RA 6957 as amended by RA 7718 explicitly states that a contractor can be
paid a portion as percentage of the reclaimed land subject to the constitutional
requirement that only Filipino citizens or corporations with at least 60%
Filipino equity can acquire the same. It cannot be denied that RBI is a private
corporation, where Filipino citizens own at least 60% of the stocks. Thus, the
transfer to RBI is valid and constitutional.
2. When Proclamations Nos. 39 and 465 were issued, inalienable
lands covered by said proclamations were converted to alienable and
disposable lands of public domain. When the titles to the reclaimed lands were
transferred to the NHA, said alienable and disposable lands of public domain
were automatically classified as lands of the private domain or patrimonial
properties of the State because the NHA is an agency NOT tasked to dispose
of alienable or disposable lands of public domain. The only way it can transfer
the reclaimed land in conjunction with its projects and to attain its goals is
when it is automatically converted to patrimonial properties of the
State. Being patrimonial or private properties of the State, then it has the
power to sell the same to any qualified personunder the Constitution, Filipino
citizens as private corporations, 60% of which is owned by Filipino citizens
like RBI.
3. The NHA is an end-user entity such that when alienable lands of public
domain are transferred to said agency, they are automatically classified as
patrimonial properties. The NHA is similarly situated as BCDA which was
granted the authority to dispose of patrimonial lands of the government under
RA 7227. The nature of the property holdings conveyed to BCDA is
elucidated and stressed in the May 6, 2003Resolution in Chavez v. PEA, thus:
BCDA is an entirely different government entity. BCDA is authorized by
law to sell specific government lands that have long been declared by
presidential proclamations as military reservations for use by the
different services of the armed forces under the Department of National
Defense. BCDAs mandate is specific and limited in area, while PEAs
mandate is general and national. BCDA holds government lands that
have been granted to end-user government entitiesthe military services of
the armed forces. In contrast, under Executive Order No. 525, PEA holds
the reclaimed public lands, not as an end-user entity, but as the
government agency primarily responsible for integrating, directing, and
coordinating all reclamation projects for and on behalf of the National
Government.
x x x Well-settled is the doctrine that public land granted to an end-user
government agency for a specific public use may subsequently be withdrawn
by Congress from public use and declared patrimonial property to be sold to
private parties. R.A. No. 7227 creating the BCDA is a law that declares
specific military reservations no longer needed for defense or military
purposes and reclassifies such lands as patrimonial property for sale to
private parties.
Government owned lands, as long as they are patrimonial property, can
be sold to private parties, whether Filipino citizens or qualified private
corporations. Thus, the so-called Friar Lands acquired by the government
under Act No. 1120 are patrimonial property which even private corporations
can acquire by purchase. Likewise, reclaimed alienable lands of the public
domain if sold or transferred to a public or municipal corporation for a
monetary consideration become patrimonial property in the hands of the
public or municipal corporation. Once converted to patrimonial property, the
land may be sold by the public or municipal corporation to private parties,
whether Filipino citizens or qualified private corporations. [86] (Emphasis
supplied.)
The foregoing Resolution makes it clear that the SMDRP was a program
adopted by the Government under Republic Act No. 6957 (An Act
Authorizing the Financing, Construction, Operation and Maintenance of
Infrastructure Projects by the Private Sector, and For Other Purposes), as
amended by RA 7718, which is a special law similar to RA 7227. Moreover,
since the implementation was assigned to the NHA, an end-user agency under
PD 757 and RA 7279, the reclaimed lands registered under the NHA are
automatically classified as patrimonial lands ready for disposition to qualified
beneficiaries.
The foregoing reasons likewise apply to the contention of petitioner that
HCPTI, being a private corporation, is disqualified from being a transferee of
public land. What was transferred to HCPTI is a 10-hectare lot which is
already classified as patrimonial property in the hands of the NHA. HCPTI,
being a qualified corporation under the 1987 Constitution, the transfer of the
subject lot to it is valid and constitutional.
Eighth Issue: Whether respondents can be compelled to disclose
all information related to the SMDRP
Petitioner asserts his right to information on all documents such as contracts,
reports, memoranda, and the like relative to SMDRP.
Petitioner asserts that matters relative to the SMDRP have not been disclosed
to the public like the current stage of the Project, the present financial capacity
of RBI, the complete list of investors in the asset pool, the exact amount of
investments in the asset pool and other similar important information
regarding the Project.
He prays that respondents be compelled to disclose all information
regarding the SMDRP and furnish him with originals or at least certified true
copies of all relevant documents relating to the said project including, but not
limited to, the original JVA, ARJVA, AARJVA, and the Asset Pool
Agreement.
This relief must be granted.
The right of the Filipino people to information on matters of public
concern is enshrined in the 1987 Constitution, thus:
 ARTICLE II
xxxx
SEC. 28. Subject to reasonable conditions prescribed by law, the State adopts
and implements a policy of full public disclosure of all its transactions
involving public interest.
ARTICLE III
SEC. 7. The right of the people to information on matters of public concern
shall be recognized. Access to official records, and to documents, and papers
pertaining to official acts, transactions, or decisions, as well as to government
research data used as basis for policy development, shall be afforded the
citizen, subject to such limitations as may be provided by law.
In Valmonte v. Belmonte, Jr., this Court explicated this way:
[A]n essential element of these freedoms is to keep open a continuing
dialogue or process of communication between the government and the
people. It is in the interest of the State that the channels for free political
discussion be maintained to the end that the government may perceive and be
responsive to the peoples will. Yet, this open dialogue can be effective only to
the extent that the citizenry is informed and thus able to formulate its will
intelligently.Only when the participants in the discussion are aware of the
issues and have access to information relating thereto can such bear fruit.[87]
In PEA, this Court elucidated the rationale behind the right to information:
These twin provisions of the Constitution seek to promote transparency in
policy-making and in the operations of the government, as well as provide the
people sufficient information to exercise effectively other constitutional rights.
These twin provisions are essential to the exercise of freedom of expression. If
the government does not disclose its official acts, transactions and decisions to
citizens, whatever citizens say, even if expressed without any restraint, will be
speculative and amount to nothing. These twin provisions are also essential to
hold public officials at all times x x x accountable to the people, for unless
citizens have the proper information, they cannot hold public officials
accountable for anything. Armed with the right information, citizens can
participate in public discussions leading to the formulation of government
policies and their effective implementation. An informed citizenry is essential
to the existence and proper functioning of any democracy.[88]
Sec. 28, Art. II compels the State and its agencies to fully disclose
all of its transactions involving public interest. Thus, the government
agencies, without need of demand from anyone, must bring into public view
all the steps and negotiations leading to the consummation of the transaction
and the contents of the perfected contract.[89] Such information must pertain to
definite propositions of the government, meaning official recommendations or
final positions reached on the different matters subject of negotiation. The
government agency, however, need not disclose intra-agency or inter-agency
recommendations or communications during the stage when common
assertions are still in the process of being formulated or are in the exploratory
stage. The limitation also covers privileged communication like information
on military and diplomatic secrets; information affecting national security;
information on investigations of crimes by law enforcement agencies before
the prosecution of the accused; information on foreign relations, intelligence,
and other classified information.
It is unfortunate, however, that after almost twenty (20) years from
birth of the 1987 Constitution, there is still no enabling law that provides the
mechanics for the compulsory duty of government agencies to disclose
information on government transactions. Hopefully, the desired enabling law
will finally see the light of day if and when Congress decides to approve the
proposed Freedom of Access to Information Act. In the meantime, it would
suffice that government agencies post on their bulletin boards the documents
incorporating the information on the steps and negotiations that produced the
agreements and the agreements themselves, and if finances permit, to upload
said information on their respective websites for easy access by interested
parties. Without any law or regulation governing the right to disclose
information, the NHA or any of the respondents cannot be faulted if they were
not able to disclose information relative to the SMDRP to the public in
general.
The other aspect of the peoples right to know apart from the duty
to disclose is the duty to allow access to information on matters of public
concern under Sec. 7, Art. III of the Constitution. The gateway to information
opens to the public the following: (1) official records; (2) documents and
papers pertaining to official acts, transactions, or decisions; and (3)
government research data used as a basis for policy development.
Thus, the duty to disclose information should be differentiated from the duty
to permit access to information. There is no need to demand from the
government agency disclosure of information as this is mandatory under the
Constitution; failing that, legal remedies are available. On the other hand, the
interested party must first request or even demand that he be allowed access to
documents and papers in the particular agency. A request or demand is
required; otherwise, the government office or agency will not know of the
desire of the interested party to gain access to such papers and what papers are
needed. The duty to disclose covers only transactions involving public
interest, while the duty to allow access has a broader scope of information
which embraces not only transactions involving public interest, but any matter
contained in official communications and public documents of the
government agency.
We find that although petitioner did not make any demand on the NHA to
allow access to information, we treat the petition as a written request or
demand. We order the NHA to allow petitioner access to its official records,
documents, and papers relating to official acts, transactions, and decisions that
are relevant to the said JVA and subsequent agreements relative to the
SMDRP.
Ninth Issue: Whether the operative fact doctrine applies to the
instant petition
Petitioner postulates that the operative fact doctrine is inapplicable to the
present case because it is an equitable doctrine which could not be used to
countenance an inequitable result that is contrary to its proper office.
On the other hand, the petitioner Solicitor General argues that the existence of
the various agreements implementing the SMDRP is an operative fact that can
no longer be disturbed or simply ignored, citing Rieta v. People of
the Philippines.[90]
The argument of the Solicitor General is meritorious.
