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 ManilaCavite Coastal Road and Reclamation Project (MCCRRP).

On December 29, 1981, then President Marcos issued a

memorandum directing PEA to amend its contract with
CDCP, so that "[A]ll future works in MCCRRP x x x shall be
funded and owned by PEA." Accordingly, PEA and CDCP
executed a Memorandum of Agreement dated December 29,
1981, which stated:
"(i) CDCP shall undertake all reclamation,
construction, and such other works in the MCCRRP as
may be agreed upon by the parties, to be paid
according to progress of works on a unit price/lump
sum basis for items of work to be agreed upon,
subject to price escalation, retention and other terms
and conditions provided for in Presidential Decree No.
1594. All the financing required for such works shall
be provided by PEA.
xxx
(iii) x x x CDCP shall give up all its development
rights and hereby agrees to cede and transfer in
favor of PEA, all of the rights, title, interest and
participation of CDCP in and to all the areas of land
reclaimed by CDCP in the MCCRRP as of December
30, 1981 which have not yet been sold, transferred
or otherwise disposed of by CDCP as of said date,
which areas consist of approximately Ninety-Nine
Thousand Four Hundred Seventy Three (99,473)
square meters in the Financial Center Area covered
by land pledge No. 5 and approximately Three Million
Three Hundred Eighty Two Thousand Eight Hundred
Eighty Eight (3,382,888) square meters of reclaimed
areas at varying elevations above Mean Low Water
Level located outside the Financial Center Area and
the First Neighborhood Unit."3
On January 19, 1988, then President Corazon C. Aquino
issued Special Patent No. 3517, granting and transferring to

PEA "the parcels of land so reclaimed under the ManilaCavite 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.

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 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. 5On June 8, 1995,
then President Fidel V. Ramos, through then Executive
Secretary Ruben Torres, approved the JVA.6

On April 4 and 5, 1998, the Philippine Daily

Inquirer and Today published reports that there were ongoing 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 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

On December 5, 1997, then President Fidel V. Ramos issued

Presidential Administrative Order No. 365 creating a Legal
Task Force to conduct a study on the legality of the JVA in
view of Senate Committee Report No. 560. The members of
the Legal Task Force were the Secretary of Justice,8 the Chief
Presidential Legal Counsel,9 and the Government Corporate
Counsel.10 The Legal Task Force upheld the legality of the
JVA, contrary to the conclusions reached by the Senate
Committees.11

On April 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.

I. WHETHER THE PRINCIPAL RELIEFS PRAYED FOR IN

THE PETITION ARE MOOT AND ACADEMIC BECAUSE
OF SUBSEQUENT EVENTS;

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.

III. WHETHER THE PETITION MERITS DISMISSAL FOR

NON-EXHAUSTION OF ADMINISTRATIVE REMEDIES;

In a Resolution dated March 23, 1999, the Court gave due

course to the petition and required the parties to file their
respective memoranda.
On March 30, 1999, PEA and AMARI signed the Amended
Joint Venture Agreement ("Amended JVA," for brevity). On
May 28, 1999, the Office of the President under the
administration of then President Joseph E. Estrada approved
the Amended JVA.
Due to the approval of the Amended JVA by the Office of the
President, petitioner now prays that on "constitutional and
statutory grounds the renegotiated contract be declared null
and void."14
The Issues
The issues raised by petitioner, PEA15 and AMARI16 are as
follows:

II. WHETHER THE PETITION MERITS DISMISSAL FOR

FAILING TO OBSERVE THE PRINCIPLE GOVERNING
THE HIERARCHY OF COURTS;

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.
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 landssold 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 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. 63825 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
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.'
Moreover, the mere fact that he is a citizen satisfies
the requirement of personal interest, when the
proceeding involves the assertion of a public right,
such as in this case. He invokes several decisions of
this Court which have set aside the procedural
matter of locus standi, when the subject of the case
involved public interest.
xxx
In Taada v. Tuvera, the Court asserted that when
the issue concerns a public right and the object of
mandamus is to obtain the enforcement of a public
duty, the people are regarded as the real parties in
interest; and because it is sufficient that petitioner is
a citizen and as such is interested in the execution of
the laws, he need not show that he has any legal or
special interest in the result of the action. In the
aforesaid case, the petitioners sought to enforce
their right to be informed on matters of public
concern, a right then recognized in Section 6, Article
IV of the 1973 Constitution, in connection with the
rule that laws in order to be valid and enforceable

must be published in the Official Gazette or

otherwise effectively promulgated. In ruling for the
petitioners' legal standing, the Court declared that
the right they sought to be enforced 'is a public right
recognized by no less than the fundamental law of
the land.'
Legaspi v. Civil Service Commission, while reiterating
Taada, further declared that 'when a mandamus
proceeding involves the assertion of a public right,
the requirement of personal interest is satisfied by
the mere fact that petitioner is a citizen and,
therefore, part of the general 'public' which
possesses the right.'
Further, in Albano v. Reyes, we said that while
expenditure of public funds may not have been
involved under the questioned contract for the
development, management and operation of the
Manila International Container Terminal, 'public
interest [was] definitely involved considering the
important role [of the subject contract] . . . in the
economic development of the country and the
magnitude of the financial consideration involved.'
We concluded that, as a consequence, the disclosure
provision in the Constitution would constitute
sufficient authority for upholding the petitioner's
standing.
Similarly, the instant petition is anchored on the right
of the people to information and access to official
records, documents and papers a right guaranteed
under Section 7, Article III of the 1987 Constitution.
Petitioner, a former solicitor general, is a Filipino
citizen. Because of the satisfaction of the two basic
requisites laid down by decisional law to sustain
petitioner's legal standing, i.e. (1) the enforcement of
a public right (2) espoused by a Filipino citizen, we
rule that the petition at bar should be allowed."

We rule that since the instant petition, brought by a citizen,

involves the enforcement of constitutional rights - to
information and to the equitable diffusion of natural
resources - matters of transcendental public importance, the
petitioner has the requisite locus standi.
Fifth issue: whether the constitutional right to
information includes official information on on-going
negotiations before a final agreement.
Section 7, Article III of the Constitution explains the 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 ongoing 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 interagency recommendations or communications during the
stage when common assertions are still in the process of
being formulated or are in the 'exploratory stage'."
Also, AMARI contends that petitioner cannot invoke the right
at the pre-decisional stage or before the closing of the

transaction. To support its contention, AMARI cites the

following discussion in the 1986 Constitutional Commission:
"Mr. Suarez. And when we say 'transactions' which
should be distinguished from contracts, agreements,
or treaties or whatever, does the Gentleman refer to
the steps leading to the consummation of the
contract, or does he refer to the contract itself?
Mr. Ople: The 'transactions' used here, I
suppose is generic and therefore, it can cover
both steps leading to a contract and already a
consummated contract, Mr. Presiding Officer.
Mr. Suarez: This contemplates inclusion of
negotiations leading to the consummation of
the transaction.
Mr. Ople: Yes, subject only to reasonable
safeguards on the national interest.
Mr. Suarez: Thank you."32 (Emphasis supplied)
AMARI argues there must first be a consummated contract
before petitioner can invoke the right. Requiring government
officials to reveal their deliberations at the pre-decisional
stage will degrade the quality of decision-making in
government agencies. Government officials will hesitate to
express their real sentiments during deliberations if there is
immediate public dissemination of their discussions, putting
them under all kinds of pressure before they decide.
We must first distinguish between information the law on
public bidding requires PEA to disclose publicly, and
information the constitutional right to information requires
PEA to release to the public. Before the consummation of
the contract, PEA must, on its own and without demand
from anyone, disclose to the public matters relating to the

disposition of its property. These include the size, location,

technical description and nature of the property being
disposed of, the terms and conditions of the disposition, the
parties qualified to bid, the minimum price and similar
information. PEA must prepare all these data and disclose
them to the public at the start of the disposition process,
long before the consummation of the contract, because the
Government Auditing Code requires public bidding. If PEA
fails to make this disclosure, any citizen can demand from
PEA this information at any time during the bidding process.
Information, however, on on-going evaluation or
review of bids or proposals being undertaken by the
bidding or review committee is not immediately accessible
under the right to information. While the evaluation or
review is still on-going, there are no "official acts,
transactions, or decisions" on the bids or proposals.
However, once the committee makes its official
recommendation, there arises a "definite
proposition" on the part of the government. From this
moment, the public's right to information attaches, and any
citizen can access all the non-proprietary information
leading to such definite proposition. In Chavez v.
PCGG,33 the Court ruled as follows:
"Considering the intent of the framers of the
Constitution, we believe that it is incumbent upon the
PCGG and its officers, as well as other government
representatives, to disclose sufficient public
information on any proposed settlement they have
decided to take up with the ostensible owners and
holders of ill-gotten wealth. Such information,
though, must pertain to definite propositions of
the government, not necessarily to intra-agency or
inter-agency recommendations or communications
during the stage when common assertions are still in
the process of being formulated or are in the
"exploratory" stage. There is need, of course, to
observe the same restrictions on disclosure of

information in general, as discussed earlier such as

on matters involving national security, diplomatic or
foreign relations, intelligence and other classified
information." (Emphasis supplied)
Contrary to 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 proposedcontract, effectively truncating a basic right
enshrined in the Bill of Rights. We can allow neither an
emasculation of a constitutional right, nor a retreat by the
State of its avowed "policy of full disclosure of all its
transactions involving public interest."
The right covers three categories of information which are
"matters of public concern," namely: (1) official records; (2)
documents and papers pertaining to official acts,
transactions and decisions; and (3) government research
data used in formulating policies. The first category refers to
any document that is part of the public records in the
custody of government agencies or officials. The second
category refers to documents and papers recording,
evidencing, establishing, confirming, supporting, justifying

or explaining official acts, transactions or decisions of

government agencies or officials. The third category refers
to research data, whether raw, collated or processed, owned
by the government and used in formulating government
policies.
The information that petitioner may access on the
renegotiation of the JVA includes evaluation reports,
recommendations, legal and expert opinions, minutes of
meetings, terms of reference and other documents attached
to such reports or minutes, all relating to the JVA. However,
the right to information does not compel PEA to prepare
lists, abstracts, summaries and the like relating to the
renegotiation of the JVA.34 The right only affords access to
records, documents and papers, which means the
opportunity to inspect and copy them. One who exercises
the right must copy the records, documents and papers at
his expense. The exercise of the right is also subject to
reasonable regulations to protect the integrity of the public
records and to minimize disruption to government
operations, like rules specifying when and how to conduct
the inspection and copying.35
The right to information, however, does not extend to
matters recognized as privileged information under the
separation of powers.36 The right does not also apply to
information on military and diplomatic secrets, information
affecting national security, and information on investigations
of crimes by law enforcement agencies before the
prosecution of the accused, which courts have long
recognized as confidential.37 The right may also be subject
to other limitations that Congress may impose by law.
There is no claim by PEA that the information demanded by
petitioner is privileged information rooted in the separation
of powers. The information does not cover Presidential
conversations, correspondences, or discussions during
closed-door Cabinet meetings which, like internal
deliberations of the Supreme Court and other collegiate

courts, or executive sessions of either house of

Congress,38 are recognized as confidential. This kind of
information cannot be pried open by a co-equal branch of
government. A frank exchange of exploratory ideas and
assessments, free from the glare of publicity and pressure
by interested parties, is essential to protect the
independence of decision-making of those tasked to
exercise Presidential, Legislative and Judicial power. 39This is
not the situation in the instant case.
We rule, therefore, that the constitutional right to
information includes official information on on-going
negotiations before a final contract. The information,
however, must constitute definite propositions by the
government and should not cover recognized exceptions like
privileged information, military and diplomatic secrets and
similar matters affecting national security and public
order.40 Congress has also prescribed other limitations on
the right to information in several legislations.41
Sixth issue: whether stipulations in the Amended JVA
for the transfer to AMARI of lands, reclaimed or to be
reclaimed, violate the Constitution.
The Regalian Doctrine
The ownership of lands reclaimed from foreshore and
submerged areas is rooted in the Regalian doctrine which
holds that the State owns all lands and waters of the public
domain. Upon the Spanish conquest of the Philippines,
ownership of all "lands, territories and possessions" in the
Philippines passed to the Spanish Crown.42The King, as the
sovereign ruler and representative of the people, acquired
and owned all lands and territories in the Philippines except
those he disposed of by grant or sale to private individuals.
The 1935, 1973 and 1987 Constitutions adopted the
Regalian doctrine substituting, however, the State, in lieu of
the King, as the owner of all lands and waters of the public

domain. The Regalian doctrine is the foundation of the timehonored principle of land ownership that "all lands that were
not acquired from the Government, either by purchase or by
grant, belong to the public domain."43 Article 339 of the Civil
Code of 1889, which is now Article 420 of the Civil Code of
1950, incorporated the Regalian doctrine.
Ownership and Disposition of Reclaimed Lands
The Spanish Law of Waters of 1866 was the first statutory
law governing the ownership and disposition of reclaimed
lands in the Philippines. On May 18, 1907, the Philippine
Commission enacted Act No. 1654 which provided for the
lease, but not the sale, of reclaimed lands of the
government to corporations and individuals. Later, on
November 29, 1919, the Philippine Legislature approved Act
No. 2874, the Public Land Act, which authorized the lease,
but not the sale, of reclaimed lands of the
government to corporations and individuals. On
November 7, 1936, the National Assembly passed
Commonwealth Act No. 141, also known as the Public Land
Act, which authorized the lease, but not the sale, of
reclaimed lands of the government to corporations
and individuals. CA No. 141 continues to this day as the
general law governing the classification and disposition of
lands of the public domain.
The Spanish Law of Waters of 1866 and the Civil Code
of 1889
Under the Spanish Law of Waters of 1866, the shores, bays,
coves, inlets and all waters within the maritime zone of the
Spanish territory belonged to the public domain for public
use.44 The Spanish Law of Waters of 1866 allowed the
reclamation of the sea under Article 5, which provided as
follows:
"Article 5. Lands reclaimed from the sea in
consequence of works constructed by the State, or

by the provinces, pueblos or private persons, with

proper permission, shall become the property of the
party constructing such works, unless otherwise
provided by the terms of the grant of authority."
Under the Spanish Law of Waters, land reclaimed from the
sea belonged to the party undertaking the reclamation,
provided the government issued the necessary permit and
did not reserve ownership of the reclaimed land to the State.
Article 339 of the Civil Code of 1889 defined property of
public dominion as follows:
"Art. 339. Property of public dominion is
1. That devoted to public use, such as roads, canals,
rivers, torrents, ports and bridges constructed by the
State, riverbanks, shores, roadsteads, and that of a
similar character;
2. That belonging exclusively to the State which,
without being of general public use, is employed in
some public service, or in the development of the
national wealth, such as walls, fortresses, and other
works for the defense of the territory, and mines,
until granted to private individuals."
Property devoted to public use referred to property open for
use by the public. In contrast, property devoted to public
service referred to property used for some specific public
service and open only to those authorized to use the
property.
Property of public dominion referred not only to property
devoted to public use, but also to property not so used but
employed to develop the national wealth. This class of
property constituted property of public dominion although

employed for some economic or commercial activity to

increase the national wealth.
Article 341 of the Civil Code of 1889 governed the reclassification 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."

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

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

(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 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

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:

disposed of under the provisions of this chapter, and

not otherwise.
Sec. 56. The lands disposable under this title
shall be classified 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) 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;

(a) Alienable or disposable,

(b) Timber, and

(d) Lands not included in any of the foregoing

classes.

(c) Mineral lands, x x x.

Sec. 7. For the purposes of the government and
disposition of alienable or disposable public
lands, the Governor-General, upon
recommendation by the Secretary of
Agriculture and Natural Resources, shall from
time to time declare what lands are open to
disposition or concession under this Act."
Sec. 8. Only those lands shall be declared open
to disposition or concession which have been
officially delimited or classified x x x.
xxx
Sec. 55. Any tract of land of the public domain which,
being neither timber nor mineral land, shall be
classified as suitable for residential purposes or
for commercial, industrial, or other productive
purposes other than agricultural purposes, and
shall be open to disposition or concession, shall be

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 title48 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 nonagricultural 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 GovernorGeneral 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 nonagricultural lands.
Section 58 of Act No. 2874 categorically mandated that
disposable lands of the public domain classified as
government reclaimed, foreshore and marshy lands "shall
be disposed of to private parties by lease only and
not otherwise." The Governor-General, before allowing the
lease of these lands to private parties, must formally declare
that the lands were "not necessary for the public service."
Act No. 2874 reiterated the State policy to lease and not to
sell government reclaimed, foreshore and marshy lands of
the public domain, a policy first enunciated in 1907 in Act
No. 1654. Government reclaimed, foreshore and marshy
lands remained sui generis, as the only alienable or
disposable lands of the public domain that the government
could not sell to private parties.
The rationale behind this State policy is obvious.
Government reclaimed, foreshore and marshy public lands
for non-agricultural purposes retain their inherent potential
as areas for public service. This is the reason the
government prohibited the sale, and only allowed the lease,
of these lands to private parties. The State always reserved
these lands for some future public service.

Act No. 2874 did not authorize the reclassification of

government reclaimed, foreshore and marshy lands into
other non-agricultural lands under Section 56 (d). Lands
falling under Section 56 (d) were the only lands for nonagricultural 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 alienate foreshore lands
only after these lands were reclaimed and classified as
alienable agricultural lands of the public domain.
Government reclaimed and marshy lands of the public
domain, being neither timber nor mineral lands, fell under
the classification of public agricultural lands.50 However,
government reclaimed and marshy lands, although subject
to classification as disposable public agricultural lands,
could only be leased and not sold to private parties because
of Act No. 2874.
The prohibition on private parties from acquiring ownership
of government reclaimed and marshy lands of the public
domain was only a statutory prohibition and the legislature
could therefore remove such prohibition. The 1935
Constitution did not prohibit individuals and corporations
from acquiring government reclaimed and marshy lands of
the public domain that were classified as agricultural lands
under existing public land laws. Section 2, Article XIII of the
1935 Constitution provided as follows:
"Section 2. No private corporation or association
may acquire, lease, or hold public agricultural
lands in excess of one thousand and twenty
four hectares, nor may any individual acquire
such lands by purchase in excess of one

hundred and forty hectares, or by lease in

excess of one thousand and twenty-four
hectares, or by homestead in excess of twenty-four
hectares. Lands adapted to grazing, not exceeding
two thousand hectares, may be leased to an
individual, private corporation, or association."
(Emphasis supplied)
Still, after the effectivity of the 1935 Constitution, the
legislature did not repeal Section 58 of Act No. 2874 to open
for sale to private parties government reclaimed and
marshy lands of the public domain. On the contrary, the
legislature continued the long established State policy of
retaining for the government title and ownership of
government reclaimed and marshy lands of the public
domain.
Commonwealth Act No. 141 of the Philippine National
Assembly
On November 7, 1936, the National Assembly approved
Commonwealth Act No. 141, also known as the Public Land
Act, which compiled the then existing laws on lands of the
public domain. CA No. 141, as amended, remains to this day
the existing general law governing the classification and
disposition of lands of the public domain other than timber
and mineral lands.51
Section 6 of CA No. 141 empowers the President to classify
lands of the public domain into "alienable or
disposable"52 lands of the public domain, which prior to such
classification are inalienable and outside the commerce of
man. Section 7 of CA No. 141 authorizes the President to
"declare what lands are open to disposition or concession."
Section 8 of CA No. 141 states that the government can
declare open for disposition or concession only lands that
are "officially delimited and classified." Sections 6, 7 and 8
of CA No. 141 read as follows:

"Sec. 6. The President, upon the

recommendation of the Secretary of
Agriculture and Commerce, shall from time to
time classify the lands of the public domain
into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands,
and may at any time and in like manner transfer
such lands from one class to another,53 for the
purpose of their administration and disposition.
Sec. 7. For the purposes of the administration and
disposition of alienable or disposable public
lands, the President, upon recommendation by
the Secretary of Agriculture and Commerce,
shall from time to time declare what lands are
open to disposition or concession under this Act.
Sec. 8. Only those lands shall be declared open
to disposition or concession which have been
officially delimited and classified and, when
practicable, surveyed, and which have not been
reserved for public or quasi-public uses, nor
appropriated by the Government, nor in any manner
become private property, nor those on which a
private right authorized and recognized by this Act or
any other valid law may be claimed, or which, having
been reserved or appropriated, have ceased to be so.
x x x."
Thus, before the government could alienate or dispose of
lands of the public domain, the President must first officially
classify these lands as alienable or disposable, and then

declare them open to disposition or concession. There must

be no law reserving these lands for public or quasi-public
uses.
The salient provisions of CA No. 141, on government
reclaimed, foreshore and marshy lands of the public domain,
are as follows:
"Sec. 58. Any tract of land of the public domain
which, being neither timber nor mineral land,
is intended to be used for residential purposes
or for commercial, industrial, or other
productive purposes other than agricultural,
and is open to disposition or concession, shall
be disposed of under the provisions of this
chapter and not otherwise.
Sec. 59. The lands disposable under this title
shall be classified as follows:
(a) Lands reclaimed by the Government
by dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with
water bordering upon the shores or banks of
navigable lakes or rivers;
(d) Lands not included in any of the foregoing
classes.
Sec. 60. Any tract of land comprised under this title
may be leased or sold, as the case may be, to any
person, corporation, or association authorized to
purchase or lease public lands for agricultural
purposes. x x x.

