In view of the facts just stated, as proved by a preponderance of the evidence, the
A. G.R. No. L-28379 March 27, 1929
THE GOVERNMENT OF THE PHILIPPINE ISLANDS, applicant-appellant,
vs. CONSORCIA CABANGIS, ET AL., claimants-appellees.
VILLA-REAL, J.:
The Government of the Philippine Islands appeals to this court from the judgment of the
Court of First Instance of Manila in cadastral proceeding No. 373 of the Court of First
Instance of Manila, G. L. R. O. Cadastral Record No. 373, adjudicating the title and
decreeing the registration of lots Nos. 36, 39 and 40, block 3055 of the cadastral survey
of the City of Manila in favor of Consuelo, Consorcia, Elvira and Tomas, surnamed
Cabangis, in equal parts, and dismissing the claims presented by the Government of
the Philippine Islands and the City of Manila.
In support of its appeal, the appellant assigns the following alleged errors as committed
by the trial court in its judgment, to wit:
1. The lower court erred in not holding that the lots in question are of the public
domain, the same having been gained from the sea (Manila Bay) by
accession, by fillings made by the Bureau of Public Works and by the
construction of the break-water (built by the Bureau of Navigation) near the
mouth of Vitas Estero.
2. The lower court erred in holding that the lots in question formed part of the
big parcel of land belonging to the spouses Maximo Cabangis and Tita
Andres, and in holding that these spouses and their successors in interest
have been in continuous, public, peaceful and uninterrupted possession of
said lots up to the time this case came up.
3. The lower court erred in holding that said lots existed before, but that due to
the current of the Pasig River and to the action of the big waves in Manila Bay
during the south-west monsoons, the same disappeared.
4. The lower court erred in adjudicating the registration of the lands in question
in the name of the appellees, and in denying the appellant's motion for a new
trial.
A preponderance of the evidence in the record which may properly be taken into
consideration in deciding the case, proves the following facts:
Lots 36, 39 and 40, block 3035 of cadastral proceeding No. 71 of the City of Manila, G.
L. R. O. Record No. 373, were formerly a part of a large parcel of land belonging to the
predecessor of the herein claimants and appellees. From the year 1896 said land
began to wear away, due to the action of the waves of Manila Bay, until the year 1901
when the said lots became completely submerged in water in ordinary tides, and
remained in such a state until 1912 when the Government undertook the dredging of
Vitas Estuary in order to facilitate navigation, depositing all the sand and silt taken from
the bed of the estuary on the low lands which were completely covered with water,
surrounding that belonging to the Philippine Manufacturing Company, thereby slowly
and gradually forming the lots, the subject matter of this proceeding.
Up to the month of February, 1927 nobody had declared lot 39 for the purposes of
taxation, and it was only in the year 1926 that Dr. Pedro Gil, in behalf of the claimants
and appellees, declared lot No. 40 for such purpose.
question arises: Who owns lots 36, 39 and 40 in question?
The claimants-appellees contend that inasmuch as the said lots once formed a part of a
large parcel of land belonging to their predecessors, whom they succeeded, and their
immediate predecessor in interest, Tomas Cabangis, having taken possession thereof
as soon as they were reclaimed, giving his permission to some fishermen to dry their
fishing nets and deposit their bancas thereon, said lots belong to them.
Article 339, subsection 1, of the Civil Code, reads:
Article 339. Property of public ownership is
1. That devoted to public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, riverbanks, shorts, roadsteads, and that of a
similar character.
xxx xxx xxx
Article 1, case 3, of the Law of Waters of August 3, 1866, provides as follows:
ARTICLE 1. The following are part of the national domain open to public use:
xxx xxx xxx
3. The Shores. By the shore is understood that space covered and uncovered
by the movement of the tide. Its interior or terrestrial limit is the line reached by
the highest equinoctial tides. Where the tides are not appreciable, the shore
begins on the land side at the line reached by the sea during ordinary storms
or tempests.
In the case of Aragon vs. Insular Government (19 Phil., 223), with reference to article
339 of the Civil Code just quoted, this court said:
We should not be understood, by this decision, to hold that in a case of gradual
encroachment or erosion by the ebb and flow of the tide, private property may not
become 'property of public ownership,' as defined in article 339 of the code, where it
appears that the owner has to all intents and purposes abandoned it and permitted it to
be totally destroyed, so as to become a part of the 'playa' (shore of the seas), 'rada'
(roadstead), or the like. . . .
In the Enciclopedia Juridica Espanola, volume XII, page 558, we read the following:
With relative frequency the opposite phenomenon occurs; that is, the sea
advances and private properties are permanently invaded by the waves, and
in this case they become part of the shore or beach. They then pass to the
public domain, but the owner thus dispossessed does not retain any right to
the natural products resulting from their new nature; it is a de facto case of
eminent domain, and not subject to indemnity.
Now then , when said land was reclaimed, did the claimants-appellees or their
predecessors recover it as their original property?
As we have seen, the land belonging to the predecessors of the herein claimants-
appellees began to wear way in 1896, owing to the gradual erosion caused by the ebb
and flow of the tide, until the year 1901, when the waters of Manila Bay completely
submerged a portion of it, included within lots 36, 39 and 40 here in question, remaining
thus under water until reclaimed as a result of certain work done by the Government in
1
1912. According to the above-cited authorities said portion of land, that is, lots 36, 39
and 40, which was private property, became a part of the public domain. The
predecessors of the herein claimants-appellees could have protected their land by
building a retaining wall, with the consent of competent authority, in 1896 when the
waters of the sea began to wear it away, in accordance with the provisions of Article 29
of the aforecited Law of Waters of August 3, 1866, and their failure to do so until 1901,
when a portion of the same became completely covered by said waters, remaining thus
submerged until 1912, constitutes abandonment.
Now then: The lots under discussion having been reclaimed from the seas as a result of
certain work done by the Government, to whom do they belong?
The answer to this question is found in article 5 of the aforementioned Law of Waters,
which is as follows:
ART. 5. Lands reclaimed from the sea in consequence of works constructed
by the State, or by the provinces, pueblos or private persons, with proper
permission, shall become the property of the party constructing such works,
unless otherwise provided by the terms of the grant of authority.
The fact that from 1912 some fishermen had been drying their fishing nets and
depositing their bancas on lots 36, 39 and 40, by permission of Tomas Cabangis, does
not confer on the latter or his successors the ownership of said lots, because, as they
were converted into public land, no private person could acquire title thereto except in
the form and manner established by the law.
In the case of Buzon vs. Insular Government and City of Manila (13 Phil., 324), cited by
the claimants-appellees, this court, admitting the findings and holdings of the lower
court, said the following:
If we heed the parol evidence, we find that the seashore was formerly about
one hundred brazas distant from the land in question; that, in the course of
time, and by the removal of a considerable quantity of sand from the shore at
the back of the land for the use of the street car company in filling in Calle
Cervantes, the sea water in ordinary tides now covers part of the land
described in the petition.
The fact that certain land, not the bed of a river or of the sea, is covered by
sea water during the period of ordinary high tide, is not a reason established
by any law to cause the loss thereof, especially when, as in the present case,
it becomes covered by water owing to circumstances entirely independent of
the will of the owner.
In the case of Director of Lands vs. Aguilar (G.R. No. 22034),1 also cited by the
claimants-appellees, wherein the Government adduced no evidence in support of its
contention, the lower court said in part:
The contention of the claimants Cabangis is to the effect that said lots are a
part of the adjoining land adjudicated to their deceased father, Don Tomas
Cabangis, which, for over fifty years had belonged to their deceased
grandmother, Tita Andres, and that, due to certain improvements made in
Manila Bay, the waters of the sea covered a large part of the lots herein
claimed.
The Government of the Philippine Islands also claims the ownership of said
lots, because, at ordinary high tide, they are covered by the sea.
Upon petition of the parties, the lower court made an ocular inspection of said
lots on September 12, 1923, and on said inspection found some light material
houses built thereon, and that on that occasion the waters of the sea did not
reach the aforesaid lots.
From the evidence adduced at the trial of this cause, it may be inferred that
Tita Andres, during her lifetime was the owner of a rather large parcel of land
which was adjudicated by a decree to her son Tomas Cabangis; the lots now
in question are contiguous to that land and are covered by the waters of the
sea at extraordinary high tide; some 50 years before the sea did not reach
said strip of land, and on it were constructed, for the most part, light material
houses, occupied by the tenants of Tita Andres, to whom they paid rent. Upon
her death, her son Tomas Cabangis succeeded to the possession, and his
children succeeded him, they being the present claimants, Consuelo, Jesus,
Tomas, and Consorcia Cabangis.
The Government of the Philippine Islands did not adduce any evidence in
support of its contention, with the exception of registry record No. 8147, to
show that the lots here in question were not excluded from the application
presented in said proceeding.
It will be seen that in the case of Buzon vs. Insular Government and City of Manila,
cited above, the rise of the waters of the sea that covered the lands there in dispute,
was due not to the action of the tide but to the fact that a large quantity of sand was
taken from the sea at the side of said land in order to fill in Cervantes Street, and this
court properly held that because of this act, entirely independent of the will of the owner
of said land, the latter could not lose the ownership thereof, and the mere fact that the
waters of the sea covered it as a result of said act, is not sufficient to convert it into
public land, especially, as the land was high and appropriate for building purposes.
In the case of the Director of Lands vs. Aguilar also cited by the claimants-appellees,
the Insular Government did not present any evidence in support of its contention, thus
leaving uncontradicted the evidence adduced by the claimants Aguilar et al., as to the
ownership, possession and occupation of said lots.
In the instant case the evidence shows that from 1896, the waves of Manila Bay had
been gradually and constantly washing away the sand that formed the lots here in
question, until 1901, when the sea water completely covered them, and thus they
remained until the year 1912. In the latter year they were reclaimed from the sea by
filling in with sand and silt extracted from the bed of Vitas Estuary when the
Government dredged said estuary in order to facilitate navigation. Neither the herein
claimants-appellees nor their predecessors did anything to prevent their destruction.
In conclusion, then, we hold that the lots in question having disappeared on account of
the gradual erosion due to the ebb and flow of the tide, and having remained in such a
state until they were reclaimed from the sea by the filling in done by the Government,
they are public land. (Aragon vs. Insular Government, 19 Phil., 223; Francisco vs.
Government of the Philippine Islands, 28 Phil., 505).
By virtue whereof, the judgment appealed from is reversed and lots Nos. 36, 39 and 40
of cadastral proceeding No. 373 of the City of Manila are held to be public land
belonging to the Government of the United States under the administration and control
of the Government of the Philippine Islands. So ordered.
Johnson, Street, Malcolm, Ostrand, Johns and Romualdez, JJ., concur.
2

B. G.R. No. L40474 August 29, 1975
CEBU OXYGEN & ACETYLENE CO., INC., petitioner,
vs.
HON. PASCUAL A. BERCILLES Presiding Judge, Branch XV, 14th Judicial
District, and JOSE L. ESPELETA, Assistant Provincial Fiscal, Province of Cebu,
representing the Solicitor General's Office and the Bureau of Lands, respondents.
Jose Antonio R Conde for petitioner.
Office of the Acting Solicitor General Hugo E. Gutierrez, Jr., Assistant Solicitor General
Octavio R. Ramirez and Trial Attorney David R. Hilario for respondents. .
CONCEPCION, Jr., J.:
This is a petition for the review of the order of the Court of First Instance of Cebu
dismissing petitioner's application for registration of title over a parcel of land situated in
the City of Cebu.
The parcel of land sought to be registered was only a portion of M. Borces Street,
Mabolo, Cebu City. On September 23, 1968, the City Council of Cebu, through
Resolution No. 2193, approved on October 3, 1968, declared the terminal portion of M.
Borces Street, Mabolo, Cebu City, as an abandoned road, the same not being included
in the City Development Plan.1 Subsequently, on December 19, 1968, the City Council
of Cebu passed Resolution No. 2755, authorizing the Acting City Mayor to sell the land
through a public bidding.2 Pursuant thereto, the lot was awarded to the herein petitioner
being the highest bidder and on March 3, 1969, the City of Cebu, through the Acting
City Mayor, executed a deed of absolute sale to the herein petitioner for a total
consideration of P10,800.00.3 By virtue of the aforesaid deed of absolute sale, the
petitioner filed an application with the Court of First instance of Cebu to have its title to
the land registered.4
On June 26, 1974, the Assistant Provincial Fiscal of Cebu filed a motion to dismiss the
application on the ground that the property sought to be registered being a public road
intended for public use is considered part of the public domain and therefore outside
the commerce of man. Consequently, it cannot be subject to registration by any private
individual.5
After hearing the parties, on October 11, 1974 the trial court issued an order dismissing
the petitioner's application for registration of title.6 Hence, the instant petition for review.
For the resolution of this case, the petitioner poses the following questions:
(1) Does the City Charter of Cebu City (Republic Act No. 3857) under
Section 31, paragraph 34, give the City of Cebu the valid right to
declare a road as abandoned? and
(2) Does the declaration of the road, as abandoned, make it the
patrimonial property of the City of Cebu which may be the object of a
common contract?
(1) The pertinent portions of the Revised Charter of Cebu City provides:
Section 31. Legislative Powers. Any provision of law and executive
order to the contrary notwithstanding, the City Council shall have the
following legislative powers:
xxx xxx xxx
(34) ...; to close any city road, street or alley, boulevard, avenue, park
or square. Property thus withdrawn from public servitude may be
used or conveyed for any purpose for which other real property
belonging to the City may be lawfully used or conveyed.
From the foregoing, it is undoubtedly clear that the City of Cebu is empowered to close
a city road or street. In the case of Favis vs. City of Baguio,7 where the power of the city
Council of Baguio City to close city streets and to vacate or withdraw the same from
public use was similarly assailed, this court said:
5. So it is, that appellant may not challenge the city council's act of
withdrawing a strip of Lapu-Lapu Street at its dead end from public
use and converting the remainder thereof into an alley. These are
acts well within the ambit of the power to close a city street. The city
council, it would seem to us, is the authority competent to determine
whether or not a certain property is still necessary for public use.
Such power to vacate a street or alley is discretionary. And the
discretion will not ordinarily be controlled or interfered with by the
courts, absent a plain case of abuse or fraud or collusion.
Faithfulness to the public trust will be presumed. So the fact that
some private interests may be served incidentally will not invalidate
the vacation ordinance.
(2) Since that portion of the city street subject of petitioner's application for registration
of title was withdrawn from public use, it follows that such withdrawn portion becomes
patrimonial property which can be the object of an ordinary contract.
Article 422 of the Civil Code expressly provides that "Property of public dominion, when
no longer intended for public use or for public service, shall form part of the patrimonial
property of the State."
Besides, the Revised Charter of the City of Cebu heretofore quoted, in very clear and
unequivocal terms, states that: "Property thus withdrawn from public servitude may be
used or conveyed for any purpose for which other real property belonging to the City
may be lawfully used or conveyed."
Accordingly, the withdrawal of the property in question from public use and its
subsequent sale to the petitioner is valid. Hence, the petitioner has a registerable title
over the lot in question.
WHEREFORE, the order dated October 11, 1974, rendered by the respondent court in
Land Reg. Case No. N-948, LRC Rec. No. N-44531 is hereby set aside, and the
respondent court is hereby ordered to proceed with the hearing of the petitioner's
application for registration of title.
SO ORDERED.
Makalintal, C.J, Fernando, Barredo and Aquino, JJ., concur.
3