The operative fact doctrine is embodied in De Agbayani v. Court of Appeals,
wherein it is stated that a legislative or executive act, prior to its being
declared as unconstitutional by the courts, is valid and must be complied with,
thus:
As the new Civil Code puts it: When the courts declare a law to be
inconsistent with the Constitution, the former shall be void and the latter shall
govern. Administrative or executive acts, orders and regulations shall be valid
only when they are not contrary to the laws of the Constitution. It is
understandable why it should be so, the Constitution being supreme and
paramount. Any legislative or executive act contrary to its terms cannot
survive.
Such a view has support in logic and possesses the merit of simplicity. It may
not however be sufficiently realistic. It does not admit of doubt that prior to
the declaration of nullity such challenged legislative or executive act must
have been in force and had to be complied with. This is so as until after the
judiciary, in an appropriate case, declares its invalidity, it is entitled to
obedience and respect. Parties may have acted under it and may have changed
their positions. What could be more fitting than that in a subsequent litigation
regard be had to what has been done while such legislative or executive act
was in operation and presumed to be valid in all respects. It is now accepted as
a doctrine that prior to its being nullified, its existence as a fact must be
reckoned with. This is merely to reflect awareness that precisely because the
judiciary is the governmental organ which has the final say on whether or not
a legislative or executive measure is valid, a period of time may have elapsed
before it can exercise the power of judicial review that may lead to a
declaration of nullity. It would be to deprive the law of its quality of fairness
and justice then, if there be no recognition of what had transpired prior to such
adjudication.
In the language of an American Supreme Court decision: The actual
existence of a statute, prior to such a determination [of
unconstitutionality], is an operative fact and may have consequences
which cannot justly be ignored. The past cannot always be erased by a
new judicial declaration. The effect of the subsequent ruling as to invalidity
may have to be considered in various aspects, with respect to particular
relations, individual and corporate, and particular conduct, private and
official. This language has been quoted with approval in a resolution
in Araneta v. Hill and the decision in Manila Motor Co., Inc. v. Flores. An
even more recent instance is the opinion of Justice Zaldivar speaking for the
Court in Fernandez v. Cuerva and Co.[91] (Emphasis supplied.)
This doctrine was reiterated in the more recent case of City of Makati v. Civil
Service Commission, wherein we ruled that:
Moreover, we certainly cannot nullify the City Governments order of
suspension, as we have no reason to do so, much less retroactively apply such
nullification to deprive private respondent of a compelling and valid reason
for not filing the leave application. For as we have held, a void act though
in law a mere scrap of paper nonetheless confers legitimacy upon past
acts or omissions done in reliance thereof. Consequently, the existence of
a statute or executive order prior to its being adjudged void is an
operative fact to which legal consequences are attached. It would indeed be
ghastly unfair to prevent private respondent from relying upon the order of
suspension in lieu of a formal leave application.[92] (Emphasis supplied.)
The principle was further explicated in the case of Rieta v. People of
the Philippines, thus:
In similar situations in the past this Court had taken the pragmatic and realistic
course set forth in Chicot County Drainage District vs. Baxter Bank to wit:
The courts below have proceeded on the theory that the Act of Congress,
having been found to be unconstitutional, was not a law; that it was
inoperative, conferring no rights and imposing no duties, and hence affording
no basis for the challenged decree. x x x It is quite clear, however, that such
broad statements as to the effect of a determination of unconstitutionality must
be taken with qualifications. The actual existence of a statute, prior to [the
determination of its invalidity], is an operative fact and may have
consequences which cannot justly be ignored. The past cannot always be
erased by a new judicial declaration. The effect of the subsequent ruling as to
invalidity may have to be considered in various aspects with respect to
particular conduct, private and official. Questions of rights claimed to have
become vested, of status, of prior determinations deemed to have finality and
acted upon accordingly, of public policy in the light of the nature both of the
statute and of its previous application, demand examination. These questions
are among the most difficult of those which have engaged the attention of
courts, state and federal, and it is manifest from numerous decisions that an
all-inclusive statement of a principle of absolute retroactive invalidity cannot
be justified.
In the May 6, 2003 Resolution in Chavez v. PEA,[93] we ruled that De
Agbayani[94] is not applicable to the case considering that the prevailing law
did not authorize private corporations from owning land.The prevailing law at
the time was the 1935 Constitution as no statute dealt with the same issue.
In the instant case, RA 6957 was the prevailing law at the time that
the joint venture agreement was signed. RA 6957, entitled An Act Authorizing
The Financing, Construction, Operation And Maintenance Of Infrastructure
Projects By The Private Sector And For Other Purposes, which was passed by
Congress on July 24, 1989, allows repayment to the private contractor of
reclaimed lands.[95] Such law was relied upon by respondents, along with the
above-mentioned executive issuances in pushing through with the Project. The
existence of such law and issuances is an operative fact to which legal
consequences have attached. This Court is constrained to give legal effect to
the acts done in consonance with such executive and legislative acts; to do
otherwise would work patent injustice on respondents.
Further, in the May 6, 2003 Resolution in Chavez v. PEA, we ruled that in
certain cases, the transfer of land, although illegal or unconstitutional, will not
be invalidated on considerations of equity and social justice. However, in that
case, we did not apply the same considering that PEA, respondent in said case,
was not entitled to equity principles there being bad faith on its part, thus:
There are, moreover, special circumstances that disqualify Amari from
invoking equity principles. Amari cannot claim good faith because even
before Amari signed the Amended JVA on March 30, 1999, petitioner had
already filed the instant case on April 27, 1998 questioning precisely the
qualification of Amari to acquire the Freedom Islands. Even before the filing
of this petition, two Senate Committees had already approved on September
16, 1997Senate Committee Report No. 560. This Report concluded, after a
well-publicized investigation into PEAs sale of the Freedom Islands to
Amari, that the Freedom Islands are inalienable lands of the public
domain. Thus, Amari signed the Amended JVA knowing and assuming all the
attendant risks, including the annulment of the Amended JVA.[96]
Such indicia of bad faith are not present in the instant case. When the ruling
in PEA was rendered by this Court on July 9, 2002, the JVAs were all
executed. Furthermore, when petitioner filed the instant case against
respondents on August 5, 2004, the JVAs were already terminated by virtue of
the MOA between the NHA and RBI. The respondents had no reason to think
that their agreements were unconstitutional or even questionable, as in fact,
the concurrent acts of the executive department lent validity to the
implementation of the Project. The SMDRP agreements have produced vested
rights in favor of the slum dwellers, the buyers of reclaimed land who were
issued titles over said land, and the agencies and investors who made
investments in the project or who bought SMPPCs. These properties and
rights cannot be disturbed or questioned after the passage of around ten (10)
years from the start of the SMDRP implementation. Evidently, the operative
fact principle has set in. The titles to the lands in the hands of the buyers can
no longer be invalidated.
The Courts Dispositions
Based on the issues raised in this petition, we find that the March 19, 1993
JVA between NHA and RBI and the SMDRP embodied in the JVA, the
subsequent amendments to the JVA and all other agreements signed and
executed in relation to it, including, but not limited to, the September 26, 1994
Smokey Mountain Asset Pool Agreement and the agreement on Phase I of the
Project as well as all other transactions which emanated from the Project, have
been shown to be valid, legal, and constitutional. Phase II has been struck
down by the Clean Air Act.
With regard to the prayer for prohibition, enjoining respondents particularly
respondent NHA from further implementing and/or enforcing the said Project
and other agreements related to it, and from further deriving and/or enjoying
any rights, privileges and interest from the Project, we find the same prayer
meritless.
Sec. 2 of Rule 65 of the 1997 Rules of Civil Procedure provides:
Sec. 2. Petition for prohibition.When the proceedings of any tribunal,
corporation, board, officer or person, whether exercising judicial, quasi-
judicial or ministerial functions, are without or in excess of its or his
jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal or any other plain, speedy, and adequate
remedy in the ordinary course of law, a person aggrieved thereby may file a
verified petition in the proper court, alleging the facts with certainty and
praying that judgment be rendered commanding the respondent to desist from
further proceedings in the action or matter specified therein, or otherwise
granting such incidental reliefs as law and justice may require.
It has not been shown that the NHA exercised judicial or quasi-
judicial functions in relation to the SMDRP and the agreements relative to it.
Likewise, it has not been shown what ministerial functions the NHA has with
regard to the SMDRP.
A ministerial duty is one which is so clear and specific as to leave no room for
the exercise of discretion in its performance. It is a duty which an officer
performs in a given state of facts in a prescribed manner in obedience to the
mandate of legal authority, without regard to the exercise of his/her own
judgment upon the propriety of the act done.[97]
Whatever is left to be done in relation to the August 27, 2003 MOA,
terminating the JVA and other related agreements, certainly does not involve
ministerial functions of the NHA but instead requires exercise of judgment. In
fact, Item No. 4 of the MOA terminating the JVAs provides for validation of
the developers (RBIs) claims arising from the termination of the SMDRP
through the various government agencies. [98] Such validation requires the
exercise of discretion.
In addition, prohibition does not lie against the NHA in view of petitioners
failure to avail and exhaust all administrative remedies. Clear is the rule that
prohibition is only available when there is no adequate remedy in the ordinary
course of law.
More importantly, prohibition does not lie to restrain an act which is already
a fait accompli. The operative fact doctrine protecting vested rights bars the
grant of the writ of prohibition to the case at bar. It should be remembered that
petitioner was the Solicitor General at the time SMDRP was formulated and
implemented. He had the opportunity to question the SMDRP and the
agreements on it, but he did not.The moment to challenge the Project had
passed.
