NATURAL RESOURCES FULL TEXT CASES PART 1
G.R. No. 2869 March 25, 1907
MATEO CARIO, petitioner-appellant,
vs.
THE INSULAR GOVERNMENT, respondent-appellee.
Coudert Brothers for appellant.
Office of the Solicitor-General Araneta for appellee.
ARELLANO, C.J.:
Mateo Cario, the appellant herein, on the 23d of February, 1904, filed his petition in the Court
of Land Registration praying that there be granted to him title to a parcel of land consisting of
40 hectares, 1 are, and 13 centares, and situated in the town of Baguio, Province of Benguet,
together with a house erected thereon and constructed of wood and roofed with rimo, and
bounded as follows: On the north, in lines running 1,048 metes and 20 decimeters with the
lands of Sepa Cario, H. Phelps Whitmarsh, and Calsi; on the east, in lines running 991 meters
and 50 decimeters with the land of Kuidno, Esteban Gonzales, and of the Civil Government;
on the south, in lines of 115 meters and 60 decimeters, with the lands of Talaca; and on the
west, in lines running 982 meters and 20 decimeters, with the lands of Sisco Cario and
Mayengmeng.
By order of the court the hearing of this petition, No. 561, and that of Antonio Rebollo and
Vicente Valpiedad filed under No. 834, were heard together for the reason that the latter petition
claimed a small portion of land included in the parcel set out in the former petition.
The Insular Government opposed the granting of these petitions, alleging that the whole parcel
of land is public property of the Government and that the same was never acquired in any
manner or through any title of egresionfrom the State.
After trial, and the hearing of documentary and oral proof, the court of Land Registration
rendered its judgment in these terms:
Therefore the court finds that Cario and his predecessors have not possessed
exclusively and adversely any part of the said property prior to the date on which Cario
constructed the house now there that is to say, for the years 1897 and 1898, and
Cario held possession for some years afterwards of but a part of the property to which
he claims title. Both petitions are dismissed and the property in question is adjudged
to be public land. (Bill of exceptions, p. 15.)
The conclusions arrived at the set forth in definite terms in the decision of the court below are
the following:
From the testimony given by Cario as well as from that of several of the witnesses for
the Government it is deduced, that in or about the year 1884 Cario erected and utilized
as a domicile a house on the property situated to the north of that property now in
question, property which, according to the plan attached to expediente No. 561,
appears to be property belonging to Donaldson Sim; that during the year 1893 Cario
sold said house to one Cristobal Ramos, who in turn sold the same to Donaldson Sim,
moving to and living on the adjoining property, which appears on the plan aforesaid to
be the property of H. Phelps Whitmarsh, a place where the father and the grandfather
of his wife, that is to say, Ortega and Minse, had lived . . ..
In or about the years 1898 Cario abandoned the property of Whitmarsh and located
on the property described in the plan attached to expediente No. 561, having
constructed a house thereon in which he now lives, and which house is situated in the
center of the property, as is indicated on the plan; and since which time he has
undoubtedly occupied some portion of the property now claimed by him. (Bill of
exceptions, pp. 11 and 12.)
1. Therefore it is evident that this court can not decree the registration of all of the superficial
extension of the land described in the petition and as appears on the plan filed herein, such
extension containing 40 hectares, 1 are, and 13 centares, inasmuch as the documentary
evidence accompanying the petition is conclusive proof against the petitioners; this
documentary proof consists of a possessory information under date of March 7, 1901, and
registered on the 11th day of the same month and year; and, according to such possessory
information, the land therein described contains an extension of only 28 hectares limited by
"the country road to the barrio of Pias," a road appearing on the plan now presented and cutting
the land, as might be said, in half, or running through its center from north to south, a
considerable extension of land remaining on the other side of the said road, the west side, and
which could not have been included in the possessory information mentioned.
2. As has been shown during the trial of this case, this land, of which mention is made in said
possessory information, and upon which is situated the house now actually occupied by the
petitioner, all of which is set forth as argument as to the possession in the judgment, is "used
for pasture and sowing," and belongs to the class called public lands.
3. Under the express provisions of law, a parcel of land, being of common origin, presumptively
belonged to the State during its sovereignty, and, in order to perfect the legitimate acquisition
of such land by private persons, it was necessary that the possession of the same pass from
the State. And there is no evidence or proof of title of egresionof this land from the domain of
the Spanish Government, nor is there any possessory information equivalent to title
by composicion or under agreement. 4, The possessory information filed herein is not the title
to property authorized in substitution for that of adjustment by the royal decree of February 13,
1894, this being the last law or legal disposition of the former sovereignty applicable to the
present subject-matter of common lands: First, for the reason that the land referred to herein
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is not covered nor does it come within any one of the three conditions required by article 19 of
the said royal decree, to wit, that the land has been in an uninterrupted state of cultivation
during a period of six years last past; or that the same has been possessed without interruption
during a period of twelve years and has been in a state of cultivation up to the date of the
information and during the three years immediately preceding such information; or that such
land had been possessed openly without interruption during a period of thirty or more years,
notwithstanding the land had not been cultivated; nor is it necessary to refer to the testimony