Sec. 61. The lands comprised in classes (a), (b),

and (c) of section fifty-nine shall be disposed
of to private parties by lease only and not
otherwise, as soon as the President, upon
recommendation by the Secretary of
Agriculture, shall declare that the same are not
necessary for the public service and are open to
disposition under this chapter. The lands included
in class (d) may be disposed of by sale or lease
under the provisions of this Act." (Emphasis
supplied)
Section 61 of CA No. 141 readopted, after the effectivity of
the 1935 Constitution, Section 58 of Act No. 2874 prohibiting
the sale of government reclaimed, foreshore and marshy
disposable lands of the public domain. All these lands are
intended for residential, commercial, industrial or other nonagricultural 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
service. This requisite must have been met before
the land could be disposed of. But even then, the
foreshore and lands under water were not to
be alienated and sold to private parties. The
disposition of the reclaimed land was only by
lease. The land remained property of the
State." (Emphasis supplied)
As observed by Justice Puno in his concurring opinion,
"Commonwealth Act No. 141 has remained in effect at
present."
The State policy prohibiting the sale to private parties of
government reclaimed, foreshore and marshy alienable
lands of the public domain, first implemented in 1907 was
thus reaffirmed in CA No. 141 after the 1935 Constitution
took effect. The prohibition on the sale of foreshore lands,
however, became a constitutional edict under the 1935
Constitution. Foreshore lands became inalienable as natural

resources of the State, unless reclaimed by the government

and classified as agricultural lands of the public domain, in
which case they would fall under the classification of
government reclaimed lands.
After the effectivity of the 1935 Constitution, government
reclaimed and marshy disposable lands of the public domain
continued to be only leased and not sold to private
parties.56 These lands remained sui generis, as the only
alienable or disposable lands of the public domain the
government could not sell to private parties.
Since then and until now, the only way the government can
sell to private parties government reclaimed and marshy
disposable lands of the public domain is for the legislature
to pass a law authorizing such sale. CA No. 141 does not
authorize the President to reclassify government reclaimed
and marshy lands into other non-agricultural lands under
Section 59 (d). Lands classified under Section 59 (d) are the
only alienable or disposable lands for non-agricultural
purposes that the government could sell to private parties.
Moreover, Section 60 of CA No. 141 expressly requires
congressional authority before lands under Section 59 that
the government previously transferred to government units
or entities could be sold to private parties. Section 60 of CA
No. 141 declares that
"Sec. 60. x x x The area so leased or sold shall be
such as shall, in the judgment of the Secretary of
Agriculture and Natural Resources, be reasonably
necessary for the purposes for which such sale or
lease is requested, and shall not exceed one hundred
and forty-four hectares: Provided, however, That this
limitation shall not apply to grants, donations, or
transfers made to a province, municipality or branch
or subdivision of the Government for the purposes
deemed by said entities conducive to the public
interest;but the land so granted, donated, or

transferred to a province, municipality or

branch or subdivision of the Government shall
not be alienated, encumbered, or otherwise
disposed of in a manner affecting its title,
except when authorized by Congress: x x x."
(Emphasis supplied)
The congressional authority required in Section 60 of CA No.
141 mirrors the legislative authority required in Section 56
of Act No. 2874.
One reason for the congressional authority is that Section 60
of CA No. 141 exempted government units and entities from
the maximum area of public lands that could be acquired
from the State. These government units and entities should
not just turn around and sell these lands to private parties in
violation of constitutional or statutory limitations. Otherwise,
the transfer of lands for non-agricultural purposes to
government units and entities could be used to circumvent
constitutional limitations on ownership of alienable or
disposable lands of the public domain. In the same manner,
such transfers could also be used to evade the statutory
prohibition in CA No. 141 on the sale of government
reclaimed and marshy lands of the public domain to private
parties. Section 60 of CA No. 141 constitutes by operation of
law a lien on these lands.57
In case of sale or lease of disposable lands of the public
domain falling under Section 59 of CA No. 141, Sections 63
and 67 require a public bidding. Sections 63 and 67 of CA
No. 141 provide as follows:
"Sec. 63. Whenever it is decided that lands covered
by this chapter are not needed for public purposes,
the Director of Lands shall ask the Secretary of
Agriculture and Commerce (now the Secretary of
Natural Resources) for authority to dispose of the
same. Upon receipt of such authority, the Director of
Lands shall give notice by public advertisement in

the same manner as in the case of leases or sales of

agricultural public land, x x x.

service or for the development of the national

wealth.

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)

x x x.

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, thereclaimed land
could become private land only if classified as
alienable agricultural land of the public domain open
to disposition under CA No. 141. The 1935 Constitution
prohibited the alienation of all natural resources except
public agricultural lands.
The Civil Code of 1950
The Civil Code of 1950 readopted substantially the definition
of property of public dominion found in the Civil Code of
1889. Articles 420 and 422 of the Civil Code of 1950 state
that
"Art. 420. The following things are property of public
dominion:
(1) Those intended for public use, such as roads,
canals, rivers, torrents, ports and bridges constructed
by the State, banks, shores, roadsteads, and others
of similar character;
(2) Those which belong to the State, without being
for public use, and are intended for some public

Art. 422. Property of public dominion, when no longer

intended for public use or for public service, shall
form part of the patrimonial property of the State."
Again, the government must formally declare that the
property of public dominion is no longer needed for public
use or public service, before the same could be classified as
patrimonial property of the State.59 In the case of
government reclaimed and marshy lands of the public
domain, the declaration of their being disposable, as well as
the manner of their disposition, is governed by the
applicable provisions of CA No. 141.
Like the Civil Code of 1889, the Civil Code of 1950 included
as property of public dominion those properties of the State
which, without being for public use, are intended for public
service or the "development of the national wealth."
Thus, government reclaimed and marshy lands of the State,
even if not employed for public use or public service, if
developed to enhance the national wealth, are classified as
property of public dominion.
Dispositions under the 1973 Constitution
The 1973 Constitution, which took effect on January 17,
1973, likewise adopted the Regalian doctrine. Section 8,
Article XIV of the 1973 Constitution stated that
"Sec. 8. All lands of the public domain, waters,
minerals, coal, petroleum and other mineral oils, all
forces of potential energy, fisheries, wildlife, and
other natural resources of the Philippines belong to
the State. With the exception of agricultural,

industrial or commercial, residential, and

resettlement lands of the public domain,
natural resources shall not be alienated, and no
license, concession, or lease for the exploration,
development, exploitation, or utilization of any of the
natural resources shall be granted for a period
exceeding twenty-five years, renewable for not more
than twenty-five years, except as to water rights for
irrigation, water supply, fisheries, or industrial uses
other than the development of water power, in which
cases, beneficial use may be the measure and the
limit of the grant." (Emphasis supplied)
The 1973 Constitution prohibited the alienation of all natural
resources with the exception of "agricultural, industrial or
commercial, residential, and resettlement lands of the public
domain." In contrast, the 1935 Constitution barred the
alienation of all natural resources except "public agricultural
lands." However, the term "public agricultural lands" in the
1935 Constitution encompassed industrial, commercial,
residential and resettlement lands of the public domain. 60 If
the land of public domain were neither timber nor mineral
land, it would fall under the classification of agricultural land
of the public domain. Both the 1935 and 1973
Constitutions, therefore, prohibited the alienation of
all natural resources except agricultural lands of the
public domain.
The 1973 Constitution, however, limited the alienation of
lands of the public domain to individuals who were citizens
of the Philippines. Private corporations, even if wholly owned
by Philippine citizens, were no longer allowed to acquire
alienable lands of the public domain unlike in the 1935
Constitution. Section 11, Article XIV of the 1973 Constitution
declared that
"Sec. 11. The Batasang Pambansa, taking into
account conservation, ecological, and development
requirements of the natural resources, shall

determine by law the size of land of the public

domain which may be developed, held or acquired
by, or leased to, any qualified individual, corporation,
or association, and the conditions therefor. No
private corporation or association may hold
alienable lands of the public domain except by
lease not to exceed one thousand hectares in area
nor may any citizen hold such lands by lease in
excess of five hundred hectares or acquire by
purchase, homestead or grant, in excess of twentyfour 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:

purposes and objectives herein specified." (Emphasis

supplied)

(a) To reclaim land, including foreshore and

submerged areas, by dredging, filling or other
means, or to acquire reclaimed land;

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.

(b) To develop, improve, acquire, administer, deal in,

subdivide, dispose, lease and sell any and all
kinds of lands, buildings, estates and other forms of
real property, owned, managed, controlled and/or
operated by the government;
(c) To provide for, operate or administer such service
as may be necessary for the efficient, economical
and beneficial utilization of the above properties.
Sec. 5. Powers and functions of the Authority. The
Authority shall, in carrying out the purposes for which
it is created, have the following powers and
functions:
(a)To prescribe its by-laws.
xxx
(i) To hold lands of the public domain in excess of
the area permitted to private corporations by statute.
(j) To reclaim lands and to construct work across, or
otherwise, any stream, watercourse, canal, ditch,
flume x x x.
xxx
(o) To perform such acts and exercise such functions
as may be necessary for the attainment of the

The ban in the 1973 Constitution on private corporations

from acquiring alienable lands of the public domain did not
apply to PEA since it was then, and until today, a fully
owned government corporation. The constitutional ban
applied then, as it still applies now, only to "private
corporations and associations." PD No. 1084 expressly
empowers PEA "to hold lands of the public domain"
even "in excess of the area permitted to private
corporations by statute." Thus, PEA can hold title to
private lands, as well as title to lands of the public
domain.
In order for PEA to sell its reclaimed foreshore and
submerged alienable lands of the public domain, there must
be legislative authority empowering PEA to sell these lands.
This legislative authority is necessary in view of Section 60
of CA No.141, which states
"Sec. 60. x x x; but the land so granted, donated or
transferred to a province, municipality, or branch or
subdivision of the Government shall not be alienated,
encumbered or otherwise disposed of in a manner
affecting its title, except when authorized by
Congress; x x x." (Emphasis supplied)

Without such legislative authority, PEA could not sell but

only lease its reclaimed foreshore and submerged alienable
lands of the public domain. Nevertheless, any legislative
authority granted to PEA to sell its reclaimed alienable lands
of the public domain would be subject to the constitutional
ban on private corporations from acquiring alienable lands
of the public domain. Hence, such legislative authority could
only benefit private individuals.
Dispositions under the 1987 Constitution
The 1987 Constitution, like the 1935 and 1973 Constitutions
before it, has adopted the Regalian doctrine. The 1987
Constitution declares that all natural resources are "owned
by the State," and except for alienable agricultural lands of
the public domain, natural resources cannot be alienated.
Sections 2 and 3, Article XII of the 1987 Constitution state
that
"Section 2. All lands of the public domain, waters,
minerals, coal, petroleum and other mineral oils, all
forces of potential energy, fisheries, forests or
timber, wildlife, flora and fauna, and other
natural resources are owned by the State. With
the exception of agricultural lands, all other
natural resources shall not be alienated. The
exploration, development, and utilization of natural
resources shall be under the full control and
supervision of the State. x x x.
Section 3. Lands of the public domain are classified
into agricultural, forest or timber, mineral lands, and
national parks. Agricultural lands of the public
domain may be further classified by law according to
the uses which they may be devoted. Alienable
lands of the public domain shall be limited to
agricultural lands. Private corporations or
associations may not hold such alienable lands
of the public domain except by lease, for a

period not exceeding twenty-five years,

renewable for not more than twenty-five years,
and not to exceed one thousand hectares in
area. Citizens of the Philippines may lease not more
than five hundred hectares, or acquire not more than
twelve hectares thereof by purchase, homestead, or
grant.
Taking into account the requirements of
conservation, ecology, and development, and subject
to the requirements of agrarian reform, the Congress
shall determine, by law, the size of lands of the
public domain which may be acquired, developed,
held, or leased and the conditions therefor."
(Emphasis supplied)
The 1987 Constitution continues the State policy in the 1973
Constitution banning private corporations fromacquiring
any kind of alienable land of the public domain. Like
the 1973 Constitution, the 1987 Constitution allows private
corporations to hold alienable lands of the public
domain only through lease. As in the 1935 and 1973
Constitutions, the general law governing the lease to private
corporations of reclaimed, foreshore and marshy alienable
lands of the public domain is still CA No. 141.
The Rationale behind the Constitutional Ban
The rationale behind the constitutional ban on corporations
from acquiring, except through lease, alienable lands of the
public domain is not well understood. During the
deliberations of the 1986 Constitutional Commission, the
commissioners probed the rationale behind this ban, thus:
"FR. BERNAS: Mr. Vice-President, my questions have
reference to page 3, line 5 which says:

`No private corporation or association may hold

alienable lands of the public domain except by lease,
not to exceed one thousand hectares in area.'
If we recall, this provision did not exist under the
1935 Constitution, but this was introduced in the
1973 Constitution. In effect, it prohibits private
corporations from acquiring alienable public
lands. But it has not been very clear in
jurisprudence what the reason for this is. In
some of the cases decided in 1982 and 1983, it was
indicated that the purpose of this is to prevent
large landholdings. Is that the intent of this
provision?
MR. VILLEGAS: I think that is the spirit of the provision.
FR. BERNAS: In existing decisions involving the
Iglesia ni Cristo, there were instances where the
Iglesia ni Cristo was not allowed to acquire a mere
313-square meter land where a chapel stood
because the Supreme Court said it would be in
violation of this." (Emphasis supplied)
In Ayog v. Cusi,64 the Court explained the rationale behind
this constitutional ban in this way:
"Indeed, one purpose of the constitutional prohibition
against purchases of public agricultural lands by
private corporations is to equitably diffuse land
ownership or to encourage 'owner-cultivatorship and
the economic family-size farm' and to prevent a
recurrence of cases like the instant case. Huge
landholdings by corporations or private persons had
spawned social unrest."
However, if the constitutional intent is to prevent huge
landholdings, the Constitution could have simply limited the

size of alienable lands of the public domain that

corporations could acquire. The Constitution could have
followed the limitations on individuals, who could acquire
not more than 24 hectares of alienable lands of the public
domain under the 1973 Constitution, and not more than 12
hectares under the 1987 Constitution.
If the constitutional intent is to encourage economic familysize farms, placing the land in the name of a corporation
would be more effective in preventing the break-up of
farmlands. If the farmland is registered in the name of a
corporation, upon the death of the owner, his heirs would
inherit shares in the corporation instead of subdivided
parcels of the farmland. This would prevent the continuing
break-up of farmlands into smaller and smaller plots from
one generation to the next.
In actual practice, the constitutional ban strengthens the
constitutional limitation on individuals from acquiring more
than the allowed area of alienable lands of the public
domain. Without the constitutional ban, individuals who
already acquired the maximum area of alienable lands of
the public domain could easily set up corporations to
acquire more alienable public lands. An individual could own
as many corporations as his means would allow him. An
individual could even hide his ownership of a corporation by
putting his nominees as stockholders of the corporation. The
corporation is a convenient vehicle to circumvent the
constitutional limitation on acquisition by individuals of
alienable lands of the public domain.
The constitutional intent, under the 1973 and 1987
Constitutions, is to transfer ownership of only a limited area
of alienable land of the public domain to a qualified
individual. This constitutional intent is safeguarded by the
provision prohibiting corporations from acquiring alienable
lands of the public domain, since the vehicle to circumvent
the constitutional intent is removed. The available alienable
public lands are gradually decreasing in the face of an ever-

growing population. The most effective way to insure faithful

adherence to this constitutional intent is to grant or sell
alienable lands of the public domain only to individuals.
This, it would seem, is the practical benefit arising from the
constitutional ban.
The Amended Joint Venture Agreement
The subject matter of the Amended JVA, as stated in its
second Whereas clause, consists of three properties,
namely:
1. "[T]hree partially reclaimed and substantially
eroded islands along Emilio Aguinaldo Boulevard in
Paranaque and Las Pinas, Metro Manila, with a
combined titled area of 1,578,441 square meters;"
2. "[A]nother area of 2,421,559 square meters
contiguous to the three islands;" and
3. "[A]t AMARI's option as approved by PEA, an
additional 350 hectares more or less to regularize the
configuration of the reclaimed area."65

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
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)

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

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.

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.

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

Under the Amended JVA, AMARI will reimburse PEA the sum
of P1,894,129,200.00 for PEA's "actual cost" in partially

"PEA hereby contributes to the joint venture its rights

and privileges to perform Rawland Reclamation and

Horizontal Development as well as own the

Reclamation Area, thereby granting the Joint Venture
the full and exclusive right, authority and privilege to
undertake the Project in accordance with the Master
Development Plan."
The Amended JVA is the product of a renegotiation of the
original JVA dated April 25, 1995 and its supplemental
agreement dated August 9, 1995.
The Threshold Issue
The threshold issue is whether AMARI, a private corporation,
can acquire and own under the Amended JVA 367.5 hectares
of reclaimed foreshore and submerged areas in Manila Bay
in view of Sections 2 and 3, Article XII of the 1987
Constitution which state that:
"Section 2. All lands of the public domain, waters,
minerals, coal, petroleum, and other mineral oils, all
forces of potential energy, fisheries, forests or
timber, wildlife, flora and fauna, and other natural
resources are owned by the State. With the
exception of agricultural lands, all other
natural resources shall not be alienated. x x x.
xxx
Section 3. x x x Alienable lands of the public domain
shall be limited to agricultural lands. Private
corporations or associations may not hold such
alienable lands of the public domain except by
lease, x x x."(Emphasis supplied)
Classification of Reclaimed Foreshore and Submerged
Areas

PEA readily concedes that lands reclaimed from foreshore or

submerged areas of Manila Bay are alienable or disposable
lands of the public domain. In its Memorandum,67 PEA
admits that
"Under the Public Land Act (CA 141, as
amended), reclaimed lands are classified as
alienable and disposable lands of the public
domain:
'Sec. 59. The lands disposable under this title
shall be classified as follows:
(a) Lands reclaimed by the government by
dredging, filling, or other means;
x x x.'" (Emphasis supplied)
Likewise, the Legal Task 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 42274of the Civil Code, a property of
public dominion retains such character until formally
declared otherwise. The Court ruled that
"The fact that the Roppongi site has not been used
for a long time for actual Embassy service does not
automatically convert it to patrimonial property. Any
such conversion happens only if the property is
withdrawn from public use (Cebu Oxygen and

Acetylene Co. v. Bercilles, 66 SCRA 481 [1975]. A

property continues to be part of the public
domain, not available for private appropriation
or ownership 'until there is a formal
declaration on the part of the government to
withdraw it from being such'(Ignacio v. Director of
Lands, 108 Phil. 335 [1960]." (Emphasis supplied)
PD No. 1085, issued on February 4, 1977, authorized the
issuance of special land patents for lands reclaimed by PEA
from the foreshore or submerged areas of Manila Bay. On
January 19, 1988 then President Corazon C. Aquino issued
Special Patent No. 3517 in the name of PEA for the 157.84
hectares comprising the partially reclaimed Freedom Islands.
Subsequently, on April 9, 1999 the Register of Deeds of the
Municipality of Paranaque issued TCT Nos. 7309, 7311 and
7312 in the name of PEA pursuant to Section 103 of PD No.
1529 authorizing the issuance of certificates of title
corresponding to land patents. To this day, these certificates
of title are still in the name of PEA.
PD No. 1085, coupled with President 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)
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 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 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 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 83of 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
"Sec. 48. Official Authorized to Convey Real Property.
Whenever real property of the Government is
authorized by law to be conveyed, the deed of
conveyance shall be executed in behalf of the
government by the following: x x x."
Thus, the Court concluded that a law is needed to convey
any real property belonging to the Government. The Court
declared that "It is not for the President to convey real property of
the government on his or her own sole will. Any
such conveyance must be authorized and
approved by a law enacted by the Congress. It
requires executive and legislative concurrence."
(Emphasis supplied)
PEA contends that PD No. 1085 and EO No. 525 constitute
the legislative authority allowing PEA to sell its reclaimed

lands. PD No. 1085, issued on February 4, 1977, provides

that
"The land reclaimed in the foreshore and
offshore area of Manila Bay pursuant to the
contract for the reclamation and construction of the
Manila-Cavite Coastal Road Project between the
Republic of the Philippines and the Construction and
Development Corporation of the Philippines dated
November 20, 1973 and/or any other contract or
reclamation covering the same area is hereby
transferred, conveyed and assigned to the
ownership and administration of the Public
Estates Authority established pursuant to PD No.
1084; Provided, however, That the rights and
interests of the Construction and Development
Corporation of the Philippines pursuant to the
aforesaid contract shall be recognized and respected.
Henceforth, the Public Estates Authority shall
exercise the rights and assume the obligations of the
Republic of the Philippines (Department of Public
Highways) arising from, or incident to, the aforesaid
contract between the Republic of the Philippines and
the Construction and Development Corporation of
the Philippines.
In consideration of the foregoing transfer and
assignment, the Public Estates Authority shall issue
in favor of the Republic of the Philippines the
corresponding shares of stock in said entity with an
issued value of said shares of stock (which) shall be
deemed fully paid and non-assessable.
The Secretary of Public Highways and the General
Manager of the Public Estates Authority shall execute
such contracts or agreements, including appropriate
agreements with the Construction and Development