On the prayer for a writ of mandamus, petitioner asks the Court to
compel respondents to disclose all documents and information relating to the
project, including, but not limited to, any subsequent agreements with respect
to the different phases of the Project, the revisions of the original plan, the
additional works incurred on the Project, the current financial condition of
respondent RBI, and the transactions made with respect to the project. We
earlier ruled that petitioner will be allowed access to official records relative
to the SMDRP. That would be adequate relief to satisfy petitioners right to the
information gateway.
WHEREFORE, the petition is PARTIALLY GRANTED.
The prayer for a writ of prohibition is DENIED for lack of merit.
The prayer for a writ of mandamus is GRANTED. Respondent NHA is
ordered to allow access to petitioner to all public documents and official
records relative to the SMDRPincluding, but not limited to, the March 19,
1993 JVA between the NHA and RBI and subsequent agreements related to
the JVA, the revisions over the original plan, and the additional works
incurred on and the transactions made with respect to the Project.
No costs. SO ORDERED.
Republic of the Philippines vs Naguiat
DECISION
GARCIA, J.:
Before the Court is this petition for review under Rule 45 of the
Rules of Court seeking the reversal of the Decision [1] dated May 29, 1998 of
the Court of Appeals (CA) in CA-G.R. CV No. 37001 which affirmed an
earlier decision[2] of the Regional Trial Court at Iba, Zambales, Branch 69
in Land Registration Case No. N-25-1.
The decision under review recites the factual backdrop, as follows:
This is an application for registration of title to four (4) parcels of
land located in Panan, Botolan, Zambales, more particularly described in the
amended application filed by Celestina Naguiat on 29 December 1989 with
the Regional Trial Court of Zambales, Branch 69. Applicant [herein
respondent] alleges, inter alia, that she is the owner of the said parcels of land
having acquired them by purchase from the LID Corporation which likewise
acquired the same from Demetria Calderon, Josefina Moraga and Fausto
Monje and their predecessors-in-interest who have been in possession thereof
for more than thirty (30) years; and that to the best of her knowledge, said lots
suffer no mortgage or encumbrance of whatever kind nor is there any person
having any interest, legal or equitable, or in possession thereof.
On 29 June 1990, the Republic of the Philippines [herein
petitioner]. . . filed an opposition to the application on the ground that neither
the applicant nor her predecessors-in interest have been in open, continuous,
exclusive and notorious possession and occupation of the lands in question
since 12 June 1945 or prior thereto; that the muniments of title and tax
payment receipts of applicant do not constitute competent and sufficient
evidence of a bona-fide acquisition of the lands applied for or of his open,
continuous, exclusive and notorious possession and occupation thereof in the
concept of (an) owner; that the applicants claim of ownership in fee simple on
the basis of Spanish title or grant can no longer be availed of . . .; and that the
parcels of land applied for are part of the public domain belonging to the
Republic of the Philippines not subject to private appropriation.
On 15 October 1990, the lower court issued an order of general
default as against the whole world, with the exception of the Office of the
Solicitor General, and proceeded with the hearing of this registration case.
After she had presented and formally offered her evidence . . .
applicant rested her case. The Solicitor General, thru the Provincial
Prosecutor, interposed no objection to the admission of the exhibits. Later . . .
the Provincial Prosecutor manifest (sic) that the Government had no evidence
to adduce. [3]
In a decision[4] dated September 30, 1991, the trial court rendered
judgment for herein respondent Celestina Naguiat, adjudicating unto her the
parcels of land in question and decreeing the registration thereof in her name,
thus:
WHEREFORE, premises considered, this Court hereby adjudicates
the parcels of land situated in Panan, Botolan, Zambales, appearing on Plan
AP-03-003447 containing an area of 3,131 square meters, appearing on Plan
AP-03-003446 containing an area of 15,322 containing an area of 15,387
square meters to herein applicant Celestina T. Naguiat, of legal age, Filipino
citizen, married to Rommel Naguiat and a resident of Angeles City, Pampanga
together with all the improvements existing thereon and orders and decrees
registration in her name in accordance with Act No. 496, Commonwealth Act
No. 14, [should be 141] as amended, and Presidential Decree No. 1529. This
adjudication, however, is subject to the various easements/reservations
provided for under pertinent laws, presidential decrees and/or presidential
letters of instructions which should be annotated/ projected on the title to be
issued. And once this decision becomes final, let the corresponding decree of
registration be immediately issued. (Words in bracket added)
With its motion for reconsideration having been denied by the trial
court, petitioner Republic went on appeal to the CA in CA-G.R. CV No.
37001.
As stated at the outset hereof, the CA, in the herein assailed
decision of May 29, 1998, affirmed that of the trial court, to wit:
WHEREFORE, premises considered, the decision appealed from is
hereby AFFIRMED.
SO ORDERED.
Hence, the Republics present recourse on its basic submission that
the CAs decision is not in accordance with law, jurisprudence and the
evidence, since respondent has not established with the required evidence her
title in fee simple or imperfect title in respect of the subject lots which would
warrant their registration under (P.D. 1529 or Public Land Act (C.A.) 141. In
particular, petitioner Republic faults the appellate court on its finding
respecting the length of respondents occupation of the property subject of her
application for registration and for not considering the fact that she has not
established that the lands in question have been declassified from forest or
timber zone to alienable and disposable property.
Public forest lands or forest reserves, unless declassified and released by
positive act of the Government so that they may form part of the disposable
agricultural lands of the public domain, are not capable of private
appropriation.[5] As to these assets, the rules on confirmation of imperfect title
do not apply.[6] Given this postulate, the principal issue to be addressed turns
on the question of whether or not the areas in question have ceased to have the
status of forest or other inalienable lands of the public domain.
Forests, in the context of both the Public Land Act[7] and the
Constitution[8] classifying lands of the public domain into agricultural, forest
or timber, mineral lands and national parks, do not necessarily refer to a large
tract of wooded land or an expanse covered by dense growth of trees and
underbrush. As we stated in Heirs of Amunategui [9]-
A forested area classified as forest land of the public domain does not lose
such classification simply because loggers or settlers have stripped it of its
forest cover. Parcels of land classified as forest land may actually be covered
with grass or planted to crops by kaingin cultivators or other farmers. Forest
lands do not have to be on mountains or in out of the way places. xxx. The
classification is merely descriptive of its legal nature or status and does not
have to be descriptive of what the land actually looks like. xxx
Under Section 2, Article XII of the Constitution, [10] which embodies
the Regalian doctrine, all lands of the public domain belong to the State the
source of any asserted right to ownership of land. [11] All lands not appearing to
be clearly of private dominion presumptively belong to the State.
[12]
Accordingly, public lands not shown to have been reclassified or released
as alienable agricultural land or alienated to a private person by the State
remain part of the inalienable public domain.[13] Under Section 6 of the Public
Land Act, the prerogative of classifying or reclassifying lands of the public
domain, i.e., from forest or mineral to agricultural and vice versa, belongs to
the Executive Branch of the government and not the court. [14] Needless to
stress, the onus to overturn, by incontrovertible evidence, the presumption that
the land subject of an application for registration is alienable or disposable
rests with the applicant.[15]
In the present case, the CA assumed that the lands in question are already
alienable and disposable. Wrote the appellate court:
theory of [petitioner] that the properties in question are lands of the public
domain cannot be sustained as it is directly against the above doctrine. Said
doctrine is a reaffirmation of the principle established in the earlier cases . . .
that open, exclusive and undisputed possession of alienable public land for
period prescribed by law creates the legal fiction whereby the land, upon
completion of the requisite period, ipso jure and without the need of judicial
or other sanction, ceases to be public land and becomes private property .
(Word in bracket and underscoring added.)
The principal reason for the appellate courts disposition, finding a registerable
title for respondent, is her and her predecessor-in-interests open, continuous
and exclusive occupation of the subject property for more than 30 years.
Prescinding from its above assumption and finding, the appellate court went
on to conclude, citing Director of Lands vs. Intermediate Appellate Court
(IAC)[16] and Herico vs. DAR,[17] among other cases, that, upon the completion
of the requisite period of possession, the lands in question cease to be public
land and become private property.
Director of Lands, Herico and the other cases cited by the CA are not,
however, winning cards for the respondent, for the simple reason that, in said
cases, the disposable and alienable nature of the land sought to be registered
was established, or, at least, not put in issue. And there lies the difference.
Here, respondent never presented the required certification from the proper
government agency or official proclamation reclassifying the land applied for
as alienable and disposable. Matters of land classification or reclassification
cannot be assumed. It calls for proof.[18] Aside from tax receipts, respondent
submitted in evidence the survey map and technical descriptions of the lands,
which, needless to state, provided no information respecting the classification
of the property. As the Court has held, however, these documents are not
sufficient to overcome the presumption that the land sought to be registered
forms part of the public domain.[19]
It cannot be overemphasized that unwarranted appropriation of public lands
has been a notorious practice resorted to in land registration cases. [20] For this
reason, the Court has made it a point to stress, when appropriate, that
declassification of forest and mineral lands, as the case may be, and their
conversion into alienable and disposable lands need an express and positive
act from the government.[21]
The foregoing considered, the issue of whether or not respondent and her
predecessor-in-interest have been in open, exclusive and continuous
possession of the parcels of land in question is now of little moment. For,
unclassified land, as here, cannot be acquired by adverse occupation or
possession; occupation thereof in the concept of owner, however long, cannot
ripen into private ownership and be registered as title.[22]
WHEREFORE, the instant petition is GRANTED and the
assailed decision dated May 29, 1998 of the Court of Appeals in CA-G.R. CV
No. 37001 is REVERSED and SET ASIDE. Accordingly, respondents
application for original registration of title in Land Registration Case No. N-
25-1 of the Regional Trial Court at Iba, Zambales, Branch 69, is DENIED.