given by the two witnesses to the possessory information for the following reason: Second,
because the possessory information authorized by said royal decree or last legal disposition of
the Spanish Government, as title or for the purpose of acquiring actual proprietary right,
equivalent to that of adjustment with the Spanish Government and required and necessary at
all times until the publication of said royal decree was limited in time to one year, in accordance
with article 21, which is as follows: " A period of one year, not to be extended, is allowed to
verify the possessory informations which are referred to in articles 19 and 20. After the
expiration of this period of the right of the cultivators and persons in possession to obtain
gratuitous title thereto lapses and the land together with full possession reverts to the state, or,
as the case may be, to the community, and the said possessors and cultivators or their assigns
would simply have rights under universal or general title of average in the event that the land
is sold within a period of five years immediately following the cancellation. The possessors not
included under this chapter can only acquire by time the ownership and title to unappropriated
or royal lands in accordance with common law."
5. In accordance with the preceding provisions, the right that remained to Cario, if it be certain
that he was the true possessor of the land in question, was the right of average in case the
Government or State could have sold the same within the period of five years immediately
following for example, if the denouncement of purchase had been carried out by Felipe Zafra
or any other person, as appears from the record of the trial of the case. Aside from this right, in
such event, his possession as attested in the possessory information herein could not, in
accordance with common law, go to show any right of ownership until after the expiration of
twenty years from the expiration of twenty years from the verification and registry of the same
in conformity with the provisions of article 393 of the Mortgage Law and other conditions
prescribe by this law.
6. The right of possession in accordance with common law that is to say, civil law remains
at all times subordinate to the Spanish administrative law, inasmuch as it could only be of force
when pertaining to royal transferable or alienable lands, which condition and the determination
thereof is reversed to the government, which classified and designated the royal alienable lands
for the purpose of distinguishing them from those lands strictly public, and from forestry lands
which could at no time pass to private ownership nor be acquired through time even after the
said royal decree of February 13, 1894.
7. The advent of the new sovereignty necessarily brought a new method of dealing with lands
and particularly as to the classification and manner of transfer and acquisition of royal or
common lands then appropriated, which were thenceforth merely called public lands, the
NATURAL RESOURCES FULL TEXT CASES PART 1
alienation of which was reserved to the Government, in accordance with section 12 and 13 of
the act of Congress of July 1, 1902,1 and in conformity with other laws enacted under this act
of Congress by the Philippine Commission prescribing rules for the execution thereof, one of
which is Act No. 648,2herein mentioned by the petitioner, in connection with Act No. 627,3 which
appears to be the law upon which the petition herein is founded.
8. Section 6 of Act No. 627 admits prescription, in accordance with the provisions contained in
Act No. 190, as a basis for obtaining the right of ownership. "The petitioners claims title under
the period of prescription of ten years established by that act, as well as by reason of his
occupancy and use thereof from time immemorial." (Allegation 1.) But said act admits such
prescription for the purpose of obtaining title and ownership to lands "not exceeding more
that sixteen hectares in extent." (Sec. 6 of said act.) The land claimed by Cario is 40 hectares
in extent, if we take into consideration his petition, or an extension of 28 hectares, according to
the possessory information, the only thing that can be considered. Therefore, it follows that the
judgment denying the petition herein and now appealed from was strictly in accordance with
the law invoked herein.
9. And of the 28 hectares of land as set out in the possessory information, one part of same,
according to the testimony of Cario, belongs to Vicente Valpiedad, the extent of which is not
determined. From all of which it follows that the precise extent has not been determined in the
trial of this case on which judgment might be based in the event that the judgment and title be
declared in favor of the petitioner, Mateo Cario. And we should not lose sight of the fact that,
considering the intention of Congress in granting ownership and title to 16 hectares, that Mateo
Cario and his children have already exceeded such amount in various acquirements of lands,
all of which is shown in different cases decided by the said Court of Land Registration,
donations or gifts of land that could only have been made efficacious as to the conveyance
thereof with the assistance of these new laws.
By reason of the findings set forth it is clearly seen that the court below did not err:
1. In finding that Mateo Cario and those from whom he claims his right had not
possessed and claimed as owners the lands in question since time immemorial;
2. In finding that the land in question did not belong to the petitioner, but that, on the
contrary, it was the property of the Government. (Allegation 21.)
Wherefore, the judgment appealed from is affirmed with the costs of this instance against the
appellant. After the expiration of twenty days from the notification of this decision let judgment
be entered in accordance herewith, and ten days thereafter let the case be remanded to the
court from whence it came for proper action. So ordered.
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G.R. No. 133250 July 9, 2002
FRANCISCO I. CHAVEZ, petitioner,
vs.
PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT
CORPORATION, respondents.
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 PEA's 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
NATURAL RESOURCES FULL TEXT CASES PART 1
(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
Page 3 of 54

