Chavez vs REA

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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. 133250 July 9, 2002

FRANCISCO I. CHAVEZ, petitioner,vs.PUBLIC ESTATES AUTHORITY and AMARI COASTALBAY DEVELOPMENT CORPORATION, respondents.

CARPIO, J.:

This is an original Petition for Mandamus with prayer for awrit of preliminary injunction and a temporary restrainingorder. The petition seeks to compel the Public Estates

Authority ("PEA" for brevity) to disclose all facts on PEA'sthen on-going renegotiations with Amari Coastal Bay andDevelopment Corporation ("AMARI" for brevity) to reclaimportions of Manila Bay. The petition further seeks to enjoin

PEA from signing a new agreement with AMARI involvingsuch reclamation.

The Facts

On November 20, 1973, the government, through theCommissioner of Public Highways, signed a contract withthe Construction and Development Corporation of thePhilippines ("CDCP" for brevity) to reclaim certain foreshoreand offshore areas of Manila Bay. The contract also includedthe construction of Phases I and II of the Manila-CaviteCoastal Road. CDCP obligated itself to carry out all theworks in consideration of fifty percent of the total reclaimedland.

On February 4, 1977, then President Ferdinand E. Marcosissued Presidential Decree No. 1084 creating PEA. PD No.1084 tasked PEA "to reclaim land, including foreshore andsubmerged areas," and "to develop, improve, acquire, x x xlease and sell any and all kinds of lands."1 On the samedate, then President Marcos issued Presidential Decree No.1085 transferring to PEA the "lands reclaimed in theforeshore 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 amemorandum directing PEA to amend its contract withCDCP, so that "[A]ll future works in MCCRRP x x x shall befunded and owned by PEA." Accordingly, PEA and CDCPexecuted a Memorandum of Agreement dated December 29,1981, which stated:

"(i) CDCP shall undertake all reclamation,construction, and such other works in theMCCRRP as may be agreed upon by the parties,to be paid according to progress of works on a unitprice/lump sum basis for items of work to beagreed upon, subject to price escalation, retentionand other terms and conditions provided for inPresidential Decree No. 1594. All the financingrequired for such works shall be provided by PEA.

x x x

(iii) x x x CDCP shall give up all its developmentrights and hereby agrees to cede and transfer infavor of PEA, all of the rights, title, interest andparticipation of CDCP in and to all the areas ofland reclaimed by CDCP in the MCCRRP as ofDecember 30, 1981 which have not yet been sold,

transferred or otherwise disposed of by CDCP asof said date, which areas consist of approximatelyNinety-Nine Thousand Four Hundred SeventyThree (99,473) square meters in the FinancialCenter Area covered by land pledge No. 5 andapproximately Three Million Three Hundred EightyTwo Thousand Eight Hundred Eighty Eight(3,382,888) square meters of reclaimed areas atvarying elevations above Mean Low Water Levellocated outside the Financial Center Area and theFirst Neighborhood Unit."3

On January 19, 1988, then President Corazon C. Aquinoissued Special Patent No. 3517, granting and transferring toPEA "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 fifteenthousand eight hundred ninety four (1,915,894) squaremeters." Subsequently, on April 9, 1988, the Register ofDeeds of the Municipality of Paraaque issued TransferCertificates of Title Nos. 7309, 7311, and 7312, in the nameof PEA, covering the three reclaimed islands known as the"Freedom Islands" located at the southern portion of theManila-Cavite Coastal Road, Paraaque City. The FreedomIslands have a total land area of One Million Five HundredSeventy 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 VentureAgreement ("JVA" for brevity) with AMARI, a privatecorporation, to develop the Freedom Islands. The JVA alsorequired the reclamation of an additional 250 hectares of

submerged areas surrounding these islands to complete theconfiguration in the Master Development Plan of theSouthern Reclamation Project-MCCRRP. PEA and AMARIentered into the JVA through negotiation without publicbidding.4 On April 28, 1995, the Board of Directors of PEA, inits Resolution No. 1245, confirmed the JVA.5On June 8,1995, then President Fidel V. Ramos, through thenExecutive Secretary Ruben Torres, approved the JVA.6

On November 29, 1996, then Senate President ErnestoMaceda delivered a privilege speech in the Senate anddenounced the JVA as the "grandmother of all scams." As aresult, the Senate Committee on Government Corporationsand Public Enterprises, and the Committee on Accountabilityof Public Officers and Investigations, conducted a jointinvestigation. The Senate Committees reported the results of

their investigation in Senate Committee Report No. 560dated September 16, 1997.7 Among the conclusions of theirreport are: (1) the reclaimed lands PEA seeks to transfer to

AMARI under the JVA are lands of the public domain whichthe government has not classified as alienable lands andtherefore PEA cannot alienate these lands; (2) thecertificates of title covering the Freedom Islands are thusvoid, and (3) the JVA itself is illegal.

On December 5, 1997, then President Fidel V. Ramosissued Presidential Administrative Order No. 365 creating a

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Legal Task Force to conduct a study on the legality of theJVA in view of Senate Committee Report No. 560. Themembers of the Legal Task Force were the Secretary ofJustice,8 the Chief Presidential Legal Counsel,9 and theGovernment Corporate Counsel.10 The Legal Task Forceupheld the legality of the JVA, contrary to the conclusionsreached by the Senate Committees.11

On April 4 and 5, 1998, the Philippine DailyInquirerand Todaypublished reports that there were on-going renegotiations between PEA and AMARI under anorder issued by then President Fidel V. Ramos. According tothese reports, PEA Director Nestor Kalaw, PEA Chairman

Arsenio Yulo and retired Navy Officer Sergio Cruz composedthe negotiating panel of PEA.

On April 13, 1998, Antonio M. Zulueta filed before the Courta Petition for Prohibition with Application for the Issuance ofa Temporary Restraining Order and PreliminaryInjunction docketed as G.R. No. 132994 seeking to nullifythe JVA. The Court dismissed the petition "for unwarranteddisregard of judicial hierarchy, without prejudice to therefiling of the case before the proper court."12

On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" forbrevity) as a taxpayer, filed the instant Petition forMandamus with Prayer for the Issuance of a Writ ofPreliminary Injunction and Temporary Restraining Order.Petitioner contends the government stands to lose billions ofpesos in the sale by PEA of the reclaimed lands to AMARI.Petitioner prays that PEA publicly disclose the terms of anyrenegotiation of the JVA, invoking Section 28, Article II, andSection 7, Article III, of the 1987 Constitution on the right ofthe people to information on matters of public concern.Petitioner assails the sale to AMARI of lands of the publicdomain as a blatant violation of Section 3, Article XII of the1987 Constitution prohibiting the sale of alienable lands ofthe public domain to private corporations. Finally, petitionerasserts that he seeks to enjoin the loss of billions of pesos inproperties of the State that are of public dominion.

After several motions for extension of time,13 PEA andAMARI filed their Comments on October 19, 1998 and June25, 1998, respectively. Meanwhile, on December 28, 1998,petitioner filed an Omnibus Motion: (a) to require PEA tosubmit the terms of the renegotiated PEA-AMARI contract;(b) for issuance of a temporary restraining order; and (c) toset the case for hearing on oral argument. Petitioner filed aReiterative 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 duecourse to the petition and required the parties to file theirrespective memoranda.

On March 30, 1999, PEA and AMARI signed the AmendedJoint Venture Agreement ("Amended JVA," for brevity). OnMay 28, 1999, the Office of the President under theadministration of then President Joseph E. Estrada approvedthe Amended JVA.

Due to the approval of the Amended JVA by the Office of thePresident, petitioner now prays that on "constitutional andstatutory grounds the renegotiated contract be declared nulland void."14

The Issues

The issues raised by petitioner, PEA15 and AMARI16 are asfollows:

I. WHETHER THE PRINCIPAL RELIEFSPRAYED FOR IN THE PETITION ARE MOOT

AND ACADEMIC BECAUSE OF SUBSEQUENTEVENTS;

II. WHETHER THE PETITION MERITSDISMISSAL FOR FAILING TO OBSERVE THEPRINCIPLE GOVERNING THE HIERARCHY OFCOURTS;

III. WHETHER THE PETITION MERITSDISMISSAL FOR NON-EXHAUSTION OF

ADMINISTRATIVE REMEDIES;

IV. WHETHER PETITIONER HAS LOCUSSTANDITO BRING THIS SUIT;

V. WHETHER THE CONSTITUTIONAL RIGHTTO INFORMATION INCLUDES OFFICIALINFORMATION ON ON-GOING NEGOTIATIONSBEFORE A FINAL AGREEMENT;

VI. WHETHER THE STIPULATIONS IN THEAMENDED JOINT VENTURE AGREEMENT FORTHE TRANSFER TO AMARI OF CERTAINLANDS, RECLAIMED AND STILL TO BERECLAIMED, VIOLATE THE 1987CONSTITUTION; AND

VII. WHETHER THE COURT IS THE PROPERFORUM FOR RAISING THE ISSUE OFWHETHER THE AMENDED JOINT VENTURE

AGREEMENT IS GROSSLYDISADVANTAGEOUS TO THE GOVERNMENT.