Corporation of the Philippines, as may be necessary

to implement the above.
Special land patent/patents shall be issued by
the Secretary of Natural Resources in favor of
the Public Estates Authority without prejudice
to the subsequent transfer to the contractor or
his assignees of such portion or portions of the
land reclaimed or to be reclaimed as provided
for in the above-mentioned contract. On the
basis of such patents, the Land Registration
Commission shall issue the corresponding
certificate of title." (Emphasis supplied)
On the other hand, Section 3 of EO No. 525, issued on
February 14, 1979, provides that "Sec. 3. All lands reclaimed by PEA shall belong
to or be owned by the PEA which shall be
responsible for its administration, development,
utilization or disposition in accordance with the
provisions of Presidential Decree No. 1084. Any and
all income that the PEA may derive from the sale,
lease or use of reclaimed lands shall be used in
accordance with the provisions of Presidential Decree
No. 1084."
There is no express authority under either PD No. 1085 or
EO No. 525 for PEA to sell its reclaimed lands. PD No. 1085
merely transferred "ownership and administration" of lands
reclaimed from Manila Bay to PEA, while EO No. 525
declared that lands reclaimed by PEA "shall belong to or be
owned by PEA." EO No. 525 expressly states that PEA should
dispose of its reclaimed lands "in accordance with the
provisions of Presidential Decree No. 1084," the charter of
PEA.
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 itspatrimonial
properties in accordance with the PEA charter free from
constitutional limitations. The constitutional ban on private
corporations from acquiring alienable lands of the public
domain does not apply to the sale of 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 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 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 buildoperate-and-transfer arrangement or any of its
variations pursuant to the provisions of this Act, the
project proponent x x x may likewise be repaid in the
form of a share in the revenue of the project or other
non-monetary payments, such as, but not limited to,
the grant of a portion or percentage of the reclaimed
land, subject to the constitutional requirements
with respect to the ownership of the land: x x
x." (Emphasis supplied)
A private corporation, even one that undertakes the physical
reclamation of a government BOT project, cannot acquire

reclaimed alienable lands of the public domain in view of the

constitutional ban.
Section 302 of the Local Government Code, also mentioned
by PEA and AMARI, authorizes local governments in land
reclamation projects to pay the contractor or developer in
kind consisting of a percentage of the reclaimed land, to wit:
"Section 302. Financing, Construction, Maintenance,
Operation, and Management of Infrastructure
Projects by the Private Sector. x x x
xxx
In case of land reclamation or construction of
industrial estates, the repayment plan may consist of
the grant of a portion or percentage of the reclaimed
land or the industrial estate constructed."
Although Section 302 of the Local Government Code does
not contain a proviso similar to that of the BOT Law, the
constitutional restrictions on land ownership automatically
apply even though not expressly mentioned in the Local
Government Code.
Thus, under either the BOT Law or the Local Government
Code, the contractor or developer, if a corporate entity, can
only be paid with leaseholds on portions of the reclaimed
land. If the contractor or developer is an individual, portions
of the reclaimed land, not exceeding 12 hectares96 of nonagricultural lands, may be conveyed to him in ownership in
view of the legislative authority allowing such conveyance.
This is the only way these provisions of the BOT Law and the
Local Government Code can avoid a direct collision with
Section 3, Article XII of the 1987 Constitution.
Registration of lands of the public domain

Finally, PEA theorizes that the "act of conveying the

ownership of the reclaimed lands to public respondent PEA
transformed such lands of the public domain to private
lands." This theory is echoed by AMARI which maintains that
the "issuance of the special patent leading to the eventual
issuance of title takes the subject land away from the land
of public domain and converts the property into patrimonial
or private property." In short, PEA and AMARI contend that
with the issuance of Special Patent No. 3517 and the
corresponding certificates of titles, the 157.84 hectares
comprising the Freedom Islands have become private lands
of PEA. In support of their theory, PEA and AMARI cite the
following rulings of the Court:
1. Sumail v. Judge of CFI of Cotabato,97 where the
Court held
"Once the patent was granted and the corresponding
certificate of title was issued, the land ceased to be
part of the public domain and became private
property over which the Director of Lands has neither
control nor jurisdiction."
2. Lee Hong Hok v. David,98 where the Court declared
"After the registration and issuance of the certificate
and duplicate certificate of title based on a public
land patent, the land covered thereby automatically
comes under the operation of Republic Act 496
subject to all the safeguards provided
therein."3. Heirs of Gregorio Tengco v. Heirs of Jose
Aliwalas,99 where the Court ruled "While the Director of Lands has the power to review
homestead patents, he may do so only so long as the
land remains part of the public domain and continues
to be under his exclusive control; but once the patent
is registered and a certificate of title is issued, the

land ceases to be part of the public domain and

becomes private property over which the Director of
Lands has neither control nor jurisdiction."
4. Manalo v. Intermediate Appellate Court,100 where
the Court held
"When the lots in dispute were certified as disposable
on May 19, 1971, and free patents were issued
covering the same in favor of the private
respondents, the said lots ceased to be part of the
public domain and, therefore, the Director of Lands
lost jurisdiction over the same."
5.Republic v. Court of Appeals,101 where the Court
stated
"Proclamation No. 350, dated October 9, 1956, of
President Magsaysay legally effected a land grant to
the Mindanao Medical Center, Bureau of Medical
Services, Department of Health, of the whole lot,
validly sufficient for initial registration under the Land
Registration Act. Such land grant is constitutive of a
'fee simple' title or absolute title in favor of petitioner
Mindanao Medical Center. Thus, Section 122 of the
Act, which governs the registration of grants or
patents involving public lands, provides that
'Whenever public lands in the Philippine Islands
belonging to the Government of the United States or
to the Government of the Philippines are alienated,
granted or conveyed to persons or to public or
private corporations, the same shall be brought
forthwith under the operation of this Act (Land
Registration Act, Act 496) and shall become
registered lands.'"
The first four cases cited involve petitions to cancel the land
patents and the corresponding certificates of titlesissued
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.
Registration of land under Act No. 496 or PD No. 1529 does
not vest in the registrant private or public ownership of the
land. Registration is not a mode of acquiring ownership but
is merely evidence of ownership previously conferred by any
of the recognized modes of acquiring ownership.
Registration does not give the registrant a better right than
what the registrant had prior to the registration.102 The
registration of lands of the public domain under the Torrens
system, by itself, cannot convert public lands into private
lands.103

Jurisprudence holding that upon the grant of the patent or

issuance of the certificate of title the alienable land of the
public domain automatically becomes private land cannot
apply to government units and entities like PEA. The transfer
of the Freedom Islands to PEA was made subject to the
provisions of CA No. 141 as expressly stated in Special
Patent No. 3517 issued by then President Aquino, to wit:
"NOW, THEREFORE, KNOW YE, that by authority of
the Constitution of the Philippines and in conformity
with the provisions of Presidential Decree No. 1084,
supplemented by Commonwealth Act No. 141,
as amended, there are hereby granted and
conveyed unto the Public Estates Authority the
aforesaid tracts of land containing a total area of one
million nine hundred fifteen thousand eight hundred
ninety four (1,915,894) square meters; the technical
description of which are hereto attached and made
an integral part hereof." (Emphasis supplied)
Thus, the provisions of CA No. 141 apply to the Freedom
Islands on matters not covered by PD No. 1084. Section 60
of CA No. 141 prohibits, "except when authorized by
Congress," the sale of alienable lands of the public domain
that are transferred to government units or entities. Section
60 of CA No. 141 constitutes, under Section 44 of PD No.
1529, a "statutory lien affecting title" of the registered land
even if not annotated on the certificate of title.104 Alienable
lands of the public domain held by government entities
under Section 60 of CA No. 141 remain public lands because
they cannot be alienated or encumbered unless Congress
passes a law authorizing their disposition. Congress,
however, cannot authorize the sale to private corporations
of reclaimed alienable lands of the public domain because of
the constitutional ban. Only individuals can benefit from
such law.
The grant of legislative authority to sell public lands in
accordance with Section 60 of CA No. 141 does not

automatically convert alienable lands of the public domain

into private or patrimonial lands. The alienable lands of the
public domain must be transferred to qualified private
parties, or to government entities not tasked to dispose of
public lands, before these lands can become private or
patrimonial lands. Otherwise, the constitutional ban will
become illusory if Congress can declare lands of the public
domain as private or patrimonial lands in the hands of a
government agency tasked to dispose of public lands. This
will allow private corporations to acquire directly from
government agencies limitless areas of lands which, prior to
such law, are concededly public lands.
Under EO No. 525, PEA became the central implementing
agency of the National Government to reclaim foreshore
and submerged areas of the public domain. Thus, EO No.
525 declares that
"EXECUTIVE ORDER NO. 525
Designating the Public Estates Authority as the
Agency Primarily Responsible for all Reclamation
Projects
Whereas, there are several reclamation projects
which are ongoing or being proposed to be
undertaken in various parts of the country which
need to be evaluated for consistency with national
programs;
Whereas, there is a need to give further institutional
support to the 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 ."
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
"Sec. 122. Whenever public lands in the Philippine
Islands belonging to the x x x Government of the
Philippine Islands are alienated, granted, or conveyed
to persons or the public or private corporations,
the same shall be brought forthwith under the
operation of this Act and shall become registered
lands."
PD No. 1529

"Sec. 103. Certificate of Title to Patents. Whenever

public land is by the Government alienated, granted
or conveyed to any person, the same shall be
brought forthwith under the operation of this
Decree." (Emphasis supplied)
Based on its legislative history, the phrase "conveyed to any
person" in Section 103 of PD No. 1529 includes conveyances
of public lands to public corporations.
Alienable lands of the public domain "granted, donated, or
transferred to a province, municipality, or branch or
subdivision of the Government," as provided in Section 60 of
CA No. 141, may be registered under the Torrens System
pursuant to Section 103 of PD No. 1529. Such registration,
however, is expressly subject to the condition in Section 60
of CA No. 141 that the land "shall not be alienated,
encumbered or otherwise disposed of in a manner
affecting its title, except when authorized by
Congress." This provision refers to government reclaimed,
foreshore and marshy lands of the public domain that have
been titled but still cannot be alienated or encumbered
unless expressly authorized by Congress. The need for
legislative authority prevents the registered land of the
public domain from becoming private land that can be
disposed of to qualified private parties.
The Revised Administrative Code of 1987 also recognizes
that lands of the public domain may be registered under the
Torrens System. Section 48, Chapter 12, Book I of the Code
states
"Sec. 48. Official Authorized to Convey Real Property.
Whenever real property of the Government is
authorized by law to be conveyed, the deed of
conveyance shall be executed in behalf of the
government by the following:
(1) x x x

(2) For property belonging to the Republic of

the Philippines, but titled in the name of any
political subdivision or of any corporate agency
or instrumentality, by the executive head of the
agency or instrumentality." (Emphasis supplied)
Thus, private property purchased by the National
Government for expansion of a public wharf may be titled in
the name of a government corporation regulating port
operations in the country. Private property purchased by the
National Government for expansion of an airport may also
be titled in the name of the government agency tasked to
administer the airport. Private property donated to a
municipality for use as a town plaza or public school site
may likewise be titled in the name of the municipality. 106 All
these properties become properties of the public domain,
and if already registered under Act No. 496 or PD No. 1529,
remain registered land. There is no requirement or provision
in any existing law for the de-registration of land from the
Torrens System.
Private lands taken by the Government for public use under
its power of eminent domain become unquestionably part of
the public domain. Nevertheless, Section 85 of PD No. 1529
authorizes the Register of Deeds to issue in the name of the
National Government new certificates of title covering such
expropriated lands. Section 85 of PD No. 1529 states
"Sec. 85. Land taken by eminent domain. Whenever
any registered land, or interest therein, is
expropriated or taken by eminent domain, the
National Government, province, city or municipality,
or any other agency or instrumentality exercising
such right shall file for registration in the proper
Registry a certified copy of the judgment which shall
state definitely by an adequate description, the
particular property or interest expropriated, the
number of the certificate of title, and the nature of
the public use. A memorandum of the right or

interest taken shall be made on each certificate of

title by the Register of Deeds, and where the fee
simple is taken, a new certificate shall be issued
in favor of the National Government, province,
city, municipality, or any other agency or
instrumentality exercising such right for the land so
taken. The legal expenses incident to the
memorandum of registration or issuance of a new
certificate of title shall be for the account of the
authority taking the land or interest therein."
(Emphasis supplied)
Consequently, lands registered under Act No. 496 or PD No.
1529 are not exclusively private or patrimonial lands. Lands
of the public domain may also be registered pursuant to
existing laws.
AMARI makes a parting shot that the Amended JVA is not a
sale to AMARI of the Freedom Islands or of the lands to be
reclaimed from submerged areas of Manila Bay. In the words
of AMARI, the Amended JVA "is not a sale but a joint venture
with a stipulation for reimbursement of the original cost
incurred by PEA for the earlier reclamation and construction
works performed by the CDCP under its 1973 contract with
the Republic." Whether the Amended JVA is a sale or a joint
venture, the fact remains that the Amended JVA requires
PEA to "cause the issuance and delivery of the certificates of
title conveying 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.
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
hectares110 of the Freedom Islands, such transfer is
void for being contrary to Section 3, Article XII of the
1987 Constitution which prohibits private
corporations from acquiring any kind of alienable
land of the public domain.
4. Since the Amended JVA also seeks to transfer to
AMARI ownership of 290.156 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.
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.
CHAVES VS NATIONAL HOUSING AUTHORITY

VELASCO, JR., J.:

DECISION

R-II Builders, Inc. and the Smokey Mountain

Development
and
Reclamation
Project
embodied
therein;
the
subsequent
amendments to the said JVA; and all other
agreements signed and executed in relation
thereto including, but not limited to the
Smokey Mountain Asset Pool Agreement
dated 26 September 1994 and the separate
agreements for Phase I and Phase II of the
Projectas well as all other transactions which
emanated
therefrom,
for
being UNCONSTITUTIONAL and INVALID;
to enjoin respondentsparticularly respondent
NHAfrom
further
implementing
and/or
enforcing the said project and other
agreements related thereto, and from further
deriving and/or enjoying any rights, privileges
and interest therefrom x x x; and
to compel respondents to disclose all
documents and information relating to the
projectincluding, but not limited to, any
subsequent agreements with respect to the
different phases of the project, the revisions
over the original plan, the additional works
incurred thereon, the current financial
condition of respondent R-II Builders, Inc., and
the transactions made respecting the project.
[1]

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

The Facts
On March 1, 1988, then President Corazon C. Aquino issued
Memorandum Order No. (MO) 161 [2] approving and directing
the implementation of the Comprehensive and Integrated

Metropolitan Manila Waste Management Plan (the Plan). The

resettlement/low-cost housing projects.[4] On the other hand,

Metro Manila Commission, in coordination with various

the DENR was tasked to review and evaluate proposed

government agencies, was tasked as the lead agency to

projects under the Plan with regard to their environmental

implement the Plan as formulated by the Presidential Task

impact, conduct regular monitoring of activities of the Plan

Force on Waste Management created by Memorandum

to ensure compliance with environmental standards and

Circular No. 39. A day after, on March 2, 1988, MO 161-

assist DOH in the conduct of the study on hospital waste

[3]

was issued, containing the guidelines which prescribed

management.[5]

the functions and responsibilities of fifteen (15) various

government departments and offices tasked to implement

At

the Plan, namely: Department of Public Works and Highway

Aquino, Smokey Mountain was

(DPWH), Department of Health (DOH), Department of

Tondo, Manila,

Environment and Natural Resources (DENR), Department of

subhuman conditions, collecting items that may have some

Transportation and Communication, Department of Budget

monetary

and Management, National Economic and Development

garbage. The Smokey Mountain dumpsite is bounded on the

Authority

Integrated

north by the Estero Marala, on the south by the property of

National Police, Philippine Information Agency and the Local

the National Government, on the east by the property of B

Government

and I Realty Co., and on the west by Radial Road 10 (R-10).

(NEDA),
Unit

Philippine
(referring

Constabulary
to

the

City

of

Manila),

the

time

MO

161-A

where

was
a

numerous

value

issued

by

wasteland
Filipinos
from

President
in

Balut,

resided

in
the

Department of Social Welfare and Development, Presidential

Commission for Urban Poor, National Housing Authority

Pursuant to MO 161-A, NHA prepared the feasibility studies

(NHA), Department of Labor and Employment, Department

of the Smokey Mountain low-cost housing project which

of Education, Culture and Sports (now Department of

resulted in the formulation of the Smokey Mountain

Education), and Presidential Management Staff.

Development Plan and Reclamation of the Area Across R-10

or the Smokey Mountain Development and Reclamation

Specifically, respondent NHA was ordered to conduct

Project (SMDRP; the Project). The Project aimed to convert

feasibility studies and develop low-cost housing projects at

the Smokey Mountain dumpsite into a habitable housing

the

project, inclusive of the reclamation of the area across R-10,

dumpsite

and

absorb

scavengers

in

NHA

adjacent

to

the Smokey Mountain as

the

enabling

return thereon. The last paragraph of Sec. 6 of the BOT Law

component of the project.[6] Once finalized, the Plan was

provides that the repayment scheme in the case of land

submitted to President Aquino for her approval.

reclamation or the building of industrial estates may consist

of [t]he grant of a portion or percentage of the reclaimed

On July 9, 1990, the Build-Operate-and-Transfer (BOT) Law

land or industrial estate built, subject to the constitutional

(Republic Act No. [RA] 6957) was enacted. [7] Its declared

requirements with respect to the ownership of lands.

policy under Section 1 is [t]o recognize the indispensable

role of the private sector as the main engine for national

On February 10, 1992, Joint Resolution No. 03[8] was

growth and development and provide the most appropriate

passed by both houses of Congress. Sec. 1 of this resolution

favorable incentives to mobilize private resources for the

provided, among other things, that:

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

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

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
related development facilities;

and

other

(l) Industrial
estates,
regional
industrial
centers and export processing zones including
steel mills, iron-making and petrochemical
complexes and related infrastructure and
utilities;

xxxx

In addition, the Public Estates Authority (PEA) was directed

(p) Environmental
and
solid
waste
management-related
facilities
such
as
collection equipment, composting plants,
incinerators, landfill and tidal barriers, among
others; and

to assist in the evaluation of proposals regarding the

(q) Development of new townsites

communities and related facilities.

evaluation of proposals regarding environmental impact

and

This resolution complied with and conformed to Sec. 4 of the

BOT Law requiring the approval of all national infrastructure
projects by the Congress.
On January 17, 1992, President Aquino proclaimed MO
415[9] approving and directing the implementation of the
SMDRP. Secs. 3 and 4 of the Memorandum Order stated:
Section 3. The National Housing Authority is
hereby directed to implement the Smokey
Mountain Development Plan and Reclamation
of the Area Across R-10 through a private
sector joint venture scheme at the least
cost to the government.
Section 4. The land area covered by
the Smokey Mountain dumpsite
is
hereby
conveyed to the National Housing Authority as
well as the area to be reclaimed across R10. (Emphasis supplied.)

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
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]

(3) The DENR evaluated Technical Proposals on Waste

Management and Disposal by conducting the Environmental
Impact Analysis; and

Subsequently, the TECHCOM put out the Public Notice and

Notice to Pre-Qualify and Bid for the right to become NHAs

(4) The NHA and the City of Manila evaluated the socio-

joint

economic benefits presented by the proposals.

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,

On June 30, 1992, Fidel V. Ramos assumed the Office of the

16, and 23, 1992, respectively. Out of the thirteen (13)

President (OP) of the Philippines.

contractors who responded, only five (5) contractors fully

complied

with

the

required

pre-qualification

On August

31,

1992,

the

TECHCOM

submitted

its

documents. Based on the evaluation of the pre-qualification

recommendation to the EXECOM to approve the R-II

documents, the EXECOM declared the New San Jose

Builders, Inc. (RBI) proposal which garnered the highest

Builders, Inc. and R-II Builders, Inc. (RBI) as the top two

score of 88.475%.

contractors.[14]
Thereafter, the TECHCOM evaluated the bids (which include

Subsequently, the EXECOM made a Project briefing

the Pre-feasibility Study and Financing Plan) of the top two

to President Ramos. As a result, President Ramos issued

(2) contractors in this manner:

Proclamation No. 39[15] on September 9, 1992, which reads:

(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;

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;

757[18] which mandated NHA [t]o undertake the physical and

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.

