Académique Documents
Professionnel Documents
Culture Documents
I. Background
A. General Concept of Project Finance – An Overview
Read: ● Chavez vs. Public Estates Authority and Amari Coastal Bay
Development Authority, G.R. 133250, July 9, 2002.
● Manila Prince Hotel vs. GSIS, et al., G.R. 122156, February 3,
1997.
● La Bugal B’laan Tribal Association, et al. vs. Ramos, WMC, et al.,
G.R. 127882, (final decision after motion for reconsideration),
December 2004.
● Chavez vs. NHA, G.R. No. 164527, August 15, 2007.
4. Republic Act No. 6957 (An Act Authorizing the Financing, Construction,
Operation and Maintenance of Infrastructure Projects by the Private
Sector, and for Other Purposes) and Implementing Rules and Regulations
(“IRR”) of R.A. 6957, as amended.
[1] These sections are flagship provisions for the Philippine economy recognizing the role of private initiative and
enterprise in a self-reliant and independent national economy effectively controlled by Filipinos.
State Policies
Section 19. The State shall develop a self-reliant and independent national economy effectively
controlled by Filipinos.
Section 20. The State recognizes the indispensable role of the private sector, encourages private
enterprise, and provides incentives to needed investments.
Section 2-C. The exercise, possession or control by a Filipino citizen having a common-law
relationship with an alien of a right, privilege, property or business, the exercise or enjoyment of
which is expressly reserved by the Constitution or the laws to citizens of the Philippines, shall
Footnotes
*As amended by RA 421, RA 134, RA 6084, and PD 715.
1
Words in bold in the text above are amendments introduced by RA 134, section 1, approved June
14, 1947.
Statutory History of section 1:
Original text —
SEC. 1. In all cases in which any constitutional or legal provision requires Philippine or [United
States] citizenship as requisite for the exercise or enjoyment of a right, franchise or privilege, any
citizen of the Philippines or [the United States] who allows his name or citizenship to be used for the
purpose of evading such provision, and any alien or foreigner profiting thereby, shall be punished by
imprisonment for not less than [two] nor more than [ten] years, and by, fine of not less than [two
thousand nor more than ten thousand pesos.]
The fact that the citizen of the Philippines or of [the United States] charged with, violation of this Act
had, at the time of acquisition of his holdings in the corporations or association referred to in section
two of this Act, no real or personal property, credit or other assets the value of which shall at least be
equivalent to said holdings, shall be admissible as circumstantial evidence of, violation of this act.
(Ed. Note: Words in brackets were deleted in RA 134, supra)
2
Words in bold in the text above are amendments introduced by RA 134, section 1, approved June
14, 1947.
Statutory History of section 2:
Original text
SEC. 2. In all cases in which a constitutional or legal provisions requires that, in order that a
corporation or association may exercise or enjoy a right, franchise or privilege, not less than a
certain per centum of its capital must be owned by citizens of the Philippines or [the United States,
or both.] It shall be unlawful to falsely simulate the existence of such minimum of stock or capital as
owned by such citizens of the Philippines [or the United States or both,] for the purpose of evading
said provision. The president or managers and directors or trustees of corporations or associations
convicted of a violation of this section shall be punished by imprisonment [for] not less than [two] nor
more than [ten] years, and by a fine of not less than [two thousand nor more than ten thousand
pesos.] (Ed. Note: Words in brackets were deleted in RA 134, supra.)
3Words in bold in the text above are amendments introduced by PD 715, section 1, promulgated May
28, 1975.
Statutory History of section 2-A:
a) Original text — (inserted by CA 421)
SEC. 2-A. Any person, corporation or association which, having in its name or under its control, a
right, franchise, privilege, property or business, the exercise or enjoyment of which is expressly
reserved by the constitution or the laws [of the Philippines] to citizens of the Philippines or of [the
United States,] or to corporations or associations at least sixty per centum of the capital of which is
owned by such citizens, permits or allows the use, exploitation or enjoyment thereof by a person,
corporation or association not possessing the requisites prescribed by the Constitution or the laws of
the Philippines; or leases, or in any other way transfers or conveys said right, franchise, privilege,
property or business to a person, corporation or association not otherwise qualified under the
Constitution, or the provisions of the existing [Acts,] any person who knowingly aids, assists, or
abets in the planning, consummation or perpetuation of any of the acts herein above enumerated,
shall be punished by imprisonment for not less than [two] nor more than [ten] years, and by a fine of
FACTS
- APPEAL for the partitioning of testate estate of Jose Eugenio Ramirez (a Filipino national, died in Spain on December 11, 1964) among principal beneficiaries:
Marcelle Demoron de Ramirez
- w idow
- French w ho lives in Paris
- receiv ed ½ (as spouse) and usufructuary rights over 1/3 of the free portion
Roberto and Jorge Ramirez
- tw o grandnephews
- liv es in Malate
- receiv ed the ½ (free portion)
Wanda de Wrobleski
- companion
- Austrian w ho liv es in Spain
- receiv ed usufructuary rights of 2/3 of the free portion
- v ulgar substitution in fav or of Juan Pablo Jankowski and Horacio Ramirez
- Maria Luisa Palacios - adminis tratix
- Jorge and Roberto Ramirez opposed because
a. v ulgar substitution in fav or of Wanda w rt widow’s usufruct and in fav or of Juan Pablo Jankowski and Horacio Ramirez, wrt to Wanda’s usufruct is INVALID
because first heirs (Marcelle and Wanda) survived the testator
b. fideicommissary substitutions are INVALID because first heirs not related to the second heirs or substitutes within the first degree as provided in Art 863 CC
c. grant of usufruct of real property in fav or of an alien, Wanda, violated Art XIII Sec 5
d. proposed partition of the testator’’s interest in the Santa Cruz Building betw een widow and appellants violates testators express will to give this property to
them
- LC: approv ed partition
ISSUE
WON the partition is v alid insofar as
a. w idow’s legitime
b. substitutions
c. usufruct of Wanda
HELD
[1]
a. YES, appellants do not question ½ because Marcelle is the widow and over which he could impose no burden, encumbrance, condition or substitution of
[2]
any kind whatsoever
- the proposed creation by the admininstratix in fav or of the testator’s w idow of a usufruct over 1/3 of the free portion of the testator’s estate cannot be made
w here it w ill run counter to the testator’s ex press will. The Court erred for Marcelle who is entitled to ½ of the estate “enpleno dominio” as her legitime and which
is more than w hat she is given under the w ill is not entitled to hav e any additional share in the estate. To give Marcelle more than her legitime will run counter to
the testator’s intention for as stated abov e his disposition even impaired her legitime and tended to fav or Wanda.
b. Vulgar substitutions are v alid because dying before the testator is not the only case where a v ulgar substitution can be made. Also, according to Art 859 CC,
cases also include refusal or incapacity to accept inheritance therefore it is VALID.
BUT fideicommissary substitutions are VOID because Juan Pablo Jankowski and Horace Ramirez are not related to Wande and according to Art 863 CC, it
v alidates a fideicommissary substitution provided that such substitution does not go beyond one degree from the heir originally instituted. Another is that there
is no absolute duty imposed on Wanda to transmit the usufructuary to the substitutes and in fact the apellee agrees that the testator contradicts the establishment
of the fideicommissary substitution when he permits the properties be subject to usufruct to be sold upon mutual agreement ofthe usufructuaries and naked
ow ners.
c. YES, usufruct of Wanda is VALID
[3]
- Art XIII Sec 5 (1935): Sav e in cases of hereditary succession, no private agricultural land shall be transferred or assigned except to individuals, corporations,
[4]
or associations qualified to acquire or hold land of the public domain in the Philippines.
The low er court upheld the usufruct thinking that the Constitution covers not only succession by operation of law but also testamentary succession BUT SC is of
the opinion that this prov ision does not apply to testamentary succession for otherwise the prohibition will be for naught and meaningless. Any alien would
circumvent the prohibition by paying money to a Philippine landowner in exchange for a dev is e of a piece of land BUT an alien may be bestowed
USUFRUCTUARY RIGHTS over a parcel of land in the Philippines. Therefore, the usufruct in fav or of Wanda, although a real right, is upheld because it does not
v est title to the land in the usufructuary (Wanda) and it is the vesting of title to land in favor of aliens which is proscribed by the Constitution.
Decision: ½ Marcelle (as legitime), ½ Jorge and Roberto Ramirez (free portion) in naked ownership and the usufruct to Wanda de Wrobleski with simple
substitution in fav or of Juan Pablo Jankowski and Horace Ramirez
[1] Art 900 CC: If the only survivor is the widow or widower, she or he shall be entitled to ½ of the hereditary estate
[2] Art 904 (2) CC
[3] Art XIII (1935): Conservation and Utilization of Natural Resources
[4] Art XII Sec 7 (1987): Save in cases of hereditary succession, no private [removed agricultural] lands shall be transferred or conveyed [1935: assigned] except to individuals, corporations, or associations qualified to
This is a misrepresentation of the grossest sort. The documents were known to the defendant-
appellant and her counsel even before the death of Justina Santos. As a matter of fact, the wills
executed on August 24 and August 29, 1959 were presented in this case as Exhibits 285 and 279,
respectively, for the defendant-appellant, and were considered and expressly referred to in the
decision of the lower court and in our decision. As for the codicil of November 11, 1957, the
i t c- alf
defendant-appellant can hardly feign ignorance of its essence even when this case was being tried
in the lower court considering that its provisions were substantially adverted to in the testimony of
one of her witnesses2 and were in fact recited in the decision a own a quo.3 By no means can the
documents in question be considered newly-discovered evidence so as to warrant a reopening of
this case.4
Nor is there anything in the documents that is likely to alter the result we have already reached in
this case. With respect to the 1957 codicil, it is claimed that Justina Santos could not have intended
by the 99-year lease to give Wong the ownership of the land considering that she had earlier (the
however, that this is nothing but a reiteration of the substance of the lease contract and conditional
option to buy which in compensation, as our decision demonstrates, amount to a conveyance, the
protestation of compliance with the law notwithstanding. In cases like the one at bar, motives are
seldom avowed and avowals are not always candid. The problem is not, however, insuperable,
especially as in this case the very witnesses for the defendant-appellant testified that —
Considering her age, ninety (90) years old at the time and her condition, she is a wealthy woman, it
is just natural when she said. "This is what I want and this will be done." In particular reference to
this contract of lease, when I said "This is not proper, she said — 'you just go ahead, you prepare
that, I am the owner, and if there is illegality, I am the only one that can question the illegality.'"6
The ambition of the old woman before her death, according to her revelation to me, was to see to it
that these properties be enjoyed, even to own them, by Wong Heng because Doña Justina told me
that she did not have any relatives, near or far, and she considered Wong Heng as a son and his
children her grandchildren; especially her consolation in life was when she would hear the children
reciting prayers in Tagalog.7
She was very emphatic in the care of the seventeen (17) dogs and of the maids who helped her
much, and she told me to see to it that no one could disturb Wong Heng from those properties. That
is why we thought of adoption, believing that thru adoption Wong Heng might acquired Filipino
citizenship, being the adopted child of a Filipino citizen. 8 l awphi l
The other points raised in the motion for new trial either have already been disposed of in our
decision or are so insubstantial to merit any attention.
ACCORDINGLY, the motion for new trial is denied.
Concepcion, C.J., Reyes J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Angeles and
Fernando, JJ.,concur.
Footnotes
1 Resolution, Oct. 5, 1967.
2 T.s.n., p. 82, June 20, 1960.
3
Decision, Sept. 16, 1960, Rec. on Appeal 208, 212 n. 1.
4 Cf . Bersabal v. Bernal, 13 Phil. 463 (1909).
5 Civ Code arts. 830(l) and 957.
6
Testimony of Atty. Tomas Yumol, T.s.n., p. 86, June 20, 1960 (emphasis added).
7
Testimony of Atty. Benjamin Alonzo, t.s.n, p. 79, July 6, 1960 (emphasis added).
8 Id., t.s.n., p. 121, June 20, 1960.
PANGANIBAN, J.:
The factual findings of a trial court, when affirmed by the Court of Appeals, may no
longer be reviewed and reversed by this Court in a petition for review under Rule 45 of
the Rules of Court. The transfer of an interest in a piece of land to an alien may no longer
be assailed on constitutional grounds after the entire parcel has been sold to a qualified
citizen.
The Case
These familiar and long-settled doctrines are applied by this Court in denying this petition
under Rule 45 to set aside the Decision 1 of the Court of Appeals 2 in CA-GR CV No.
37829 promulgated on September 14, 1993, the dispositive portion of which states: 3
WHEREFORE, and upon all the foregoing, the Decision of the court below dated March
10, 1992 dismissing the complaint for lack of merit is AFFIRMED without pronouncement
as to costs.
The Facts
The factual antecedents, as narrated by Respondent Court, are not disputed by the
parties. We reproduce them in part, as follows:
Simeon de Guzman, an American citizen, died sometime in 1968, leaving real properties
in the Philippines. His forced heirs were his widow, defendant appellee [herein private
respondent] Helen Meyers Guzman, and his son, defendant appellee [also herein private
respondent] David Rey Guzman, both of whom are also American citizens. On August 9,
1989, Helen executed a deed of quitclaim (Annex A-Complaint), assigning [,] transferring
and conveying to David Rey all her rights, titles and interests in and over six parcels of
land which the two of them inherited from Simeon.
Among the said parcels of land is that now in litigation, . . . situated in Bagbaguin, Sta.
Maria, Bulacan, containing an area of 6,695 square meters, covered by Transfer
Certificate of Title No. T-170514 of the Registry of Deeds of Bulacan. The quitclaim
having been registered, TCT No. T-170514 was cancelled and TCT No. T-120259 was
issued in the name of appellee David Rey Guzman.
On February 5, 1991, David Rey Guzman sold said parcel of land to defendant -appellee [also
herein private respondent] Emiliano Cataniag, upon which TCT No. T-120259 was cancelled
and TCT No. T-130721(M) was issued in the latter's name. 4
Petitioners, who are owners of the adjoining lot, filed a complaint before the Regional
Trial Court of Malolos, Bulacan, questioning the constitutionality and validity of the two
conveyances — between Helen Guzman and David Rey Guzman, and between the
latter and Emiliano Cataniag — and claiming ownership thereto based on their right of
legal redemption under Art. 1621 5 of the Civil Code.
In its decision 6 dated March 10, 1992, 7 the trial court dismissed the complaint. It ruled
that Helen Guzman's waiver of her inheritance in favor of her son was not contrary to the
constitutional prohibition against the sale of land to an alien, since the purpose of the
waiver was simply authorize David Rey Guzman to dispose of their properties in
accordance with the Constitution and the laws of the Philippines, and not to subvert
them. On the second issue, it held that the subject land was urban; hence, petitioners
had no reason to invoke their right of redemption under Art. 1621 of the Civil Code.
The Halilis sought a reversal from the Court of Appeals which, however, denied their
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. The State may directly undertake such
activities, or it may enter into co-production, joint venture, or production-sharing agreements with
Filipino citizens, or corporations or associations at least 60 per centum of whose capital is owned by
such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for
not more than twenty-five years, and under such terms and conditions as may provided by law. In
cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of waterpower, beneficial use may be the measure and limit of the grant.