C. G.R. No. L-24950 March 25, 1926
VIUDA DE TAN TOCO, plaintiff-appellant,
vs.
THE MUNICIPAL COUNCIL OF ILOILO, defendant-appellee.
Arroyo & Evangelista for appellant.
Provincial Fiscal Borromeo Veloso for appelle.
VILLAMOR, J.:
It appears from the record that the widow of Tan Toco had sued the municipal council
of Iloilo for the amount of P42,966.40, being the purchase price of two strips of land,
one on Calle J. M. Basa consisting of 592 square meters, and the other on Calle
Aldiguer consisting of 59 square meters, which the municipality of Iloilo had
appropriated for widening said street. The Court of First Instance of Iloilo sentenced the
said municipality to pay the plaintiff the amount so claimed, plus the interest, and the
said judgment was on appeal affirmed by this court.1
On account of lack of funds the municipality of Iloilo was unable to pay the said
judgment, wherefore plaintiff had a writ of execution issue against the property of the
said municipality, by virtue of which the sheriff attached two auto trucks used for street
sprinkling, one police patrol automobile, the police stations on Mabini street, and in
Molo and Mandurriao and the concrete structures, with the corresponding lots, used as
markets by Iloilo, Molo, and Mandurriao.
After notice of the sale of said property had been made, and a few days before the
sale, the provincial fiscal of Iloilo filed a motion which the Court of First Instance praying
that the attachment on the said property be dissolved, that the said attachment be
declared null and void as being illegal and violative of the rights of the defendant
municipality.
Plaintiffs counsel objected o the fiscal's motion but the court, by order of August 12,
1925, declared the attachment levied upon the aforementioned property of the
defendant municipality null and void, thereby dissolving the said attachment.
From this order the plaintiff has appealed by bill of exceptions. The fundamental
question raised by appellant in her four assignments of error is whether or not the
property levied upon is exempt from execution.
The municipal law, section 2165 of the Administrative Code, provides that:
Municipalities are political bodies corporate, and as such are endowed with the
faculties of municipal corporations, to be exercised by and through their
respective municipal government in conformity with law.
It shall be competent for them, in their proper corporate name, to sue and be
sued, to contract and be contracted with, to acquire and hold real and
personal property for municipal purposes, and generally to exercise the
powers hereinafter specified or otherwise conferred upon them by law.
For the purposes of the matter here in question, the Administrative Code does not
specify the kind of property that a municipality may acquire. However, article 343 of the
Civil Code divides the property of provinces and towns (municipalities) into property for
public use and patrimonial property. According to article 344 of the same Code,
provincial roads and foot-path, squares, streets, fountains and public waters, drives and
public improvements of general benefit built at the expense of the said towns or
provinces, are property for public use.
All other property possessed by the said towns and provinces is patrimonial and shall
be subject to the provisions of the Civil Code except as provided by special laws.
Commenting upon article 344, Mr. Manresa says that "In accordance with
administrative legislation" (Spanish) we must distinguish, as to the patrimonial property
of the towns, "between that a common benefit and that which is private property of the
town. The first differs from property for public use in that generally its enjoyment is less,
as it is limited to neighbors or to a group or class thereof; and, furthermore, such use,
more or less general, is not intrinsic with this kind of property, for by its very nature it
may be enjoyed as though it were private property. The third group, that is, private
property, is used in the name of the town or province by the entities representing it and,
like and private property, giving a source of revenue."
Such distinction, however, is of little practical importance in this jurisdiction in view of
the different principles underlying the functions of a municipality under the American
rule. Notwithstanding this, we believe that the principle governing property of the public
domain of the State is applicable to property for public use of the municipalities as said
municipal is similar in character. The principle is that the property for public use of the
State is not within the commerce of man and, consequently, is inalienable and not
subject to prescription. Likewise, property for public of the municipality is not within the
commerce of man so long as it is used by the public and, consequently, said property is
also inalienable.
The American Law is more explicit about this matter as expounded by Mcquilin in
Municipal Corporations, volume 3, paragraph 1160, where he says that:
States statutes often provide the court houses, jails and other buildings owned
by municipalities and the lots on which they stand shall be exempt from
attachment and execution. But independent of express statutory exemption, as
a general proposition, property, real and personal, held by municipal
corporations, in trust for the benefit of their inhabitants, and used for public
purposes, is exempt.
For example, public buildings, school houses, streets, squares, parks,
wharves, engines and engine houses, and the like, are not subject to
execution. So city waterworks, and a stock of liquors carried in a town
dispensary, are exempt. The reason for the exemption is obvious. Municipal
corporations are created for public purposes and for the good of the citizens in
their aggregate or public capacity. That they may properly discharge such
public functions corporate property and revenues are essential, and to deny
them these means the very purpose of their creation would be materially
impeded, and in some instances practically destroy it. Respecting this subject
the Supreme Court of Louisiana remarked: "On the first view of this question
there is something very repugnant to the moral sense in the idea that a
municipal corporation should contract debts, and that, having no resources but
the taxes which are due to it, these should not be subjected by legal process
to the satisfaction of its creditors. This consideration, deduced from the
principles of moral equity has only given way to the more enlarged
contemplation of the great and paramount interests of public order and the
principles of government."
4
 It is generally held that property owned by a municipality, where not used for a
public purpose but for quasi private purposes, is subject to execution on a
judgment against the municipality, and may be sold. This rule applies to
shares of stock owned by a municipal corporation, and the like. But the mere
fact that corporate property held for public uses is being temporarily used for
private purposes does not make it subject execution.
If municipal property exempt from execution is destroyed, the insurance
money stands in lieu thereof and is also exempt.
The members or inhabitants of a municipal corporation proper are not
personally liable for the debts of the municipality, except that in the New
England States the individual liability of the inhabitant is generally maintained.
In Corpus Juris, vol 23, page 355, the following is found:
Where property of a municipal or other public corporation is sough to be
subjected to execution to satisfy judgments recovered against such
corporation, the question as to whether such property is leviable or not is to be
determined by the usage and purposes for which it is held. The rule is that
property held for public uses, such as public buildings, streets, squares parks,
promenades, wharves, landing places fire engines, hose and hose carriages,
engine houses, public markets, hospitals, cemeteries, and generally
everything held for governmental purposes, is not subject to levy and sale
under execution against such corporation. The rule also applies to funds in the
hands of a public officer. Likewise it has been held that taxes due to a
municipal corporation or country cannot be seized under execution by a
creditor of such corporation. But where a municipal corporation or country
owns in its proprietary, as distinguished from its public or governmental
capacity, property not useful or used for a public purpose but for quasi private
purposes, the general rule is that such property may be seized and sold under
execution against the corporation, precisely as similar property of individuals is
seized and sold. But property held for public purposes is not subject to
execution merely because it is temporarily used for private purposes, although
if the public use is wholly abandoned it becomes subject to execution.
Whether or not property held as public property is necessary for the public use
is a political, rather than a judicial question.
In the case of City of New Orleans vs. Louisiana Construction Co., Ltd. (140 U. S., 654;
35 Law. ed., 556), it was held that a wharf for unloading sugar and molasses, open to
the public, was property for the public use of the City of New Orleans and was not
subject to attachment for the payment of the debts of the said city.
In that case it was proven that the said wharf was a parcel of land adjacent to the
Mississippi River where all shipments of sugar and molasses taken to New Orleans
were unloaded.
That city leased the said wharf to the Louisiana Construction Company, Ltd., in order
that it might erect warehouses so that the merchandise upon discharge might not be
spoiled by the elements. The said company was given the privilege of charging certain
fees for storing merchandise in the said warehouses and the public in general had the
right to unload sugar and molasses there by paying the required fees, 10 per cent of
which was turned over to the city treasury.
The United States Supreme Court on an appeal held that the wharf was public
property, that it never ceased to be such in order to become private property of the city;
wherefore the company could not levy execution upon the wharf in order to collect the
amount of the judgment rendered in favor thereof.
In the case of Klein vs. City of New Orleans (98 U. S., 149; 25 Law. ed., 430), the
Supreme Court of the United States that a public wharf on the banks of the Mississippi
River was public property and not subject to execution for the payment of a debt of the
City of New Orleans where said wharf was located.
In this case a parcel of land adjacent to the Mississippi River, which formerly was the
shore of the river and which later enlarged itself by accession, was converted into a
wharf by the city for public use, who charged a certain fee for its use.
It was held that the land was public property as necessary as a public street and was
not subject to execution on account of the debts of the city. It was further held that the
fees collected where also exempt from execution because they were a part of the
income of the city.
In the case of Tufexis vs. Olaguera and Municipal Council of Guinobatan (32 Phil.,
654), the question raised was whether for the payment of a debt to a third person by
the concessionaire of a public market, the said public market could be attached and
sold at public auction. The Supreme Court held that:
Even though a creditor is unquestionably entitled to recover out of his debtor's
property, yet when among such property there is included the special right
granted by the Government of usufruct in a building intended for a public
service, and when this privilege is closely related to a service of a public
character, such right of the creditor to the collection of a debt owed him by the
debtor who enjoys the said special privilege of usufruct in a public market is
not absolute and may be exercised only through the action of court of justice
with respect to the profits or revenue obtained under the special right of
usufruct enjoyed by debtor.
The special concession of the right of usufruct in a public market cannot be
attached like any ordinary right, because that would be to permit a person who
has contracted with the state or with the administrative officials thereof to
conduct and manage a service of a public character, to be substituted, without
the knowledge and consent of the administrative authorities, by one who took
no part in the contract, thus giving rise to the possibility of the regular course
of a public service being disturbed by the more or less legal action of a
grantee, to the prejudice of the state and the public interests.
The privilege or franchise granted to a private person to enjoy the usufruct of a
public market cannot lawfully be attached and sold, and a creditor of such
person can recover his debt only out of the income or revenue obtained by the
debtor from the enjoyment or usufruct of the said privilege, in the same
manner that the rights of such creditors of a railroad company can be
exercised and their credit collected only out of the gross receipts remaining
after deduction has been made therefrom of the operating expenses of the
road. (Law of November 12, 1896, extended to the overseas provinces by the
royal order of August 3, 1886.)
5
For the reasons contained in the authorities above quoted we believe that this court
would have reached the same conclusion if the debtor had been municipality of
Guinobatan and the public market had been levied upon by virtue of the execution.
It is evident that the movable and immovable property of a municipality, necessary for
governmental purpose, may not be attached and sold for the payment of a judgment
against the municipality. The supreme reason for this rule is the character of the public
use to which such kind of property is devoted. The necessity for government service
justifies that the property of public of the municipality be exempt from execution just as
it is necessary to exempt certain property of private individuals in accordance with
section 452 of the Code of Civil Procedure.
Even the municipal income, according to the above quoted authorities, is exempt from
levy and execution. In volume 1, page 467, Municipal Corporations by Dillon we find
that:
Municipal corporations are instituted by the supreme authority of a state for the
public good. They exercise, by delegation from the legislature, a portion of the
sovereign power. The main object of their creation is to act as administrative
agencies for the state, and to provide for the police and local government of
certain designated civil divisions of its territory. To this end they are invested
with certain governmental powers and charged with civil, political, and
municipal duties. To enable them beneficially to exercise these powers and
discharge these duties, they are clothed with the authority to raise revenues,
chiefly by taxation, and subordinately by other modes as by licenses, fines,
and penalties. The revenue of the public corporation is the essential means by
which it is enabled to perform its appointed work. Deprived of its regular and
adequate supply of revenue, such a corporation is practically destroyed and
the ends of its erection thwarted. Based upon considerations of this character,
it is the settled doctrine of the law that only the public property but also the
taxes and public revenues of such corporations cannot be seized under
execution against them, either in the treasury or when in transit to it.
Judgments rendered for taxes, and the proceeds of such judgments in the
hands of officers of the law, are not subject to execution unless so declared by
statute. The doctrine of the inviolability of the public revenues by the creditor is
maintained, although the corporation is in debt, and has no means of payment
but the taxes which it is authorized to collect.
Another error assigned by counsel for appellant is the holding of the court a quo that
the proper remedy for collecting the judgment in favor of the plaintiff was by way or
mandamus.
While this question is not necessarily included in the one which is the subject of this
appeal, yet we believe that the holding of the court, assigned as error by appellant's
counsel, is true when, after a judgment is rendered against a municipality, it has no
property subject to execution. This doctrine is maintained by Dillon (Municipal
Corporations, vol. 4, par. 1507, 5th ed.) based upon the decisions of several States of
the Union upholding the same principle and which are cited on page 2679 of the
aforesaid work. In this sense this assignment of error, we believe, is groundless.
By virtue of all the foregoing, the judgment appealed from should be and is hereby
affirmed with costs against the appellant. So ordered.
Avancea, C. J., Street, Malcolm, Ostrand, Johns, Romualdez and Villa-Real., JJ.,
concur.
6
 D. G.R. No. L-29788 August 30, 1972
RAFAEL S. SALAS, in his capacity as Executive Secretary; CONRADO F.
ESTRELLA, in his capacity as Governor of the Land Authority; and LORENZO
GELLA, in his capacity as Register of Deeds of Manila, petitioners-appellants,
vs.
HON. HILARION U. JARENCIO, as Presiding Judge of Branch XXIII, Court of First
Instance of Manila; ANTONIO J. VILLEGAS, in his capacity as Mayor of the City of
Manila; and the CITY OF MANILA, respondents-appellees.
Office of the Solicitor General Felix V. Makasiar, Assistant Solicitor-General Antonio A.
Torres, Solicitor Raul I. Goco and Magno B. Pablo & Cipriano A. Tan, Legal Staff, Land
Authority for petitioners-appellants.
Gregorio A. Ejercito and Felix C. Chavez for respondents-appellees.
ESGUERRA, J.:p
This is a petition for review of the decision of the Court of First Instance of Manila,
Branch XXIII, in Civil Case No. 67946, dated September 23, 1968, the dispositive
portion of which is as follows:
WHEREFORE, the Court renders judgment declaring Republic Act
No. 4118 unconstitutional and invalid in that it deprived the City of
Manila of its property without due process and payment of just
compensation. Respondent Executive Secretary and Governor of the
Land Authority are hereby restrained and enjoined from implementing
the provisions of said law. Respondent Register of Deeds of the City
of Manila is ordered to cancel Transfer Certificate of Title No. 80876
which he had issued in the name of the Land Tenure Administration
and reinstate Transfer Certificate of Title No. 22547 in the name of
the City of Manila which he cancelled, if that is feasible, or issue a
new certificate of title for the same parcel of land in the name of the
City of Manila.1
The facts necessary for a clear understanding of this case are as follows:
On February 24, 1919, the 4th Branch of the Court of First Instance of Manila, acting as
a land registration court, rendered judgment in Case No. 18, G.L.R.O. Record No. 111,
declaring the City of Manila the owner in fee simple of a parcel of land known as Lot
No. 1, Block 557 of the Cadastral Survey of the City of Mani1a, containing an area of
9,689.8 square meters, more or less. Pursuant to said judgment the Register of Deeds
of Manila on August 21, 1920, issued in favor of the City of Manila, Original Certificate
of Title No. 4329 covering the aforementioned parcel of land. On various dates in 1924,
the City of Manila sold portions of the aforementioned parcel of land in favor of Pura
Villanueva. As a consequence of the transactions Original Certificate of Title No. 4329
was cancelled and transfer certificates of title were issued in favor of Pura Villanueva
for the portions purchased by her. When the last sale to Pura Villanueva was effected
on August 22, 1924, Transfer Certificate of Title No. 21974 in the name of the City of
Manila was cancelled and in lieu thereof Transfer Certificate of Title (TCT) No. 22547
covering the residue thereof known as Lot 1-B-2-B of Block 557, with an area of
7,490.10 square meters, was issued in the name of the City of Manila.
On September 21, 1960, the Municipal Board of Manila, presided by then Vice-Mayor
Antono J. Villegas, adopted a resolution requesting His Excellency, the President of the
Philippines to consider the feasibility of declaring the City property bounded by Florida,
San Andres, and Nebraska Streets, under Transfer Certificate of Title Nos. 25545 and
22547, containing a total area of 7,450 square meters as a patrimonial property of the
City of Manila for the purpose of reselling these lots to the actual occupants thereof. 2
The said resolution of the Municipil Board of the City of Manila was officially transmitted
to the President of the Philippines by then Vice-Mayor Antonio J. Villegas on
September 21, 1960, with the information that the same resolution was, on the same
date, transmitted to the Senate and House of Representatives of the Congress of the
Philippines.3
During the First Session of the Fifth Congress of the Philippines, House Bill No. 191
was filed in the House of Representatives by then Congressman Bartolome
Cabangbang seeking to declare the property in question as patrimonial property of the
City of Manila, and for other purposes. The explanatory note of the Bill gave the
grounds for its enactment, to wit:
In the particular case of the property subject of this bill, the City of
Manila does not seem to have use thereof as a public communal
property. As a matter of fact, a resolution was adopted by the
Municipal Board of Manila at its regular session held on September
21, 1960, to request the feasibility of declaring the city property
bounded by Florida, San Andres and Nebraska Streets as a
patrimonial property of the City of Manila for the purpose of reselling
these lots to the actual occupants thereof. Therefore, it will be to the
best interest of society that the said property be used in one way or
another. Since this property has been occupied for a long time by the
present occupants thereof and since said occupants have expressed
their willingness to buy the said property, it is but proper that the
same be sold to them.4
Subsequently, a revised version of the Bill was introduced in the House of
Representatives by Congressmen Manuel Cases, Antonio Raquiza and Nicanor
Yiguez as House Bill No. 1453, with the following explanatory note:
The accompanying bill seeks to convert one (1) parcel of land in the
district of Malate, which is reserved as communal property into a
disposable or alienable property of the State and to provide its
subdivision and sale to bona fide occupants or tenants.
This parcel of land in question was originally an aggregate part of a
piece of land with an area of 9,689.8 square meters, more or less. ...
On September 21, 1960, the Municipal Board of Manila in its regular
session unanimously adopted a resolution requesting the President
of the Philippines and Congress of the Philippines the feasibility of
declaring this property into disposable or alienable property of the
State. There is therefore a precedent that this parcel of land could be
subdivided and sold to bona fide occupants. This parcel of land will
not serve any useful public project because it is bounded on all sides
by private properties which were formerly parts of this lot in question.
Approval of this bill will implement the policy of the Administration of
land for the landless and the Fifth Declaration of Principles of the
7
 Constitution, which states that the promotion of Social Justice to
insure the well-being and economic security of all people should be
the concern of the State. We are ready and willing to enact legislation
promoting the social and economic well-being of the people
whenever an opportunity for enacting such kind of legislation arises.
In view of the foregoing consideration and to insure fairness and justice to the present
bona fide occupants thereof, approval of this Bill is strongly urged. 5
The Bill having been passed by the House of Representatives, the same was thereafter
sent to the Senate where it was thoroughly discussed, as evidenced by the
Congressional Records for May 20, 1964, pertinent portion of which is as follows:
SENATOR FERNANDEZ: Mr. President, it will be re called that when
the late Mayor Lacson was still alive, we approved a similar bill. But
afterwards, the late Mayor Lacson came here and protested against
the approval, and the approval was reconsidered. May I know
whether the defect in the bill which we approved, has already been
eliminated in this present bill?
SENATOR TOLENTINO: I understand Mr. President, that that has
already been eliminated and that is why the City of Manila has no
more objection to this bill.
SENATOR FERNANDEZ: Mr. President, in view of that manifestation
and considering that Mayor Villegas and Congressman Albert of the
Fourth District of Manila are in favor of the bill. I would not want to
pretend to know more what is good for the City of Manila.
SENATOR TOLENTINO: Mr. President, there being no objection, I
move that we approve this bill on second reading.
PRESIDENT PRO-TEMPORE: The biII is approved on second
reading after several Senetors said aye and nobody said nay.
The bill was passed by the Senate, approved by the President on June 20, 1964, and
became Republic Act No. 4118. It reads as follows:
Lot I-B-2-B of Block 557 of the cadastral survey of the City of Manila,
situated in the District of Malate, City of Manila, which is reserved as
communal property, is hereby converted into disposal or alienable
land of the State, to be placed under the disposal of the Land Tenure
Administration. The Land Tenure Administration shall subdivide the
property into small lots, none of which shall exceed one hundred and
twenty square meters in area and sell the same on installment basis
to the tenants or bona fide occupants thereof and to individuals, in
the order mentioned: Provided, That no down payment shall be
required of tenants or bona fide occupants who cannot afford to pay
such down payment: Provided, further, That no person can purchase
more than one lot: Provided, furthermore, That if the tenant or bona
fide occupant of any given lot is not able to purchase the same, he
shall be given a lease from month to month until such time that he is
able to purchase the lot: Provided, still further, That in the event of
lease the rentals which may be charged shall not exceed eight per
cent per annum of the assessed value of the property leased:
And provided, finally, That in fixing the price of each lot, which shall
not exceed twenty pesos per square meter, the cost of subdivision
and survey shall not be included.
Sec. 2. Upon approval of this Act no ejectment proceedings against
any tenant or bona fide occupant of the above lots shall be instituted
and any ejectment proceedings pending in court against any such
tenant or bona fide occupant shall be dismissed upon motion of the
defendant: Provided, That any demolition order directed against any
tenant or bona fide occupant shall be lifted.
Sec. 3. Upon approval of this Act, if the tenant or bona fide occupant
is in arrears in the payment of any rentals, the amount legally due
shall be liquidated and shall be payable in twenty-four equal monthly
installments from the date of liquidation.
Sec. 4. No property acquired by virtue of this Act shall be transferred,
sold, mortgaged, or otherwise disposed of within a period of five
years from the date full ownership thereof has been vested in the
purchaser without the consent of the Land Tenure Administration.
Sec. 5. In the event of the death of the purchaser prior to the
complete payment of the price of the lot purchased by him, his widow
and children shall succeed in all his rights and obligations with
respect to his lot.
Sec. 6. The Chairman of the Land Tenure Administration shall
implement and issue such rules and regulations as may be
necessary to carry out the provisions of this Act.
Sec. 7. The sum of one hundred fifty thousand pesos is appropriated
out of any funds in the National Treasury not otherwise appropriated,
to carry out the purposes of this Act.
Sec. 8. All laws or parts of laws inconsistent with this Act are
repealed or modified accordingly.
Sec. 9. This Act shall take effect upon its approval.
Approved, June 20, 1964.
To implement the provisions of Republic Act No. 4118, and pursuant to the request of
the occupants of the property involved, then Deputy Governor Jose V. Yap of the Land
Authority (which succeeded the Land Tenure Administration) addressed a letter, dated
February 18, 1965, to Mayor Antonio Villegas, furnishing him with a copy of the
proposed subdivision plan of said lot as prepared for the Republic of the Philippines for
resale of the subdivision lots by the Land Authority to bona fide applicants. 6
On March 2, 1965, the City Mayor of Manila, through his Executive and Technical
Adviser, acknowledged receipt of the proposed subdivision plan of the property in
question and informed the Land Authority that his office would interpose no objection to
the implementation of said law, provided that its provisions be strictly complied with. 7
With the above-mentioned written conformity of the City of Manila for the
implementation of Republic Act No. 4118, the Land Authority, thru then Deputy
Governor Jose V. Yap, requested the City Treasurer of Manila, thru the City Mayor, for
the surrender and delivery to the former of the owner's duplicate of Transfer Certificate
8
of Title No. 22547 in order to obtain title thereto in the name of the Land Authority. The
request was duly granted with the knowledge and consent of the Office of the City
Mayor.8
With the presentation of Transfer Certificate of Title No. 22547, which had been yielded
as above stated by the, City authorities to the Land Authority, Transfer Certificate of
Title (T.C.T. No. 22547) was cancelled by the Register of Deeds of Manila and in lieu
thereof Transfer Certificate of Title No. 80876 was issued in the name of the Land
Tenure Administration (now Land Authority) pursuant to the provisions of Republic Act
No.
4118.9
But due to reasons which do not appear in the record, the City of Manila made a
complete turn-about, for on December 20, 1966, Antonio J. Villegas, in his capacity as
the City Mayor of Manila and the City of Manila as a duly organized public corporation,
brought an action for injunction and/or prohibition with preliminary injunction to restrain,
prohibit and enjoin the herein appellants, particularly the Governor of the Land Authority
and the Register of Deeds of Manila, from further implementing Republic Act No. 4118,
and praying for the declaration of Republic Act No. 4118 as unconstitutional.
With the foregoing antecedent facts, which are all contained in the partial stipulation of
facts submitted to the trial court and approved by respondent Judge, the parties waived
the presentation of further evidence and submitted the case for decision. On
September 23, 1968, judgment was rendered by the trial court declaring Republic Act
No. 4118 unconstitutional and invalid on the ground that it deprived the City of Manila of
its property without due process of law and payment of just compensation. The
respondents were ordered to undo all that had been done to carry out the provisions of
said Act and were restrained from further implementing the same.
Two issues are presented for determination, on the resolution of which the decision in
this case hinges, to wit:
I. Is the property involved private or patrimonial property of the City of
Manila?
II. Is Republic Act No. 4118 valid and not repugnant to the
Constitution?
I.
As regards the first issue, appellants maintain that the land involved is a communal land
or "legua comunal" which is a portion of the public domain owned by the State; that it
came into existence as such when the City of Manila, or any pueblo or town in the
Philippines for that matter, was founded under the laws of Spain, the former sovereign;
that upon the establishment of a pueblo, the administrative authority was required to
allot and set aside portions of the public domain for a public plaza, a church site, a site
for public buildings, lands to serve as common pastures and for streets and roads; that
in assigning these lands some lots were earmarked for strictly public purposes, and
ownership of these lots (for public purposes) immediately passed to the new
municipality; that in the case of common lands or "legua comunal", there was no such
immediate acquisition of ownership by the pueblo, and the land though administered
thereby, did not automatically become its property in the absence of an express grant
from the Central Government, and that the reason for this arrangement is that this class
of land was not absolutely needed for the discharge of the municipality's governmental
functions.
It is argued that the parcel of land involved herein has not been used by the City of
Manila for any public purpose and had not been officially earmarked as a site for the
erection of some public buildings; that this circumstance confirms the fact that it was
originally "communal" land alloted to the City of Manila by the Central Government not
because it was needed in connection with its organization as a municipality but simply
for the common use of its inhabitants; that the present City of Manila as successor of
the Ayuntamiento de Manila under the former Spanish sovereign merely enjoys the
usufruct over said land, and its exercise of acts of ownership by selling parts thereof did
not necessarily convert the land into a patrimonial property of the City of Manila nor
divest the State of its paramount title.
Appellants further argue that a municipal corporation, like a city is a governmental
agent of the State with authority to govern a limited portion of its territory or to
administer purely local affairs in a given political subdivision, and the extent of its
authority is strictly delimited by the grant of power conferred by the State; that Congress
has the exclusive power to create, change or destroy municipal corporations; that even
if We admit that legislative control over municipal corporations is not absolute and even
if it is true that the City of Manila has a registered title over the property in question, the
mere transfer of such land by an act of the legislature from one class of public land to
another, without compensation, does not invade the vested rights of the City.
Appellants finally argue that Republic Act No. 4118 has treated the land involved as
one reserved for communal use, and this classification is conclusive upon the courts;
that if the City of Manila feels that this is wrong and its interests have been thereby
prejudiced, the matter should be brought to the attention of Congress for correction;
and that since Congress, in the exercise of its wide discretionary powers has seen fit to
classify the land in question as communal, the Courts certainly owe it to a coordinate
branch of the Government to respect such determination and should not interfere with
the enforcement of the law.
Upon the other hand, appellees argue by simply quoting portions of the appealed
decision of the trial court, which read thus:
The respondents (petitioners-appellants herein) contend, among
other defenses, that the property in question is communal property.
This contention is, however, disproved by Original Certificate of Title
No. 4329 issued on August 21, 1920 in favor of the City of Manila
after the land in question was registered in the City's favor. The
Torrens Title expressly states that the City of Manila was the owner in
'fee simple' of the said land. Under Sec. 38 of the Land Registration
Act, as amended, the decree of confirmation and registration in favor
of the City of Manila ... shall be conclusive upon and against all
persons including the Insular Government and all the branches there
... There is nothing in the said certificate of title indicating that the
land was 'communal' land as contended by the respondents. The
erroneous assumption by the Municipal Board of Manila that the land
in question was communal land did not make it so. The Municipal
Board had no authority to do that.
The respondents, however, contend that Congress had the power
and authority to declare that the land in question was 'communal'
land and the courts have no power or authority to make a contrary
finding. This contention is not entirely correct or accurate. Congress
has the power to classify 'land of the public domain', transfer them
9
 from one classification to another and declare them disposable or
not. Such power does not, however, extend to properties which are
owned by cities, provinces and municipalities in their 'patrimonial'
capacity.
Art. 324 of the Civil Code provides that properties of provinces, cities
and municipalities are divided into properties for public use and
patrimonial property. Art. 424 of the same code provides that
properties for public use consist of provincial roads, city streets,
municipal streets, the squares, fountains, public waters, promenades
and public works for public service paid for by said province, cities or
municipalities. All other property possessed by any of them is
patrimonial. Tested by this criterion the Court finds and holds that the
land in question is patrimonial property of the City of Manila.
Respondents contend that Congress has declared the land in
question to be 'communal' and, therefore, such designation is
conclusive upon the courts. The Courts holds otherwise. When a
statute is assailed as unconstitutional the Courts have the power and
authority to inquire into the question and pass upon it. This has long
ago been settled in Marbury vs. Madison, 2 L. ed. 60, when the
United States Supreme Court speaking thru Chief Justice Marshall
held:
... If an act of the legislature, repugnant to the
constitution, is void, does it, notwithstanding its
validity, bind the courts, and oblige them to give
effect? It is emphatically the province and duty of
the judicial department to say what the law is ... So
if a law be in opposition to the constitution; if both
the law and the constitution apply to a particular
case, so that the court must either decide that case
conformable to the constitution, disregarding the
law, the court must determine which of these
conflicting rules governs the case. This is of the
very essence of unconstitutional judicial duty.
Appellees finally concluded that when the courts declare a law unconstitutional it does
not mean that the judicial power is superior to the legislative power. It simply means
that the power of the people is superior to both and that when the will of the legislature,
declared in statutes, stands in opposition to that of the people, declared in the
Constitution, the judges ought to be governed by the Constitution rather than by the
statutes.
There is one outstanding factor that should be borne in mind in resolving the character
of the land involved, and it is that the City of Manila, although declared by the Cadastral
Court as owner in fee simple, has not shown by any shred of evidence in what manner
it acquired said land as its private or patrimonial property. It is true that the City of
Manila as well as its predecessor, the Ayuntamiento de Manila, could validly acquire
property in its corporate or private capacity, following the accepted doctrine on the dual
character public and private of a municipal corporation. And when it acquires
property in its private capacity, it acts like an ordinary person capable of entering into
contracts or making transactions for the transmission of title or other real rights. When it
comes to acquisition of land, it must have done so under any of the modes established
by law for the acquisition of ownership and other real rights. In the absence of a title
deed to any land claimed by the City of Manila as its own, showing that it was acquired
with its private or corporate funds, the presumption is that such land came from the
State upon the creation of the municipality (Unson vs. Lacson, et al., 100 Phil. 695).
Originally the municipality owned no patrimonial property except those that were
granted by the State not for its public but for private use. Other properties it owns are
acquired in the course of the exercise of its corporate powers as a juridical entity to
which category a municipal corporation pertains.
Communal lands or "legua comunal" came into existence when a town or pueblo was
established in this country under the laws of Spain (Law VII, Title III, Book VI,
Recopilacion de las Leyes de Indios). The municipalities of the Philippines were not
entitled, as a matter of right, to any part of the public domain for use as communal
lands. The Spanish law provided that the usufruct of a portion of the public domain
adjoining municipal territory might be granted by the Government for communal
purposes, upon proper petition, but, until granted, no rights therein passed to the
municipalities, and, in any event, the ultimate title remained in the sovereign (City of
Manila vs. Insular Government, 10 Phil. 327).
For the establishment, then, of new pueblos the administrative
authority of the province, in representation of the Governor General,
designated the territory for their location and extension and the metes
and bounds of the same; and before alloting the lands among the
new settlers, a special demarcation was made of the places which
were to serve as the public square of the pueblo, for the erection of
the church, and as sites for the public buildings, among others, the
municipal building or the casa real, as well as of the lands whick were
to constitute the common pastures, and propios of the
municipality and the streets and roads which were to intersect the
new town were laid out, ... . (Municipality of Catbalogan vs. Director
of Lands, 17 Phil. 216, 220) (Emphasis supplied)
It may, therefore, be laid down as a general rule that regardless of the source or
classification of land in the possession of a municipality, excepting those acquired with
its own funds in its private or corporate capacity, such property is held in trust for the
State for the benefit of its inhabitants, whether it be for governmental or proprietary
purposes. It holds such lands subject to the paramount power of the legislature to
dispose of the same, for after all it owes its creation to it as an agent for the
performance of a part of its public work, the municipality being but a subdivision or
instrumentality thereof for purposes of local administration. Accordingly, the legal
situation is the same as if the State itself holds the property and puts it to a different use
(2 McQuilin,Municipal Corporations, 3rd Ed., p. 197, citing Monagham vs. Armatage,
218 Minn. 27, 15 N. W. 2nd 241).
True it is that the legislative control over a municipal corporation is not absolute even
when it comes to its property devoted to public use, for such control must not be
exercised to the extent of depriving persons of their property or rights without due
process of law, or in a manner impairing the obligations of contracts. Nevertheless,
when it comes to property of the municipality which it did not acquire in its private or
corporate capacity with its own funds, the legislature can transfer its administration and
disposition to an agency of the National Government to be disposed of according to its
discretion. Here it did so in obedience to the constitutional mandate of promoting social
justice to insure the well-being and economic security of the people.
10
It has been held that a statute authorizing the transfer of a Municipal airport to an
Airport Commission created by the legislature, even without compensation to the city,
was not violative of the due process clause of the American Federal Constitution. The
Supreme Court of Minnessota in Monagham vs. Armatage, supra, said:
... The case is controlled by the further rule that the legislature,
having plenary control of the local municipality, of its creation and of
all its affairs, has the right to authorize or direct the expenditures of
money in its treasury, though raised, for a particular purpose, for any
legitimate municipal purpose, or to order and direct a distribution
thereof upon a division of the territory into separate municipalities ... .
The local municipality has no such vested right in or to its public
funds, like that which the Constitution protects in the individual as
precludes legislative interferences. People vs. Power, 25 Ill.
187; State Board (of Education) vs. City, 56 Miss. 518. As remarked
by the supreme court of Maryland in Mayor vs. Sehner, 37 Md. 180:
"It is of the essence of such a corporation, that the government has
the sole right as trustee of the public interest, at its own good will and
pleasure, to inspect, regulate, control, and direct the corporation, its
funds, and franchises."
We therefore hold that c.500, in authorizing the transfer of the use
and possession of the municipal airport to the commission without
compensation to the city or to the park board, does not violate the
Fourteenth Amendment to the Constitution of the United States.
The Congress has dealt with the land involved as one reserved for communal use
(terreno comunal). The act of classifying State property calls for the exercise of wide
discretionary legislative power and it should not be interfered with by the courts.
This brings Us to the second question as regards the validity of Republic Act No. 4118,
viewed in the light of Article III, Sections 1, subsection (1) and (2) of the Constitution
which ordain that no person shall be deprived of his property without due process of
law and that no private property shall be taken for public use without just compensation.
II .
The trial court declared Republic Act No. 4118 unconstitutional for allegedly depriving
the City of Manila of its property without due process of law and without payment of just
compensation. It is now well established that the presumption is always in favor of the
constitutionality of a law (U S. vs. Ten Yu, 24 Phil. 1; Go Ching, et al. vs. Dinglasan, et
al., 45 O.G. No. 2, pp. 703, 705). To declare a law unconstitutional, the repugnancy of
that law to the Constitution must be clear and unequivocal, for even if a law is aimed at
the attainment of some public good, no infringement of constitutional rights is allowed.
To strike down a law there must be a clear showing that what the fundamental law
condemns or prohibits, the statute allows it to be done (Morfe vs. Mutuc, et al., G.R. No.
L-20387, Jan. 31, 1968; 22 SCRA 424). That situation does not obtain in this case as
the law assailed does not in any manner trench upon the constitution as will hereafter
be shown. Republic Act No. 4118 was intended to implement the social justice policy of
the Constitution and the Government program of "Land for the Landless". The
explanatory note of House Bill No. 1453 which became Republic Act No. 4118, reads in
part as follows:
Approval of this bill will implement the policy of the administration of
"land for the landless" and the Fifth Declaration of Principles of the
Constitution which states that "the promotion of social justice to
insure the well-being and economic security of all people should be
the concern of the State." We are ready and willing to enact
legislation promoting the social and economic well-being of the
people whenever an opportunity for enacting such kind of legislation
arises.
The respondent Court held that Republic Act No. 4118, "by converting the land in
question which is the patrimonial property of the City of Manila into disposable
alienable land of the State and placing it under the disposal of the Land Tenure
Administration violates the provisions of Article III (Secs. 1 and 2) of the Constitution
which ordain that "private property shall not be taken for public use without just
compensation, and that no person shall be deprived of life, liberty or property without
due process of law". In support thereof reliance is placed on the ruling in Province of
Zamboanga del Norte vs. City of Zamboanga, G.R. No. 2440, March 28, 1968; 22
SCRA 1334, which holds that Congress cannot deprive a municipality of its private or
patrimonial property without due process of law and without payment of just
compensation since it has no absolute control thereof. There is no quarrel over this rule
if it is undisputed that the property sought to be taken is in reality a private or
patrimonial property of the municipality or city. But it would be simply begging the
question to classify the land in question as such. The property, as has been previously
shown, was not acquired by the City of Manila with its own funds in its private or
proprietary capacity. That it has in its name a registered title is not questioned, but this
title should be deemed to be held in trust for the State as the land covered thereby was
part of the territory of the City of Manila granted by the sovereign upon its creation. That
the National Government, through the Director of Lands, represented by the Solicitor
General, in the cadastral proceedings did not contest the claim of the City of Manila that
the land is its property, does not detract from its character as State property and in no
way divests the legislature of its power to deal with it as such, the state not being bound
by the mistakes and/or negligence of its officers.
One decisive fact that should be noted is that the City of Manila expressly recognized
the paramount title of the State over said land when by its resolution of September 20,
1960, the Municipal Board, presided by then Vice-Mayor Antonio Villegas, requested
"His Excellency the President of the Philippines to consider the feasibility of declaring
the city property bounded by Florida, San Andres and Nebraska Streets, under Transfer
Certificate of Title Nos. 25545 and 25547, containing an area of 7,450 square
meters, as patrimonial property of the City of Manila for the purpose of reselling these
lots to the actual occupants thereof." (See Annex E, Partial Stipulation of Facts, Civil
Case No. 67945, CFI, Manila, p. 121, Record of the Case) [Emphasis Supplied]
The alleged patrimonial character of the land under the ownership of the City of Manila
is totally belied by the City's own official act, which is fatal to its claim since the
Congress did not do as bidden. If it were its patrimonial property why should the City of
Manila be requesting the President to make representation to the legislature to declare
it as such so it can be disposed of in favor of the actual occupants? There could be no
more blatant recognition of the fact that said land belongs to the State and was simply
granted in usufruct to the City of Manila for municipal purposes. But since the City did
not actually use said land for any recognized public purpose and allowed it to remain
idle and unoccupied for a long time until it was overrun by squatters, no presumption of
State grant of ownership in favor of the City of Manila may be acquiesced in to justify
the claim that it is its own private or patrimonial property (Municipality of Tigbauan vs.
Director of Lands, 35 Phil. 798; City of Manila vs. Insular Government, 10 Phil. 327;
11
Municipality of Luzuriaga vs. Director of Lands, 24 Phil. 193). The conclusion of the
respondent court that Republic Act No. 4118 converted a patrimonial property of the
City of Manila into a parcel of disposable land of the State and took it away from the
City without compensation is, therefore, unfounded. In the last analysis the land in
question pertains to the State and the City of Manila merely acted as trustee for the
benefit of the people therein for whom the State can legislate in the exercise of its
legitimate powers.
Republic Act No. 4118 was never intended to expropriate the property involved but
merely to confirm its character as communal land of the State and to make it available
for disposition by the National Government: And this was done at the instance or upon
the request of the City of Manila itself. The subdivision of the land and conveyance of
the resulting subdivision lots to the occupants by Congressional authorization does not
operate as an exercise of the power of eminent domain without just compensation in
violation of Section 1, subsection (2), Article III of the Constitution, but simply as a
manifestation of its right and power to deal with state property.
It should be emphasized that the law assailed was enacted upon formal written petition
of the Municipal Board of Manila in the form of a legally approved resolution. The
certificate of title over the property in the name of the City of Manila was accordingly
cancelled and another issued to the Land Tenure Administration after the voluntary
surrender of the City's duplicate certificate of title by the City Treasurer with the
knowledge and consent of the City Mayor. To implement the provisions of Republic Act
No. 4118, the then Deputy Governor of the Land Authority sent a letter, dated February
18, 1965, to the City Mayor furnishing him with a copy of the "proposed subdivision plan
of the said lot as prepared for the Republic of the Philippines for subdivision and resale
by the Land Authority to bona fide applicants." On March 2, 1965, the Mayor of Manila,
through his Executive and Technical Adviser, acknowledged receipt of the subdivision
plan and informed the Land Authority that his Office "will interpose no objection to the
implementation of said law provided that its provisions are strictly complied with." The
foregoing sequence of events, clearly indicate a pattern of regularity and observance of
due process in the reversion of the property to the National Government. All such acts
were done in recognition by the City of Manila of the right and power of the Congress to
dispose of the land involved.
Consequently, the City of Manila was not deprived of anything it owns, either under the
due process clause or under the eminent domain provisions of the Constitution. If it
failed to get from the Congress the concession it sought of having the land involved
given to it as its patrimonial property, the Courts possess no power to grant that relief.
Republic Act No. 4118 does not, therefore, suffer from any constitutional infirmity.
WHEREFORE, the appealed decision is hereby reversed, and petitioners shall proceed
with the free and untrammeled implementation of Republic Act No. 4118 without any
obstacle from the respondents. Without costs.
Concepcion, C.J., Makalintal, Zaldivar, Castro, Fernando, Teehankee and Antonio, JJ.,
concur.
Barredo and Makasiar, JJ., took no part.

12
 E. G.R. No. L-61744 June 25, 1984
MUNICIPALITY OF SAN MIGUEL, BULACAN, petitioner,
vs.
HONORABLE OSCAR C. FERNANDEZ, in his capacity as the Presiding Judge,
Branch IV, Baliuag, Bulacan, The PROVINCIAL SHERIFF of Bulacan, MARGARITA
D. VDA. DE IMPERIO, ADORACION IMPERIO, RODOLFO IMPERIO, CONRADO
IMPERIO, ERNESTO IMPERIO, ALFREDO IMPERIO, CARLOS IMPERIO, JR., JUAN
IMPERIO and SPOUSES MARCELO PINEDA and LUCILA PONGCO, respondents.
Pascual C. Liatchko for petitioner.
The Solicitor General and Marcelo Pineda for respondents.
RELOVA, J.:
In Civil Case No. 604-B, entitled "Margarita D. Vda. de Imperio, et al. vs. Municipal
Government of San Miguel, Bulacan, et al.", the then Court of First Instance of Bulacan,
on April 28, 1978, rendered judgment holding herein petitioner municipality liable to
private respondents, as follows:
WHEREFORE, premises considered, judgment is hereby rendered in
favor of the plaintiffs and against the defendant Municipal
Government of San Miguel Bulacan, represented by Mayor Mar
Marcelo G. Aure and its Municipal Treasurer:
1. ordering the partial revocation of the Deed of Donation signed by
the deceased Carlos Imperio in favor of the Municipality of San
Miguel Bulacan, dated October 27, 1947 insofar as Lots Nos. 1, 2, 3,
4 and 5, Block 11 of Subdivision Plan Psd-20831 are concerned, with
an aggregate total area of 4,646 square meters, which lots are
among those covered and described under TCT No. T-1831 of the
Register of Deeds of Bulacan in the name of the Municipal
Government of San Miguel Bulacan,
2. ordering the defendant to execute the corresponding Deed of
Reconveyance over the aforementioned five lots in favor of the
plaintiffs in the proportion of the undivided one-half () share in the
name of plaintiffs Margarita D. Vda. de Imperio, Adoracion, Rodolfo,
Conrado, Ernesto, Alfredo, Carlos, Jr. and Juan, all surnamed
Imperio, and the remaining undivided one-half () share in favor of
plaintiffs uses Marcelo E. Pineda and Lucila Pongco;
3. ordering the defendant municipality to pay to the plaintiffs in the
proportion mentioned in the immediately preceding paragraph the
sum of P64,440.00 corresponding to the rentals it has collected from
the occupants for their use and occupation of the premises from 1970
up to and including 1975, plus interest thereon at the legal rate from
January 1970 until fully paid;
4. ordering the restoration of ownership and possession over the five
lots in question in favor of the plaintiffs in the same proportion
aforementioned;
5. ordering the defendant to pay the plaintiffs the sum of P3,000.00
for attomey's fees; and to pay the cost of suit.
The counterclaim of the defendant is hereby ordered dismissed for
lack of evidence presented to substantiate the same.
SO ORDERED. (pp. 11-12, Rollo)
The foregoing judgment became final when herein petitioner's appeal was dismissed
due to its failure to file the record on appeal on time. The dismissal was affirmed by the
then Court of Appeals in CA-G.R. No. SP-12118 and by this Court in G.R. No. 59938.
Thereafter, herein private respondents moved for issuance of a writ of execution for the
satisfaction of the judgment. Respondent judge, on July 27, 1982, issued an order, to
wit:
Considering that an entry of judgment had already been made on
June 14, 1982 in G. R. No. L-59938 and;
Considering further that there is no opposition to plaintiffs' motion for
execution dated July 23, 1983;
Let a writ of execution be so issued, as prayed for in the aforestated
motion. (p. 10, Rollo)
Petitioner, on July 30, 1982, filed a Motion to Quash the writ of execution on the ground
that the municipality's property or funds are all public funds exempt from execution. The
said motion to quash was, however, denied by the respondent judge in an order dated
August 23, 1982 and the alias writ of execution stands in full force and effect.
On September 13, 1982, respondent judge issued an order which in part, states:
It is clear and evident from the foregoing that defendant has more
than enough funds to meet its judgment obligation. Municipal
Treasurer Miguel C, Roura of San Miguel, Bulacan and Provincial
Treasurer of Bulacan Agustin O. Talavera are therefor hereby
ordered to comply with the money judgment rendered by Judge
Agustin C. Bagasao against said municipality. In like manner, the
municipal authorities of San Miguel, Bulacan are likewise ordered to
desist from plaintiffs' legal possession of the property already
returned to plaintiffs by virtue of the alias writ of execution.
Finally, defendants are hereby given an inextendible period of ten
(10) days from receipt of a copy of this order by the Office of the
Provincial Fiscal of Bulacan within which to submit their written
compliance, (p. 24, Rollo)
When the treasurers (provincial and municipal) failed to comply with the order of
September 13, 1982, respondent judge issued an order for their arrest and that they will
be release only upon compliance thereof.
Hence, the present petition on the issue whether the funds of the Municipality of San
Miguel, Bulacan, in the hands of the provincial and municipal treasurers of Bulacan and
San Miguel, respectively, are public funds which are exempt from execution for the
satisfaction of the money judgment in Civil Case No. 604-B.
Well settled is the rule that public funds are not subject to levy and execution. The
reason for this was explained in the case of Municipality of Paoay vs. Manaois, 86 Phil.
13
629 "that they are held in trust for the people, intended and used for the Teehankee (Chairman), Melencio-Herrera, Plana, Gutierrez, Jr., and De la Fuente, JJ,.
accomplishment of the purposes for which municipal corporations are created, and that concur.
to subject said properties and public funds to execution would materially impede, even
defeat and in some instances destroy said purpose." And, in Tantoco vs. Municipal
Council of Iloilo, 49 Phil. 52, it was held that "it is the settled doctrine of the law that not
only the public property but also the taxes and public revenues of such corporations
Cannot be seized under execution against them, either in the treasury or when in transit
to it. Judgments rendered for taxes, and the proceeds of such judgments in the hands
of officers of the law, are not subject to execution unless so declared by statute." Thus,
it is clear that all the funds of petitioner municipality in the possession of the Municipal
Treasurer of San Miguel, as well as those in the possession of the Provincial Treasurer
of Bulacan, are also public funds and as such they are exempt from execution.
Besides, Presidential Decree No. 477, known as "The Decree on Local Fiscal
Administration", Section 2 (a), provides:
SEC. 2. Fundamental Principles. Local government financial
affairs, transactions, and operations shall be governed by the
fundamental principles set forth hereunder:
(a) No money shall be paid out of the treasury except in pursuance of
a lawful appropriation or other specific statutory authority.
xxx xxx xxx
Otherwise stated, there must be a corresponding appropriation in the form of an
ordinance duly passed by the Sangguniang Bayan before any money of the
municipality may be paid out. In the case at bar, it has not been shown that the
Sangguniang Bayan has passed an ordinance to this effect.
Furthermore, Section 15, Rule 39 of the New Rules of Court, outlines the procedure for
the enforcement of money judgment:
(a) By levying on all the property of the debtor, whether real or
personal, not otherwise exempt from execution, or only on such part
of the property as is sufficient to satisfy the judgment and accruing
cost, if he has more than sufficient property for the purpose;
(b) By selling the property levied upon;
(c) By paying the judgment-creditor so much of the proceeds as will
satisfy the judgment and accruing costs; and
(d) By delivering to the judgment-debtor the excess, if any, unless
otherwise, directed by judgment or order of the court.
The foregoing has not been followed in the case at bar.
ACCORDINGLY, the petition is granted and the order of respondent judge, dated July
27, 1982, granting issuance of a writ of execution; the alias writ of execution, dated July
27, 1982; and the order of respondent judge, dated September 13, 1982, directing the
Provincial Treasurer of Bulacan and the Municipal Treasurer of San Miguel, Bulacan to
comply with the money judgments, are SET ASIDE; and respondents are hereby
enjoined from implementing the writ of execution.
SO ORDERED.