The Court's Ruling

First issue: whether the principal reliefs prayed for inthe petition are moot and academic because of

subsequent events.

The petition prays that PEA publicly disclose the "terms andconditions of the on-going negotiations for a newagreement." The petition also prays that the Court enjoinPEA from "privately entering into, perfecting and/orexecuting any new agreement with AMARI."

PEA and AMARI claim the petition is now moot andacademic because AMARI furnished petitioner on June 21,1999 a copy of the signed Amended JVA containing theterms and conditions agreed upon in the renegotiations.Thus, PEA has satisfied petitioner's prayer for a publicdisclosure of the renegotiations. Likewise, petitioner's prayerto enjoin the signing of the Amended JVA is now mootbecause PEA and AMARI have already signed the AmendedJVA on March 30, 1999. Moreover, the Office of thePresident has approved the Amended JVA on May 28, 1999.

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Petitioner counters that PEA and AMARI cannot avoid theconstitutional issue by simply fast-tracking the signing andapproval of the Amended JVA before the Court could act onthe issue. Presidential approval does not resolve theconstitutional issue or remove it from the ambit of judicialreview.

We rule that the signing of the Amended JVA by PEA and

AMARI and its approval by the President cannot operate tomoot the petition and divest the Court of its jurisdiction. PEAand AMARI have still to implement the Amended JVA. Theprayer to enjoin the signing of the Amended JVA onconstitutional grounds necessarily includes preventing itsimplementation if in the meantime PEA and AMARI havesigned one in violation of the Constitution. Petitioner'sprincipal basis in assailing the renegotiation of the JVA is itsviolation of Section 3, Article XII of the Constitution, whichprohibits the government from alienating lands of the publicdomain to private corporations. If the Amended JVA indeedviolates the Constitution, it is the duty of the Court to enjoinits implementation, and if already implemented, to annul theeffects of such unconstitutional contract.

The Amended JVA is not an ordinary commercial contract

but one which seeks to transfer title and ownership to367.5 hectares of reclaimed lands and submerged areasof Manila Bay to a single private corporation. It nowbecomes more compelling for the Court to resolve the issueto insure the government itself does not violate a provision ofthe Constitution intended to safeguard the nationalpatrimony. Supervening events, whether intended oraccidental, cannot prevent the Court from rendering adecision if there is a grave violation of the Constitution. In theinstant case, if the Amended JVA runs counter to theConstitution, the Court can still prevent the transfer of titleand ownership of alienable lands of the public domain in thename of AMARI. Even in cases where supervening eventshad made the cases moot, the Court did not hesitate toresolve the legal or constitutional issues raised to formulatecontrolling principles to guide the bench, bar, and the

public.

17

Also, the instant petition is a case of first impression. Allprevious decisions of the Court involving Section 3, ArticleXII of the 1987 Constitution, or its counterpart provision inthe 1973 Constitution,18 covered agricultural landssold toprivate corporations which acquired the lands from privateparties. The transferors of the private corporations claimedor could claim the right tojudicial confirmation of theirimperfect titles19 underTitle IIof Commonwealth Act. 141("CA No. 141" for brevity). In the instant case, AMARI seeksto acquire from PEA, a public corporation, reclaimed landsand submerged areas fornon-agriculturalpurposesbypurchase under PD No. 1084 (charter of PEA) and TitleIIIof 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 oftheir titles because the lands covered by the Amended JVAare newly reclaimed or still to be reclaimed. Judicialconfirmation of imperfect title requires open, continuous,exclusive and notorious occupation of agricultural lands ofthe public domain for at least thirty years since June 12,1945 or earlier. Besides, the deadline for filing applicationsfor judicial confirmation of imperfect title expired onDecember 31, 1987.20

Lastly, there is a need to resolve immediately theconstitutional issue raised in this petition because of the

possible transfer at any time by PEA to AMARI of title andownership to portions of the reclaimed lands. Under the

Amended JVA, PEA is obligated to transfer to AMARI thelatter's seventy percent proportionate share in the reclaimedareas as the reclamation progresses. The Amended JVAeven allows AMARI to mortgage at any timethe entirereclaimed area to raise financing for thereclamation project.21

Second issue: whether the petition merits dismissal forfailing to observe the principle governing the hierarchy

of courts.

PEA and AMARI claim petitioner ignored the judicialhierarchy by seeking relief directly from the Court. Theprinciple of hierarchy of courts applies generally to casesinvolving factual questions. As it is not a trier of facts, theCourt cannot entertain cases involving factual issues. Theinstant case, however, raises constitutional issues oftranscendental importance to the public.22 The Court canresolve this case without determining any factual issuerelated to the case. Also, the instant case is a petition formandamus which falls under the original jurisdiction of theCourt 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 fornon-exhaustion of administrative remedies.

PEA faults petitioner for seeking judicial intervention incompelling PEA to disclose publicly certain informationwithout first asking PEA the needed information. PEA claimspetitioner's direct resort to the Court violates the principle ofexhaustion of administrative remedies. It also violates therule that mandamus may issue only if there is no other plain,speedy and adequate remedy in the ordinary course of law.

PEA distinguishes the instant case from Taada v.Tuvera23 where the Court granted the petition for mandamus

even if the petitioners there did not initially demand from theOffice of the President the publication of the presidentialdecrees. PEA points out that in Taada, the ExecutiveDepartment had an affirmative statutoryduty under Article2 of the Civil Code24 and Section 1 of Commonwealth ActNo. 63825 to publish the presidential decrees. There was,therefore, no need for the petitioners in Taada to make aninitial demand from the Office of the President. In the instantcase, PEA claims it has no affirmative statutory duty todisclose publicly information about its renegotiation of theJVA. Thus, PEA asserts that the Court must apply theprinciple of exhaustion of administrative remedies to theinstant case in view of the failure of petitioner here todemand 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 ofthe Government Auditing Code,26 the disposition ofgovernment lands to private parties requires publicbidding. PEA was under a positive legal duty to discloseto the public the terms and conditions for the sale of itslands. The law obligated PEA to make this public disclosureeven without demand from petitioner or from anyone. PEAfailed to make this public disclosure because the originalJVA, like the Amended JVA, was the result of a negotiatedcontract, not of a public bidding. Considering that PEA hadan affirmative statutory duty to make the public disclosure,

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and was even in breach of this legal duty, petitioner had theright to seek direct judicial intervention.

Moreover, and this alone is determinative of this issue, theprinciple of exhaustion of administrative remedies does notapply when the issue involved is a purely legal orconstitutional question.27 The principal issue in the instantcase is the capacity of AMARI to acquire lands held by PEA

in view of the constitutional ban prohibiting the alienation oflands of the public domain to private corporations. We rulethat the principle of exhaustion of administrative remediesdoes not apply in the instant case.

Fourth issue: whether petitioner has locus standi tobring this suit

PEA argues that petitioner has no standing toinstitute mandamus proceedings to enforce his constitutionalright to information without a showing that PEA refused toperform an affirmative duty imposed on PEA by theConstitution. PEA also claims that petitioner has not shownthat he will suffer any concrete injury because of the signingor implementation of the Amended JVA. Thus, there is no

actual controversy requiring the exercise of the power ofjudicial review.

The petitioner has standing to bring this taxpayer's suitbecause the petition seeks to compel PEA to comply with itsconstitutional duties. There are two constitutional issuesinvolved here. First is the right of citizens to information onmatters of public concern. Second is the application of aconstitutional provision intended to insure the equitabledistribution of alienable lands of the public domain amongFilipino citizens. The thrust of the first issue is to compelPEA to disclose publicly information on the sale ofgovernment lands worth billions of pesos, information whichthe Constitution and statutory law mandate PEA to disclose.The thrust of the second issue is to prevent PEA fromalienating hundreds of hectares of alienable lands of the

public domain in violation of the Constitution, compellingPEA to comply with a constitutional duty to the nation.

Moreover, the petition raises matters of transcendentalimportance to the public. In Chavez v. PCGG,28 the Courtupheld the right of a citizen to bring a taxpayer's suit onmatters of transcendental importance to the public, thus -

"Besides, petitioner emphasizes, the matter ofrecovering the ill-gotten wealth of the Marcoses isan issue of ' transcendental importance to thepublic.' He asserts that ordinary taxpayers have aright to initiate and prosecute actions questioningthe validity of acts or orders of governmentagencies or instrumentalities, if the issues raisedare of 'paramount public interest,' and if they

'immediately affect the social, economic and moralwell being of the people.'