No costs. SO ORDERED.
G.R. No. 179987 April 29, 2009
HEIRS OF MARIO MALABANAN,
- versus - AUSTRIA-MARTINEZ,
DECISION
TINGA, J.:
One main reason why the informal sector has not become formal is that
from Indonesia to Brazil, 90 percent of the informal lands are not titled and
registered. This is a generalized phenomenon in the so-called Third World.
And it has many consequences.
xxx
The question is: How is it that so many governments, from
Suharto's in Indonesia to Fujimori's in Peru, have wanted to title these people
and have not been able to do so effectively? One reason is that none of the
state systems in Asia or Latin America can gather proof of informal titles.
In Peru, the informals have means of proving property ownership to each
other which are not the same means developed by the Spanish legal system.
The informals have their own papers, their own forms of agreements, and their
own systems of registration, all of which are very clearly stated in the maps
which they use for their own informal business transactions.
If you take a walk through the countryside, from Indonesia to Peru,
and you walk by field after field--in each field a different dog is going to bark
at you. Even dogs know what private property is all about. The only one who
does not know it is the government. The issue is that there exists a "common
law" and an "informal law" which the Latin American formal legal system
does not know how to recognize.
- Hernando De Soto[1]
This decision inevitably affects all untitled lands currently in
possession of persons and entities other than the Philippine government. The
petition, while unremarkable as to the facts, was accepted by the Court en
banc in order to provide definitive clarity to the applicability and scope of
original registration proceedings under Sections 14(1) and 14(2) of the
Property Registration Decree. In doing so, the Court confronts not only the
relevant provisions of the Public Land Act and the Civil Code, but also the
reality on the ground. The countrywide phenomenon of untitled lands, as well
as the problem of informal settlement it has spawned, has unfortunately been
treated with benign neglect. Yet our current laws are hemmed in by their own
circumscriptions in addressing the phenomenon. Still, the duty on our part is
primarily to decide cases before us in accord with the Constitution and the
legal principles that have developed our public land law, though our social
obligations dissuade us from casting a blind eye on the endemic problems.
I.
On 20 February 1998, Mario Malabanan filed an application for land
registration covering a parcel of land identified as Lot 9864-A, Cad-452-D,
Silang Cadastre,[2] situated in Barangay Tibig, Silang Cavite, and consisting of
71,324 square meters. Malabanan claimed that he had purchased the property
from Eduardo Velazco,[3] and that he and his predecessors-in-interest had been
in open, notorious, and continuous adverse and peaceful possession of the
land for more than thirty (30) years.
The application was raffled to the Regional Trial Court of (RTC) Cavite-
Tagaytay City, Branch 18. The Office of the Solicitor General (OSG) duly
designated the Assistant Provincial Prosecutor of Cavite, Jose Velazco, Jr., to
appear on behalf of the State.[4] Apart from presenting documentary evidence,
Malabanan himself and his witness, Aristedes Velazco, testified at the hearing.
Velazco testified that the property was originally belonged to a twenty-two
hectare property owned by his great-grandfather, Lino Velazco. Lino had four
sons Benedicto, Gregorio, Eduardo and Estebanthe fourth being Aristedess
grandfather. Upon Linos death, his four sons inherited the property and
divided it among themselves. But by 1966, Estebans wife, Magdalena, had
become the administrator of all the properties inherited by the Velazco sons
from their father, Lino. After the death of Esteban and Magdalena, their son
Virgilio succeeded them in administering the properties, including Lot 9864-
A, which originally belonged to his uncle, Eduardo Velazco. It was this
property that was sold by Eduardo Velazco to Malabanan.[5]
Assistant Provincial Prosecutor Jose Velazco, Jr. did not cross-
examine Aristedes Velazco. He further manifested that he also [knew] the
property and I affirm the truth of the testimony given by Mr. Velazco. [6] The
Republic of the Philippines likewise did not present any evidence to
controvert the application.
Among the evidence presented by Malabanan during trial was a
Certification dated 11 June 2001, issued by the Community Environment &
Natural Resources Office, Department of Environment and Natural Resources
(CENRO-DENR), which stated that the subject property was verified to be
within the Alienable or Disposable land per Land Classification Map No. 3013
established under Project No. 20-A and approved as such under FAO 4-
1656 on March 15, 1982.[7]
On 3 December 2002, the RTC rendered judgment in favor of
Malabanan, the dispositive portion of which reads:
WHEREFORE, this Court hereby approves this application for
registration and thus places under the operation of Act 141, Act 496 and/or
P.D. 1529, otherwise known as Property Registration Law, the lands described
in Plan Csd-04-0173123-D, Lot 9864-A and containing an area of Seventy
One Thousand Three Hundred Twenty Four (71,324) Square Meters, as
supported by its technical description now forming part of the record of this
case, in addition to other proofs adduced in the name of MARIO
MALABANAN, who is of legal age, Filipino, widower, and with residence at
Munting Ilog, Silang, Cavite.
Once this Decision becomes final and executory, the corresponding
decree of registration shall forthwith issue.
SO ORDERED.
The Republic interposed an appeal to the Court of Appeals,
arguing that Malabanan had failed to prove that the property belonged to the
alienable and disposable land of the public domain, and that the RTC had
erred in finding that he had been in possession of the property in the manner
and for the length of time required by law for confirmation of imperfect title.
On 23 February 2007, the Court of Appeals rendered a
Decision[8] reversing the RTC and dismissing the application of Malabanan.
The appellate court held that under Section 14(1) of the Property Registration
Decree any period of possession prior to the classification of the lots as
alienable and disposable was inconsequential and should be excluded from the
computation of the period of possession. Thus, the appellate court noted that
since the CENRO-DENR certification had verified that the property was
declared alienable and disposable only on 15 March 1982, the Velazcos
possession prior to that date could not be factored in the computation of the
period of possession. This interpretation of the Court of Appeals of Section
14(1) of the Property Registration Decree was based on the Courts ruling
in Republic v. Herbieto.[9]
Malabanan died while the case was pending with the Court of
Appeals;[10] hence, it was his heirs who appealed the decision of the appellate
court. Petitioners, before this Court, rely on our ruling in Republic v. Naguit,
[11]
which was handed down just four months prior to Herbieto. Petitioners
suggest that the discussion in Herbieto cited by the Court of Appeals is
actually obiter dictum since the Metropolitan Trial Court therein which had
directed the registration of the property had no jurisdiction in the first place
since the requisite notice of hearing was published only after the hearing had
already begun. Naguit, petitioners argue, remains the controlling doctrine,
especially when the property in question is agricultural land. Therefore, with
respect to agricultural lands, any possession prior to the declaration of the
alienable property as disposable may be counted in reckoning the period of
possession to perfect title under the Public Land Act and the Property
Registration Decree.
The petition was referred to the Court en banc,[12] and on 11
November 2008, the case was heard on oral arguments. The Court formulated
the principal issues for the oral arguments, to wit:
1. In order that an alienable and disposable land of the public
domain may be registered under Section 14(1) of Presidential Decree No.
1529, otherwise known as the Property Registration Decree, should the land
be classified as alienable and disposable as of June 12, 1945 or is it sufficient
that such classification occur at any time prior to the filing of the applicant for
registration provided that it is established that the applicant has been in open,
continuous, exclusive and notorious possession of the land under a bona
fide claim of ownership since June 12, 1945 or earlier?
2. For purposes of Section 14(2) of the Property Registration
Decree may a parcel of land classified as alienable and disposable be deemed
private land and therefore susceptible to acquisition by prescription in
accordance with the Civil Code?
3. May a parcel of land established as agricultural in character
either because of its use or because its slope is below that of forest lands be
registrable under Section 14(2) of the Property Registration Decree in relation
to the provisions of the Civil Code on acquisitive prescription?
4. Are petitioners entitled to the registration of the subject land in
their names under Section 14(1) or Section 14(2) of the Property Registration
Decree or both?[13]
Based on these issues, the parties formulated their respective
positions.
With respect to Section 14(1), petitioners reiterate that the analysis
of the Court in Naguit is the correct interpretation of the provision. The
seemingly contradictory pronouncement in Herbieto, it is submitted, should
be considered obiter dictum, since the land registration proceedings therein
was void ab initio due to lack of publication of the notice of initial hearing.
Petitioners further point out that in Republic v. Bibonia,[14] promulgated in
June of 2007, the Court applied Naguit and adopted the same observation that
the preferred interpretation by the OSG of Section 14(1) was patently absurd.
For its part, the OSG remains insistent that for Section 14(1) to apply, the land
should have been classified as alienable and disposable as of 12 June 1945.
Apart from Herbieto, the OSG also cites the subsequent rulings
in Buenaventura v. Republic,[15] Fieldman Agricultural Trading v.