14
 F. G.R. No. L-24440 March 28, 1968
THE PROVINCE OF ZAMBOANGA DEL NORTE, plaintiff-appellee,
vs.
CITY OF ZAMBOANGA, SECRETARY OF FINANCE and COMMISSIONER OF
INTERNAL REVENUE,defendants-appellants.
Fortugaleza, Lood, Sarmiento, M. T. Yap & Associates for plaintiff-appellee.
Office of the Solicitor General for defendants-appellants.
BENGZON, J.P., J.:
Prior to its incorporation as a chartered city, the Municipality of Zamboanga used
to be the provincial capital of the then Zamboanga Province. On October 12, 1936,
Commonwealth Act 39 was approved converting the Municipality of Zamboanga into
Zamboanga City. Sec. 50 of the Act also provided that
Buildings and properties which the province shall abandon upon the
transfer of the capital to another place will be acquired and paid for by the City
of Zamboanga at a price to be fixed by the Auditor General.
The properties and buildings referred to consisted of 50 lots and some buildings
constructed thereon, located in the City of Zamboanga and covered individually by
Torrens certificates of title in the name of Zamboanga Province. As far as can be
gleaned from the records, 1 said properties were being utilized as follows
No. of Lots Use
1 ................................................ Capitol Site
3 ................................................ School Site
3 ................................................ Hospital Site
3 ................................................ Leprosarium
1 ................................................ Curuan School
1 ................................................ Trade School
2 ................................................ Burleigh School
2 ................................................ High School Playground
9 ................................................ Burleighs
1 ................................................ Hydro-Electric Site (Magay)
1 ................................................ San Roque
23 ................................................ vacant
It appears that in 1945, the capital of Zamboanga Province was transferred to
Dipolog. 2 Subsequently, or on June 16, 1948, Republic Act 286 was approved creating
the municipality of Molave and making it the capital of Zamboanga Province.
On May 26, 1949, the Appraisal Committee formed by the Auditor General,
pursuant to Commonwealth Act 39, fixed the value of the properties and buildings in
question left by Zamboanga Province in Zamboanga City at P1,294,244.00. 3
On June 6, 1952, Republic Act 711 was approved dividing the province of
Zamboanga into two (2): Zamboanga del Norte and Zamboanga del Sur. As to how the
assets and obligations of the old province were to be divided between the two new
ones, Sec. 6 of that law provided:
Upon the approval of this Act, the funds, assets and other properties
and the obligations of the province of Zamboanga shall be divided equitably
between the Province of Zamboanga del Norte and the Province of
Zamboanga del Sur by the President of the Philippines, upon the
recommendation of the Auditor General.
Pursuant thereto, the Auditor General, on January 11, 1955, apportioned the
assets and obligations of the defunct Province of Zamboanga as follows: 54.39% for
Zamboanga del Norte and 45.61% for Zamboanga del Sur. Zamboanga del Norte
therefore became entitled to 54.39% of P1,294,244.00, the total value of the lots and
buildings in question, or P704,220.05 payable by Zamboanga City.
On March 17, 1959, the Executive Secretary, by order of the President, issued a
ruling 4 holding that Zamboanga del Norte had a vested right as owner (should be co-
owner pro-indiviso) of the properties mentioned in Sec. 50 of Commonwealth Act 39,
and is entitled to the price thereof, payable by Zamboanga City. This ruling revoked the
previous Cabinet Resolution of July 13, 1951 conveying all the said 50 lots and
buildings thereon to Zamboanga City for P1.00, effective as of 1945, when the
provincial capital of the then Zamboanga Province was transferred to Dipolog.
The Secretary of Finance then authorized the Commissioner of Internal Revenue
to deduct an amount equal to 25% of the regular internal revenue allotment for the City
of Zamboanga for the quarter ending March 31, 1960, then for the quarter ending June
30, 1960, and again for the first quarter of the fiscal year 1960-1961. The deductions,
all aggregating P57,373.46, was credited to the province of Zamboanga del Norte, in
partial payment of the P764,220.05 due it.
However, on June 17, 1961, Republic Act 3039 was approved amending Sec. 50
of Commonwealth Act 39 by providing that
All buildings, properties and assets belonging to the former province of
Zamboanga and located within the City of Zamboanga are hereby transferred,
free of charge, in favor of the said City of Zamboanga. (Stressed for
emphasis).
Consequently, the Secretary of Finance, on July 12, 1961, ordered the
Commissioner of Internal Revenue to stop from effecting further payments to
Zamboanga del Norte and to return to Zamboanga City the sum of P57,373.46 taken
from it out of the internal revenue allotment of Zamboanga del Norte. Zamboanga City
admits that since the enactment of Republic Act 3039, P43,030.11 of the P57,373.46
has already been returned to it.
This constrained plaintiff-appellee Zamboanga del Norte to file on March 5, 1962,
a complaint entitled "Declaratory Relief with Preliminary Mandatory Injunction" in the
Court of First Instance of Zamboanga del Norte against defendants-appellants
Zamboanga City, the Secretary of Finance and the Commissioner of Internal Revenue.
15
It was prayed that: (a) Republic Act 3039 be declared unconstitutional for depriving
plaintiff province of property without due process and just compensation; (b) Plaintiff's
rights and obligations under said law be declared; (c) The Secretary of Finance and the
Internal Revenue Commissioner be enjoined from reimbursing the sum of P57,373.46
to defendant City; and (d) The latter be ordered to continue paying the balance of
P704,220.05 in quarterly installments of 25% of its internal revenue allotments.
On June 4, 1962, the lower court ordered the issuance of preliminary injunction
as prayed for. After defendants filed their respective answers, trial was held. On August
12, 1963, judgment was rendered, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered declaring Republic Act No.
3039 unconstitutional insofar as it deprives plaintiff Zamboanga del Norte of its
private properties, consisting of 50 parcels of land and the improvements
thereon under certificates of title (Exhibits "A" to "A-49") in the name of the
defunct province of Zamboanga; ordering defendant City of Zamboanga to pay
to the plaintiff the sum of P704,220.05 payment thereof to be deducted from its
regular quarterly internal revenue allotment equivalent to 25% thereof every
quarter until said amount shall have been fully paid; ordering defendant
Secretary of Finance to direct defendant Commissioner of Internal Revenue to
deduct 25% from the regular quarterly internal revenue allotment for defendant
City of Zamboanga and to remit the same to plaintiff Zamboanga del Norte
until said sum of P704,220.05 shall have been fully paid; ordering plaintiff
Zamboanga del Norte to execute through its proper officials the corresponding
public instrument deeding to defendant City of Zamboanga the 50 parcels of
land and the improvements thereon under the certificates of title (Exhibits "A"
to "A-49") upon payment by the latter of the aforesaid sum of P704,220.05 in
full; dismissing the counterclaim of defendant City of Zamboanga; and
declaring permanent the preliminary mandatory injunction issued on June 8,
1962, pursuant to the order of the Court dated June 4, 1962. No costs are
assessed against the defendants.
It is SO ORDERED.
Subsequently, but prior to the perfection of defendants' appeal, plaintiff province
filed a motion to reconsider praying that Zamboanga City be ordered instead to pay the
P704,220.05 in lump sum with 6% interest per annum. Over defendants' opposition, the
lower court granted plaintiff province's motion.
The defendants then brought the case before Us on appeal.
Brushing aside the procedural point concerning the property of declaratory relief
filed in the lower court on the assertion that the law had already been violated and that
plaintiff sought to give it coercive effect, since assuming the same to be true, the Rules
anyway authorize the conversion of the proceedings to an ordinary action, 5 We
proceed to the more important and principal question of the validity of Republic Act
3039.
The validity of the law ultimately depends on the nature of the 50 lots and
buildings thereon in question. For, the matter involved here is the extent of legislative
control over the properties of a municipal corporation, of which a province is one. The
principle itself is simple: If the property is owned by the municipality (meaning municipal
corporation) in its public and governmental capacity, the property is public and
Congress has absolute control over it. But if the property is owned in its private or
proprietary capacity, then it is patrimonial and Congress has no absolute control. The
municipality cannot be deprived of it without due process and payment of just
compensation. 6
The capacity in which the property is held is, however, dependent on the use to
which it is intended and devoted. Now, which of two norms, i.e., that of the Civil Code or
that obtaining under the law of Municipal Corporations, must be used in classifying the
properties in question?
The Civil Code classification is embodied in its Arts. 423 and 424 which
provide:1wph1.t
ART. 423. The property of provinces, cities, and municipalities is divided
into property for public use and patrimonial property.
ART. 424. Property for public use, in the provinces, cities, and
municipalities, consists of the provincial roads, city streets, municipal streets,
the squares, fountains, public waters, promenades, and public works for public
service paid for by said provinces, cities, or municipalities.
All other property possessed by any of them is patrimonial and shall be
governed by this Code, without prejudice to the provisions of special laws.
(Stressed for emphasis).
Applying the above cited norm, all the properties in question, except the two (2)
lots used as High School playgrounds, could be considered as patrimonial properties of
the former Zamboanga province. Even the capital site, the hospital and leprosarium
sites, and the school sites will be considered patrimonial for they are not for public use.
They would fall under the phrase "public works for public service" for it has been held
that under the ejusdem generis rule, such public works must be for free and
indiscriminate use by anyone, just like the preceding enumerated properties in the first
paragraph of Art 424. 7 The playgrounds, however, would fit into this category.
This was the norm applied by the lower court. And it cannot be said that its
actuation was without jurisprudential precedent for in Municipality of Catbalogan v.
Director of Lands, 8 and in Municipality of Tacloban v. Director of Lands, 9 it was held
that the capitol site and the school sites in municipalities constitute their patrimonial
properties. This result is understandable because, unlike in the classification regarding
State properties, properties for public service in the municipalities are not classified as
public. Assuming then the Civil Code classification to be the chosen norm, the lower
court must be affirmed except with regard to the two (2) lots used as playgrounds.
On the other hand, applying the norm obtaining under the principles constituting
the law of Municipal Corporations, all those of the 50 properties in question which are
devoted to public service are deemed public; the rest remain patrimonial. Under this
norm, to be considered public, it is enough that the property be held and, devoted for
governmental purposes like local administration, public education, public health, etc. 10
Supporting jurisprudence are found in the following cases: (1) HINUNANGAN V.
DIRECTOR OF LANDS, 11where it was stated that "... where the municipality has
occupied lands distinctly for public purposes, such as for the municipal court house, the
public school, the public market, or other necessary municipal building, we will, in the
absence of proof to the contrary, presume a grant from the States in favor of the
municipality; but, as indicated by the wording, that rule may be invoked only as to
property which is used distinctly for public purposes...." (2) VIUDA DE TANTOCO V.
MUNICIPAL COUNCIL OF ILOILO 12 held that municipal properties necessary for
16
governmental purposes are public in nature. Thus, the auto trucks used by the
municipality for street sprinkling, the police patrol automobile, police stations and ..................................... ..................................... Leprosariu
11943 927
concrete structures with the corresponding lots used as markets were declared exempt . . m
from execution and attachment since they were not patrimonial properties. (3)
MUNICIPALITY OF BATANGAS VS. CANTOS 13 held squarely that a municipal lot ..................................... ..................................... Leprosariu
11944 925
which had always been devoted to school purposes is one dedicated to public use and . . m
is not patrimonial property of a municipality.
..................................... ..................................... Burleigh
5557 170
Following this classification, Republic Act 3039 is valid insofar as it affects the . . School
lots used as capitol site, school sites and its grounds, hospital and leprosarium sites
and the high school playground sites a total of 24 lots since these were held by ..................................... ..................................... Burleigh
5562 180
the former Zamboanga province in its governmental capacity and therefore are subject . . School
to the absolute control of Congress. Said lots considered as public property are the
following: ..................................... .....................................
5565 172-B Burleigh
. .
TCT
Numbe Lot Number Use ..................................... .....................................
5570 171-A Burleigh
r . .

..................................... ..................................... ..................................... .....................................

2200 4-B Capitol Site 5571 172-C Burleigh
. . . .

..................................... ..................................... ..................................... .....................................

2816 149 School Site 5572 174 Burleigh
. . . .

..................................... ..................................... Hospital ..................................... .....................................

3281 1224 5573 178 Burleigh
. . Site . .

..................................... ..................................... Hospital ..................................... .....................................

3282 1226 5585 171-B Burleigh
. . Site . .

..................................... ..................................... Hospital ..................................... .....................................

3283 1225 5586 173 Burleigh
. . Site . .

..................................... ..................................... ..................................... .....................................

3748 434-A-1 School Site 5587 172-A Burleigh
. . . .

..................................... ..................................... We noticed that the eight Burleigh lots above described are adjoining each other
5406 171 School Site and in turn are between the two lots wherein the Burleigh schools are built, as per
. .
records appearing herein and in the Bureau of Lands. Hence, there is sufficient basis
..................................... ..................................... High School for holding that said eight lots constitute the appurtenant grounds of the Burleigh
5564 168 schools, and partake of the nature of the same.
. . Play-ground
Regarding the several buildings existing on the lots above-mentioned, the
..................................... 157 & ..................................... Trade
5567 records do not disclose whether they were constructed at the expense of the former
. 158 . School
Province of Zamboanga. Considering however the fact that said buildings must have
..................................... ..................................... High School been erected even before 1936 when Commonwealth Act 39 was enacted and the
5583 167 further fact that provinces then had no power to authorize construction of buildings such
. . Play-ground
as those in the case at bar at their own expense, 14 it can be assumed that said
..................................... (O.C.T. ..................................... Curuan buildings were erected by the National Government, using national funds. Hence,
6181 Congress could very well dispose of said buildings in the same manner that it did with
. ) . School
the lots in question.
..................................... ..................................... Leprosariu
11942 926
. . m

17
 But even assuming that provincial funds were used, still the buildings constitute
mere accessories to the lands, which are public in nature, and so, they follow the nature 5590 ...................................... 189 ...................................... "
of said lands, i.e., public. Moreover, said buildings, though located in the city, will not be
for the exclusive use and benefit of city residents for they could be availed of also by 5591 ...................................... 192 ...................................... "
the provincial residents. The province then and its successors-in-interest are not
5592 ...................................... 193 ...................................... "
really deprived of the benefits thereof.
But Republic Act 3039 cannot be applied to deprive Zamboanga del Norte of its 5593 ...................................... 185 ...................................... "
share in the value of the rest of the 26 remaining lots which are patrimonial properties
since they are not being utilized for distinctly, governmental purposes. Said lots are: 7379 ...................................... 4147 ...................................... "

TCT Number
5577 ...................................... 177
13198 ...................................... 127-0 ...................................... San Roque
5569 ...................................... 169
5558 ...................................... 175
5559 ...................................... 188
5560 ...................................... 183
5561 ...................................... 186
5563 ...................................... 191
5566 ...................................... 176
5568 ...................................... 179
5574 ...................................... 196
5575 ...................................... 181-A ......................................
5576 ...................................... 181-B ......................................
5578 ...................................... 182
5579 ...................................... 197
5580 ...................................... 195
5581 ...................................... 159-B ......................................
5582 ...................................... 194
5584 ...................................... 190
5588 ...................................... 184
5589 ...................................... 187
Lot Number
...................................... Mydro, Magay
...................................... Burleigh
...................................... Vacant
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
Use Moreover, the fact that these 26 lots are registered strengthens the proposition
that they are truly private in nature. On the other hand, that the 24 lots used for
governmental purposes are also registered is of no significance since registration
cannot convert public property to private. 16
We are more inclined to uphold this latter view. The controversy here is more
15 along the domains of the Law of Municipal Corporations State vs. Province than
along that of Civil Law. Moreover, this Court is not inclined to hold that municipal
property held and devoted to public service is in the same category as ordinary private
property. The consequences are dire. As ordinary private properties, they can be levied
" upon and attached. They can even be acquired thru adverse possession all these to
the detriment of the local community. Lastly, the classification of properties other than
" those for public use in the municipalities as patrimonial under Art. 424 of the Civil Code
is "... without prejudice to the provisions of special laws." For purpose of this article,
" the principles, obtaining under the Law of Municipal Corporations can be considered as
"special laws". Hence, the classification of municipal property devoted for distinctly
" governmental purposes as public should prevail over the Civil Code classification in this
particular case.
"
Defendants' claim that plaintiff and its predecessor-in-interest are "guilty of laches
" is without merit. Under Commonwealth Act 39, Sec. 50, the cause of action in favor of
the defunct Zamboanga Province arose only in 1949 after the Auditor General fixed the
" value of the properties in question. While in 1951, the Cabinet resolved transfer said
properties practically for free to Zamboanga City, a reconsideration thereof was
" seasonably sought. In 1952, the old province was dissolved. As successor-in-interest to
more than half of the properties involved, Zamboanga del Norte was able to get a
"
reconsideration of the Cabinet Resolution in 1959. In fact, partial payments were
" effected subsequently and it was only after the passage of Republic Act 3039 in 1961
that the present controversy arose. Plaintiff brought suit in 1962. All the foregoing,
" negative laches.
It results then that Zamboanga del Norte is still entitled to collect from the City of
"
Zamboanga the former's 54.39% share in the 26 properties which are patrimonial in
" nature, said share to computed on the basis of the valuation of said 26 properties as
contained in Resolution No. 7, dated March 26, 1949, of the Appraisal Committee
" formed by the Auditor General.
Plaintiff's share, however, cannot be paid in lump sum, except as to the
" P43,030.11 already returned to defendant City. The return of said amount to defendant
was without legal basis. Republic Act 3039 took effect only on June 17, 1961 after a
"
partial payment of P57,373.46 had already been made. Since the law did not provide
" for retroactivity, it could not have validly affected a completed act. Hence, the amount of
P43,030.11 should be immediately returned by defendant City to plaintiff province. The

18
remaining balance, if any, in the amount of plaintiff's 54.39% share in the 26 lots should
then be paid by defendant City in the same manner originally adopted by the Secretary
of Finance and the Commissioner of Internal Revenue, and not in lump sum. Plaintiff's
prayer, particularly pars. 5 and 6, read together with pars. 10 and 11 of the first cause
of action recited in the complaint 17clearly shows that the relief sought was merely the
continuance of the quarterly payments from the internal revenue allotments of
defendant City. Art. 1169 of the Civil Code on reciprocal obligations invoked by plaintiff
to justify lump sum payment is inapplicable since there has been so far in legal
contemplation no complete delivery of the lots in question. The titles to the registered
lots are not yet in the name of defendant Zamboanga City.
WHEREFORE, the decision appealed from is hereby set aside and another
judgment is hereby entered as follows:.
(1) Defendant Zamboanga City is hereby ordered to return to plaintiff Zamboanga
del Norte in lump sum the amount of P43,030.11 which the former took back from the
latter out of the sum of P57,373.46 previously paid to the latter; and
(2) Defendants are hereby ordered to effect payments in favor of plaintiff of
whatever balance remains of plaintiff's 54.39% share in the 26 patrimonial properties,
after deducting therefrom the sum of P57,373.46, on the basis of Resolution No. 7
dated March 26, 1949 of the Appraisal Committee formed by the Auditor General, by
way of quarterly payments from the allotments of defendant City, in the manner
originally adopted by the Secretary of Finance and the Commissioner of Internal
Revenue. No costs. So ordered.
Reyes, J.B.L., Actg. C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and
Fernando, JJ., concur.
Concepcion, C.J., is on leave.

19
 G. G.R. No. L-61311 September 2l, 1987
FELICIDAD VILLANUEVA, FERNANDO CAISIP, ANTONIO LIANG, FELINA
MIRANDA, RICARDO PUNO, FLORENCIO LAXA, and RENE OCAMPO, petitioners,
vs.
HON. MARIANO CASTAEDA, JR., Presiding Judge of the Court of First Instance
of Pampanga, Branch III, VICENTE A. MACALINO, Officer-in-Charge, Office of the
Mayor, San Fernando, Pampanga, respondents.
CRUZ, J.:
There is in the vicinity of the public market of San Fernando, Pampanga, along
Mercado Street, a strip of land measuring 12 by 77 meters on which stands a
conglomeration of vendors stalls together forming what is commonly known as
a talipapa. This is the subject of the herein petition. The petitioners claim they have a
right to remain in and conduct business in this area by virtue of a previous authorization
granted to them by the municipal government. The respondents deny this and justify
the demolition of their stalls as illegal constructions on public property. At the
petitioners' behest, we have issued a temporary restraining order to preserve the status
quo between the parties pending our decision. 1 Now we shall rule on the merits.
This dispute goes back to November 7, 1961, when the municipal council of San
Fernando adopted Resolution No. 218 authorizing some 24 members of the
Fernandino United Merchants and Traders Association to construct permanent stags
and sell in the above-mentioned place. 2 The action was protested on November 10,
1961, in Civil Case No. 2040, where the Court of First Instance of Pampanga, Branch 2,
issued a writ of preliminary injunction that prevented the defendants from constructing
the said stalls until final resolution of the controversy. 3 On January 18, 1964, while this
case was pending, the municipal council of San Fernando adopted Resolution G.R. No.
29, which declared the subject area as "the parking place and as the public plaza of the
municipality, 4 thereby impliedly revoking Resolution No. 218, series of 1961. Four
years later, on November 2, 1968, Judge Andres C. Aguilar decided the aforesaid case
and held that the land occupied by the petitioners, being public in nature, was beyond
the commerce of man and therefore could not be the subject of private
occupancy. 5 The writ of preliminary injunction was made permanent. 6
The decision was apparently not enforced, for the petitioners were not evicted from the
place; in fact, according to then they and the 128 other persons were in 1971 assigned
specific areas or space allotments therein for which they paid daily fees to the municipal
government. 7 The problem appears to have festered for some more years under a
presumably uneasy truce among the protagonists, none of whom made any move, for
some reason that does not appear in the record. Then, on January 12, 1982, the
Association of Concerned Citizens and Consumers of San Fernando filed a petition for
the immediate implementation of Resolution No. 29, to restore the subject property "to
its original and customary use as a public plaza. 8
Acting thereon after an investigation conducted by the municipal attorney, 9 respondent
Vicente A. Macalino, as officer-in-charge of the office of the mayor of San Fernando,
issued on June 14, 1982, a resolution requiring the municipal treasurer and the
municipal engineer to demolish the stalls in the subject place beginning July 1,
1982. 10The reaction of the petitioners was to file a petition for prohibition with the
Court of First Instance of Pampanga, docketed as Civil Case No. 6470, on June 26,
1982. The respondent judge denied the petition on July 19, 1982, 11 and the motion for
reconsideration on August 5, 1982, 12 prompting the petitioners to come to this Court
on certiorari to challenge his decision. 13
As required, respondent Macalino filed his comment 14 on the petition, and the
petitioners countered with their reply. 15 In compliance with our resolution of February
2, 1983, the petitioners submitted their memorandum 16 and respondent Macalino, for
his part, asked that his comment be considered his memorandum. 17 On July 28, 1986,
the new officer-in-charge of the office of the mayor of San Fernando, Paterno S.
Guevarra, was impleaded in lieu of Virgilio Sanchez, who had himself earlier replaced
the original respondent Macalino. 18
After considering the issues and the arguments raised by the parties in their respective
pleadings, we rule for the respondents. The petition must be dismissed.
There is no question that the place occupied by the petitioners and from which they are
sought to be evicted is a public plaza, as found by the trial court in Civil Case No. 2040.
This finding was made after consideration of the antecedent facts as especially
established by the testimony of former San Fernando Mayor Rodolfo Hizon, who later
became governor of Pampanga, that the National Planning Commission had reserved
the area for a public plaza as early as 1951. This intention was reiterated in 1964
through the adoption of Resolution No. 29. 19
It does not appear that the decision in this case was appealed or has been reversed. In
Civil Case G.R. No. 6740, which is the subject of this petition, the respondent judge
saw no reason to disturb the finding in Civil Case No. 2040 and indeed used it as a
basis for his own decision sustaining the questioned order. 20
The basic contention of the petitioners is that the disputed area is under lease to them
by virtue of contracts they had entered into with the municipal government, first in 1961
insofar as the original occupants were concerned, and later with them and the other
petitioners by virtue of the space allocations made in their favor in 1971 for which they
saw they are paying daily fees. 21 The municipal government has denied making such
agreements. In any case, they argue, since the fees were collected daily, the leases,
assuming their validity, could be terminated at will, or any day, as the claimed rentals
indicated that the period of the leases was from day to day. 22
The parties belabor this argument needlessly.
A public plaza is beyond the commerce of man and so cannot be the subject of lease or
any other contractual undertaking. This is elementary. Indeed, this point was settled as
early as in Municipality of Cavite vs. Rojas, 23decided in 1915, where the Court
declared as null and void the lease of a public plaza of the said municipality in favor of
a private person.
Justice Torres said in that case:
According to article 344 of the Civil Code: "Property for public use in
provinces and in towns comprises the provincial and town roads, the
squares, streets, fountains, and public waters, the promenades, and
public works of general service supported by said towns or provinces.
The said Plaza Soledad being a promenade for public use, the
municipal council of Cavite could not in 1907 withdraw or exclude
from public use a portion thereof in order to lease it for the sole
benefit of the defendant Hilaria Rojas. In leasing a portion of said
plaza or public place to the defendant for private use the plaintiff
20
 municipality exceeded its authority in the exercise of its powers by
executing a contract over a thing of which it could not dispose, nor is
it empowered so to do.
The Civil Code, article 1271, prescribes that everything which is not
outside the commerce of man may be the object of a contract, and
plazas and streets are outside of this commerce, as was decided by
the supreme court of Spain in its decision of February 12, 1895,
which says: "communal things that cannot be sold because they are
by their very nature outside of commerce are those for public use,
such as the plazas, streets, common lands, rivers, fountains, etc."
Therefore, it must be concluded that the contract, Exhibit C, whereby
the municipality of Cavite leased to Hilaria Rojas a portion of the
Plaza Soledad is null and void and of no force or effect, because it is
contrary to the law and the thing leased cannot be the object of a was
held that the City of contract.
In Muyot vs. de la Fuente, 24 it was held that the City of Manila could not lease a portion
of a public sidewalk on Plaza Sta. Cruz, being likewise beyond the commerce of man.
Echoing Rojas, the decision said:
Appellants claim that they had obtained permit from the present of
the City of Manila, to connect booths Nos. 1 and 2, along the
premises in question, and for the use of spaces where the booths
were constructed, they had paid and continued paying the
corresponding rentals. Granting this claim to be true, one should not
entertain any doubt that such permit was not legal, because the City
of Manila does not have any power or authority at all to lease a
portion of a public sidewalk. The sidewalk in question, forming part of
the public plaza of Sta. Cruz, could not be a proper subject matter of
the contract, as it was not within the commerce of man (Article 1347,
new Civil Code, and article 1271, old Civil Code). Any contract
entered into by the City of Manila in connection with the sidewalk,
is ipso facto null and ultra vires. (Municipality of Cavite vs. Roxas, et
a1, 30 Phil. 603.) The sidewalk in question was intended for and was
used by the public, in going from one place to another. "The streets
and public places of the city shall be kept free and clear for the use of
the public, and the sidewalks and crossings for the pedestrians, and
the same shall only be used or occupied for other purpose as
provided by ordinance or regulation; ..." (Sec. 1119, Revised
Ordinances of the City of Manila.) The booths in question served as
fruit stands for their owners and often, if not always, blocked the fire
passage of pedestrians who had to take the plaza itself which used to
be clogged with vehicular traffic.
Exactly in point is Espiritu vs. Municipal Council of Pozorrubio, 25 where the Supreme
Court declared:
There is absolutely no question that the town plaza cannot be used
for the construction of market stalls, specially of residences, and that
such structures constitute a nuisance subject to abatement according
to law. Town plazas are properties of public dominion, to be devoted
to public use and to be made available to the public in general They
are outside the common of man and cannot be disposed of or even
leased by the municipality to private parties.
Applying this well-settled doctrine, we rule that the petitioners had no right in the first
place to occupy the disputed premises and cannot insist in remaining there now on the
strength of their alleged lease contracts. They should have realized and accepted this
earlier, considering that even before Civil Case No. 2040 was decided, the
municipalcouncil of San Fernando had already adopted Resolution No. 29, series of
1964, declaring the area as the parking place and public plaza of the municipality.
It is the decision in Civil Case No. 2040 and the said resolution of the municipal council
of San Fernando that respondent Macalino was seeking to enforce when he ordered
the demolition of the stags constructed in the disputed area. As officer-in-charge of the
office of the mayor, he had the duty to clear the area and restore it to its intended use
as a parking place and public plaza of the municipality of San Fernando, conformably to
the aforementioned orders from the court and the council. It is, therefore, not correct to
say that he had acted without authority or taken the law into his hands in issuing his
order.
Neither can it be said that he acted whimsically in exercising his authority for it has
been established that he directed the demolition of the stalls only after, upon his
instructions, the municipal attorney had conducted an investigation, to look into the
complaint filed by the Association of Concerned Citizens and Consumers of San
Fernando. 26 There is evidence that the petitioners were notified of this hearing, 27which
they chose to disregard. Photographs of the disputed area, 28 which does look
congested and ugly, show that the complaint was valid and that the area really needed
to be cleared, as recommended by the municipal attorney.
The Court observes that even without such investigation and recommendation, the
respondent mayor was justified in ordering the area cleared on the strength alone of its
status as a public plaza as declared by the judicial and legislative authorities. In calling
first for the investigation (which the petitioner saw fit to boycott), he was just
scrupulously paying deference to the requirements of due process, to remove an taint
of arbitrariness in the action he was caged upon to take.
Since the occupation of the place in question in 1961 by the original 24 stallholders
(whose number later ballooned to almost 200), it has deteriorated increasingly to the
great prejudice of the community in general. The proliferation of stags therein, most of
them makeshift and of flammable materials, has converted it into a veritable fire trap,
which, added to the fact that it obstructs access to and from the public market itself, has
seriously endangered public safety. The filthy condition of the talipapa, where fish and
other wet items are sold, has aggravated health and sanitation problems, besides
pervading the place with a foul odor that has spread into the surrounding areas. The
entire place is unsightly, to the dismay and embarrassment of the inhabitants, who want
it converted into a showcase of the town of which they can all be proud. The vendors in
the talipapa have also spilled into the street and obstruct the flow of traffic, thereby
impairing the convenience of motorists and pedestrians alike. The regular stallholders
in the public market, who pay substantial rentals to the municipality, are deprived of a
sizable volume of business from prospective customers who are intercepted by
the talipapa vendors before they can reach the market proper. On top of all these, the
people are denied the proper use of the place as a public plaza, where they may spend
their leisure in a relaxed and even beautiful environment and civic and other communal
activities of the town can be held.
21
The problems caused by the usurpation of the place by the petitioners are covered by
the police power as delegated to the municipality under the general welfare
clause. 29 This authorizes the municipal council "to enact such ordinances and make
such regulations, not repugnant to law, as may be necessary to carry into effect and
discharge the powers and duties conferred upon it by law and such as shall seem
necessary and proper to provide for the health and safety, promote the prosperity,
improve the morals, peace, good order, comfort, and convenience of the municipality
and the inhabitants thereof, and for the protection of property therein." This authority
was validly exercised in this casethrough the adoption of Resolution No. 29, series of
1964, by the municipal council of San Fernando.
Even assuming a valid lease of the property in dispute, the resolution could have
effectively terminated the agreement for it is settled that the police power cannot be
surrendered or bargained away through the medium of a contract. 30 In fact, every
contract affecting the public interest suffers a congenital infirmity in that it contains an
implied reservation of the police power as a postulate of the existing legal order. 31 This
power can be activated at any time to change the provisions of the contract, or even
abrogate it entirely, for the promotion or protection of the general welfare. Such an act
will not militate against the impairment clause, which is subject to and limited by the
paramount police power. 32
We hold that the respondent judge did not commit grave abuse of discretion in denying
the petition for prohibition. On the contrary, he acted correctly in sustaining the right and
responsibility of the mayor to evict the petitioners from the disputed area and clear it of
an the structures illegally constructed therein.
The Court feels that it would have been far more amiable if the petitioners themselves,
recognizing their own civic duty, had at the outset desisted from their original stance
and withdrawn in good grace from the disputed area to permit its peaceful restoration
as a public plaza and parking place for the benefit of the whole municipality. They
owned this little sacrifice to the community in general which has suffered all these many
years because of their intransigence. Regrettably, they have refused to recognize that
in the truly democratic society, the interests of the few should yield to those of the
greater number in deference to the principles that the welfare of the people is the
supreme law and overriding purpose. We do not see any altruism here. The traditional
ties of sharing are absent here. What we find, sad to say, is a cynical disdaining of the
spirit of "bayanihan," a selfish rejection of the cordial virtues of "pakikisama " and
"pagbibigayan" which are the hallmarks of our people.
WHEREFORE, the petition is DISMISSED. The decision dated July 19, 1982, and the
order-dated August 5, 1982, are AFFIRMED. The temporary restraining order dated
August 9, 1982, is LIFTED. This decision is immediately executory. Costs against the
petitioners.
SO ORDERED.