Moreover, the mere fact that he is a citizensatisfies the requirement of personal interest,when the proceeding involves the assertion of apublic right, such as in this case. He invokesseveral decisions of this Court which have setaside the procedural matter oflocus standi, whenthe subject of the case involved public interest.

x x x

In Taada v. Tuvera, the Court asserted that whenthe issue concerns a public right and the object ofmandamus is to obtain the enforcement of a publicduty, the people are regarded as the real parties ininterest; and because it is sufficient that petitioneris a citizen and as such is interested in the

execution of the laws, he need not show that hehas any legal or special interest in the result of theaction. In the aforesaid case, the petitionerssought to enforce their right to be informed onmatters of public concern, a right then recognizedin Section 6, Article IV of the 1973 Constitution, inconnection with the rule that laws in order to bevalid and enforceable must be published in theOfficial Gazette or otherwise effectivelypromulgated. In ruling for the petitioners' legalstanding, the Court declared that the right theysought to be enforced 'is a public right recognizedby no less than the fundamental law of the land.'

Legaspi v. Civil Service Commission, whilereiterating Taada, further declared that 'when a

mandamus proceeding involves the assertion of apublic right, the requirement of personal interest issatisfied by the mere fact that petitioner is a citizenand, therefore, part of the general 'public' whichpossesses the right.'

Further, inAlbano v. Reyes, we said that whileexpenditure of public funds may not have beeninvolved under the questioned contract for thedevelopment, management and operation of theManila International Container Terminal, 'publicinterest [was] definitely involved considering theimportant role [of the subject contract] . . . in theeconomic development of the country and themagnitude of the financial consideration involved.'We concluded that, as a consequence, the

disclosure provision in the Constitution wouldconstitute sufficient authority for upholding thepetitioner's standing.

Similarly, the instant petition is anchored on theright of the people to information and access toofficial records, documents and papers a rightguaranteed under Section 7, Article III of the 1987Constitution. Petitioner, a former solicitor general,is a Filipino citizen. Because of the satisfaction ofthe two basic requisites laid down by decisionallaw to sustain petitioner's legal standing, i.e. (1)the enforcement of a public right (2) espoused bya Filipino citizen, we rule that the petition at barshould be allowed."

We rule that since the instant petition, brought by a citizen,involves the enforcement of constitutional rights - toinformation and to the equitable diffusion of naturalresources - matters of transcendental public importance, thepetitioner has the requisite locus standi.

Fifth issue: whether the constitutional right toinformation includes official information on on-going

negotiations before a final agreement.

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Section 7, Article III of the Constitution explains the people'sright to information on matters of public concern in thismanner:

"Sec. 7. The right of the people to information onmatters 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 togovernment research data used as basis for policydevelopment, shall be afforded the citizen, subjectto such limitations as may be provided by law."(Emphasis supplied)

The State policy of full transparency in all transactionsinvolving public interest reinforces the people's right toinformation on matters of public concern. This State policy isexpressed in Section 28, Article II of the Constitution, thus:

"Sec. 28. Subject to reasonable conditionsprescribed by law, the State adopts andimplements apolicy of full public disclosure ofall its transactions involving public interest."

(Emphasis supplied)

These twin provisions of the Constitution seek to promotetransparency in policy-making and in the operations of thegovernment, as well as provide the people sufficientinformation to exercise effectively other constitutional rights.These twin provisions are essential to the exercise offreedom of expression. If the government does not discloseits official acts, transactions and decisions to citizens,whatever citizens say, even if expressed without anyrestraint, will be speculative and amount to nothing. Thesetwin provisions are also essential to hold public officials "atall times x x x accountable to the people,"29 for unlesscitizens have the proper information, they cannot hold publicofficials accountable for anything. Armed with the rightinformation, citizens can participate in public discussions

leading to the formulation of government policies and theireffective implementation. An informed citizenry is essentialto the existence and proper functioning of any democracy.

As explained by the Court inValmonte v. Belmonte, Jr.30

"An essential element of these freedoms is to keepopen a continuing dialogue or process ofcommunication between the government and thepeople. It is in the interest of the State that thechannels for free political discussion bemaintained to the end that the government mayperceive and be responsive to the people's will.Yet, this open dialogue can be effective only to theextent that the citizenry is informed and thus ableto formulate its will intelligently. Only when theparticipants in the discussion are aware of theissues and have access to information relatingthereto 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 theright does not include access to "intra-agency or inter-agency recommendations or communications during thestage when common assertions are still in the process ofbeing formulated or are in the 'exploratory stage'."

Also, AMARI contends that petitioner cannot invoke the rightat the pre-decisional stage or before the closing of thetransaction. To support its contention, AMARI cites thefollowing 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 theconsummation of the contract, or does he refer tothe contract itself?

Mr. Ople: The 'transactions' used here, Isuppose is generic and therefore, it can coverboth steps leading to a contract and already aconsummated contract, Mr. Presiding Officer.

Mr. Suarez: This contemplates inclusion ofnegotiations leading to the consummation ofthe transaction.

Mr. Ople: Yes, subject only to reasonablesafeguards on the national interest.

Mr. Suarez: Thank you."32 (Emphasis supplied)

AMARI argues there must first be a consummated contractbefore petitioner can invoke the right. Requiring governmentofficials to reveal their deliberations at the pre-decisionalstage will degrade the quality of decision-making ingovernment agencies. Government officials will hesitate toexpress their real sentiments during deliberations if there isimmediate public dissemination of their discussions, puttingthem under all kinds of pressure before they decide.

We must first distinguish between information the law onpublic bidding requires PEA to disclose publicly, andinformation the constitutional right to information requires

PEA to release to the public. Before the consummation ofthe contract, PEA must, on its own and without demand fromanyone, disclose to the public matters relating to thedisposition of its property. These include the size, location,technical description and nature of the property beingdisposed of, the terms and conditions of the disposition, theparties qualified to bid, the minimum price and similarinformation. PEA must prepare all these data and disclosethem to the public at the start of the disposition process, longbefore the consummation of the contract, because theGovernment Auditing Code requirespublic bidding. If PEAfails to make this disclosure, any citizen can demand fromPEA this information at any time during the bidding process.

Information, however, on on-going evaluation or reviewofbids or proposals being undertaken by the bidding or review

committee is not immediately accessible under the right toinformation. While the evaluation or review is still on-going,there are no "official acts, transactions, or decisions" on thebids or proposals. However, once the committee makesits official recommendation, there arises a "definite

proposition"on the part of the government. From thismoment, the public's right to information attaches, and anycitizen can access all the non-proprietary information leadingto such definite proposition. In Chavez v. PCGG,33 the Courtruled as follows:

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"Considering the intent of the framers of theConstitution, we believe that it is incumbent uponthe PCGG and its officers, as well as othergovernment representatives, to disclose sufficientpublic information on any proposed settlementthey have decided to take up with the ostensibleowners and holders of ill-gotten wealth. Suchinformation, though, must pertain to definite

propositions of the government, not necessarilyto intra-agency or inter-agency recommendationsor communications during the stage whencommon assertions are still in the process of beingformulated or are in the "exploratory" stage. Thereis need, of course, to observe the samerestrictions on disclosure of information in general,as discussed earlier such as on mattersinvolving national security, diplomatic or foreignrelations, intelligence and other classifiedinformation." (Emphasis supplied)

Contrary to AMARI's contention, the commissioners of the1986 Constitutional Commission understood that the right toinformation "contemplates inclusion of negotiationsleading to the consummation of the

transaction."Certainly, a consummated contract is not arequirement for the exercise of the right to information.Otherwise, the people can never exercise the right if nocontract is consummated, and if one is consummated, it maybe too late for the public to expose its defects.1wphi1.nt

Requiring a consummated contract will keep the public in thedark until the contract, which may be grosslydisadvantageous to the government or even illegal, becomesa fait accompli. This negates the State policy of fulltransparency on matters of public concern, a situation whichthe framers of the Constitution could not have intended.Such a requirement will prevent the citizenry fromparticipating in the public discussion ofanyproposedcontract, effectively truncating a basic rightenshrined in the Bill of Rights. We can allow neither an

emasculation of a constitutional right, nor a retreat by theState of its avowed "policy of full disclosure of all itstransactions 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 researchdata used in formulating policies. The first category refers toany document that is part of the public records in the custodyof government agencies or officials. The second categoryrefers to documents and papers recording, evidencing,establishing, confirming, supporting, justifying or explainingofficial acts, transactions or decisions of governmentagencies or officials. The third category refers to researchdata, whether raw, collated or processed, owned by thegovernment and used in formulating government policies.

