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Chavez v.

National Housing Authority

G.R. 117272

NOTE: Men relate nyo to dun sa ruling ng PEA.


1. This is a petition for prohibition to declare null and void the Joint Venture Agreement (JVA) and other
supplemental and amended Agreements (specifically the Smokey Mountain Development and
Reclamation Project (SMDRP) between R-II Builders Inc. (RBI) and National Housing Authority (NHA).
2. Pres. Cory Aquino signed MO- 161 A which created the feasibility study of the Smokey Mountain low-cost
housing project. This would convert Smokey Mountain dumpsite to a habitable housing project inclusive
of the area across R-10 (Radial Road 10), adjacent to the Smokey Mountain. Project was subsequently
approved by Pres. Aquino.
3. Under MO 415 approving and directing implementation of the SMDRP, pertinent provision:

Sec. 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

Sec. 3 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-104.
4. RBI and New San Jose Builders Inc. were the winners of the bidding for the project. President Ramos then
issued Proclamation No. 39. Pertinent provision:

“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.”
5. In the aforementioned Proclamation, DENR was directed to approve boundary and subdivision survey and
issue special patent and title in the name of the NHA.
6. The Joint Venture Agreement was finally entered into by RBI and NHA. The SMDRP covered a 212,234
sqm lot in Tondo Manila and another lot to be reclaimed in Tondo (400,000 sqm. Or 40 hectares). RBI’s
part on the JV is to construct 3,500 medium rise low cost permanent housing units on the leveled Smokey
Mountain. NHA was tasked to relocate all squatters to the Temporary Housing Complex. Additional works
were needed hence an Amended and Restated Joint Venture Agreement was entered into. Phase I was
increased from 40 ha. to 79 hectares. Phase II shall include an incineration area for the onsite disposal of
garbage (This was subsequently declared void by the Congress under the Clean Air Act.)
7. Phase II also included the reclamation and development of the 119-hectare area contiguous to that to
be reclaimed under Phase I to be approved by the SMDRP committee.
8. DENR issued Special Patent in favor of the NHA an area of 211,975 sqm covering the Smokey Mountain
9. May nadagdag na naman na supplemental agreement (baka lang itanong). But such was left unacted since
the 220ha extension was no longer technically feasible and the financial crises made it difficult to sell the
remaining lots.
10. Estrada sat as President, and such supplemental agreement was finally acted upon. Daming nangyare…
11. RBI and NHA signed a MOA to terminate the JVA since the government unilaterally terminated the project
when the gov’t constituted Housing and Urban Development Coordinating Council (HUDCC) to take over
the SMDRP.
12. SOLGEN Chavez raised the constitutionality of the SMDRP. Hence this petition.
13. Chavez said that NHA and RIB have no authority for the reclamation of foreshore and submerged lands
since they were not given any power and authority to do so. He argues that such authority and power was
given by law to PEA. HE posits that 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".

ISSUES: (Relevant only to PROPERTY LAW)

1. W/N RIB can acquire reclaimed foreshore and submerged land areas because:
a. Such are inalienable public lands which are beyond the commerce of man
b. There was no declaration that said lands were no longer needed for public uses
c. There was no law authorizing RIB for the transfer of foreshore land areas

The foreshore and submerged lands are PATRIMONIAL PROPERTY hence, may be transferred by the

NOTE: The Authority of the NHA and RBI to reclaim the foreshore and submerged lands was also questioned. The
Court ruled that the NHA indeed has authority to do so pursuant to the series of proclamations of the past
presidents and the Build-Operate-Transfer Laws. Also, E.O. 525 says “primarily” and not exclusively, hence not all
reclamation fall under PEA’s authority of supervision, integration, and coordination.

Further, the Court ruled that NHA charter did not explicitly include the power to reclaim, however it is an
implied power as enunciated in Sec. 9 of Article XIII of the 1987 Constitution since to reclaim lands is vital or
incidental to effectively, logically, and successfully implement an urban land reform and housing program. Finally
the approval by President Ramos shows that the authority has been granted to NHA.

1. Can RBI acquire reclaimed foreshore and submerged lands since they are considered as inalienable
and outside the commerce of man?

The Court ruled that the reclaimed lands were in fact classified as disposable and alienable of public domain of
the State since:
a. MO 415 issued by President Aquino 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.
Such issuance implies that the transfer of lands to the NHA implicitly carries with it the declaration
that said lands are alienable and disposable. Otherwise, the NHA cannot effectively use them in
housing and resettlement project.
b. Proc. No 39 issued by Pres. Ramos also implicitly converted such lands as alienable and disposable
since there can be no other legal way for NHA to transfer these lands to the beneficiaries.
c. The increase to 79 ha. to be developed and disposed of in the implementation of the SMDRP proved
that President has approved them to be alienable and disposable.
d. The issuance by the DENR of Patents to NHA covering these lands converts the reclaimed lands to
the patrimonial properties of the NHA.

2. Can RBI acquire reclaimed lands when there was no declaration that said lands were no longer for
public use? YES.
a. There was an implicit declaration that the lands were no longer for public use through MO
415 by Pres. Aquino, 39 by Pres. Ramos since again, there can be no way to transfer these
lands to the qualified beneficiaries without them being classified as patrimonial property.
b. Further, under the Build-Operate-Transfer Law, these lands were converted to patrimonial
property. Undoubtedly, if these lands were still considered as property of public dominion,
the contractors would not have entered into the agreement, since property of public
dominion cannot be the subject of a contract.

WHEREFORE, Petition denied.