22
 H. G.R. No. L-66575 September 30, 1986 belonging to the public domain which is not susceptible to private appropriation and
acquisitive prescription, and as a public water, it cannot be registered under the Torrens
ADRIANO MANECLANG, JULIETA, RAMONA, VICTOR, ANTONINA, LOURDES,
System in the name of any individual [Diego v. Court of Appeals, 102 Phil. 494;
TEODORO and MYRNA, all surnamed MANECLANG, petitioners,
Mangaldan v. Manaoag, 38 Phil. 4551; and considering further that neither the mere
vs. construction of irrigation dikes by the National Irrigation Administration which prevented
THE INTERMEDIATE APPELLATE COURT and ALFREDO MAZA, CORLETO
the water from flowing in and out of the subject fishpond, nor its conversion into a
CASTRO, SALOME RODRIGUEZ, EDUCARDO CUISON, FERNANDO ZARCILLA,
fishpond, alter or change the nature of the creek as a property of the public domain, the
MARIANO GABRIEL, NICOMEDES CORDERO, CLETO PEDROZO, FELIX SALARY
Court finds the Compromise Agreement null and void and of no legal effect, the same
and JOSE PANLILIO, respondents.
being contrary to law and public policy.
Loreto Novisteros for petitioners. The finding that the subject body of water is a creek belonging to the public domain is a
Corleto R. Castro for respondents. factual determination binding upon this Court. The Municipality of Bugallon, acting thru
its duly-constituted municipal council is clothed with authority to pass, as it did the two
resolutions dealing with its municipal waters, and it cannot be said that petitioners were
FERNAN, J.: deprived of their right to due process as mere publication of the notice of the public
bidding suffices as a constructive notice to the whole world.
Petitioners Adriano Maneclang, et. al. filed before the then Court of First Instance of
Pangasinan, Branch XI a complaint for quieting of title over a certain fishpond located IN VIEW OF THE FOREGOING, the Court Resolved to set aside the Compromise
within the four [41 parcels of land belonging to them situated in Barrio Salomague, Agreement and declare the same null and void for being contrary to law and public
Bugallon, Pangasinan, and the annulment of Resolutions Nos. 38 and 95 of the policy. The Court further resolved to DISMISS the instant petition for lack of merit.
Municipal Council of Bugallon Pangasinan. The trial court dismissed the complaint in a
decision dated August 15, 1975 upon a finding that the body of water traversing the
titled properties of petitioners is a creek constituting a tributary of the Agno River;
therefore public in nature and not subject to private appropriation. The lower court
likewise held that Resolution No. 38, ordering an ocular inspection of the Cayangan
Creek situated between Barrios Salomague Sur and Salomague Norte, and Resolution
No. 95 authorizing public bidding for the lease of all municipal ferries and fisheries,
including the fishpond under consideration, were passed by respondents herein as
members of the Municipal Council of Bugallon, Pangasinan in the exercise of their
legislative powers.
Petitioners appealed said decision to the Intermediate Appellate Court, which affirmed
the same on April 29, 1983. Hence, this petition for review on certiorari.
Acting on the petition, the Court required the respondents to comment thereon.
However, before respondents could do so, petitioners manifested that for lack of
interest on the part of respondent Alfredo Maza, the awardee in the public bidding of
the fishpond, the parties desire to amicably settle the case by submitting to the Court a
Compromise Agreement praying that judgment be rendered recognizing the ownership
of petitioners over the land the body of water found within their titled properties, stating
therein, among other things, that "to pursue the case, the same will not amount to any
benefit of the parties, on the other hand it is to the advantage and benefit of the
municipality if the ownership of the land and the water found therein belonging to
petitioners be recognized in their favor as it is now clear that after the National Irrigation
Administration [NIA] had built the dike around the land, no water gets in or out of the
land. 1
The stipulations contained in the Compromise Agreement partake of the nature of an
adjudication of ownership in favor of herein petitioners of the fishpond in dispute, which,
as clearly found by the lower and appellate courts, was originally a creek forming a
tributary of the Agno River. Considering that as held in the case of Mercado vs.
Municipal President of Macabebe, 59 Phil. 592 [1934], a creek, defined as a recess or
arm extending from a river and participating in the ebb and flow of the sea, is a property

23
 I. G.R. No. L-57461 September 11, 1987
THE DIRECTOR OF LANDS, petitioner,
vs.
MANILA ELECTRIC COMPANY and HON. RIZALINA BONIFACIO VERA, as
Presiding Judge, Court of First Instance of Rizal, Pasig, Branch
XXIII, respondents.
CORTES, J.:
This is an appeal by certiorari of a decision of the respondent Judge in Land
Registration Case No. N-10317 LRC Record No. N-54803 entitled "In Re: Application
for Registration of Title, Manila Electric Company, applicant," dated May 29, 1981.
The facts are not disputed. Manila Electric Company filed an amended application for
registration of a parcel of land located in Taguig, Metro Manila on December 4, 1979.
On August 17, 1976, applicant acquired the land applied for registration by purchase
from Ricardo Natividad (Exhibit E) who in turn acquired the same from his father
Gregorio Natividad as evidenced by a Deed of Original Absolute Sale executed on
December 28, 1970 (Exhibit E). Applicant's predecessors-in-interest have possessed
the property under the concept of an owner for more than 30 years. The property was
declared for taxation purposes under the name of the applicant (Exhibit 1) and the
taxes due thereon have been paid (Exhibits J and J-1).
On May 29, 1981 respondent Judge rendered a decision ordering the registration of the
property in the name of the private respondent. The Director of Lands interposed this
petition raising the issue of whether or not a corporation may apply for registration of
title to land. After comments were filed by the respondents, the Court gave the petition
due course. The legal issue raised by the petitioner Director of Lands has been
squarely dealt with in two recent cases (The Director of Lands v. Intermediate Appellate
Court and Acme Plywood & Veneer Co., Inc., etc., No. L-73002 (December 29, 1986),
146 SCRA 509. The Director of Lands v. Hon. Bengzon and Dynamarine Corporation,
etc., No. 54045 (July 28, 1987)], and resolved in the affirmative. There can be no
different answer in the case at bar.
In the Acme decision, this Court upheld the doctrine that open, exclusive and
undisputed possession of alienable public land for the period prescribed by law creates
the legal fiction whereby the land, upon completion of the requisite period ipso jure and
without the need of judicial or other sanction, ceases to be public land and becomes
private property.
As the Court said in that case:
Nothing can more clearly demonstrate the logical inevitability of
considering possession of public land which is of the character and
duration prescribed by statute as the equivalent of an express grant
from the State than the dictum of the statute itself that the
possessor(s) "... shall be conclusively presumed to have performed
all the conditions essential to a Government grant and shall be
entitled to a certificate of title .... " No proof being admissible to
overcome a conclusive presumption, confirmation proceedings would
in truth be little more than a formality, at the most limited to
ascertaining whether the possession claimed is of the required
character and length of time; and registration thereunder would not
confer title, but simply recognize a title already vested. The
proceedings would not originallyconvert the land from public to
private land, but only confirm such a conversion already affected (sic)
from the moment the required period of possession became
complete.
Coming to the case at bar, if the land was already private at the time Meralco bought it
from Natividad, then the prohibition in the 1973 Constitution against corporations
holding alienable lands of the public domain except by lease (1973 Const., Art. XIV,
See. 11) does not apply.
Petitioner, however, contends that a corporation is not among those that may apply for
confirmation of title under Section 48 of Commonwealth Act No. 141, the Public Land
Act.
As ruled in the Acme case, the fact that the confirmation proceedings were instituted by
a corporation is simply another accidental circumstance, "productive of a defect hardly
more than procedural and in nowise affecting the substance and merits of the right of
ownership sought to be confirmed in said proceedings." Considering that it is not
disputed that the Natividads could have had their title confirmed, only a rigid
subservience to the letter of the law would deny private respondent the right to register
its property which was validly acquired.
WHEREFORE, the petition is DENIED. The questioned decision of the respondent
Judge is AFFIRMED.
SO ORDERED.
Fernan (Chairman), Feliciano and Bidin JJ., concur.
Separate Opinions
GUTIERREZ, JR., J.:, dissenting.
It is my view that Article XII, Section 3 of the Constitution which prohibits private
corporations or associations from holding alienable lands of the public domain except
by lease is circumvented when we allow corporations to apply for judicial confirmation
of imperfect titles to public land. I, therefore, reiterate my vote in Meralco v. Castro
Bartolome, (114 SCRA 799), Republic v. Villanueva and Iglesia ni Cristo (114 SCRA
875) and Director of Lands v. Intermediate Appellate Court (146 SCRA 509), and
accordingly, dissent from the majority opinion in this case.
Separate Opinions
GUTIERREZ, JR., J.:, dissenting.
It is my view that Article XII, Section 3 of the Constitution which prohibits private
corporations or associations from holding alienable lands of the public domain except
by lease is circumvented when we allow corporations to apply for judicial confirmation
of imperfect titles to public land. I, therefore, reiterate my vote in Meralco v. Castro
Bartolome, (114 SCRA 799), Republic v. Villanueva and Iglesia ni Cristo (114 SCRA
875) and Director of Lands v. Intermediate Appellate Court (146 SCRA 509), and
accordingly, dissent from the majority opinion in this case.
24
 J. G.R. No. 92013 July 25, 1990
SALVADOR H. LAUREL, petitioner,
vs.
RAMON GARCIA, as head of the Asset Privatization Trust, RAUL MANGLAPUS,
as Secretary of Foreign Affairs, and CATALINO MACARAIG, as Executive
Secretary, respondents.
G.R. No. 92047 July 25, 1990
DIONISIO S. OJEDA, petitioner,
vs.
EXECUTIVE SECRETARY MACARAIG, JR., ASSETS PRIVATIZATION TRUST
CHAIRMAN RAMON T. GARCIA, AMBASSADOR RAMON DEL ROSARIO, et al., as
members of the PRINCIPAL AND BIDDING COMMITTEES ON THE
UTILIZATION/DISPOSITION PETITION OF PHILIPPINE GOVERNMENT
PROPERTIES IN JAPAN, respondents.
Arturo M. Tolentino for petitioner in 92013.
GUTIERREZ, JR., J.:
These are two petitions for prohibition seeking to enjoin respondents, their
representatives and agents from proceeding with the bidding for the sale of the 3,179
square meters of land at 306 Roppongi, 5-Chome Minato-ku Tokyo, Japan scheduled
on February 21, 1990. We granted the prayer for a temporary restraining order effective
February 20, 1990. One of the petitioners (in G.R. No. 92047) likewise prayes for a writ
of mandamus to compel the respondents to fully disclose to the public the basis of their
decision to push through with the sale of the Roppongi property inspire of strong public
opposition and to explain the proceedings which effectively prevent the participation of
Filipino citizens and entities in the bidding process.
The oral arguments in G.R. No. 92013, Laurel v. Garcia, et al. were heard by the Court
on March 13, 1990. After G.R. No. 92047, Ojeda v. Secretary Macaraig, et al. was filed,
the respondents were required to file a comment by the Court's resolution dated
February 22, 1990. The two petitions were consolidated on March 27, 1990 when the
memoranda of the parties in the Laurel case were deliberated upon.
The Court could not act on these cases immediately because the respondents filed a
motion for an extension of thirty (30) days to file comment in G.R. No. 92047, followed
by a second motion for an extension of another thirty (30) days which we granted on
May 8, 1990, a third motion for extension of time granted on May 24, 1990 and a fourth
motion for extension of time which we granted on June 5, 1990 but calling the attention
of the respondents to the length of time the petitions have been pending. After the
comment was filed, the petitioner in G.R. No. 92047 asked for thirty (30) days to file a
reply. We noted his motion and resolved to decide the two (2) cases.
I approval and ratification between the parties. Instead, on August 11, 1986, President
The subject property in this case is one of the four (4) properties in Japan acquired by
the Philippine government under the Reparations Agreement entered into with Japan
on May 9, 1956, the other lots being:
(1) The Nampeidai Property at 11-24 Nampeidai-machi, Shibuya-ku, Tokyo which has
an area of approximately 2,489.96 square meters, and is at present the site of the
Philippine Embassy Chancery;
(2) The Kobe Commercial Property at 63 Naniwa-cho, Kobe, with an area of around
764.72 square meters and categorized as a commercial lot now being used as a
warehouse and parking lot for the consulate staff; and
(3) The Kobe Residential Property at 1-980-2 Obanoyama-cho, Shinohara, Nada-ku,
Kobe, a residential lot which is now vacant.
The properties and the capital goods and services procured from the Japanese
government for national development projects are part of the indemnification to the
Filipino people for their losses in life and property and their suffering during World War
II.
The Reparations Agreement provides that reparations valued at $550 million would be
payable in twenty (20) years in accordance with annual schedules of procurements to
be fixed by the Philippine and Japanese governments (Article 2, Reparations
Agreement). Rep. Act No. 1789, the Reparations Law, prescribes the national policy on
procurement and utilization of reparations and development loans. The procurements
are divided into those for use by the government sector and those for private parties in
projects as the then National Economic Council shall determine. Those intended for the
private sector shall be made available by sale to Filipino citizens or to one hundred
(100%) percent Filipino-owned entities in national development projects.
The Roppongi property was acquired from the Japanese government under the Second
Year Schedule and listed under the heading "Government Sector", through Reparations
Contract No. 300 dated June 27, 1958. The Roppongi property consists of the land and
building "for the Chancery of the Philippine Embassy" (Annex M-D to Memorandum for
Petitioner, p. 503). As intended, it became the site of the Philippine Embassy until the
latter was transferred to Nampeidai on July 22, 1976 when the Roppongi building
needed major repairs. Due to the failure of our government to provide necessary funds,
the Roppongi property has remained undeveloped since that time.
A proposal was presented to President Corazon C. Aquino by former Philippine
Ambassador to Japan, Carlos J. Valdez, to make the property the subject of a lease
agreement with a Japanese firm - Kajima Corporation which shall construct two (2)
buildings in Roppongi and one (1) building in Nampeidai and renovate the present
Philippine Chancery in Nampeidai. The consideration of the construction would be the
lease to the foreign corporation of one (1) of the buildings to be constructed in
Roppongi and the two (2) buildings in Nampeidai. The other building in Roppongi shall
then be used as the Philippine Embassy Chancery. At the end of the lease period, all
the three leased buildings shall be occupied and used by the Philippine government.
No change of ownership or title shall occur. (See Annex "B" to Reply to Comment) The
Philippine government retains the title all throughout the lease period and thereafter.
However, the government has not acted favorably on this proposal which is pending
Aquino created a committee to study the disposition/utilization of Philippine government
properties in Tokyo and Kobe, Japan through Administrative Order No. 3, followed by
Administrative Orders Numbered 3-A, B, C and D.
On July 25, 1987, the President issued Executive Order No. 296 entitling non-Filipino
citizens or entities to avail of separations' capital goods and services in the event of
25
sale, lease or disposition. The four properties in Japan including the Roppongi were
specifically mentioned in the first "Whereas" clause.
Amidst opposition by various sectors, the Executive branch of the government has
been pushing, with great vigor, its decision to sell the reparations properties starting
with the Roppongi lot. The property has twice been set for bidding at a minimum floor
price of $225 million. The first bidding was a failure since only one bidder qualified. The
second one, after postponements, has not yet materialized. The last scheduled bidding
on February 21, 1990 was restrained by his Court. Later, the rules on bidding were
changed such that the $225 million floor price became merely a suggested floor price.
The Court finds that each of the herein petitions raises distinct issues. The petitioner in
G.R. No. 92013 objects to the alienation of the Roppongi property to anyone while the
petitioner in G.R. No. 92047 adds as a principal objection the alleged unjustified bias of
the Philippine government in favor of selling the property to non-Filipino citizens and
entities. These petitions have been consolidated and are resolved at the same time for
the objective is the same - to stop the sale of the Roppongi property.
The petitioner in G.R. No. 92013 raises the following issues:
(1) Can the Roppongi property and others of its kind be alienated by the Philippine
Government?; and
(2) Does the Chief Executive, her officers and agents, have the authority and
jurisdiction, to sell the Roppongi property?
Petitioner Dionisio Ojeda in G.R. No. 92047, apart from questioning the authority of the
government to alienate the Roppongi property assails the constitutionality of Executive
Order No. 296 in making the property available for sale to non-Filipino citizens and
entities. He also questions the bidding procedures of the Committee on the Utilization
or Disposition of Philippine Government Properties in Japan for being discriminatory
against Filipino citizens and Filipino-owned entities by denying them the right to be
informed about the bidding requirements.
II
In G.R. No. 92013, petitioner Laurel asserts that the Roppongi property and the related
lots were acquired as part of the reparations from the Japanese government for
diplomatic and consular use by the Philippine government. Vice-President Laurel states
that the Roppongi property is classified as one of public dominion, and not of private
ownership under Article 420 of the Civil Code (See infra).
The petitioner submits that the Roppongi property comes under "property intended for
public service" in paragraph 2 of the above provision. He states that being one of public
dominion, no ownership by any one can attach to it, not even by the State. The
Roppongi and related properties were acquired for "sites for chancery, diplomatic, and
consular quarters, buildings and other improvements" (Second Year Reparations
Schedule). The petitioner states that they continue to be intended for a necessary
service. They are held by the State in anticipation of an opportune use. (Citing 3
Manresa 65-66). Hence, it cannot be appropriated, is outside the commerce of man, or
to put it in more simple terms, it cannot be alienated nor be the subject matter of
contracts (Citing Municipality of Cavite v. Rojas, 30 Phil. 20 [1915]). Noting the non-use
of the Roppongi property at the moment, the petitioner avers that the same remains
property of public dominion so long as the government has not used it for other
purposes nor adopted any measure constituting a removal of its original purpose or
use.
The respondents, for their part, refute the petitioner's contention by saying that the
subject property is not governed by our Civil Code but by the laws of Japan where the
property is located. They rely upon the rule of lex situs which is used in determining the
applicable law regarding the acquisition, transfer and devolution of the title to a
property. They also invoke Opinion No. 21, Series of 1988, dated January 27, 1988 of
the Secretary of Justice which used the lex situs in explaining the inapplicability of
Philippine law regarding a property situated in Japan.
The respondents add that even assuming for the sake of argument that the Civil Code
is applicable, the Roppongi property has ceased to become property of public
dominion. It has become patrimonial property because it has not been used for public
service or for diplomatic purposes for over thirteen (13) years now (Citing Article 422,
Civil Code) and because the intention by the Executive Department and the
Congress to convert it to private use has been manifested by overt acts, such as,
among others: (1) the transfer of the Philippine Embassy to Nampeidai (2) the issuance
of administrative orders for the possibility of alienating the four government properties in
Japan; (3) the issuance of Executive Order No. 296; (4) the enactment by the Congress
of Rep. Act No. 6657 [the Comprehensive Agrarian Reform Law] on June 10, 1988
which contains a provision stating that funds may be taken from the sale of Philippine
properties in foreign countries; (5) the holding of the public bidding of the Roppongi
property but which failed; (6) the deferment by the Senate in Resolution No. 55 of the
bidding to a future date; thus an acknowledgment by the Senate of the government's
intention to remove the Roppongi property from the public service purpose; and (7) the
resolution of this Court dismissing the petition in Ojeda v. Bidding Committee, et al.,
G.R. No. 87478 which sought to enjoin the second bidding of the Roppongi property
scheduled on March 30, 1989.
III
In G.R. No. 94047, petitioner Ojeda once more asks this Court to rule on the
constitutionality of Executive Order No. 296. He had earlier filed a petition in G.R. No.
87478 which the Court dismissed on August 1, 1989. He now avers that the executive
order contravenes the constitutional mandate to conserve and develop the national
patrimony stated in the Preamble of the 1987 Constitution. It also allegedly violates:
(1) The reservation of the ownership and acquisition of alienable lands of the public
domain to Filipino citizens. (Sections 2 and 3, Article XII, Constitution; Sections 22 and
23 of Commonwealth Act 141).itc-asl
(2) The preference for Filipino citizens in the grant of rights, privileges and concessions
covering the national economy and patrimony (Section 10, Article VI, Constitution);
(3) The protection given to Filipino enterprises against unfair competition and trade
practices;
(4) The guarantee of the right of the people to information on all matters of public
concern (Section 7, Article III, Constitution);
(5) The prohibition against the sale to non-Filipino citizens or entities not wholly owned
by Filipino citizens of capital goods received by the Philippines under the Reparations
Act (Sections 2 and 12 of Rep. Act No. 1789); and
26
(6) The declaration of the state policy of full public disclosure of all transactions
involving public interest (Section 28, Article III, Constitution).
Petitioner Ojeda warns that the use of public funds in the execution of an
unconstitutional executive order is a misapplication of public funds He states that since
the details of the bidding for the Roppongi property were never publicly disclosed until
February 15, 1990 (or a few days before the scheduled bidding), the bidding guidelines
are available only in Tokyo, and the accomplishment of requirements and the selection
of qualified bidders should be done in Tokyo, interested Filipino citizens or entities
owned by them did not have the chance to comply with Purchase Offer Requirements
on the Roppongi. Worse, the Roppongi shall be sold for a minimum price of $225
million from which price capital gains tax under Japanese law of about 50 to 70% of the
floor price would still be deducted.
IV
The petitioners and respondents in both cases do not dispute the fact that the
Roppongi site and the three related properties were through reparations agreements,
that these were assigned to the government sector and that the Roppongi property
itself was specifically designated under the Reparations Agreement to house the
Philippine Embassy.
The nature of the Roppongi lot as property for public service is expressly spelled out. It
is dictated by the terms of the Reparations Agreement and the corresponding contract
of procurement which bind both the Philippine government and the Japanese
government.
There can be no doubt that it is of public dominion unless it is convincingly shown that
the property has become patrimonial. This, the respondents have failed to do.
As property of public dominion, the Roppongi lot is outside the commerce of man. It
cannot be alienated. Its ownership is a special collective ownership for general use and
enjoyment, an application to the satisfaction of collective needs, and resides in the
social group. The purpose is not to serve the State as a juridical person, but the
citizens; it is intended for the common and public welfare and cannot be the object of
appropration. (Taken from 3 Manresa, 66-69; cited in Tolentino, Commentaries on the
Civil Code of the Philippines, 1963 Edition, Vol. II, p. 26).
The applicable provisions of the Civil Code are:
ART. 419. Property is either of public dominion or of private
ownership.
ART. 420. The following things are property of public dominion
(1) Those intended for public use, such as roads, canals, rivers,
torrents, ports and bridges constructed by the State, banks shores
roadsteads, and others of similar character;
(2) Those which belong to the State, without being for public use, and
are intended for some public service or for the development of the
national wealth.
ART. 421. All other property of the State, which is not of the character
stated in the preceding article, is patrimonial property.
The Roppongi property is correctly classified under paragraph 2 of Article 420 of the
Civil Code as property belonging to the State and intended for some public service.
Has the intention of the government regarding the use of the property been changed
because the lot has been Idle for some years? Has it become patrimonial?
The fact that the Roppongi site has not been used for a long time for actual Embassy
service does not automatically convert it to patrimonial property. Any such conversion
happens only if the property is withdrawn from public use (Cebu Oxygen and Acetylene
Co. v. Bercilles, 66 SCRA 481 [1975]). A property continues to be part of the public
domain, not available for private appropriation or ownership until there is a formal
declaration on the part of the government to withdraw it from being such (Ignacio v.
Director of Lands, 108 Phil. 335 [1960]).
The respondents enumerate various pronouncements by concerned public officials
insinuating a change of intention. We emphasize, however, that an abandonment of the
intention to use the Roppongi property for public service and to make it patrimonial
property under Article 422 of the Civil Code must be definiteAbandonment cannot be
inferred from the non-use alone specially if the non-use was attributable not to the
government's own deliberate and indubitable will but to a lack of financial support to
repair and improve the property (See Heirs of Felino Santiago v. Lazaro, 166 SCRA
368 [1988]). Abandonment must be a certain and positive act based on correct legal
premises.
A mere transfer of the Philippine Embassy to Nampeidai in 1976 is not relinquishment
of the Roppongi property's original purpose. Even the failure by the government to
repair the building in Roppongi is not abandonment since as earlier stated, there simply
was a shortage of government funds. The recent Administrative Orders authorizing a
study of the status and conditions of government properties in Japan were merely
directives for investigation but did not in any way signify a clear intention to dispose of
the properties.
Executive Order No. 296, though its title declares an "authority to sell", does not have a
provision in its text expressly authorizing the sale of the four properties procured from
Japan for the government sector. The executive order does not declare that the
properties lost their public character. It merely intends to make the
properties available to foreigners and not to Filipinos alone in case of a sale, lease or
other disposition. It merely eliminates the restriction under Rep. Act No. 1789 that
reparations goods may be sold only to Filipino citizens and one hundred (100%)
percent Filipino-owned entities. The text of Executive Order No. 296 provides:
Section 1. The provisions of Republic Act No. 1789, as amended,
and of other laws to the contrary notwithstanding, the above-
mentioned properties can be made available for sale, lease or any
other manner of disposition to non-Filipino citizens or to entities
owned by non-Filipino citizens.
Executive Order No. 296 is based on the wrong premise or assumption that the
Roppongi and the three other properties were earlier converted into alienable real
properties. As earlier stated, Rep. Act No. 1789 differentiates the procurements for the
government sector and the private sector (Sections 2 and 12, Rep. Act No. 1789). Only
the private sector properties can be sold to end-users who must be Filipinos or entities
owned by Filipinos. It is this nationality provision which was amended by Executive
Order No. 296.
27
Section 63 (c) of Rep. Act No. 6657 (the CARP Law) which provides as one of the
sources of funds for its implementation, the proceeds of the disposition of the properties
of the Government in foreign countries, did not withdraw the Roppongi property from
being classified as one of public dominion when it mentions Philippine properties
abroad. Section 63 (c) refers to properties which are alienable and not to those
reserved for public use or service. Rep Act No. 6657, therefore, does not authorize the
Executive Department to sell the Roppongi property. It merely enumerates possible
sources of future funding to augment (as and when needed) the Agrarian Reform Fund
created under Executive Order No. 299. Obviously any property outside of the
commerce of man cannot be tapped as a source of funds.
The respondents try to get around the public dominion character of the Roppongi
property by insisting that Japanese law and not our Civil Code should apply.
It is exceedingly strange why our top government officials, of all people, should be the
ones to insist that in the sale of extremely valuable government property, Japanese law
and not Philippine law should prevail. The Japanese law - its coverage and effects,
when enacted, and exceptions to its provision is not presented to the Court It is
simply asserted that the lex loci rei sitae or Japanese law should apply without stating
what that law provides. It is a ed on faith that Japanese law would allow the sale.
We see no reason why a conflict of law rule should apply when no conflict of law
situation exists. A conflict of law situation arises only when: (1) There is a dispute over
the title or ownership of an immovable, such that the capacity to take and transfer
immovables, the formalities of conveyance, the essential validity and effect of the
transfer, or the interpretation and effect of a conveyance, are to be determined (See
Salonga, Private International Law, 1981 ed., pp. 377-383); and (2) A foreign law on
land ownership and its conveyance is asserted to conflict with a domestic law on the
same matters. Hence, the need to determine which law should apply.
In the instant case, none of the above elements exists.
The issues are not concerned with validity of ownership or title. There is no question
that the property belongs to the Philippines. The issue is the authority of the respondent
officials to validly dispose of property belonging to the State. And the validity of the
procedures adopted to effect its sale. This is governed by Philippine Law. The rule
of lex situs does not apply.
The assertion that the opinion of the Secretary of Justice sheds light on the relevance
of the lex situs rule is misplaced. The opinion does not tackle the alienability of the real
properties procured through reparations nor the existence in what body of the authority
to sell them. In discussing who are capable of acquiring the lots, the Secretary merely
explains that it is the foreign law which should determine who can acquire the
properties so that the constitutional limitation on acquisition of lands of the public
domain to Filipino citizens and entities wholly owned by Filipinos is inapplicable. We
see no point in belaboring whether or not this opinion is correct. Why should we discuss
who can acquire the Roppongi lot when there is no showing that it can be sold?
The subsequent approval on October 4, 1988 by President Aquino of the
recommendation by the investigating committee to sell the Roppongi property was
premature or, at the very least, conditioned on a valid change in the public character of
the Roppongi property. Moreover, the approval does not have the force and effect of
law since the President already lost her legislative powers. The Congress had already
convened for more than a year.
Assuming for the sake of argument, however, that the Roppongi property is no longer of
public dominion, there is another obstacle to its sale by the respondents.
There is no law authorizing its conveyance.
Section 79 (f) of the Revised Administrative Code of 1917 provides
Section 79 (f ) Conveyances and contracts to which the Government
is a party. In cases in which the Government of the Republic of the
Philippines is a party to any deed or other instrument conveying the
title to real estate or to any other property the value of which is in
excess of one hundred thousand pesos, the respective Department
Secretary shall prepare the necessary papers which, together with
the proper recommendations, shall be submitted to the Congress of
the Philippines for approval by the same. Such deed, instrument, or
contract shall be executed and signed by the President of the
Philippines on behalf of the Government of the Philippines unless the
Government of the Philippines unless the authority therefor be
expressly vested by law in another officer. (Emphasis supplied)
The requirement has been retained in Section 48, Book I of the Administrative Code of
1987 (Executive Order No. 292).
SEC. 48. Official Authorized to Convey Real Property. Whenever
real property of the Government is authorized by law to be
conveyed, the deed of conveyance shall be executed in behalf of the
government by the following:
(1) For property belonging to and titled in the name of the Republic of
the Philippines, by the President, unless the authority therefor is
expressly vested by law in another officer.
(2) For property belonging to the Republic of the Philippines but titled
in the name of any political subdivision or of any corporate agency or
instrumentality, by the executive head of the agency or
instrumentality. (Emphasis supplied)
It is not for the President to convey valuable real property of the government on his or
her own sole will. Any such conveyance must be authorized and approved by a law
enacted by the Congress. It requires executive and legislative concurrence.
Resolution No. 55 of the Senate dated June 8, 1989, asking for the deferment of the
sale of the Roppongi property does not withdraw the property from public domain much
less authorize its sale. It is a mere resolution; it is not a formal declaration abandoning
the public character of the Roppongi property. In fact, the Senate Committee on
Foreign Relations is conducting hearings on Senate Resolution No. 734 which raises
serious policy considerations and calls for a fact-finding investigation of the
circumstances behind the decision to sell the Philippine government properties in
Japan.
The resolution of this Court in Ojeda v. Bidding Committee, et al., supra, did not pass
upon the constitutionality of Executive Order No. 296. Contrary to respondents'
assertion, we did not uphold the authority of the President to sell the Roppongi
property. The Court stated that the constitutionality of the executive order was not the
real issue and that resolving the constitutional question was "neither necessary nor
finally determinative of the case." The Court noted that "[W]hat petitioner ultimately
28
questions is the use of the proceeds of the disposition of the Roppongi property." In of 45 years since the war ended, inspire of the passage of 32 years
emphasizing that "the decision of the Executive to dispose of the Roppongi property to since the property passed on to the Philippine government.
finance the CARP ... cannot be questioned" in view of Section 63 (c) of Rep. Act No.
6657, the Court did not acknowledge the fact that the property became alienable nor Roppongi is a reminder that cannot should not be dissipated ...
did it indicate that the President was authorized to dispose of the Roppongi property. (Rollo-92047, p. 9)
The resolution should be read to mean that in case the Roppongi property is re- It is indeed true that the Roppongi property is valuable not so much because of the
classified to be patrimonial and alienable by authority of law, the proceeds of a sale inflated prices fetched by real property in Tokyo but more so because of its symbolic
may be used for national economic development projects including the CARP. value to all Filipinos veterans and civilians alike. Whether or not the Roppongi and
Moreover, the sale in 1989 did not materialize. The petitions before us question the related properties will eventually be sold is a policy determination where both the
proposed 1990 sale of the Roppongi property. We are resolving the issues raised in President and Congress must concur. Considering the properties' importance and
these petitions, not the issues raised in 1989. value, the laws on conversion and disposition of property of public dominion must be
faithfully followed.
Having declared a need for a law or formal declaration to withdraw the Roppongi
property from public domain to make it alienable and a need for legislative authority to WHEREFORE, IN VIEW OF THE FOREGOING, the petitions are GRANTED. A writ of
allow the sale of the property, we see no compelling reason to tackle the constitutional prohibition is issued enjoining the respondents from proceeding with the sale of the
issues raised by petitioner Ojeda. Roppongi property in Tokyo, Japan. The February 20, 1990 Temporary Restraining
Order is made PERMANENT.
The Court does not ordinarily pass upon constitutional questions unless these
questions are properly raised in appropriate cases and their resolution is necessary for SO ORDERED.
the determination of the case (People v. Vera, 65 Phil. 56 [1937]). The Court will not Melencio-Herrera, Paras, Bidin, Grio-Aquino and Regalado, JJ., concur.
pass upon a constitutional question although properly presented by the record if the
case can be disposed of on some other ground such as the application of a statute or
general law (Siler v. Louisville and Nashville R. Co., 213 U.S. 175, [1909], Railroad
Commission v. Pullman Co., 312 U.S. 496 [1941]).
The petitioner in G.R. No. 92013 states why the Roppongi property should not be sold:
The Roppongi property is not just like any piece of property. It was
given to the Filipino people in reparation for the lives and blood of
Filipinos who died and suffered during the Japanese military
occupation, for the suffering of widows and orphans who lost their
loved ones and kindred, for the homes and other properties lost by
countless Filipinos during the war. The Tokyo properties are a
monument to the bravery and sacrifice of the Filipino people in the
face of an invader; like the monuments of Rizal, Quezon, and other
Filipino heroes, we do not expect economic or financial benefits from
them. But who would think of selling these monuments? Filipino
honor and national dignity dictate that we keep our properties in
Japan as memorials to the countless Filipinos who died and suffered.
Even if we should become paupers we should not think of selling
them. For it would be as if we sold the lives and blood and tears of
our countrymen. (Rollo- G.R. No. 92013, p.147)
The petitioner in G.R. No. 92047 also states:
Roppongi is no ordinary property. It is one ceded by the Japanese
government in atonement for its past belligerence for the valiant
sacrifice of life and limb and for deaths, physical dislocation and
economic devastation the whole Filipino people endured in World
War II.
It is for what it stands for, and for what it could never bring back to
life, that its significance today remains undimmed, inspire of the lapse