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.
NATURAL RESOURCES FULL TEXT CASES PART 1
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, PEA15 and AMARI16 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 Court's 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 petitioner's prayer for a
public disclosure of the renegotiations. Likewise, petitioner's prayer to enjoin the signing of the
Amended JVA is now moot because PEA and AMARI have already signed the Amended JVA
on March 30, 1999. Moreover, the Office of the President has approved the Amended JVA on
May 28, 1999.
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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. Petitioner's
principal basis in assailing the renegotiation of the JVA is its violation of Section 3, Article XII
of the Constitution, which prohibits the government from alienating lands of the public domain
to private corporations. If the Amended JVA indeed violates the Constitution, it is the duty of
the Court to enjoin its implementation, and if already implemented, to annul the effects of such
unconstitutional contract.
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 titles19 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
NATURAL RESOURCES FULL TEXT CASES PART 1
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
latter's 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 petitioner's
direct resort to the Court violates the principle of exhaustion of administrative remedies. It also
violates the rule that mandamus may issue only if there is no other plain, speedy and adequate
remedy in the ordinary course of law.
PEA distinguishes the instant case from Taada v. Tuvera23 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
Code24 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 the disposition of
Page 5 of 54

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 taxpayer's suit because the petition seeks to compel
PEA to comply with its constitutional duties. There are two constitutional issues involved here.
First is the right of citizens to information on matters of public concern. Second is the application
of a constitutional provision intended to insure the equitable distribution of alienable lands of
the public domain among Filipino citizens. The thrust of the first issue is to compel PEA to
disclose publicly information on the sale of government lands worth billions of pesos,
information which the Constitution and statutory law mandate PEA to disclose. The thrust of
the second issue is to prevent PEA from alienating hundreds of hectares of alienable lands of
the public domain in violation of the Constitution, compelling PEA to comply with a constitutional
duty to the nation.
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 taxpayer's 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.'
NATURAL RESOURCES FULL TEXT CASES PART 1
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.
Page 6 of 54

Section 7, Article III of the Constitution explains the people's 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
people's 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 people's 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'."
NATURAL RESOURCES FULL TEXT CASES PART 1
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 public's right to information attaches, and any citizen can
Page 7 of 54