The State shall protect the nations marine wealth in its archipelagic waters, territorial sea, and
exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as
well as cooperative fish farming, with priority to subsistence fishermen and fish workers in rivers,
lakes, bays, and lagoons.
The President may enter into agreements with foreign-owned corporations involving either technical
or financial assistance for large-scale exploration, development, and utilization of minerals,
petroleum, and other mineral oils according to the general terms and conditions provided by law,
based on real contributions to the economic growth and general welfare of the country. In such
agreements, the State shall promote the development and use of local scientific and technical
resources.
The President shall notify the Congress of every contract entered into in accordance with this
provision, within thirty days from its execution.
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 to 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.
Section 5. The State, subject to the provisions of this Constitution and national development policies
and programs, shall protect the rights of indigenous cultural communities to their ancestral lands to
ensure their economic, social, and cultural well-being.
The Congress may provide for the applicability of customary laws governing property rights or
relations in determining the ownership and extent of ancestral domain.
Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed
except to individuals, corporations, or associations qualified to acquire or hold lands of the public
domain.
Section 10. The Congress shall, upon recommendation of the economic and planning agency, when
the national interest dictates, reserve to citizens of the Philippines or to corporations or associations
at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as
Section 16. The Congress shall not, except by general law, provide for the formation, organization,
or regulation of private corporations. Government-owned or controlled corporations may be created
or established by special charters in the interest of the common good and subject to the test of
economic viability.
FACTS
- Nature original Petition for Mandamus with prayer for writ of preliminary injunction and a temporary restraining order. Petition also seeks to compel the Public
Estates Authority (PEA) to disclose all facts on PEA’s then on-going renegotiations with Amari Coastal Bay and Development Corporation to reclaim portions of
Manila Bay . The petition further seeks to enjoin PEA from signing a new agreement with AMARI involv ing such recalamtion.
- 1973-The gov ernment through the Commission of Public Highways signed a contract with the Construction and Development Corporation of the Philippines
(CDCP) to reclaim certain foreshore and offshore areas of Manila Bay
- 1977-President Marcos issued Presidential Decree No. 1084 creating the PEA. And was tasked to reclaim land, including foreshore and submerged areas and
to dev elop, improve, acquire x x x lease and sell any and all kinds of lands. On the same date, President Marcos issued PD. 1085 transferring to PEA the lands
reclaimed in the foreshore and offshore of the Manila Bay under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP)
- 1981-Pres. Marcos issued a memorandum ordering PEA to amend its contract with CDCP whic h stated that CDCP shall transfer in favor of PEA the areas
reclaimed by CDCP in the MCCRRP
- 1988-President Aquino issued Special Patent granting and transferring to PEA parcels of land so reclaimed under the MCCRRP. Subsequently she transferred
in the name of PEA the three reclaimed islands known as the “Freedom Islands”
- 1995-PEA entered into a Joint Venture Agreement (JVA) w ith AMARI, a private corporation, to develop the Freedom Islands and this was done without public
bidding
- President Ramos through Executive Secretary Ruben Torres approved the JVA
- 1996-Senate President Maceda delivered a privileged speech in the Senate and denounced the JVA as the “grandmother of all scams”. As a result,
inv estigations were conducted by the Senate. Among the conclusions were: (1) the reclaimed lands PEA seeks to transfer to AMARI under the JVA are lands of
the public domain w hich the government has not classified as alienable lands and therefore PEA cannot alienate these lands; (2) the certificates of the title
cov ering the Freedom Islands are thus void, and (3) the JVA itself is illegal
- 1997-President Ramos created the Legal Task Force to conduct a study on the legality of the JVA in v iew of the Senate Committee report.1998-The Philippine
Daily Inquirer published reports on on-going renegotiations between PEA and AMARI
- PEA Director Nestor Kalaw and PEA Chairman Arsenio Yulo and former navy officer Sergio Cruz were members of the negotiating panel
- Frank Chav ez filed petition for Mandamus stating that the gov ernment stands to lose billions of pesos in the sale by PEA of the reclaimed lands to AMARI and
pray s that PEA publicly disclose the terms of the renegotiations of JVA. He cited that the sale to AMARI is in v iolation of Article 12, Sec. 3 prohibiting sale of
alienable lands of the public domain to priv ate corporations and Article 2 Section 28 and Article 3 Sec. 7 of the Constitution on the right to information on matters
of public concern
- 1999-PEA and AMARI signed Amended JVA which Pres. Estrada approved
ISSUES
1. WON the principal reliefs pray ed for in the petition are moot and academic because subsequent events
2. WON the petition merits dismissal for failure to observe the principle governing the hierarchy of courts
3. WON the petition merits dismissal for non-exhaustion of administrative-remedies
4. WON petitioner has locus standi to bring this suit
5. WON the constitutional right to information includes official information on on-going negotiations before a final agreement
6. WON the stipulations in the amended joint v enture agreement for the transfer to amari of certain lands, reclaimed and still to be reclaimed, violate the 1987
consitution; and
7. WON the court is the proper forum for raising the issue of w hether the amended joint v enture agreement is grossly disadvantageuos to the gov ernment.
o threshold issue: whether amari, a private corporation, can acquire and own under the amended jv a 367.5 hectares of reclaimedfroeshore and
submerged area in manila bay in view of sections 2 and 3, article 12 of the 1987 constitution
HELD
(1) The pray er to enjoin the signing of the Amended JVA on constitutional grounds necessarily includes preventing its implementation if in the meantime PEA and
AMARI hav e signed one in violation of the Constitution and if already implemented, to annul the effects of an unconstitutional contract
(2) The principle of hierarchy of courts applies generally to cases involv ing factual questions
Reasoning the instant case raises constitutional issues of transcendental importance to the public
(3) The principle of ex haustion of administrative remedies does not apply when the issue involv ed is a purely legal or constitutional question
(4) Petitioner has standing if petition is of transcendental public importance and as such, there is the right of a citizen to bring a tax payer’s suit on these matters
of transcendental public importance
(5) The constitutional right to information includes official information on on-going negotiations before a final contract and must therefore constitute definite
propositions by the government and should not cover recognized exceptions like priv ileged information, military and diplomatic secrets and similar matters
affecting national security and public order
Reasoning The State policy of full transparency in all transactions involv ing public interest reinforces the people’s right to information on matters of public
concern. PEA must prepare all the data and disclose them to the public at the start of the disposition process, long before the consummation of the contract.
While the ev aluation or rev iew is on-going, there are no “official acts, transactions, or decisions” on the bids or proposals but once the committee makes its
official recommendation, there arises a definite proposition on the part of the gov ernment
(6) In a form of a summary :
o 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 ow nership of
these lands to priv ate corporations. PEA may only sell these lands to Philippine citizens, subject to ow nership limitations in the 1987
Requiring a consummated contract will keep the public in the dark until the contract, which may be
grossly disadvantageous to the government or even illegal, becomes a fait accompli. This negates
the State policy of full transparency on matters of public concern, a situation which the framers of the
Constitution could not have intended. Such a requirement will prevent the citizenry from participating
in the public discussion of any proposed contract, effectively truncating a basic right enshrined in
the Bill of Rights. We can allow neither an emasculation of a constitutional right, nor a retreat by the
State of its avowed "policy of full disclosure of all its transactions involving public interest."
The right covers three categories of information which are "matters of public concern," namely: (1)
official records; (2) documents and papers pertaining to official acts, transactions and decisions; and
(3) government research data used in formulating policies. The first category refers to any document
that is part of the public records in the custody of government agencies or officials. The second
category refers to documents and papers recording, evidencing, establishing, confirming, supporting,
justifying or explaining official acts, transactions or decisions of government agencies or officials.
The third category refers to research data, whether raw, collated or processed, owned by the
government and used in formulating government policies.
The information that petitioner may access on the renegotiation of the JVA includes evaluation
reports, recommendations, legal and expert opinions, minutes of meetings, terms of reference and
other documents attached to such reports or minutes, all relating to the JVA. However, the 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-
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
xx x
(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,
of Facts and the Case, the Statement of Facts in Senate Committee Report No. 560 dated
September 16, 1997.
4 In Opinion No. 330 dated December 23, 1994, the Government Corporate Counsel, citing COA
Audit Circular No. 89-296, advised PEA that PEA could negotiate the sale of the 157.84-hectare
Freedom Islands in view of the failure of the public bidding held on December 10, 1991 where there
was not a single bidder. See also Senate Committee Report No. 560, p. 12.
5 PEA's Memorandum, supra note 2 at 9.
6 Ibid.
7
The existence of this report is a matter of judicial notice pursuant to Section 1, Rule 129 of the
Rules of Court which provides, "A court shall take judicial notice, without the introduction of
evidence, of x x x the official acts of the legislature x x x."
8
Teofisto Guingona, Jr.
9
Renato Cayetano.
10 Virgilio C. Abejo.
11 Report and Recommendation of the Legal Task Force, Annex "C", AMARI's Memorandum dated
filed nine motions for extension of time (Rollo, pp. 127, 139).
14
Petitioner's Memorandum dated July 6, 1999, p. 42.
15 Represented by the Office of the Solicitor General, with Solicitor General Ricardo P. Galvez,
take effect after fifteen days following the completion of their publication in the Official Gazette,
unless it is provided otherwise, x x x."
25
Section 1 of CA No. 638 provides as follows: "There shall be published in the Official Gazette all
important legislative acts and resolutions of the Congress of the Philippines; all executive and
administrative orders and proclamations, except such as have no general applicability; x x x."
26
Section 79 of the Government Auditing Codes provides as follows: "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."
27 Paat v. Court of Appeals, 266 SCRA 167 (1997); Quisumbing v. Judge Gumban, 193 SCRA 520
the Indies, and all lands, territories, and possessions not heretofore ceded away by our royal
predecessors, or by us, or in our name, still pertaining to the royal crown and patrimony, it is our will
that all lands which are held without proper and true deeds of grant be restored to us according as
they belong to us, in order that after reserving before all what to us or to our viceroys, audiencias,
and governors may seem necessary for public squares, ways, pastures, and commons in those
places which are peopled, taking into consideration not only their present condition, but also their
future and their probable increase, and after distributing to the natives what may be necessary for
tillage and pasturage, confirming them in what they now have and giving them more if necessary, all
the rest of said lands may remain free and unencumbered for us to dispose of as we may
wish." See concurring opinion of Justice Reynato S. Puno in Republic Real Estate Corporation v.
Court of Appeals, 299 SCRA 199 (1998).
43 Cariño v. Insular Government, 41 Phil. 935 (1909). The exception mentioned in Cariño, referring to
lands in the possession of an occupant and of his predecessors-in-interest, since time immemorial,
is actually a species of a grant by the State. The United States Supreme Court, speaking through
Justice Oliver Wendell Holmes, Jr., declared in Cariño: "Prescription is mentioned again in the royal
cedula of October 15, 1754, cited in 3 Philippine, 546; 'Where such possessors shall not be able to
produce title deeds, it shall be sufficient if they shall show that ancient possession, as a valid title by
prescription.' It may be that this means possession from before 1700; but, at all events, the principle
is admitted. As prescription, even against the Crown lands, was recognized by the laws of Spain, we
see no sufficient reason for hesitating to admit that it was recognized in the Philippines in regard to
lands over which Spain had only a paper sovereignty." See also Republic v. Lee, 197 SCRA 13
(1991).
44 Article 1 of the Spanish Law of Waters of 1866.
45
Ignacio v. Director of Lands, 108 Phil. 335 (1960); Joven v. Director of Lands, 93 Phil. 134 (1953);
Laurel v. Garcia, 187 SCRA 797 (1990). See concurring opinion of Justice Reynato S. Puno in
Republic Real Estate Corporation v. Court of Appeals, 299 SCRA 199 (1998).
46 Act No. 926, enacted on October 7, 1903, was also titled the Public Land Act. This Act, however,
did not cover reclaimed lands. Nevertheless, Section 23 of this Act provided as follows: "x x x In no
case may lands leased under the provisions of this chapter be taken so as to gain control of adjacent
land, water, stream, shore line, way, roadstead, or other valuable right which in the opinion of the
Chief of the Bureau of Public Lands would be prejudicial to the interests of the public."
47
Section 10 of Act No. 2874 provided as follows: "The words "alienation," "disposition," or
"concession" as used in this Act, shall mean any of the methods authorized by this Act for the
acquisition, lease, use, or benefit of the lands of the public domain other than timber or mineral
lands."
48
Title II of Act No. 2874 governed alienable lands of the public domain for agricultural purposes,
while Title III of the same Act governed alienable lands of the public domain for non-agricultural
purposes.
49 Section 57 of Act No. 2874 provided as follows: "x x x; but the land so granted, donated, or
follows: "The words "alienation," "disposition," or "concession" as used in this Act, shall mean any of
the methods authorized by this Act for the acquisition, lease, use, or benefit of the lands of the public
domain other than timber or mineral lands."
53 R.A. No. 6657 has suspended the authority of the President to reclassify forest or mineral lands
into agricultural lands. Section 4 (a) of RA No. 6657 (Comprehensive Agrarian Reform Law of 1988)
states, "No reclassification of forest or mineral lands to agricultural lands shall be undertaken after
the approval of this Act until Congress, taking into account ecological, developmental and equity
considerations, shall have delimited by law, the specific limits of the public domain."
54
Covering Sections 58 to 68 of CA No. 141.
55 299 SCRA 199 (1998).
56 Section 1, Article XIII of the 1935 Constitution limited the disposition and utilization of public
agricultural lands to Philippine citizens or to corporations at least sixty percent owned by Philippine
citizens. This was, however, subject to the original Ordinance appended to the 1935 Constitution
stating, among others, that until the withdrawal of United States sovereignty in the Philippines,
"Citizens and corporations of the United States shall enjoy in the Commonwealth of the Philippines
all the civil rights of the citizens and corporations, respectively, thereof."
57
Section 44 of PD No. 1529 (previously Section 39 of Act No. 496) provides that "liens, claims or
rights arising or existing under the laws and the Constitution of the Philippines which are not by law
required to appear of record in the Registry of Deeds in order to be valid against subsequent
purchasers or encumbrancers of record" constitute statutory liens affecting the title.1âwphi1.n
êt
58
RA No. 730, which took effect on June 18, 1952, authorized the private sale of home lots to actual
occupants of public lands not needed for public service. Section 1 of RA No. 730 provided as
follows: "Notwithstanding the provisions of Sections 61 and 67 of Commonwealth Act No. 141, as
amended by RA No. 293, any Filipino citizen of legal age who is not the owner of a home lot in the
municipality or city in which he resides and who had in good faith established his residence on a
parcel of land of the Republic of the Philippines which is not needed for public service, shall be given
preference to purchase at a private sale of which reasonable notice shall be given to him, not more
than one thousand square meters at a price to be fixed by the Director of Lands with the approval of
the Secretary of Agriculture and Natural Resources. x x x." In addition, on June 16, 1948, Congress
enacted R.A. No. 293 allowing the private sale of marshy alienable or disposable lands of the public
domain to lessees who have improved and utilized the same as farms, fishponds or other similar
purposes for at least five years from the date of the lease contract with the government. R.A. No.
293, however, did not apply to marshy lands under Section 56 (c), Title III of CA No. 141 which
refers to marshy lands leased for residential, commercial, industrial or other non-agricultural
purposes.