Republic[16] and Republic v. Imperial Credit Corporation,[17] as well as the
earlier case of Director of Lands v. Court of Appeals.[18]
With respect to Section 14(2), petitioners submit that open,
continuous, exclusive and notorious possession of an alienable land of the
public domain for more than 30 years ipso jure converts the land into private
property, thus placing it under the coverage of Section 14(2). According to
them, it would not matter whether the land sought to be registered was
previously classified as agricultural land of the public domain so long as, at
the time of the application, the property had already been converted into
private property through prescription. To bolster their argument, petitioners
cite extensively from our 2008 ruling in Republic v. T.A.N. Properties.[19]
The arguments submitted by the OSG with respect to Section 14(2)
are more extensive. The OSG notes that under Article 1113 of the Civil Code,
the acquisitive prescription of properties of the State refers to patrimonial
property, while Section 14(2) speaks of private lands. It observes that the
Court has yet to decide a case that presented Section 14(2) as a ground for
application for registration, and that the 30-year possession period refers to the
period of possession under Section 48(b) of the Public Land Act, and not the
concept of prescription under the Civil Code. The OSG further submits that,
assuming that the 30-year prescriptive period can run against public lands,
said period should be reckoned from the time the public land was declared
alienable and disposable.
Both sides likewise offer special arguments with respect to the
particular factual circumstances surrounding the subject property and the
ownership thereof.
II.
First, we discuss Section 14(1) of the Property Registration Decree. For a full
understanding of the provision, reference has to be made to the Public Land
Act.
A.
Commonwealth Act No. 141, also known as the Public Land Act,
has, since its enactment, governed the classification and disposition of lands
of the public domain. The President is authorized, from time to time, to
classify the lands of the public domain into alienable and disposable, timber,
or mineral lands.[20] Alienable and disposable lands of the public domain are
further classified according to their uses into (a) agricultural; (b) residential,
commercial, industrial, or for similar productive purposes; (c) educational,
charitable, or other similar purposes; or (d) reservations for town sites and for
public and quasi-public uses.[21]
May a private person validly seek the registration in his/her name
of alienable and disposable lands of the public domain? Section 11 of the
Public Land Act acknowledges that public lands suitable for agricultural
purposes may be disposed of by confirmation of imperfect or incomplete titles
through judicial legalization.[22] Section 48(b) of the Public Land Act, as
amended by P.D. No. 1073, supplies the details and unmistakably grants that
right, subject to the requisites stated therein:
Sec. 48. The following described citizens of the Philippines,
occupying lands of the public domain or claiming to own any such land or an
interest therein, but whose titles have not been perfected or completed, may
apply to the Court of First Instance of the province where the land is located
for confirmation of their claims and the issuance of a certificate of title
therefor, under the Land Registration Act, to wit:
xxx
 (b) Those who by themselves or through their predecessors in
interest have been in open, continuous, exclusive, and notorious possession
and occupation of alienable and disposable lands of the public domain, under
a bona fide claim of acquisition of ownership, since June 12, 1945, or earlier,
immediately preceding the filing of the application for confirmation of title
except when prevented by war or force majeure. These shall be conclusively
presumed to have performed all the conditions essential to a Government
grant and shall be entitled to a certificate of title under the provisions of this
chapter.
Section 48(b) of Com. Act No. 141 received its present wording in 1977 when
the law was amended by P.D. No. 1073. Two significant amendments were
introduced by P.D. No. 1073. First, the term agricultural lands was changed to
alienable and disposable lands of the public domain. The OSG submits that
this amendment restricted the scope of the lands that may be registered.
[23]
This is not actually the case. Under Section 9 of the Public Land Act,
agricultural lands are a mere subset of lands of the public domain alienable or
open to disposition. Evidently, alienable and disposable lands of the public
domain are a larger class than only agricultural lands.
Second, the length of the requisite possession was changed from possession
for thirty (30) years immediately preceding the filing of the application to
possession since June 12, 1945 or earlier. The Court in Naguit explained:
When the Public Land Act was first promulgated in 1936, the
period of possession deemed necessary to vest the right to register their title to
agricultural lands of the public domain commenced from July 26, 1894.
However, this period was amended by R.A. No. 1942, which provided that
the bona fide claim of ownership must have been for at least thirty (30) years.
Then in 1977, Section 48(b) of the Public Land Act was again amended, this
time by P.D. No. 1073, which pegged the reckoning date at June 12, 1945. xxx
It bears further observation that Section 48(b) of Com. Act No, 141 is virtually
the same as Section 14(1) of the Property Registration Decree. Said Decree
codified the various laws relative to the registration of property, including
lands of the public domain. It is Section 14(1) that operationalizes the
registration of such lands of the public domain. The provision reads:
SECTION 14. Who may apply. The following persons may file in
the proper Court of First Instance an application for registration of title to
land, whether personally or through their duly authorized representatives:
(1) those who by themselves or through their predecessors-in-interest have been in
open, continuous, exclusive and notorious possession and occupation of
alienable and disposable lands of the public domain under a bona fide claim of
ownership since June 12, 1945, or earlier.
Notwithstanding the passage of the Property Registration Decree
and the inclusion of Section 14(1) therein, the Public Land Act has remained
in effect. Both laws commonly refer to persons or their predecessors-in-
interest who have been in open, continuous, exclusive and notorious
possession and occupation of alienable and disposable lands of the public
domain under a bona fide claim of ownership since June 12, 1945, or earlier.
That circumstance may have led to the impression that one or the other is a
redundancy, or that Section 48(b) of the Public Land Act has somehow been
repealed or mooted. That is not the case.
The opening clauses of Section 48 of the Public Land Act and
Section 14 of the Property Registration Decree warrant comparison:
Sec. 48 [of the Public Land Act]. The following described citizens
of the Philippines, occupying lands of the public domain or claiming to own
any such land or an interest therein, but whose titles have not been perfected
or completed, may apply to the Court of First Instance of the province where
the land is located for confirmation of their claims and the issuance of a
certificate of title therefor, under the Land Registration Act, to wit:
xxx
Sec. 14 [of the Property Registration Decree]. Who may apply. The
following persons may file in the proper Court of First Instance an application
for registration of title to land, whether personally or through their duly
authorized representatives:
xxx
It is clear that Section 48 of the Public Land Act is more
descriptive of the nature of the right enjoyed by the possessor than Section 14
of the Property Registration Decree, which seems to presume the pre-
existence of the right, rather than establishing the right itself for the first time.
It is proper to assert that it is the Public Land Act, as amended by P.D. No.
1073 effective 25 January 1977, that has primarily established the right of a
Filipino citizen who has been in open, continuous, exclusive, and notorious
possession and occupation of alienable and disposable lands of the public
domain, under a bona fide claim of acquisition of ownership, since June 12,
1945 to perfect or complete his title by applying with the proper court for the
confirmation of his ownership claim and the issuance of the corresponding
certificate of title.
Section 48 can be viewed in conjunction with the afore-quoted
Section 11 of the Public Land Act, which provides that public lands suitable
for agricultural purposes may be disposed of by confirmation of imperfect or
incomplete titles, and given the notion that both provisions declare that it is
indeed the Public Land Act that primarily establishes the substantive
ownership of the possessor who has been in possession of the property since
12 June 1945. In turn, Section 14(a) of the Property Registration Decree
recognizes the substantive right granted under Section 48(b) of the Public
Land Act, as well provides the corresponding original registration procedure
for the judicial confirmation of an imperfect or incomplete title.
There is another limitation to the right granted under Section 48(b). Section 47
of the Public Land Act limits the period within which one may exercise the
right to seek registration under Section 48. The provision has been amended
several times, most recently by Rep. Act No. 9176 in 2002. It currently reads
thus:
Section 47. The persons specified in the next following section are
hereby granted time, not to extend beyond December 31, 2020 within which
to avail of the benefits of this Chapter: Provided, That this period shall apply
only where the area applied for does not exceed twelve (12)
hectares: Provided, further, That the several periods of time designated by the
President in accordance with Section Forty-Five of this Act shall apply also to
the lands comprised in the provisions of this Chapter, but this Section shall not
be construed as prohibiting any said persons from acting under this Chapter at
any time prior to the period fixed by the President.[24]
Accordingly under the current state of the law, the substantive right granted
under Section 48(b) may be availed of only until 31 December 2020.
B.
Despite the clear text of Section 48(b) of the Public Land Act, as
amended and Section 14(a) of the Property Registration Decree, the OSG has
adopted the position that for one to acquire the right to seek registration of an
alienable and disposable land of the public domain, it is not enough that the
applicant and his/her predecessors-in-interest be in possession under a bona
fide claim of ownership since 12 June 1945; the alienable and disposable
character of the property must have been declared also as of 12 June 1945.
Following the OSGs approach, all lands certified as alienable and disposable
after 12 June 1945cannot be registered either under Section 14(1) of the
Property Registration Decree or Section 48(b) of the Public Land Act as
amended. The absurdity of such an implication was discussed in Naguit.
Petitioner suggests an interpretation that the alienable and
disposable character of the land should have already been established
since June 12, 1945 or earlier. This is not borne out by the plain meaning of
Section 14(1). Since June 12, 1945, as used in the provision, qualifies its
antecedent phrase under a bonafide claim of ownership. Generally speaking,
qualifying words restrict or modify only the words or
phrases to which they are immediately associated, and not those distantly or
remotely located.[25] Ad proximum antecedents fiat relation nisi impediatur
sentencia.
Besides, we are mindful of the absurdity that would result if we adopt
petitioners position. Absent a legislative amendment, the rule would be,
adopting the OSGs view, that all lands of the public domain which were not
declared alienable or disposable before June 12, 1945 would not be
susceptible to original registration, no matter the length of unchallenged
possession by the occupant. Such interpretation renders paragraph (1) of
Section 14 virtually inoperative and even precludes the government from
giving it effect even as it decides to reclassify public agricultural lands as
alienable and disposable. The unreasonableness of the situation would even be
aggravated considering that before June 12, 1945, the Philippines was not yet
even considered an independent state.
