CHAVEZ V PUBLIC ESTATES AUTHORITY AND AMARI COASTAL BAY

FACTS:
 Nature: original Petition for Mandamus with prayer for writ of preliminary injunction
and a temporary restraining order. Petition also seeks to compel the Public Estates
Authority (PEA) to disclose all facts on PEA’s then on-going renegotiations with Amari
Coastal Bay and Development Corporation to reclaim portions of Manila Bay. The
petition further seeks to enjoin PEA from signing a new agreement with AMARI
involving such reclamation.

 1973: The government through the Commission of Public Highways signed a contract
with the Construction and Development Corporation of the Philippines (CDCP) to
reclaim certain foreshore and offshore areas of Manila Bay

 1977: President Marcos issued PD No. 1084 creating the PEA, which was tasked to
reclaim land, including foreshore and submerged areas and to develop, improve, acquire
x xx lease and sell any and all kinds of lands. On the same date, President Marcos issued
PD. 1085 transferring to PEA the lands reclaimed in the foreshore and offshore of the
Manila Bay under the Manila-Cavite Coastal Road and Reclamation Project
(MCCRRP)

 1981: Pres. Marcos issued a memorandum ordering PEA to amend its contract with
CDCP which stated that CDCP shall transfer in favor of PEA the areas reclaimed by CDCP
in the MCCRRP

 1988: Pres. Aquino issued Special Patent granting and transferring to PEA parcels of land
so reclaimed under the MCCRRP. Subsequently she transferred in the name of PEA the
three reclaimed islands known as the “Freedom Islands”

 1995: PEA entered into a Joint Venture Agreement (JVA) with AMARI, a private
corporation, to develop the Freedom Islands and this was done without public
bidding

 Pres. Ramos through Executive Secretary Ruben Torres approved the JVA

 1996: Senate Pres.Maceda delivered a privileged speech in the Senate and denounced
the JVA as the “grandmother of all scams”. As a result, the Senate conducted
investigations. Among the conclusions were:

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 the title covering the Freedom Islands are thus void, and
3. The JVA itself is illegal

 1997: Pres. Ramos created the Legal Task Force to conduct a study on the legality of the
JVA in view of the Senate Committee report.

 1998: The Philippine Daily Inquirer published reports on on-going renegotiations

between PEA and AMARI

 PEA Director Nestor Kalaw and PEA Chairman ArsenioYulo and former navy officer
Sergio Cruz were members of the negotiating panel

 Frank Chavez filed petition for Mandamus stating that the government stands to lose
billions of pesos in the sale by PEA of the reclaimed lands to AMARI and prays that PEA
publicly disclose the terms of the renegotiations of JVA. He cited that the sale to AMARI is
in violation of Article 12, Sec. 3 prohibiting sale of alienable lands of the public domain to
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CONSTITUTIONAL I

private corporations and Article 2 Section 28 and Article 3 Sec. 7 of the Constitution on
the right to information on matters of public concern

 1999: PEA and AMARI signed Amended JVA which Pres. Estrada approved

ISSUES:
1. WON the principal reliefs prayed for in the petition are moot and academic because of
the subsequent events
2. WON the petition merits dismissal for failure to observe the principle governing the
hierarchy of courts
3. WON the petition merits dismissal for non-exhaustion of administrative remedies
4. WON petitioner has locus standi to bring this suit
5. WON the constitutional right to information includes official information on on-going
negotiations before a final agreement
6. WON 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
7. WON the court is the proper forum for raising the issue of whether the amended joint
venture agreement is grossly disadvantageous to the government.
o Threshold issue: whether AMARI, a private corporation, can acquire and
own under the amended JVA 367.5 has. of reclaimed foreshore and
submerged area in Manila Bay in view of Sections 2 & 3, Art. 12 of the 1987
constitution

HELD
(1) 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 and if already implemented, to annul the effects of an
unconstitutional contract

(2) The principle of hierarchy of courts applies generally to cases involving factual questions

Reasoning: the instant case raises constitutional issues of transcendental importance to the
public

(3) The principle of exhaustion of administrative remedies does not apply when the issue
involved is a purely legal or constitutional question

(4) Petitioner has standing if petition is of transcendental public importance and as such, there is
the right of a citizen to bring a taxpayer’s suit on these matters of transcendental public
importance

(5) The constitutional right to information includes official information on on-going negotiations
before a final contract and must therefore 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

Reasoning The State policy of full transparency in all transactions involving public interest
reinforces the people’s right to information on matters of public concern. PEA must prepare all
the data and disclose them to the public at the start of the disposition process, long before the
consummation of the contract. While the evaluation or review is on-going, there are no “official
acts, transactions, or decisions” on the bids or proposals but once the committee makes its
official recommendation, there arises a definite proposition on the part of the government