The information that petitioner may access on therenegotiation of the JVA includes evaluation reports,recommendations, legal and expert opinions, minutes ofmeetings, terms of reference and other documents attachedto 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 therenegotiation of the JVA.34 The right only affords access torecords, documents and papers, which means theopportunity to inspect and copy them. One who exercises

the right must copy the records, documents and papers athis expense. The exercise of the right is also subject toreasonable regulations to protect the integrity of the publicrecords and to minimize disruption to governmentoperations, like rules specifying when and how to conductthe inspection and copying.35

The right to information, however, does not extend to

matters recognized as privileged information under theseparation of powers.36 The right does not also apply toinformation on military and diplomatic secrets, informationaffecting national security, and information on investigationsof crimes by law enforcement agencies before theprosecution of the accused, which courts have longrecognized as confidential.37 The right may also be subject toother limitations that Congress may impose by law.

There is no claim by PEA that the information demanded bypetitioner is privileged information rooted in the separation ofpowers. The information does not cover Presidentialconversations, correspondences, or discussions duringclosed-door Cabinet meetings which, like internaldeliberations of the Supreme Court and other collegiatecourts, or executive sessions of either house of

Congress,38 are recognized as confidential. This kind ofinformation cannot be pried open by a co-equal branch ofgovernment. A frank exchange of exploratory ideas andassessments, free from the glare of publicity and pressureby interested parties, is essential to protect theindependence of decision-making of those tasked toexercise Presidential, Legislative and Judicial power.39 Thisis not the situation in the instant case.

We rule, therefore, that the constitutional right to informationincludes official information on on-goingnegotiations before a final contract. The information,however, must constitute definite propositions by thegovernment and should not cover recognized exceptions likeprivileged information, military and diplomatic secrets andsimilar matters affecting national security and public

order.40 Congress has also prescribed other limitations onthe right to information in several legislations.41

Sixth issue: whether stipulations in the Amended JVAfor the transfer to AMARI of lands, reclaimed or to be

reclaimed, violate the Constitution.

The Regalian Doctrine

The ownership of lands reclaimed from foreshore andsubmerged areas is rooted in the Regalian doctrine whichholds that the State owns all lands and waters of the publicdomain. Upon the Spanish conquest of the Philippines,ownership of all "lands, territories and possessions" in thePhilippines passed to the Spanish Crown.42 The King, as the

sovereign ruler and representative of the people, acquiredand owned all lands and territories in the Philippines exceptthose he disposed of by grant or sale to private individuals.

The 1935, 1973 and 1987 Constitutions adopted theRegalian doctrine substituting, however, the State, in lieu ofthe King, as the owner of all lands and waters of the publicdomain. The Regalian doctrine is the foundation of the time-honored principle of land ownership that "all lands that werenot acquired from the Government, either by purchase or bygrant, belong to the public domain."43 Article 339 of the Civil

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Code of 1889, which is now Article 420 of the Civil Code of1950, incorporated the Regalian doctrine.

Ownership and Disposition of Reclaimed Lands

The Spanish Law of Waters of 1866 was the first statutorylaw governing the ownership and disposition of reclaimed

lands in the Philippines. On May 18, 1907, the PhilippineCommission enacted Act No. 1654 which provided for thelease, but not the sale, of reclaimed lands of thegovernment to corporations and individuals. Later, onNovember 29, 1919, the Philippine Legislature approved ActNo. 2874, the Public Land Act, which authorized the lease,but not the sale, of reclaimed lands of the governmentto corporations and individuals. On November 7, 1936,the National Assembly passed Commonwealth Act No. 141,also known as the Public Land Act, which authorized thelease, but not the sale, of reclaimed lands of thegovernment to corporations and individuals. CA No. 141continues to this day as the general law governing theclassification 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 theSpanish territory belonged to the public domain for publicuse.44 The Spanish Law of Waters of 1866 allowed thereclamation of the sea under Article 5, which provided asfollows:

"Article 5. Lands reclaimed from the sea inconsequence of works constructed by the State, orby the provinces, pueblos or private persons, withproper permission, shall become the property ofthe party constructing such works, unlessotherwise provided by the terms of the grant ofauthority."

Under the Spanish Law of Waters, land reclaimed from thesea belonged to the party undertaking the reclamation,provided the government issued the necessary permit anddid not reserve ownership of the reclaimed land to the State.

Article 339 of the Civil Code of 1889 defined property ofpublic dominion as follows:

"Art. 339. Property of public dominion is

1. That devoted to public use, such as roads,canals, rivers, torrents, ports and bridgesconstructed 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 insome public service, or in the development of thenational wealth, such as walls, fortresses, andother works for the defense of the territory, andmines, until granted to private individuals."

Property devoted to public use referred to property open foruse by the public. In contrast, property devoted to public

service referred to property used for some specific publicservice and open only to those authorized to use theproperty.

Property of public dominion referred not only to propertydevoted to public use, but also to property not so used butemployed to develop the national wealth. This class ofproperty constituted property of public dominion although

employed for some economic or commercial activity toincrease the national wealth.

Article 341 of the Civil Code of 1889 governed the re-classification of property of public dominion into privateproperty, to wit:

"Art. 341. Property of public dominion, when nolonger devoted to public use or to the defense ofthe territory, shall become a part of the privateproperty of the State."

This provision, however, was not self-executing. Thelegislature, 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 oralienate 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 foreshorelands. The salient provisions of this law were as follows:

"Section 1. The control and disposition of theforeshore as defined in existing law, and the titleto all Government or public lands made orreclaimed by the Government by dredging orfillingor otherwise throughout the PhilippineIslands, shall be retained by the

Governmentwithout prejudice to vested rightsand without prejudice to rights conceded to theCity of Manila in the Luneta Extension.

Section 2. (a) The Secretary of the Interior shallcause all Government or public lands made orreclaimed by the Government by dredging or fillingor otherwise to be divided into lots or blocks, withthe necessary streets and alleyways locatedthereon, and shall cause plats and plans of suchsurveys to be prepared and filed with the Bureauof Lands.

(b) Upon completion of such plats and plansthe Governor-General shall give notice to the

public that such parts of the lands so made orreclaimed as are not needed for publicpurposes will be leased for commercial andbusiness purposes, x x x.

x x x

(e) The leases above provided for shall bedisposed of to the highest and bestbiddertherefore, subject to such regulations and

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safeguards as the Governor-General may byexecutive order prescribe." (Emphasis supplied)

Act No. 1654 mandated that the government should retaintitle to all lands reclaimed by the government. The Actalso vested in the government control and disposition offoreshore lands. Private parties could lease lands reclaimedby the government only if these lands were no longer

needed for public purpose. Act No. 1654 mandatedpublicbiddingin the lease of government reclaimed lands. Act No.1654 made government reclaimed lands sui generis in thatunlike other public lands which the government could sell toprivate parties, these reclaimed lands were available only forlease to private parties.

Act No. 1654, however, did not repeal Section 5 of theSpanish Law of Waters of 1866. Act No. 1654 did notprohibit private parties from reclaiming parts of the sea underSection 5 of the Spanish Law of Waters. Lands reclaimedfrom the sea by private parties with government permissionremained private lands.

Act No. 2874 of the Philippine Legislature

On November 29, 1919, the Philippine Legislature enactedAct No. 2874, the Public Land Act.46 The salient provisions ofAct No. 2874, on reclaimed lands, were as follows:

"Sec. 6. The Governor-General, upon therecommendation of the Secretary of

Agriculture and Natural Resources, shall fromtime to time classify the lands of the publicdomain into

(a)Alienable or disposable,

(b) Timber, and

(c) Mineral lands, x x x.

Sec. 7. For the purposes of the government anddisposition of alienable or disposable publiclands, the Governor-General, uponrecommendation by the Secretary of

Agriculture and Natural Resources, shall fromtime to time declare what lands are open todisposition or concession under this Act."

Sec. 8. Only those lands shall be declaredopen to disposition or concession which havebeen officially delimited or classifiedx x x.

x x x

Sec. 55. Any tract of land of the public domainwhich, being neither timber nor mineral land, shallbe classified as suitable for residential

purposes or for commercial, industrial, orother productive purposes other thanagricultural purposes, and shall be open todisposition or concession, shall be disposed ofunder the provisions of this chapter, and nototherwise.

Sec. 56. The lands disposable under this titleshall be classified as follows:

(a) Lands reclaimed by theGovernment by dredging, filling, orother means;

(b) Foreshore;

(c) Marshy lands or lands covered withwater bordering upon the shores orbanks of navigable lakes or rivers;

(d) Lands not included in any of theforegoing classes.

x x x.