Accordingly, the Court in Naguit explained:
[T]he more reasonable interpretation of Section 14(1) is that it
merely requires the property sought to be registered as already alienable and
disposable at the time the application for registration of title is filed. If the
State, at the time the application is made, has not yet deemed it proper to
release the property for alienation or disposition, the presumption is that the
government is still reserving the right to utilize the property; hence, the need
to preserve its ownership in the State irrespective of the length of adverse
possession even if in good faith. However, if the property has already been
classified as alienable and disposable, as it is in this case, then there is already
an intention on the part of the State to abdicate its exclusive prerogative over
the property.
The Court declares that the correct interpretation of Section 14(1)
is that which was adopted in Naguit. The contrary pronouncement
in Herbieto, as pointed out in Naguit, absurdly limits the application of the
provision to the point of virtual inutility since it would only cover lands
actually declared alienable and disposable prior to 12 June 1945, even if the
current possessor is able to establish open, continuous, exclusive and
notorious possession under a bona fide claim of ownership long before that
date.
Moreover, the Naguit interpretation allows more possessors under
a bona fide claim of ownership to avail of judicial confirmation of their
imperfect titles than what would be feasible under Herbieto. This balancing
fact is significant, especially considering our forthcoming discussion on the
scope and reach of Section 14(2) of the Property Registration Decree.
Petitioners make the salient observation that the contradictory
passages from Herbieto are obiter dicta since the land registration proceedings
therein is void ab initio in the first place due to lack of the requisite
publication of the notice of initial hearing. There is no need to explicitly
overturn Herbieto, as it suffices that the Courts acknowledgment that the
particular line of argument used therein concerning Section 14(1) is
indeed obiter.
It may be noted that in the subsequent case of Buenaventura,[26] the
Court, citing Herbieto, again stated that [a]ny period of possession prior to the
date when the [s]ubject [property was] classified as alienable and disposable is
inconsequential and should be excluded from the computation of the period of
possession That statement, in the context of Section 14(1), is certainly
erroneous. Nonetheless, the passage as cited in Buenaventura should again be
considered as obiter. The application therein was ultimately granted, citing
Section 14(2). The evidence submitted by petitioners therein did not establish
any mode of possession on their part prior to 1948, thereby precluding the
application of Section 14(1). It is not even apparent from the decision whether
petitioners therein had claimed entitlement to original registration following
Section 14(1), their position being that they had been in exclusive possession
under a bona fide claim of ownership for over fifty (50) years, but not
before 12 June 1945.
Thus, neither Herbieto nor its principal discipular
ruling Buenaventura has any precedental value with respect to Section 14(1).
On the other hand, the ratio of Naguit is embedded in Section 14(1), since it
precisely involved situation wherein the applicant had been in exclusive
possession under a bona fide claim of ownership prior to 12 June 1945. The
Courts interpretation of Section 14(1) therein was decisive to the resolution of
the case. Any doubt as to which between Naguit or Herbieto provides the final
word of the Court on Section 14(1) is now settled in favor of Naguit.
We noted in Naguit that it should be distinguished from Bracewell v. Court of
Appeals[27] since in the latter, the application for registration had been
filed before the land was declared alienable or disposable. The dissent though
pronounces Bracewell as the better rule between the two. Yet two years
after Bracewell, its ponente, the esteemed Justice Consuelo Ynares-Santiago,
penned the ruling in Republic v. Ceniza,[28] which involved a claim of
possession that extended back to 1927 over a public domain land that was
declared alienable and disposable only in 1980. Ceniza cited Bracewell,
quoted extensively from it, and following the mindset of the dissent, the
attempt at registration in Ceniza should have failed. Not so.
To prove that the land subject of an application for registration is
alienable, an applicant must establish the existence of a positive act of the
government such as a presidential proclamation or an executive order; an
administrative action; investigation reports of Bureau of Lands investigators;
and a legislative act or a statute.
In this case, private respondents presented a certification dated
November 25, 1994, issued by Eduardo M. Inting, the Community
Environment and Natural Resources Officer in the Department of
Environment and Natural Resources Office in Cebu City, stating that the lots
involved were "found to be within the alienable and disposable (sic) Block-I,
Land Classification Project No. 32-A, per map 2962 4-I555 dated December
9, 1980." This is sufficient evidence to show the real character of the land
subject of private respondents application. Further, the certification enjoys a
presumption of regularity in the absence of contradictory evidence, which is
true in this case. Worth noting also was the observation of the Court of
Appeals stating that:
[n]o opposition was filed by the Bureaus of Lands and Forestry to
contest the application of appellees on the ground that the property still forms
part of the public domain. Nor is there any showing that the lots in question
are forestal land....
Thus, while the Court of Appeals erred in ruling that mere
possession of public land for the period required by law would entitle its
occupant to a confirmation of imperfect title, it did not err in ruling in favor of
private respondents as far as the first requirement in Section 48(b) of the
Public Land Act is concerned, for they were able to overcome the burden of
proving the alienability of the land subject of their application.
As correctly found by the Court of Appeals, private respondents
were able to prove their open, continuous, exclusive and notorious possession
of the subject land even before the year 1927. As a rule, we are bound by the
factual findings of the Court of Appeals. Although there are exceptions,
petitioner did not show that this is one of them.[29]
Why did the Court in Ceniza, through the same eminent member who
authored Bracewell, sanction the registration under Section 48(b) of public
domain lands declared alienable or disposable thirty-five (35) years and 180
days after 12 June 1945? The telling difference is that in Ceniza, the
application for registration was filed nearly six (6) years after the land had
been declared alienable or disposable, while in Bracewell, the application was
filed nine (9) years before the land was declared alienable or
disposable. That crucial difference was also stressed in Naguit to
contradistinguish it from Bracewell, a difference which the dissent seeks to
belittle.
III.
We next ascertain the correct framework of analysis with respect to Section
14(2). The provision reads:
SECTION 14. Who may apply. The following persons may file in
the proper Court of First Instance an application for registration of title to
land, whether personally or through their duly authorized representatives:
xxx
(2) Those who have acquired ownership over private lands by prescription under
the provisions of existing laws.
The Court in Naguit offered the following discussion concerning
Section 14(2), which we did even then recognize, and still do, to be an obiter
dictum, but we nonetheless refer to it as material for further discussion, thus:
Did the enactment of the Property Registration Decree and the
amendatory P.D. No. 1073 preclude the application for registration of
alienable lands of the public domain, possession over which commenced only
after June 12, 1945? It did not, considering Section 14(2) of the Property
Registration Decree, which governs and authorizes the application of those
who have acquired ownership of private lands by prescription under the
provisions of existing laws.
Prescription is one of the modes of acquiring ownership under the
Civil Code.[[30]] There is a consistent jurisprudential rule that properties
classified as alienable public land may be converted into private property by
reason of open, continuous and exclusive possession of at least thirty (30)
years.[[31]] With such conversion, such property may now fall within the
contemplation of private lands under Section 14(2), and thus susceptible to
registration by those who have acquired ownership through prescription.
Thus, even if possession of the alienable public land commenced on a date
later than June 12, 1945, and such possession being been open, continuous
and exclusive, then the possessor may have the right to register the land by
virtue of Section 14(2) of the Property Registration Decree.
Naguit did not involve the application of Section 14(2), unlike in this case
where petitioners have based their registration bid primarily on that provision,
and where the evidence definitively establishes their claim of possession only
as far back as 1948. It is in this case that we can properly appreciate the
nuances of the provision.
A.
The obiter in Naguit cited the Civil Code provisions on prescription as the
possible basis for application for original registration under Section 14(2).
Specifically, it is Article 1113 which provides legal foundation for the
application. It reads:
All things which are within the commerce of men are susceptible
of prescription, unless otherwise provided. Property of the State or any of its
subdivisions not patrimonial in character shall not be the object of
prescription.
It is clear under the Civil Code that where lands of the public domain are
patrimonial in character, they are susceptible to acquisitive prescription. On
the other hand, among the public domain lands that are not susceptible to
acquisitive prescription are timber lands and mineral lands. The Constitution
itself proscribes private ownership of timber or mineral lands.
There are in fact several provisions in the Civil Code concerning
the acquisition of real property through prescription. Ownership of real
property may be acquired by ordinary prescription of ten (10) years, [32] or
through extraordinary prescription of thirty (30) years. [33] Ordinary acquisitive
prescription requires possession in good faith,[34] as well as just title.[35]
When Section 14(2) of the Property Registration Decree explicitly
provides that persons who have acquired ownership over private lands by
prescription under the provisions of existing laws, it unmistakably refers to
the Civil Code as a valid basis for the registration of lands. The Civil Code is
the only existing law that specifically allows the acquisition by prescription of
private lands, including patrimonial property belonging to the State. Thus, the
critical question that needs affirmation is whether Section 14(2) does
encompass original registration proceedings over patrimonial property of the
State, which a private person has acquired through prescription.
The Naguit obiter had adverted to a frequently reiterated
jurisprudence holding that properties classified as alienable public land may
be converted into private property by reason of open, continuous and
exclusive possession of at least thirty (30) years. [36] Yet if we ascertain the
source of the thirty-year period, additional complexities relating to Section
14(2) and to how exactly it operates would emerge. For there are in fact two
distinct origins of the thirty (30)-year rule.
The first source is Rep. Act No. 1942, enacted in 1957, which
amended Section 48(b) of the Public Land Act by granting the right to seek
original registration of alienable public lands through possession in the
concept of an owner for at least thirty years.