(6) In a form of a summary:

o The 157.84 has.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
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CONSTITUTIONAL I

lands to private corporations. PEA may only sell these lands to Philippine citizens, subject
to ownership limitations in the 1987 Constitution and existing laws.

o The 592.15 has.of submerged areas of Manila Bay remain inalienable natural resources of
the public domain and outside the commerce of man 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

o Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of
77.34 has.of the Freedom Islands, such transfer is void for being contrary to Section 3,
Article 12 of the 1987 Constitution which prohibits private corporations from acquiring
any kind of alienable land of the public domain
o Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 has.of still
submerged areas of Manila Bay, such transfer is void for being contrary to Section 2,
Article 12 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 services. Still, the
transfer of such reclaimed alienable lands of the public domain to AMARI will be void in
view of Section 3, Article 12 that prohibits private corporations from acquiring any kind of
alienable land of the public domain.

Reasoning:
 CA 141 of the Philippine National Assembly empowers the president to classify lands of
the public domain into alienable or disposable (Sec. 6).The President, upon
recommendation of the Secretary of Agriculture and Commerce, shall from time to time
classify the lands of the public domain into—(a) Alienable of disposable, (b) timber, and (c)
mineral lands.
 The President must first officially classify these lands as alienable or disposable, and
then declare them open to disposition or concession.
 Sec. 59 states that 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 (d) Lands not included in any of the foregoing classes.
 Sec. 61 states that the lands comprised in classes (a), (b) and (c) of section 59 shall be
disposed f to private parties by lease only and not otherwise
 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. These lands remained suis generic as the only alienable or disposable lands of
the public domain the government could not sell to private parties. The only way that 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.
 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.

 in case of sale or lease of disposable lands of the public domain, a public bidding is
required
 1987 Constitution declares that all natural resources are owned by the State. With the
exception of agricultural lands, all other natural resources shall not be alienated. Article
12, Sec. 3 states that alienable lands of the public domain shall be limited to agricultural
 J. Valenton 4
CONSTITUTIONAL I

lands. Private corporations or associations may not hold such alienable lands of the public
domain except by lease, for a period not exceeding 25 years, renewable for not more than
25 years, and not to exceed 1,000 has.in area.
 ration behind the ban on corporations from acquiring except through lease is not well
understood. If the purpose is to equitably diffuse lands ownership then the Consti could
have simply limited the size of alienable lands of the public domain that corporations
could acquire. If the intent were to encourage “owner-cultivatorship” and the
economic family-size farm and to prevent a recurrence of cases like the instant
case, then placing the land in the name of a corporation would be more effective in
preventing the break-up of farmlands. If the farmland were 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 then, this ban strengthens the consti limitation on
individuals from acquiring more than the allowed area of alienable lands of the
public domain. Without the 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. He could even hide his ownership of a
corporation by putting his nominees as stockholders of the corporation.

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.
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. i[102] The registration of lands of the public domain under
the Torrens system, by itself, cannot convert public lands into private lands. ii[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. iii[104]
Alienable lands of the public domain held by government entities under Section 60 of CA No.
141 remain public lands because they cannot be alienated or encumbered unless Congress
passes a law authorizing their disposition. Congress, however, cannot authorize the sale to
private corporations of reclaimed alienable lands of the public domain because of the
constitutional ban. Only individuals can benefit from such law.
 J. Valenton 5
CONSTITUTIONAL I

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
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.
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 hectaresiv[110] of the Freedom Islands, such transfer is void for
being contrary to Section 3, Article XII of the 1987 Constitution which prohibits
private corporations from acquiring any kind of alienable land of the public
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CONSTITUTIONAL I

domain.
4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156
hectaresv[111] of still submerged areas of Manila Bay, such transfer is void for
being contrary to Section 2, Article XII of the 1987 Constitution which prohibits
the alienation of natural resources other than agricultural lands of the public
domain. PEA may reclaim these submerged areas. Thereafter, the government
can classify the reclaimed lands as alienable or disposable, and further declare
them no longer needed for public service. Still, the transfer of such reclaimed
alienable lands of the public domain to AMARI will be void in view of Section 3,
Article XII of the 1987 Constitution which prohibits private corporations from
acquiring any kind of alienable land of the public domain.
Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987
Constitution. Under Article 1409vi[112] of the Civil Code, contracts whose “object or purpose is
contrary to law,” or whose “object is outside the commerce of men,” are “inexistent and void
from the beginning.” The Court must perform its duty to defend and uphold the Constitution,
and therefore declares the Amended JVA null and void ab initio.
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