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 AMARI's 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.1wphi1.nt
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
NATURAL RESOURCES FULL TEXT CASES PART 1
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 negotiationsbefore 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.
Page 8 of 54

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,
NATURAL RESOURCES FULL TEXT CASES PART 1
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
Page 9 of 54

(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
NATURAL RESOURCES FULL TEXT CASES PART 1
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
Page 10 of 54

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 State's natural resources, became inalienable by constitutional fiat,
available only for lease for 25 years, renewable for another 25 years. The government could
NATURAL RESOURCES FULL TEXT CASES PART 1
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:
Page 11 of 54

"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;
NATURAL RESOURCES FULL TEXT CASES PART 1
(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,55Justice 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
Page 12 of 54

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.
NATURAL RESOURCES FULL TEXT CASES PART 1
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;
Page 13 of 54

(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.
NATURAL RESOURCES FULL TEXT CASES PART 1
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:
Page 14 of 54

(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 domain63 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
NATURAL RESOURCES FULL TEXT CASES PART 1
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.'
Page 15 of 54

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
NATURAL RESOURCES FULL TEXT CASES PART 1
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 AMARI's 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 PEA's
"actual cost" in partially reclaiming the Freedom Islands. AMARI will also complete, at its own
expense, the reclamation of the Freedom Islands. AMARI will further shoulder all the
reclamation costs of all the other areas, totaling 592.15 hectares, still to be reclaimed. AMARI
and PEA will share, in the proportion of 70 percent and 30 percent, respectively, the total net
usable area which is defined in the Amended JVA as the total reclaimed area less 30 percent
earmarked for common areas. Title to AMARI's share in the net usable area, totaling 367.5
hectares, will be issued in the name of AMARI. 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 AMARI's 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 AMARI's 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
Page 16 of 54

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 PEA's 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:
NATURAL RESOURCES FULL TEXT CASES PART 1
(a) Lands reclaimed by the government by dredging, filling, or other means;
x x x.'" (Emphasis supplied)
Likewise, the Legal Task Force68 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 42274 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
Page 17 of 54

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 Aquino's actual issuance of a special patent covering
the Freedom Islands, is equivalent to an official proclamation classifying the Freedom Islands
as alienable or disposable lands of the public domain. PD No. 1085 and President Aquino's
issuance of a land patent also constitute a declaration that the Freedom Islands are no longer
needed for public service. The Freedom Islands are thus alienable or disposable lands of
the public domain, open to disposition or concession to qualified parties.
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)
NATURAL RESOURCES FULL TEXT CASES PART 1
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
Government's implementing arm to undertake "all reclamation projects of the government,"
which "shall be undertaken by the PEA or through a proper contract executed by it with
any person or entity." Under such contract, a private party receives compensation for
reclamation services rendered to PEA. Payment to the contractor may be in cash, or in kind
consisting of portions of the reclaimed land, subject to the constitutional ban on private
Page 18 of 54

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 PEA's reclaimed foreshore and submerged lands into alienable or
disposable lands open to disposition is necessary because PEA is tasked under its charter to
undertake public services that require the use of lands of the public domain. 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
NATURAL RESOURCES FULL TEXT CASES PART 1
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.1wphi1.nt
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 country's 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
Page 19 of 54

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 681 and 782 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
PEA's Authority to Sell Reclaimed Lands
PEA, like the Legal Task Force, argues that as alienable or disposable lands of the public
domain, the reclaimed lands shall be disposed of in accordance with CA No. 141, the Public
Land Act. PEA, citing Section 60 of CA No. 141, admits that reclaimed lands transferred to a
branch or subdivision of the government "shall not be alienated, encumbered, or otherwise
disposed of in a manner affecting its title, except when authorized by Congress: x x
x."85 (Emphasis by PEA)
In Laurel vs. Garcia,86 the Court cited Section 48 of the Revised Administrative Code of 1987,
which states that
NATURAL RESOURCES FULL TEXT CASES PART 1
"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
Page 20 of 54