The following-described citizens of the Philippines, occupying
lands of the public domain or claiming to own any such lands or an interest
therein, but whose titles have not been perfected or completed, may apply to
the Court of First Instance of the province where the land is located for
confirmation of their claims and the issuance of a certificate of title therefor,
under the Land Registration Act, to wit:
xxx xxx xxx
(b) Those who by themselves or through their predecessors in
interest have been in open, continuous, exclusive and notorious possession
and occupation of agricultural lands of the public domain, under a bona
fide claim of acquisition of ownership, for at least thirty years immediately
preceding the filing of the application for confirmation of title, except
when prevented by war or force majeure. These shall be conclusively
presumed to have performed all the conditions essential to a Government
grant and shall be entitled to a certificate of title under the provisions of this
Chapter. (emphasis supplied)[37]
This provision was repealed in 1977 with the enactment of P.D.
1073, which made the date 12 June 1945 the reckoning point for the first time.
Nonetheless, applications for registration filed prior to 1977 could have
invoked the 30-year rule introduced by Rep. Act No. 1942.
The second source is Section 14(2) of P.D. 1529 itself, at least by
implication, as it applies the rules on prescription under the Civil Code,
particularly Article 1113 in relation to Article 1137. Note that there are two
kinds of prescription under the Civil Codeordinary acquisitive prescription
and extraordinary acquisitive prescription, which, under Article 1137, is
completed through uninterrupted adverse possession for thirty years, without
need of title or of good faith.
Obviously, the first source of the thirty (30)-year period rule, Rep.
Act No. 1942, became unavailable after 1977. At present, the only legal basis
for the thirty (30)-year period is the law on prescription under the Civil Code,
as mandated under Section 14(2). However, there is a material difference
between how the thirty (30)-year rule operated under Rep. Act No. 1942 and
how it did under the Civil Code.
Section 48(b) of the Public Land Act, as amended by Rep. Act No.
1942, did not refer to or call into application the Civil Code provisions on
prescription. It merely set forth a requisite thirty-year possession period
immediately preceding the application for confirmation of title, without any
qualification as to whether the property should be declared alienable at the
beginning of, and continue as such, throughout the entire thirty-(30) years.
There is neither statutory nor jurisprudential basis to assert Rep. Act No. 1942
had mandated such a requirement, [38] similar to our earlier finding with respect
to the present language of Section 48(b), which now sets 12 June 1945 as the
point of reference.
Then, with the repeal of Rep. Act No. 1942, the thirty-year
possession period as basis for original registration became Section 14(2) of
the Property Registration Decree, which entitled those who have acquired
ownership over private lands by prescription under the provisions of existing
laws to apply for original registration. Again, the thirty-year period is derived
from the rule on extraordinary prescription under Article 1137 of the Civil
Code. At the same time, Section 14(2) puts into operation the entire regime of
prescription under the Civil Code, a fact which does not hold true with respect
to Section 14(1).
B.
Unlike Section 14(1), Section 14(2) explicitly refers to the
principles on prescription under existing laws. Accordingly, we are impelled
to apply the civil law concept of prescription, as set forth in the Civil Code, in
our interpretation of Section 14(2). There is no similar demand on our part in
the case of Section 14(1).
The critical qualification under Article 1113 of the Civil Code is
thus: [p]roperty of the State or any of its subdivisions not patrimonial in
character shall not be the object of prescription. The identification what
consists of patrimonial property is provided by Articles 420 and 421, which
we quote in full:
Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports
and bridges constructed by the State, banks, shores, roadsteads, and others of
similar character;
(2) Those which belong to the State, without being for public use, and are
intended for some public service or for the development of the national
wealth.
Art. 421. All other property of the State, which is not of the character
stated in the preceding article, is patrimonial property
It is clear that property of public dominion, which generally includes property
belonging to the State, cannot be the object of prescription or, indeed, be
subject of the commerce of man. [39] Lands of the public domain, whether
declared alienable and disposable or not, are property of public dominion and
thus insusceptible to acquisition by prescription.
Let us now explore the effects under the Civil Code of a declaration by the
President or any duly authorized government officer of alienability and
disposability of lands of the public domain. Would such lands so declared
alienable and disposable be converted, under the Civil Code, from property of
the public dominion into patrimonial property? After all, by connotative
definition, alienable and disposable lands may be the object of the commerce
of man; Article 1113 provides that all things within the commerce of man are
susceptible to prescription; and the same provision further provides that
patrimonial property of the State may be acquired by prescription.
Nonetheless, Article 422 of the Civil Code states that [p]roperty of
public dominion, when no longer intended for public use or for public service,
shall form part of the patrimonial property of the State. It is this provision that
controls how public dominion property may be converted into patrimonial
property susceptible to acquisition by prescription. After all, Article 420 (2)
makes clear that those property which belong to the State, without being for
public use, and are intended for some public service or for the development of
the national wealth are public dominion property. For as long as the property
belongs to the State, although already classified as alienable or disposable, it
remains property of the public dominion if when it is intended for some public
service or for the development of the national wealth.
Accordingly, there must be an express declaration by the State
that the public dominion property is no longer intended for public service
or the development of the national wealth or that the property has been
converted into patrimonial. Without such express declaration, the
property, even if classified as alienable or disposable, remains property of
the public dominion, pursuant to Article 420(2), and thus incapable of
acquisition by prescription. It is only when such alienable and disposable
lands are expressly declared by the State to be no longer intended for
public service or for the development of the national wealth that the
period of acquisitive prescription can begin to run. Such declaration shall
be in the form of a law duly enacted by Congress or a Presidential
Proclamation in cases where the President is duly authorized by law.
It is comprehensible with ease that this reading of Section 14(2) of
the Property Registration Decree limits its scope and reach and thus affects the
registrability even of lands already declared alienable and disposable to the
detriment of the bona fide possessors or occupants claiming title to the lands.
Yet this interpretation is in accord with the Regalian doctrine and its
concomitant assumption that all lands owned by the State, although declared
alienable or disposable, remain as such and ought to be used only by the
Government.
Recourse does not lie with this Court in the matter. The duty of the
Court is to apply the Constitution and the laws in accordance with their
language and intent. The remedy is to change the law, which is the province of
the legislative branch. Congress can very well be entreated to amend Section
14(2) of the Property Registration Decree and pertinent provisions of the Civil
Code to liberalize the requirements for judicial confirmation of imperfect or
incomplete titles.
The operation of the foregoing interpretation can be illustrated by
an actual example. Republic Act No. 7227, entitled An Act Accelerating The
Conversion Of Military Reservations Into Other Productive Uses, etc., is more
commonly known as the BCDA law. Section 2 of the law authorizes the sale
of certain military reservations and portions of military camps in Metro
Manila, including Fort Bonifacio and Villamor Air Base. For purposes of
effecting the sale of the military camps, the law mandates the President to
transfer such military lands to the Bases Conversion Development Authority
(BCDA)[40] which in turn is authorized to own, hold and/or administer them.
[41]
The President is authorized to sell portions of the military camps, in whole
or in part.[42] Accordingly, the BCDA law itself declares that the military lands
subject thereof are alienable and disposable pursuant to the provisions of
existing laws and regulations governing sales of government properties.[43]
From the moment the BCDA law was enacted the subject military
lands have become alienable and disposable. However, said lands did not
become patrimonial, as the BCDA law itself expressly makes the reservation
that these lands are to be sold in order to raise funds for the conversion of the
former American bases at Clark and Subic.[44] Such purpose can be tied to
either public service or the development of national wealth under Article
420(2). Thus, at that time, the lands remained property of the public dominion
under Article 420(2), notwithstanding their status as alienable and disposable.
It is upon their sale as authorized under the BCDA law to a private person or
entity that such lands become private property and cease to be property of the
public dominion.
C.
Should public domain lands become patrimonial because they are
declared as such in a duly enacted law or duly promulgated proclamation that
they are no longer intended for public service or for the development of the
national wealth, would the period of possession prior to the conversion of
such public dominion into patrimonial be reckoned in counting the
prescriptive period in favor of the possessors? We rule in the negative.
The limitation imposed by Article 1113 dissuades us from ruling that the
period of possession before the public domain land becomes patrimonial may
be counted for the purpose of completing the prescriptive period. Possession
of public dominion property before it becomes patrimonial cannot be the
object of prescription according to the Civil Code. As the application for
registration under Section 14(2) falls wholly within the framework of
prescription under the Civil Code, there is no way that possession during the
time that the land was still classified as public dominion property can be
counted to meet the requisites of acquisitive prescription and justify
registration.
Are we being inconsistent in applying divergent rules for Section
14(1) and Section 14(2)? There is no inconsistency. Section 14(1) mandates
registration on the basis of possession, while Section 14(2) entitles
registration on the basis of prescription. Registration under Section 14(1)
is extended under the aegis of the Property Registration Decree and the
Public Land Act while registration under Section 14(2) is made available
both by the Property Registration Decree and the Civil Code.
In the same manner, we can distinguish between the thirty-year period under
Section 48(b) of the Public Land Act, as amended by Rep. Act No. 1472, and
the thirty-year period available through Section 14(2) of the Property
Registration Decree in relation to Article 1137 of the Civil Code. The period
under the former speaks of a thirty-year period of possession , while the
period under the latter concerns a thirty-year period of extraordinary
prescription. Registration under Section 48(b) of the Public Land Act as
amended by Rep. Act No. 1472 is based on thirty years of possession alone
without regard to the Civil Code, while the registration under Section
14(2) of the Property Registration Decree is founded on extraordinary
prescription under the Civil Code.