29
 K. G.R. No. 97764 August 10, 1992
LEVY D. MACASIANO, Brigadier General/PNP Superintendent, Metropolitan
Traffic Command, petitioner,
vs.
HONORABLE ROBERTO C. DIOKNO, Presiding Judge, Branch 62, Regional Trial
Court of Makati, Metro Manila, MUNICIPALITY OF PARAAQUE, METRO MANILA,
PALANYAG KILUSANG BAYAN FOR SERVICE, respondents.
Ceferino, Padua Law Office for Palanyag Kilusang Bayan for service.
Manuel de Guia for Municipality of Paraaque.
MEDIALDEA, J.:
This is a petition for certiorari under Rule 65 of the Rules of Court seeking the
annulment of the decision of the Regional Trial Court of Makati, Branch 62, which
granted the writ of preliminary injunction applied for by respondents Municipality of
Paraaque and Palanyag Kilusang Bayan for Service (Palanyag for brevity) against
petitioner herein.
The antecedent facts are as follows:
On June 13, 1990, the respondent municipality passed Ordinance No. 86, Series of
1990 which authorized the closure of J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia
Extension and Opena Streets located at Baclaran, Paraaque, Metro Manila and the
establishment of a flea market thereon. The said ordinance was approved by the
municipal council pursuant to MMC Ordinance No. 2, Series of 1979, authorizing and
regulating the use of certain city and/or municipal streets, roads and open spaces within
Metropolitan Manila as sites for flea market and/or vending areas, under certain terms
and conditions.
On July 20, 1990, the Metropolitan Manila Authority approved Ordinance No. 86, s.
1990 of the municipal council of respondent municipality subject to the following
conditions:
1. That the aforenamed streets are not used for vehicular traffic, and
that the majority of the residents do not oppose the establishment of
the flea market/vending areas thereon;
2. That the 2-meter middle road to be used as flea market/vending
area shall be marked distinctly, and that the 2 meters on both sides of
the road shall be used by pedestrians;
3. That the time during which the vending area is to be used shall be
clearly designated;
4. That the use of the vending areas shall be temporary and shall be
closed once the reclaimed areas are developed and donated by the
Public Estate Authority.
On June 20, 1990, the municipal council of Paraaque issued a resolution authorizing
Paraaque Mayor Walfrido N. Ferrer to enter into contract with any service cooperative
for the establishment, operation, maintenance and management of flea markets and/or
vending areas.
On August 8, 1990, respondent municipality and respondent Palanyag, a service
cooperative, entered into an agreement whereby the latter shall operate, maintain and
manage the flea market in the aforementioned streets with the obligation to remit dues
to the treasury of the municipal government of Paraaque. Consequently, market stalls
were put up by respondent Palanyag on the said streets.
On September 13, 1990, petitioner Brig. Gen. Macasiano, PNP Superintendent of the
Metropolitan Traffic Command, ordered the destruction and confiscation of stalls along
G.G. Cruz and J. Gabriel St. in Baclaran. These stalls were later returned to respondent
Palanyag.
On October 16, 1990, petitioner Brig. General Macasiano wrote a letter to respondent
Palanyag giving the latter ten (10) days to discontinue the flea market; otherwise, the
market stalls shall be dismantled.
Hence, on October 23, 1990, respondents municipality and Palanyag filed with the trial
court a joint petition for prohibition and mandamus with damages and prayer for
preliminary injunction, to which the petitioner filed his memorandum/opposition to the
issuance of the writ of preliminary injunction.
On October 24, 1990, the trial court issued a temporary restraining order to enjoin
petitioner from enforcing his letter-order of October 16, 1990 pending the hearing on
the motion for writ of preliminary injunction.
On December 17, 1990, the trial court issued an order upholding the validity of
Ordinance No. 86 s. 1990 of the Municipality' of Paraaque and enjoining petitioner
Brig. Gen. Macasiano from enforcing his letter-order against respondent Palanyag.
Hence, this petition was filed by the petitioner thru the Office of the Solicitor General
alleging grave abuse of discretion tantamount to lack or excess of jurisdiction on the
part of the trial judge in issuing the assailed order.
The sole issue to be resolved in this case is whether or not an ordinance or resolution
issued by the municipal council of Paraaque authorizing the lease and use of public
streets or thoroughfares as sites for flea markets is valid.
The Solicitor General, in behalf of petitioner, contends that municipal roads are used for
public service and are therefore public properties; that as such, they cannot be subject
to private appropriation or private contract by any person, even by the respondent
Municipality of Paraaque. Petitioner submits that a property already dedicated to
public use cannot be used for another public purpose and that absent a clear showing
that the Municipality of Paraaque has been granted by the legislature specific authority
to convert a property already in public use to another public use, respondent
municipality is, therefore, bereft of any authority to close municipal roads for the
establishment of a flea market. Petitioner also submits that assuming that the
respondent municipality is authorized to close streets, it failed to comply with the
conditions set forth by the Metropolitan Manila Authority for the approval of the
ordinance providing for the establishment of flea markets on public streets. Lastly,
petitioner contends that by allowing the municipal streets to be used by market vendors
the municipal council of respondent municipality violated its duty under the Local
Government Code to promote the general welfare of the residents of the municipality.
In upholding the legality of the disputed ordinance, the trial court ruled:
. . . that Chanter II Section 10 of the Local Government Code is a
statutory grant of power given to local government units, the
30
 Municipality of Paraaque as such, is empowered under that law to
close its roads, streets or alley subject to limitations stated therein
(i.e., that it is in accordance with existing laws and the provisions of
this code).
xxx xxx xxx
The actuation of the respondent Brig. Gen. Levi Macasiano, though
apparently within its power is in fact an encroachment of power
legally vested to the municipality, precisely because when the
municipality enacted the ordinance in question the authority of the
respondent as Police Superintendent ceases to be operative on the
ground that the streets covered by the ordinance ceases to be a
public thoroughfare. (pp. 33-34, Rollo)
We find the petition meritorious. In resolving the question of whether the disputed
municipal ordinance authorizing the flea market on the public streets is valid, it is
necessary to examine the laws in force during the time the said ordinance was enacted,
namely, Batas Pambansa Blg. 337, otherwise known as Local Government Code, in
connection with established principles embodied in the Civil Code an property and
settled jurisprudence on the matter.
The property of provinces, cities and municipalities is divided into property for public
use and patrimonial property (Art. 423, Civil Code). As to what consists of property for
public use, Article 424 of Civil Code states:
Art. 424. Property for public use, in the provinces, cities and
municipalities, consists of the provincial roads, city streets, the
squares, fountains, public waters, promenades, and public works for
public service paid for by said provinces, cities or municipalities.
All other property possessed by any of them is patrimonial and shall
be governed by this Code, without prejudice to the provisions of
special laws.
Based on the foregoing, J. Gabriel G.G. Cruz, Bayanihan, Lt. Garcia Extension and
Opena streets are local roads used for public service and are therefore considered
public properties of respondent municipality. Properties of the local government which
are devoted to public service are deemed public and are under the absolute control of
Congress (Province of Zamboanga del Norte v. City of Zamboanga, L-24440, March
28, 1968, 22 SCRA 1334). Hence, local governments have no authority whatsoever to
control or regulate the use of public properties unless specific authority is vested upon
them by Congress. One such example of this authority given by Congress to the local
governments is the power to close roads as provided in Section 10, Chapter II of the
Local Government Code, which states:
Sec. 10. Closure of roads. A local government unit may likewise,
through its head acting pursuant to a resolution of its sangguniang
and in accordance with existing law and the provisions of this Code,
close any barangay, municipal, city or provincial road, street, alley,
park or square. No such way or place or any part of thereof shall be
close without indemnifying any person prejudiced thereby. A property
thus withdrawn from public use may be used or conveyed for any
purpose for which other real property belonging to the local unit
concerned might be lawfully used or conveyed. (Emphasis ours).
However, the aforestated legal provision which gives authority to local government units
to close roads and other similar public places should be read and interpreted in
accordance with basic principles already established by law. These basic principles
have the effect of limiting such authority of the province, city or municipality to close a
public street or thoroughfare. Article 424 of the Civil Code lays down the basic principle
that properties of public dominion devoted to public use and made available to the
public in general are outside the commerce of man and cannot be disposed of or
leased by the local government unit to private persons. Aside from the requirement of
due process which should be complied with before closing a road, street or park, the
closure should be for the sole purpose of withdrawing the road or other public property
from public use when circumstances show that such property is no longer intended or
necessary for public use or public service. When it is already withdrawn from public
use, the property then becomes patrimonial property of the local government unit
concerned (Article 422, Civil Code; Cebu Oxygen, etc. et al. v. Bercilles, et al., G.R. No.
L-40474, August 29, 1975, 66 SCRA 481). It is only then that the respondent
municipality can "use or convey them for any purpose for which other real property
belonging to the local unit concerned might be lawfully used or conveyed" in
accordance with the last sentence of Section 10, Chapter II of Blg. 337, known as Local
Government Code. In one case, the City Council of Cebu, through a resolution,
declared the terminal road of M. Borces Street, Mabolo, Cebu City as an abandoned
road, the same not being included in the City Development Plan. Thereafter, the City
Council passes another resolution authorizing the sale of the said abandoned road
through public bidding. We held therein that the City of Cebu is empowered to close a
city street and to vacate or withdraw the same from public use. Such withdrawn portion
becomes patrimonial property which can be the object of an ordinary contract (Cebu
Oxygen and Acetylene Co., Inc. v. Bercilles, et al., G.R. No.
L-40474, August 29, 1975, 66 SCRA 481). However, those roads and streets which are
available to the public in general and ordinarily used for vehicular traffic are still
considered public property devoted to public use. In such case, the local government
has no power to use it for another purpose or to dispose of or lease it to private
persons. This limitation on the authority of the local government over public properties
has been discussed and settled by this Court en banc in "Francisco V. Dacanay,
petitioner v. Mayor Macaria Asistio, Jr., et al., respondents, G.R. No. 93654, May 6,
1992." This Court ruled:
There is no doubt that the disputed areas from which the private
respondents' market stalls are sought to be evicted are public streets,
as found by the trial court in Civil Case No. C-12921. A public street
is property for public use hence outside the commerce of man (Arts.
420, 424, Civil Code). Being outside the commerce of man, it may not
be the subject of lease or others contract (Villanueva, et al. v.
Castaeda and Macalino, 15 SCRA 142 citing the Municipality of
Cavite v. Rojas, 30 SCRA 602; Espiritu v. Municipal Council of
Pozorrubio, 102 Phil. 869; And Muyot v. De la Fuente, 48 O.G. 4860).
As the stallholders pay fees to the City Government for the right to
occupy portions of the public street, the City Government, contrary to
law, has been leasing portions of the streets to them. Such leases or
licenses are null and void for being contrary to law. The right of the
public to use the city streets may not be bargained away through
contract. The interests of a few should not prevail over the good of
the greater number in the community whose health, peace, safety,
31
 good order and general welfare, the respondent city officials are
under legal obligation to protect.
The Executive Order issued by acting Mayor Robles authorizing the
use of Heroes del '96 Street as a vending area for stallholders who
were granted licenses by the city government contravenes the
general law that reserves city streets and roads for public use. Mayor
Robles' Executive Order may not infringe upon the vested right of the
public to use city streets for the purpose they were intended to
serve: i.e., as arteries of travel for vehicles and pedestrians.
Even assuming, in gratia argumenti, that respondent municipality has the authority to
pass the disputed ordinance, the same cannot be validly implemented because it
cannot be considered approved by the Metropolitan Manila Authority due to non-
compliance by respondent municipality of the conditions imposed by the former for the
approval of the ordinance, to wit:
1. That the aforenamed streets are not used for vehicular traffic, and
that the majority of the residents do(es) not oppose the establishment
of the flea market/vending areas thereon;
2. That the 2-meter middle road to be used as flea market/vending
area shall be marked distinctly, and that the 2 meters on both sides of
the road shall be used by pedestrians;
3. That the time during which the vending area is to be used shall be
clearly designated;
4. That the use of the vending areas shall be temporary and shall be
closed once the reclaimed areas are developed and donated by the
Public Estate Authority. (p. 38, Rollo)
Respondent municipality has not shown any iota of proof that it has complied with the
foregoing conditions precedent to the approval of the ordinance. The allegations of
respondent municipality that the closed streets were not used for vehicular traffic and
that the majority of the residents do not oppose the establishment of a flea market on
said streets are unsupported by any evidence that will show that this first condition has
been met. Likewise, the designation by respondents of a time schedule during which
the flea market shall operate is absent.
Further, it is of public notice that the streets along Baclaran area are congested with
people, houses and traffic brought about by the proliferation of vendors occupying the
streets. To license and allow the establishment of a flea market along J. Gabriel, G.G.
Cruz, Bayanihan, Lt. Garcia Extension and Opena streets in Baclaran would not help in
solving the problem of congestion. We take note of the other observations of the
Solicitor General when he said:
. . . There have been many instances of emergencies and fires where
ambulances and fire engines, instead of using the roads for a more
direct access to the fire area, have to maneuver and look for other
streets which are not occupied by stalls and vendors thereby losing
valuable time which could, otherwise, have been spent in saving
properties and lives.
Along G.G. Cruz Street is a hospital, the St. Rita Hospital. However,
its ambulances and the people rushing their patients to the hospital
cannot pass through G.G. Cruz because of the stalls and the
vendors. One can only imagine the tragedy of losing a life just
because of a few seconds delay brought about by the inaccessibility
of the streets leading to the hospital.
The children, too, suffer. In view of the occupancy of the roads by
stalls and vendors, normal transportation flow is disrupted and school
children have to get off at a distance still far from their schools and
walk, rain or shine.
Indeed one can only imagine the garbage and litter left by vendors on
the streets at the end of the day. Needless to say, these cause
further pollution, sickness and deterioration of health of the residents
therein. (pp. 21-22, Rollo)
Respondents do not refute the truth of the foregoing findings and observations of
petitioners. Instead, respondents want this Court to focus its attention solely on the
argument that the use of public spaces for the establishment of a flea market is well
within the powers granted by law to a local government which should not be interfered
with by the courts.
Verily, the powers of a local government unit are not absolute. They are subject to
limitations laid down by toe Constitution and the laws such as our Civil Code. Moreover,
the exercise of such powers should be subservient to paramount considerations of
health and well-being of the members of the community. Every local government unit
has the sworn obligation to enact measures that will enhance the public health, safety
and convenience, maintain peace and order, and promote the general prosperity of the
inhabitants of the local units. Based on this objective, the local government should
refrain from acting towards that which might prejudice or adversely affect the general
welfare.
As what we have said in the Dacanay case, the general public have a legal right to
demand the demolition of the illegally constructed stalls in public roads and streets and
the officials of respondent municipality have the corresponding duty arising from public
office to clear the city streets and restore them to their specific public purpose.
The instant case as well as the Dacanay case, involves an ordinance which is void and
illegal for lack of basis and authority in laws applicable during its time. However, at this
point, We find it worthy to note that Batas Pambansa Blg. 337, known as Local
Government Lode, has already been repealed by Republic Act No. 7160 known as
Local Government Code of 1991 which took effect on January 1, 1992. Section 5(d) of
the new Code provides that rights and obligations existing on the date of effectivity of
the new Code and arising out of contracts or any other source of prestation involving a
local government unit shall be governed by the original terms and conditions of the said
contracts or the law in force at the time such rights were vested.
ACCORDINGLY, the petition is GRANTED and the decision of the respondent Regional
Trial Court dated December 17, 1990 which granted the writ of preliminary injunction
enjoining petitioner as PNP Superintendent, Metropolitan Traffic Command from
enforcing the demolition of market stalls along J. Gabriel, G.G. Cruz, Bayanihan, Lt.
Garcia Extension and Opena streets is hereby RESERVED and SET ASIDE.
32
 L. [G.R. No. 133250. July 9, 2002]
FRANCISCO I. CHAVEZ, petitioner, vs. PUBLIC ESTATES AUTHORITY and
AMARI COASTAL BAY DEVELOPMENT CORPORATION, respondents.
DECISION
CARPIO, J.:
This is an original Petition for Mandamus with prayer for a writ of preliminary
injunction and a temporary restraining order. The petition seeks to compel the Public
Estates Authority (PEA for brevity) to disclose all facts on PEAs then on-going
renegotiations with Amari Coastal Bay and Development Corporation (AMARI for
brevity) to reclaim portions of Manila Bay. The petition further seeks to enjoin PEA from
signing a new agreement with AMARI involving such reclamation.
The Facts
On November 20, 1973, the government, through the Commissioner of Public
Highways, signed a contract with the Construction and Development Corporation of the
Philippines (CDCP for brevity) to reclaim certain foreshore and offshore areas of Manila
Bay. The contract also included the construction of Phases I and II of the Manila-Cavite
Coastal Road. CDCP obligated itself to carry out all the works in consideration of fifty
percent of the total reclaimed land.
On February 4, 1977, then President Ferdinand E. Marcos issued Presidential
Decree No. 1084 creating PEA. PD No. 1084 tasked PEA to reclaim land, including
foreshore and submerged areas, and to develop, improve, acquire, x x x lease and sell
any and all kinds of lands.[1] On the same date, then President Marcos issued
Presidential Decree No. 1085 transferring to PEA the lands reclaimed in the foreshore
and offshore of the Manila Bay[2] under the Manila-Cavite Coastal Road and
Reclamation Project (MCCRRP).
On December 29, 1981, then President Marcos issued a memorandum directing
PEA to amend its contract with CDCP, so that [A]ll future works in MCCRRP x x x shall
be funded and owned by PEA. Accordingly, PEA and CDCP executed a Memorandum
of Agreement dated December 29, 1981, which stated:
(i) CDCP shall undertake all reclamation, construction, and such other works in the
MCCRRP as may be agreed upon by the parties, to be paid according to progress of
works on a unit price/lump sum basis for items of work to be agreed upon, subject to
price escalation, retention and other terms and conditions provided for in Presidential
Decree No. 1594. All the financing required for such works shall be provided by PEA.
xxx
(iii) x x x CDCP shall give up all its development rights and hereby agrees to cede and
transfer in favor of PEA, all of the rights, title, interest and participation of CDCP in and
to all the areas of land reclaimed by CDCP in the MCCRRP as of December 30, 1981
which have not yet been sold, transferred or otherwise disposed of by CDCP as of said
date, which areas consist of approximately Ninety-Nine Thousand Four Hundred
Seventy Three (99,473) square meters in the Financial Center Area covered by land
pledge No. 5 and approximately Three Million Three Hundred Eighty Two Thousand
Eight Hundred Eighty Eight (3,382,888) square meters of reclaimed areas at varying
elevations above Mean Low Water Level located outside the Financial Center Area and
the First Neighborhood Unit.[3]
On January 19, 1988, then President Corazon C. Aquino issued Special Patent
No. 3517, granting and transferring to PEA the parcels of land so reclaimed under the
Manila-Cavite Coastal Road and Reclamation Project (MCCRRP) containing a total
area of one million nine hundred fifteen thousand eight hundred ninety four (1,915,894)
square meters. Subsequently, on April 9, 1988, the Register of Deeds of the
Municipality of Paraaque issued Transfer Certificates of Title Nos. 7309, 7311, and
7312, in the name of PEA, covering the three reclaimed islands known as the Freedom
Islands located at the southern portion of the Manila-Cavite Coastal Road, Paraaque
City. The Freedom Islands have a total land area of One Million Five Hundred Seventy
Eight Thousand Four Hundred and Forty One (1,578,441) square meters or 157.841
hectares.
On April 25, 1995, PEA entered into a Joint Venture Agreement (JVA for brevity)
with AMARI, a private corporation, to develop the Freedom Islands. The JVA also
required the reclamation of an additional 250 hectares of submerged areas surrounding
these islands to complete the configuration in the Master Development Plan of the
Southern Reclamation Project-MCCRRP. PEA and AMARI entered into the JVA
through negotiation without public bidding. [4] On April 28, 1995, the Board of Directors
of PEA, in its Resolution No. 1245, confirmed the JVA. [5] On June 8, 1995, then
President Fidel V. Ramos, through then Executive Secretary Ruben Torres, approved
the JVA.[6]
On November 29, 1996, then Senate President Ernesto Maceda delivered a
privilege speech in the Senate and denounced the JVA as the grandmother of all
scams. As a result, the Senate Committee on Government Corporations and Public
Enterprises, and the Committee on Accountability of Public Officers and Investigations,
conducted a joint investigation. The Senate Committees reported the results of their
investigation in Senate Committee Report No. 560 dated September 16,
1997.[7] Among the conclusions of their report are: (1) the reclaimed lands PEA seeks
to transfer to AMARI under the JVA are lands of the public domain which the
government has not classified as alienable lands and therefore PEA cannot alienate
these lands; (2) the certificates of title covering the Freedom Islands are thus void, and
(3) the JVA itself is illegal.
On December 5, 1997, then President Fidel V. Ramos issued Presidential
Administrative Order No. 365 creating a Legal Task Force to conduct a study on the
legality of the JVA in view of Senate Committee Report No. 560. The members of the
Legal Task Force were the Secretary of Justice,[8] the Chief Presidential Legal
Counsel,[9] and the Government Corporate Counsel.[10] The Legal Task Force upheld
the legality of the JVA, contrary to the conclusions reached by the Senate
Committees.[11]
On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published reports
that there were on-going renegotiations between PEA and AMARI under an order
issued by then President Fidel V. Ramos. According to these reports, PEA Director
Nestor Kalaw, PEA Chairman Arsenio Yulo and retired Navy Officer Sergio Cruz
composed the negotiating panel of PEA.
On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition for
Prohibition with Application for the Issuance of a Temporary Restraining Order and
Preliminary Injunction docketed as G.R. No. 132994 seeking to nullify the JVA. The
Court dismissed the petition for unwarranted disregard of judicial hierarchy, without
prejudice to the refiling of the case before the proper court. [12]
33
 On April 27, 1998, petitioner Frank I. Chavez (Petitioner for brevity) as a taxpayer,
filed the instant Petition for Mandamus with Prayer for the Issuance of a Writ of
Preliminary Injunction and Temporary Restraining Order. Petitioner contends the
government stands to lose billions of pesos in the sale by PEA of the reclaimed lands to
AMARI. Petitioner prays that PEA publicly disclose the terms of any renegotiation of the
JVA, invoking Section 28, Article II, and Section 7, Article III, of the 1987 Constitution
on the right of the people to information on matters of public concern. Petitioner assails
the sale to AMARI of lands of the public domain as a blatant violation of Section 3,
Article XII of the 1987 Constitution prohibiting the sale of alienable lands of the public
domain to private corporations. Finally, petitioner asserts that he seeks to enjoin the
loss of billions of pesos in properties of the State that are of public dominion.
After several motions for extension of time,[13] PEA and AMARI filed their
Comments on October 19, 1998 and June 25, 1998, respectively. Meanwhile, on
December 28, 1998, petitioner filed an Omnibus Motion: (a) to require PEA to submit
the terms of the renegotiated PEA-AMARI contract; (b) for issuance of a temporary
restraining order; and (c) to set the case for hearing on oral argument. Petitioner filed a
Reiterative Motion for Issuance of a TRO dated May 26, 1999, which the Court denied
in a Resolution dated June 22, 1999.
In a Resolution dated March 23, 1999, the Court gave due course to the petition
and required the parties to file their respective memoranda.
On March 30, 1999, PEA and AMARI signed the Amended Joint Venture
Agreement (Amended JVA, for brevity). On May 28, 1999, the Office of the President
under the administration of then President Joseph E. Estrada approved the Amended
JVA.
Due to the approval of the Amended JVA by the Office of the President, petitioner
now prays that on constitutional and statutory grounds the renegotiated contract be
declared null and void.[14]
The Issues
The issues raised by petitioner, PEA[15] and AMARI[16] are as follows:
I. WHETHER THE PRINCIPAL RELIEFS PRAYED FOR IN THE PETITION
ARE MOOT AND ACADEMIC BECAUSE OF SUBSEQUENT EVENTS;
II. WHETHER THE PETITION MERITS DISMISSAL FOR FAILING TO
OBSERVE THE PRINCIPLE GOVERNING THE HIERARCHY OF
COURTS;
III. WHETHER THE PETITION MERITS DISMISSAL FOR NON-
EXHAUSTION OF ADMINISTRATIVE REMEDIES;
IV. WHETHER PETITIONER HAS LOCUS STANDI TO BRING THIS SUIT;
V. WHETHER THE CONSTITUTIONAL RIGHT TO INFORMATION
INCLUDES OFFICIAL INFORMATION ON ON-GOING NEGOTIATIONS
BEFORE A FINAL AGREEMENT;
VI. WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE
AGREEMENT FOR THE TRANSFER TO AMARI OF CERTAIN LANDS,
RECLAIMED AND STILL TO BE RECLAIMED, VIOLATE THE 1987
CONSTITUTION; AND
VII. WHETHER THE COURT IS THE PROPER FORUM FOR RAISING THE
ISSUE OF WHETHER THE AMENDED JOINT VENTURE AGREEMENT
IS GROSSLY DISADVANTAGEOUS TO THE GOVERNMENT.
The Courts Ruling
First issue: whether the principal reliefs prayed for in the petition are moot and
academic because of subsequent events.
The petition prays that PEA publicly disclose the terms and conditions of the on-
going negotiations for a new agreement. The petition also prays that the Court enjoin
PEA from privately entering into, perfecting and/or executing any new agreement with
AMARI.
PEA and AMARI claim the petition is now moot and academic because AMARI
furnished petitioner on June 21, 1999 a copy of the signed Amended JVA containing
the terms and conditions agreed upon in the renegotiations. Thus, PEA has satisfied
petitioners prayer for a public disclosure of the renegotiations. Likewise, petitioners
prayer to enjoin the signing of the Amended JVA is now moot because PEA and AMARI
have already signed the Amended JVA on March 30, 1999. Moreover, the Office of the
President has approved the Amended JVA on May 28, 1999.
Petitioner counters that PEA and AMARI cannot avoid the constitutional issue by
simply fast-tracking the signing and approval of the Amended JVA before the Court
could act on the issue. Presidential approval does not resolve the constitutional issue or
remove it from the ambit of judicial review.
We rule that the signing of the Amended JVA by PEA and AMARI and its approval
by the President cannot operate to moot the petition and divest the Court of its
jurisdiction. PEA and AMARI have still to implement the Amended JVA. The prayer to
enjoin the signing of the Amended JVA on constitutional grounds necessarily includes
preventing its implementation if in the meantime PEA and AMARI have signed one in
violation of the Constitution. Petitioners principal basis in assailing the renegotiation of
the JVA is its violation of Section 3, Article XII of the Constitution, which prohibits the
government from alienating lands of the public domain to private corporations. If the
Amended JVA indeed violates the Constitution, it is the duty of the Court to enjoin its
implementation, and if already implemented, to annul the effects of such
unconstitutional contract.
The Amended JVA is not an ordinary commercial contract but one which seeks
to transfer title and ownership to 367.5 hectares of reclaimed lands and
submerged areas of Manila Bay to a single private corporation. It now becomes
more compelling for the Court to resolve the issue to insure the government itself does
not violate a provision of the Constitution intended to safeguard the national
patrimony. Supervening events, whether intended or accidental, cannot prevent the
Court from rendering a decision if there is a grave violation of the Constitution. In the
instant case, if the Amended JVA runs counter to the Constitution, the Court can still
prevent the transfer of title and ownership of alienable lands of the public domain in the
name of AMARI. Even in cases where supervening events had made the cases moot,
the Court did not hesitate to resolve the legal or constitutional issues raised to formulate
controlling principles to guide the bench, bar, and the public. [17]
Also, the instant petition is a case of first impression. All previous decisions of the
Court involving Section 3, Article XII of the 1987 Constitution, or its counterpart
provision in the 1973 Constitution,[18] covered agricultural lands sold to private
34
corporations which acquired the lands from private parties. The transferors of the
private corporations claimed or could claim the right to judicial confirmation of their
imperfect titles[19] under Title II of Commonwealth Act. 141 (CA No. 141 for brevity). In
the instant case, AMARI seeks to acquire from PEA, a public corporation,
reclaimed lands and submerged areas for non-agricultural purposes
by purchase under PD No. 1084 (charter of PEA) and Title III of CA No. 141. Certain
undertakings by AMARI under the Amended JVA constitute the consideration for the
purchase. Neither AMARI nor PEA can claim judicial confirmation of their titles because
the lands covered by the Amended JVA are newly reclaimed or still to be
reclaimed. Judicial confirmation of imperfect title requires open, continuous, exclusive
and notorious occupation of agricultural lands of the public domain for at least thirty
years since June 12, 1945 or earlier. Besides, the deadline for filing applications for
judicial confirmation of imperfect title expired on December 31, 1987. [20]
Lastly, there is a need to resolve immediately the constitutional issue raised in this
petition because of the possible transfer at any time by PEA to AMARI of title and
ownership to portions of the reclaimed lands. Under the Amended JVA, PEA is
obligated to transfer to AMARI the latters seventy percent proportionate share in the
reclaimed areas as the reclamation progresses. The Amended JVA even allows AMARI
to mortgage at any time the entire reclaimed area to raise financing for the reclamation
project.[21]
Second issue: whether the petition merits dismissal for failing to observe the
principle governing the hierarchy of courts.
PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief
directly from the Court. The principle of hierarchy of courts applies generally to cases
involving factual questions. As it is not a trier of facts, the Court cannot entertain cases
involving factual issues. The instant case, however, raises constitutional issues of
transcendental importance to the public.[22] The Court can resolve this case without
determining any factual issue related to the case. Also, the instant case is a petition
for mandamus which falls under the originaljurisdiction of the Court under Section 5,
Article VIII of the Constitution. We resolve to exercise primary jurisdiction over the
instant case.
Third issue: whether the petition merits dismissal for non-exhaustion of
administrative remedies.
PEA faults petitioner for seeking judicial intervention in compelling PEA to
disclose publicly certain information without first asking PEA the needed
information. PEA claims petitioners direct resort to the Court violates the principle of
exhaustion of administrative remedies. It also violates the rule that mandamus may
issue only if there is no other plain, speedy and adequate remedy in the ordinary
course of law.
PEA distinguishes the instant case from Taada v. Tuvera[23] where the Court
granted the petition for mandamus even if the petitioners there did not initially demand
from the Office of the President the publication of the presidential decrees. PEA points
out that in Taada, the Executive Department had an affirmative statutory duty under
Article 2 of the Civil Code[24] and Section 1 of Commonwealth Act No. 638[25] to publish
the presidential decrees. There was, therefore, no need for the petitioners in Taada to
make an initial demand from the Office of the President. In the instant case, PEA claims
it has no affirmative statutory duty to disclose publicly information about its
renegotiation of the JVA. Thus, PEA asserts that the Court must apply the principle of
exhaustion of administrative remedies to the instant case in view of the failure of
petitioner here to demand initially from PEA the needed information.
The original JVA sought to dispose to AMARI public lands held by PEA, a
government corporation. Under Section 79 of the Government Auditing Code, [26]2 the
disposition of government lands to private parties requires public bidding. PEA was
under a positive legal duty to disclose to the public the terms and conditions for
the sale of its lands. The law obligated PEA to make this public disclosure even
without demand from petitioner or from anyone. PEA failed to make this public
disclosure because the original JVA, like the Amended JVA, was the result of
a negotiated contract, not of a public bidding. Considering that PEA had an affirmative
statutory duty to make the public disclosure, and was even in breach of this legal duty,
petitioner had the right to seek direct judicial intervention.
Moreover, and this alone is determinative of this issue, the principle of exhaustion
of administrative remedies does not apply when the issue involved is a purely legal or
constitutional question.[27] The principal issue in the instant case is the capacity of
AMARI to acquire lands held by PEA in view of the constitutional ban prohibiting the
alienation of lands of the public domain to private corporations. We rule that the
principle of exhaustion of administrative remedies does not apply in the instant case.
Fourth issue: whether petitioner has locus standi to bring this suit
PEA argues that petitioner has no standing to institute mandamus proceedings to
enforce his constitutional right to information without a showing that PEA refused to
perform an affirmative duty imposed on PEA by the Constitution. PEA also claims that
petitioner has not shown that he will suffer any concrete injury because of the signing or
implementation of the Amended JVA. Thus, there is no actual controversy requiring the
exercise of the power of judicial review.