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

In order to facilitate the early development of

the area for disposition, the Department of
Environment and Natural Resources, through
the Lands and Management Bureau, is hereby
directed to approve the boundary and
subdivision survey and to issue a special
patent and title in the name of the National
Housing Authority, subject to final survey and
private rights, if any there be.(Emphasis
supplied.)

into

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 thirtyfour (212,234) square meters and another lot to be
reclaimed also in Tondo with an area of four hundred

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)

thousand (400,000) square meters.

The Scope of Work of RBI under Article II of the JVA is as
follows:
a) To fully finance all aspects of development
of Smokey Mountain and reclamation of no
more than 40 hectares of Manila Bay area
across Radial Road 10.
b) To
immediately
commence
on
the
preparation of feasibility report and detailed

engineering with emphasis to the expedient

acquisition of the Environmental Clearance
Certificate (ECC) from the DENR.
c) The construction activities will only
commence after the acquisition of the ECC,
and
d) Final details of the contract, including
construction,
duration
and
delivery
timetables, shall be based on the approved
feasibility report and detailed engineering.

Other obligations of RBI are as follows:

2.02 The [RBI] shall develop the PROJECT
based on the Final Report and Detailed
Engineering as approved by the Office of the
President. All costs and expenses for hiring
technical personnel, date gathering, permits,
licenses, appraisals, clearances, testing and
similar undertaking shall be for the account of
the [RBI].
2.03 The
[RBI]
shall
undertake
the
construction of 3,500 temporary housing units
complete with basic amenities such as
plumbing, electrical and sewerage facilities
within the temporary housing project as
staging area to temporarily house the
squatter
families
from
the Smokey Mountain while development is
being undertaken. These temporary housing
units shall be turned over to the [NHA] for
disposition.
2.04 The [RBI] shall construct 3,500 medium
rise low cost permanent housing units on the

leveled Smokey Mountain complete with basic

utilities and amenities, in accordance with the
plans and specifications set forth in the Final
Report approved by the [NHA]. Completed
units ready for mortgage take out shall be
turned over by the [RBI] to NHA on agreed
schedule.
2.05 The [RBI] shall reclaim forty (40)
hectares of Manila Bay area directly across [R10] 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 prefeasibility 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

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.

5. To own the open spaces, roads and facilities

within 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.

In the event of extraordinary increase in labor, materials,

4.02 Finance the total project cost for land

development, housing construction and
reclamation of the PROJECT.

fuel and non-recoverability of total project expenses, [20] the

OP, upon recommendation of the NHA, may approve a
corresponding adjustment in the enabling component.
The functions and responsibilities of RBI and NHA are as
follows:
For RBI:
4.01 Immediately
commence
on
preparation of the FINAL REPORT

the
with

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.
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

and the recommendations from other government agencies,

executed later by the parties.

it was discovered that design changes and additional work

have to be undertaken to successfully implement the

The JVA may be modified or revised by written agreement

Project.[21]

between the NHA and RBI specifying the clauses to be

revised or modified and the corresponding amendments.

Thus, on February 21, 1994, the parties entered into another

agreement denominated as the Amended and Restated Joint

If the Project is revoked or terminated by the Government

Venture Agreement[22] (ARJVA) which delineated the different

through no fault of RBI or by mutual agreement, the

phases of the Project. Phase I of the Project involves the

Government shall compensate RBI for its actual expenses

construction of temporary housing units for the current

incurred in the Project plus a reasonable rate of return not

residents of the Smokey Mountain dumpsite, the clearing

exceeding that stated in the feasibility study and in the

and leveling-off of the dumpsite, and the construction of

contract as of the date of such revocation, cancellation, or

medium-rise low-cost housing units at the cleared and

termination on a schedule to be agreed upon by both

leveled dumpsite.[23] Phase II of the Project involves the

parties.

construction of an incineration area for the on-site disposal

of the garbage at the dumpsite. [24] The enabling component

As a preliminary step in the project implementation,

or consideration for Phase I of the Project was increased

consultations and dialogues were conducted with the

from 40 hectares of reclaimed lands across R-10 to 79

settlers of the Smokey Mountain Dumpsite Area. At the

hectares.[25] The revision also provided for the enabling

same time, DENR started processing the application for the

component for Phase II of 119 hectares of reclaimed lands

Environmental Clearance Certificate (ECC) of the SMDRP. As

contiguous to the 79 hectares of reclaimed lands for Phase I.

a result however of the consultative dialogues, public

[26]

hearings, the report on the on-site field conditions, the

of works and the terms and conditions of Phases I and II,

Environmental Impact Statement (EIS) published on April 29

thus:

and May 12, 1993 as required by the Environmental

Management Bureau of DENR, the evaluation of the DENR,

Furthermore, the amended contract delineated the scope

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 SmokeyMountain area

under the JVA. There was a substantial change in the design

of the permanent housing units such that a loft shall be
incorporated in each unit so as to increase the living space
from 20 to 32 square meters. The additions and changes in
the Original Project Component are as follows:
ORIGINAL CHANGES/REVISIONS
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.

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:

2. MEDIUM RISE MASS

HOUSING

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 119hectare area contiguous to that to be
reclaimed under Phase I to serve as
the enabling component of Phase II.
Under the ARJVA, RBI shall construct 2,992 temporary
housing units, a reduction from 3,500 units under the JVA.
[27]

However, it was required to construct 3,520 medium-rise

low-cost permanent housing units instead of 3,500 units

3.

Box type precast Shelter Convention

al 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 improve
d
architectural faade, 80 units/
building.
M
I
T

I
G
A
T
I
N
G
M
E
A
S
U
R
E
S
3.1

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

1.0

For

reclamation

work Use of
clean
dred
gefill
mate
rial
belo
w
the
MLL
W
and
SM
mate
rial
mixe
d
with
dred
gefill
abov
e
MLL
W.

meter

c. Silt removal approximately Need

to remove more than 3.0
only meters of silt after sub-soil
inves
tigati
on.
[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 sixtyfour pesos (PhP 6,693,387,364).
In

his February

10,

1994 Memorandum,

the

Chairperson of the SMDRP EXECOM submitted the ARJVA for

approval by the OP. After review of said agreement, the OP

directed that certain terms and conditions of the ARJVA be

further

clarified

or

amended

preparatory

to

its

approval. Pursuant to the Presidents directive, the parties

reached

an

agreement

on

the

clarifications

and

amendments required to be made on the ARJVA.

On August 11, 1994, the NHA and RBI executed an
Amendment To the Amended and Restated Joint Venture
Agreement

(AARJVA)[29] clarifying

certain

terms

and

condition of the ARJVA, which was submitted to President

Ramos for approval, to wit:
Phase II shall involve the following:
a.

the construction and operation of an

incinerator plant that will conform to the
emission standards of the DENR

b. the reclamation and development of 119hectare area contiguous to that to be

reclaimed under Phase I to serve as the
enabling component of Phase II, the
exact size and configuration of which
shall be approved by the SMDRP
Committee[30]
Other substantial amendments are the following:
4. Paragraph 2.05 of Article II of the ARJVA is
hereby amended to read as follows:

2.05. The DEVELOPER shall reclaim

seventy nine (79) hectares of the
Manila Bay area directly across Radial
Road 10 (R-10) to serve as payment to
the DEVELOPER as its asset share for
Phase I and to develop such land into
commercial area with port facilities;
provided, that the port plan shall be
integrated with the Philippine Port
Authoritys North Harbor plan for the
Manila Bay area and provided further,
that the final reclamation and port plan
for said reclaimed area shall be
submitted for approval by the Public
Estates Authority and the Philippine
Ports Authority, respectively: provided
finally, that subject to par. 2.02 above,
actual
reclamation
work
may
commence upon approval of the final
reclamation plan by the Public Estates
Authority.
xxxx
9. A new paragraph to be numbered 5.05 shall
be added to Article V of the ARJVA, and shall
read as follows:
5.05. In the event this Agreement
is revoked, cancelled or terminated by
the AUTHORITY through no fault of the
DEVELOPER, the AUTHORITY shall
compensate the DEVELOPER for the
value of the completed portions of,
and actual expenditures on the
PROJECT plus a reasonable rate of
return thereon, not exceeding that
stated in the Cost Estimates of Items
of Work previously approved by the
SMDRP Executive Committee and the

AUTHORITY
and
stated
in
this
Agreement, as of the date of such
revocation,
cancellation,
or
termination, on a schedule to be
agreed upon by the parties, provided
that said completed portions of Phase I
are in accordance with the approved
FINAL REPORT.

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.

Afterwards, President Ramos issued Proclamation No.

On September 8, 1994, the DENR issued Special

465 dated August 31, 1994[31] increasing the proposed area

Patent 3592 pursuant to Proclamation No. 39, conveying in

for reclamation across R-10 from 40 hectares to 79 hectares,

favor of NHA a 401,485-square meter area.

[32]

to wit:
On September

26,

1994,

the

NHA,

RBI,

Home

NOW, THEREFORE, I, FIDEL V. RAMOS,

President of the Republic of the Philippines, by
virtue of the powers vested in me by the law,
and as recommended by the SMDRP
Executive Committee, do hereby authorize
the increase of the area of foreshore or
submerged lands of Manila Bay to be
reclaimed, as previously authorized under
Proclamation
No.
39
(s.
1992)
and
Memorandum Order No. 415 (s. 1992), from
Four Hundred Thousand (400,000) square
meters, more or less, to Seven Hundred
Ninety Thousand (790,000) square meters,
more or less.

Insurance and Guaranty Corporation (HIGC), now known as

On September 1, 1994, pursuant to Proclamation No.

planned incinerator project under Phase II. Thus, the off-site

39, the DENR issued Special Patent No. 3591 conveying in

disposal of the garbage at the Smokey Mountain became

the Home Guaranty Corporation, and the Philippine National

Bank (PNB)[33] executed the Smokey Mountain Asset Pool
Formation
[34]

Trust

Agreement

(Asset

Pool

Agreement).

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

necessary.[36]

The land reclamation was completed in August 1996.[37]

was required for the change orders and/or necessary

works. The DOJ, through DOJ Opinion Nos. 119 and 155

Sometime

later

in

1996,

pursuant

likewise

to

dated August 26, 1993 and November 12, 1993, opined that

Proclamation No. 39, the DENR issued Special Patent No.

a rebidding, pursuant to the aforequoted provisions of the

3598 conveying in favor of NHA an additional 390,000

implementing rules (referring to PD 1594) would not be

square meter area.

necessary where the change orders inseparable from the

original scope of the project, in which case, a negotiation

During the actual construction and implementation of

with the incumbent contractor may be allowed.

Phase I of the SMDRP, the Inter-Agency Technical Committee

found and recommended to the EXECOM onDecember 17,
1997 that

additional

works

were

necessary

for

the

completion and viability of the Project. The EXECOM

Thus, on February 19, 1998, the EXECOM issued a

resolution directing NHA to enter into a supplemental
agreement covering said necessary works.

approved the recommendation and so, NHA instructed RBI

to implement the change orders or necessary works.[38]

On March 20, 1998, the NHA and RBI entered into a

Supplemental

Such necessary works comprised more than 25% of

the original contract price and as a result, the Asset Pool

Agreement

covering

the

aforementioned

necessary works and submitted it to the President on March

24, 1998 for approval.

incurred direct and indirect costs. Based on C1 12 A of the

Implementing

Rules

and

Regulations

of

PD

1594,

Outgoing President Ramos decided to endorse the

supplemental agreement is required for all change orders

consideration of the Supplemental Agreement to incoming

and extra work orders, the total aggregate cost of which

President Joseph E. Estrada. On June 30, 1998, Estrada

being more than twenty-five (25%) of the escalated original

became the 13th Philippine President.

contract price.
However,
The

EXECOM

requested

an

opinion

from

the

approval

of

the

Supplemental

the

Agreement was unacted upon for five months. As a result,

Department of Justice (DOJ) to determine whether a bidding

the utilities and the road networks were constructed to

cover only the 79-hectare original enabling component

payment for the advances for direct and indirect costs

granted under the ARJVA. The 220-hectare extension of the

subject to NHA validation.

79-hectare

area

was

no

longer

technically

feasible. Moreover, the financial crises and unreliable real

In

November

1998,

President

Estrada

issued

estate situation made it difficult to sell the remaining

Memorandum Order No. 33 reconstituting the SMDRP

reclaimed lots. The devaluation of the peso and the increase

EXECOM and further directed it to review the Supplemental

in interest cost led to the substantial increase in the cost of

Agreement

reclamation.

completion of the SMDRP.

and

submit

its

recommendation

on

the

On August 1, 1998, the NHA granted RBIs request to

The reconstituted EXECOM conducted a review of the

suspend work on the SMDRP due to the delay in the

project and recommended the amendment of the March 20,

approval of the Supplemental Agreement, the consequent

1998 Supplemental Agreement to make it more feasible and

absence of an enabling component to cover the cost of the

to identify and provide new sources of funds for the project

necessary works for the project, and the resulting inability to

and provide for a new enabling component to cover the

replenish the Asset Pool funds partially used for the

payment for the necessary works that cannot be covered by

completion of the necessary works.[39]

the 79-hectare enabling component under the ARJVA. [41]

As

of August

1,

1998 when

the

project

was

The EXECOM passed Resolution Nos. 99-16-01 and

suspended, RBI had already accomplished a portion of the

99-16-02[42] which

necessary works and change orders which resulted in [RBI]

Supplemental Agreement, to wit:

and the Asset Pool incurring advances for direct and indirect
cost which amount can no longer be covered by the 79hectare 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

approved

the

modification

of

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.

the

As of February 28, 2001, the estimated total project

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.

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

d) Revision in the sharing agreement between

the parties.

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

In the March 23, 2000 OP Memorandum, the EXECOM

an additional 150-hectare reclamation area and to authorize

was authorized to proceed and complete the SMDRP subject

the release by NHA of PhP 480 million as advance to the

to certain guidelines and directives.

project to make the Permanent Housing habitable, subject to

reimbursement from the proceeds of the expanded enabling

After the parties in the case at bar had complied with

component.[44]

the March 23, 2000 Memorandum, the NHA November 9,

2000 Resolution No. 4323 approved the conveyance of the

On November 19, 2001, the Amended Supplemental

17-hectare Vitas property in favor of the existing or a newly

Agreement

created Asset Pool of the project to be developed into a

on February 28, 2002, the Housing and Urban Development

mixed

Coordinating Council (HUDCC) submitted the agreement to

commercial-industrial

area,

subject

to

certain

conditions.

(ASA)

was

signed

by

the

parties,

and

the OP for approval.

In the July 20, 2002 Cabinet Meeting, HUDCC was

On January 20, 2001, then President Estrada was

directed to submit the works covered by the PhP 480 million

considered resigned. On the same day, President Gloria M.

[advance to the Project] and the ASA to public bidding.

Arroyo

took

the Philippines.

her

oath

as

the

14th

President

of

[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
terminated, to wit:

hereby

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
DEVELOPERs
claims,
NHA
hereby
agrees
initially
compensate
Developer
for
abovementioned costs
follows:

the
the
to
the
the
as

a. Direct
payment
to
DEVELOPER
of
the
amounts herein listed
in
the
following
manner:
a.1 P250 Million in cash from
the
escrow

account
accordance
Section
herewith;

in
with
2

a.2 Conveyance of a 3
hectare portion of
the
Vitas
Industrial
area
immediately after
joint
determination of
the
appraised
value of the said
property
in
accordance with
the
procedure
herein set forth in
the last paragraph
of Section 5.3. For
purposes of all
payments to be
made
through
conveyance
of
real
properties,
the parties shall
secure from the
NHA
Board
of
Directors
all
documents
necessary
and
sufficient to effect
the transfer of
title
over
the
properties to be
conveyed to RBI,
which documents
shall be issued
within
a
reasonable period.

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
appraisers.

independent

number of HCPTI shares to RBI in lieu of cash payment for

the latters work in SMDRP.

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

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

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.

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

The Issues

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

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 ISVESTED
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
SUBMERGED PARCELS
OF
LAND
INALIENABLE PUBLIC LANDS WHICH
BEYOND THE COMMERCE OF MAN.

AND
ARE
ARE

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 STILLCANNOT

ACQUIRE
THE
SAME
BECAUSE
THERE
WAS NEVER ANY LAW AUTHORIZING THE SALE
THEREOF.
4. THERE WAS NEVER ANY PUBLIC BIDDING
AWARDING OWNERSHIP
OF
THE SUBJECT LAND TO
RESPONDENT R-II
BUILDERS.
5. ASSUMING THAT ALL THE REQUIREMENTS
FOR A VALID TRANSFER OF ALIENABLE
PUBLIC
HAD
BEEN
PERFORMED,
RESPONDENT R-II BUILDERS, BEING
PRIVATE
CORPORATION
IS
NONETHELESS EXPRESSLYPROHIBITED
BY THE PHILIPPINE CONSTITUTION TO
ACQUIRE LANDS OF THE PUBLIC
DOMAIN.
III
RESPONDENT HARBOUR, BEING A PRIVATE
CORPORATION WHOSE MAJORITY STOCKS ARE
OWNED AND CONTROLLED BY RESPONDENT
ROMEROS CORPORATIONS R-II BUILDERS AND
R-II HOLDINGS IS DISQUALIFIED FROM BEING
A TRANSFEREE OF PUBLIC LAND.
IV
RESPONDENTS MUST BE COMPELLED TO
DISCLOSE ALL INFORMATION RELATED TO THE
SMOKEY MOUNTAIN DEVELOPMENT AND
RECLAMATION PROJECT.

The Courts Ruling

PEA[50] as conclusive authority

Before we delve into the substantive issues raised in this

our ruling in Chavez v.

petition, we will first deal with several procedural matters

onlocus standi in the case at bar since the issues raised in

raised by respondents.

this petition are averred to be in breach of the fair diffusion

Whether petitioner has the requisite locus standi to

file this case

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,

Respondents argue that petitioner Chavez has no legal

the pleadings especially those of respondents readily reveal

standing to file the petition.

that public funds have been indirectly utilized in the Project

by

Only a person who stands to be benefited or injured

means

Certificates

of

Smokey

(SMPPCs)

Mountain
bought

by

Project

Participation

some

government

by the judgment in the suit or entitled to the avails of the

agencies.

suit can file a complaint or petition. [47] Respondents claim

Hence, petitioner, as a taxpayer, is a proper party to the

that petitioner is not a proper party-in-interest as he was

instant petition before the court.

unable to show that he has sustained or is in immediate or

imminent danger of sustaining some direct and personal

Whether petitioners direct recourse to this Court was

injury as a result of the execution and enforcement of the

proper

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. PCGG[49] that in cases
where issues of transcendental public importance are
presented, there is no necessity to show that petitioner has
experienced or is in actual danger of suffering direct and
personal injury as the requisite injury is assumed. We find

Respondents

are

one

in

asserting

that

petitioner

circumvents the principle of hierarchy of courts in his

petition. Judicial hierarchy was made clear in the case
of People v. Cuaresma, thus:
There is after all a hierarchy of courts. That
hierarchy is determinative of the venue of
appeals, and should also serve as a general
determinant of the appropriate forum for
petitions for the extraordinary writs. A
becoming regard for that judicial hierarchy
most certainly indicates that petitions for the

issuance of extraordinary writs against first

level (inferior) courts should be filed with the
Regional Trial Court, and those against the
latter, with the Court of Appeals. A direct
invocation of the Supreme Courts original
jurisdiction to issue these writs should be
allowed only when there are special and
important reasons therefor, clearly and
specifically set out in the petition. This is
established policy. It is a policy that is
necessary to prevent inordinate demands
upon the Courts time and attention which are
better devoted to those matters within its
exclusive jurisdiction, and to prevent further
over-crowding of the Courts docket.[51] x x x
The OSG claims that the jurisdiction over petitions for
prohibition and mandamus is concurrent with other lower
courts like the Regional Trial Courts and the Court of
Appeals. Respondent NHA argues that the instant petition is
misfiled because it does not introduce special and important
reasons or exceptional and compelling circumstances to
warrant direct recourse to this Court and that the lower
courts are more equipped for factual issues since this Court
is not a trier of facts. Respondents RBI and RHI question the
filing of the petition as this Court should not be unduly
burdened with repetitions, invocation of jurisdiction over
constitutional questions it had previously resolved and
settled.