59
See note 49.
60 See note 60.
61 Republic Real Estate Corporation v. Court of Appeals, see note 56.
62
Ibid.
63 Insular Government v. Aldecoa, 19 Phil. 505 (1911); Government v. Cabangis, 53 Phil. 112 (1929).
64 118 SCRA 492 (1982).
65
Annex "B", AMARI's Memorandum, see note 2 at 1 & 2.
66
PEA's Memorandum, see note 6.
67 Ibid., p. 44.
68 See notes 9, 10 & 11.
69
Annex "C", p. 3, AMARI's Memorandum, see note 12 at 3.
70 This should read Article XII.
71 Section 8 of CA No. 141.
72
Emphasis supplied.
73
187 SCRA 797 (1990).
74 Article 422 of the Civil Code states as follows: "Property of public dominion, when no longer
needed for public use or public service, shall form part of the patrimonial property of the State."
75
AMARI's Comment dated June 24, 1998, p. 20; Rollo, p. 85.
76 Dizon v. Rodriguez, 13 SCRA 705 (1965); Republic v. Lat Vda. de Castillo, 163 SCRA 286 (1988).
77 Cariño v. Insular Government, 41 Phil. 935 (1909).
78
Proclamation No. 41, issued by President Ramon Magsaysay on July 5, 1954, reserved for
"National Park purposes" 464.66 hectares of the public domain in Manila Bay "situated in the cities
of Manila and Pasay and the municipality of Paranaque, Province of Rizal, Island of Luzon," which
area, as described in detail in the Proclamation, is "B]ounded on the North, by Manila Bay; on the
East, by Dewey Boulevard; and on the south and west, by Manila Bay." See concurring opinion of
Secretary of Agriculture and Commerce, shall from time to time classify the lands of the public
domain into – (a) Alienable or disposable, x x x."
82 Section 7 of CA No. 141 provides as follows: "For 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."
83 On "Lands for Residential, Commercial, or Industrial and other Similar Purposes."
84
RA No. 293, enacted on June 16, 1948, authorized the sale of marshy lands under certain
conditions. Section 1 of RA No. 293 provided as follows: "The provisions of section sixty-one of
Commonwealth Act Numbered One hundred and forty-one to the contrary notwithstanding, marshy
lands and lands under water bordering on shores or banks or navigable lakes or rivers which are
covered by subsisting leases or leases which may hereafter be duly granted under the provisions of
the said Act and are already improved and have been utilized for farming, fishpond, or similar
purposes for at least five years from the date of the contract of lease, may be sold to the lessees
thereof under the provisions of Chapter Five of the said Act as soon as the President, upon
recommendation of the Secretary of Agriculture and Natural Resources, shall declare that the same
are not necessary for the public service."
85 PEA's Memorandum, see note 2 at 45.
86 See note 73.
87
Section 4 (b) of PD No. 1084
88 R.A. No. 730 allows the private sale of home lots to actual occupants of public lands. See note 63.
89 Issued on February 26, 1981.
90
While PEA claims there was a failure of public bidding on December 10, 1991, there is no showing
that the Commission on Audit approved the price or consideration stipulated in the negotiated
Amended JVA as required by Section 79 of the Government Auditing Code. Senate Committee
Report No. 560 did not discuss this issue.
91
Paragraph 2 (a) of COA Circular No. 89-296, on "Sale Thru Negotiation," states that disposal
through negotiated sale may be resorted to if "[T]here was a failure of public auction."
92 Senate Committee Report No. 560, Statement of Facts, p. 7, citing PEA Board Resolution No.
835, as appearing in the Minutes of the PEA Board of Directors Meeting held on May 30, 1991, per
Certification of Jaime T. De Veyra, Corporate Secretary, dated June 11, 1991.
93 Opinion No. 330, citing COA Audit Circular No. 89-296. See note 5.
94 PEA's Memorandum, see note 2.
95
Senate Committee Report No. 560, pp. 7-8, citing the Minutes of Meeting of the PEA Board of
Directors held on December 19, 1991.
96 Section 3, Article XII of the 1987 Constitution provides as follows: "x x x Citizens of the Philippines
may x x x acquire not more than twelve hectares thereof by purchase, homestead or grant."
However, Section 6 of R.A. No. 6657 (Comprehensive Agrarian Reform Law) limits the ownership of
"public or private agricultural land" to a maximum of five hectares per person.
97 96 Phil. 946 (1955).
98 48 SCRA 372 (1977).
99
168 SCRA 198 (1988).
100 172 SCRA 795 (1989).
101 73 SCRA 146 (1976).
102
Avila v. Tapucar, 201 SCRA 148 (1991).
103
Republic v. Ayala Cia, et al., 14 SCRA 259 (1965); Dizon v. Rodriguez, 13 SCRA 705 (1965).
104 Section 44 of PD No. 1529 states as follows: "Every registered owner receiving a certificate of title
in pursuance of a decree of registration, and every subsequent purchaser of registered land taking a
certificate of title for value and in good faith, shall hold the same free from all encumbrances except
those noted on said certificate and any of the following encumbrances which may be subsisting,
namely: First. Liens, claims or rights arising or existing under the laws and Constitution of the
Philippines which are not by law required to appear of record in the Registry of Deeds in
order to be valid against subsequent purchasers or encumbrancers of record. x x x." Under
Section 103 of PD No. 1529, Section 44 applies to certificates of title issued pursuant to a land
patent granted by the government.
105 Section 2, Article XIII of the 1935 Constitution.
usable area of 110.49 hectares. The net usable area is the total land area of the Freedom Islands
less 30 percent allocated for common areas.
111 The share of AMARI in the submerged areas for reclamation is 290.129 hectares, which is 70
In the grant of rights, privileges, and concessions covering the national economy and
patrimony, the State shall give preference to qualified Filipinos.
T he State shall regulate and exercise authority over foreign investments within its national
jurisdiction and in accordance with its national goals and priorities."
The first paragraph directs Congress to reserve certain areas of investments in the country 25 to Filipino
citizens or to corporations sixty per cent 26 of whose capital stock is owned by Filipinos. It further commands
Congress to enact laws that will encourage the formation and operation of one hundred percent Filipino-owned
enterprises. In checkered contrast, the second paragraph orders the entire State to give preference to qualified
Filipinos in the grant of rights and privileges covering the national economy and patrimony. The third
paragraph also directs the State to regulate foreign investments in line with our national goals and well-set
priorities.
T he first paragraph of Section 10 is not self-executing. By its express text, there is a categorical
command for Congress to enact laws restricting foreign ownership in certain areas of
investments in the country and to encourage the formation and operation of wholly-owned
Filipino enterprises. The right granted by the provision is clearly still in esse. Congress has to
breathe life to the right by means of legislation. Parenthetically, this paragraph was plucked from section 3,
Article XIV of the 1973 Constitution. 27 The provision in the 1 973 Constitution affirmed our ruling in the
landmark case of Lao Ichong v. Hernandez, 28 where we upheld the discretionary authority of Congress to
Filipinize certain areas of investments. 29 By reenacting the 1973 provision, the first paragraph of section 1 0
affirmed the power of Congress to nationalize certain areas of investments in favor of Filipinos.
The second and third paragraphs of Section 1 0 are different. They are directed to the State and not to
Congress alone which is but one of the three great branches of our government.Their coverage is
also broader for they cover "the national economy and patrimony" and "foreign investments within [the]
national jurisdiction" and not merely "certain areas of investments." Bey ond debate, they cannot be read as
granting Congress the exclusive power to implement by law the policy of giving preference to qualified Filipinos
in the conferral of rights and privileges covering our national economy and patrimony. Their language does not
suggest that any of the State agency or instrumentality has the privilege to hedge or to refuse its
implementation for any reason whatsoever. Their duty to implement is unconditional and it is now. The
second and the third paragraphs of Section 10, Article XII are thus self-executing.
ISSUES
1. WON Sec. 10, 2nd par., Art. XII, of the 1987 Constitution is non-self-executing
2. WON the Manila Hotel falls under the term national patrimony
3. WON 51% of the equity of MHC can be considered part of national patrimony
4. WON petitioner should be allow ed to match the highest bid
5. WON GSIS committed grav e abuse of discretion
HELD
1. NO. A prov ision whic h is complete in itself and becomes operative without the aid of supplementary or enabling legislation, or that w hich supplies sufficient rule
by means of which the right it grants may be enjoyed or protected, is self-executing. Unless the contrary is clearly intended, the provisions of the Constitution
should be considered self-executing, as a contrary rule would give the legislature discretion to determine when, or whether, they shall be effective. Sec. 10,
second par., of Art. XII is couched in such a way as not to make it appear that it is non-self-ex ecuting but simply for purposes of sty le. The argument of
respondents that the non-self-ex ecuting nature of Sec. 10, second par. of Art. XII is implied from the tenor of the first and third paragraphs of the same section
w hich undoubtedly are not self-executing is flawed. If the first and third paragraphs are not self-ex ecuting because Congress is still to enact measures to
encourage the formation and operation of enterprises fully owned by Filipinos, as in the first paragraph, and the State still needs legislation to regulate and
ex ercise authority over foreign investments within its national jurisdiction, as in the third paragraph, then a fortiori, by the same logic, the second paragraph can
only be self-executing as it does not by its language require any legislation in order to give preference to qualified Filipinos in the grant of rights, privileges and
concessions covering the national economy and patrimony. A constitutional provision may be self-executing in one part and non-self-executing in another. Sec.
10, second par., Art. XII of the 1987 Constitution is a mandatory , positive command whic h is complete in itself and w hich needs no further guidelines or
implementing law s or rules for its enforcement. From its very words the provision does not require any legislation to put it in operation. It is per se judicially
enforceable.
2. YES. In its plain and ordinary meaning, the term patrimony pertains to heritage. When the Constitution speaks of national patrimony, it refers not only to the
natural resources of the Philippines, as the Constitution could have very well used the term natural resources, but also to the cultural heritage of the Filipinos.
Manila Hotel has become a landmark - a liv ing testimonial of Philippine heritage. Its ex istence is impressed with public interest; its own historicity associated with
our struggle for sov ereignty, independence and nationhood. Verily , Manila Hotel has become part of our national economy and patrimony.
3. YES. 51% of the equity of the MHC comes within the purview of the constitutional shelter for it comprises the majority andcontrolling stock, so that anyone
w ho acquires or owns the 51% will have actual control and management of the hotel. In this instance, 51% of the MHC cannot be disassociated from the hotel
and the land on w hich the hotel edifice stands. Respondents further argue that the constitutional prov ision is addressed to the State, not to respondent GSIS
w hich by itself possesses a separate and distinct personality . In constitutional jurisprudence, the acts of persons distinct from the gov ernment are considered
"state action" cov ered by the Constitution (1) when the activity it engages in is a "public function"; (2) when the government is so significantly involv ed with the
priv ate actor as to make the government responsible for his action; and, (3) when the government has approved or authorized the action. It is ev ident that the act
of respondent GSIS in selling 51% of its share in respondent MHC comes under the second and third categories of "state action." Therefore the transaction,
although entered into by respondent GSIS, is in fact a transaction of the State and therefore subject to the constitutional command.
4. YES. It should be stressed that w hile the Malaysian firm offered the higher bid it is not y et the w inning bidder. The bidding rules expressly provide that the
highest bidder shall only be declared the winning bidder after it has negotiated and ex ecuted the necessary contracts, and secured the requisite approvals. Since
the Filipino First Policy provision of the Constitution bestows preference on qualified Filipinos the mere tending of the highest bid is not an assurance that the
highest bidder w ill be declared the winning bidder. Resultantly, respondents are not bound to make the award yet, nor are they under obligation to enter into one
w ith the highest bidder. For in choosing the awardee respondents are mandated to abide by the dictates of the 1987 Constitution the prov isions of w hich are
presumed to be know n to all the bidders and other interested parties. Paragraph V. J. I of the bidding rules provides that [i]f for any reason the Highest Bidder
cannot be aw arded the Block of Shares, GSIS may offer this to other Qualified Bidders that hav e v alidly submitted bids provided that these Qualified Bidders are
w illing to match the highest bid in terms of price per share. The constitutional mandate itself is reason enough not to aw ard the block of shares immediately to the
foreign bidder notw ithstanding its submission of a higher, or even the highest, bid. Where a foreign firm submits the highestbid in a public bidding concerning the
grant of rights, priv ileges and concessions covering the national economy and patrimony, thereby exceeding the bid of a Filipino, there is no question that the
Filipino w ill have to be allowed to match the bid of the foreign entity . And if the Filipino matches the bid of a foreign firm the aw ard should go to the Filipino. It
must be so if w e are to giv e life and meaning to the Filipino First Policy provision of the 1987 Constitution. The argument of respondents that petitioner is now
estopped from questioning the sale to Renong Berhad since petitioner w as well aware from the beginning that a foreigner could participate in the bidding is
SEPARATE OPINION
PADILLA [concur]
- Under the 1987 Constitution, "national patrimony " consists of the natural resources provided by Almighty God (Preamble) in our territory (Article 1) consisting of
land, sea, and air. The concept of national patrimony has been viewed as referring not only to our rich natural resources butalso to the cultural heritage of our
race. The Manila Hotel is very much a part of our national patrimony and, as such, deserves constitutional protection as to who shall own it and benefit from its
operation. This institution has played an important role in our nation's history, having been the v enue of many a historical event, and serving as it did, and as it
does, as the Philippine Guest House for v isiting foreign heads of state, dignitaries, celebrities, and others.
- "Preference to qualified Filipinos," to be meaningful, must refer not only to things that are peripheral, collateral, or tangential. It must touch and affect the v ery
"heart of the ex isting order." In the field of public bidding in the acquisition of things that pertain to the national patrim ony , preference to qualified Filipinos must
allow a qualified Filipino to match or equal the higher bid of a non-Filipino; the preference shall not operate only when the bids of the qualified Filipino and the
non-Filipino are equal in w hich case, the aw ard should undisputedly be made to the qualified Filipino. The Constitutional preference should giv e the qualified
Filipino an opportunity to match or equal the higher bid of the non-Filipino bidder if the preference of the qualified Filipino bidder is to be significant at all.
VITUG [separate]
- The prov ision in our fundamental law which provides that "(i)n the grant of rights, priv ileges, and concessions covering the national economy and patrimony, the
State shall giv e preference to qualified Filipinos" is self-executory. The provision does not need, although it can obviously be amplified or regulated by, an
enabling law or a set of rules.
- The term "patrimony " does not merely refer to the country 's natural resources but also to its cultural heritage. A "historical landmark”, Manila Hotel has now
indeed become part of Philippine heritage.
- The act of the GSIS, a gov ernment entity which deriv es its authority from the State, in selling 51% of its share in MHC should be considered an act of the State
subject to the Constitutional mandate.
- On the piv otal issue of the degree of "preference to qualified Filipinos," the only meaningful preference would really be to allow the qualified Filipino to match the
foreign bid. The magnitude of the bids is such that it becomes hardly possible for the competing bids to stand exactly "equal" which alone, under the dissenting
v iew, could trigger the right of preference.