The petitioner has standing to bring this taxpayers suit because the petition seeks
to compel PEA to comply with its constitutional duties. There are two constitutional
issues involved here. First is the right of citizens to information on matters of public
concern. Second is the application of a constitutional provision intended to insure the
equitable distribution of alienable lands of the public domain among Filipino
citizens. The thrust of the first issue is to compel PEA to disclose publicly information on
the sale of government lands worth billions of pesos, information which the Constitution
and statutory law mandate PEA to disclose. The thrust of the second issue is to prevent
PEA from alienating hundreds of hectares of alienable lands of the public domain in
violation of the Constitution, compelling PEA to comply with a constitutional duty to the
nation.
Moreover, the petition raises matters of transcendental importance to the
public. In Chavez v. PCGG,[28] the Court upheld the right of a citizen to bring a
taxpayers suit on matters of transcendental importance to the public, thus -
Besides, petitioner emphasizes, the matter of recovering the ill-gotten wealth of the
Marcoses is an issue of transcendental importance to the public. He asserts that
ordinary taxpayers have a right to initiate and prosecute actions questioning the validity
of acts or orders of government agencies or instrumentalities, if the issues raised are of
paramount public interest, and if they immediately affect the social, economic and moral
well being of the people.
Moreover, the mere fact that he is a citizen satisfies the requirement of personal
interest, when the proceeding involves the assertion of a public right, such as in this
35
case. He invokes several decisions of this Court which have set aside the procedural
matter of locus standi, when the subject of the case involved public interest.
xxx
In Taada v. Tuvera, the Court asserted that when the issue concerns a public right and
the object of mandamus is to obtain the enforcement of a public duty, the people are
regarded as the real parties in interest; and because it is sufficient that petitioner is a
citizen and as such is interested in the execution of the laws, he need not show that he
has any legal or special interest in the result of the action. In the aforesaid case, the
petitioners sought to enforce their right to be informed on matters of public concern, a
right then recognized in Section 6, Article IV of the 1973 Constitution, in connection with
the rule that laws in order to be valid and enforceable must be published in the Official
Gazette or otherwise effectively promulgated. In ruling for the petitioners' legal
standing, the Court declared that the right they sought to be enforced is a public right
recognized by no less than the fundamental law of the land.
Legaspi v. Civil Service Commission, while reiterating Taada, further declared that
when a mandamus proceeding involves the assertion of a public right, the requirement
of personal interest is satisfied by the mere fact that petitioner is a citizen and,
therefore, part of the general 'public' which possesses the right.
Further, in Albano v. Reyes, we said that while expenditure of public funds may not
have been involved under the questioned contract for the development, management
and operation of the Manila International Container Terminal, public interest [was]
definitely involved considering the important role [of the subject contract] . . . in the
economic development of the country and the magnitude of the financial consideration
involved. We concluded that, as a consequence, the disclosure provision in the
Constitution would constitute sufficient authority for upholding the petitioner's standing.
Similarly, the instant petition is anchored on the right of the people to information and
access to official records, documents and papers a right guaranteed under Section 7,
Article III of the 1987 Constitution. Petitioner, a former solicitor general, is a Filipino
citizen. Because of the satisfaction of the two basic requisites laid down by decisional
law to sustain petitioner's legal standing, i.e. (1) the enforcement of a public right (2)
espoused by a Filipino citizen, we rule that the petition at bar should be allowed.
We rule that since the instant petition, brought by a citizen, involves the
enforcement of constitutional rights - to information and to the equitable diffusion of
natural resources - matters of transcendental public importance, the petitioner has the
requisite locus standi.
Fifth issue: whether the constitutional right to information includes official
information on on-going negotiations before a final agreement.
Section 7, Article III of the Constitution explains the peoples right to information on
matters of public concern in this manner:
Sec. 7. The right of the people to information on matters of public concern shall be
recognized. Access to official records, and to documents, and papers pertaining
to official acts, transactions, or decisions, as well as to government research data
used as basis for policy development, shall be afforded the citizen, subject to such
limitations as may be provided by law. (Emphasis supplied)
The State policy of full transparency in all transactions involving public interest
reinforces the peoples right to information on matters of public concern. This State
policy is expressed in Section 28, Article II of the Constitution, thus:
Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and
implements a policy of full public disclosure of all its transactions involving public
interest. (Emphasis supplied)
These twin provisions of the Constitution seek to promote transparency in policy-
making and in the operations of the government, as well as provide the people
sufficient information to exercise effectively other constitutional rights. These twin
provisions are essential to the exercise of freedom of expression. If the government
does not disclose its official acts, transactions and decisions to citizens, whatever
citizens say, even if expressed without any restraint, will be speculative and amount to
nothing. These twin provisions are also essential to hold public officials at all times x x x
accountable to the people,[29] for unless citizens have the proper information, they
cannot hold public officials accountable for anything. Armed with the right information,
citizens can participate in public discussions leading to the formulation of government
policies and their effective implementation. An informed citizenry is essential to the
existence and proper functioning of any democracy. As explained by the Court
in Valmonte v. Belmonte, Jr.[30]
An essential element of these freedoms is to keep open a continuing dialogue or
process of communication between the government and the people. It is in the interest
of the State that the channels for free political discussion be maintained to the end that
the government may perceive and be responsive to the peoples will. Yet, this open
dialogue can be effective only to the extent that the citizenry is informed and thus able
to formulate its will intelligently. Only when the participants in the discussion are aware
of the issues and have access to information relating thereto can such bear fruit.
PEA asserts, citing Chavez v. PCGG,[31] that in cases of on-going negotiations
the right to information is limited to definite propositions of the government. PEA
maintains the right does not include access to intra-agency or inter-agency
recommendations or communications during the stage when common assertions are
still in the process of being formulated or are in the exploratory stage.
Also, AMARI contends that petitioner cannot invoke the right at the pre-decisional
stage or before the closing of the transaction. To support its contention, AMARI cites
the following discussion in the 1986 Constitutional Commission:
Mr. Suarez. And when we say transactions which should be distinguished from
contracts, agreements, or treaties or whatever, does the Gentleman refer to the steps
leading to the consummation of the contract, or does he refer to the contract itself?
Mr. Ople: The transactions used here, I suppose is generic and therefore, it can
cover both steps leading to a contract and already a consummated contract, Mr.
Presiding Officer.
Mr. Suarez: This contemplates inclusion of negotiations leading to the
consummation of the transaction.
Mr. Ople: Yes, subject only to reasonable safeguards on the national interest.
Mr. Suarez: Thank you.[32] (Emphasis supplied)
36
AMARI argues there must first be a consummated contract before petitioner can invoke
the right. Requiring government officials to reveal their deliberations at the pre-
decisional stage will degrade the quality of decision-making in government
agencies. Government officials will hesitate to express their real sentiments during
deliberations if there is immediate public dissemination of their discussions, putting
them under all kinds of pressure before they decide.
We must first distinguish between information the law on public bidding requires
PEA to disclose publicly, and information the constitutional right to information requires
PEA to release to the public. Before the consummation of the contract, PEA must, on
its own and without demand from anyone, disclose to the public matters relating to the
disposition of its property.These include the size, location, technical description and
nature of the property being disposed of, the terms and conditions of the disposition,
the parties qualified to bid, the minimum price and similar information. PEA must
prepare all these data and disclose them to the public at the start of the disposition
process, long before the consummation of the contract, because the Government
Auditing Code requires public bidding. If PEA fails to make this disclosure, any citizen
can demand from PEA this information at any time during the bidding process.
Information, however, on on-going evaluation or review of bids or proposals
being undertaken by the bidding or review committee is not immediately accessible
under the right to information. While the evaluation or review is still on-going, there are
no official acts, transactions, or decisions on the bids or proposals. However, once the
committee makes its official recommendation, there arises a definite proposition on
the part of the government. From this moment, the publics right to information attaches,
and any citizen can access all the non-proprietary information leading to such definite
proposition. In Chavez v. PCGG,[33] the Court ruled as follows:
Considering the intent of the framers of the Constitution, we believe that it is incumbent
upon the PCGG and its officers, as well as other government representatives, to
disclose sufficient public information on any proposed settlement they have decided to
take up with the ostensible owners and holders of ill-gotten wealth. Such information,
though, must pertain to definite propositions of the government, not necessarily to
intra-agency or inter-agency recommendations or communications during the stage
when common assertions are still in the process of being formulated or are in the
exploratory stage. There is need, of course, to observe the same restrictions on
disclosure of information in general, as discussed earlier such as on matters involving
national security, diplomatic or foreign relations, intelligence and other classified
information. (Emphasis supplied)
Contrary to AMARIs contention, the commissioners of the 1986 Constitutional
Commission understood that the right to information contemplates inclusion of
negotiations leading to the consummation of the transaction. Certainly, a
consummated contract is not a requirement for the exercise of the right to
information. Otherwise, the people can never exercise the right if no contract is
consummated, and if one is consummated, it may be too late for the public to expose
its defects.
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-equal branch of
government. A frank exchange of exploratory ideas and assessments, free from the
glare of publicity and pressure by interested parties, is essential to protect the
independence of decision-making of those tasked to exercise Presidential, Legislative
and Judicial power.[39] This is not the situation in the instant case.
We rule, therefore, that the constitutional right to information includes official
information on on-going negotiations before a final contract. The information,
however, must constitute definite propositions by the government and should not cover
recognized exceptions like privileged information, military and diplomatic secrets and
similar matters affecting national security and public order. [40] Congress has also
prescribed other limitations on the right to information in several legislations. [41]
Sixth issue: whether stipulations in the Amended JVA for the transfer to AMARI
of lands, reclaimed or to be reclaimed, violate the Constitution.
The Regalian Doctrine
37
 The ownership of lands reclaimed from foreshore and submerged areas is rooted
in the Regalian doctrine which holds that the State owns all lands and waters of the
public domain.Upon the Spanish conquest of the Philippines, ownership of all lands,
territories and possessions in the Philippines passed to the Spanish Crown. [42] The
King, as the sovereign ruler and representative of the people, acquired and owned all
lands and territories in the Philippines except those he disposed of by grant or sale to
private individuals.
The 1935, 1973 and 1987 Constitutions adopted the Regalian doctrine
substituting, however, the State, in lieu of the King, as the owner of all lands and waters
of the public domain.The Regalian doctrine is the foundation of the time-honored
principle of land ownership that all lands that were not acquired from the Government,
either by purchase or by grant, belong to the public domain. [43] Article 339 of the Civil
Code of 1889, which is now Article 420 of the Civil Code of 1950, incorporated the
Regalian doctrine.
Ownership and Disposition of Reclaimed Lands
The Spanish Law of Waters of 1866 was the first statutory law governing the
ownership and disposition of reclaimed lands in the Philippines. On May 18, 1907, the
Philippine Commission enacted Act No. 1654 which provided for the lease, but not
the sale, of reclaimed lands of the government to corporations and individuals.
Later, on November 29, 1919, the Philippine Legislature approved Act No. 2874, the
Public Land Act, which authorized the lease, but not the sale, of reclaimed lands of
the government to corporations and individuals. On November 7, 1936, the
National Assembly passed Commonwealth Act No. 141, also known as the Public Land
Act, which authorized the lease, but not the sale, of reclaimed lands of the
government to corporations and individuals. CA No. 141 continues to this day as
the general law governing the classification and disposition of lands of the public
domain.
The Spanish Law of Waters of 1866 and the Civil Code of 1889
Under the Spanish Law of Waters of 1866, the shores, bays, coves, inlets and all
waters within the maritime zone of the Spanish territory belonged to the public domain
for public use.[44] The Spanish Law of Waters of 1866 allowed the reclamation of the
sea under Article 5, which provided as follows:
Article 5. Lands reclaimed from the sea in consequence of works constructed by the
State, or by the provinces, pueblos or private persons, with proper permission, shall
become the property of the party constructing such works, unless otherwise provided
by the terms of the grant of authority.
Under the Spanish Law of Waters, land reclaimed from the sea belonged to the party
undertaking the reclamation, provided the government issued the necessary permit and
did not reserve ownership of the reclaimed land to the State.
Article 339 of the Civil Code of 1889 defined property of public dominion as
follows:
Art. 339. Property of public dominion is
1. That devoted to public use, such as roads, canals, rivers, torrents, ports
and bridges constructed by the State, riverbanks, shores, roadsteads,
and that of a similar character;
2. That belonging exclusively to the State which, without being of general
public use, is employed in some public service, or in the development of
the national wealth, such as walls, fortresses, and other works for the
defense of the territory, and mines, until granted to private individuals.
Property devoted to public use referred to property open for use by the public. In
contrast, property devoted to public service referred to property used for some specific
public service and open only to those authorized to use the property.
Property of public dominion referred not only to property devoted to public use,
but also to property not so used but employed to develop the national wealth. This
class of property constituted property of public dominion although employed for some
economic or commercial activity to increase the national wealth.
Article 341 of the Civil Code of 1889 governed the re-classification of property of
public dominion into private property, to wit:
Art. 341. Property of public dominion, when no longer devoted to public use or to the
defense of the territory, shall become a part of the private property of the State.
This provision, however, was not self-executing. The legislature, or the executive
department pursuant to law, must declare the property no longer needed for public use
or territorial defense before the government could lease or alienate the property to
private parties.[45]
Act No. 1654 of the Philippine Commission
On May 8, 1907, the Philippine Commission enacted Act No. 1654 which
regulated the lease of reclaimed and foreshore lands. The salient provisions of this law
were as follows:
Section 1. The control and disposition of the foreshore as defined in existing law,
and the title to all Government or public lands made or reclaimed by the
Government by dredging or filling or otherwise throughout the Philippine
Islands, shall be retained by the Government without prejudice to vested rights and
without prejudice to rights conceded to the City of Manila in the Luneta Extension.
Section 2. (a) The Secretary of the Interior shall cause all Government or public lands
made or reclaimed by the Government by dredging or filling or otherwise to be divided
into lots or blocks, with the necessary streets and alleyways located thereon, and shall
cause plats and plans of such surveys to be prepared and filed with the Bureau of
Lands.
(b) Upon completion of such plats and plans the Governor-General shall give notice
to the public that such parts of the lands so made or reclaimed as are not needed
for public purposes will be leased for commercial and business purposes, x x x.
xxx
(e) The leases above provided for shall be disposed of to the highest and best
bidder therefore, subject to such regulations and safeguards as the Governor-General
may by executive order prescribe. (Emphasis supplied)
Act No. 1654 mandated that the government should retain title to all lands
reclaimed by the government. The Act also vested in the government control and
disposition of foreshore lands. Private parties could lease lands reclaimed by the
government only if these lands were no longer needed for public purpose. Act No. 1654
38
mandated public bidding in the lease of government reclaimed lands. Act No. 1654
made government reclaimed lands sui generis in that unlike other public lands which
the government could sell to private parties, these reclaimed lands were available only
for lease to private parties.
Act No. 1654, however, did not repeal Section 5 of the Spanish Law of Waters of
1866. Act No. 1654 did not prohibit private parties from reclaiming parts of the sea
under Section 5 of the Spanish Law of Waters. Lands reclaimed from the sea by private
parties with government permission remained private lands.
Act No. 2874 of the Philippine Legislature
On November 29, 1919, the Philippine Legislature enacted Act No. 2874, the
Public Land Act.[46] The salient provisions of Act No. 2874, on reclaimed lands, were as
follows:
Sec. 6. The Governor-General, upon the recommendation of the Secretary of
Agriculture and Natural Resources, shall from time to time classify the lands of
the public domain into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands, x x x.
Sec. 7. For the purposes of the government and disposition of alienable or disposable
public lands, the Governor-General, upon recommendation by the Secretary of
Agriculture and Natural Resources, shall from time to time declare what lands are
open to disposition or concession under this Act.
Sec. 8. Only those lands shall be declared open to disposition or concession
which have been officially delimited or classified x x x.
xxx
Sec. 55. Any tract of land of the public domain which, being neither timber nor mineral
land, shall be classified as suitable for residential purposes or for commercial,
industrial, or other productive purposes other than agricultural purposes, and
shall be open to disposition or concession, shall be disposed of under the provisions of
this chapter, and not otherwise.
Sec. 56. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other
means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or
banks of navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
x x x.
Sec. 58. The lands comprised in classes (a), (b), and (c) of section fifty-six shall
be disposed of to private parties by lease only and not otherwise, as soon as the
Governor-General, upon recommendation by the Secretary of Agriculture and
Natural Resources, shall declare that the same are not necessary for the public
service and are open to disposition under this chapter. The lands included in class
(d) may be disposed of by sale or lease under the provisions of this
Act. (Emphasis supplied)
Section 6 of Act No. 2874 authorized the Governor-General to classify lands of
the public domain into x x x alienable or disposable [47] lands. Section 7 of the Act
empowered the Governor-General to declare what lands are open to disposition or
concession. Section 8 of the Act limited alienable or disposable lands only to those
lands which have been officially delimited and classified.
Section 56 of Act No. 2874 stated that lands disposable under this title[48] shall be
classified as government reclaimed, foreshore and marshy lands, as well as other
lands. All these lands, however, must be suitable for residential, commercial, industrial
or other productive non-agricultural purposes. These provisions vested upon the
Governor-General the power to classify inalienable lands of the public domain into
disposable lands of the public domain. These provisions also empowered the
Governor-General to classify further such disposable lands of the public domain into
government reclaimed, foreshore or marshy lands of the public domain, as well as other
non-agricultural lands.
Section 58 of Act No. 2874 categorically mandated that disposable lands of the
public domain classified as government reclaimed, foreshore and marshy lands shall
be disposed of to private parties by lease only and not otherwise. The Governor-
General, before allowing the lease of these lands to private parties, must formally
declare that the lands were not necessary for the public service. Act No. 2874 reiterated
the State policy to lease and not to sell government reclaimed, foreshore and marshy
lands of the public domain, a policy first enunciated in 1907 in Act No.
1654. Government reclaimed, foreshore and marshy lands remained sui generis, as
the only alienable or disposable lands of the public domain that the government could
not sell to private parties.
The rationale behind this State policy is obvious. Government reclaimed,
foreshore and marshy public lands for non-agricultural purposes retain their inherent
potential as areas for public service. This is the reason the government prohibited the
sale, and only allowed the lease, of these lands to private parties. The State always
reserved these lands for some future public service.
Act No. 2874 did not authorize the reclassification of government reclaimed,
foreshore and marshy lands into other non-agricultural lands under Section 56
(d). Lands falling under Section 56 (d) were the only lands for non-agricultural purposes
the government could sell to private parties. Thus, under Act No. 2874, the government
could not sell government reclaimed, foreshore and marshy lands to private
parties, unless the legislature passed a law allowing their sale.[49]
Act No. 2874 did not prohibit private parties from reclaiming parts of the sea
pursuant to Section 5 of the Spanish Law of Waters of 1866. Lands reclaimed from the
sea by private parties with government permission remained private lands.
Dispositions under the 1935 Constitution
On May 14, 1935, the 1935 Constitution took effect upon its ratification by the
Filipino people. The 1935 Constitution, in adopting the Regalian doctrine, declared in
Section 1, Article XIII, that
39
Section 1. All agricultural, timber, and mineral lands of the public domain, waters,
minerals, coal, petroleum, and other mineral oils, all forces of potential energy and
other natural resources of the Philippines belong to the State, and their disposition,
exploitation, development, or utilization shall be limited to citizens of the Philippines or
to corporations or associations at least sixty per centum of the capital of which is owned
by such citizens, subject to any existing right, grant, lease, or concession at the time of
the inauguration of the Government established under this Constitution. Natural
resources, with the exception of public agricultural land, shall not be alienated,
and no license, concession, or lease for the exploitation, development, or utilization of
any of the natural resources shall be granted for a period exceeding twenty-five years,
renewable for another twenty-five years, except as to water rights for irrigation, water
supply, fisheries, or industrial uses other than the development of water power, in which
cases beneficial use may be the measure and limit of the grant. (Emphasis supplied)
The 1935 Constitution barred the alienation of all natural resources except public
agricultural lands, which were the only natural resources the State could alienate. Thus,
foreshore lands, considered part of the States natural resources, became inalienable by
constitutional fiat, available only for lease for 25 years, renewable for another 25
years. The government could alienate foreshore lands only after these lands were
reclaimed and classified as alienable agricultural lands of the public
domain. Government reclaimed and marshy lands of the public domain, being neither
timber nor mineral lands, fell under the classification of public agricultural
lands.[50] However, government reclaimed and marshy lands, although subject to
classification as disposable public agricultural lands, could only be leased and not sold
to private parties because of Act No. 2874.
The prohibition on private parties from acquiring ownership of government
reclaimed and marshy lands of the public domain was only a statutory prohibition and
the legislature could therefore remove such prohibition. The 1935 Constitution did not
prohibit individuals and corporations from acquiring government reclaimed and marshy
lands of the public domain that were classified as agricultural lands under existing
public land laws. Section 2, Article XIII of the 1935 Constitution provided as follows:
Section 2. No private corporation or association may acquire, lease, or hold
public agricultural lands in excess of one thousand and twenty four hectares, nor
may any individual acquire such lands by purchase in excess of one hundred
and forty hectares, or by lease in excess of one thousand and twenty-four hectares, or
by homestead in excess of twenty-four hectares. Lands adapted to grazing, not
exceeding two thousand hectares, may be leased to an individual, private corporation,
or association. (Emphasis supplied)
Still, after the effectivity of the 1935 Constitution, the legislature did not repeal Section
58 of Act No. 2874 to open for sale to private parties government reclaimed and marshy
lands of the public domain. On the contrary, the legislature continued the long
established State policy of retaining for the government title and ownership of
government reclaimed and marshy lands of the public domain.
Commonwealth Act No. 141 of the Philippine National Assembly
On November 7, 1936, the National Assembly approved Commonwealth Act No.
141, also known as the Public Land Act, which compiled the then existing laws on lands
of the public domain. CA No. 141, as amended, remains to this day the existing
general law governing the classification and disposition of lands of the public domain
other than timber and mineral lands.[51]
Section 6 of CA No. 141 empowers the President to classify lands of the public
domain into alienable or disposable[52] lands of the public domain, which prior to such
classification are inalienable and outside the commerce of man. Section 7 of CA No.
141 authorizes the President to declare what lands are open to disposition or
concession. Section 8 of CA No. 141 states that the government can declare open for
disposition or concession only lands that are officially delimited and classified. Sections
6, 7 and 8 of CA No. 141 read as follows:
Sec. 6. The President, upon the recommendation of the Secretary of Agriculture
and Commerce, shall from time to time classify the lands of the public domain
into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands,
and may at any time and in like manner transfer such lands from one class to
another,[53] for the purpose of their administration and disposition.
Sec. 7. For the purposes of the administration and disposition of alienable or
disposable public lands, the President, upon recommendation by the Secretary of
Agriculture and Commerce, shall from time to time declare what lands are open
to disposition or concession under this Act.
Sec. 8. Only those lands shall be declared open to disposition or concession
which have been officially delimited and classified and, when practicable, surveyed,
and which have not been reserved for public or quasi-public uses, nor
appropriated by the Government, nor in any manner become private property, nor those
on which a private right authorized and recognized by this Act or any other valid law
may be claimed, or which, having been reserved or appropriated, have ceased to be
so. x x x.
Thus, before the government could alienate or dispose of lands of the public domain,
the President must first officially classify these lands as alienable or disposable, and
then declare them open to disposition or concession. There must be no law reserving
these lands for public or quasi-public uses.
The salient provisions of CA No. 141, on government reclaimed, foreshore and
marshy lands of the public domain, are as follows:
Sec. 58. Any tract of land of the public domain which, being neither timber nor
mineral land, is intended to be used for residential purposes or for commercial,
industrial, or other productive purposes other than agricultural, and is open to
disposition or concession, shall be disposed of under the provisions of this
chapter and not otherwise.
Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other
means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or
banks of navigable lakes or rivers;
40
(d) Lands not included in any of the foregoing classes.
Sec. 60. Any tract of land comprised under this title may be leased or sold, as the case
may be, to any person, corporation, or association authorized to purchase or lease
public lands for agricultural purposes. x x x.
Sec. 61. The lands comprised in classes (a), (b), and (c) of section fifty-nine shall
be disposed of to private parties by lease only and not otherwise, as soon as the
President, upon recommendation by the Secretary of Agriculture, shall declare that
the same are not necessary for the public service and are open to disposition under
this chapter. The lands included in class (d) may be disposed of by sale or lease
under the provisions of this Act. (Emphasis supplied)
Section 61 of CA No. 141 readopted, after the effectivity of the 1935 Constitution,
Section 58 of Act No. 2874 prohibiting the sale of government reclaimed, foreshore and
marshy disposable lands of the public domain. All these lands are intended for
residential, commercial, industrial or other non-agricultural purposes. As before, Section
61 allowed only the lease of such lands to private parties. The government could sell to
private parties only lands falling under Section 59 (d) of CA No. 141, or those lands for
non-agricultural purposes not classified as government reclaimed, foreshore and
marshy disposable lands of the public domain. Foreshore lands, however, became
inalienable under the 1935 Constitution which only allowed the lease of these lands to
qualified private parties.
Section 58 of CA No. 141 expressly states that disposable lands of the public
domain intended for residential, commercial, industrial or other productive purposes
other than agricultural shall be disposed of under the provisions of this chapter
and not otherwise. Under Section 10 of CA No. 141, the term disposition includes
lease of the land. Any disposition of government reclaimed, foreshore and marshy
disposable lands for non-agricultural purposes must comply with Chapter IX, Title III of
CA No. 141,[54] unless a subsequent law amended or repealed these provisions.
In his concurring opinion in the landmark case of Republic Real Estate
Corporation v. Court of Appeals,[55] Justice Reynato S. Puno summarized succinctly
the law on this matter, as follows:
Foreshore lands are lands of public dominion intended for public use. So too are lands
reclaimed by the government by dredging, filling, or other means. Act 1654 mandated
that the control and disposition of the foreshore and lands under water remained in the
national government. Said law allowed only the leasing of reclaimed land. The Public
Land Acts of 1919 and 1936 also declared that the foreshore and lands reclaimed by
the government were to be disposed of to private parties by lease only and not
otherwise. Before leasing, however, the Governor-General, upon recommendation of
the Secretary of Agriculture and Natural Resources, had first to determine that the land
reclaimed was not necessary for the public service. This requisite must have been met
before the land could be disposed of. But even then, the foreshore and lands under
water were not to be alienated and sold to private parties. The disposition of the
reclaimed land was only by lease. The land remained property of the
State. (Emphasis supplied)
As observed by Justice Puno in his concurring opinion, Commonwealth Act No. 141
has remained in effect at present.
The State policy prohibiting the sale to private parties of government reclaimed,
foreshore and marshy alienable lands of the public domain, first implemented in 1907
was thus reaffirmed in CA No. 141 after the 1935 Constitution took effect. The
prohibition on the sale of foreshore lands, however, became a constitutional edict under
the 1935 Constitution. Foreshore lands became inalienable as natural resources of the
State, unless reclaimed by the government and classified as agricultural lands of the
public domain, in which case they would fall under the classification of government
reclaimed lands.
After the effectivity of the 1935 Constitution, government reclaimed and marshy
disposable lands of the public domain continued to be only leased and not sold to
private parties.[56]These lands remained sui generis, as the only alienable or
disposable lands of the public domain the government could not sell to private parties.
Since then and until now, the only way the government can sell to private parties
government reclaimed and marshy disposable lands of the public domain is for the
legislature to pass a law authorizing such sale. CA No. 141 does not authorize the
President to reclassify government reclaimed and marshy lands into other non-
agricultural lands under Section 59 (d). Lands classified under Section 59 (d) are the
only alienable or disposable lands for non-agricultural purposes that the government
could sell to private parties.
Moreover, Section 60 of CA No. 141 expressly requires congressional authority
before lands under Section 59 that the government previously transferred to
government units or entities could be sold to private parties. Section 60 of CA No. 141
declares that
Sec. 60. x x x The area so leased or sold shall be such as shall, in the judgment of the
Secretary of Agriculture and Natural Resources, be reasonably necessary for the
purposes for which such sale or lease is requested, and shall not exceed one hundred
and forty-four hectares: Provided, however, That this limitation shall not apply to grants,
donations, or transfers made to a province, municipality or branch or subdivision of the
Government for the purposes deemed by said entities conducive to the public
interest; but the land so granted, donated, or transferred to a province,
municipality or branch or subdivision of the Government shall not be alienated,
encumbered, or otherwise disposed of in a manner affecting its title, except when
authorized by Congress: x x x. (Emphasis supplied)
The congressional authority required in Section 60 of CA No. 141 mirrors the legislative
authority required in Section 56 of Act No. 2874.
One reason for the congressional authority is that Section 60 of CA No. 141
exempted government units and entities from the maximum area of public lands that
could be acquired from the State. These government units and entities should not just
turn around and sell these lands to private parties in violation of constitutional or
statutory limitations. Otherwise, the transfer of lands for non-agricultural purposes to