In the light of existing jurisprudence, we find paucity of

merit in respondents postulation.
While direct recourse to this Court is generally frowned upon
and discouraged, we have however ruled in Santiago v.
Vasquez that such resort to us may be allowed in certain
situations,

wherein this

Court

ruled

that

petitions

for

certiorari, prohibition, or mandamus, though cognizable by

other courts, may directly be filed with us if the redress
desired cannot be obtained in the appropriate courts or
where

exceptional

compelling

circumstances

justify

availment of a remedy within and calling for the exercise of

[this Courts] primary jurisdiction.[52]
The instant petition challenges the constitutionality and
legality

of

the

SMDRP

involving

several

hectares

of

government land and hundreds of millions of funds of

several

government

agencies. Moreover,

serious

constitutional challenges are made on the different aspects

of the Project which allegedly affect the right of Filipinos to
the distribution of natural resources in the country and the
right to information of a citizenmatters which have been
considered to be of extraordinary significance and grave
consequence to the public in general. These concerns in the
instant action compel us to turn a blind eye to the judicial
structure meant to provide an orderly dispensation of justice

and consider the instant petition as a justified deviation

from an established precept.

Now we will tackle the issues that prop up the instant

petition.

Core factual matters undisputed

Since petitioner has cited our decision in PEA as basis

for his postulations in a number of issues, we first resolve

Respondents next challenge the projected review by this

the queryis PEA applicable to the case at bar?

Court of the alleged factual issues intertwined in the issues

propounded by petitioner. They listed a copious number of

A juxtaposition of the facts in the two cases constrains the

questions seemingly factual in nature which would make

Court to rule in the negative.

this Court a trier of facts.[53]

The Court finds that PEA is not a binding precedent to the
We find the position of respondents bereft of merit.

instant

petition

because

the

facts

in

said

case

are

For one, we already gave due course to the instant petition

substantially different from the facts and circumstances in

in our January 18, 2005 Resolution.[54] In said issuance, the

the case at bar, thus:

parties were required to make clear and concise statements

of established facts upon which our decision will be based.

(1) The reclamation project in PEA was undertaken through

a JVA entered into between PEA and AMARI. The reclamation

Secondly, we agree with petitioner that there is no necessity

project in the instant NHA case was undertaken by the NHA,

for us to make any factual findings since the facts needed to

a national government agency in consultation with PEA and

decide the instant petition are well established from the

with the approval of two Philippine Presidents;

admissions of the parties in their pleadings

derived

from

the

documents

[55]

appended

and those
to

said

(2) In PEA, AMARI and PEA executed a JVA to develop

submissions. Indeed, the core facts which are the subject

the Freedom Islands and reclaim submerged areas without

matter of the numerous issues raised in this petition are

public bidding on April 25, 1995. In the instant NHA case,

undisputed.

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

in good faith as the Project was terminated even before the

bidding.

Chavez petition was filed;

(3) In PEA, there was no law or presidential proclamation

(6) The PEA-AMARI JVA was executed as a result of direct

classifying the lands to be reclaimed as alienable and

negotiation between the parties and not in accordance with

disposal lands of public domain. In this RBI case, MO 415 of

the BOT Law. The NHA-RBI JVA and subsequent amendments

former President Aquino and Proclamation No. 39 of then

constitute a BOT contract governed by the BOT Law; and

President Ramos, coupled with Special Patents Nos. 3591,

3592, and 3598, classified the reclaimed lands as alienable

(7) In PEA, the lands to be reclaimed or already reclaimed

and disposable;

were transferred to PEA, a government entity tasked to

dispose of public lands under Executive Order No. (EO) 525.

(4) In PEA,

the

Chavez

petition

was

filed

before

the

[56]

In the NHA case, the reclaimed lands were transferred to

amended JVA was executed by PEA and AMARI. In this NHA

NHA, a government entity NOT tasked to dispose of public

case, the JVA and subsequent amendments were already

land and therefore said alienable lands were converted to

substantially implemented. Subsequently, the Project was

patrimonial lands upon their transfer to NHA.[57]

27,

Thus the PEA Decision[58] cannot be considered an

2003. Almost one year later on August 5, 2004, the Chavez

authority or precedent to the instant case. The principle

petition was filed;

of stare decisis[59] has no application to the different factual

terminated

through

MOA

signed

on August

setting of the instant case.

(5) In PEA, AMARI was considered to be in bad faith as it
signed the amended JVA after the Chavez petition was filed

We will now dwell on the substantive issues raised by

with the Court and after Senate Committee Report No. 560

petitioner. After a perusal of the grounds raised in this

was issued finding that the subject lands are inalienable

petition, we find that most of these issues are moored on

lands of public domain. In the instant petition, RBI and other

ourPEA Decision

respondents are considered to have signed the agreements

application to the instant petition. For this reason alone, the

which,

as

earlier

discussed,

has

no

petition can already be rejected. Nevertheless, on the

upon recommendation of the PEA, and shall

be undertaken by the PEA or through a proper
contract executed by it with any person or
entity; x x x. Thus, under EO No. 525, in
relation to PD No. 3-A and PD No. 1084, PEA
became the primary implementing agency of
the National Government to reclaim foreshore
and
submerged
lands
of
the
public
domain. EO No. 525 recognized PEA as the
government
entity
to
undertake
the
reclamation of lands and ensure their
maximum utilization in promoting public
welfare and interests. Since large portions of
these reclaimed lands would obviously be
needed for public service, there must be a
formal declaration segregating reclaimed
lands no longer needed for public service from
those still needed for public service.[60]

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
respondent

contends
RBI

that

may

neither

validly

respondent

reclaim

NHA

foreshore

nor
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

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.)

coordinating
mainly,

all

reclamation

principally,

reclamation

projects.

mostly,

projects

fall

Primarily

generally. Thus,

under

PEAs

means
not

all

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

The aforequoted provision points to three (3) requisites for a

legal and valid reclamation project, viz:

Ports Authority (PPA) to reclaim and develop submerged

areas for port related purposes. Under its charter, PD 857,
PPA has the power to reclaim, excavate, enclose or raise any

(1) approval by the President;

of the lands vested in it.

(2) favorable recommendation of PEA; and

(3) undertaken by any of the following:

Thus, while PEA under PD 1084 has the power to reclaim

land and under EO 525 is primarily responsible for

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

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

or

less,

of

the

foreshore

and

submerged

lands

reclamation phase of SMDRP. After a scrutiny of the facts

of Manila Bayadjoining R-10 as an enabling component

culled from the records, we find that the project met all the

of the SMDRP.

three (3) requirements, thus:

As a result of Proclamations Nos. 39 and 465, Special Patent
1. There

was

ample

approval

by

the

President

of

No.

3591

covering

211,975

square

meters

the Philippines; as a matter of fact, two Philippine Presidents

of Smokey Mountain, Special Patent No. 3592 covering

approved

and

401,485 square meters of reclaimed land, and Special

Ramos.President Aquino sanctioned the reclamation of both

Patent No. 3598 covering another 390,000 square meters of

the SMDRP housing and commercial-industrial sites through

reclaimed land were issued by the DENR.

the

same,

namely: Presidents

Aquino

MO 415 (s. 1992) which approved the SMDRP under Sec. 1

and directed NHA x x x to implement the Smokey Mountain

Thus, the first requirement of presidential imprimatur on the

Development Plan and Reclamation of the Area across

SMDRP has been satisfied.

R-10 through a private sector joint venture scheme at the

least cost to government under Section 3.

2. The requisite favorable endorsement of the reclamation

phase was impliedly granted by PEA. President Aquino saw

For his part, then President Ramos issued Proclamation No.

to it that there was coordination of the project with PEA by

39 (s. 1992) which expressly reserved the Smokey Mountain

designating its general manager as member of the EXECOM

Area and the Reclamation Area for a housing project

tasked

and related commercial/industrial development.

assignment was made in Sec. 2 of MO 415 which provides:

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

to

supervise

the

project

implementation. The

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.)

pertinent lawsRA 7279[62] and RA 6957 as amended by RA

7718.
While the authority of NHA to reclaim lands is challenged by

The favorable recommendation by PEA of the JVA and

petitioner, we find that the NHA had more than enough

subsequent amendments were incorporated as part of the

authority to do so under existing laws. While PD 757, the

recommendations of the EXECOM created under MO 415.

charter of NHA, does not explicitly mention reclamation in

While there was no specific recommendation on the SMDRP

any of the listed powers of the agency, we rule that the NHA

emanating solely from PEA, we find that the approbation of

has an implied power to reclaim land as this is vital or

the Project and the land reclamation as an essential

incidental

component by the EXECOM of which PEA is a member, and

implement an urban land reform and housing program

its submission of the SMDRP and the agreements on the

enunciated in Sec. 9 of Article XIII of the 1987 Constitution.

to

effectively,

logically,

and

successfully

Project to the President for approval amply met the second

requirement of EO 525.

Basic

in

administrative

3. The third element was also presentthe reclamation was

government agency or office has express and implied

undertaken either by PEA or any person or entity under

powers

contract with PEA or by the National Government agency or

statutes. Express

entity authorized under its charter to reclaim lands subject

allocated, and delegated to a government agency or office

to consultation with PEA. It cannot be disputed that the

by express provisions of law. On the other hand, implied

reclamation phase was not done by PEA or any person or

powers are those that can be inferred or are implicit in the

entity under contract with PEA. However, the reclamation

wordings of the law[63] or conferred by necessary or fair

was implemented by the NHA, a national government

implication in the enabling act.[64] In Angara v. Electoral

agency whose authority to reclaim lands under consultation

Commission, the Court clarified and stressed that when a

with PEA is derived from its charterPD 727 and other

general grant of power is conferred or duty enjoined, every

based

on

its

powers

law

is

charter
are

the
and

those

doctrine

that

other

pertinent

powers

granted,

particular power necessary for the exercise of the one or the

performance of the other is also conferred by necessary

implication.[65] It was also explicated that when the statute

does not specify the particular method to be followed or
used by a government agency in the exercise of the power
vested in it by law, said agency has the authority to adopt
any reasonable method to carry out its functions.[66]
The power to reclaim on the part of the NHA is implicit from
PD 757, RA 7279, MO 415, RA 6957, and PD 3-A,[67] viz:
1. NHAs power to reclaim derived from PD 757 provisions:
a. Sec. 3 of PD 757 implies that reclamation may be resorted
to in order to attain the goals of NHA:
Section 3. Progress and Objectives. The
Authority shall have the following purposes
and objectives:
xxxx
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;
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, propertyrights 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

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:

(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

(a) Develop
and
implement
the comprehensive
and
integrated
housing program provided for in Section
hereof;

lands under letter (c) of Sec. 6 which includes reclaimed

xxxx

joint ventures with private entities under letter (e). Taken

(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

land as site for its comprehensive and integrated housing

projects under letter (a) which can be undertaken through
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

Housing Authority may deem most expedient

in carrying out the purposes of this Act.

and

construction of the SMDRP housing facilities.

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.)

2. NHAs implied power to reclaim land is enhanced by RA

7279.
PD 757 identifies NHAs mandate to [d]evelop and undertake
housing development and/or resettlement projects through
joint ventures or other arrangements with public and private
entities.
The power of the NHA to undertake reclamation of land can
be inferred from Secs. 12 and 29 of RA 7279, which provide:

Section 12. Disposition of Lands for Socialized

Housing.The National Housing Authority, with
respect to lands belonging to the
National Government, and the local
government units with respect to other lands
within their respective localities, shall
coordinate with each other to formulate and
make
available various
alternative
schemes for the disposition of lands to
the beneficiaries of the Program. These
schemes shall not be limited to those
involving transfer of ownership in fee simple
but shall include lease, with option to
purchase, usufruct or such other variations as
the local government units or the National

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 lowcost housing projects at the dumpsites
of Metro Manila;

Based on the provisions of the BOT Law and

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;

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

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;

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.

WHEREAS,
the
government
encourages private sector initiative in the
implementation of its projects. (Emphasis
supplied.)

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

Proceeding
unequivocal

from

that

these

whereas

reclamation

of

clauses,

it

is

land

in

the Smokey Mountain area is an essential and vital power of

the NHA to effectively implement its avowed goal of
developing

low-cost

housing

units

at

the Smokey Mountain dumpsites. The interpretation made

by no less than the President of the Philippines as Chief of
the Executive Branch, of which the NHA is a part, must
necessarily command respect and much weight and credit.
4. RA 6957 as amended by RA 7718the BOT Lawserves as
an exception to PD 1084 and EO 525.

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.

agencies can be designated by the President to reclaim

[68]

Under PD 3-A, national government can only mean the

lands in coordination with the PEA. Despite the issuance of

Executive Branch headed by the President. It cannot refer to

EO 525, PD 3-A remained valid and subsisting. Thus, the

Congress as it was dissolved and abolished at the time of

National Government through the President still retained the

the issuance of PD 3-A on September 23, 1972. Moreover,

power and control over all reclamation projects in the

the Executive Branch is the only implementing arm in the

country.

government with the equipment, manpower, expertise, and

capability by the very nature of its assigned powers and

The

functions to undertake reclamation projects. Thus, under PD

President over reclamation of areas, that is, underwater

3-A, the Executive Branch through the President can

whether foreshore or inland, was made clear in EO

implement

543[69] which took effect on June 24, 2006. Under EO 543,

reclamation

of

lands

through

any

of

its

departments, agencies, or offices.

power

of

the

National

Government

through

the

PEA was renamed the Philippine Reclamation Authority

(PRA) and was granted the authority to approve reclamation

Subsequently, on February 4, 1977, President Marcos issued

projects, a power previously reposed in the President under

PD 1084 creating the PEA, which was granted, among

EO 525. EO 543 reads:

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

Section 1. The power of the President to

approve reclamation projects is hereby
delegated to the Philippine Reclamation
Authority [formerly
PEA],
through
its
governing board, subject to compliance with
existing laws and rules and subject to the
condition that reclamation contracts to be
executed with any person or entity go through
public bidding.
Section 2. Nothing in the Order shall be
construed as diminishing the Presidents
authority to modify, amend or nullify
PRAs action.

Section 3. All executive issuances inconsistent

with this Executive Order are hereby repealed
or amended accordingly. (Emphasis supplied.)

Sec. 2 of EO 543 strengthened the power of control

and supervision of the President over reclamation of lands
as s/he can modify, amend, or nullify the action of PEA (now
PRA).
From the foregoing issuances, we conclude that the
Presidents delegation to NHA, a national government
agency, to reclaim lands under the SMDRP, is legal and
valid, firmly anchored on PD 3-A buttressed by EO 525
notwithstanding the absence of any specific grant of power
under its charter, PD 757.
Second Issue: Whether respondents NHA and RBI
were given the
power and authority by DENR to reclaim foreshore
and submerged
lands

Petitioner Chavez puts forth the view that even if the NHA
and RBI were granted the authority to reclaim, they were
not authorized to do so by the DENR.
Again, reliance is made on our ruling in PEA where it
was held that the DENRs authority is necessary in order for

the government to validly reclaim foreshore and submerged

lands. In PEA, we expounded in this manner:
As manager, conservator and overseer of the
natural resources of the State, DENR exercises
supervision and control over alienable and
disposable public lands. DENR also exercises
exclusive jurisdiction on the management and
disposition of all lands of the public
domain. Thus, DENR decides whether areas
under water, like foreshore or submerged
areas of Manila Bay, should be reclaimed or
not. This means that PEA needs authorization
from DENR before PEA can undertake
reclamation projects in Manila Bay, or in any
part of the country.
DENR also exercises exclusive jurisdiction
over the disposition of all lands of the public
domain. Hence,
DENR
decides
whether
reclaimed lands of PEA should be classified as
alienable under Sections 6 and 7 of CA No.
141. Once DENR decides that the reclaimed
lands should be so classified, it then
recommends to the President the issuance of
a proclamation classifying the lands as
alienable or disposable lands of the public
domain open to disposition. We note that then
DENR Secretary Fulgencio S. Factoran, Jr.
countersigned Special Patent No. 3517 in
compliance with the Revised Administrative
Code and Sections 6 and 7 of CA No. 141.
In short, DENR is vested with the power to
authorize the reclamation of areas under
water, while PEA is vested with the power to
undertake the physical reclamation of areas
under water, whether directly or through

private contractors. DENR is also empowered

to classify lands of the public domain into
alienable or disposable lands subject to the
approval of the President. On the other hand,
PEA is tasked to develop, sell or lease the
reclaimed alienable lands of the public
domain.[70]

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

Despite our finding that PEA is not a precedent to the

proprio and

can

supplant

the

act

or

decision

of

case at bar, we find after all that under existing laws, the

subordinate with the Presidents own. The DENR is a

NHA is still required to procure DENRs authorization before a

department in the executive branch under the President,

reclamation project in Manila Bay or in any part of

and it is only an alter ego of the latter. Ordinarily the

the Philippines can be undertaken. The requirement applies

proposed action and the staff work are initially done by a

to PEA, NHA, or any other government agency or office

department like the DENR and then submitted to the

granted with such power under the law.

President for approval. However, there is nothing infirm or

unconstitutional

Notwithstanding the need for DENR permission, we

nevertheless find petitioners position bereft of merit.

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

The DENR is deemed to have granted the authority to

authorized by law to supervise or execute the Project. Thus,

reclaim in the Smokey Mountain Project for the following

as in this case, when the President approved and ordered

reasons:

the

development

of

housing

project

with

the

corresponding reclamation work, making DENR a member of

1. Sec. 17, Art. VII of the Constitution provides that the

the committee tasked to implement the project, the required

President shall have control of all executive departments,

authorization from the DENR to reclaim land can be deemed

bureaus and offices. The President is assigned the task of

satisfied. It cannot be disputed that the ultimate power over

seeing to it that all laws are faithfully executed. Control, in

alienable and disposable public lands is reposed in the

President of the Philippines and not the DENR Secretary. To

still

require

theSmokey Mountain when

DENR
the

authorization
President

has

on
already

authorized and ordered the implementation of the Project

Moreover, the power to order the reclamation of lands of

would be a derogation of the powers of the President as the

public domain is reposed first in the Philippine President.

head of the executive branch. Otherwise, any department

The Revised Administrative Code of 1987 grants authority to

head can defy or oppose the implementation of a project

the President to reserve lands of public domain for

approved by the head of the executive branch, which is

settlement for any specific purpose, thus:

patently illegal and unconstitutional.

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.)

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]

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

the lands to be reclaimed to the NHA and granted to said

granted by the Revised Administrative Code to the DENR

agency the administration and disposition of said lands for

Secretary to authorize the NHA to reclaim said lands. What

subdivision and disposition to qualified beneficiaries and for

can be done indirectly by the DENR can be done directly by

development for mix land use (commercial/industrial) to

the President. It would be absurd if the power of the

provide employment opportunities to on-site families and

President cannot be exercised simply because the head of a

additional areas for port related activities. Such grant of

department in the executive branch has not acted favorably

authority to administer and dispose of lands of public

on a project already approved by the President. If such

domain under the SMDRP is of course subject to the powers

arrangement is allowed then the department head will

of the EXECOM of SMDRP, of which the DENR is a member.

become more powerful than the President.

4. The issuance of ECCs by the DENR for SMDRP is but an
2. Under Sec. 2 of MO 415, the DENR is one of the members

exercise of its power of supervision and control over the

of the EXECOM chaired by the NCR-CORD to oversee the

lands of public domain covered by the Project.

implementation of the Project. The EXECOM was the one

which recommended approval of the project plan and the

Based on these reasons, it is clear that the DENR, through

joint venture agreements. Clearly, the DENR retained its

its acts and issuances, has ratified and confirmed the

power of supervision and control over the laws affected by

reclamation of the subject lands for the purposes laid down

the Project since it was tasked to facilitate the titling of

in Proclamations Nos. 39 and 465.

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

Third Issue: Whether respondent RBI can acquire

reclaimed
foreshore and submerged lands considered as
inalienable and
outside the commerce of man

Patents Nos. 3591 and 3592 while then Secretary Victor O.

Ramos issued Special Patent No. 3598 that embraced the

Petitioner postulates that respondent RBI cannot acquire the

areas covered by the reclamation. These patents conveyed

reclaimed foreshore and submerged areas as these are

inalienable public lands beyond the commerce of man based

lands cannot be the enabling component or consideration to

on Art. 1409 of the Civil Code which provides:

be paid to RBI as these are beyond the commerce of man.

Article 1409. The following contracts

inexistent and void from the beginning:

are

We are not convinced of petitioners postulation.

(1) Those whose cause, object or purpose is

contrary to law, morals, good customs, public
order or public policy;

The reclaimed lands across R-10 were classified alienable

xxxx

following reasons, viz:

(7) Those expressly prohibited or declared

void by law.

First,

and disposable lands of public domain of the State for the

there

were

three

(3) presidential

proclamations

classifying the reclaimed lands across R-10 as alienable or

These contracts cannot be ratified. Neither

can the right to set up the defense of illegality
be waived.

disposable hence open to disposition or concession, to wit:

(1) MO 415 issued by President Aquino, of which Sec. 4

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

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.

public domain. One of the States natural resources are lands

The directive to transfer the lands once reclaimed to the

of public domain which include reclaimed lands.