TORRES [separate]
- History , culture, heritage, and tradition are not legislated and is the product of ev ents, customs, usages and practices. It is actually a product of grow th and
acceptance by the collectiv e mores of a race. It is the spirit and soul of a people. The Manila Hotel is part of our history , culture and heritage. The Manila Hotel is
w itness to historic events which shaped our history for almost 84 years. The history of the Manila Hotel should not be placed in the auction block of a purely
business transaction, where profit subverts the cherished historical values of our people.
PUNO [dissent]
- The v ital issues can be summed up as follows:
1. Whether Sec. 10, Par. 2 of Art. XII of the Constitution is a self-ex ecuting provision and does not need implementing legislation to carry it into effect;
2. Assuming Sec. 10, Par. 2 of Art. XII is self ex ecuting, whether the controlling shares of the Manila Hotel Corporation form part of our patrimony as a
nation;
3. Whether GSIS is included in the term "State," hence, mandated to implement Sec. 10, Par. 2 of Art. XII of the Constitution;
4. Assuming GSIS is part of the State, w hether it failed to giv e preference to petitioner, a qualified Filipino corporation, over and above Renong Berhad, a
foreign corporation, in the sale of the controlling shares of the Manila Hotel Corporation;
5. Whether petitioner is estopped from questioning the sale of the shares to Renong Berhad, a foreign corporation.
- 1st issue: courts as a rule consider the provisions of the Constitution as self executing, rather than as requiring future legislation for their enforcement. If they are
not treated as self-ex ecuting, the mandate of the fundamental law ratified by the sovereign people can be easily ignored and nullified by Congress. Case law also
lay s down the rule that a constitutional prov ision is not self-executing where it merely announces a policy and its language empowers the Legislature to prescribe
the means by which the policy shall be carried into effect. The first paragraph of Section 10 is not self-ex ecuting. By its express text, there is a categorical
command for Congress to enact laws restricting foreign ownership in certain areas of inv estments in the country and to encourage the formation and operation of
w holly-owned Filipino enterprises. The second and third paragraphs of Section 10 are different. They are directed to the State and not to Congress alone w hich is
but one of the three great branches of our gov ernment. Their coverage is also broader for they cover "the national economy and patrimony" and "foreign
PANGANIBAN [dissent]
- The majority contends the Constitution should be interpreted to mean that, after a bidding process is concluded, the losing Filipino bidder should be given the
right to equal the highest foreign bid, and thus to w in. No statute empowers a losing Filipino bidder to increase his bid andequal that of the w inning foreigner. In
the absence of such empowering law, the majority's strained interpretation, I respectfully submit, constitutes unadulterated judicial legislation, which makes
bidding a ridiculous sham where no Filipino can lose and where no foreigner can win.
- Aside from being prohibited by the Constitution, such judicial legislation is short-sighted and, viewed properly , gravely prejudicial to long-term Filipino interests.
It encourages other countries - in the guise of rev erse comity or worse, unabashed retaliation - to discriminate against us in their own jurisdictions by authorizing
their ow n nationals to similarly equal and defeat the higher bids of Filipino enterprises solely , while on the other hand, allowing similar bids of other foreigners to
remain unchallenged by their nationals.
- In the absence of a law specifying the degree or extent of the "Filipino First" policy of the Constitution, the constitutional preference for the "qualified Filipinos"
may be allowed only where all the bids are equal. The Constitution mandates a victory for the qualified Filipino only when the scores are tied. But not w hen the
ballgame is ov er and the foreigner clearly posted the highest score.
BELLOSILLO, J.:
The FiIipino First Policy enshrined in the 1987 Constitution, i.e., in the grant of rights,
privileges, and concessions covering the national economy and patrimony, the State
shall give preference to qualified Filipinos, 1 is in oked by petitioner in its bid to acquire
51% of the shares of the Manila Hotel Corporation (MHC) which owns the historic Manila
Hotel. Opposing, respondents maintain that the provision is not self-executing but
requires an implementing legislation for its enforcement. Corollarily, they ask whether the
51% shares form part of the national economy and patrimony covered by the protective
mantle of the Constitution.
The controversy arose when respondent Government Service Insurance System (GSIS),
pursuant to the privatization program of the Philippine Government under Proclamation
No. 50 dated 8 December 1986, decided to sell through public bidding 30% to 51% of the
issued and outstanding shares of respondent MHC. The winning bidder, or the eventual
"strategic partner," is to provide management expertise and/or an international
marketing/reservation system, and financial support to strengthen the profitability and
performance of the Manila Hotel. 2 In a close bidding held on 18 September 1995 only
two (2) bidders participated: petitioner Manila Prince Hotel Corporation, a Filipino
corporation, which offered to buy 51% of the MHC or 15,300,000 shares at P41.58 per
Quite apparently, Sec. 10, second par., of Art XII is couched in such a way as not to
make it appear that it is non-self-executing but simply for purposes of style. But,
certainly, the legislature is not precluded from enacting other further laws to enforce the
constitutional provision so long as the contemplated statute squares with the
Constitution. Minor details may be left to the legislature without impairing the self-
executing nature of constitutional provisions.
In self-executing constitutional provisions, the legislature may still enact legislation to
facilitate the exercise of powers directly granted by the constitution, further the operation
of such a provision, prescribe a practice to be used for its enforcement, provide a
convenient remedy for the protection of the rights secured or the determination thereof,
or place reasonable safeguards around the exercise of the right. The mere fact that
legislation may supplement and add to or prescribe a penalty for the violation of a self-
executing constitutional provision does not render such a provision ineffective in the
absence of such legislation. The omission from a constitution of any express provision
for a remedy for enforcing a right or liability is not necessarily an indication that it was not
intended to be self-executing. The rule is that a self-executing provision of the
constitution does not necessarily exhaust legislative power on the subject, but any
legislation must be in harmony with the constitution, further the exercise of constitutional
right and make it more available. 17 Subsequent legislation however does not necessarily
mean that the subject constitutional provision is not, by itself, fully enforceable.
Respondents also argue that the non-self-executing nature of Sec. 10, second par., of
Art. XII is implied from the tenor of the first and third paragraphs of the same section
which undoubtedly are not self-executing. 18 The argument is flawed. If the first and third
paragraphs are not self-executing because Congress is still to enact measures to
encourage the formation and operation of enterprises fully owned by Filipinos, as in the
first paragraph, and the State still needs legislation to regulate and exercise authority
over foreign investments within its national jurisdiction, as in the third paragraph, then
a fortiori, by the same logic, the second paragraph can only be self-executing as it does
not by its language require any legislation in order to give preference to qualified Filipinos
Separate Opinions
Separate Opinions
PADILLA, J., concurring:
I concur with the ponencia of Mr. Justice Bellosillo. At the same time, I would like to
expound a bit more on the concept of national patrimony as including within its scope
and meaning institutions such as the Manila Hotel.
It is argued by petitioner that the Manila Hotel comes under "national patrimony" over
which qualified Filipinos have the preference, in ownership and operation. The
Constitutional provision on point states:
xxx xxx xxx
In the grant of rights, privileges, and concessions covering the national economy and
patrimony, the State shall Give preference to qualified Filipinos. 1
Petitioner's argument, I believe, is well taken. Under the 1987 Constitution, "national
patrimony" consists of the natural resources provided by Almighty God (Preamble) in our
territory (Article I) consisting of land, sea, and air. 2study of the 1935 Constitution, where
ISSUES
1. WON case is justiciable
2. WON EO 279 took effect
3. WON the WMCP FTAA is constitutional
4. WON RA 7942 is constitutional
HELD
1. Case is justiciable.
Ratio In cases involving constitutional questions, the Court is not concerned with whether petitioners are real parties in interest, but with whether they have legal
SEPARATE OPINION
VITUG
- It could not hav e been the object of the framers of the Charter to limit the contracts w hich the President may enter into, to mere “agreements for financial and
technical assistance; The Constitution has not prohibited the State from itself ex ploring, developing, or utilizing the country’s natural resources, and, for this
purpose, it may , enter into the necessary agreements with individuals or entities in the pursuit of a feasible operation.”
PANGANIBAN
- The petition should be dismissed on the ground of mootness. The dispute claiming the right to purchase the foreign shares in WMCP is between two Filipino
companies (Sagittarius and Lepanto). So regardless of which side wins, the FTAA would still be in the hands of a qualified Filipino company.
- The w ord “involv ing” signifies the possibility of inclusion of other activ ities. If the intention of the drafters w ere strictly to confine foreign corporations to financial
or technical assistance and nothing more, their language would have been unmistakably restrictiv e and stringent.
- The present Constitution still recognizes and allows service contracts (and has not rendered them taboo), albeit subject to sev eral restrictions and modifications
aimed at av oiding pitfalls of the past.
- In the minds of the commissioners, the concept of technical and financial assistance agreements did not exist at all apart from the concept of service contracts
duly modified to prev ent abuses –“technical and financial agreements” were understood by the delegates to include service contracts duly modified to prev ent
abuses.
RESOLUTION
PANGANIBAN; December 1, 2004
FACTS
- Mariv ic M.V.F. Leonen, et. al for petitioners
- SPECIAL CIVIL ACTION in Supreme Court. Mandamus and Prohibition
- Ponente: Panganiban, J. (take note: major dissenter in part1)
- All mineral resources are owned by the State. Their exploration, development and utilization (EDU) must always be subject to the full control and superv ision of
the State. More specifically, giv en the inadequacy of Filipino capital and technology in large-scale EDU activities, the State may secure the help of foreign
companies in all relevant matters –especially financial and technical assistance –provided that, at all times, the State maintains its right of full control. The foreign
assistor or contractor assumes all financial, technical and entrepreneurial risks in the EDU activities; hence it may be given reasonable management, operational,
marketing, audit and other prerogativ es to protect its inv estments and enable the business to succeed.
- The Constitution should be read in broad, life-giving strokes. It should not be used to strangulate economic growth or to serve narrow, parochial interests.
Rather, it should be construed to grant the President and Congress sufficient discretion and reasonable leeway to enable them to attract foreign inv estments and
ex pertise, as well as to secure for our people and our posterity the blessings of prosperity and peace.
- On the basis of this control standard, this Court upholds the constitutionality of the Philippine Mining Law, its Implementing Rules and Regulations –insofar as
they relate to financial and technical agreements –as well as the subject Financial and Technical Assis tance Agreement (FTAA).
ISSUES
1. WON the case been rendered moot by the sale of the WMC shares in WMCP to Sagittarius and by the subsequent transfer and registration of the FTAA from
WMCP to Sagittarius
2. Assuming that the case has been rendered moot, WON it would still be proper to resolv e the constitutionality of the assailed provisions of the Mining Law,
DAO 96-40 and the WMCP FTAA
3. What is the proper interpretation of the phrase Agreements Inv olving Either Technical or Financial Assistance contained in paragraph 4 of Section 2 of Article
XII of the Constitution?
HELD
1. YES.
Ratio The courts will decide a question –otherwise moot and academic –if it is capable of repetition, yet evading review.
- The dispute claiming the right to purchase the foreign shares in WMCP is between two Filipino companies (Sagittarius and Lepanto). So regardless of w hich
side w ins, the FTAA would still be in the hands of a qualified Filipino company. The plea to nullify the Mining Law has become a virtual petition for declaratory
relief, ov er w hich this Court has no original jurisdiction.
- Petitioners argue that the sale of shares and transfer of the FTAA is inv alid. Government cannot enter into FTAA with Filipinos.
- It does not take deep know ledge of law and logic to understand that w hat the Constitution grants to foreigners should be equally available to Filipinos.
2. Ratio FTAAs are service contracts. But unlike those of the 1973 v ariety , the grant thereof is subject to several safeguards.
- Petitioners stress the follow ing points. First, while a case becomes moot and academic when there is no more actual controversy between the parties or no
useful purpose can be served in passing upon the merits, what is at issue is not only the validity of the WMCP FTAA but also the constitutionality of RA 7942 and
its Implementing Rules and Regulations. Second, the acts of private respondent cannot operate to cure the law of its alleged unconstitutionality or to div est this
Court of its jurisdiction to decide. Third, the Constitution imposes upon the Supreme Court the duty to declare invalid any law that offends the Constitution.
- But of equal if not greater significance is the cloud of uncertainty hanging over the mining industry, which is even now scaring away foreign investments. It is
ev ident that strong reasons of public policy demand that the constitutionality issue be resolv ed now. And citing Acop v. Guingona, the courts will decide a
question –otherw ise moot and academic –if it is “capable of repetition, yet evading review.”
3. Citing Francisco v. House of Representatives, the ponencia reiterated the well settled principles of constitutional construction:
Verba legis, that is, w herever possible, the words used in the Constitution must be given their ordinary meaning except where technicalterms
are employ ed.
Where there is ambiguity , ratio legis est anima. The words of the Constitution should be interpreted in accordance with the intent of its framers.
Ut magis valeat quam pereat. The Constitution is to be interpreted as a w hole.
- Petitioners claim that the phrase “agreements… involv ing either technical or financial assistance” sim ply means technical assistance or financial assistance
agreements, nothing more and nothing else.
- But if that w as the intention, then w hat is the point of requiring that they be based on real contributions to the economic growth and general welfare of the
country ?
- It is also unclear how a verba legis approach leads to the conclusion that “the management or operation of mining activities by foreign contractors, which is the
primary feature of service contracts, was precisely the evil that the drafters of the 1987 Constitution sought to eradicate. If the framers had intended to put an end
to serv ice contracts, they would have at least left some transitory guidelines.
- The drafters w ill hav e to be credited w ith enough pragmatism and savvy to know that these foreign entities w ill not enter into such “agreements involving
assistance” without requiring arrangements for the protection of their inv estments, gains and benefits.
- Using ratio legis est anima, we may now examine the CONCOM deliberations. It may be observed that the members use the terms “financial and technical
assistance agreements” and “service contracts” interchangeably . From their statements, it may be concluded that FTAAs are service contracts. But unlike those
of the 1973 v ariety , the grant thereof is subject to sev eral safeguards (in accordance with law, President as signatory, reporting to Congress…)
- With ut magis v aleat quam pereat, we may notice a contradiction between the State’s full control and supervision and the safeguarded service contracts with
foreign contractors. It must be pointed out that the full control and superv ision cannot be taken literally to mean that the State controls and superv ises everything
inv olved, down to the minutest details, and makes all decisions required in the mining operations. Control by State may be onthe macro level –establishment of
policies, guidelines, regulations, industry standards, etc.
- To further disabuse the notion of these “new service contracts”, the government’s share in these operations will not be limited to tax es, duties and fees to be
imposed. Those only consis t of the basic government share. The law provides for an additional gov ernment share to be determined using formulas presented in
DAO 96-40, either of w hich results to at least 50% of the net benefits from the mining.
Decision WHEREFORE, the Court RESOLVES to GRANT the respondents’ and the intervenors’ Motions for Reconsideration; to REVERSE and SET ASIDE
this Court’s January 27, 2004 Decision; to DISMISS the Petition; and to issue this new judgment declaring CONSTITUTIONAL 1) RA 7942 (Phil. Mining Law), 2)
its Implementing Rules and Regulations contained in DAO 96-40 –insofar as they relate to financial and technical assistance agreements referred to in par. 4 of
Section 2 of Art. XII of the Constitution; and 3) the FTAA dated March 30, 1995 ex ecuted by the government and WMCP, except Sections 7.8 and 7.9 of the
SEPARATE OPINION
CARPIO
- Prov isions of RA 7942 abdicate the State’s constitutional duty to control and supervise fully the ex ploitation of mineral resources.