Sec. 58. The lands comprised in classes (a),(b), and (c) of section fifty-six shall bedisposed of to private parties by lease onlyand not otherwise, as soon as the Governor-

General, upon recommendation by theSecretary of Agriculture and NaturalResources, shall declare that the same are notnecessary for the public service and are opento disposition under this chapter. The landsincluded in class (d) may be disposed of bysale or lease under the provisions of this Act."(Emphasis supplied)

Section 6 of Act No. 2874 authorized the Governor-Generalto "classify lands of the public domain into x x x alienable ordisposable"47 lands. Section 7 of the Act empowered theGovernor-General to "declare what lands are open todisposition or concession." Section 8 of the Act limitedalienable or disposable lands only to those lands which havebeen "officially delimited and classified."

Section 56 of Act No. 2874 stated that lands "disposableunder this title48 shall be classified" as governmentreclaimed, foreshore and marshy lands, as well as otherlands. All these lands, however, must be suitable forresidential, commercial, industrial or other productive non-agriculturalpurposes. These provisions vested upon theGovernor-General the power to classify inalienable lands ofthe public domain into disposable lands of the public domain.These provisions also empowered the Governor-General toclassify further such disposable lands of the public domaininto government reclaimed, foreshore or marshy lands of thepublic domain, as well as other non-agricultural lands.

Section 58 of Act No. 2874 categorically mandated that

disposable lands of the public domain classified asgovernment reclaimed, foreshore and marshy lands "shallbe disposed of to private parties by lease only and nototherwise."The Governor-General, before allowing thelease of these lands to private parties, must formally declarethat the lands were "not necessary for the public service."

Act No. 2874 reiterated the State policy to lease and not tosell government reclaimed, foreshore and marshy lands ofthe public domain, a policy first enunciated in 1907 in ActNo. 1654. Government reclaimed, foreshore and marshylands remained sui generis, as the only alienable or

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disposable lands of the public domain that the governmentcould not sell to private parties.

The rationale behind this State policy is obvious.Government reclaimed, foreshore and marshy public landsfor non-agricultural purposes retain their inherent potentialas areas for public service. This is the reason thegovernment prohibited the sale, and only allowed the lease,

of these lands to private parties. The State always reservedthese lands for some future public service.

Act No. 2874 did not authorize the reclassification ofgovernment reclaimed, foreshore and marshy lands intoother non-agricultural lands under Section 56 (d). Landsfalling under Section 56 (d) were the only lands for non-agricultural purposes the government could sell to privateparties. Thus, under Act No. 2874, the government could notsell government reclaimed, foreshore and marshy lands toprivate parties, unless the legislature passed a lawallowing their sale.49

Act No. 2874 did not prohibit private parties from reclaimingparts of the sea pursuant to Section 5 of the Spanish Law of

Waters of 1866. Lands reclaimed from the sea by privateparties with government permission remained private lands.

Dispositions under the 1935 Constitution

On May 14, 1935, the 1935 Constitution took effect upon itsratification by the Filipino people. The 1935 Constitution, inadopting the Regalian doctrine, declared in Section 1, ArticleXIII, that

"Section 1. All agricultural, timber, and minerallands of the public domain, waters, minerals, coal,petroleum, and other mineral oils, all forces ofpotential energy and other natural resources of thePhilippines belong to the State, and their

disposition, exploitation, development, orutilization shall be limited to citizens of thePhilippines or to corporations or associations atleast sixty per centum of the capital of which isowned by such citizens, subject to any existingright, grant, lease, or concession at the time of theinauguration of the Government established underthis Constitution. Natural resources, with theexception of public agricultural land, shall notbe alienated, and no license, concession, or leasefor the exploitation, development, or utilization ofany of the natural resources shall be granted for aperiod exceeding twenty-five years, renewable foranother twenty-five years, except as to waterrights for irrigation, water supply, fisheries, orindustrial uses other than the development ofwater power, in which cases beneficial use may be

the measure and limit of the grant." (Emphasissupplied)

The 1935 Constitution barred the alienation of all naturalresources except public agricultural lands, which were theonly natural resources the State could alienate. Thus,foreshore lands, considered part of the State's naturalresources, became inalienable by constitutional fiat,available only for lease for 25 years, renewable for another25 years. The government could alienate foreshore landsonly after these lands were reclaimed and classified as

alienable agricultural lands of the public domain.Government reclaimed and marshy lands of the publicdomain, being neither timber nor mineral lands, fell under theclassification of public agricultural lands.50 However,government reclaimed and marshy lands, although subjectto classification as disposable public agricultural lands, couldonly be leased and not sold to private parties because of ActNo. 2874.

The prohibition on private parties from acquiring ownershipof government reclaimed and marshy lands of the publicdomain was only a statutory prohibition and the legislaturecould therefore remove such prohibition. The 1935Constitution did not prohibit individuals and corporationsfrom acquiring government reclaimed and marshy lands ofthe public domain that were classified as agricultural landsunder existing public land laws. Section 2, Article XIII of the1935 Constitution provided as follows:

"Section 2. No private corporation orassociation may acquire, lease, or hold publicagricultural lands in excess of one thousandand twenty four hectares, nor may anyindividual acquire such lands by purchase in

excess of one hundred and forty hectares, orby lease in excess of one thousand andtwenty-four hectares, or by homestead in excessof twenty-four hectares. Lands adapted to grazing,not exceeding two thousand hectares, may beleased to an individual, private corporation, orassociation." (Emphasis supplied)

Still, after the effectivity of the 1935 Constitution, thelegislature did not repeal Section 58 of Act No. 2874 to openfor sale to private parties government reclaimed and marshylands of the public domain. On the contrary, the legislaturecontinued the long established State policy of retaining forthe government title and ownership of government reclaimedand marshy lands of the public domain.

Commonwealth Act No. 141 of the Philippine NationalAssembly

On November 7, 1936, the National Assembly approvedCommonwealth Act No. 141, also known as the Public Land

Act, which compiled the then existing laws on lands of thepublic domain. CA No. 141, as amended, remains to this daythe existing general lawgoverning the classification anddisposition of lands of the public domain other than timberand mineral lands.51

Section 6 of CA No. 141 empowers the President to classifylands of the public domain into "alienable ordisposable"52 lands of the public domain, which prior to suchclassification 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 candeclare open for disposition or concession only lands thatare "officially delimited and classified." Sections 6, 7 and 8 ofCA No. 141 read as follows:

"Sec. 6. The President, upon therecommendation of the Secretary of

Agriculture and Commerce, shall from time to

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time classify the lands of the public domaininto

(a) Alienable or disposable,

(b) Timber, and

(c) Mineral lands,

and may at any time and in like manner transfersuch lands from one class to another,53 for thepurpose of their administration and disposition.

Sec. 7. For the purposes of the administration anddisposition of alienable or disposable publiclands, the President, upon recommendation bythe Secretary of Agriculture and Commerce,shall from time to time declare what lands areopen to disposition or concession under this

Act.

Sec. 8. Only those lands shall be declared

open to disposition or concession which havebeen officially delimited and classifiedand,when practicable, surveyed, and which have notbeen reserved for public or quasi-public uses,nor appropriated by the Government, nor in anymanner become private property, nor those onwhich a private right authorized and recognized bythis Act or any other valid law may be claimed, orwhich, having been reserved or appropriated,have ceased to be so. x x x."

Thus, before the government could alienate or dispose oflands of the public domain, the President must first officiallyclassify these lands as alienable or disposable, and thendeclare them open to disposition or concession. There mustbe no law reserving these lands for public or quasi-public

uses.

The salient provisions of CA No. 141, on governmentreclaimed, foreshore and marshy lands of the public domain,are as follows:

"Sec. 58.Any tract of land of the public domainwhich, being neither timber nor mineral land,is intended to be used for residential purposesor for commercial, industrial, or other

productive purposes other than agricultural,and is open to disposition or concession, shallbe disposed of under the provisions of thischapter and not otherwise.

Sec. 59. The lands disposable under this titleshall be classified as follows:

(a) Lands reclaimed by theGovernment by dredging, filling, orother means;

(b) Foreshore;

(c) Marshy lands or lands covered withwater bordering upon the shores orbanks of navigable lakes or rivers;

(d) Lands not included in any of theforegoing classes.

Sec. 60. Any tract of land comprised under thistitle may be leased or sold, as the case may be, toany person, corporation, or association authorizedto purchase or lease public lands for agriculturalpurposes. x x x.

Sec. 61. The lands comprised in classes (a),(b), and (c) of section fifty-nine shall bedisposed of to private parties by lease onlyand not otherwise, as soon as the President,upon recommendation by the Secretary of

Agriculture, shall declare that the same are notnecessary for the public service and are opento disposition under this chapter. The landsincluded in class (d) may be disposed of bysale or lease under the provisions of this Act."