government units and entities could be used to circumvent constitutional limitations on
ownership of alienable or disposable lands of the public domain. In the same manner,
such transfers could also be used to evade the statutory prohibition in CA No. 141 on
the sale of government reclaimed and marshy lands of the public domain to private
parties. Section 60 of CA No. 141 constitutes by operation of law a lien on these
lands.[57]
In case of sale or lease of disposable lands of the public domain falling under
Section 59 of CA No. 141, Sections 63 and 67 require a public bidding. Sections 63
and 67 of CA No. 141 provide as follows:
41
Sec. 63. Whenever it is decided that lands covered by this chapter are not needed for
public purposes, the Director of Lands shall ask the Secretary of Agriculture and
Commerce (now the Secretary of Natural Resources) for authority to dispose of the
same. Upon receipt of such authority, the Director of Lands shall give notice by public
advertisement in the same manner as in the case of leases or sales of agricultural
public land, x x x.
Sec. 67. The lease or sale shall be made by oral bidding; and adjudication shall
be made to the highest bidder. x x x. (Emphasis supplied)
Thus, CA No. 141 mandates the Government to put to public auction all leases or sales
of alienable or disposable lands of the public domain. [58]
Like Act No. 1654 and Act No. 2874 before it, CA No. 141 did not repeal Section 5
of the Spanish Law of Waters of 1866. Private parties could still reclaim portions of the
sea with government permission. However, the reclaimed land could become private
land only if classified as alienable agricultural land of the public domain open to
disposition under CA No. 141. The 1935 Constitution prohibited the alienation of all
natural resources except public agricultural lands.
The Civil Code of 1950
The Civil Code of 1950 readopted substantially the definition of property of public
dominion found in the Civil Code of 1889. Articles 420 and 422 of the Civil Code of
1950 state that
Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents,
ports and bridges constructed by the State, banks, shores, roadsteads,
and others of similar character;
(2) Those which belong to the State, without being for public use, and are
intended for some public service or for the development of the national
wealth.
x x x.
Art. 422. Property of public dominion, when no longer intended for public use or for
public service, shall form part of the patrimonial property of the State.
Again, the government must formally declare that the property of public dominion
is no longer needed for public use or public service, before the same could be classified
as patrimonial property of the State.[59] In the case of government reclaimed and
marshy lands of the public domain, the declaration of their being disposable, as well as
the manner of their disposition, is governed by the applicable provisions of CA No. 141.
Like the Civil Code of 1889, the Civil Code of 1950 included as property of public
dominion those properties of the State which, without being for public use, are intended
for public service or the development of the national wealth. Thus, government
reclaimed and marshy lands of the State, even if not employed for public use or public
service, if developed to enhance the national wealth, are classified as property of public
dominion.
Dispositions under the 1973 Constitution
The 1973 Constitution, which took effect on January 17, 1973, likewise adopted
the Regalian doctrine. Section 8, Article XIV of the 1973 Constitution stated that
Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other
mineral oils, all forces of potential energy, fisheries, wildlife, and other natural resources
of the Philippines belong to the State. With the exception of agricultural, industrial
or commercial, residential, and resettlement lands of the public domain, natural
resources shall not be alienated, and no license, concession, or lease for the
exploration, development, exploitation, or utilization of any of the natural resources
shall be granted for a period exceeding twenty-five years, renewable for not more than
twenty-five years, except as to water rights for irrigation, water supply, fisheries, or
industrial uses other than the development of water power, in which cases, beneficial
use may be the measure and the limit of the grant. (Emphasis supplied)
The 1973 Constitution prohibited the alienation of all natural resources with the
exception of agricultural, industrial or commercial, residential, and resettlement lands of
the public domain. In contrast, the 1935 Constitution barred the alienation of all natural
resources except public agricultural lands. However, the term public agricultural lands
in the 1935 Constitution encompassed industrial, commercial, residential and
resettlement lands of the public domain.[60] If the land of public domain were neither
timber nor mineral land, it would fall under the classification of agricultural land of the
public domain. Both the 1935 and 1973 Constitutions, therefore, prohibited the
alienation of all natural resources except agricultural lands of the public domain.
The 1973 Constitution, however, limited the alienation of lands of the public
domain to individuals who were citizens of the Philippines. Private corporations, even if
wholly owned by Philippine citizens, were no longer allowed to acquire alienable lands
of the public domain unlike in the 1935 Constitution. Section 11, Article XIV of the 1973
Constitution declared that
Sec. 11. The Batasang Pambansa, taking into account conservation, ecological, and
development requirements of the natural resources, shall determine by law the size of
land of the public domain which may be developed, held or acquired by, or leased to,
any qualified individual, corporation, or association, and the conditions therefor. No
private corporation or association may hold alienable lands of the public domain
except by lease not to exceed one thousand hectares in area nor may any citizen hold
such lands by lease in excess of five hundred hectares or acquire by purchase,
homestead or grant, in excess of twenty-four hectares. No private corporation or
association may hold by lease, concession, license or permit, timber or forest lands and
other timber or forest resources in excess of one hundred thousand hectares. However,
such area may be increased by the Batasang Pambansa upon recommendation of the
National Economic and Development Authority. (Emphasis supplied)
Thus, under the 1973 Constitution, private corporations could hold alienable lands
of the public domain only through lease. Only individuals could now acquire alienable
lands of the public domain, and private corporations became absolutely barred
from acquiring any kind of alienable land of the public domain. The constitutional
ban extended to all kinds of alienable lands of the public domain, while the statutory
ban under CA No. 141 applied only to government reclaimed, foreshore and marshy
alienable lands of the public domain.
PD No. 1084 Creating the Public Estates Authority
On February 4, 1977, then President Ferdinand Marcos issued Presidential
Decree No. 1084 creating PEA, a wholly government owned and controlled corporation
with a special charter. Sections 4 and 8 of PD No. 1084, vests PEA with the following
purposes and powers:
42
Sec. 4. Purpose. The Authority is hereby created for the following purposes:
(a) To reclaim land, including foreshore and submerged areas, by
dredging, filling or other means, or to acquire reclaimed land;
(b) To develop, improve, acquire, administer, deal in, subdivide,
dispose, lease and sell any and all kinds of lands, buildings, estates and
other forms of real property, owned, managed, controlled and/or operated by
the government;
(c) To provide for, operate or administer such service as may be necessary for the
efficient, economical and beneficial utilization of the above properties.
Sec. 5. Powers and functions of the Authority. The Authority shall, in carrying out the
purposes for which it is created, have the following powers and functions:
(a)To prescribe its by-laws.
xxx
(i) To hold lands of the public domain in excess of the area permitted to
private corporations by statute.
(j) To reclaim lands and to construct work across, or otherwise, any stream,
watercourse, canal, ditch, flume x x x.
xxx
(o) To perform such acts and exercise such functions as may be necessary for the
attainment of the purposes and objectives herein specified. (Emphasis supplied)
PD No. 1084 authorizes PEA to reclaim both foreshore and submerged areas of
the public domain. Foreshore areas are those covered and uncovered by the ebb and
flow of the tide.[61] Submerged areas are those permanently under water regardless of
the ebb and flow of the tide.[62] Foreshore and submerged areas indisputably belong to
the public domain[63] and are inalienable unless reclaimed, classified as alienable lands
open to disposition, and further declared no longer needed for public service.
The ban in the 1973 Constitution on private corporations from acquiring alienable
lands of the public domain did not apply to PEA since it was then, and until today, a
fully owned government corporation. The constitutional ban applied then, as it still
applies now, only to private corporations and associations. PD No. 1084 expressly
empowers PEA to hold lands of the public domain even in excess of the area
permitted to private corporations by statute. Thus, PEA can hold title to private
lands, as well as title to lands of the public domain.
In order for PEA to sell its reclaimed foreshore and submerged alienable lands of
the public domain, there must be legislative authority empowering PEA to sell these
lands. This legislative authority is necessary in view of Section 60 of CA No.141, which
states
Sec. 60. x x x; but the land so granted, donated or transferred to a province,
municipality, or branch or subdivision of the Government shall not be alienated,
encumbered or otherwise disposed of in a manner affecting its title, except when
authorized by Congress; x x x. (Emphasis supplied)
Without such legislative authority, PEA could not sell but only lease its reclaimed
foreshore and submerged alienable lands of the public domain. Nevertheless, any
legislative authority granted to PEA to sell its reclaimed alienable lands of the public
domain would be subject to the constitutional ban on private corporations from
acquiring alienable lands of the public domain. Hence, such legislative authority could
only benefit private individuals.
Dispositions under the 1987 Constitution
The 1987 Constitution, like the 1935 and 1973 Constitutions before it, has
adopted the Regalian doctrine. The 1987 Constitution declares that all natural
resources are owned by the State, and except for alienable agricultural lands of the
public domain, natural resources cannot be alienated. Sections 2 and 3, Article XII of
the 1987 Constitution state that
Section 2. All lands of the public domain, waters, minerals, coal, petroleum and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and
fauna, and other natural resources are owned by the State. With the exception of
agricultural lands, all other natural resources shall not be alienated. The
exploration, development, and utilization of natural resources shall be under the full
control and supervision of the State. x x x.
Section 3. Lands of the public domain are classified into agricultural, forest or timber,
mineral lands, and national parks. Agricultural lands of the public domain may be
further classified by law according to the uses which they may be devoted. Alienable
lands of the public domain shall be limited to agricultural lands. Private
corporations or associations may not hold such alienable lands of the public
domain except by lease, for a period not exceeding twenty-five years, renewable
for not more than twenty-five years, and not to exceed one thousand hectares in
area. Citizens of the Philippines may lease not more than five hundred hectares, or
acquire not more than twelve hectares thereof by purchase, homestead, or grant.
Taking into account the requirements of conservation, ecology, and development, and
subject to the requirements of agrarian reform, the Congress shall determine, by law,
the size of lands of the public domain which may be acquired, developed, held, or
leased and the conditions therefor. (Emphasis supplied)
The 1987 Constitution continues the State policy in the 1973 Constitution banning
private corporations from acquiring any kind of alienable land of the public
domain. Like the 1973 Constitution, the 1987 Constitution allows private corporations
to hold alienable lands of the public domain only through lease. As in the 1935 and
1973 Constitutions, the general law governing the lease to private corporations of
reclaimed, foreshore and marshy alienable lands of the public domain is still CA No.
141.
The Rationale behind the Constitutional Ban
The rationale behind the constitutional ban on corporations from acquiring, except
through lease, alienable lands of the public domain is not well understood. During the
deliberations of the 1986 Constitutional Commission, the commissioners probed the
rationale behind this ban, thus:
FR. BERNAS: Mr. Vice-President, my questions have reference to page 3, line 5 which
says:
`No private corporation or association may hold alienable lands of the public
domain except by lease, not to exceed one thousand hectares in area.
43
If we recall, this provision did not exist under the 1935 Constitution, but this was
introduced in the 1973 Constitution. In effect, it prohibits private corporations from
acquiring alienable public lands. But it has not been very clear in jurisprudence
what the reason for this is. In some of the cases decided in 1982 and 1983, it was
indicated that the purpose of this is to prevent large landholdings. Is that the
intent of this provision?
MR. VILLEGAS: I think that is the spirit of the provision.
FR. BERNAS: In existing decisions involving the Iglesia ni Cristo, there were instances
where the Iglesia ni Cristo was not allowed to acquire a mere 313-square meter land
where a chapel stood because the Supreme Court said it would be in violation of
this. (Emphasis supplied)
In Ayog v. Cusi,[64] the Court explained the rationale behind this constitutional
ban in this way:
Indeed, one purpose of the constitutional prohibition against purchases of public
agricultural lands by private corporations is to equitably diffuse land ownership or to
encourage owner-cultivatorship and the economic family-size farm and to prevent a
recurrence of cases like the instant case. Huge landholdings by corporations or private
persons had spawned social unrest.
However, if the constitutional intent is to prevent huge landholdings, the Constitution
could have simply limited the size of alienable lands of the public domain that
corporations could acquire. The Constitution could have followed the limitations on
individuals, who could acquire not more than 24 hectares of alienable lands of the
public domain under the 1973 Constitution, and not more than 12 hectares under the
1987 Constitution.
If the constitutional intent is to encourage economic family-size farms, placing the
land in the name of a corporation would be more effective in preventing the break-up of
farmlands. If the farmland is registered in the name of a corporation, upon the death of
the owner, his heirs would inherit shares in the corporation instead of subdivided
parcels of the farmland. This would prevent the continuing break-up of farmlands into
smaller and smaller plots from one generation to the next.
In actual practice, the constitutional ban strengthens the constitutional limitation
on individuals from acquiring more than the allowed area of alienable lands of the
public domain.Without the constitutional ban, individuals who already acquired the
maximum area of alienable lands of the public domain could easily set up corporations
to acquire more alienable public lands. An individual could own as many corporations
as his means would allow him. An individual could even hide his ownership of a
corporation by putting his nominees as stockholders of the corporation. The corporation
is a convenient vehicle to circumvent the constitutional limitation on acquisition by
individuals of alienable lands of the public domain.
The constitutional intent, under the 1973 and 1987 Constitutions, is to transfer
ownership of only a limited area of alienable land of the public domain to a qualified
individual. This constitutional intent is safeguarded by the provision prohibiting
corporations from acquiring alienable lands of the public domain, since the vehicle to
circumvent the constitutional intent is removed. The available alienable public lands are
gradually decreasing in the face of an ever-growing population. The most effective way
to insure faithful adherence to this constitutional intent is to grant or sell alienable lands
of the public domain only to individuals. This, it would seem, is the practical benefit
arising from the constitutional ban.
The Amended Joint Venture Agreement
The subject matter of the Amended JVA, as stated in its second Whereas clause,
consists of three properties, namely:
1. [T]hree partially reclaimed and substantially eroded islands along Emilio
Aguinaldo Boulevard in Paranaque and Las Pinas, Metro Manila, with a
combined titled area of 1,578,441 square meters;
2. [A]nother area of 2,421,559 square meters contiguous to the three
islands; and
3. [A]t AMARIs option as approved by PEA, an additional 350 hectares more
or less to regularize the configuration of the reclaimed area.[65]
PEA confirms that the Amended JVA involves the development of the Freedom Islands
and further reclamation of about 250 hectares x x x, plus an option granted to AMARI to
subsequently reclaim another 350 hectares x x x.[66]
In short, the Amended JVA covers a reclamation area of 750 hectares. Only
157.84 hectares of the 750-hectare reclamation project have been reclaimed, and
the rest of the 592.15 hectares are still submerged areas forming part of Manila
Bay.
Under the Amended JVA, AMARI will reimburse PEA the sum
of P1,894,129,200.00 for PEAs actual cost in partially reclaiming the Freedom Islands.
AMARI will also complete, at its own expense, the reclamation of the Freedom
Islands. AMARI will further shoulder all the reclamation costs of all the other areas,
totaling 592.15 hectares, still to be reclaimed. AMARI and PEA will share, in the
proportion of 70 percent and 30 percent, respectively, the total net usable area which is
defined in the Amended JVA as the total reclaimed area less 30 percent earmarked for
common areas. Title to AMARIs share in the net usable area, totaling 367.5 hectares,
will be issued in the name of AMARI. Section 5.2 (c) of the Amended JVA provides that
x x x, PEA shall have the duty to execute without delay the necessary deed of transfer
or conveyance of the title pertaining to AMARIs Land share based on the Land
Allocation Plan. PEA, when requested in writing by AMARI, shall then cause the
issuance and delivery of the proper certificates of title covering AMARIs Land
Share in the name of AMARI, x x x; provided, that if more than seventy percent (70%)
of the titled area at any given time pertains to AMARI, PEA shall deliver to AMARI only
seventy percent (70%) of the titles pertaining to AMARI, until such time when a
corresponding proportionate area of additional land pertaining to PEA has been
titled. (Emphasis supplied)
Indisputably, under the Amended JVA AMARI will acquire and own a maximum of
367.5 hectares of reclaimed land which will be titled in its name.
To implement the Amended JVA, PEA delegated to the unincorporated PEA-
AMARI joint venture PEAs statutory authority, rights and privileges to reclaim foreshore
and submerged areas in Manila Bay. Section 3.2.a of the Amended JVA states that
PEA hereby contributes to the joint venture its rights and privileges to perform Rawland
Reclamation and Horizontal Development as well as own the Reclamation Area,
44
thereby granting the Joint Venture the full and exclusive right, authority and privilege to
undertake the Project in accordance with the Master Development Plan.
The Amended JVA is the product of a renegotiation of the original JVA dated April 25,
1995 and its supplemental agreement dated August 9, 1995.
The Threshold Issue
The threshold issue is whether AMARI, a private corporation, can acquire and
own under the Amended JVA 367.5 hectares of reclaimed foreshore and submerged
areas in Manila Bay in view of Sections 2 and 3, Article XII of the 1987 Constitution
which state that:
Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and
fauna, and other natural resources are owned by the State. With the exception of
agricultural lands, all other natural resources shall not be alienated. x x x.
xxx
Section 3. x x x Alienable lands of the public domain shall be limited to agricultural
lands. Private corporations or associations may not hold such alienable lands of
the public domain except by lease, x x x.(Emphasis supplied)
Classification of Reclaimed Foreshore and Submerged Areas
PEA readily concedes that lands reclaimed from foreshore or submerged areas of
Manila Bay are alienable or disposable lands of the public domain. In its
Memorandum,[67] PEA admits that
Under the Public Land Act (CA 141, as amended), reclaimed lands are classified as
alienable and disposable lands of the public domain:
Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the government by dredging, filling, or
other means;
x x x. (Emphasis supplied)
Likewise, the Legal Task Force[68] constituted under Presidential Administrative
Order No. 365 admitted in its Report and Recommendation to then President Fidel V.
Ramos, [R]eclaimed lands are classified as alienable and disposable lands of the
public domain.[69] The Legal Task Force concluded that
D. Conclusion
Reclaimed lands are lands of the public domain. However, by statutory authority, the
rights of ownership and disposition over reclaimed lands have been transferred to PEA,
by virtue of which PEA, as owner, may validly convey the same to any qualified person
without violating the Constitution or any statute.
The constitutional provision prohibiting private corporations from holding public land,
except by lease (Sec. 3, Art. XVII,[70] 1987 Constitution), does not apply to reclaimed
lands whose ownership has passed on to PEA by statutory grant.
Under Section 2, Article XII of the 1987 Constitution, the foreshore and
submerged areas of Manila Bay are part of the lands of the public domain, waters x x x
and other natural resources and consequently owned by the State. As such, foreshore
and submerged areas shall not be alienated, unless they are classified as agricultural
lands of the public domain. The mere reclamation of these areas by PEA does not
convert these inalienable natural resources of the State into alienable or disposable
lands of the public domain. There must be a law or presidential proclamation officially
classifying these reclaimed lands as alienable or disposable and open to disposition or
concession. Moreover, these reclaimed lands cannot be classified as alienable or
disposable if the law has reserved them for some public or quasi-public use.[71]
Section 8 of CA No. 141 provides that only those lands shall be declared open to
disposition or concession which have been officially delimited and classified.[72] The
President has the authority to classify inalienable lands of the public domain into
alienable or disposable lands of the public domain, pursuant to Section 6 of CA No.
141. In Laurel vs. Garcia,[73] the Executive Department attempted to sell the Roppongi
property in Tokyo, Japan, which was acquired by the Philippine Government for use as
the Chancery of the Philippine Embassy.Although the Chancery had transferred to
another location thirteen years earlier, the Court still ruled that, under Article 422[74] of
the Civil Code, a property of public dominion retains such character until formally
declared otherwise. The Court ruled that
The fact that the Roppongi site has not been used for a long time for actual Embassy
service does not automatically convert it to patrimonial property. Any such conversion
happens only if the property is withdrawn from public use (Cebu Oxygen and Acetylene
Co. v. Bercilles, 66 SCRA 481 [1975]. A property continues to be part of the public
domain, not available for private appropriation or ownership until there is a
formal declaration on the part of the government to withdraw it from being
such (Ignacio v. Director of Lands, 108 Phil. 335 [1960]. (Emphasis supplied)
PD No. 1085, issued on February 4, 1977, authorized the issuance of special land
patents for lands reclaimed by PEA from the foreshore or submerged areas of Manila
Bay. On January 19, 1988 then President Corazon C. Aquino issued Special Patent
No. 3517 in the name of PEA for the 157.84 hectares comprising the partially reclaimed
Freedom Islands.Subsequently, on April 9, 1999 the Register of Deeds of the
Municipality of Paranaque issued TCT Nos. 7309, 7311 and 7312 in the name of PEA
pursuant to Section 103 of PD No. 1529 authorizing the issuance of certificates of title
corresponding to land patents. To this day, these certificates of title are still in the name
of PEA.
PD No. 1085, coupled with President Aquinos actual issuance of a special patent
covering the Freedom Islands, is equivalent to an official proclamation classifying the
Freedom Islands as alienable or disposable lands of the public domain. PD No. 1085
and President Aquinos issuance of a land patent also constitute a declaration that the
Freedom Islands are no longer needed for public service. The Freedom Islands are
thus alienable or disposable lands of the public domain, open to disposition or
concession to qualified parties.
At the time then President Aquino issued Special Patent No. 3517, PEA had
already reclaimed the Freedom Islands although subsequently there were partial
erosions on some areas. The government had also completed the necessary surveys
on these islands. Thus, the Freedom Islands were no longer part of Manila Bay but part
of the land mass. Section 3, Article XII of the 1987 Constitution classifies lands of the
public domain into agricultural, forest or timber, mineral lands, and national parks.
Being neither timber, mineral, nor national park lands, the reclaimed Freedom Islands
necessarily fall under the classification of agricultural lands of the public domain. Under
the 1987 Constitution, agricultural lands of the public domain are the only natural
45
resources that the State may alienate to qualified private parties. All other natural
resources, such as the seas or bays, are waters x x x owned by the State forming part
of the public domain, and are inalienable pursuant to Section 2, Article XII of the 1987
Constitution.
AMARI claims that the Freedom Islands are private lands because CDCP, then a
private corporation, reclaimed the islands under a contract dated November 20, 1973
with the Commissioner of Public Highways. AMARI, citing Article 5 of the Spanish Law
of Waters of 1866, argues that if the ownership of reclaimed lands may be given to the
party constructing the works, then it cannot be said that reclaimed lands are lands of
the public domain which the State may not alienate. [75] Article 5 of the Spanish Law of
Waters reads as follows:
Article 5. Lands reclaimed from the sea in consequence of works constructed by the
State, or by the provinces, pueblos or private persons, with proper permission, shall
become the property of the party constructing such works, unless otherwise provided
by the terms of the grant of authority. (Emphasis supplied)
Under Article 5 of the Spanish Law of Waters of 1866, private parties could
reclaim from the sea only with proper permission from the State. Private parties could
own the reclaimed land only if not otherwise provided by the terms of the grant of
authority. This clearly meant that no one could reclaim from the sea without permission
from the State because the sea is property of public dominion. It also meant that the
State could grant or withhold ownership of the reclaimed land because any reclaimed
land, like the sea from which it emerged, belonged to the State. Thus, a private person
reclaiming from the sea without permission from the State could not acquire ownership
of the reclaimed land which would remain property of public dominion like the sea it
replaced.[76] Article 5 of the Spanish Law of Waters of 1866 adopted the time-honored
principle of land ownership that all lands that were not acquired from the government,
either by purchase or by grant, belong to the public domain.[77]
Article 5 of the Spanish Law of Waters must be read together with laws
subsequently enacted on the disposition of public lands. In particular, CA No. 141
requires that lands of the public domain must first be classified as alienable or
disposable before the government can alienate them. These lands must not be
reserved for public or quasi-public purposes.[78]Moreover, the contract between CDCP
and the government was executed after the effectivity of the 1973 Constitution which
barred private corporations from acquiring any kind of alienable land of the public
domain. This contract could not have converted the Freedom Islands into private lands
of a private corporation.
Presidential Decree No. 3-A, issued on January 11, 1973, revoked all laws
authorizing the reclamation of areas under water and revested solely in the National
Government the power to reclaim lands. Section 1 of PD No. 3-A declared that
The provisions of any law to the contrary notwithstanding, the reclamation of areas
under water, whether foreshore or inland, shall be limited to the National
Government or any person authorized by it under a proper contract. (Emphasis
supplied)
x x x.
PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866 because
reclamation of areas under water could now be undertaken only by the National
Government or by a person contracted by the National Government. Private parties
may reclaim from the sea only under a contract with the National Government, and no
longer by grant or permission as provided in Section 5 of the Spanish Law of Waters of
1866.
Executive Order No. 525, issued on February 14, 1979, designated PEA as the
National Governments implementing arm to undertake all reclamation projects of the
government, which shall be undertaken by the PEA or through a proper contract
executed by it with any person or entity. Under such contract, a private party
receives compensation for reclamation services rendered to PEA. Payment to the
contractor may be in cash, or in kind consisting of portions of the reclaimed land,
subject to the constitutional ban on private corporations from acquiring alienable lands
of the public domain. The reclaimed land can be used as payment in kind only if the
reclaimed land is first classified as alienable or disposable land open to disposition, and
then declared no longer needed for public service.
The Amended JVA covers not only the Freedom Islands, but also an additional
592.15 hectares which are still submerged and forming part of Manila Bay. There is no
legislative or Presidential act classifying these submerged areas as alienable or
disposable lands of the public domain open to disposition. These submerged
areas are not covered by any patent or certificate of title. There can be no dispute that
these submerged areas form part of the public domain, and in their present state
are inalienable and outside the commerce of man. Until reclaimed from the sea,
these submerged areas are, under the Constitution, waters x x x owned by the State,
forming part of the public domain and consequently inalienable.Only when actually
reclaimed from the sea can these submerged areas be classified as public agricultural
lands, which under the Constitution are the only natural resources that the State may
alienate. Once reclaimed and transformed into public agricultural lands, the government
may then officially classify these lands as alienable or disposable lands open to
disposition.Thereafter, the government may declare these lands no longer needed for
public service. Only then can these reclaimed lands be considered alienable or
disposable lands of the public domain and within the commerce of man.
The classification of PEAs reclaimed foreshore and submerged lands into
alienable or disposable lands open to disposition is necessary because PEA is tasked
under its charter to undertake public services that require the use of lands of the public
domain. Under Section 5 of PD No. 1084, the functions of PEA include the following:
[T]o own or operate railroads, tramways and other kinds of land transportation, x x x;
[T]o construct, maintain and operate such systems of sanitary sewers as may be
necessary; [T]o construct, maintain and operate such storm drains as may be
necessary. PEA is empowered to issue rules and regulations as may be necessary for
the proper use by private parties of any or all of the highways, roads, utilities,
buildings and/or any of its properties and to impose or collect fees or tolls for their
use. Thus, part of the reclaimed foreshore and submerged lands held by the PEA
would actually be needed for public use or service since many of the functions imposed
on PEA by its charter constitute essential public services.
Moreover, Section 1 of Executive Order No. 525 provides that PEA shall be
primarily responsible for integrating, directing, and coordinating all reclamation projects
for and on behalf of the National Government. The same section also states that [A]ll
reclamation projects shall be approved by the President upon recommendation of the
PEA, and shall be undertaken by the PEA or through a proper contract executed by it
with any person or entity; x x x. Thus, under EO No. 525, in relation to PD No. 3-A and
PD No.1084, PEA became the primary implementing agency of the National
46
Government to reclaim foreshore and submerged lands of the public domain. EO No.
525 recognized PEA as the government entity to undertake the reclamation of lands
and ensure their maximum utilization in promoting public welfare and
interests.[79] Since large portions of these reclaimed lands would obviously be needed
for public service, there must be a formal declaration segregating reclaimed lands no
longer needed for public service from those still needed for public service.
Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA shall
belong to or be owned by the PEA, could not automatically operate to classify
inalienable lands into alienable or disposable lands of the public domain. Otherwise,
reclaimed foreshore and submerged lands of the public domain would automatically
become alienable once reclaimed by PEA, whether or not classified as alienable or
disposable.
The Revised Administrative Code of 1987, a later law than either PD No. 1084 or
EO No. 525, vests in the Department of Environment and Natural Resources (DENR for
brevity) the following powers and functions:
Sec. 4. Powers and Functions. The Department shall:
(1) x x x
xxx
(4) Exercise supervision and control over forest lands, alienable and disposable
public lands, mineral resources and, in the process of exercising such control, impose
appropriate taxes, fees, charges, rentals and any such form of levy and collect such
revenues for the exploration, development, utilization or gathering of such resources;
xxx
(14) Promulgate rules, regulations and guidelines on the issuance of licenses,
permits, concessions, lease agreements and such other privileges concerning
the development, exploration and utilization of the countrys marine, freshwater,
and brackish water and over all aquatic resources of the country and shall
continue to oversee, supervise and police our natural resources; cancel or cause
to cancel such privileges upon failure, non-compliance or violations of any regulation,
order, and for all other causes which are in furtherance of the conservation of natural
resources and supportive of the national interest;
(15) Exercise exclusive jurisdiction on the management and disposition of all
lands of the public domain and serve as the sole agency responsible for
classification, sub-classification, surveying and titling of lands in consultation with
appropriate agencies.[80] (Emphasis supplied)
As manager, conservator and overseer of the natural resources of the State,
DENR exercises supervision and control over alienable and disposable public
lands. DENR also exercises exclusive jurisdiction on the management and disposition
of all lands of the public domain. Thus, DENR decides whether areas under water, like
foreshore or submerged areas of Manila Bay, should be reclaimed or not. This means
that PEA needs authorization from DENR before PEA can undertake reclamation
projects in Manila Bay, or in any part of the country.
DENR also exercises exclusive jurisdiction over the disposition of all lands of the
public domain. Hence, DENR decides whether reclaimed lands of PEA should be
classified as alienable under Sections 6[81] and 7[82] of CA No. 141. Once DENR
decides that the reclaimed lands should be so classified, it then recommends to the
President the issuance of a proclamation classifying the lands as alienable or
disposable lands of the public domain open to disposition. We note that then DENR
Secretary Fulgencio S. Factoran, Jr. countersigned Special Patent No. 3517 in
compliance with the Revised Administrative Code and Sections 6 and 7 of CA No. 141.
In short, DENR is vested with the power to authorize the reclamation of areas
under water, while PEA is vested with the power to undertake the physical reclamation
of areas under water, whether directly or through private contractors. DENR is also
empowered to classify lands of the public domain into alienable or disposable lands
subject to the approval of the President. On the other hand, PEA is tasked to develop,