- The change in language in the Constitution w as a clear rejection of the old system of “license, concession or lease.”
- The State as ow ner of the natural resources must receive income from its exploitation –taxes, fees and charges cannot substitute.
- State must receiv e at least 60% of the net proceeds in FTAAs, which share is equivalent to the Filipino equity requirement.
- The majority opinion refused to accept that the State is entitled to w hat the entire mining industry is willing to pay the State.
- The phrase “natural resources are owned by the State” simultaneously vests the legal title to the nation’s natural resources to the Gov ernment, and the
beneficial ow nership of these resources in the sovereign Filipino people.
- In the EDU of natural resources, Gov ernment acts as trustee. So it cannot, without v iolating its sacred trust, enter into any agreement or arrangement which
effectiv ely depriv es the Filipino people of their beneficial ownership of these resources.
- Art. XII, sec. 2 in mentioning “based on real contributions to the economic growth and general welfare of the country articulates the value which the Constitution
places on natural resources, and recognizes their potential benefits.
- Real benefits are intergenerational benefits because the motherland’s natural resources are the birthright not only of the present generation of Filipinos but of
future generations as w ell.
- “Inv olving” as the majority construes it runs counter to the restrictiv e spirit of the prov ision.
- “Either” refers to one of tw o items and “any” is required when more than tw o items are involved.
- “Either” is not merely descriptiv e but restrictive.
- Casus omisus pro omisso habendus est –a person, object or thing omitted from an enumeration must be held to hav e been omitted intentionally.
- It is understandable, how ever regrettable, that a gov ernment, strapped for cash and in the midst of a self proclaimed fiscal crisis, would be inclined to turn a
blind ey e to the consequences of unconstitutional legislation in the hope, however false or empty , of obtaining fabulous amounts of hard currency; As alw ays, the
one ov erriding the consideration of this Court should be will of the sovereign Filipino people as embodied in their Constitution.
- The task of reclaiming Filipino control over Philippine natural resources now belongs to another generation.
EN BANC
PUNO, CJ,
QUISUMBING,
YNARES-SANTIAGO,
SANDOVAL-GUTIERREZ,
- versus - CARPIO,
AUSTRIA-MARTINEZ,
CORONA,
CARPIO MORALES,
AZCUNA,
TINGA,
CHICO-NAZARIO,
GARCIA,
NATIONAL HOUSING VELASCO,
AUTHORITY, R-II BUILDERS, NACHURA, and
INC., R-II HOLDINGS, INC., REYES, JJ.
HARBOUR CENTRE PORT
TERMINAL, INC., and Promulgated:
MR. REGHIS ROMERO II,
Respondents. August 15, 2007
x-----------------------------------------------------------------------------------------x
DE C I S I ON
In this Petition for Prohibition and Mandamus with Prayer for Temporary
Restraining Order and/or Writ of Preliminary Injunction under Rule 65, petitioner,
in his capacity as taxpayer, seeks:
to declare NULL AND VOID the Joint Venture Agreement (JVA) dated March 9, 1993
between the National Housing Authority and R-II Builders, Inc. and the Smokey Mountain
to compel respondents to disclose all documents and information relating to the project––
including, but not limited to, any subsequent agreements with respect to the different
phases of the project, the revisions over the original plan, the additional works incurred
thereon, the current financial condition of respondent R-II Builders, Inc., and the
transactions made respecting the project.[1]
The Facts
On February 10, 1992, Joint Resolution No. 03[8] was passed by both houses
of Congress. Sec. 1 of this resolution provided, among other things, that:
xxxx
(d) Port infrastructure like piers, wharves, quays, storage handling, ferry service
and related facilities;
xxxx
(l) Industrial estates, regional industrial centers and export processing zones
including steel mills, iron-making and petrochemical complexes and related infrastructure
and utilities;
xxxx
This resolution complied with and conformed to Sec. 4 of the BOT Law
requiring the approval of all national infrastructure projects by the Congress.
Section 4. The land area covered by the Smokey Mountain dumpsite is hereby
conveyed to the National Housing Authority as well as the area to be reclaimed across
R-10. (Emphasis supplied.)
In addition, the Public Estates Authority (PEA) was directed to assist in the
evaluation of proposals regarding the technical feasibility of reclamation, while the
DENR was directed to (1) facilitate titling of Smokey Mountain and of the area to
be reclaimed and (2) assist in the technical evaluation of proposals regarding
environmental impact statements.[10]
Subsequently, the TECHCOM put out the Public Notice and Notice to Pre-
Qualify and Bid for the right to become NHA’s joint venture partner in the
implementation of the SMDRP. The notices were published in newspapers of
general circulation on January 23 and 26 and February 1, 14, 16, and 23, 1992,
respectively. Out of the thirteen (13) contractors who responded, only five (5)
contractors fully complied with the required pre-qualification documents. Based
on the evaluation of the pre-qualification documents, the EXECOM declared the
New San Jose Builders, Inc. and R-II Builders, Inc. (RBI) as the top two
contractors.[14]
Thereafter, the TECHCOM evaluated the bids (which include the Pre-
feasibility Study and Financing Plan) of the top two (2) contractors in this manner:
(1) The DBP, as financial advisor to the Project, evaluated their Financial
Proposals;
(2) The DPWH, PPA, PEA and NHA evaluated the Technical Proposals
for the Housing Construction and Reclamation;
(4) The NHA and the City of Manila evaluated the socio-economic
benefits presented by the proposals.
On June 30, 1992, Fidel V. Ramos assumed the Office of the President (OP)
of the Philippines.
WHEREAS, the National Housing Authority has presented a viable conceptual plan
to convert the Smokey Mountain dumpsite into a habitable housing project, inclusive of the
reclamation of the area across Road Radial 10 (R-10) adjacent to the Smokey Mountain as
the enabling component of the project;
xxxx
These parcels of land of public domain are hereby placed under the
administration and disposition of the National Housing Authority to develop,
subdivide and dispose to qualified beneficiaries, as well as its development for mix
land use (commercial/industrial) to provide employment opportunities to on-site
families and additional areas for port-related activities.
In order to facilitate the early development of the area for disposition, the
Department of Environment and Natural Resources, through the Lands and Management
Bureau, is hereby directed to approve the boundary and subdivision survey and to issue a
special patent and title in the name of the National Housing Authority, subject to final
survey and private rights, if any there be. (Emphasis supplied.)
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)
757[18] which mandated NHA ―[t]o undertake the physical and socio-economic
upgrading and development of lands of the public domain identified for housing,‖
MO 161-A which required NHA to conduct the feasibility studies and develop a
low-cost housing project at the Smokey Mountain, and MO 415 as amended by
MO 415-A which approved the Conceptual Plan for Smokey Mountain and
creation of the EXECOM and TECHCOM. Under the JVA, the Project ―involves
the clearing of Smokey Mountain for eventual development into a low cost
medium rise housing complex and industrial/commercial site with the reclamation
of the area directly across [R-10] to act as the enabling component of the Project.‖
[19]
The JVA covered a lot in Tondo, Manila with an area of two hundred twelve
thousand two hundred thirty-four (212,234) square meters and another lot to be
reclaimed also in Tondo with an area of four hundred thousand (400,000) square
meters.
c) The construction activities will only commence after the acquisition of the
ECC, and
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 [R-10] as contained in Proclamation No. 39 as the enabling component of the project
and payment to the [RBI] as its asset share.
2.06 The [RBI] shall likewise furnish all labor materials and equipment necessary
to complete all herein development works to be undertaken on a phase to phase basis in
accordance with the work program stipulated therein.
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 RBI:
The FINAL REPORT shall provide the necessary subdivision and housing plans,
detailed engineering and architectural drawings, technical specifications and other related
and required documents relative to the Smokey Mountain area.
With respect to the 40-hectare reclamation area, the [RBI] shall have the discretion
to develop the same in a manner that it deems necessary to recover the [RBI’s] investment,
subject to environmental and zoning rules.
4.02 Finance the total project cost for land development, housing construction
and reclamation of the PROJECT.
4.03 Warrant that all developments shall be in compliance with the requirements
of the FINAL REPORT.
4.05 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)
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 executed
later by the parties.
Thus, on February 21, 1994, the parties entered into another agreement
denominated as the Amended and Restated Joint Venture Agreement[22] (ARJVA)
which delineated the different phases of the Project. Phase I of the Project
involves the construction of temporary housing units for the current residents of
the SmokeyMountain dumpsite, the clearing and leveling-off of the dumpsite, and
the construction of medium-rise low-cost housing units at the cleared and leveled
dumpsite.[23] Phase II of the Project involves the construction of an incineration
area for the on-site disposal of the garbage at the dumpsite.[24] The enabling
component or consideration for Phase I of the Project was increased from 40
hectares of reclaimed lands across R-10 to 79 hectares.[25] The revision also
provided for the enabling component for Phase II of 119 hectares of reclaimed
lands contiguous to the 79 hectares of reclaimed lands for Phase I.[26] Furthermore,
the amended contract delineated the scope of works and the terms and conditions
of Phases I and II, thus:
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 theSmokey Mountain area
c. the reclamation and development of a 79 hectare area directly across Radial Road
10 to serve as the enabling component of Phase I
a. the construction and operation of an incinerator plant that will conform to the
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 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
3. MITIGATING MEASURES
3.1 For reclamation work Use of clean dredgefill material below the MLLW
and SM material mixed with dredgefill above MLLW.
Under the JVA, the specific costs of the Project were not
stipulated but under the ARJVA, the stipulated cost for Phase I was pegged at six
billion six hundred ninety-three million three hundred eighty-seven thousand three
hundred sixty-four pesos (PhP 6,693,387,364).
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:
a. the construction and operation of an incinerator plant that will conform to the
emission standards of the DENR
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 Authority’s 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
Afterwards, President Ramos issued Proclamation No. 465 dated August 31,
1994[31] increasing the proposed area for reclamation across R-10 from 40
hectares to 79 hectares,[32] to wit:
On September 26, 1994, the NHA, RBI, Home Insurance and Guaranty
Corporation (HIGC), now known as the Home Guaranty Corporation, and the
Philippine National Bank (PNB)[33] executed the Smokey Mountain Asset
Pool Formation Trust Agreement (Asset Pool Agreement).[34] Thereafter, a
Guaranty Contract was entered into by NHA, RBI, and HIGC.
On June 23, 1994, the Legislature passed the Clean Air Act.[35] The Act made
the establishment of an incinerator illegal and effectively barred the
implementation of the planned incinerator project under Phase II. Thus, the
off-site disposal of the garbage at the Smokey Mountain became necessary.[36]
Such necessary works comprised more than 25% of the original contract price
and as a result, the Asset Pool incurred direct and indirect costs. Based on C1
12 A of the Implementing Rules and Regulations of PD 1594, a supplemental
agreement is required for ―all change orders and extra work orders, the total
aggregate cost of which being more than twenty-five (25%) of the escalated
original contract price.‖
Thus, on February 19, 1998, the EXECOM issued a resolution directing NHA
to enter into a supplemental agreement covering said necessary works.
On March 20, 1998, the NHA and RBI entered into a Supplemental
Agreement covering the aforementioned necessary works and submitted it to
the President onMarch 24, 1998 for approval.
However, the approval of the Supplemental Agreement was unacted upon for
five months. As a result, the utilities and the road networks were constructed
to cover only the 79-hectare original enabling component granted under the
ARJVA. The 220-hectare extension of the 79-hectare area was no longer
technically feasible. Moreover, the financial crises and unreliable real estate
situation made it difficult to sell the remaining reclaimed lots. The
devaluation of the peso and the increase in interest cost led to the substantial
increase in the cost of reclamation.
As of August 1, 1998 when the project was suspended, RBI had ―already
accomplished a portion of the necessary works and change orders which
resulted in [RBI] and the Asset Pool incurring advances for direct and indirect
cost which amount can no longer be covered by the 79-hectare enabling
component under the ARJVA.‖[40]
Repeated demands were made by RBI in its own capacity and on behalf of the
asset pool on NHA for payment for the advances for direct and indirect costs
subject to NHA validation.
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.
On January 20, 2001, then President Estrada was considered resigned. On the
same day, President Gloria M. Arroyo took her oath as the 14th President of
thePhilippines.
As of February 28, 2001, ―the estimated total project cost of the SMDRP has
reached P8.65 billion comprising of P4.78 billion in direct cost and P3.87
billion in indirect cost,‖[43] subject to validation by the NHA.
On August 28, 2001, NHA issued Resolution No. 4436 to pay for ―the various
necessary works/change orders to SMDRP, to effect the corresponding
enabling component consisting of the conveyance of the NHA’s Vitas
Property and an additional 150-hectare reclamation area‖ and to authorize the
release by NHA of PhP 480 million ―as advance to the project to make the
Permanent Housing habitable, subject to reimbursement from the proceeds of
the expanded enabling component.‖[44]
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.
1.1 In compliance with the Cabinet directive dated 30 July 2002 to submit the
works covered by the P480 Million and the ASA to public bidding, the following
agreements executed by and between the NHA and the DEVELOPER are hereby
terminated, to wit:
5. SETTLEMENT OF CLAIMS
5.1 Subject to the validation of the DEVELOPER’s claims, the NHA hereby
agrees to initially compensate the Developer for the abovementioned costs as follows:
5.2 Any unpaid balance of the DEVELOPERS claims determined after the
validation process referred to in Section 4 hereof, may be paid in cash, bonds or
through the conveyance of properties or any combination thereof. The manner, terms
and conditions of payment of the balance shall be specified and agreed upon later
within a period of three months from the time a substantial amount representing the
unpaid balance has been validated pursuant hereto including, but not limited to the
programming of quarterly cash payments to be sourced by the NHA from its budget
for debt servicing, from its income or from any other sources.
5.3 In any case the unpaid balance is agreed to be paid, either partially or totally
through conveyance of properties, the parties shall agree on which properties shall be
subject to conveyance. The NHA and DEVELOPER hereby agree to determine the
valuation of the properties to be conveyed by getting the average of the appraisals to
be made by two (2) mutually acceptable independent appraisers.
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.
The Issues
II
III
IV
Before we delve into the substantive issues raised in this petition, we will
first deal with several procedural matters raised by respondents.
Whether petitioner has the requisite locus standi to file this case
Respondents argue that petitioner Chavez has no legal standing to file the
petition.
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 Court’s 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
Court’s time and attention which are better devoted to those matters within its exclusive
jurisdiction, and to prevent further over-crowding of the Court’s 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
Respondents next challenge the projected review by this Court of the alleged
factual issues intertwined in the issues propounded by petitioner. They listed a
copious number of questions seemingly factual in nature which would make this
Court a trier of facts.[53]
For one, we already gave due course to the instant petition in our January 18,
2005 Resolution.[54] In said issuance, the parties were required to make clear and
concise statements of established facts upon which our decision will be based.
Now we will tackle the issues that prop up the instant petition.
Since petitioner has cited our decision in PEA as basis for his postulations in a
number of issues, we first resolve the query—is PEA applicable to the case at
bar?
A juxtaposition of the facts in the two cases constrains the Court to rule in
the negative.