(Emphasis supplied)

Section 61 of CA No. 141 readopted, after the effectivity ofthe 1935 Constitution, Section 58 of Act No. 2874 prohibitingthe sale of government reclaimed, foreshore and marshydisposable lands of the public domain. All these lands areintended for residential, commercial, industrial or other non-agricultural purposes. As before, Section 61 allowed only thelease of such lands to private parties. The government couldsell to private parties only lands falling under Section 59 (d)of CA No. 141, or those lands for non-agricultural purposesnot classified as government reclaimed, foreshore andmarshy disposable lands of the public domain. Foreshorelands, however, became inalienable under the 1935Constitution which only allowed the lease of these lands toqualified private parties.

Section 58 of CA No. 141 expressly states that disposablelands of the public domain intended for residential,commercial, industrial or other productive purposes otherthan agricultural "shall be disposed of under the

provisions of this chapter and not otherwise." UnderSection 10 of CA No. 141, the term "disposition" includeslease of the land. Any disposition of government reclaimed,foreshore and marshy disposable lands for non-agriculturalpurposes must comply with Chapter IX, Title III of CA No.141,54 unless a subsequent law amended or repealed theseprovisions.

In his concurring opinion in the landmark case ofRepublicReal Estate Corporation v. Court of Appeals,55JusticeReynato S. Puno summarized succinctly the law on this

matter, as follows:

"Foreshore lands are lands of public dominionintended for public use. So too are landsreclaimed by the government by dredging, filling,or other means. Act 1654 mandated that thecontrol and disposition of the foreshore and landsunder water remained in the national government.Said law allowed only the 'leasing' of reclaimedland. The Public Land Acts of 1919 and 1936 alsodeclared that the foreshore and lands reclaimed

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by the government were to be "disposed of toprivate 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 todetermine that the land reclaimed was notnecessary for the public service. This requisitemust have been met before the land could be

disposed of. But even then, the foreshore andlands under water were not to be alienated andsold to private parties. The disposition of thereclaimed land was only by lease. The landremained property of the State." (Emphasissupplied)

As observed by Justice Puno in his concurring opinion,"Commonwealth Act No. 141 has remained in effect atpresent."

The State policy prohibiting the sale to private parties ofgovernment reclaimed, foreshore and marshy alienablelands of the public domain, first implemented in 1907 wasthus reaffirmed in CA No. 141 after the 1935 Constitutiontook effect. The prohibition on the sale of foreshore lands,

however, became a constitutional edict under the 1935Constitution. Foreshore lands became inalienable as naturalresources of the State, unless reclaimed by the governmentand classified as agricultural lands of the public domain, inwhich case they would fall under the classification ofgovernment reclaimed lands.

After the effectivity of the 1935 Constitution, governmentreclaimed and marshy disposable lands of the public domaincontinued to be only leased and not sold to privateparties.56 These lands remained sui generis, as the onlyalienable or disposable lands of the public domain thegovernment could not sell to private parties.

Since then and until now, the only way the government can

sell to private parties government reclaimed and marshydisposable lands of the public domain is for the legislature topass a law authorizing such sale. CA No. 141 does notauthorize the President to reclassify government reclaimedand marshy lands into other non-agricultural lands underSection 59 (d). Lands classified under Section 59 (d) are theonly alienable or disposable lands for non-agriculturalpurposes that the government could sell to private parties.

Moreover, Section 60 of CA No. 141 expresslyrequirescongressional authority before lands under Section 59 thatthe government previously transferred to government unitsor entities could be sold to private parties. Section 60 of CANo. 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 ofAgriculture and Natural Resources, be reasonablynecessary for the purposes for which such sale orlease is requested, and shall not exceed onehundred and forty-four hectares: Provided,however, That this limitation shall not apply togrants, donations, or transfers made to a province,municipality or branch or subdivision of theGovernment for the purposes deemed by saidentities conducive to the public interest;but theland so granted, donated, or transferred to a

province, municipality or branch or

subdivision of the Government shall not bealienated, encumbered, or otherwise disposedof in a manner affecting its title, except whenauthorized by Congress: x x x." (Emphasissupplied)

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 60of CA No. 141 exempted government units and entities fromthe maximum area of public lands that could be acquiredfrom the State. These government units and entities shouldnot just turn around and sell these lands to private parties inviolation of constitutional or statutory limitations. Otherwise,the transfer of lands for non-agricultural purposes togovernment units and entities could be used to circumventconstitutional limitations on ownership of alienable ordisposable lands of the public domain. In the same manner,such transfers could also be used to evade the statutoryprohibition in CA No. 141 on the sale of governmentreclaimed and marshy lands of the public domain to privateparties. Section 60 of CA No. 141 constitutes by operation of

law a lien on these lands.57

In case ofsale or lease of disposable lands of the publicdomain falling under Section 59 of CA No. 141, Sections 63and 67 require a public bidding. Sections 63 and 67 of CANo. 141 provide as follows:

"Sec. 63. Whenever it is decided that landscovered by this chapter are not needed for publicpurposes, the Director of Lands shall ask theSecretary of Agriculture and Commerce (now theSecretary of Natural Resources) for authority todispose of the same. Upon receipt of suchauthority, the Director of Lands shall give notice bypublic 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 byoral bidding; and adjudication shall be made tothe highest bidder. x x x." (Emphasis supplied)

Thus, CA No. 141 mandates the Government to put to publicauction all leases or sales of alienable or disposable lands ofthe public domain.58

Like Act No. 1654 and Act No. 2874 before it, CA No. 141did not repeal Section 5 of the Spanish Law of Waters of1866. Private parties could still reclaim portions of the seawith government permission. However, the reclaimed land

could become private land only if classified as alienableagricultural land of the public domain open to dispositionunder CA No. 141. The 1935 Constitution prohibited thealienation of all natural resources except public agriculturallands.

The Civil Code of 1950

The Civil Code of 1950 readopted substantially the definitionof property of public dominion found in the Civil Code of

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1889. Articles 420 and 422 of the Civil Code of 1950 statethat

"Art. 420. The following things are property ofpublic dominion:

(1) Those intended for public use, such as roads,

canals, rivers, torrents, ports and bridgesconstructed by the State, banks, shores,roadsteads, and others of similar character;

(2) Those which belong to the State, without beingfor public use, and are intended for some publicservice or for the development of the nationalwealth.

x x x.

Art. 422. Property of public dominion, when nolonger intended for public use or for public service,shall form part of the patrimonial property of theState."

Again, the government must formally declare that theproperty of public dominion is no longer needed for publicuse or public service, before the same could be classified aspatrimonial property of the State.59 In the case of governmentreclaimed and marshy lands of the public domain, thedeclaration of their being disposable, as well as the mannerof their disposition, is governed by the applicable provisionsof CA No. 141.

Like the Civil Code of 1889, the Civil Code of 1950 includedas property of public dominion those properties of the Statewhich, without being for public use, are intended for publicservice or the "development of the national wealth." Thus,government reclaimed and marshy lands of the State, even ifnot employed for public use or public service, if developed to

enhance the national wealth, are classified as property ofpublic dominion.


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 Philippinesbelong to the State. With the exception ofagricultural, industrial or commercial,

residential, and resettlement lands of thepublic domain, natural resources shall not bealienated, and no license, concession, or lease forthe exploration, development, exploitation, orutilization of any of the natural resources shall begranted for a period exceeding twenty-five years,renewable for not more than twenty-five years,except as to water rights for irrigation, watersupply, fisheries, or industrial uses other than thedevelopment of water power, in which cases,beneficial use may be the measure and the limit ofthe grant." (Emphasis supplied)

The 1973 Constitution prohibited the alienation of all naturalresources with the exception of "agricultural, industrial orcommercial, residential, and resettlement lands of the publicdomain." In contrast, the 1935 Constitution barred thealienation of all natural resources except "public agriculturallands." However, the term "public agricultural lands" in the1935 Constitution encompassed industrial, commercial,residential and resettlement lands of the public domain.60 If

the land of public domain were neither timber nor mineralland, it would fall under the classification of agricultural landof the public domain. Both the 1935 and 1973Constitutions, therefore, prohibited the alienation of allnatural resources except agricultural lands of the publicdomain.