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.
PEA's charter, however, expressly tasks PEA "to develop, improve, acquire, administer, deal
in, subdivide, dispose, lease and sell any and all kinds of lands x x x owned, managed,
controlled and/or operated by the government."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 propertiesin
accordance with the PEA charter free from constitutional limitations. The constitutional ban on
private corporations from acquiring alienable lands of the public domain does not apply to the
sale of PEA's patrimonial lands.
PEA may also sell its alienable or disposable lands of the public domain to private
individuals since, with the legislative authority, there is no longer any statutory prohibition
against such sales and the constitutional ban does not apply to individuals. PEA, however,
cannot sell any of its alienable or disposable lands of the public domain to private corporations
since Section 3, Article XII of the 1987 Constitution expressly prohibits such sales. The
legislative authority benefits only individuals. Private corporations remain barred from acquiring
any kind of alienable land of the public domain, including government reclaimed lands.
The 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
NATURAL RESOURCES FULL TEXT CASES PART 1
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. 89-29691 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 PEA's reclaimed
foreshore and submerged alienable lands of the public domain. Private corporations are barred
from bidding at the auction sale of any kind of alienable land of the public domain.
PEA originally scheduled a public bidding for the Freedom Islands on December 10, 1991. PEA
imposed a condition that the winning bidder should reclaim another 250 hectares of submerged
Page 21 of 54

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
NATURAL RESOURCES FULL TEXT CASES PART 1
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
hectares96 of non-agricultural lands, may be conveyed to him in ownership in view of the
legislative authority allowing such conveyance. This is the only way these provisions of the
BOT Law and the Local Government Code can avoid a direct collision with Section 3, Article
XII of the 1987 Constitution.
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
Page 22 of 54

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 PEA's patent or certificates of title. In fact, the thrust of the instant petition
is that PEA's certificates of title should remain with PEA, and the land covered by these
certificates, being alienable lands of the public domain, should not be sold to a private
corporation.
NATURAL RESOURCES FULL TEXT CASES PART 1
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. 104Alienable
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.
Page 23 of 54

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 Government's 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.
x x x ."
NATURAL RESOURCES FULL TEXT CASES PART 1
As the central implementing agency tasked to undertake reclamation projects nationwide, with
authority to sell reclaimed lands, PEA took the place of DENR as the government agency
charged with leasing or selling reclaimed lands of the public domain. The reclaimed lands being
leased or sold by PEA are not private lands, in the same manner that DENR, when it disposes
of other alienable lands, does not dispose of private lands but alienable lands of the public
domain. Only when qualified private parties acquire these lands will the lands become private
lands. In the hands of the government agency tasked and authorized to dispose of
alienable of disposable lands of the public domain, these lands are still public, not
private lands.
Furthermore, PEA's charter expressly states that PEA "shall hold lands of the public
domain" as well as "any and all kinds of lands." PEA can hold both lands of the public domain
and private lands. Thus, the mere fact that alienable lands of the public domain like the
Freedom Islands are transferred to PEA and issued land patents or certificates of title in PEA's
name does not automatically make such lands private.
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
Page 24 of 54

"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,
NATURAL RESOURCES FULL TEXT CASES PART 1
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 AMARI's 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.
Page 25 of 54

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 hectares110of 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
hectares111 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.
NATURAL RESOURCES FULL TEXT CASES PART 1
Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987
Constitution. Under Article 1409112 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
FRANCISCO I. CHAVEZ, Petitioner,
vs.
NATIONAL HOUSING AUTHORITY, R-II BUILDERS, INC., R-II HOLDINGS, INC.,
HARBOUR CENTRE PORT TERMINAL, INC., and MR. REGHIS ROMERO
II, Respondents.
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;
Page 26 of 54

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 project
including, 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)
1612 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-A3 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).
NATURAL RESOURCES FULL TEXT CASES PART 1
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. 038 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;
Page 27 of 54

(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 4159 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
NATURAL RESOURCES FULL TEXT CASES PART 1
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. 3915 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
Page 28 of 54

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) 75718 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
NATURAL RESOURCES FULL TEXT CASES PART 1
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,"20the 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:
Page 29 of 54

