GR No 133250 July 9, 2002

FRANCISCO I. CHAVEZ vs. PUBLIC ESTATES AUTHORITY AND

AMARI COASTAL BAY DEVELOPMENT CORPORATION

FACTS:

Through subsequent events, the Public Estates Authority (PEA) owned the
Freedom Islands and on April 25, 1995, the latter entered into a Joint Venture Agreement
(JVA) with AMARI, a private corporation, to develop the Freedom Islands through
negotiation without public bidding. The JVA required the reclamation of an additional
250 hectares of submerged areas surrounding the said islands to complete the
configuration in the Master Development Plan of the Southern Reclamation Project-
MCCRRP.

On November 29, 1996, then Senate President Ernesto Maceda denounced the
JVA as the "grandmother of all scams." The Senate Committee on Government
Corporations and Public Enterprises, and the Committee on Accountability of Public
Officers and Investigations conducted a joint investigation and found the following:

(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 created a Legal Task Force
to conduct a study on the legality of the JVA in view of Senate Committee Report No.
560. The Legal Task Force upheld the legality of the JVA, contrary to the conclusions
reached by the Senate Committees.

On April 27, 1998, petitioner Frank I. Chavez as a taxpayer, 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 also filed a Reiterative Motion for Issuance of a
TRO dated May 26, 1999, which the Court denied however 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 JVA. On May 28,
1999, the Office of the President under the administration of then President Joseph E.
Estrada approved the Amended JVA. Due to the approval of the Amended JVA by the
Office of the President, petitioner now prays that on "constitutional and statutory grounds
the renegotiated contract be declared null and void."

ISSUE:

WON the stipulations in the amended JVA for the transfer to AMARI, reclaimed
or still to be reclaimed, violate the 1987 Constitution.

HELD: YES

Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the
1987 Constitution. Under Article 1409 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.