The 1973 Constitution, however, limited the alienation oflands of the public domain to individuals who were citizens ofthe Philippines. Private corporations, even if wholly ownedby Philippine citizens, were no longer allowed to acquirealienable lands of the public domain unlike in the 1935Constitution. Section 11, Article XIV of the 1973 Constitutiondeclared that

"Sec. 11. The Batasang Pambansa, taking into

account conservation, ecological, anddevelopment requirements of the naturalresources, shall determine by law the size of landof the public domain which may be developed,held or acquired by, or leased to, any qualifiedindividual, corporation, or association, and theconditions therefor. No private corporation orassociation may hold alienable lands of the

public domain except by lease not to exceedone thousand hectares in area nor may any citizenhold such lands by lease in excess of five hundredhectares or acquire by purchase, homestead orgrant, in excess of twenty-four hectares. Noprivate corporation or association may hold bylease, concession, license or permit, timber orforest lands and other timber or forest resources in

excess of one hundred thousand hectares.However, such area may be increased by theBatasang Pambansa upon recommendation of theNational Economic and Development Authority."(Emphasis supplied)

Thus, under the 1973 Constitution, private corporationscould hold alienable lands of the public domain only throughlease. Only individuals could now acquire alienable lands ofthe public domain, andprivate corporations becameabsolutely barred from acquiring any kind of alienableland of the public domain. The constitutional ban extendedto all kinds of alienable lands of the public domain, while thestatutory ban under CA No. 141 applied only to governmentreclaimed, foreshore and marshy alienable lands of thepublic domain.

PD No. 1084 Creating the Public Estates Authority

On February 4, 1977, then President Ferdinand Marcosissued Presidential Decree No. 1084 creating PEA, a whollygovernment owned and controlled corporation with a specialcharter. Sections 4 and 8 of PD No. 1084, vests PEA withthe following purposes and powers:

"Sec. 4. Purpose. The Authority is hereby createdfor the following purposes:

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(a) To reclaim land, including foreshore andsubmerged areas, by dredging, filling or othermeans, or to acquire reclaimed land;

(b) To develop, improve, acquire, administer, dealin, subdivide, dispose, lease and sell any and allkinds of lands, buildings, estates and other formsof real property, owned, managed, controlled

and/or operated by the government;

(c) To provide for, operate or administer suchservice as may be necessary for the efficient,economical and beneficial utilization of the aboveproperties.

Sec. 5. Powers and functions of the Authority. TheAuthority shall, in carrying out the purposes forwhich it is created, have the following powers andfunctions:

(a)To prescribe its by-laws.

x x x

(i) To hold lands of the public domain in excessof the area permitted to private corporations bystatute.

(j) To reclaim lands and to construct work across,or otherwise, any stream, watercourse, canal,ditch, flume x x x.

x x x

(o) To perform such acts and exercise suchfunctions as may be necessary for the attainmentof the purposes and objectives herein specified."

(Emphasis supplied)

PD No. 1084 authorizes PEA to reclaim both foreshore andsubmerged areas of the public domain. Foreshore areas arethose covered and uncovered by the ebb and flow of thetide.61 Submerged areas are those permanently under waterregardless of the ebb and flow of the tide.62 Foreshore andsubmerged areas indisputably belong to the publicdomain63 and are inalienable unless reclaimed, classified asalienable lands open to disposition, and further declared nolonger needed for public service.

The ban in the 1973 Constitution on private corporationsfrom acquiring alienable lands of the public domain did notapply 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 andassociations." PD No. 1084 expressly empowers PEA "tohold lands of the public domain" even "in excess of thearea permitted to private corporations by statute." Thus,PEA can hold title to private lands, as well as title tolands of the public domain.

In order for PEA to sell its reclaimed foreshore andsubmerged alienable lands of the public domain, there mustbe legislative authority empowering PEA to sell these lands.

This legislative authority is necessary in view of Section 60of CA No.141, which states

"Sec. 60. x x x; but the land so granted, donated ortransferred to a province, municipality, or branchor subdivision of the Government shall not bealienated, encumbered or otherwise disposed of ina manner affecting its title, except when

authorized by Congress; x x x." (Emphasissupplied)

Without such legislative authority, PEA could not sell butonly lease its reclaimed foreshore and submerged alienablelands of the public domain. Nevertheless, any legislativeauthority granted to PEA to sell its reclaimed alienable landsof the public domain would be subject to the constitutionalban on private corporations from acquiring alienable lands ofthe public domain. Hence, such legislative authority couldonly benefit private individuals.


The 1987 Constitution, like the 1935 and 1973 Constitutions

before it, has adopted the Regalian doctrine. The 1987Constitution declares that all natural resources are "ownedby the State," and except for alienable agricultural lands ofthe public domain, natural resources cannot be alienated.Sections 2 and 3, Article XII of the 1987 Constitution statethat

"Section 2. All lands of the public domain, waters,minerals, coal, petroleum and other mineral oils,all forces of potential energy, fisheries, forests ortimber, wildlife, flora and fauna, and othernatural resources are owned by the State. Withthe exception of agricultural lands, all othernatural resources shall not be alienated. Theexploration, development, and utilization of naturalresources shall be under the full control and

supervision of the State. x x x.

Section 3. Lands of the public domain areclassified into agricultural, forest or timber, minerallands, and national parks. Agricultural lands of thepublic domain may be further classified by lawaccording to the uses which they may bedevoted.Alienable lands of the public domainshall be limited to agricultural lands. Privatecorporations or associations may not holdsuch alienable lands of the public domainexcept by lease, for a period not exceedingtwenty-five years, renewable for not more thantwenty-five years, and not to exceed onethousand hectares in area. Citizens of thePhilippines may lease not more than five hundred

hectares, or acquire not more than twelvehectares thereof by purchase, homestead, orgrant.

Taking into account the requirements ofconservation, ecology, and development, andsubject to the requirements of agrarian reform, theCongress shall determine, by law, the size oflands of the public domain which may be acquired,developed, held, or leased and the conditionstherefor." (Emphasis supplied)

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The 1987 Constitution continues the State policy in the 1973Constitution banning private corporations fromacquiringany kind of alienable land of the public domain. Like the1973 Constitution, the 1987 Constitution allows privatecorporations to hold alienable lands of the publicdomain only through lease. As in the 1935 and 1973Constitutions, the general law governing the lease to privatecorporations 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 corporationsfrom acquiring, except through lease, alienable lands of thepublic domain is not well understood. During thedeliberations of the 1986 Constitutional Commission, thecommissioners probed the rationale behind this ban, thus:

"FR. BERNAS: Mr. Vice-President, my questionshave reference to page 3, line 5 which says:

`No private corporation or association may holdalienable lands of the public domain except by

lease, not to exceed one thousand hectares inarea.'

If we recall, this provision did not exist under the1935 Constitution, but this was introduced in the1973 Constitution. In effect, it prohibits privatecorporations from acquiring alienable publiclands. But it has not been very clear in

jurisprudence what the reason for this is. Insome of the cases decided in 1982 and 1983, itwas indicated that the purpose of this is to

prevent large landholdings. Is that the intent ofthis provision?

MR. VILLEGAS: I think that is the spirit of the provision.

FR. BERNAS: In existing decisions involving theIglesia ni Cristo, there were instances where theIglesia ni Cristo was not allowed to acquire a mere313-square meter land where a chapel stoodbecause the Supreme Court said it would be inviolation of this." (Emphasis supplied)

InAyog v. Cusi,64 the Court explained the rationale behindthis constitutional ban in this way:

"Indeed, one purpose of the constitutionalprohibition against purchases of public agriculturallands by private corporations is to equitably diffuseland ownership or to encourage 'owner-

cultivatorship and the economic family-size farm'and to prevent a recurrence of cases like theinstant case. Huge landholdings by corporations orprivate persons had spawned social unrest."

However, if the constitutional intent is to prevent hugelandholdings, the Constitution could have simply limited thesize of alienable lands of the public domain that corporationscould acquire. The Constitution could have followed thelimitations on individuals, who could acquire not more than24 hectares of alienable lands of the public domain under

the 1973 Constitution, and not more than 12 hectares underthe 1987 Constitution.

If the constitutional intent is to encourage economic family-size farms, placing the land in the name of a corporationwould be more effective in preventing the break-up offarmlands. If the farmland is registered in the name of acorporation, upon the death of the owner, his heirs would

inherit shares in the corporation instead of subdividedparcels of the farmland. This would prevent the continuingbreak-up of farmlands into smaller and smaller plots fromone generation to the next.

In actual practice, the constitutional ban strengthens theconstitutional limitation on individuals from acquiring morethan the allowed area of alienable lands of the publicdomain. Without the constitutional ban, individuals whoalready acquired the maximum area of alienable lands of thepublic domain could easily set up corporations to acquiremore alienable public lands. An individual could own asmany corporations as his means would allow him. Anindividual could even hide his ownership of a corporation byputting his nominees as stockholders of the corporation. Thecorporation is a convenient vehicle to circumvent the

constitutional limitation on acquisition by individuals ofalienable lands of the public domain.