It may be asked why the principles of prescription under the Civil Code
should not apply as well to Section 14(1). Notwithstanding the vaunted status
of the Civil Code, it ultimately is just one of numerous statutes, neither
superior nor inferior to other statutes such as the Property Registration Decree.
The legislative branch is not bound to adhere to the framework set forth by the
Civil Code when it enacts subsequent legislation. Section 14(2) manifests a
clear intent to interrelate the registration allowed under that provision with the
Civil Code, but no such intent exists with respect to Section 14(1).
IV.
One of the keys to understanding the framework we set forth today is seeing
how our land registration procedures correlate with our law on prescription,
which, under the Civil Code, is one of the modes for acquiring ownership over
property.
The Civil Code makes it clear that patrimonial property of the State may be
acquired by private persons through prescription. This is brought about by
Article 1113, which states that [a]ll things which are within the commerce of
man are susceptible to prescription, and that [p]roperty of the State or any of
its subdivisions not patrimonial in character shall not be the object of
prescription.
There are two modes of prescription through which immovables may be
acquired under the Civil Code. The first is ordinary acquisitive prescription,
which, under Article 1117, requires possession in good faith and with just title;
and, under Article 1134, is completed through possession of ten (10) years.
There is nothing in the Civil Code that bars a person from acquiring
patrimonial property of the State through ordinary acquisitive prescription, nor
is there any apparent reason to impose such a rule. At the same time, there are
indispensable requisitesgood faith and just title. The ascertainment of good
faith involves the application of Articles 526, 527, and 528, as well as Article
1127 of the Civil Code,[45] provisions that more or less speak for themselves.
On the other hand, the concept of just title requires some
clarification. Under Article 1129, there is just title for the purposes of
prescription when the adverse claimant came into possession of the property
through one of the modes recognized by law for the acquisition of ownership
or other real rights, but the grantor was not the owner or could not transmit
any right. Dr. Tolentino explains:
 Just title is an act which has for its purpose the transmission of
ownership, and which would have actually transferred ownership if the
grantor had been the owner. This vice or defect is the one cured by
prescription. Examples: sale with delivery, exchange, donation, succession,
and dacion in payment.[46]
The OSG submits that the requirement of just title necessarily precludes the
applicability of ordinary acquisitive prescription to patrimonial property. The
major premise for the argument is that the State, as the owner and grantor,
could not transmit ownership to the possessor before the completion of the
required period of possession.[47] It is evident that the OSG erred when it
assumed that the grantor referred to in Article 1129 is the State. The grantor is
the one from whom the person invoking ordinary acquisitive prescription
derived the title, whether by sale, exchange, donation, succession or any other
mode of the acquisition of ownership or other real rights.
Earlier, we made it clear that, whether under ordinary prescription
or extraordinary prescription, the period of possession preceding the
classification of public dominion lands as patrimonial cannot be counted for
the purpose of computing prescription. But after the property has been become
patrimonial, the period of prescription begins to run in favor of the possessor.
Once the requisite period has been completed, two legal events ensue: (1) the
patrimonial property is ipso jure converted into private land; and (2) the
person in possession for the periods prescribed under the Civil Code acquires
ownership of the property by operation of the Civil Code.
It is evident that once the possessor automatically becomes the
owner of the converted patrimonial property, the ideal next step is the
registration of the property under the Torrens system. It should be
remembered that registration of property is not a mode of acquisition of
ownership, but merely a mode of confirmation of ownership.[48]
Looking back at the registration regime prior to the adoption of the
Property Registration Decree in 1977, it is apparent that the registration
system then did not fully accommodate the acquisition of ownership of
patrimonial property under the Civil Code. What the system accommodated
was the confirmation of imperfect title brought about by the completion of a
period of possession ordained under the Public Land Act (either 30 years
following Rep. Act No. 1942, or since 12 June 1945 following P.D. No. 1073).
The Land Registration Act[49] was noticeably silent on the
requisites for alienable public lands acquired through ordinary prescription
under the Civil Code, though it arguably did not preclude such registration.
[50]
Still, the gap was lamentable, considering that the Civil Code, by itself,
establishes ownership over the patrimonial property of persons who have
completed the prescriptive periods ordained therein. The gap was finally
closed with the adoption of the Property Registration Decree in 1977, with
Section 14(2) thereof expressly authorizing original registration in favor of
persons who have acquired ownership over private lands by prescription under
the provisions of existing laws, that is, the Civil Code as of now.
V.
We synthesize the doctrines laid down in this case, as follows:
(1) In connection with Section 14(1) of the Property Registration Decree,
Section 48(b) of the Public Land Act recognizes and confirms that those who
by themselves or through their predecessors in interest have been in open,
continuous, exclusive, and notorious possession and occupation of alienable
and disposable lands of the public domain, under a bona fide claim of
acquisition of ownership, since June 12, 1945 have acquired ownership of,
and registrable title to, such lands based on the length and quality of their
possession.
(a) Since Section 48(b) merely requires possession since 12 June
1945 and does not require that the lands should have been alienable and
disposable during the entire period of possession, the possessor is entitled to
secure judicial confirmation of his title thereto as soon as it is declared
alienable and disposable, subject to the timeframe imposed by Section 47 of
the Public Land Act.[51]
(b) The right to register granted under Section 48(b) of the Public
Land Act is further confirmed by Section 14(1) of the Property Registration
Decree.
(2) In complying with Section 14(2) of the Property Registration Decree,
consider that under the Civil Code, prescription is recognized as a mode of
acquiring ownership of patrimonial property. However, public domain lands
become only patrimonial property not only with a declaration that these are
alienable or disposable. There must also be an express government
manifestation that the property is already patrimonial or no longer retained for
public service or the development of national wealth, under Article 422 of the
Civil Code. And only when the property has become patrimonial can the
prescriptive period for the acquisition of property of the public dominion
begin to run.
(a) Patrimonial property is private property of the government. The
person acquires ownership of patrimonial property by prescription under the
Civil Code is entitled to secure registration thereof under Section 14(2) of the
Property Registration Decree.
(b) There are two kinds of prescription by which patrimonial
property may be acquired, one ordinary and other extraordinary. Under
ordinary acquisitive prescription, a person acquires ownership of a patrimonial
property through possession for at least ten (10) years, in good faith and with
just title. Under extraordinary acquisitive prescription, a persons uninterrupted
adverse possession of patrimonial property for at least thirty (30) years,
regardless of good faith or just title, ripens into ownership.
B.
We now apply the above-stated doctrines to the case at bar.
It is clear that the evidence of petitioners is insufficient to establish that
Malabanan has acquired ownership over the subject property under Section
48(b) of the Public Land Act. There is no substantive evidence to establish
that Malabanan or petitioners as his predecessors-in-interest have been in
possession of the property since 12 June 1945 or earlier. The earliest that
petitioners can date back their possession, according to their own evidencethe
Tax Declarations they presented in particularis to the year 1948. Thus, they
cannot avail themselves of registration under Section 14(1) of the Property
Registration Decree.
Neither can petitioners properly invoke Section 14(2) as basis for registration.
While the subject property was declared as alienable or disposable in 1982,
there is no competent evidence that is no longer intended for public use
service or for the development of the national evidence, conformably with
Article 422 of the Civil Code. The classification of the subject property as
alienable and disposable land of the public domain does not change its status
as property of the public dominion under Article 420(2) of the Civil
Code. Thus, it is insusceptible to acquisition by prescription.
VI.
A final word. The Court is comfortable with the correctness of the
legal doctrines established in this decision. Nonetheless, discomfiture over the
implications of todays ruling cannot be discounted. For, every untitled
property that is occupied in the country will be affected by this ruling. The
social implications cannot be dismissed lightly, and the Court would be
abdicating its social responsibility to the Filipino people if we simply levied
the law without comment.
The informal settlement of public lands, whether declared alienable or not, is a
phenomenon tied to long-standing habit and cultural acquiescence, and is
common among the so-called Third World countries. This paradigm
powerfully evokes the disconnect between a legal system and the reality on
the ground. The law so far has been unable to bridge that gap. Alternative
means of acquisition of these
public domain lands, such as through homestead or free patent, have
proven unattractive due to limitations imposed on the grantee in the
encumbrance or alienation of said properties. [52] Judicial confirmation of
imperfect title has emerged as the most viable, if not the most attractive means
to regularize the informal settlement of alienable or disposable lands of the
public domain, yet even that system, as revealed in this decision, has
considerable limits.
There are millions upon millions of Filipinos who have individually or
exclusively held residential lands on which they have lived and raised their
families. Many more have tilled and made productive idle lands of the State
with their hands. They have been regarded for generation by their families and
their communities as common law owners. There is much to be said about the
virtues of according them legitimate states. Yet such virtues are not for the
Court to translate into positive law, as the law itself considered such lands as
property of the public dominion. It could only be up to Congress to set forth a
new phase of land reform to sensibly regularize and formalize the settlement
of such lands which in legal theory are lands of the public domain before the
problem becomes insoluble. This could be accomplished, to cite two
examples, by liberalizing the standards for judicial confirmation of imperfect
title, or amending the Civil Code itself to ease the requisites for the conversion
of public dominion property into patrimonial.

Ones sense of security over land rights infuses into every aspect of
well-being not only of that individual, but also to the persons family. Once
that sense of security is deprived, life and livelihood are put on stasis. It is for
the political branches to bring welcome closure to the long pestering problem.

WHEREFORE, the Petition is DENIED. The Decision of the Court of

Appeals dated 23 February 2007 and Resolution dated 2 October
2007 are AFFIRMED. No pronouncement as to costs.

SO ORDERED.