The Court finds that PEA is not a binding precedent to the instant petition
because the facts in said case are substantially different from the facts and
circumstances in the case at bar, thus:
(1) The reclamation project in PEA was undertaken through a JVA entered
into between PEA and AMARI. The reclamation project in the instant NHA case
was undertaken by the NHA, a national government agency in consultation with
PEA and with the approval of two Philippine Presidents;
(4) In PEA, the Chavez petition was filed before the amended JVA was
executed by PEA and AMARI. In this NHA case, the JVA and subsequent
amendments were already substantially implemented. Subsequently, the Project
was terminated through a MOA signed on August 27, 2003. Almost one year later
onAugust 5, 2004, the Chavez petition was filed;
First Issue: Whether respondents NHA and RBI have been granted
the power and authority to reclaim lands of the public domain as
this power is vested exclusively in PEA as claimed by petitioner
Petitioner contends that neither respondent NHA nor respondent RBI may
validly reclaim foreshore and submerged land because they were not given any
power and authority to reclaim lands of the public domain as this power was
delegated by law to PEA.
Asserting that existing laws did not empower the NHA and RBI to reclaim
lands of public domain, the Public Estates Authority (PEA), petitioner claims, is
―the primary authority for the reclamation of all foreshore and submerged lands of
public domain,‖ and relies on PEA where this Court held:
Moreover, Section 1 of Executive Order No. 525 provides that PEA ―shall be
primarily responsible for integrating, directing, and coordinating all reclamation projects
for and on behalf of the National Government.‖ The same section also states that ―[A]ll
reclamation projects shall be approved by the President upon recommendation of the PEA,
and shall be undertaken by the PEA or through a proper contract executed by it with any
person or entity; x x x.‖ Thus, under EO No. 525, in relation to PD No. 3-A and PD No.
1084, PEA became the primary implementing agency of the National Government to
reclaim foreshore and submerged lands of the public domain. EO No. 525 recognized PEA
as the government entity ―to undertake the reclamation of lands and ensure their maximum
utilization in promoting public welfare and interests.‖ Since large portions of these
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.
EO 525 reads:
Section 1. The Public Estates Authority (PEA) shall be primarily responsible for
integrating, directing, and coordinating all reclamation projects for and on behalf of the
National Government. All reclamation projects shall be approved by the President upon
recommendation of the PEA, and shall be undertaken by the PEA or through a proper
contract executed by it with any person or entity; Provided, that, reclamation projects of
any national government agency or entity authorized under its charter shall be
undertaken in consultation with the PEA upon approval of the President. (Emphasis
supplied.)
The aforequoted provision points to three (3) requisites for a legal and valid
reclamation project, viz:
a. by PEA
b. by any person or entity pursuant to a contract it
executed with PEA
c. by the National Government agency or entity
authorized under its charter to reclaim lands subject to
consultation with PEA
Without doubt, PEA under EO 525 was designated as the agency primarily
responsible for integrating, directing, and coordinating all reclamation projects.
Primarily means ―mainly, principally, mostly, generally.‖ Thus, not all reclamation
projects fall under PEA’s 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 exception—reclamation projects by a national
government agency or entity authorized by its charter to reclaim land. One
example is EO 405 which authorized the Philippine Ports Authority (PPA) to
reclaim and develop submerged areas for port related purposes. Under its charter,
Thus, while PEA under PD 1084 has the power to reclaim land and under
EO 525 is primarily responsible for integrating, directing and coordinating
reclamation projects, such authority is NOT exclusive and such power to reclaim
may be granted or delegated to another government agency or entity or may even
be undertaken by the National Government itself, PEA being only an agency and a
part of the National Government.
Let us apply the legal parameters of Sec. 1, EO 525 to the reclamation phase
of SMDRP. After a scrutiny of the facts culled from the records, we find that the
project met all the three (3) requirements, thus:
For his part, then President Ramos issued Proclamation No. 39 (s. 1992)
which expressly reserved the Smokey Mountain Area and the Reclamation Area
for a housing project and related commercial/industrial development.
Moreover, President Ramos issued Proclamation No. 465 (s. 1994) which
authorized the increase of the Reclamation Area from 40 hectares of
foreshore and submerged land of the Manila Bay to 79 hectares. It speaks
of the reclamation of 400,000 square meters, more or less, of the foreshore
and submerged lands of Manila Bay adjoining R-10 as an enabling
component of the SMDRP.
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:
xxxx
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:
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;
From the foregoing provisions, it is readily apparent that the TFDA has the
explicit power to develop public lands covering the Tondo foreshore land and any
other additional and alternative resettlement sites under letter b, Sec. 3 of PD
570. Since the additional and/or alternative sites adjacent to Tondo foreshore land
cover foreshore and submerged areas, the reclamation of said areas is necessary in
order to convert them into a comprehensive and integrated resettlement housing
project for the slum dwellers and squatters of Tondo. Since the powers of TFDA
were assumed by the NHA, then the NHA has the power to reclaim lands in the
Tondo foreshore area which covers the 79-hectare land subject of Proclamations
Nos. 39 and 465 and Special Patents Nos. 3592 and 3598.
Sec. 6. Powers and functions of the Authority.—The Authority shall have the
xxxx
xxxx
(k) Enter into contracts whenever necessary under such terms and conditions as
it may deem proper and reasonable;
(l) Acquire property rights and interests and encumber or otherwise dispose
the same as it may deem appropriate;
xxxx
(s) Perform such other acts not inconsistent with this Decree, as may be
necessary to effect the policies and objectives herein declared. (Emphasis supplied.)
The NHA’s authority to reclaim land can be inferred from the aforequoted
provisions. It can make use of public lands under letter (c) of Sec. 6 which
includes reclaimed land as site for its comprehensive and integrated housing
projects under letter (a) which can be undertaken through joint ventures with
private entities under letter (e). Taken together with letter (s) which
authorizes NHA to perform such other activities ―necessary to effect the
policies and objectives‖ of PD 757, it is safe to conclude that the NHA’s
power to reclaim lands is a power that is implied from the exercise of its
explicit powers under Sec. 6 in order to effectively accomplish its policies and
objectives under Sec. 3 of its charter. Thus, the reclamation of land is an
indispensable component for the development and construction of the
SMDRP housing facilities.
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 therelocation 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.)
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;
Based on the provisions of the BOT Law and Implementing Rules and
Regulations, it is unequivocal that all government infrastructure agencies like
the NHA can undertake infrastructure or development projects using the
contractual arrangements prescribed by the law, and land reclamation is one of
the projects that can be resorted to in the BOT project implementation under
the February 10, 1992 Joint Resolution No. 3 of the 8th Congress.
From the foregoing considerations, we find that the NHA has ample implied
authority to undertake reclamation projects.
Section 3. All executive issuances inconsistent with this Executive Order are
hereby repealed or amended accordingly. (Emphasis supplied.)
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
DENR’s 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 ofManila Bay, should be reclaimed or not. This means that PEA needs
authorization from DENR before PEA can undertake reclamation projects in Manila Bay,
or in any part of the country.
DENR also exercises exclusive jurisdiction over the disposition of all lands of the
public domain. Hence, DENR decides whether reclaimed lands of PEA should be
classified as alienable under Sections 6 and 7 of CA No. 141. Once DENR decides that the
reclaimed lands should be so classified, it then recommends to the President the issuance of
a proclamation classifying the lands as alienable or disposable lands of the public domain
open to disposition. We note that then DENR Secretary Fulgencio S. Factoran, Jr.
countersigned Special Patent No. 3517 in compliance with the Revised Administrative
Code and Sections 6 and 7 of CA No. 141.
In short, DENR is vested with the power to authorize the reclamation of areas under
water, while PEA is vested with the power to undertake the physical reclamation of areas
under water, whether directly or through private contractors. DENR is also empowered to
classify lands of the public domain into alienable or disposable lands subject to the
approval of the President. On the other hand, PEA is tasked to develop, sell or lease the
reclaimed alienable lands of the public domain.[70]
Despite our finding that PEA is not a precedent to the case at bar, we find after
all that under existing laws, the NHA is still required to procure DENR’s
authorization before a reclamation project in Manila Bay or in any part of
the Philippines can be undertaken. The requirement applies to PEA, NHA, or
any other government agency or office granted with such power under the
law.
The DENR is deemed to have granted the authority to reclaim in the Smokey
Mountain Project for the following reasons:
1. Sec. 17, Art. VII of the Constitution provides that ―the President shall
have control of all executive departments, bureaus and offices.‖ The President is
assigned the task of seeing to it that all laws are faithfully executed. ―Control,‖ in
administrative law, means ―the power of an officer to alter, modify, nullify or set
aside what a subordinate officer has done in the performance of his duties and to
substitute the judgment of the former for that of the latter.‖[71]
As such, the President can exercise executive power motu proprio and can
supplant the act or decision of a subordinate with the President’s own. The DENR
is a department in the executive branch under the President, and it is only an alter
[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]
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.)
Based on these reasons, it is clear that the DENR, through its acts and
issuances, has ratified and confirmed the reclamation of the subject lands for the
purposes laid down in Proclamations Nos. 39 and 465.
Article 1409. The following contracts are inexistent and void from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good
customs, public order or public policy;
xxxx
These contracts cannot be ratified. Neither can the right to set up the defense of
illegality be waived.
Secs. 2 and 3, Art. XII of the Constitution declare that all natural resources
are owned by the State and they cannot be alienated except for alienable
agricultural lands of the public domain. One of the State’s natural resources are
lands of public domain which include reclaimed lands.
Petitioner contends that for these reclaimed lands to be alienable, there must
be a law or presidential proclamation officially classifying these reclaimed
lands as alienable and disposable and open to disposition or
concession. Absent such law or proclamation, the reclaimed lands cannot be
the enabling component or consideration to be paid to RBI as these are
beyond the commerce of man.
The reclaimed lands across R-10 were classified alienable and disposable
lands of public domain of the State for the following reasons, viz:
(1) MO 415 issued by President Aquino, of which Sec. 4 states that ―[t]he
land covered by the Smokey Mountain Dumpsite is hereby conveyed to the
National Housing Authority as well as the area to be reclaimed across R-10.‖
The directive to transfer the lands once reclaimed to the NHA implicitly
carries with it the declaration that said lands are alienable and
disposable. Otherwise, the NHA cannot effectively use them in its housing and
For July 31 Lecture Page 139
disposable. Otherwise, the NHA cannot effectively use them in its housing and
resettlement project.
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.
The query is, when did the declaration take effect? It did so only after the
special patents covering the reclaimed areas were issued. It is only on such date
that the reclaimed lands became alienable and disposable lands of the public
domain. This is in line with the ruling in PEA where said issue was clarified and
stressed:
Thus, MO 415 and Proclamations Nos. 39 and 465 cumulatively and jointly
taken together with Special Patent Nos. 3591, 3592, and 3598 more than
satisfy the requirement in PEA that ―[t]here must be a law or presidential
proclamation officially classifying these reclaimed lands as alienable or
disposable and open to disposition or concession (emphasis supplied).‖[74]
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?
It may be argued that the grant of authority to sell public lands, pursuant
to PEA, does not convert alienable lands of public domain into private or
patrimonial lands. We ruled in PEA that ―alienable lands of public domain must
be transferred to qualified private parties, or to government entities not
tasked to dispose of public lands, before these lands can become private or
patrimonial lands (emphasis supplied).‖[75] To lands reclaimed by PEA or
through a contract with a private person or entity, such reclaimed lands still remain
alienable lands of public domain which can be transferred only to Filipino citizens
but not to a private corporation. This is because PEA under PD 1084 and EO 525
is tasked to hold and dispose of alienable lands of public domain and it is only
when it is transferred to Filipino citizens that it becomes patrimonial property. On
the other hand, the NHA is a government agency not tasked to dispose of public
lands under its charter—The Revised Administrative Code of 1987. The NHA is
an ―end-user agency‖ authorized by law to administer and dispose of reclaimed
lands. The moment titles over reclaimed lands based on the special patents are
transferred to the NHA by the Register of Deeds, they are automatically converted
to patrimonial properties of the State which can be sold to Filipino citizens and
private corporations, 60% of which are owned by Filipinos. The reason is
obvious: if the reclaimed land is not converted to patrimonial land once transferred
to NHA, then it would be useless to transfer it to the NHA since it cannot legally
transfer or alienate lands of public domain. More importantly, it cannot attain its
avowed purposes and goals since it can only transfer patrimonial lands to qualified
beneficiaries and prospective buyers to raise funds for the SMDRP.
The reclaimed lands covered by Special Patents Nos. 3591, 3592, and 3598,
which evidence transfer of ownership of reclaimed lands to the NHA, are
official acts of the DENR Secretary in the exercise of his power of supervision
and control over alienable and disposable public lands and his exclusive
jurisdiction over the management and disposition of all lands of public
domain under the Revised Administrative Code of 1987. Special Patent No.
3592 speaks of the transfer of Lots 1 and 2, and RI-003901-000012-D with an
area of 401,485 square meters based on the survey and technical description
approved by the Bureau of Lands. Lastly, Special Patent No. 3598 was issued
in favor of the NHA transferring to said agency a tract of land described in
Plan RL-00-000013 with an area of 390,000 square meters based on the
survey and technical descriptions approved by the Bureau of Lands.
The conduct of the survey, the preparation of the survey plan, the
computation of the technical description, and the processing and preparation of the
special patent are matters within the technical area of expertise of administrative
agencies like the DENR and the Land Management Bureau and are generally
accorded not only respect but at times even finality.[76] Preparation of special
patents calls for technical examination and a specialized review of calculations and
specific details which the courts are ill-equipped to undertake; hence, the latter
defer to the administrative agency which is trained and knowledgeable on such
matters.[77]
Subsequently, the special patents in the name of the NHA were submitted to
the Register of Deeds of the City of Manila for registration, and corresponding
certificates of titles over the reclaimed lots were issued based on said special
patents. The issuance of certificates of titles in NHA’s name automatically
converts the reclaimed lands to patrimonial properties of the NHA. Otherwise, the
lots would not be of use to the NHA’s housing projects or as payment to the BOT
For July 31 Lecture Page 142
lots would not be of use to the NHA’s housing projects or as payment to the BOT
contractor as the enabling component of the BOT contract. The laws of the land
have to be applied and interpreted depending on the changing conditions and
times. Tempora mutantur et legis mutantur in illis (time changes and laws change
with it). One such law that should be treated differently is the BOT Law (RA
6957) which brought about a novel way of implementing government contracts by
allowing reclaimed land as part or full payment to the contractor of a government
project to satisfy the huge financial requirements of the undertaking. The NHA
holds the lands covered by Special Patents Nos. 3592 and 3598 solely for the
purpose of the SMDRP undertaken by authority of the BOT Law and for
disposition in accordance with said special law. The lands become alienable and
disposable lands of public domain upon issuance of the special patents and become
patrimonial properties of the Government from the time the titles are issued to the
NHA.