The constitutional intent, under the 1973 and 1987Constitutions, is to transfer ownership of only a limited areaof alienable land of the public domain to a qualifiedindividual. This constitutional intent is safeguarded by theprovision prohibiting corporations from acquiring alienablelands of the public domain, since the vehicle to circumventthe constitutional intent is removed. The available alienablepublic lands are gradually decreasing in the face of an ever-growing population. The most effective way to insure faithfuladherence to this constitutional intent is to grant or sellalienable lands of the public domain only to individuals. This,it would seem, is the practical benefit arising from theconstitutional ban.

The Amended Joint Venture Agreement

The subject matter of the Amended JVA, as stated in itssecond Whereas clause, consists of three properties,namely:

1. "[T]hree partially reclaimed and substantiallyeroded islands along Emilio Aguinaldo Boulevardin Paranaque and Las Pinas, Metro Manila, with acombined titled area of 1,578,441 square meters;"

2. "[A]nother area of 2,421,559 square meterscontiguous to the three islands;" and

3. "[A]t AMARI's option as approved by PEA, anadditional 350 hectares more or less to regularizethe configuration of the reclaimed area."65

PEA confirms that the Amended JVA involves "thedevelopment of the Freedom Islands and further reclamationof about 250 hectares x x x," plus an option "granted to

AMARI to subsequently reclaim another 350 hectares x xx."66

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In short, the Amended JVA covers a reclamation area of 750hectares. Only 157.84 hectares of the 750-hectarereclamation project have been reclaimed, and the rest ofthe 592.15 hectares are still submerged areas forming

part of Manila Bay.

Under the Amended JVA, AMARI will reimburse PEA thesum of P1,894,129,200.00 for PEA's "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 allthe other areas, totaling 592.15 hectares, still to bereclaimed. AMARI and PEA will share, in the proportion of70 percent and 30 percent, respectively, the total net usablearea which is defined in the Amended JVA as the totalreclaimed area less 30 percent earmarked for commonareas. Title to AMARI's share in the net usable area, totaling367.5 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 withoutdelay the necessary deed of transfer orconveyance of the title pertaining to AMARI's Landshare based on the Land Allocation Plan. PEA,

when requested in writing by AMARI, shallthen cause the issuance and delivery of the

proper certificates of title covering AMARI'sLand 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 seventypercent (70%) of the titles pertaining to AMARI,until such time when a correspondingproportionate area of additional land pertaining toPEA has been titled." (Emphasis supplied)

Indisputably, under the Amended JVA AMARI willacquire and own a maximum of 367.5 hectares ofreclaimed land which will be titled in its name.

To implement the Amended JVA, PEA delegated to theunincorporated PEA-AMARI joint venture PEA's statutoryauthority, rights and privileges to reclaim foreshore andsubmerged areas in Manila Bay. Section 3.2.a of the

Amended JVA states that

"PEA hereby contributes to the joint venture itsrights and privileges to perform RawlandReclamation and Horizontal Development as wellas own the Reclamation Area, thereby grantingthe Joint Venture the full and exclusive right,authority and privilege to undertake the Project inaccordance with the Master Development Plan."

The Amended JVA is the product of a renegotiation of the

original JVA dated April 25, 1995 and its supplementalagreement dated August 9, 1995.

The Threshold Issue

The threshold issue is whether AMARI, a private corporation,can acquire and own under the Amended JVA 367.5hectares of reclaimed foreshore and submerged areas inManila Bay in view of Sections 2 and 3, Article XII of the1987 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 ortimber, wildlife, flora and fauna, and other naturalresources are owned by the State. With theexception of agricultural lands, all othernatural resources shall not be alienated. x x x.

x x x

Section 3. x x x Alienable lands of the publicdomain shall be limited to agriculturallands. Private corporations or associationsmay not hold such alienable lands of the

public domain except by lease, x x x."(Emphasissupplied)

Classification of Reclaimed Foreshore and SubmergedAreas

PEA readily concedes that lands reclaimed from foreshore orsubmerged areas of Manila Bay are alienable or disposablelands of the public domain. In its Memorandum,67 PEA

admits that

"Under the Public Land Act (CA 141, asamended), reclaimed lands are classified asalienable and disposable lands of the publicdomain:

'Sec. 59. The lands disposable underthis title shall be classified as follows:

(a) Lands reclaimed by the governmentby dredging, filling, or other means;

x x x.'" (Emphasis supplied)

Likewise, the Legal Task Force68 constituted underPresidential Administrative Order No. 365 admitted in itsReport and Recommendation to then President Fidel V.Ramos, "[R]eclaimed lands are classified as alienableand disposable lands of the public domain."69 The LegalTask Force concluded that

"D. Conclusion

Reclaimed lands are lands of the public domain.However, by statutory authority, the rights ofownership and disposition over reclaimed landshave been transferred to PEA, by virtue of whichPEA, as owner, may validly convey the same to

any qualified person without violating theConstitution or any statute.

The constitutional provision prohibiting privatecorporations from holding public land, except bylease (Sec. 3, Art. XVII,70 1987 Constitution), doesnot apply to reclaimed lands whose ownership haspassed on to PEA by statutory grant."

Under Section 2, Article XII of the 1987 Constitution, theforeshore and submerged areas of Manila Bay are part of

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the "lands of the public domain, waters x x x and othernatural resources" and consequently "owned by the State."

As such, foreshore and submerged areas "shall not bealienated," unless they are classified as "agricultural lands"of the public domain. The mere reclamation of these areasby PEA does not convert these inalienable natural resourcesof the State into alienable or disposable lands of the publicdomain. There must be a law or presidential proclamation

officially classifying these reclaimed lands as alienable ordisposable and open to disposition or concession. Moreover,these reclaimed lands cannot be classified as alienable ordisposable if the law has reserved them for some public orquasi-public use.71

Section 8 of CA No. 141 provides that "only those lands shallbe declared open to disposition or concession which havebeen officially delimited and classified."72 The Presidenthas the authority to classify inalienable lands of the publicdomain into alienable or disposable lands of the publicdomain, pursuant to Section 6 of CA No. 141. In Laurel vs.Garcia,73 the Executive Department attempted to sell theRoppongi property in Tokyo, Japan, which was acquired bythe Philippine Government for use as the Chancery of thePhilippine Embassy. Although the Chancery had transferred

to another location thirteen years earlier, the Court still ruledthat, under Article 42274of the Civil Code, a property of publicdominion retains such character until formally declaredotherwise. The Court ruled that

"The fact that the Roppongi site has not been usedfor a long time for actual Embassy service doesnot automatically convert it to patrimonial property.

Any such conversion happens only if the propertyis withdrawn from public use (Cebu Oxygen and

Acetylene Co. v. Bercilles, 66 SCRA 481 [1975].Aproperty continues to be part of the publicdomain, not available for private appropriationor ownership 'until there is a formaldeclaration on the part of the government towithdraw it from being such'(Ignacio v. Director

of Lands, 108 Phil. 335 [1960]." (Emphasissupplied)

PD No. 1085, issued on February 4, 1977, authorized theissuance of special land patents for lands reclaimed by PEAfrom the foreshore or submerged areas of Manila Bay. OnJanuary 19, 1988 then President Corazon C. Aquino issuedSpecial Patent No. 3517 in the name of PEA for the 157.84hectares comprising the partially reclaimed Freedom Islands.Subsequently, on April 9, 1999 the Register of Deeds of theMunicipality of Paranaque issued TCT Nos. 7309, 7311 and7312 in the name of PEA pursuant to Section 103 of PD No.1529 authorizing the issuance of certificates of titlecorresponding to land patents. To this day, these certificatesof title are still in the name of PEA.

PD No. 1085, coupled with President Aquino's actualissuance of a special patent covering the Freedom Islands,is equivalent to an official proclamation classifying theFreedom Islands as alienable or disposable lands of thepublic domain. PD No. 1085 and President Aquino'sissuance of a land patent also constitute a declaration thatthe Freedom Islands are no longer needed for publicservice. The Freedom Islands are thus alienable ordisposable lands of the public domain, open todisposition or concession to qualified parties.

At the time then President Aquino issued Special Patent No.3517, PEA had already reclaimed the Freedom Islandsalthough subsequently there were partial erosions on someareas. The government had also completed the necessarysurveys on these islands. Thus, the Freedom Islands wereno longer part of Manila Bay but part of the land mass.Section 3, Article XII of the 1987 Constitution classifies landsof the public domain into "agricultural, forest or timber,

mineral lands, and national parks." Being neither timber,mineral, nor national park lands, the reclaimed FreedomIslands necessarily fall under the classification of agriculturallands of the public domain. Under the 1987 Constitution,agricultural lands of the public domain are the only naturalresources that the State may alienate to qualified privateparties. All other natural resources, such as the seas orbay

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