Petitioner contends that for these reclaimed lands to
be

alienable,

there

must

be

law

or

presidential

NHA implicitly carries with it the declaration that said lands

are alienable and disposable. Otherwise, the NHA cannot

proclamation officially classifying these reclaimed lands as

effectively use them in its housing and resettlement project.

alienable

or

(2) Proclamation No. 39 issued by then President Ramos by

concession. Absent such law or proclamation, the reclaimed

which the reclaimed lands were conveyed to NHA for

and

disposable

and open to

disposition

subdivision and disposition to qualified beneficiaries and for

development into a mixed land use (commercial/industrial)

The query is, when did the declaration take effect? It did so

to provide employment opportunities to on-site families and

only after the special patents covering the reclaimed areas

additional areas for port-related activities. Said directive

were issued. It is only on such date that the reclaimed lands

carries with it the pronouncement that said lands have been

became alienable and disposable lands of the public

transformed to alienable and disposable lands. Otherwise,

domain. This is in line with the ruling in PEA where said issue

there is no legal way to convey it to the beneficiaries.

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 FreedomIslands 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.)

(3) Proclamation No. 465 likewise issued by President Ramos

enlarged the reclaimed area to 79 hectares to be developed
and disposed of in the implementation of the SMDRP.The
authority put into the hands of the NHA to dispose of the
reclaimed lands tacitly sustains the conversion to alienable
and disposable lands.
Secondly, Special Patents Nos. 3591, 3592, and 3598 issued
by the DENR anchored on Proclamations Nos. 39 and 465
issued by President Ramos, without doubt, classified the
reclaimed areas as alienable and disposable.
Admittedly, it cannot be said that MO 415, Proclamations
Nos. 39 and 465 are explicit declarations that the lands to
be reclaimed are classified as alienable and disposable. We
find however that such conclusion is derived and implicit
from the authority given to the NHA to transfer the
reclaimed lands to qualified beneficiaries.

Thus, MO 415 and Proclamations Nos. 39 and 465

cumulatively and jointly taken together with Special Patent
Nos.

3591,

requirement

3592,

and

in PEA that

3598

more

[t]here

than

must

satisfy
be

the
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

It may be argued that the grant of authority to sell public

alienable or disposable, we find that RA 6957 as amended

lands, pursuant to PEA, does not convert alienable lands of

by RA 7718 provides ample authority for the classification of

public domain into private or patrimonial lands. We ruled

reclaimed land in the SMDRP for the repayment scheme of

inPEA that alienable lands of public domain must be

the BOT project as alienable and disposable lands of public

transferred

domain. Sec. 6 of RA 6957 as amended by RA 7718

government entities not tasked to dispose of public

provides:

lands, before these lands can become private or

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.)

patrimonial

to

qualified

private

lands (emphasis

parties,

or

supplied).[75] To

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

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?

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

of

useless to transfer it to the NHA since it cannot legally

equivalent

transfer

domain. More

Freedom islands as alienable or disposable lands of public

importantly, it cannot attain its avowed purposes and goals

domain. In a similar vein, the combined and collective effect

since it can only transfer patrimonial lands to qualified

of Proclamations Nos. 39 and 465 with Special Patents Nos.

beneficiaries and prospective buyers to raise funds for the

3592 and 3598 is tantamount to and can be considered to

SMDRP.

be an official declaration that the reclaimed lots are

or

alienate

lands

of

public

special
to

patent
an

covering

official

the Freedom Islands is

proclamation

classifying

the

alienable or disposable lands of the public domain.

From the foregoing considerations, we find that the 79hectare reclaimed land has been declared alienable and

The reclaimed lands covered by Special Patents Nos.

disposable land of the public domain; and in the hands of

3591, 3592, and 3598, which evidence transfer of ownership

NHA, it has been reclassified as patrimonial property.

of reclaimed lands to the NHA, are official acts of the DENR

Secretary in the exercise of his power of supervision and

Petitioner, however, contends that the reclaimed lands were

control over alienable and disposable public lands and his

inexistent prior to the three (3) Presidential Acts (MO 415

exclusive jurisdiction over the management and disposition

and Proclamations Nos. 39 and 465) and hence, the

of

declaration that such areas are alienable and disposable

Administrative Code of 1987. Special Patent No. 3592

land of the public domain, citing PEA, has no legal basis.

speaks of the transfer of Lots 1 and 2, and RI-003901-

all

lands

of

public

domain

under

the

Revised

000012-D with an area of 401,485 square meters based on

Petitioners contention is not well-taken.

the survey and technical description approved by the

Bureau of Lands. Lastly, Special Patent No. 3598 was issued

Petitioners sole reliance on Proclamations Nos. 39 and 465

in favor of the NHA transferring to said agency a tract of

without taking into consideration the special patents issued

land described in Plan RL-00-000013 with an area of

by the DENR demonstrates the inherent weakness of his

390,000 square meters based on the survey and technical

proposition. As was ruled in PEA cited by petitioner himself,

descriptions approved by the Bureau of Lands.

PD No. 1085, coupled with President Aquinos actual issuance

The conduct of the survey, the preparation of the survey

be treated differently is the BOT Law (RA 6957) which

plan, the computation of the technical description, and the

brought about a novel way of implementing government

processing and preparation of the special patent are matters

contracts by allowing reclaimed land as part or full payment

within the technical area of expertise of administrative

to the contractor of a government project to satisfy the huge

agencies like the DENR and the Land Management Bureau

financial requirements of the undertaking. The NHA holds

and are generally accorded not only respect but at times

the lands covered by Special Patents Nos. 3592 and 3598

even finality.
technical

[76]

Preparation of special patents calls for

examination

and

specialized

review

solely for the purpose of the SMDRP undertaken by authority

of

of the BOT Law and for disposition in accordance with said

calculations and specific details which the courts are ill-

special law. The lands become alienable and disposable

equipped to undertake; hence, the latter defer to the

lands of public domain upon issuance of the special patents

administrative agency which is trained and knowledgeable

and become patrimonial properties of the Government from

on such matters.[77]

the time the titles are issued to the NHA.

As early as 1999, this Court in Baguio v. Republic laid down

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

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]

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

The doctrine was reiterated in Republic v. Heirs of Felipe

interpreted depending on the changing conditions and

Alijaga, Sr.,[79] Heirs of Carlos Alcaraz v. Republic,[80] and the

times. Tempora mutantur et legis mutantur in illis (time

more recent case of Doris Chiongbian-Oliva v. Republic of

changes and laws change with it). One such law that should

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

Memorandum

of

Project

was

Agreement

terminated
signed

through

on August

a
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,

(commercial/industrial)
to
provide
employment opportunities to on-site families
and additional areas for port related activities.
(Emphasis supplied.)

still, the reclamation is flawed for there was never any

declaration that said lands are no longer needed for public
use.
We are not moved by petitioners submission.

While numerical count of the persons to be benefited is not

the determinant whether the property is to be devoted to

Even if it is conceded that there was no explicit declaration

public

that the lands are no longer needed for public use or public

undeniably

service, there was however an implicit executive declaration

beneficiaries to whom the reclaimed lands can be sold,

that the reclaimed areas R-10 are not necessary anymore

namelythe Smokey Mountain dwellers. The

for public use or public service when President Aquino

Filipinos are not qualified; hence, said lands are no longer

through MO 415 conveyed the same to the NHA partly for

essential for the use of the public in general.

housing

project

and

related

use,

the

declaration

identifies

only

in

Proclamation

particular

No.

39

individuals

as

rest

of

the

commercial/industrial

development intended for disposition to and enjoyment of

In addition, President Ramos issued on August 31,

certain beneficiaries and not the public in general and partly

1994 Proclamation No. 465 increasing the area to be

as enabling component to finance the project.

reclaimed from forty (40) hectares to seventy-nine (79)

hectares, elucidating that said lands are undoubtedly set

President Ramos, in issuing Proclamation No. 39,

aside

for

the

beneficiaries

of

SMDRP

and

not

the

declared, though indirectly, that the reclaimed lands of the

publicdeclaring the power of NHA to dispose of land to be

Smokey Mountain project are no longer required for public

reclaimed, thus: The authority to administer, develop, or

use or service, thus:

dispose lands identified and reserved by this Proclamation

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

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

concession

that proclaimed the non-use of the reclaimed areas for

for Smokey Mountain beneficiaries. Hence, said lands are no

public use or service as the Project cannot be successfully

longer intended for public use or service and shall form part

implemented without the withdrawal of said lands from

of the patrimonial properties of the State under Art. 422 of

public use or service. Certainly, the devotion of the

the Civil Code.[84] As discussed a priori, the lands were

reclaimed land to public use or service conflicts with the

classified as patrimonial properties of the NHA ready for

intended use of the Smokey Mountain areas for housing and

disposition when the titles were registered in its name by

employment of the Smokey Mountain scavengers and for

the Register of Deeds.

financing

the

Project

because

the

latter

cannot

as

they

would

be

devoted

to

units

be

accomplished without abandoning the public use of the

Moreover, reclaimed lands that are made the enabling

subject land. Without doubt, the presidential proclamations

components of a BOT infrastructure project are necessarily

on SMDRP together with the issuance of the special patents

reclassified as alienable and disposable lands under the

had effectively removed the reclaimed lands from public

BOT Law; otherwise, absurd and illogical consequences

use.

would naturally result. Undoubtedly, the BOT contract will

not be accepted by the BOT contractor since there will be no

More decisive and not in so many words is the ruling

consideration for its contractual obligations. Since reclaimed

in PEA which we earlier cited, that PD No. 1085 and

land will be conveyed to the contractor pursuant to the BOT

President Aquinos issuance of a land patent also constitute a

Law, then there is an implied declaration that such land is

declaration that the Freedom Islands are no longer needed

no longer intended for public use or public service and,

for public service. Consequently, we ruled in that case that

hence, considered patrimonial property of the State.

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

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.

disposed of in a manner affecting its

title,
except
when
authorized
by
Congress; Provided,
further,
That
any
person,
corporation,
association
or
partnership disqualified from purchasing
public land for agricultural purposes under the
provisions of this Act, may lease land included
under this title suitable for industrial or
residential purposes, but the lease granted
shall only be valid while such land is used for
the purposes referred to. (Emphasis supplied.)

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:

Reliance on said provision is incorrect as the same applies

only to a province, municipality or branch or subdivision of

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

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;

rights and interests and encumber or otherwise dispose of

Section 63. Whenever it is decided that

lands covered by this chapter are not needed
for public purposes, the Director of Lands
shall ask the Secretary of Agriculture and
Commerce for authority to dispose of the
same. Upon receipt of such authority, the
Director of Lands shall give notice by public
advertisement in the same manner as in the
case of leases or sales of agricultural public
land, that the Government will lease or sell, as
the case may be, the lots or blocks specified
in the advertisement, for the purpose stated
in the notice and subject to the conditions
specified in this chapter.

them as it may deem appropriate. The transfer of the

xxxx

(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

reclaimed lands by the National Government to the NHA for

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.

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:

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.

but the absence of bidding in the sale of alienable and

This stand is devoid of merit.

disposable lands of public domain pursuant to CA 141 as

amended.

There is no doubt that respondent NHA conducted a public

bidding of the right to become its joint venture partner in

Petitioners theory is incorrect.

the Smokey Mountain Project. Notices or Invitations to Bid

were published in the national dailies on January 23 and 26,

Secs. 63 and 67 of CA 141, as amended, are in point as they

1992 and February 1, 14, 16, and 23, 1992. The bidding

refer

proper was done by the Bids and Awards Committee (BAC)

of alienable

on May 18, 1992. On August 31, 1992, the Inter-Agency

domain. This is not present in the case at bar. The lands

Techcom made up of the NHA, PEA, DPWH, PPA, DBP, and

reclaimed by and conveyed to the NHA are no longer lands

DENR opened the bids and evaluated them, resulting in the

of public domain. These lands became proprietary lands or

award of the contract to respondent RBI on October 7, 1992.

patrimonial properties of the State upon transfer of the titles

to

government
and

sale

by

the

disposable

Director
lands

of

of

Lands
public

over the reclaimed lands to the NHA and hence outside the
On March 19, 1993, respondents NHA and RBI signed the

ambit of CA 141. The NHA can therefore legally transfer

JVA. On February 23, 1994, said JVA was amended and

patrimonial land to RBI or to any other interested qualified

restated into the ARJVA. On August 11, 1994, the ARJVA was

buyer without any bidding conducted by the Director of

again amended. On September 7, 1994, the OP approved

Lands because the NHA, unlike PEA, is a government

the ARJVA and the amendments to the ARJVA. From these

agency not tasked to sell lands of public domain. Hence, it

factual settings, it cannot be gainsaid that there was full

can only hold patrimonial lands and can dispose of such

compliance with the laws and regulations governing public

lands by sale without need of public bidding.

biddings involving a right, concession, or property of the

government.

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

Petitioner concedes that he does not question the public

needed.It appears from the Handbook on Property and

bidding on the right to be a joint venture partner of the NHA,

Supply Management System, Chapter 6, that reclaimed

lands which have become patrimonial properties of the

Reclaimed lands cannot be considered unserviceable

State, whose titles are conveyed to government agencies

properties. The reclaimed lands in question are very much

like the NHA, which it will use for its projects or programs,

needed by the NHA for the Smokey Mountain Project

are not within the ambit of Sec. 79. We quote the

because without it, then the projects will not be successfully

determining

implemented. Since

factors

in

the

Disposal

of

Unserviceable

Property, thus:
Determining Factors in
Unserviceable Property

the

reclaimed

lands

are

not

unserviceable properties and are very much needed by

the

Property, which can no

repaired or reconditioned;

Disposal

of

longer

be

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]

NHA, then Sec. 79 of PD 1445 does not apply.

More importantly, Sec. 79 of PD 1445 cannot be applied to
patrimonial properties like reclaimed lands transferred to a
government agency like the NHA which has entered into a
BOT contract with a private firm. The reason is obvious. If
the patrimonial property will be subject to public bidding as
the only way of disposing of said property, then Sec. 6 of RA
6957 on the repayment scheme is almost impossible or
extremely difficult to implement considering the uncertainty
of a winning bid during public auction. Moreover, the
repayment scheme of a BOT contract may be in the form of
non-monetary payment like the grant of a portion or
percentage of reclaimed land. Even if the BOT partner
participates in the public bidding, there is no assurance that
he will win the bid and therefore the payment in kind as
agreed to by the parties cannot be performed or the winning
bid prize might be below the estimated valuation of the
land. The only way to harmonize Sec. 79 of PD 1445 with
Sec. 6 of RA 6957 is to consider Sec. 79 of PD 1445 as

inapplicable

to

BOT

contracts

involving

patrimonial

converted to alienable and disposable lands of public

lands. The law does not intend anything impossible (lex non

domain.When the titles to the reclaimed lands were

intendit aliquid impossibile).

transferred to the NHA, said alienable and disposable lands

of public domain were automatically classified as lands of

Seventh Issue: Whether RBI, being a private

corporation,
is barred by the Constitution to acquire lands of
public domain

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

private

projects and to attain its goals is when it is automatically

corporation, is expressly prohibited by the 1987 Constitution

converted to patrimonial properties of the State. Being

from acquiring lands of public domain.

patrimonial or private properties of the State, then it has the

Petitioner

maintains

that

RBI,

being

power to sell the same to any qualified personunder the

Petitioners proposition has no legal mooring for the following

Constitution, Filipino citizens as private corporations, 60% of

reasons:

which is owned by Filipino citizens like RBI.

1. RA 6957 as amended by RA 7718 explicitly states that a

3. The NHA is an end-user entity such that when alienable

contractor can be paid a portion as percentage of the

lands of public domain are transferred to said agency, they

reclaimed land subject to the constitutional requirement

are automatically classified as patrimonial properties. The

that only Filipino citizens or corporations with at least 60%

NHA is similarly situated as BCDA which was granted the

Filipino equity can acquire the same. It cannot be denied

authority to dispose of patrimonial lands of the government

that RBI is a private corporation, where Filipino citizens own

under RA 7227. The nature of the property holdings

at least 60% of the stocks. Thus, the transfer to RBI is valid

conveyed to BCDA is elucidated and stressed in the May 6,

and constitutional.

2003 Resolution in Chavez v. PEA, thus:

2. When Proclamations Nos. 39 and 465 were issued,

inalienable lands covered by said proclamations were

BCDA is an entirely different government

entity. BCDA is authorized by law to

sell specific government lands that have

long been declared by presidential
proclamations as military reservations
for use by the different services of the
armed forces under the Department of
National Defense. BCDAs mandate is
specific and limited in area, while PEAs
mandate is general and national. BCDA
holds government lands that have been
granted
to
end-user
government
entitiesthe military services of the
armed
forces.
In
contrast,
under
Executive Order No. 525, PEA holds the
reclaimed public lands, not as an enduser entity, but as the government
agency
primarily
responsible
for
integrating, directing, and coordinating
all reclamation projects for and on
behalf of the National Government.

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

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.

Private Sector, and For Other Purposes), as amended by RA

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

The foregoing reasons likewise apply to the contention of

7718, which is a special law similar to RA 7227. Moreover,

since the implementation was assigned to the NHA, an enduser 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.

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

This relief must be granted.

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

The right of the Filipino people to information on

matters of public concern is enshrined in the 1987
Constitution, thus:
ARTICLE II
xxxx

Petitioner asserts his right to information on all documents

such as contracts, reports, memoranda, and the like relative
to SMDRP.

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.

Petitioner asserts that matters relative to the SMDRP have

ARTICLE III

not been disclosed to the public like the current stage of the

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.

Project, the present financial capacity of RBI, the complete

list of investors in the asset pool, the exact amount of
investments in the asset pool and other similar important
information regarding the Project.
He prays that respondents be compelled to disclose
all information regarding the SMDRP and furnish him with
originals or at least certified true copies of all relevant
documents relating to the said project including, but not
limited to, the original JVA, ARJVA, AARJVA, and the Asset
Pool Agreement.

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]

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

In PEA, this Court elucidated the rationale behind the right

the government, meaning official recommendations or final

to information:

positions reached on the different matters subject of

These twin provisions of the Constitution seek

to promote transparency in policy-making and
in the operations of the government, as well
as provide the people sufficient information to
exercise effectively other constitutional rights.
These twin provisions are essential to the
exercise of freedom of expression. If the
government does not disclose its official acts,
transactions and decisions to citizens,
whatever citizens say, even if expressed
without any restraint, will be speculative and
amount to nothing. These twin provisions are
also essential to hold public officials at all
times x x x accountable to the people, for
unless citizens have the proper information,
they cannot hold public officials accountable
for
anything.
Armed
with
the
right
information, citizens can participate in public
discussions leading to the formulation of
government policies and their effective
implementation. An informed citizenry is
essential to the existence and proper
functioning of any democracy.[88]

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

information. There

desired enabling law will finally see the light of day if and

government agency disclosure of information as this is

when Congress decides to approve the proposed Freedom of

mandatory

Access to Information Act. In the meantime, it would suffice

remedies are available. On the other hand, the interested

that government agencies post on their bulletin boards the

party must first request or even demand that he be allowed

documents incorporating the information on the steps and

access to documents and papers in the particular agency. A

negotiations

the

request or demand is required; otherwise, the government

agreements themselves, and if finances permit, to upload

office or agency will not know of the desire of the interested

said information on their respective websites for easy

party to gain access to such papers and what papers are

access by interested parties. Without any law or regulation

needed. The duty to disclose covers only transactions

governing the right to disclose information, the NHA or any

involving public interest, while the duty to allow access has

of the respondents cannot be faulted if they were not able to

a broader scope of information which embraces not only

disclose information relative to the SMDRP to the public in

transactions involving public interest, but any matter

general.

contained in official communications and public documents

that

produced

the

agreements

and

under

is
the

no

need

to

Constitution;

demand
failing

from
that,

the
legal

of the government agency.

The other aspect of the peoples right to know apart
from the duty to disclose is the duty to allow access to

We find that although petitioner did not make any demand

information on matters of public concern under Sec. 7, Art.

on the NHA to allow access to information, we treat the

III of the Constitution. The gateway to information opens to

petition as a written request or demand. We order the NHA

the public the following: (1) official records; (2) documents

to allow petitioner access to its official records, documents,

and papers pertaining to official acts, transactions, or

and papers relating to official acts, transactions, and

decisions; and (3) government research data used as a basis

decisions that are relevant to the said JVA and subsequent

for policy development.

agreements relative to the SMDRP.