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 Mountain area.
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 of way to the
PROJECT, from the owners of the adjacent lots for access road, 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.
NATURAL RESOURCES FULL TEXT CASES PART 1
4.09 The [NHA] shall inspect, evaluate and monitor all works at the Smokey Mountain and
Reclamation Area while the land development and construction of housing units are in progress
to determine whether the development and construction works are undertaken in accordance
with the FINAL REPORT. If in its judgment, the PROJECT is not pursued in accordance with
the FINAL REPORT, the [NHA] shall require the [RBI] to undertake necessary remedial works.
All expenses, charges and penalties incurred for such remedial, if any, shall be for the account
of the [RBI].
4.10 The [NHA] shall assist the [RBI] in the complete electrification of the PROJECT. x x x
4.11 Handle the processing and documentation of all sales transactions related 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.
4.12 All advances outside of project costs made by the [RBI] to the [NHA] shall be deducted
from the proceeds due to the [NHA].
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.
The final details of the JVA, which will include the construction duration, costs, extent of
reclamation, and delivery timetables, shall be based on the FINAL REPORT which will be
contained in a Supplemental Agreement to be executed later by the parties.
The JVA may be modified or revised by written agreement between the NHA and RBI specifying
the clauses to be revised or modified and the corresponding amendments.
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 actual expenses incurred in the
Project plus a reasonable rate of return not exceeding that stated in the feasibility study and in
the contract as of the date of such revocation, cancellation, or termination on a schedule to be
agreed upon by both parties.
As a preliminary step in the project implementation, consultations and dialogues were
conducted with the settlers of the Smokey Mountain Dumpsite Area. At the same time, DENR
started processing the application for the Environmental Clearance Certificate (ECC) of the
SMDRP. As a result however of the consultative dialogues, public hearings, the report on the
on-site field conditions, the Environmental Impact Statement (EIS) published on April 29 and
May 12, 1993 as required by the Environmental Management Bureau of DENR, the evaluation
Page 30 of 54

of the DENR, and the recommendations from other government agencies, it was discovered
that design changes and additional work have to be undertaken to successfully implement the
Project.21
Thus, on February 21, 1994, the parties entered into another agreement denominated as the
Amended and Restated Joint Venture Agreement22 (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.
Phase I shall involve the following:
a. the construction of 2,992 units of temporary housing for the affected residents while clearing
and development of Smokey Mountain [are] being undertaken
b. the clearing of Smokey Mountain and the subsequent construction of 3,520 units of medium
rise housing and the development of the industrial/commercial site within the Smokey Mountain
area
c. the reclamation and development of a 79 hectare area directly across Radial Road 10 to
serve as the enabling component of Phase I
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.
Under the ARJVA, RBI shall construct 2,992 temporary housing units, a reduction from 3,500
units under the JVA.27However, 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:
NATURAL RESOURCES FULL TEXT CASES PART 1
ORIGINAL CHANGES/REVISIONS
1. TEMPORARY HOUSING
Wood/Plywood, ga. 31 G.I. Concrete/Steel Frame Structure Sheet usable life 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 area.
2. MEDIUM RISE MASS
HOUSING
Box type precast Shelter Conventional and precast component 20 square meter concrete
structures, 32 square floor area with 2.4 meter meter floor area with loft floor height; bare type,
160 units/ (sleeping quarter) 3.6 m. floor building. height, painted and improved
architectural faade, 80 units/building.
3. MITIGATING MEASURES
3.1 For reclamation work Use of clean dredgefill material below the MLLW and SM material
mixed with dredgefill above MLLW.
a. 100% use of Smokey Mountain material as 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
1.0 meter only meters of silt after sub-soil investigation.28
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.
Under the 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.
Page 31 of 54

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 Committee30
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, 199431 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
NATURAL RESOURCES FULL TEXT CASES PART 1
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
Page 32 of 54

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
NATURAL RESOURCES FULL TEXT CASES PART 1
component to cover the payment for the necessary works that cannot be covered by the 79-
hectare enabling component under the ARJVA."41
The EXECOM passed Resolution Nos. 99-16-01 and 99-16-0242 which approved the
modification of the Supplemental Agreement, to wit:
a) Approval of 150 hectares additional reclamation in order to make the 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 stated in the Supplemental Agreement
dated March 20, 1998 from PhP 2,953,984,941.40 to PhP 2,969,134,053.13.
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.
Page 33 of 54