sell or lease the reclaimed alienable lands of the public domain.
Clearly, the mere physical act of reclamation by PEA of foreshore or submerged
areas does not make the reclaimed lands alienable or disposable lands of the public
domain, much less patrimonial lands of PEA. Likewise, the mere transfer by the
National Government of lands of the public domain to PEA does not make the lands
alienable or disposable lands of the public domain, much less patrimonial lands of PEA.
Absent two official acts a classification that these lands are alienable or
disposable and open to disposition and a declaration that these lands are not needed
for public service, lands reclaimed by PEA remain inalienable lands of the public
domain. Only such an official classification and formal declaration can convert
reclaimed lands into alienable or disposable lands of the public domain, open to
disposition under the Constitution, Title I and Title III [83] of CA No. 141 and other
applicable laws.[84]
PEAs Authority to Sell Reclaimed Lands
PEA, like the Legal Task Force, argues that as alienable or disposable lands of
the public domain, the reclaimed lands shall be disposed of in accordance with CA No.
141, the Public Land Act. PEA, citing Section 60 of CA No. 141, admits that reclaimed
lands transferred to a branch or subdivision of the government shall not be alienated,
encumbered, or otherwise disposed of in a manner affecting its title, except when
authorized by Congress: x x x.[85] (Emphasis by PEA)
In Laurel vs. Garcia,[86] the Court cited Section 48 of the Revised Administrative
Code of 1987, which states that
Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the
Government is authorized by law to be conveyed, the deed of conveyance shall be
executed in behalf of the government by the following: x x x.
Thus, the Court concluded that a law is needed to convey any real property belonging
to the Government. The Court declared that -
It is not for the President to convey real property of the government on his or her own
sole will. Any such conveyance must be authorized and approved by a law
enacted by the Congress. It requires executive and legislative
concurrence. (Emphasis supplied)
PEA contends that PD No. 1085 and EO No. 525 constitute the legislative
authority allowing PEA to sell its reclaimed lands. PD No. 1085, issued on February 4,
1977, provides that
47
The land reclaimed in the foreshore and offshore area of Manila Bay pursuant to
the contract for the reclamation and construction of the Manila-Cavite Coastal Road
Project between the Republic of the Philippines and the Construction and Development
Corporation of the Philippines dated November 20, 1973 and/or any other contract or
reclamation covering the same area is hereby transferred, conveyed and assigned
to the ownership and administration of the Public Estates Authority established
pursuant to PD No. 1084; Provided, however, That the rights and interests of the
Construction and Development Corporation of the Philippines pursuant to the aforesaid
contract shall be recognized and respected.
Henceforth, the Public Estates Authority shall exercise the rights and assume the
obligations of the Republic of the Philippines (Department of Public Highways) arising
from, or incident to, the aforesaid contract between the Republic of the Philippines and
the Construction and Development Corporation of the Philippines.
In consideration of the foregoing transfer and assignment, the Public Estates Authority
shall issue in favor of the Republic of the Philippines the corresponding shares of stock
in said entity with an issued value of said shares of stock (which) shall be deemed fully
paid and non-assessable.
The Secretary of Public Highways and the General Manager of the Public Estates
Authority shall execute such contracts or agreements, including appropriate
agreements with the Construction and Development Corporation of the Philippines, as
may be necessary to implement the above.
Special land patent/patents shall be issued by the Secretary of Natural Resources
in favor of the Public Estates Authority without prejudice to the subsequent
transfer to the contractor or his assignees of such portion or portions of the land
reclaimed or to be reclaimed as provided for in the above-mentioned contract. On
the basis of such patents, the Land Registration Commission shall issue the
corresponding certificate of title. (Emphasis supplied)
On the other hand, Section 3 of EO No. 525, issued on February 14, 1979,
provides that -
Sec. 3. All lands reclaimed by PEA shall belong to or be owned by the PEA which
shall be responsible for its administration, development, utilization or disposition in
accordance with the provisions of Presidential Decree No. 1084. Any and all income
that the PEA may derive from the sale, lease or use of reclaimed lands shall be used in
accordance with the provisions of Presidential Decree No. 1084.
There is no express authority under either PD No. 1085 or EO No. 525 for PEA to
sell its reclaimed lands. PD No. 1085 merely transferred ownership and administration
of lands reclaimed from Manila Bay to PEA, while EO No. 525 declared that lands
reclaimed by PEA shall belong to or be owned by PEA. EO No. 525 expressly states
that PEA should dispose of its reclaimed lands in accordance with the provisions of
Presidential Decree No. 1084, the charter of PEA.
PEAs charter, however, expressly tasks PEA to develop, improve, acquire,
administer, deal in, subdivide, dispose, lease and sell any and all kinds of lands x x x
owned, managed, controlled and/or operated by the government. [87] (Emphasis
supplied) There is, therefore, legislative authority granted to PEA to sell its lands,
whether patrimonial or alienable lands of the public domain. PEA may sell to
private parties its patrimonial properties in accordance with the PEA charter free from
constitutional limitations. The constitutional ban on private corporations from acquiring
alienable lands of the public domain does not apply to the sale of PEAs patrimonial
lands.
PEA may also sell its alienable or disposable lands of the public domain to
private individuals since, with the legislative authority, there is no longer any statutory
prohibition against such sales and the constitutional ban does not apply to
individuals. PEA, however, cannot sell any of its alienable or disposable lands of the
public domain to private corporations since Section 3, Article XII of the 1987
Constitution expressly prohibits such sales. The legislative authority benefits only
individuals. Private corporations remain barred from acquiring any kind of alienable land
of the public domain, including government reclaimed lands.
The provision in PD No. 1085 stating that portions of the reclaimed lands could be
transferred by PEA to the contractor or his assignees (Emphasis supplied) would not
apply to private corporations but only to individuals because of the constitutional
ban. Otherwise, the provisions of PD No. 1085 would violate both the 1973 and 1987
Constitutions.
The requirement of public auction in the sale of reclaimed lands
Assuming the reclaimed lands of PEA are classified as alienable or disposable
lands open to disposition, and further declared no longer needed for public service,
PEA would have to conduct a public bidding in selling or leasing these lands. PEA must
observe the provisions of Sections 63 and 67 of CA No. 141 requiring public auction, in
the absence of a law exempting PEA from holding a public auction. [88] Special Patent
No. 3517 expressly states that the patent is issued by authority of the Constitution and
PD No. 1084, supplemented by Commonwealth Act No. 141, as amended. This is an
acknowledgment that the provisions of CA No. 141 apply to the disposition of reclaimed
alienable lands of the public domain unless otherwise provided by law. Executive Order
No. 654,[89] which authorizes PEA to determine the kind and manner of payment for the
transfer of its assets and properties, does not exempt PEA from the requirement of
public auction. EO No. 654 merely authorizes PEA to decide the mode of payment,
whether in kind and in installment, but does not authorize PEA to dispense with public
auction.
Moreover, under Section 79 of PD No. 1445, otherwise known as the Government
Auditing Code, the government is required to sell valuable government property
through public bidding. Section 79 of PD No. 1445 mandates that
Section 79. When government property has become unserviceable for any cause,
or is no longer needed, it shall, upon application of the officer accountable therefor, be
inspected by the head of the agency or his duly authorized representative in the
presence of the auditor concerned and, if found to be valueless or unsaleable, it may
be destroyed in their presence. If found to be valuable, it may be sold at public
auction to the highest bidder under the supervision of the proper committee on award
or similar body in the presence of the auditor concerned or other authorized
representative of the Commission, after advertising by printed notice in the Official
Gazette, or for not less than three consecutive days in any newspaper of general
circulation, or where the value of the property does not warrant the expense of
publication, by notices posted for a like period in at least three public places in the
locality where the property is to be sold. In the event that the public auction fails, the
property may be sold at a private sale at such price as may be fixed by the same
committee or body concerned and approved by the Commission.
48
It is only when the public auction fails that a negotiated sale is allowed, in which case
the Commission on Audit must approve the selling price. [90] The Commission on Audit
implements Section 79 of the Government Auditing Code through Circular No. 89-
296[91] dated January 27, 1989. This circular emphasizes that government assets must
be disposed of only through public auction, and a negotiated sale can be resorted to
only in case of failure of public auction.
At the public auction sale, only Philippine citizens are qualified to bid for PEAs
reclaimed foreshore and submerged alienable lands of the public domain. Private
corporations are barred from bidding at the auction sale of any kind of alienable land of
the public domain.
PEA originally scheduled a public bidding for the Freedom Islands on December
10, 1991. PEA imposed a condition that the winning bidder should reclaim another 250
hectares of submerged areas to regularize the shape of the Freedom Islands, under a
60-40 sharing of the additional reclaimed areas in favor of the winning bidder.[92] No
one, however, submitted a bid. On December 23, 1994, the Government Corporate
Counsel advised PEA it could sell the Freedom Islands through negotiation, without
need of another public bidding, because of the failure of the public bidding on
December 10, 1991.[93]
However, the original JVA dated April 25, 1995 covered not only the Freedom
Islands and the additional 250 hectares still to be reclaimed, it also granted an option to
AMARI to reclaim another 350 hectares. The original JVA, a negotiated contract,
enlarged the reclamation area to 750 hectares.[94] The failure of public bidding on
December 10, 1991, involving only 407.84 hectares, [95] is not a valid justification for a
negotiated sale of 750 hectares, almost double the area publicly auctioned. Besides,
the failure of public bidding happened on December 10, 1991, more than three years
before the signing of the original JVA on April 25, 1995. The economic situation in the
country had greatly improved during the intervening period.
Reclamation under the BOT Law and the Local Government Code
The constitutional prohibition in Section 3, Article XII of the 1987 Constitution is
absolute and clear: Private corporations or associations may not hold such alienable
lands of the public domain except by lease, x x x. Even Republic Act No. 6957 (BOT
Law, for brevity), cited by PEA and AMARI as legislative authority to sell reclaimed
lands to private parties, recognizes the constitutional ban. Section 6 of RA No. 6957
states
Sec. 6. Repayment Scheme. - For the financing, construction, operation and
maintenance of any infrastructure projects undertaken through the build-operate-and-
transfer arrangement or any of its variations pursuant to the provisions of this Act, the
project proponent x x x may likewise be repaid in the form of a share in the revenue of
the project or other non-monetary payments, such as, but not limited to, the grant of a
portion or percentage of the reclaimed land, subject to the constitutional
requirements with respect to the ownership of the land: x x x. (Emphasis supplied)
A private corporation, even one that undertakes the physical reclamation of a
government BOT project, cannot acquire reclaimed alienable lands of the public domain
in view of the constitutional ban.
Section 302 of the Local Government Code, also mentioned by PEA and AMARI,
authorizes local governments in land reclamation projects to pay the contractor or
developer in kind consisting of a percentage of the reclaimed land, to wit:
Section 302. Financing, Construction, Maintenance, Operation, and Management of
Infrastructure Projects by the Private Sector. x x x
xxx
In case of land reclamation or construction of industrial estates, the repayment plan
may consist of the grant of a portion or percentage of the reclaimed land or the
industrial estate constructed.
Although Section 302 of the Local Government Code does not contain a proviso similar
to that of the BOT Law, the constitutional restrictions on land ownership automatically
apply even though not expressly mentioned in the Local Government Code.
Thus, under either the BOT Law or the Local Government Code, the contractor or
developer, if a corporate entity, can only be paid with leaseholds on portions of the
reclaimed land. If the contractor or developer is an individual, portions of the reclaimed
land, not exceeding 12 hectares[96] of non-agricultural lands, may be conveyed to him in
ownership in view of the legislative authority allowing such conveyance. This is the only
way these provisions of the BOT Law and the Local Government Code can avoid a
direct collision with Section 3, Article XII of the 1987 Constitution.
Registration of lands of the public domain
Finally, PEA theorizes that the act of conveying the ownership of the reclaimed
lands to public respondent PEA transformed such lands of the public domain to private
lands. This theory is echoed by AMARI which maintains that the issuance of the special
patent leading to the eventual issuance of title takes the subject land away from the
land of public domain and converts the property into patrimonial or private property. In
short, PEA and AMARI contend that with the issuance of Special Patent No. 3517 and
the corresponding certificates of titles, the 157.84 hectares comprising the Freedom
Islands have become private lands of PEA. In support of their theory, PEA and AMARI
cite the following rulings of the Court:
1. Sumail v. Judge of CFI of Cotabato,[97] where the Court held
Once the patent was granted and the corresponding certificate of title
was issued, the land ceased to be part of the public domain and became
private property over which the Director of Lands has neither control nor
jurisdiction.
2. Lee Hong Hok v. David,[98] where the Court declared -
After the registration and issuance of the certificate and duplicate
certificate of title based on a public land patent, the land covered thereby
automatically comes under the operation of Republic Act 496 subject to
all the safeguards provided therein.
3. Heirs of Gregorio Tengco v. Heirs of Jose Aliwalas,[99] where the Court
ruled -
While the Director of Lands has the power to review homestead patents,
he may do so only so long as the land remains part of the public domain
and continues to be under his exclusive control; but once the patent is
registered and a certificate of title is issued, the land ceases to be part of
the public domain and becomes private property over which the Director
of Lands has neither control nor jurisdiction.
49
 4. Manalo v. Intermediate Appellate Court,[100] where the Court held
When the lots in dispute were certified as disposable on May 19, 1971,
and free patents were issued covering the same in favor of the private
respondents, the said lots ceased to be part of the public domain and,
therefore, the Director of Lands lost jurisdiction over the same.
5.Republic v. Court of Appeals,[101] where the Court stated
Proclamation No. 350, dated October 9, 1956, of President Magsaysay
legally effected a land grant to the Mindanao Medical Center, Bureau of
Medical Services, Department of Health, of the whole lot, validly
sufficient for initial registration under the Land Registration Act. Such
land grant is constitutive of a fee simple title or absolute title in favor of
petitioner Mindanao Medical Center.Thus, Section 122 of the Act, which
governs the registration of grants or patents involving public lands,
provides that Whenever public lands in the Philippine Islands belonging
to the Government of the United States or to the Government of the
Philippines are alienated, granted or conveyed to persons or to public or
private corporations, the same shall be brought forthwith under the
operation of this Act (Land Registration Act, Act 496) and shall become
registered lands.
The first four cases cited involve petitions to cancel the land patents and the
corresponding certificates of titles issued to private parties. These four cases
uniformly hold that the Director of Lands has no jurisdiction over private lands or that
upon issuance of the certificate of title the land automatically comes under the Torrens
System. The fifth case cited involves the registration under the Torrens System of a
12.8-hectare public land granted by the National Government to Mindanao Medical
Center, a government unit under the Department of Health. The National Government
transferred the 12.8-hectare public land to serve as the site for the hospital buildings
and other facilities of Mindanao Medical Center, which performed a public service. The
Court affirmed the registration of the 12.8-hectare public land in the name of Mindanao
Medical Center under Section 122 of Act No. 496. This fifth case is an example of a
public land being registered under Act No. 496 without the land losing its character as a
property of public dominion.
In the instant case, the only patent and certificates of title issued are those in the
name of PEA, a wholly government owned corporation performing public as well as
proprietary functions. No patent or certificate of title has been issued to any private
party. No one is asking the Director of Lands to cancel PEAs patent or certificates of
title. In fact, the thrust of the instant petition is that PEAs certificates of title should
remain with PEA, and the land covered by these certificates, being alienable lands of
the public domain, should not be sold to a private corporation.
Registration of land under Act No. 496 or PD No. 1529 does not vest in the
registrant private or public ownership of the land. Registration is not a mode of
acquiring ownership but is merely evidence of ownership previously conferred by any of
the recognized modes of acquiring ownership. Registration does not give the registrant
a better right than what the registrant had prior to the registration. [102] The registration of
lands of the public domain under the Torrens system, by itself, cannot convert public
lands into private lands.[103]
Jurisprudence holding that upon the grant of the patent or issuance of the
certificate of title the alienable land of the public domain automatically becomes private
land cannot apply to government units and entities like PEA. The transfer of the
Freedom Islands to PEA was made subject to the provisions of CA No. 141 as
expressly stated in Special Patent No. 3517 issued by then President Aquino, to wit:
NOW, THEREFORE, KNOW YE, that by authority of the Constitution of the Philippines
and in conformity with the provisions of Presidential Decree No. 1084, supplemented
by Commonwealth Act No. 141, as amended, there are hereby granted and
conveyed unto the Public Estates Authority the aforesaid tracts of land containing a
total area of one million nine hundred fifteen thousand eight hundred ninety four
(1,915,894) square meters; the technical description of which are hereto attached and
made an integral part hereof. (Emphasis supplied)
Thus, the provisions of CA No. 141 apply to the Freedom Islands on matters not
covered by PD No. 1084. Section 60 of CA No. 141 prohibits, except when authorized
by Congress, the sale of alienable lands of the public domain that are transferred to
government units or entities. Section 60 of CA No. 141 constitutes, under Section 44 of
PD No. 1529, a statutory lien affecting title of the registered land even if not annotated
on the certificate of title.[104] Alienable lands of the public domain held by government
entities under Section 60 of CA No. 141 remain public lands because they cannot be
alienated or encumbered unless Congress passes a law authorizing their
disposition. Congress, however, cannot authorize the sale to private corporations of
reclaimed alienable lands of the public domain because of the constitutional ban. Only
individuals can benefit from such law.
The grant of legislative authority to sell public lands in accordance with Section 60
of CA No. 141 does not automatically convert alienable lands of the public domain into
private or patrimonial lands. The alienable lands of the public domain must be
transferred to qualified private parties, or to government entities not tasked to dispose
of public lands, before these lands can become private or patrimonial lands. Otherwise,
the constitutional ban will become illusory if Congress can declare lands of the public
domain as private or patrimonial lands in the hands of a government agency tasked to
dispose of public lands. This will allow private corporations to acquire directly from
government agencies limitless areas of lands which, prior to such law, are concededly
public lands.
Under EO No. 525, PEA became the central implementing agency of the
National Government to reclaim foreshore and submerged areas of the public
domain. Thus, EO No. 525 declares that
EXECUTIVE ORDER NO. 525
Designating the Public Estates Authority as the Agency Primarily Responsible for all
Reclamation Projects
Whereas, there are several reclamation projects which are ongoing or being proposed
to be undertaken in various parts of the country which need to be evaluated for
consistency with national programs;
Whereas, there is a need to give further institutional support to the Governments
declared policy to provide for a coordinated, economical and efficient reclamation of
lands;
Whereas, Presidential Decree No. 3-A requires that all reclamation of areas shall be
limited to the National Government or any person authorized by it under proper
contract;
50
Whereas, a central authority is needed to act on behalf of the National
Government which shall ensure a coordinated and integrated approach in the
reclamation of lands;
Whereas, Presidential Decree No. 1084 creates the Public Estates Authority as a
government corporation to undertake reclamation of lands and ensure their
maximum utilization in promoting public welfare and interests; and
Whereas, Presidential Decree No. 1416 provides the President with continuing
authority to reorganize the national government including the transfer, abolition, or
merger of functions and offices.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by
virtue of the powers vested in me by the Constitution and pursuant to Presidential
Decree No. 1416, do hereby order and direct the following:
Section 1. The Public Estates Authority (PEA) shall be primarily responsible for
integrating, directing, and coordinating all reclamation projects for and on behalf
of the National Government. All reclamation projects shall be approved by the
President upon recommendation of the PEA, and shall be undertaken by the PEA or
through a proper contract executed by it with any person or entity; Provided, that,
reclamation projects of any national government agency or entity authorized under its
charter shall be undertaken in consultation with the PEA upon approval of the
President.
xxx.
As the central implementing agency tasked to undertake reclamation projects
nationwide, with authority to sell reclaimed lands, PEA took the place of DENR as the
government agency charged with leasing or selling reclaimed lands of the public
domain. The reclaimed lands being leased or sold by PEA are not private lands, in the
same manner that DENR, when it disposes of other alienable lands, does not dispose
of private lands but alienable lands of the public domain. Only when qualified private
parties acquire these lands will the lands become private lands. In the hands of the
government agency tasked and authorized to dispose of alienable of disposable
lands of the public domain, these lands are still public, not private lands.
Furthermore, PEAs charter expressly states that PEA shall hold lands of the
public domain as well as any and all kinds of lands. PEA can hold both lands of the
public domain and private lands. Thus, the mere fact that alienable lands of the public
domain like the Freedom Islands are transferred to PEA and issued land patents or
certificates of title in PEAs name does not automatically make such lands private.
To allow vast areas of reclaimed lands of the public domain to be transferred to
PEA as private lands will sanction a gross violation of the constitutional ban on private
corporations from acquiring any kind of alienable land of the public domain. PEA will
simply turn around, as PEA has now done under the Amended JVA, and transfer
several hundreds of hectares of these reclaimed and still to be reclaimed lands to a
single private corporation in only one transaction. This scheme will effectively nullify the
constitutional ban in Section 3, Article XII of the 1987 Constitution which was intended
to diffuse equitably the ownership of alienable lands of the public domain among
Filipinos, now numbering over 80 million strong.
This scheme, if allowed, can even be applied to alienable agricultural lands of the
public domain since PEA can acquire x x x any and all kinds of lands. This will open the
floodgates to corporations and even individuals acquiring hundreds of hectares of
alienable lands of the public domain under the guise that in the hands of PEA these
lands are private lands. This will result in corporations amassing huge landholdings
never before seen in this country - creating the very evil that the constitutional ban was
designed to prevent. This will completely reverse the clear direction of constitutional
development in this country. The 1935 Constitution allowed private corporations to
acquire not more than 1,024 hectares of public lands. [105] The 1973 Constitution
prohibited private corporations from acquiring any kind of public land, and the 1987
Constitution has unequivocally reiterated this prohibition.
The contention of PEA and AMARI that public lands, once registered under Act
No. 496 or PD No. 1529, automatically become private lands is contrary to existing
laws. Several laws authorize lands of the public domain to be registered under the
Torrens System or Act No. 496, now PD No. 1529, without losing their character as
public lands. Section 122 of Act No. 496, and Section 103 of PD No. 1529, respectively,
provide as follows:
Act No. 496
Sec. 122. Whenever public lands in the Philippine Islands belonging to the x x x
Government of the Philippine Islands are alienated, granted, or conveyed to persons or
the public or private corporations, the same shall be brought forthwith under the
operation of this Act and shall become registered lands.
PD No. 1529
Sec. 103. Certificate of Title to Patents. Whenever public land is by the Government
alienated, granted or conveyed to any person, the same shall be brought forthwith
under the operation of this Decree. (Emphasis supplied)
Based on its legislative history, the phrase conveyed to any person in Section 103 of
PD No. 1529 includes conveyances of public lands to public corporations.
Alienable lands of the public domain granted, donated, or transferred to a
province, municipality, or branch or subdivision of the Government, as provided in
Section 60 of CA No. 141, may be registered under the Torrens System pursuant to
Section 103 of PD No. 1529. Such registration, however, is expressly subject to the
condition in Section 60 of CA No. 141 that the land shall not be alienated, encumbered
or otherwise disposed of in a manner affecting its title, except when authorized by
Congress. This provision refers to government reclaimed, foreshore and marshy lands
of the public domain that have been titled but still cannot be alienated or encumbered
unless expressly authorized by Congress. The need for legislative authority prevents
the registered land of the public domain from becoming private land that can be
disposed of to qualified private parties.
The Revised Administrative Code of 1987 also recognizes that lands of the public
domain may be registered under the Torrens System. Section 48, Chapter 12, Book I of
the Code states
Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the
Government is authorized by law to be conveyed, the deed of conveyance shall be
executed in behalf of the government by the following:
(1) x x x
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(2) For property belonging to the Republic of the Philippines, but titled in the
name of any political subdivision or of any corporate agency or instrumentality,
by the executive head of the agency or instrumentality. (Emphasis supplied)
Thus, private property purchased by the National Government for expansion of a public
wharf may be titled in the name of a government corporation regulating port operations
in the country. Private property purchased by the National Government for expansion of
an airport may also be titled in the name of the government agency tasked to
administer the airport.Private property donated to a municipality for use as a town plaza
or public school site may likewise be titled in the name of the municipality. [106] All these
properties become properties of the public domain, and if already registered under Act
No. 496 or PD No. 1529, remain registered land. There is no requirement or provision
in any existing law for the de-registration of land from the Torrens System.
Private lands taken by the Government for public use under its power of eminent
domain become unquestionably part of the public domain. Nevertheless, Section 85 of
PD No. 1529 authorizes the Register of Deeds to issue in the name of the National
Government new certificates of title covering such expropriated lands. Section 85 of PD
No. 1529 states
Sec. 85. Land taken by eminent domain. Whenever any registered land, or interest
therein, is expropriated or taken by eminent domain, the National Government,
province, city or municipality, or any other agency or instrumentality exercising such
right shall file for registration in the proper Registry a certified copy of the judgment
which shall state definitely by an adequate description, the particular property or
interest expropriated, the number of the certificate of title, and the nature of the public
use. A memorandum of the right or interest taken shall be made on each certificate of
title by the Register of Deeds, and where the fee simple is taken, a new certificate
shall be issued in favor of the National Government, province, city, municipality,
or any other agency or instrumentality exercising such right for the land so taken. The
legal expenses incident to the memorandum of registration or issuance of a new
certificate of title shall be for the account of the authority taking the land or interest
therein. (Emphasis supplied)
Consequently, lands registered under Act No. 496 or PD No. 1529 are not exclusively
private or patrimonial lands. Lands of the public domain may also be registered
pursuant to existing laws.
AMARI makes a parting shot that the Amended JVA is not a sale to AMARI of the
Freedom Islands or of the lands to be reclaimed from submerged areas of Manila
Bay. In the words of AMARI, the Amended JVA is not a sale but a joint venture with a
stipulation for reimbursement of the original cost incurred by PEA for the earlier
reclamation and construction works performed by the CDCP under its 1973 contract
with the Republic. Whether the Amended JVA is a sale or a joint venture, the fact
remains that the Amended JVA requires PEA to cause the issuance and delivery of the
certificates of title conveying AMARIs Land Share in the name of AMARI. [107]
This stipulation still contravenes Section 3, Article XII of the 1987 Constitution
which provides that private corporations shall not hold such alienable lands of the
public domain except by lease. The transfer of title and ownership to AMARI clearly
means that AMARI will hold the reclaimed lands other than by lease. The transfer of
title and ownership is a disposition of the reclaimed lands, a transaction considered a
sale or alienation under CA No. 141,[108] the Government Auditing Code,[109] and
Section 3, Article XII of the 1987 Constitution.
The Regalian doctrine is deeply implanted in our legal system. Foreshore and
submerged areas form part of the public domain and are inalienable. Lands reclaimed
from foreshore and submerged areas also form part of the public domain and are also
inalienable, unless converted pursuant to law into alienable or disposable lands of the
public domain. Historically, lands reclaimed by the government are sui generis, not
available for sale to private parties unlike other alienable public lands. Reclaimed lands
retain their inherent potential as areas for public use or public service. Alienable lands
of the public domain, increasingly becoming scarce natural resources, are to be
distributed equitably among our ever-growing population. To insure such equitable
distribution, the 1973 and 1987 Constitutions have barred private corporations from
acquiring any kind of alienable land of the public domain. Those who attempt to dispose
of inalienable natural resources of the State, or seek to circumvent the constitutional
ban on alienation of lands of the public domain to private corporations, do so at their
own risk.
We can now summarize our conclusions as follows:
1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands,
now covered by certificates of title in the name of PEA, are alienable
lands of the public domain. PEA may lease these lands to private
corporations but may not sell or transfer ownership of these lands to
private corporations. PEA may only sell these lands to Philippine
citizens, subject to the ownership limitations in the 1987 Constitution and
existing laws.
2. The 592.15 hectares of submerged areas of Manila Bay remain
inalienable natural resources of the public domain until classified as
alienable or disposable lands open to disposition and declared no longer
needed for public service. The government can make such classification
and declaration only after PEA has reclaimed these submerged
areas. Only then can these lands qualify as agricultural lands of the
public domain, which are the only natural resources the government can
alienate. In their present state, the 592.15 hectares of submerged areas
are inalienable and outside the commerce of man.
3. Since the Amended JVA seeks to transfer to AMARI, a private
corporation, ownership of 77.34 hectares [110] of the Freedom Islands,
such transfer is void for being contrary to Section 3, Article XII of the
1987 Constitution which prohibits private corporations from acquiring any
kind of alienable land of the public domain.
4. Since the Amended JVA also seeks to transfer to AMARI ownership of
290.156 hectares[111] of still submerged areas of Manila Bay, such
transfer is void for being contrary to Section 2, Article XII of the 1987
Constitution which prohibits the alienation of natural resources other than
agricultural lands of the public domain. PEA may reclaim these
submerged areas. Thereafter, the government can classify the reclaimed
lands as alienable or disposable, and further declare them no longer
needed for public service. Still, the transfer of such reclaimed alienable
lands of the public domain to AMARI will be void in view of Section 3,
Article XII of the 1987 Constitution which prohibits private corporations
from acquiring any kind of alienable land of the public domain.
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Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987
Constitution. Under Article 1409[112] of the Civil Code, contracts whose object or
purpose is contrary to law, or whose object is outside the commerce of men, are
inexistent and void from the beginning. The Court must perform its duty to defend and
uphold the Constitution, and therefore declares the Amended JVA null and void ab
initio.
Seventh issue: whether the Court is the proper forum to raise the issue of
whether the Amended JVA is grossly disadvantageous to the government.
Considering that the Amended JVA is null and void ab initio, there is no necessity
to rule on this last issue. Besides, the Court is not a trier of facts, and this last issue
involves a determination of factual matters.
WHEREFORE, the petition is GRANTED. The Public Estates Authority and Amari
Coastal Bay Development Corporation are PERMANENTLY ENJOINED from
implementing the Amended Joint Venture Agreement which is hereby declared NULL
and VOID ab initio.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Puno, Vitug, Kapunan, Mendoza, Panganiban,
Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Austria-Martinez, and Corona,
JJ., concur.

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