As early as 1999, this Court in Baguio v. Republic laid down the
jurisprudence that:
It is true that, once a patent is registered and the corresponding certificate of title is
issued, the land covered by them ceases to be part of the public domain and becomes
private property, and the Torrens Title issued pursuant to the patent becomes indefeasible
upon the expiration of one year from the date of issuance of such patent. [78]
One last point. The ruling in PEA cannot even be applied retroactively to the
lots covered by Special Patents Nos. 3592 (40 hectare reclaimed land) and 3598
(39-hectare reclaimed land). The reclamation of the land under SMDRP was
completed in August 1996 while the PEA decision was rendered on July 9,
2002. In the meantime, subdivided lots forming parts of the reclaimed land were
already sold to private corporations for value and separate titles issued to the
buyers. The Project was terminated through a Memorandum of Agreement signed
on August 27, 2003. The PEA decision became final through the November 11,
2003 Resolution. It is a settled precept that decisions of the Supreme Court can
only be applied prospectively as they may prejudice vested rights if applied
retroactively.
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]
Petitioner Chavez avers that despite the declaration that the reclaimed areas
are alienable lands of the public domain, still, the reclamation is flawed for there
was never any declaration that said lands are no longer needed for public use.
Even if it is conceded that there was no explicit declaration that the lands are
no longer needed for public use or public service, there was however an implicit
executive declaration that the reclaimed areas R-10 are not necessary anymore for
public use or public service when President Aquino through MO 415 conveyed the
same to the NHA partly for housing project and related commercial/industrial
development intended for disposition to and enjoyment of certain beneficiaries and
not the public in general and partly as enabling component to finance the project.
These parcels of land of public domain are hereby placed under the administration
and disposition of the National Housing Authority to develop, subdivide and dispose to
qualified beneficiaries, as well as its development for mix land use
(commercial/industrial) to provide employment opportunities to on-site families and
additional areas for port related activities. (Emphasis supplied.)
MO 415 and Proclamations Nos. 39 and 465 are declarations that proclaimed
the non-use of the reclaimed areas for public use or service as the Project cannot be
successfully implemented without the withdrawal of said lands from public use or
service. Certainly, the devotion of the reclaimed land to public use or service
conflicts with the intended use of the Smokey Mountain areas for housing and
employment of the Smokey Mountain scavengers and for financing the Project
because the latter cannot be accomplished without abandoning the public use of the
subject land. Without doubt, the presidential proclamations on SMDRP together
with the issuance of the special patents had effectively removed the reclaimed
lands from public use.
More decisive and not in so many words is the ruling in PEA which we
earlier cited, that ―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.‖ Consequently, we ruled in that case that the reclaimed lands are
―open to disposition or concession to qualified parties.‖[83]
In a similar vein, presidential Proclamations Nos. 39 and 465 jointly with the
special patents have classified the reclaimed lands as alienable and disposable and
open to disposition or concession as they would be devoted to units
for Smokey Mountain beneficiaries. Hence, said lands are no longer intended for
public use or service and shall form part of the patrimonial properties of the State
under Art. 422 of the Civil Code.[84] As discussed a priori, the lands were
classified as patrimonial properties of the NHA ready for disposition when the
titles were registered in its name by the Register of Deeds.
Moreover, reclaimed lands that are made the enabling components of a BOT
infrastructure project are necessarily reclassified as alienable and disposable lands
under the BOT Law; otherwise, absurd and illogical consequences would naturally
result. Undoubtedly, the BOT contract will not be accepted by the BOT contractor
since there will be no consideration for its contractual obligations. Since reclaimed
land will be conveyed to the contractor pursuant to the BOT Law, then there is an
implied declaration that such land is no longer intended for public use or public
service and, hence, considered patrimonial property of the State.
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.
Section 60. Any tract of land comprised under this title may be leased or sold, as
the case may be, to any person, corporation or association authorized to purchase or lease
public lands for agricultural purposes. The area of the land so leased or sold shall be such
as shall, in the judgment of the Secretary of Agriculture and Natural Resources, be
reasonably necessary for the purposes for which such sale or lease if requested and shall in
no case exceed one hundred and forty-four hectares: Provided, however, That this
limitation shall not apply to grants, donations, transfers, made to a province, municipality
or branch or subdivision of the Government for the purposes deemed by said entities
conducive to the public interest; but the land so granted donated or transferred to a
province, municipality, or branch or subdivision of the Government shall not be
alienated, encumbered, or otherwise disposed of in a manner 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.)
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;
Letter (l) is emphatic that the NHA can acquire property rights and interests
and encumber or otherwise dispose of them as it may deem appropriate. The
transfer of the reclaimed lands by the National Government to the NHA for
housing, commercial, and industrial purposes transformed them into patrimonial
lands which are of course owned by the State in its private or proprietary
capacity. Perforce, the NHA can sell the reclaimed lands to any Filipino citizen or
qualified corporation.
Petitioner also contends that there was no public bidding but an awarding of
ownership of said reclaimed lands to RBI. Public bidding, he says, is required
under Secs. 63 and 67 of CA 141 which read:
Section 63. Whenever it is decided that lands covered by this chapter are not needed
for public purposes, the Director of Lands shall ask the Secretary of Agriculture and
Commerce for authority to dispose of the same. Upon receipt of such authority, the
Director of Lands shall give notice by public advertisement in the same manner as in
the case of leases or sales of agricultural public land, that the Government will lease
or sell, as the case may be, the lots or blocks specified in the advertisement, for the
purpose stated in the notice and subject to the conditions specified in this chapter.
xxxx
Section 67. The lease or sale shall be made through oral bidding; and adjudication
shall be made to the highest bidder. However, where an applicant has made improvements
on the land by virtue of a permit issued to him by competent authority, the sale or lease
shall be made by sealed bidding as prescribed in section twenty-six of this Act, the
provisions of which shall be applied whenever applicable. If all or part of the lots remain
unleased or unsold, the Director of Lands shall from time to time announce in the Official
Gazette or in any other newspapers of general circulation, the lease of sale of those lots, if
necessary.
He finds that the NHA and RBI violated Secs. 63 and 67 of CA 141, as the
reclaimed lands were conveyed to RBI by negotiated contract and not by public
bidding as required by law.
Petitioner concedes that he does not question the public bidding on the right
to be a joint venture partner of the NHA, but the absence of bidding in the sale of
alienable and disposable lands of public domain pursuant to CA 141 as amended.
• Property whose maintenance costs of repair more than outweigh the benefits and services
that will be derived from its continued use;
• Serviceable property that has been rendered unnecessary due to change in the agency’s
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]
The foregoing Resolution makes it clear that the SMDRP was a program
adopted by the Government under Republic Act No. 6957 (An Act Authorizing the
Financing, Construction, Operation and Maintenance of Infrastructure Projects by
the Private Sector, and For Other Purposes), as amended by RA 7718, which is a
special law similar to RA 7227. Moreover, since the implementation was assigned
to the NHA, an end-user agency under PD 757 and RA 7279, the reclaimed lands
registered under the NHA are automatically classified as patrimonial lands ready
for disposition to qualified beneficiaries.
Petitioner asserts that matters relative to the SMDRP have not been disclosed
to the public like the current stage of the Project, the present financial capacity of
RBI, the complete list of investors in the asset pool, the exact amount of
investments in the asset pool and other similar important information regarding the
Project.
ARTICLE II
SEC. 28. Subject to reasonable conditions prescribed by law, the State adopts and
implements a policy of full public disclosure of all its transactions involving public interest.
ARTICLE III
SEC. 7. The right of the people to information on matters of public concern shall
be recognized. Access to official records, and to documents, and papers pertaining to
official acts, transactions, or decisions, as well as to government research data used as basis
for policy development, shall be afforded the citizen, subject to such limitations as may be
provided by law.
In PEA, this Court elucidated the rationale behind the right to information:
Sec. 28, Art. II compels the State and its agencies to fully disclose ―all of its
transactions involving public interest.‖ Thus, the government agencies,
without need of demand from anyone, must bring into public view all the
steps and negotiations leading to the consummation of the transaction and the
contents of the perfected contract.[89] Such information must pertain to
―definite propositions of the government,‖ meaning official recommendations
or final positions reached on the different matters subject of negotiation. The
government agency, however, need not disclose ―intra-agency or inter-agency
recommendations or communications during the stage when common
For July 31 Lecture Page 152
recommendations or communications during the stage when common
assertions are still in the process of being formulated or are in the exploratory
stage.‖ The limitation also covers privileged communication like information
on military and diplomatic secrets; information affecting national security;
information on investigations of crimes by law enforcement agencies before
the prosecution of the accused; information on foreign relations, intelligence,
and other classified information.
It is unfortunate, however, that after almost twenty (20) years from birth of the
1987 Constitution, there is still no enabling law that provides the mechanics
for the compulsory duty of government agencies to disclose information on
government transactions. Hopefully, the desired enabling law will finally see
the light of day if and when Congress decides to approve the proposed
―Freedom of Access to Information Act.‖ In the meantime, it would suffice
that government agencies post on their bulletin boards the documents
incorporating the information on the steps and negotiations that produced the
agreements and the agreements themselves, and if finances permit, to upload
said information on their respective websites for easy access by interested
parties. Without any law or regulation governing the right to disclose
information, the NHA or any of the respondents cannot be faulted if they were
not able to disclose information relative to the SMDRP to the public in
general.
The other aspect of the people’s right to know apart from the duty to disclose
is the duty to allow access to information on matters of public concern under
Sec. 7, Art. III of the Constitution. The gateway to information opens to the
public the following: (1) official records; (2) documents and papers pertaining
to official acts, transactions, or decisions; and (3) government research data
used as a basis for policy development.
Thus, the duty to disclose information should be differentiated from the duty
to permit access to information. There is no need to demand from the government
agency disclosure of information as this is mandatory under the Constitution;
failing that, legal remedies are available. On the other hand, the interested party
must first request or even demand that he be allowed access to documents and
papers in the particular agency. A request or demand is required; otherwise, the
government office or agency will not know of the desire of the interested party to
gain access to such papers and what papers are needed. The duty to disclose
covers only transactions involving public interest, while the duty to allow access
has a broader scope of information which embraces not only transactions involving
public interest, but any matter contained in official communications and public
documents of the government agency.
We find that although petitioner did not make any demand on the NHA to
allow access to information, we treat the petition as a written request or
demand. We order the NHA to allow petitioner access to its official records,
documents, and papers relating to official acts, transactions, and decisions that are
relevant to the said JVA and subsequent agreements relative to the SMDRP.
For July 31 Lecture Page 153
relevant to the said JVA and subsequent agreements relative to the SMDRP.
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]
As the new Civil Code puts it: ―When the courts declare a law to be inconsistent with the
Constitution, the former shall be void and the latter shall govern. Administrative or
executive acts, orders and regulations shall be valid only when they are not contrary to the
laws of the Constitution.‖ It is understandable why it should be so, the Constitution being
supreme and paramount. Any legislative or executive act contrary to its terms cannot
survive.
Such a view has support in logic and possesses the merit of simplicity. It may not
however be sufficiently realistic. It does not admit of doubt that prior to the
declaration of nullity such challenged legislative or executive act must have been in
force and had to be complied with. This is so as until after the judiciary, in an
appropriate case, declares its invalidity, it is entitled to obedience and respect. Parties may
have acted under it and may have changed their positions. What could be more fitting than
that in a subsequent litigation regard be had to what has been done while such legislative or
executive act was in operation and presumed to be valid in all respects. It is now accepted
as a doctrine that prior to its being nullified, its existence as a fact must be reckoned
with. This is merely to reflect awareness that precisely because the 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.
This doctrine was reiterated in the more recent case of City of Makati v. Civil
Service Commission, wherein we ruled that:
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.
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
There are, moreover, special circumstances that disqualify Amari from invoking
equity principles. Amari cannot claim good faith because even before Amari signed the
Amended JVA on March 30, 1999, petitioner had already filed the instant case on April 27,
1998 questioning precisely the qualification of Amari to acquire
the Freedom Islands. Even before the filing of this petition, two Senate Committees had
already approved on September 16, 1997 Senate Committee Report No. 560. This Report
concluded, after a well-publicized investigation into PEA’s sale of the Freedom Islands to
Amari, that the Freedom Islands are inalienable lands of the public domain. Thus, Amari
signed the Amended JVA knowing and assuming all the attendant risks, including the
annulment of the Amended JVA.[96]
Such indicia of bad faith are not present in the instant case. When the ruling
in PEA was rendered by this Court on July 9, 2002, the JVAs were all
executed. Furthermore, when petitioner filed the instant case against respondents
on August 5, 2004, the JVAs were already terminated by virtue of the MOA
between the NHA and RBI. The respondents had no reason to think that their
agreements were unconstitutional or even questionable, as in fact, the concurrent
acts of the executive department lent validity to the implementation of the
Project. The SMDRP agreements have produced vested rights in favor of the slum
dwellers, the buyers of reclaimed land who were issued titles over said land, and
the agencies and investors who made investments in the project or who bought
SMPPCs. These properties and rights cannot be disturbed or questioned after the
passage of around ten (10) years from the start of the SMDRP implementation.
Evidently, the ―operative fact‖ principle has set in. The titles to the lands in the
hands of the buyers can no longer be invalidated.
The Court’s Dispositions
Based on the issues raised in this petition, we find that the March 19, 1993
JVA between NHA and RBI and the SMDRP embodied in the JVA, the
subsequent amendments to the JVA and all other agreements signed and executed
in relation to it, including, but not limited to, the September 26, 1994 Smokey
It has not been shown that the NHA exercised judicial or quasi-judicial
functions in relation to the SMDRP and the agreements relative to it.
Likewise, it has not been shown what ministerial functions the NHA has with
regard to the SMDRP.
In addition, prohibition does not lie against the NHA in view of petitioner’s
failure to avail and exhaust all administrative remedies. Clear is the rule that
prohibition is only available when there is no adequate remedy in the ordinary
course of law.
More importantly, prohibition does not lie to restrain an act which is already
a fait accompli. The ―operative fact‖ doctrine protecting vested rights bars the
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 petitioner’s right to the
information gateway.
No costs.
SO ORDERED.
WE CONCUR:
RUBEN T. REYES
Associate Justice
REYNATO S. PUNO
Chief Justice
Powers and Functions, Providing Funds Therefor, and for Other Purposes‖ (1975).
[19] Rollo, p. 70.
[20] Id. at 73.
[21] Id. at 479.
[22] Id. at 80-94.
[23] Id. at 83.
[24] Id.
[25] Id.
[26] Id.
[27] Id. at 84.
[28] Id. at 93.
[29] Id. at 95-104.
[30] Id. at 98.
[31] Id. at 526-533.
[32] Id. at 435.
[33] The PNB was later replaced by the Planters Development Bank.
[34] Rollo, p. 105.
[35] Id. at 18. RA 8749, ―The Clean Air Act of 1999.‖
[36] Id.
[37] Id. at 244.
[38] Id. at 747-751.
[39] Id. at 858.
[40] Id. at 860.
negotiations and that there was no public bidding awarding ownership of the subject land to respondent R-II
Builders, while respondents alleged that NHA publicly bidded out the right to become NHA’s joint venture
partner in the prosecution of the SMDRP;
2. Petitioner averred that ―PEA had no participation whatsoever in the reclamation of
the subject lands‖ while respondents stated PEA had a name therein;
3. Petitioner alleged that ―neither respondent NHA nor respondent R-II Builders was given
the authority [by DENR] to reclaim the subject lands‖ while respondents claimed such authority
was granted;
4. Mr. Chavez claimed ―that there is no legislative or Presidential act classifying the submerged
areas around Smokey Mountain as alienable or disposable lands of the public domain open to disposition‖
while respondents said that Presidents Aquino and Ramos made the classification;
5. Whether respondent R-II Builders complied with its obligation to ―fully finance‖ the Project;
6. Whether the Project has been terminated by agreements of the parties;
7. Whether respondents Harbour Centre and Romero fraudulently caused the dilution of the Asset
Pool’s Holdings in HCPTI;
8. Whether Harbour Centre contracts attached to the Petition are genuine.
[54] Rollo, p. 871.