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
1.1 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:
a. Joint Venture Agreement (JVA) dated 19 March 1993
b. Amended and Restated Joint Venture Agreement (ARJVA) dated 21 February 1994
c. Amendment and Restated Joint Venture Agreement dated 11 August 1994
d. Supplemental Agreement dated 24 March 1998
e. Amended Supplemental Agreement (ASA) dated 19 November 2001.
xxxx
5. SETTLEMENT OF CLAIMS
5.1 Subject to the validation of the DEVELOPERs claims, the NHA hereby agrees to initially
compensate the Developer for the abovementioned costs as follows:
a. Direct payment to DEVELOPER of the amounts herein listed in the following manner:
a.1 P250 Million in cash from the escrow account in accordance with Section 2 herewith;
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
NATURAL RESOURCES FULL TEXT CASES PART 1
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.
5.2 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.
5.3 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.
Page 34 of 54

The Issues
The grounds presented in the instant petition are:
I
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.
NATURAL RESOURCES FULL TEXT CASES PART 1
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 execution
and enforcement of the assailed contracts or agreements."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. PCGG49 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. PEA50 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
Page 35 of 54

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."521avvphi1
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.
NATURAL RESOURCES FULL TEXT CASES PART 1
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 pleadings55 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.1avvphi1 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;
Page 36 of 54

(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 Decision58 cannot be considered an authority or precedent to the instant case.
The principle of stare decisis59 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
NATURAL RESOURCES FULL TEXT CASES PART 1
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
Page 37 of 54

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:
NATURAL RESOURCES FULL TEXT CASES PART 1
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 727962 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 law63 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,67viz:
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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
b) To undertake housing, development, resettlement or other activities as would enhance the
provision of housing to every Filipino;
c) 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;
NATURAL RESOURCES FULL TEXT CASES PART 1
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:
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(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:
NATURAL RESOURCES FULL TEXT CASES PART 1
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
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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
NATURAL RESOURCES FULL TEXT CASES PART 1
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
Page 41 of 54

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
NATURAL RESOURCES FULL TEXT CASES PART 1
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 Smokey Mountain 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
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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;
NATURAL RESOURCES FULL TEXT CASES PART 1
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.
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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?
NATURAL RESOURCES FULL TEXT CASES PART 1
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 PEA cited 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.
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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
NATURAL RESOURCES FULL TEXT CASES PART 1
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.
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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 public
declaring 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.
NATURAL RESOURCES FULL TEXT CASES PART 1
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
Page 46 of 54

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
NATURAL RESOURCES FULL TEXT CASES PART 1
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
Page 47 of 54

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
NATURAL RESOURCES FULL TEXT CASES PART 1
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, 2003 Resolution 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
Page 48 of 54

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
NATURAL RESOURCES FULL TEXT CASES PART 1
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
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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
NATURAL RESOURCES FULL TEXT CASES PART 1
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
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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
NATURAL RESOURCES FULL TEXT CASES PART 1
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 Agbayani94 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, 1997 Senate
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
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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
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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.
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G.R. No. 134209 January 24, 2006
REPUBLIC OF THE PHILIPPINES, Petitioner,
vs.
CELESTINA NAGUIAT, Respondent.
DECISION
GARCIA, J.:
Before the Court is this petition for review under Rule 45 of the Rules of Court seeking the
reversal of the Decision1dated May 29, 1998 of the Court of Appeals (CA) in CA-G.R. CV No.
37001 which affirmed an earlier decision2 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
NATURAL RESOURCES FULL TEXT CASES PART 1
the exhibits. Later . . . the Provincial Prosecutor manifest (sic) that the Government had no
evidence to adduce. 3
In a decision4 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
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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 Act7 and the Constitution8 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:
The 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
NATURAL RESOURCES FULL TEXT CASES PART 1
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.
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