Thus,

the

differentiated

duty

to

from

disclose
the

duty

information
to

permit

should

be

access

to

Ninth Issue: Whether the operative fact doctrine

applies to the
instant petition

executive act contrary to its terms cannot

survive.
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

Such a view has support in logic and

possesses the merit of simplicity. It may not
however be sufficiently realistic. It does not
admit of doubt that prior to the
declaration of nullity such challenged
legislative or executive act must have
been in force and had to be complied
with. This is so as until after the judiciary, in
an appropriate case, declares its invalidity, it
is entitled to obedience and respect. Parties
may have acted under it and may have
changed their positions. What could be more
fitting than that in a subsequent litigation
regard be had to what has been done while
such legislative or executive act was in
operation and presumed to be valid in all
respects. It is now accepted as a doctrine that
prior to its being nullified, its existence as a
fact must be reckoned with. This is merely to
reflect awareness that precisely because the
judiciary is the governmental organ which has
the final say on whether or not a legislative or
executive measure is valid, a period of time
may have elapsed before it can exercise the
power of judicial review that may lead to a
declaration of nullity. It would be to deprive
the law of its quality of fairness and justice
then, if there be no recognition of what had
transpired prior to such adjudication.
In the language of an American Supreme
Court decision: The actual existence of a
statute, prior to such a determination [of
unconstitutionality], is an operative fact
and may have consequences which
cannot justly be ignored. The past
cannot always be erased by a new

judicial declaration. The effect of the

subsequent ruling as to invalidity may have to
be considered in various aspects, with respect
to
particular
relations,
individual
and
corporate, and particular conduct, private and
official. This language has been quoted with
approval in a resolution in Araneta v. Hill and
the decision in Manila Motor Co., Inc.
v. Flores. An even more recent instance is the
opinion of Justice Zaldivar speaking for the
Court in Fernandez v. Cuerva and Co.
[91]
(Emphasis supplied.)
This doctrine was reiterated in the more recent case of City
of Makati v. Civil Service Commission, wherein we ruled that:
Moreover, we certainly cannot nullify the City
Governments order of suspension, as we have
no reason to do so, much less retroactively
apply such nullification to deprive private
respondent of a compelling and valid reason
for not filing the leave application. For as we
have held, a void act though in law a
mere scrap of paper nonetheless confers
legitimacy upon past acts or omissions
done in reliance thereof. Consequently,
the existence of a statute or executive
order prior to its being adjudged void is
an operative fact to which legal
consequences are attached. It would
indeed be ghastly unfair to prevent private
respondent from relying upon the order of
suspension in lieu of a formal leave
application.[92] (Emphasis supplied.)

The principle was further explicated in the case of Rieta v.

People of the Philippines, thus:
In similar situations in the past this Court had
taken the pragmatic and realistic course set
forth in Chicot County Drainage District vs.
Baxter Bank to wit:
The courts below have proceeded on
the theory that the Act of Congress,
having
been
found
to
be
unconstitutional, was not a law; that it
was inoperative, conferring no rights
and imposing no duties, and hence
affording no basis for the challenged
decree. x x x It is quite clear, however,
that such broad statements as to the
effect
of
a
determination
of
unconstitutionality must be taken with
qualifications. The actual existence of
a statute, prior to [the determination
of its invalidity], is an operative fact
and may have consequences which
cannot justly be ignored. The past
cannot always be erased by a new
judicial declaration. The effect of the
subsequent ruling as to invalidity may
have to be considered in various
aspects with respect to particular
conduct, private and official. Questions
of rights claimed to have become
vested,
of
status,
of
prior
determinations
deemed
to
have
finality and acted upon accordingly, of
public policy in the light of the nature
both of the statute and of its previous
application,
demand
examination. These
questions
are

among the most difficult of those

which have engaged the attention of
courts, state and federal, and it is
manifest from numerous decisions that
an all-inclusive statement of a principle
of
absolute
retroactive
invalidity
cannot be justified.

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

In the May 6, 2003 Resolution in Chavez v. PEA,[93] we ruled

that De Agbayani[94] is not applicable to the case considering
that the prevailing law did not authorize private corporations
from owning land. The prevailing law at the time was the
1935 Constitution as no statute dealt with the same issue.
In the instant case, RA 6957 was the prevailing law at
the time that the joint venture agreement was signed. RA
6957,

entitled

An

Act

Authorizing

The

Financing,

Construction, Operation And Maintenance Of Infrastructure

Projects By The Private Sector And For Other Purposes,
which was passed by Congress on July 24, 1989, allows
repayment to the private contractor of reclaimed lands.
[95]

Such law was relied upon by respondents, along with the

above-mentioned executive issuances in pushing through

with the Project. The existence of such law and issuances is
an operative fact to which legal consequences have
attached. This Court is constrained to give legal effect to the
acts done in consonance with such executive and legislative

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 onMarch 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

26, 1994 Smokey Mountain Asset Pool Agreement and the

case. When the ruling in PEA was rendered by this Court

agreement on Phase I of the Project as well as all other

on July 9, 2002, the JVAs were all executed. Furthermore,

transactions which emanated from the Project, have been

when petitioner filed the instant case against respondents

shown to be valid, legal, and constitutional. Phase II has

on August 5, 2004, the JVAs were already terminated by

been struck down by the Clean Air Act.

virtue

of

the

MOA

between

the

NHA

and

RBI. The

respondents had no reason to think that their agreements

With

regard

to

the

prayer

were unconstitutional or even questionable, as in fact, the

respondents

concurrent acts of the executive department lent validity to

implementing and/or enforcing the said Project and other

the implementation of the Project. The SMDRP agreements

agreements related to it, and from further deriving and/or

have produced vested rights in favor of the slum dwellers,

enjoying any rights, privileges and interest from the Project,

the buyers of reclaimed land who were issued titles over

we find the same prayer meritless.

particularly

for

prohibition,

respondent

NHA

enjoining

from

further

said land, and the agencies and investors who made

investments in the project or who bought SMPPCs. These

Sec. 2 of Rule 65 of the 1997 Rules of Civil Procedure

properties and rights cannot be disturbed or questioned

provides:

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

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.

In addition, prohibition does not lie against the NHA in view

of petitioners failure to avail and exhaust all administrative

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

remedies. Clear is the rule that prohibition is only available

when there is no adequate remedy in the ordinary course of
law.

what ministerial functions the NHA has with regard to the

More importantly, prohibition does not lie to restrain an act

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

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.

act done.[97]
Whatever is left to be done in relation to the August 27,
2003 MOA,

terminating

the

JVA

and

other

related

agreements, certainly does not involve ministerial functions

of the NHA but instead requires exercise of judgment. In
fact, Item No. 4 of the MOA terminating the JVAs provides for
validation of the developers (RBIs) claims arising from the
termination of the SMDRP through the various government
agencies.[98] Such
discretion.

validation

requires

the

exercise

of

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

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.

JAVIER VS VERIDIANO II

Petitioner Felicidad Javier questions before us the order of a

regional trial court citing the final decision of the city court
previously dismissing her complaint for forcible entry, and on the
basis thereof, dismissed her petition to quiet title on the ground
of res judicata. We summon the time-honored remedies accion
interdictal, accion publiciana and accion reivindicatoria or accion
de reivindicacion to resolve the issues presented in the petition.
It appears that on 25 January 1963, petitioner filed a
Miscellaneous Sales Application for Lot No. 1641, Ts-308 of the
Olongapo Townsite Subdivision, Lower Kalaklan, Olongapo City,
with the District Land Officer, Bureau of Lands, Olongapo City.
Sometime in December 1970, alleging that she was forcibly
dispossessed of a portion of the land by a certain Ben Babol, she
instituted a complaint for forcible entry before the City Court of
Olongapo City, docketed as Civil Case No. 926, stating in pars. 2
and 3 therein that
. . . plaintiff is the true, lawful and in actual, prior
physical possession of a certain parcel of land
situated at Lower Kalaklan, City of Olongapo, said
lot being designated as Lot No. 1641, Ts-308 of
the Olongapo Townsite Subdivision since 1961
and up to the present time, until the day and

incidents hereinafter narrated. . . . Sometime on

December 12, 1970, the defendant, without
express consent of plaintiff and without lawful
authority, through scheme, strategy and stealth,
forcibly entered a portion on the southwestern
part of Lot No. 1641, Ts-308, with the assistance
of hired helpers, started construction of riprap
along the Kalaklan River perimeter of said portion
of land; said entry was further augmented by
removing plaintiff's chain link, fence with
galvanized iron posts embedded in concrete,
likewise destroying plants introduced by plaintiff
by removing existing BL (Bureau of Lands)
monuments thereon, and by these actions,
defendant started exercising illegal possession of
said portion of land which contains an area of 200
square meters, more or less. 1
On 7 November 1972 the City Court of Olongapo City, Br.
4, 2 dismissed Civil Case No. 926 on the ground that "it appears to
the Court that the Bureau of Lands has considered the area in
question to be outside Lot 1641 of the plaintiff. . . ." 3 The Decision of
the City Court of Olongapo City became final and executory on 30
April 1973 when the then Court of First Instance of Zambales and
Olongapo City, Br. 3, 4 dismissed the appeal and affirmed the findings
and conclusions of the City Court holding that appellant (herein
petitioner) failed to give sufficient evidence to prove that the area in
question was within the boundaries of Lot No. 1641. 5
Subsequently, on 17 December 1973, petitioner was granted
Miscellaneous Sales Patent No. 5548 and issued Original
Certificate of Title No. P-3259 covering Lot No. 1641. Meanwhile,
Ben Babol who was the defendant and appellee in the complaint
for forcible entry had sold the property he was occupying,
including the portion of about 200 square meters in question, to a
certain Reino Rosete. Thus petitioner demanded the surrender of

the same area in dispute from Reino Rosete who repeatedly

refused to comply with the demand.
On 29 June 1977, or after about four (4) years from the finality of
the dismissal of Civil Case No. 926, petitioner instituted a
complaint for quieting of title and recovery of possession with
damages against Ben Babol and Reino Rosete before the then
Court of First Instance of Zambales and Olongapo City, docketed
as Civil Case No. 2203-0, alleging in pars. 2 and 3 therein that
. . . plaintiff is the absolute owner in fee simple of
a parcel of land identified as Lot No. 1641, Ts-308,
Olongapo Townsite Subdivision . . . covered by
Original Certificate of Title No. P-3259, issued by
the Register of Deeds for the province of
Zambales. . . . Sometime in December,
1970, and until present, defendants, relying on an
application filed on December 23, 1969, with the
Bureau of Lands, however have squatted, illegally
occupied and unlawfully possessed the
southwestern portion of plaintiff's above-described
property of about 200 square meters, then by
defendant BEN BABOL and now by defendant
REINO ROSETE, the former having sold the
entirety of his property to the latter, including the
portion in question. . . . 6
Instead of filing a responsive pleading, therein defendant Reino
Rosete (private respondent herein) moved to dismiss the
complaint on the ground of res judicata. Defendant Ben Babol did
not file any pleading.
In its Order dated 27 January 1978, 7 the then Court of First
Instance of Zambales, Br. 1, 8 sustained the argument of Rosete and
granted his motion to dismiss. Thereafter, petitioner's motion for

reconsideration was denied. 9 Hence, this petition for review

on certiorari.

Petitioner contends that res judicata cannot apply in the instant

case since there is no identity of parties and causes of action
between her complaint for forcible entry, which had long become
final and executory, and her subsequent petition for quieting of
title. She argues that private respondent Reino Rosete, who
invokes the defense or res judicata, was never impleaded in the
forcible entry case, which is an action in personam; neither was
he a purchaser pendente lite who, perhaps, could have validly
invoked the defense of res judicata. With regard to the cause of
action, she maintains that there is no identity of causes of action
since the first case was for forcible entry, which is merely
concerned with the possession of the property, whereas the
subsequent case was for quieting of title, which looks into the
ownership of the disputed land.
Private respondent however submits that there is identity of
parties in the two cases since he is a successor in interest by title
of the defendant in the first case after the commencement of the
first action. On the issue of identity of causes of action, he simply
states that neither of the two cases, i.e., the complaint for forcible
entry and the subsequent petition for quieting of title, alleges a
cause of action. Thus, private respondent continues, both cases
have to be dismissed.
Time and again it has been said that for res judicata to bar the
institution of a subsequent action the following requisites must
concur: (1) There must be a final judgment or order; (2) The court
rendering the judgment must have jurisdiction over the subject
matter; (3) The former judgment is a judgment on the merits; and,
(4) There is between the first and second actions identity of
parties, of subject matter and of causes of action. 10 The presence
of the first three requirements and the identity of subject matter in the

fourth requirement are not disputed. Hence, the only issues

remaining are whether as between Civil Case No. 926 and Civil
Case No. 2203-0 there is identity of parties and of causes of action
which would bar the institution of Civil Case No. 2203-0.

Petitioner's argument that there is no identity of parties between

the two actions is without merit. We have repeatedly ruled that
for res judicata to apply, what is required is not absolute but only
substantial identity of parties. 11 It is fundamental that the
application of res judicata may not be evaded by simply including
additional parties in a subsequent litigation. In fact we have said that
there is still identity of parties although in the second action there is
one party who was not joined in the first action, if it appears that such
party is not
a necessary party either in the first or second action, 12 or is a mere
nominal party. 13 Thus, Sec. 49, par. (b), Rule 39, Rules of Court,
provides that ". . . the judgment or order is, with respect to the matter
directly adjudged or as to any other matter that could have been
raised in relation thereto, conclusive between the parties and their
successors in interest by title subsequent to the commencement of
the action or special proceeding, litigating for the same thing and
under the same title and in the same capacity."
In the case at bench, it is evident that private respondent Reino
Rosete is a successor in interest of Ben Babol by title subsequent
to the commencement and termination of the first action. Hence,
there is actual, if not substantial, identity of the parties between
the two actions. But, there is merit in petitioner's argument that
there is no identity of causes of action between Civil Case
No. 926 and Civil Case No. 2203-0.
Civil Case No. 926 is a complaint for forcible entry, where what is
at issue is prior possession, regardless of who has lawful title
over the disputed property. 14 Thus, "[t]he only issue in an action for
forcible entry is the physical or material possession of real property,
that is, possession de facto and not possession de jure. The

philosophy underlying this remedy is that irrespective of the actual

condition of the title to the property, the party in peaceable quiet
possession shall not be turned out by strong hand, violence or
terror." 15 And, a judgment rendered in a case for recovery of
possession is conclusive only on the question of possession and not
on the ownership. It does not in any way bind the title or affect the
ownership of the land or building. 16

On the other hand, Civil Case No. 2203-0 while inaccurately

captioned as an action for "Quieting of Title and Recovery of
Possession with Damages" is in reality an action to recover a
parcel of land or an accion reivindicatoria under Art. 434 17 of the
Civil Code, and should be distinguished from Civil Case No. 926,
which is anaccion interdictal. From the averments of the complaint in
Civil Case No. 2203-0, plaintiff therein (petitioner herein) clearly sets
up title to herself and prays that respondent Rosete be ejected from
the disputed land and that she be declared the owner and given
possession thereof. Certainly, the allegations partake of the nature of
an accion reivindicatoria. 18
The doctrine in Emilia v. Bado, 19, decided more than twenty-five
years ago, is still good law and has preserved the age-old remedies
available under existing laws and jurisprudence to recover
possession of real property, namely accion interdictal, which is the
summary action for forcible entry (detentacion) where the
defendant's possession of the property is illegal ab initio, or the
summary action for unlawful detainer (desahuico) where the
defendant's possession was originally lawful but ceased to be so by
the expiration of his right to possess, both of which must be brought
within one year from the date of actual entry on the land, in case of
forcible entry, and from the date of last demand, in case of unlawful
detainer, in the proper municipal trial court or metropolitan trial
court; 20 accion publiciana which is a plenary action for recovery of
the right to possess and which should be brought in the proper
regional trial court when the dispossession has lasted for more than
one year; and, accion reivindicatoria or accion de
reivindicacion which seeks the recovery of ownership and includes

the jus utendi and the jus fruendi brought in the proper regional trial
court.

Accion reivindicatoria or accion de reivindicacion is thus an action

whereby plaintiff alleges ownership over a parcel of land and
seeks recovery of its full possession. 21 It is different from accion
interdictal or accion publicianawhere plaintiff merely alleges proof of
a better right to possess without claim of title. 22
In Civil Case No. 926 petitioner merely claimed a better right or
prior possession over the disputed area without asserting title
thereto. It should be distinguished from Civil Case No. 2203-0
where she expressly alleged ownership, specifically praying that
she be declared the rightful owner and given possession of the
disputed portion. Hence, in Civil Case No. 926 petitioner merely
alleged that she was "the true, lawful (possessor) and in actual,
prior physical possession" of the subject parcel of land, whereas
in Civil Case
No. 2203-0 she asserted that she was "the absolute owner in fee
simple" of the parcel of land "covered by Original Transfer
Certificate of Title No. P-3259." The complaint in Civil Case No.
2203-0 definitely raises the question of ownership and clearly
gives defendants therein notice of plaintiff's claim of exclusive and
absolute ownership, including the right to possess which is an
elemental attribute of such ownership. Thus, this Court has ruled
that a judgment in forcible entry or detainer case disposes of no
other issue than possession and declares only who has the right
of possession, but by no means constitutes a bar to an action for
determination of who has the right or title of ownership. 23
And, applying the ruling of the Court En Banc in Quimpo v. De la
Victoria, 24 even if we treat Civil Case No. 2203-0 as a petition to
quiet title, as its caption suggests, still it has a cause of action
different from that for ejectment. Consequently, there being no
identity of causes of action between Civil Case No. 926 and Civil

Case No. 2203-0, the prior complaint for ejectment cannot bar the
subsequent action for recovery, or petition to quiet title.

WHEREFORE, the petition is GRANTED. The Order dated 27

January 1978 of the then Court of First Instance of Zambales, Br.
I, with station in Olongapo City, dismissing Civil Case No. 2203-0,
and its subsequent Order denying reconsideration of the
dismissal are REVERSED and SET ASIDE.
The Clerk of Court is directed to remand the records immediately
to the court of a quo and the latter to proceed with the trial of Civil
Case No. 2203-0 with deliberate dispatch. This decision is
immediately executory.
SO ORDERED.
BUSTOS VS CA

The case before the Court is an appeal via certiorari

seeking to set aside the decision of the Court of
Appeals[1] modifying that of the Regional Trial Court,
Pampanga, Macabebe, Branch 55[2] and the resolution denying
reconsideration.[3]
Paulino Fajardo died intestate on April 2, 1957. [4] He had
four (4) children, namely: Manuela, Trinidad, Beatriz and
Marcial, all surnamed Fajardo.
On September 30, 1964, the heirs executed an extrajudicial partition[5] of the estate of Paulino Fajardo. On the same
date, Manuela sold her share to Moses [6] G. Mendoza, husband
of Beatriz by deed of absolute sale.[7] The description of the
property reads as follows:

A parcel of an irrigated riceland located in the barrio of

San Isidro, Masantol, Pampanga. Bounded on the North,
by Paulino Fajardo; on the East, by Paulino Fajardo; on
the South, by Eleuterio Bautista; and on the West, by
Paulino Guintu. Containing an area of 5,253 sq. mts.,
more or less. Declared under Tax Declaration No. 3029
in the sum of P710.00.
At the time of the sale, there was no cadastral survey in
Masantol, Pampanga. Later, the cadastre was conducted, and
the property involved in the partition case were specified as
Lots 280, 283, 284, 1000-A and 1000-B. The share of Manuela,
which was sold to Moses, includes Lot 284 of the Masantol
Cadastre and Lot 284 was subdivided into Lots 284-A and 284B.
Trinidad was in physical possession of the land. She
refused to surrender the land to her brother-in-law Moses G.
Mendoza, despite several demands.
On September 3, 1971, Moses filed with the Court of First
Instance, Pampanga a complaint for partition claiming the one
fourth () share of Manuela which was sold to him.[8]
During the pendency of the case for partition, Trinidad
Fajardo died. On December 15, 1984, the heirs executed an
extra-judicial partition of the estate of Trinidad Fajardo. On
February 16, 1987, Lucio Fajardo Ignacio, son of Trinidad sold
Lot 284-B to spouses Venancio Viray and Cecilia Nunga-Viray.

On February 8, 1989, the Regional Trial Court, Pampanga,

Macabebe, Branch 55 rendered a decision in favor of Moses G.
Mendoza, the dispositive portion of which provides:

WHEREFORE, premises considered, judgment is

hereby rendered in favor of the plaintiffs and against the
defendants, and hereby orders
1. The division and partition of the parcel of land identified
and described earlier with the aid and assistance of a
qualified surveyor, segregating therefrom an area
equivalent to portion to be taken from the vacant right
eastern portion which is toward the national road the
same to be determined by one (or the said surveyor)
standing on the subject land facing the municipal road,
at the expense of the plaintiffs;
2. The said portion segregated shall be a fixed portion,
described by metes and bounds, and shall be
adjudicated and assigned to the plaintiffs;
3. In case of disagreement as to where the said right eastern
portion should be taken, a commission is hereby
constituted, and the OIC-Clerk of Court is hereby
appointed chairman, and the OIC-Branch Clerk of
Court of Branches 54 and 55 of this Court are hereby
appointed members, to carry out the orders contained in
the foregoing first two paragraphs;
4. The defendants to pay the plaintiffs the sum of P500.00
as attorneys fees, and to pay the costs of the
proceedings.