[55] Petition, Comments, Reply, and Memoranda.
[56] ―Designating the Public Estates Authority as the Agency Primarily Responsible for All Reclamation
Projects‖ (1979).
[57] Rollo, p. 235.
[58] The July 9, 2002 Decision entitled Chavez v. PEA was concurred in by 13 members of this Court who
voted to grant the petition. However, in the May 6, 2003 Resolution, the Court was divided when it voted 8-5
to affirm the Decision. And in the most recent November 11, 2003 Resolution of this Court, a 7-7 vote was
arrived at. Thus, the July 9, 2002 Decision is still the valid case law.
[59] The doctrine of stare decisis provides that a conclusion reached in one case should, for the sake of
certainty, be applied to those which follow if the facts are substantially the same even though the parties may
be different.
[60] Supra note 50, at 221.
[61] ―Creating the Public Estates Authority, Defining its Power and Functions, Providing Funds Therefor and
Establish the Mechanism for its Implementation, and for Other Purposes‖ (1992).
[63] Radio Communications of the Philippines, Inc. v. Santiago, Nos. L-29236 & L-29247, 58 SCRA
130, 141.
In the case of land reclamation or the building of industrial estates, the repayment
scheme may consist of the grant of a portion of percentage of the reclaimed land or industrial estate
built, subject to the constitutional requirements with respect to the ownership of lands.
[96] Supra note 86, at 29-30.
[97] Symaco v. Hon. Aquino, etc., 106 Phil. 1130, 1135 (1960).
[98] Rollo, p. 866.
xxx
2. That the purpose or purposes of the corporation are patently unconstitutional, illegal, immoral, or
contrary to government rules and regulations;
ection 140. Stock ownership in certain corporations. - Pursuant to the duties specified by Article XIV
of the Constitution, the National Economic and Development Authority shall, from time to time, make
a determination of whether the corporate vehicle has been used by any corporation or by business
or industry to frustrate the provisions thereof or of applicable laws, and shall submit to the Batasang
Pambansa, whenever deemed necessary, a report of its findings, including recommendations for
their prevention or correction.
Maximum limits may be set by the Batasang Pambansa for stockholdings in corporations declared
by it to be vested with a public interest pursuant to the provisions of this section, belonging to
individuals or groups of individuals related to each other by consanguinity or affinity or by close
The C onstitution, in no uncertain terms, requires a franchise for the operation of a public utility; however, it
does not requires a franchise before one can own the facilities needed to operate a public utility so long as it
does not operate them to serve the public. In law there is a clear distinction between the “operation” of a public
utility and the ownership of the facilities and equipment used to serve the public. Tatad v. Garcia, Jr., 243 SC RA
436 (1995)
QUIASON, J.:
This is a petition under Rule 65 of the Revised Rules of Court to prohibit respondents
from further implementing and enforcing the "Revised and Restated Agreement to Build,
Lease and Transfer a Light Rail Transit System for EDSA" dated April 22, 1992, and the
"Supplemental Agreement to the 22 April 1992 Revised and Restated Agreement To
Build, Lease and Transfer a Light Rail Transit System for EDSA" dated May 6, 1993.
Petitioners Francisco S. Tatad, John H. Osmena and Rodolfo G. Biazon are members of
the Philippine Senate and are suing in their capacities as Senators and as taxpayers.
Respondent Jesus B. Garcia, Jr. is the incumbent Secretary of the Department of
Transportation and Communications (DOTC), while private respondent EDSA LRT
Corporation, Ltd. is a private corporation organized under the laws of Hongkong.
I
In 1989, DOTC planned to construct a light railway transit line along EDSA, a major
thoroughfare in Metropolitan Manila, which shall traverse the cities of Pasay, Quezon,
Mandaluyong and Makati. The plan, referred to as EDSA Light Rail Transit III (EDSA LRT
III), was intended to provide a mass transit system along EDSA and alleviate the
congestion and growing transportation problem in the metropolis.
On March 3, 1990, a letter of intent was sent by the Eli Levin Enterprises, Inc.,
represented by Elijahu Levin to DOTC Secretary Oscar Orbos, proposing to construct the
EDSA LRT III on a Build-Operate-Transfer (BOT) basis.
On March 15, 1990, Secretary Orbos invited Levin to send a technical team to discuss
the project with DOTC.
On July 9, 1990, Republic Act No. 6957 entitled "An Act Authorizing the Financing,
Construction, Operation and Maintenance of Infrastructure Projects by the Private Sector,
and For Other Purposes," was signed by President Corazon C. Aquino. Referred to as
the Build-Operate-Transfer (BOT) Law, it took effect on October 9, 1990.
Republic Act No. 6957 provides for two schemes for the financing, construction and
operation of government projects through private initiative and investment: Build-
Operate-Transfer (BOT) or Build-Transfer (BT).
In accordance with the provisions of R.A. No. 6957 and to set the EDSA LRT III project
underway, DOTC, on January 22, 1991 and March 14, 1991, issued Department Orders
Nos. 91-494 and 91-496, respectively creating the Prequalification Bids and Awards
Committee (PBAC) and the Technical Committee.
After its constitution, the PBAC issued guidelines for the prequalification of contractors for
Separate Opinions
Separate Opinions
MENDOZA, J., concurring:
I concur in all but Part III of the majority opinion. Because I hold that petitioners do not
have standing to sue, I join to dismiss the petition in this case. I write only to set forth
what I understand the grounds for our decisions petitioners do not have the rights to sue,
whether as legislators, taxpayers or citizens. As members of Congress, because they
allege no infringement of prerogative as legislators. 1 As taxpayers because petitioners
allege neither an unconstitutional exercise of the taxing or spending powers of Congress
(Art VI, §§24-25 and 29) 2 nor an illegal disbursement of public money. 3 As this Court
1) Build-own-and-operate (BOO)
2) Build-Lease-and-trans fer (BLT)
3) Build-transfer-and-operat e (BTO)
4) Contract-add-and-operate (CAO)
5) Develop-operat e-and-transfer (DOT)
6) Rehabilitate-operate-and-transfer (ROT)
7) Rehabilitate-own-and-operat e (ROO).
b) Section 3 of R.A. No. 6957 by deleting therefrom the phrase "through the build-
operate-and-transfer or build-and-transfer scheme.
II
Public bidding is mandatory in R.A. No. 6957. Section 5 thereof reads as follows:
Sec. 5 Public Bidding of Projects. — Upon approval of the projects mentioned in Section
4 of this Act, the concerned head of the infrastructure agency or local government unit
shall forthwith cause to be published, once every week for three (3) consecutive weeks,
in at least two (2) newspapers of general circulation and in at least one (1) local
newspaper which is circulated in the region, province, city or municipality in which the
project is to be constructed a notice inviting all duly prequalified infrastructure contractors
to participate in the public bidding for the projects so approved. In the case of a build-
operate-and-transfer arrangement, the contract shall be awarded to the lowest complying
bidder based on the present value of its proposed tolls, fees, rentals, and charges over a
fixed term for the facility to be constructed, operated, and maintained according to the
prescribed minimum design and performance standards plans, and specifications. For
this purpose, the winning contractor shall be automatically granted by the infrastructure
Facts: A build-Operate-Transfer Contract for the waste-to energy project was signed between JANCOM and
the Philippine Government. The BOT Contract was submitted to President Ramos for approval but was then
too close to the end of his term that his term expired without him signing the contract. He, however,
endorsed the same to incoming President Estrada. With the change in administration came changes in policy
and economic environment, thus the BOT contract was not pursued and implemented. JANCOM appealed to
the President for reconsideration and despite the pendency of the appeal, MMDA caused the publication of
an inv itation to pre-qualify and submit proposals for solid waste management.
Issue: Whether or not there is a v alid and binding contract between the Republic of the Philippines and
JANCOM.
Held: There is a v alid and binding contract between JANCOM and the Republic of the Philippines. Under
Articles 1 305 of the Civil Code, “A contract is a meeting of the minds between two persons whereby one
binds himself, with respect to the other, to give something or to render some service.” Art. 1 315 of the Civ il
Code provides that a contract is perfected by mere consent. Consent, on the other hand, is manifested by the
meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract
(Art. 1 319, Civ il Code). In the case at bar, the signing and execution of the contract by the parties clearly
show that, as between the parties, there was a concurrence of offer and acceptance with respect to the
material details of the contract, thereby giving rise to the perfection of the absence of President’s signature is
untenable. Significantly, the contract itself provides that the signature of the President is necessary only for
its effectivity, not its perfection.
There being a perfected contract, MMDA cannot revoke or renounce the same without the consent of the
other. From the moment of perfection, the parties are bound not only to the fulfillment of what has been
ex pressly stipulated but also to all the consequences which, according to their nature, may be in keeping with
good faith, usage and law. (Art. 1 315) It is a general principle of law that no one may be permitted to change
hid mind or disavow and go back upon his own acts, or to proceed contrary thereto, to the prejudice of the
other party.
THIRD DIVISION
[G.R. No. 147465. January 30, 2002]
METROPOLITAN MANILA DEVELOPMENT
AUTHORITY, Petitioner, vs. JANCOMENVIRONMENTAL CORPORATION
and JANCOM INTERNATIONAL DEVELOPMENT PROJECTS PTY. LIMITED OF
AUSTRALIA, Respondents.
DE C I SI O N
MELO, J.:chanroblesvirtuallawlibrary
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of
Civil Procedure filed by petitioner Metropolitan Manila Development Authority
(MMDA), seeking to reverse and set aside the November 13, 2000 decision of the
Court of Appeals declaring valid and perfected the waste management contract
entered into by the Republic of the Philippines, represented by the Secretary of
National Resources and the Executive Committee to oversee the build-operate-
transfer implementation of solid waste management projects,
and JANCOM Environmental Corporation.chanroblesvirtuallawlibrary
IRR on Section 2
SECTION 1.3 - DEFINITION OF TERMS
For purposes of these Implementing Rules and Regulations, the terms and phrases
hereunder shall be understood as follows:
a. Act - shall mean Republic Act No. 6957, as amended by Republic Act No.
7718.
b. Agency - Refers to any department, bureau, office, commission, authority or
agency of the national government, including Government-Owned or
-Controlled Corporations (GOCCs), Government Financial Institutions (GFIs),
and State Universities and Colleges (SUCs) authorized by law or their
respective charters to contract for or undertake Infrastructure or Development
Projects.
c. Amortization - The regular, periodic repayment of principal and payment of
interest of a debt for a definite period of time, at the maturity of which the
entire indebtedness is paid in full.
d. Approving Body - The entity authorized to approve projects proposed under
this Act and in accordance with Sections 2.7 and 2.8 of these Revised IRR.
e. BOT Center - The successor of the Coordinating Council of the Philippine
Assistance Program (CCPAP), the agency mandated under Section 12 of the
Act, to coordinate and monitor projects implemented under the Act, pursuant
to Administrative Order No. 67 (s. 1999), as amended by Administrative Order
No. 103 (s. 2000) and Executive Order No. 144 (s. 2002).
MENDOZA, J.:
This is a petition for review of the decision 1 of the Court of Appeals dismissing a complaint for
specific performance which petitioner had filed against private respondent on the ground that the
Regional Trial Court of Quezon City did not acquire jurisdiction over private respondent, a
nonresident foreign corporation, and of the appellate court's order denying petitioner's motion for
reconsideration.
The following are the facts:
Petitioner Alfred Hahn is a Filipino citizen doing business under the name and style "Hahn-Manila."
On the other hand, private respondent Bayerische Motoren Werke Aktiengesellschaft (BMW) is a
nonresident foreign corporation existing under the laws of the former Federal Republic of Germany,
with principal office at Munich, Germany.
On March 7, 1967, petitioner executed in favor of private respondent a "Deed of Assignment with
Special Power of Attorney," which reads in full as follows:
WHEREAS, the ASSIGNOR is the present owner and holder of the BMW trademark and device in
the Philippines which ASSIGNOR uses and has been using on the products manufactured by
ASSIGNEE, and for which ASSIGNOR is the authorized exclusive Dealer of the ASSIGNEE in the
Philippines, the same being evidenced by certificate of registration issued by the Director of Patents
on 12 December 1963 and is referred to as Trademark No. 10625;
WHEREAS, the ASSIGNOR has agreed to transfer and consequently record said transfer of the said
BMW trademark and device in favor of the ASSIGNEE herein with the Philippines Patent Office;
NOW THEREFORE, in view of the foregoing and in consideration of the stipulations hereunder
stated, the ASSIGNOR hereby affirms the said assignment and transfer in favor of the ASSIGNEE
under the following terms and conditions:
1. The ASSIGNEE shall take appropriate steps against any user other than ASSIGNOR or infringer
of the BMW trademark in the Philippines; for such purpose, the ASSIGNOR shall inform the
ASSIGNEE immediately of any such use or infringement of the said trademark which comes to his
knowledge and upon such information the ASSIGNOR shall automatically act as Attorney-In-Fact of
the ASSIGNEE for such case, with full power, authority and responsibility to prosecute unilaterally or
in concert with ASSIGNEE, any such infringer of the subject mark and for purposes hereof the
ASSIGNOR is hereby named and constituted as ASSIGNEE's Attorney-In-Fact, but any such suit
without ASSIGNEE's consent will exclusively be the responsibility and for the account of the
ASSIGNOR,
2. That the ASSIGNOR and the ASSIGNEE shall continue business relations as has been usual in
the past without a formal contract, and for that purpose, the dealership of ASSIGNOR shall cover the
ASSIGNEE's complete production program with the only limitation that, for the present, in view of
ASSIGNEE's limited production, the latter shall not be able to supply automobiles to ASSIGNOR.
Per the agreement, the parties "continue[d] business relations as has been usual in the past without
a formal contract." But on February 16, 1993, in a meeting with a BMW representative and the
president of Columbia Motors Corporation (CMC), Jose Alvarez, petitioner was informed that BMW
was arranging to grant the exclusive dealership of BMW cars and products to CMC, which had
expressed interest in acquiring the same. On February 24, 1993, petitioner received confirmation of
the information from BMW which, in a letter, expressed dissatisfaction with various aspects of
petitioner's business, mentioning among other things, decline in sales, deteriorating services, and
inadequate showroom and warehouse facilities, and petitioner's alleged failure to comply with the
standards for an exclusive BMW dealer. 2 Nonetheless, BMW expressed willingness to continue
business relations with the petitioner on the basis of a "standard BMW importer" contract, otherwise,
it said, if this was not acceptable to petitioner, BMW would have no alternative but to terminate
petitioner's exclusive dealership effective June 30, 1993.
Petitioner protested, claiming that the termination of his exclusive dealership would be a breach of
the Deed of Assignment. 3 Hahn insisted that as long as the assignment of its trademark and device
subsisted, he remained BMW's exclusive dealer in the Philippines because the assignment was