SO ORDERED.[9]
On September 13, 1991, Moses sold the subject land to
spouses Warlito Bustos and Herminia Reyes-Bustos.
In the meantime, on November 6, 1989, spouses Venancio
Viray and Cecilia Nunga-Viray, buyers of Lucio Ignacios share
of the property, filed with the Municipal Circuit Trial Court,
Macabebe-Masantol, Pampanga an action for unlawful
detainer[10] against spouses Bustos, the buyers of Moses G.
Mendoza, who were in actual possession as lessees of the
husband of Trinidad, Francisco Ignacio, of the subject land.
The municipal circuit trial court decided the case in favor
of spouses Viray. Subsequently, the trial court issued writs of
execution and demolition, but were stayed when spouses
Bustos filed with the Regional Trial Court, Pampanga,
Macabebe, Branch 55,[11] a petition for certiorari, prohibition
and injunction.
On December 18, 1992, the regional trial court rendered a
decision, the dispositive portion of which reads:

WHEREFORE, premises considered, this case, is as it is

hereby, dismissed. The preliminary injunction is ordered
dissolved and the petitioners and Meridian Assurance
Corporation are hereby ordered jointly and severally, to
pay the private respondents the sum of P20,000.00 by
way of litigation expenses and attorneys fees, and to pay
the cost of the proceedings.[12]

In time, the spouses Bustos appealed the decision to the

Court of Appeals.[13]
On February 27, 1989, Lucio Fajardo Ignacio also
appealed the decision to the Court of Appeals.[14]
Upon motion for consolidation of the petitioners, on
August 9, 1993, the Court of Appeals resolved to consolidate
CA-G. R. SP No. 30369 and CA-G. R. CV No. 37606.[15]
On August 26, 1994, the Court of Appeals promulgated its
decision in the two cases, the dispositive portion of which
provides:

WHEREFORE, in view of all the foregoing,

consolidated judgment is hereby rendered for both CAG. R. SP No. 37607 and CA-G. R. SP NO. 30369 as
follows:
1. The appeal docketed as CA-G. R. CV No.
37607 is dismissed; Moses Mendoza is declared
as owner of the undivided share previously
owned by Manuela Fajardo; and the decision of
the Regional Trial Court dated February 8, 1989
in Civil Case No. 83-0005-M is affirmed but
MODIFIED as follows:
WHEREFORE, premises considered, judgment is
hereby rendered in favor of the plaintiffs and against the
defendants, and hereby orders

1. A relocation survey to be conducted (at the expense

of the plaintiffs) to retrace the land subject of the deed
of sale dated September 30, 1964 between Manuela
Fajardo and Moses Mendoza;
2. The division and partition of said relocated land by
segregating therefrom an area equivalent to portion to
be taken from the vacant right eastern portion which is
toward the national road, the same to be determined by
one standing on the subject land facing the municipal
road, at the expense of the plaintiff-appellees;
3. The said portion segregated shall be a fixed portion,
described by metes and bounds, and shall be adjudicated
and assigned to the plaintiffs-appellees;
4. In case of disagreement as to where the said right
eastern portion should be taken, a Commission is hereby
constituted, with the OIC/present Clerk of Court as
Chairman, and the OIC/present Branch Clerks of Court
of Branches 54 and 55 of the Court (RTC) as members,
to carry out and implement the Orders contained in the
second and third paragraphs hereof;
5. The defendants are ordered to pay the plaintiffs the
sum of P500.00 as attorneys fees, and to pay the costs of
the proceedings.

2. The dismissal of Civil Case No. 92-0421-M

is AFFIRMED but the reasons for its dismissal
shall be effective only as to the issue of
possession. CA-G. R. SP No. 30369 is
DISMISSED.
3. No pronouncement as to costs.
SO ORDERED.[16]
On September 9, 1994, petitioners filed a motion for
reconsideration;[17] however, on June 21, 1995, the Court of
Appeals denied the motion.[18]
Hence, this petition.[19]
The issue raised is whether petitioners could be ejected
from what is now their own land.
The petition is meritorious.
In this case, the issue of possession is intertwined with the
issue of ownership. In the unlawful detainer case, the Court of
Appeals affirmed the decision of the trial court as to possession
on the ground that the decision has become final and
executory. This means that the petitioners may be evicted. In
the accion reinvindicatoria, the Court of Appeals affirmed the
ownership of petitioners over the subject land. Hence, the court
declared petitioners as the lawful owners of the land.

Admittedly, the decision in the ejectment case is final and

executory. However, the ministerial duty of the court to order
execution of a final and executory judgment admits of
exceptions. In Lipana vs. Development Bank of Rizal,[20] the
Supreme Court reiterated the rule once a decision becomes
final and executory, it is the ministerial duty of the court to
order its execution, admits of certain exceptions as in cases of
special and exceptional nature where it becomes imperative in
the higher interest of justice to direct the suspension of its
execution (Vecine v. Geronimo, 59 O. G. 579); whenever it is
necessary to accomplish the aims of justice (Pascual v. Tan, 85
Phil. 164); or when certain facts and circumstances transpired
after the judgment became final which could render the
execution of the judgment unjust (Cabrias v. Adil, 135 SCRA
354).
In the present case, the stay of execution is warranted by
the fact that petitioners are now legal owners of the land in
question and are occupants thereof. To execute the judgment by
ejecting petitioners from the land that they owned would
certainly result in grave injustice. Besides, the issue of
possession was rendered moot when the court adjudicated
ownership to the spouses Bustos by virtue of a valid deed of
sale.
Placing petitioners in possession of the land in question is
the necessary and logical consequence of the decision declaring
them as the rightful owners of the property.[21] One of the
essential attributes of ownership is possession. It follows that
as owners of the subject property, petitioners are entitled to
possession of the same. An owner who cannot exercise the

seven (7) juses or attributes of ownership--the right to possess,

to use and enjoy, to abuse or consume, to accessories, to
dispose or alienate, to recover or vindicate and to the fruits--is
a crippled owner.[22]
WHEREFORE, we GRANT the petition. We SET ASIDE
the decision of the Court of Appeals in CA G. R. SP No. 30609
for being moot and academic. We AFFIRM the decision of the
Court of Appeals in CA G. R. CV No. 37606.
No costs.
SO ORDERED.

HEIRS OF ROMAN SORIANO, petitioners,

vs. THE HONORABLE COURT OF
APPEALS, SPOUSES BRAULIO ABALOS
and AQUILINA ABALOS, respondents.
DECISION
YNARES-SANTIAGO, J.:

May a winning party in a land registration case effectively

eject the possessor thereof, whose security of tenure rights are
still pending determination before the DARAB?
The instant petition for certiorari seeks to set aside the
Decision dated September 20, 1996 of the Court of Appeals in
[1]

CA-G.R. SP No. 34930 as well as its Resolution dated

January 15, 1997, denying petitioners Motion for
Reconsideration.
[2]

We quote the undisputed facts as narrated by the Court of

Appeals, to wit

The property subject of this case is a parcel of land

containing an area of 24,550 square meters, more or
less, located in Lingayen, Pangasinan, and particularly
described as follows:
A parcel of land (Nipa with an area of 8,410 square
meters; fishpond with an area of 14,000 square meters;
and residential land with an area of 1,740 square meters,
more or less. Bounded on the N, by river and Filemon
Anselmo; on the South by Alejandro Soriano and
Filemon Anselmo; and on the West by Fortunata
Soriano.
Originally owned by Adriano Soriano until his death in
1947, the above-described property passed on to his
heirs who leased the same to spouses David de Vera and
Consuelo Villasista for a period of fifteen (15) years
beginning July 1, 1967 with Roman Soriano, one of the
children of Adriano Soriano, acting as caretaker of the
property during the period of the lease. After executing
an extra judicial settlement among themselves, the heirs
of Adriano Soriano subsequently subdivided the

property into two (2) lots, Lot No. 60052 and Lot No.
8459. Lot No. 60052 was assigned to Lourdes, Candido
and the heirs of Dionisia while Lot No. 8459 was
assigned to Francisca, Librada, Elocadio and Roman. In
1971, Lot No. 60052 was sold by Lourdes, Candido and
the heirs of Dionisia to petitioner spouses Braulio and
Aquilina Abalos (hereinafter referred to as petitioners),
while, Elocadio, Francisca and Librada sold their threefourths shares in Lot No. 8459 also to petitioners.
On March 14, 1968, the de Vera spouses ousted Roman
Soriano as caretaker and appointed Isidro Verzosa and
Vidal Verzosa as his substitutes. Thereafter, Roman
Soriano filed CAR Case No. 1724-P-68 for
reinstatement and reliquidation against the de Vera
spouses. The agrarian court authorized the ejectment of
Roman Soriano but on appeal, the decision was reversed
by the Court of Appeals, which decision became final
and executory. However, prior to the execution of the
said decision, the parties entered into a post-decisional
agreement wherein the de Vera spouses allowed Roman
Soriano to sub-lease the property until the termination
of the lease in 1982. In an Order dated December 22,
1972, the post-decisional agreement was approved by
the agrarian court.
On August 16, 1976, petitioners filed with the Regional
Trial Court of Lingayen, Pangasinan, Branch 38, an

application for registration of title over Lot No. 60052

and three-fourths (3/4) pro-indiviso of Lot No. 8459,
docketed as LRC Case No. N-3405. Said application for
registration was granted by the trial court, acting as a
land registration court, per Decision dated June 27,
1983. On appeal, the Court of Appeals affirmed the
decision of the land registration court. The petition for
review filed with the Supreme Court by Roman Soriano
docketed as G.R. 70842, was denied for lack of merit
and entry of judgment was entered on December 16,
1985.
Meanwhile, it appears that on July 15, 1983, a day after
the promulgation of the land registration courts
decision, Roman Soriano, together with Elocadio and
Librada Soriano, filed before the Regional Trial Court
of Lingayen, Branch 37, and against petitioners, an
action for annulment of document and/or redemption,
ownership and damages, docketed as Civil Case No.
159568 (sic; should be 15958). Petitioners filed a
motion to dismiss on the ground of res judicata,
pendency of another action, laches, misjoinder of parties
and lack of jurisdiction, which was denied by the trial
court.
Thereafter, on August 22, 1984, or eleven (11) years
after the approval of the post-decisional agreement
between Roman Soriano and the spouses de Vera

in CAR Case No. 1724-P-68 for reinstatement and

reliquidation, petitioners filed with the agrarian court a
motion for execution of said post-decisional agreement
which allowed Roman Soriano to sub-lease the
property. The motion prayed that petitioners be placed
in possession of the subject property, jointly with
Roman Soriano, and to levy so much of Romans
property to answer for the use and occupation by
Soriano of 6/7 share of the property. On October 25,
1984, Roman Soriano filed a motion to suspend hearing
on the rental demanded by petitioners, which, however,
was denied by the agrarian court. The agrarian court
likewise authorized the substitution of the de Vera
spouses by petitioners. Sorianos motion for
reconsideration was also denied, prompting Soriano to
file a petition for certiorari with the Court of Appeals.

of action. Upon reconsideration, the dismissal was set

aside and petitioners were ordered to file their Answer,
in view of which petitioners filed a petition for certiorari
and prohibition with the Court of Appeals, docketed
as C.A. GR SP No. 22149.

In the meantime, Roman Soriano died on December 11,

1985. Thus, the complaint in Civil Case No.
159568 (sic) for annulment of document and/or
redemption, ownership and damages, was amended to
substitute Sorianos heirs, herein private respondents, as
party-plaintiffs. The complaint was again amended to
include Juanito Ulanday as party-defendant for having
allegedly purchased part of the disputed property from
petitioners. On motion of petitioners, the re-amended
complaint was dismissed by the trial court on the
ground that the re-amended complaint altered the cause

Meanwhile, on December 7, 1990, the Court of Appeals

in C.A. GR SP No. 22149, also denied the petition for
certiorari and prohibition filed by petitioners, ruling that
the land registration court committed no error when it
refused to adhere to the rule of res judicata. Petitioners
then filed with the Supreme Court a petition for review
on certiorari, docketed as G.R. 99843.

On April 25, 1990, the Court of Appeals denied the

petition filed by Roman Soriano (substituted by private
respondents) impugning the denial of their motion to
suspend hearing on the rental demanded by petitioners,
and authorizing the substitution of the de Vera spouses
by petitioners, on the ground that no grave abuse of
discretion was committed by the agrarian court. Thus,
private respondents filed a petition for review on
certiorari with the Supreme Court, docketed as G.R.
93401.

On June 26, 1991, the Supreme Court promulgated its

decision in G.R. 93401, and granted the petition filed by
private respondents. Thus, the decision of the Court of

Appeals denying the petition of private respondents was

set aside, and the motion for execution filed by
petitioners in CAR Case No. 1724-P-48 was denied.
On June 22, 1993, the Supreme Court, in G.R. 99843,
reversed and set aside the denial of the Court of Appeals
in C.A. GR SP No. 22149, and consequently, Civil Case
No. 15958 for annulment of document and/or
redemption, ownership and damages, was ordered
dismissed.
On October 18, 1993, private respondents filed with the
Department of Agrarian Adjudication Board (sic), a
complaint against petitioners for Security of Tenure with
prayer for Status Quo Order and Preliminary Injunction
docketed as DARAB Case No. 528-P-93.
Meanwhile, it appears that the decision of the land
registration court in LRC Case No. N-3405 was partially
executed with the creation of a Committee on Partition
per Order dated March 25, 1987. On July 27, 1988, the
land registration court approved the partition of Lot No.
8459, with Lot No. 8459-A assigned to private
respondent, and Lot No. 8459-B assigned to
petitioners. For Lot No. 60052, O.C.T. No. 22670 was
issued in the name of petitioners; for Lot No. 8459-B,
O.C.T. No. 22687 was issued, also in the name of
petitioner; and for Lot No. 8459-A, O.C.T. No. 22686

was issued in the name of Roman Soriano. Dissatisfied

with said partition, private respondents appealed to the
Court of Appeals, docketed as CA G.R. SP No.
119497. The appellate court affirmed the partition but
reversed the order of the land registration court directing
the issuance of a writ of possession on the ground of
pendency of Civil Case No. 15958.
On November 15, 1993, the trial court in compliance
with the decision of the Supreme Court in G.R. No.
99843, dismissed Civil Case No. 15958, in view of
which, petitioner, on November 25, 1993, in LRC Case
No. N-3405, moved for the issuance of an alias writ of
execution and/or writ of possession to place them in
possession of Lot No. 60052 and Lot No. 8459-B. Per
Resolution dated January 21, 1994, said motion was
held in abeyance by the land registration court until and
after DARAB Case No. 528-P-93 for security of tenure
with prayer for status quo, has been resolved.
Their motion for reconsideration having been denied on
April 5, 1984, petitioners interposed an appeal to the
Supreme Court, docketed as G.R. 115073. In a
Resolution dated July 27, 1994 issued by the Supreme
Court, petitioners appeal, which was treated as a petition
for certiorari, was referred to this Court [of Appeals] for
determination and disposition.
[3]

The Court of Appeals annulled and set aside the

Resolution of the land registration court and ordered instead
the issuance of the corresponding writ of possession in favor of
private respondents. With the denial of their Motion for
Reconsideration, petitioners are now before us raising the
following grounds:
1. THE DECISION AND RESOLUTION OF
RESPONDENT COURT OF APPEALS
CONTRARY TO THE PROVISIONS OF
AGRARIAN
REFORM
LAWS
JURISPRUDENCE ON THE SECURITY
TENURE OF TENANT-CARETAKER.

THE
ARE
THE
AND
OF

2. THE DECISION AND RESOLUTION OF THE

RESPONDENT COURT OF APPEALS ARE
VIOLATIVE OF THE PROVISION ON RIGHT TO
DUE PROCESS.
3. THE HONORABLE COURT OF APPEALS GRAVELY
ABUSED ITS DISCRETION IN GIVING DUE
COURSE TO THE PETITION CONSIDERING THAT
PRIVATE
RESPONDENTS
HAD
EARLIER
PERFECTED AN APPEAL OF THE RESOLUTION
SUBJECT OF THEIR PETITION.[4]

Possession
and
ownership
are
distinct
legal
concepts. There is ownership when a thing pertaining to one
person is completely subjected to his will in a manner not
prohibited by law and consistent with the rights of
others. Ownership confers certain rights to the owner, among
which are the right to enjoy the thing owned and the right to
exclude other persons from possession thereof. On the other

hand, possession is defined as the holding of a thing or the

enjoyment of a right. Literally, to possess means to actually and
physically occupy a thing with or without right. Possession
may be had in one of two ways: possession in the concept of an
owner and possession of a holder. A person may be declared
owner but he may not be entitled to possession. The possession
may be in the hands of another either as a lessee or a tenant. A
person may have improvements thereon of which he may not
be deprived without due hearing. He may have other valid
defenses to resist surrender of possession. A judgment for
ownership, therefore, does not necessarily include possession
as a necessary incident.
[5]

[6]

There is no dispute that private respondents (petitioners

below) title over the land under litigation has been confirmed
with finality. As explained above, however, such declaration
pertains only to ownership and does not automatically include
possession, especially so in the instant case where there is a
third party occupying the said parcel of land, allegedly in the
concept of an agricultural tenant.
While the issue of ownership of the subject land has been
laid to rest in the final judgment of the land registration court,
the right of possession thereof is, as yet, controverted. This is
precisely what is put in issue in the security of tenure case filed
by petitioners (private respondents below) before the DARAB.
It is important to note that although private respondents
have been declared titled owners of the subject land, the
exercise of their rights of ownership are subject to limitations
that may be imposed by law. The Tenancy Act provides one
[7]

such limitation. Agricultural lessees are entitled to security of

tenure and they have the right to work on their respective
landholdings
once
the
leasehold
relationship
is
established. Security of tenure is a legal concession to
agricultural lessees which they value as life itself and
deprivation of their landholdings is tantamount to deprivation
of their only means of livelihood. The exercise of the right of
ownership, then, yields to the exercise of the rights of an
agricultural tenant.
[8]

However, petitioners status as tenant has not yet been

declared by the DARAB. In keeping with judicial order, we
refrain from ruling on whether petitioners may be dispossessed
of the subject property.As ratiocinated in Nona v. Plan
[9]

It is to the credit of respondent Judge that he has shown

awareness of the recent Presidential Decrees which are
impressed with an even more solicitous concern for the
rights of the tenants. If, therefore, as he pointed out in
his order granting the writ of possession, there is a
pending case between the parties before the Court of
Agrarian Relations, ordinary prudence, let alone the
letter of the law, ought to have cautioned him against
granting the plea of private respondents that they be
placed in possession of the land in controversy. x x
x. At the time the challenged orders were issued,
without any showing of how the tenancy controversy in
the Court of Agrarian Relations was disposed of,
respondent Judge could not by himself and with due

observance of the restraints that cabin and confine his

jurisdiction pass upon the question of tenancy.
(Emphasis ours)
In its challenged Decision, the Court of Appeals relied
heavily on the principle of finality of judgments. It applied the
legal doctrine that once a judgment has become final, the
issuance of a writ of execution becomes ministerial. The
appellate court held that petitioners situation does not fall
under any of the exceptions to this rule since his occupation of
the subject land did not transpire after the land registration
courts adjudication became final.
In so ruling, however, the Court of Appeals loses sight of
the fact that petitioners claim of possession as a tenant of the
litigated property, if proven, entitles him to protection against
dispossession.
Private respondents argue that petitioners tenancy claim is
barred by res judicata, having been ruled upon in G.R. Nos.
99843 and 93401. However, not being an issue in the case
before us, this question should properly be resolved in DARAB
Case No. 528-P-93. To restate, the only issue before us is
whether or not a winning party in a land registration case can
effectively eject the possessor thereof, whose security of tenure
rights are still pending determination before the DARAB.
A judgment in a land registration case cannot be
effectively used to oust the possessor of the land, whose
security of tenure rights are still pending determination before
the DARAB. Stated differently, the prevailing party in a land

registration case cannot be placed in possession of the area

while it is being occupied by one claiming to be an agricultural
tenant, pending a declaration that the latters occupancy was
unlawful.

ASIDE. The Resolution of the Regional Trial Court of

Lingayen, Pangasinan in LRC Case No. N-3405 dated January
21, 1994 is ordered REINSTATED.
SO ORDERED.

WHEREFORE, the instant petition for certiorari is

hereby GRANTED. The Decision of respondent Court of
Appeals in CA-G.R. SP No. 34930 dated September 20, 1996,
as well as its Resolution dated January 15, 1997 are SET