1

G.R. No. 133250 July 9, 2002

FRANCISCO I. CHAVEZ, petitioner,
vs.
PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT CORPORATION, respondents.
CARPIO, J .:
This is an original Petition for Mandamus with prayer for a writ of preliminary injunction and a temporary restraining
order. The petition seeks to compel the Public Estates Authority ("PEA" for brevity) to disclose all facts on PEA's
then on-going renegotiations with Amari Coastal Bay and Development Corporation ("AMARI" for brevity) to reclaim
portions of Manila Bay. The petition further seeks to enjoin PEA from signing a new agreement with AMARI
involving such reclamation.
The Facts
On November 20, 1973, the government, through the Commissioner of Public Highways, signed a contract with the
Construction and Development Corporation of the Philippines ("CDCP" for brevity) to reclaim certain foreshore and
offshore areas of Manila Bay. The contract also included the construction of Phases I and II of the Manila-Cavite
Coastal Road. CDCP obligated itself to carry out all the works in consideration of fifty percent of the total reclaimed
land.
On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree No. 1084 creating PEA. PD
No. 1084 tasked PEA "to reclaim land, including foreshore and submerged areas," and "to develop, improve,
acquire, x x x lease and sell any and all kinds of lands."
1
On the same date, then President Marcos issued
Presidential Decree No. 1085 transferring to PEA the "lands reclaimed in the foreshore and offshore of the Manila
Bay"
2
under the 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.
x x x
(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
2

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

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;
3

VI. WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE AGREEMENT FOR THE
TRANSFER TO AMARI OF CERTAIN LANDS, RECLAIMED AND STILL TO BE RECLAIMED, VIOLATE
THE 1987 CONSTITUTION; AND
VII. WHETHER THE COURT IS THE PROPER FORUM FOR RAISING THE ISSUE OF WHETHER THE
AMENDED JOINT VENTURE AGREEMENT IS GROSSLY DISADVANTAGEOUS TO THE
GOVERNMENT.
The Court's Ruling
First issue: whether the principal reliefs prayed for in the petition are moot and academic because of
subsequent events.
The petition prays that PEA publicly disclose the "terms and conditions of the on-going negotiations for a new
agreement." The petition also prays that the Court enjoin PEA from "privately entering into, perfecting and/or
executing any new agreement with AMARI."
PEA and AMARI claim the petition is now moot and academic because AMARI furnished petitioner on June 21,
1999 a copy of the signed Amended JVA containing the terms and conditions agreed upon in the renegotiations.
Thus, PEA has satisfied petitioner's prayer for a public disclosure of the renegotiations. Likewise, petitioner's prayer
to enjoin the signing of the Amended JVA is now moot because PEA and AMARI have already signed the Amended
JVA on March 30, 1999. Moreover, the Office of the President has approved the Amended JVA on May 28, 1999.
Petitioner counters that PEA and AMARI cannot avoid the constitutional issue by simply fast-tracking the signing
and approval of the Amended JVA before the Court could act on the issue. Presidential approval does not resolve
the constitutional issue or remove it from the ambit of judicial review.
We rule that the signing of the Amended JVA by PEA and AMARI and its approval by the President cannot operate
to moot the petition and divest the Court of its jurisdiction. PEA and AMARI have still to implement the Amended
JVA. The prayer to enjoin the signing of the Amended JVA on constitutional grounds necessarily includes preventing
its implementation if in the meantime PEA and AMARI have signed one in violation of the Constitution. Petitioner's
principal basis in assailing the renegotiation of the JVA is its violation of Section 3, Article XII of the Consti tution,
which prohibits the government from alienating lands of the public domain to private corporations. If the Amended
JVA indeed violates the Constitution, it is the duty of the Court to enjoin its implementation, and if already
implemented, to annul the effects of such unconstitutional contract.
The Amended JVA is not an ordinary commercial contract but one which seeks to transfer title and ownership to
367.5 hectares of reclaimed lands and submerged areas of Manila Bay to a single private corporation. It now
becomes more compelling for the Court to resolve the issue to insure the government itself does not violate a
provision of the Constitution intended to safeguard the national patrimony. Supervening events, whether intended or
accidental, cannot prevent the Court from rendering a decision if there is a grave violation of the Constitution. In the
instant case, if the Amended JVA runs counter to the Constitution, the Court can still prevent the transfer of title and
ownership of alienable lands of the public domain in the name of AMARI. Even in cases where supervening events
had made the cases moot, the Court did not hesitate to resolve the legal or constitutional issues raised to formulate
controlling principles to guide the bench, bar, and the public.
17

Also, the instant petition is a case of first impression. All previous decisions of the Court involving Section 3, Article
XII of the 1987 Constitution, or its counterpart provision in the 1973 Constitution,
18
covered agricultural landssold
to private corporations which acquired the lands from private parties. The transferors of the private corporations
claimed or could claim the right to judicial confirmation of their imperfect 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 latter's seventy percent proportionate share in the reclaimed areas
as the reclamation progresses. The Amended JVA even allows AMARI to mortgage at any time the entirereclaimed
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.
4

PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief directly from the Court. The principle
of hierarchy of courts applies generally to cases involving factual questions. As it is not a trier of facts, the Court
cannot entertain cases involving factual issues. The instant case, however, raises constitutional issues of
transcendental importance to the public.
22
The Court can resolve this case without determining any factual issue
related to the case. Also, the instant case is a petition for mandamus which falls under the original jurisdiction of the
Court under Section 5, Article VIII of the Constitution. We resolve to exercise primary jurisdiction over the instant
case.
Third issue: whether the petition merits dismissal for non-exhaustion of administrative remedies.
PEA faults petitioner for seeking judicial intervention in compelling PEA to disclose publicly certain information
without first asking PEA the needed information. PEA claims petitioner's direct resort to the Court violates the
principle of exhaustion of administrative remedies. It also violates the rule that mandamus may issue only if there is
no other plain, speedy and adequate remedy in the ordinary course of law.
PEA distinguishes the instant case from Taada v. 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
the disposition of government lands to private parties requires public
bidding. PEA was under a positive legal duty to disclose to the public the terms and conditions for the sale
of its lands. The law obligated PEA to make this public disclosure even without demand from petitioner or from
anyone. PEA failed to make this public disclosure because the original JVA, like the Amended JVA, was the result of
a negotiated contract, not of a public bidding. Considering that PEA had an affirmative statutory duty to make the
public disclosure, and was even in breach of this legal duty, petitioner had the right to seek direct judicial
intervention.
Moreover, and this alone is determinative of this issue, the principle of exhaustion of administrative remedies does
not apply when the issue involved is a purely legal or constitutional question.
27
The principal issue in the instant case
is the capacity of AMARI to acquire lands held by PEA in view of the constitutional ban prohibiting the alienation of
lands of the public domain to private corporations. We rule that the principle of exhaustion of administrative
remedies does not apply in the instant case.
Fourth issue: whether petitioner has locus standi to bring this suit
PEA argues that petitioner has no standing to institute mandamus proceedings to enforce his constitutional right to
information without a showing that PEA refused to perform an affirmative duty imposed on PEA by the Constitution.
PEA also claims that petitioner has not shown that he will suffer any concrete injury because of the signing or
implementation of the Amended JVA. Thus, there is no actual controversy requiring the exercise of the power of
judicial review.
The petitioner has standing to bring this taxpayer's suit because the petition seeks to compel PEA to comply with its
constitutional duties. There are two constitutional issues involved here. First is the right of citizens to information on
matters of public concern. Second is the application of a constitutional provision intended to insure the equitable
distribution of alienable lands of the public domain among Filipino citizens. The thrust of the first issue is to compel
PEA to disclose publicly information on the sale of government lands worth billions of pesos, information which the
Constitution and statutory law mandate PEA to disclose. The thrust of the second issue is to prevent PEA from
alienating hundreds of hectares of alienable lands of the public domain in violation of the Constitution, compelling
PEA to comply with a constitutional duty to the nation.
Moreover, the petition raises matters of transcendental importance to the public. In Chavez v. PCGG,
28
the Court
upheld the right of a citizen to bring a taxpayer's suit on matters of transcendental importance to the public, thus -
"Besides, petitioner emphasizes, the matter of recovering the ill-gotten wealth of the Marcoses is an issue of
'transcendental importance to the public.' He asserts that ordinary taxpayers have a right to initiate and
prosecute actions questioning the validity of acts or orders of government agencies or instrumentalities, if
the issues raised are of 'paramount public interest,' and if they 'immediately affect the social, economic and
moral well being of the people.'
5

Moreover, the mere fact that he is a citizen satisfies the requirement of personal interest, when the
proceeding involves the assertion of a public right, such as in this case. He invokes several decisions of this
Court which have set aside the procedural matter of locus standi, when the subject of the case involved
public interest.
x x x
In Taada v. Tuvera, the Court asserted that when the issue concerns a public right and the object of
mandamus is to obtain the enforcement of a public duty, the people are regarded as the real parties in
interest; and because it is sufficient that petitioner is a citizen and as such is interested in the execution of
the laws, he need not show that he has any legal or special interest in the result of the action. In the
aforesaid case, the petitioners sought to enforce their right to be informed on matters of public concern, a
right then recognized in Section 6, Article IV of the 1973 Constitution, in connection with the rule that laws in
order to be valid and enforceable must be published in the Official Gazette or otherwise effectively
promulgated. In ruling for the petitioners' legal standing, the Court declared that the right they sought to be
enforced 'is a public right recognized by no less than the fundamental law of the land.'
Legaspi v. Civil Service Commission, while reiterating Taada, further declared that 'when a mandamus
proceeding involves the assertion of a public right, the requirement of personal interest is satisfied by the
mere fact that petitioner is a citizen and, therefore, part of the general 'public' which possesses the right.'
Further, in Albano v. Reyes, we said that while expenditure of public funds may not have been involved
under the questioned contract for the development, management and operation of the Manila International
Container Terminal, 'public interest [was] definitely involved considering the important role [of the subject
contract] . . . in the economic development of the country and the magnitude of the financial consideration
involved.' We concluded that, as a consequence, the disclosure provision in the Constitution would
constitute sufficient authority for upholding the petitioner's standing.
Similarly, the instant petition is anchored on the right of the people to information and access to official
records, documents and papers a right guaranteed under Section 7, Article III of the 1987 Constitution.
Petitioner, a former solicitor general, is a Filipino citizen. Because of the satisfaction of the two basic
requisites laid down by decisional law to sustain petitioner's legal standing, i.e. (1) the enforcement of a
public right (2) espoused by a Filipino citizen, we rule that the petition at bar should be allowed."
We rule that since the instant petition, brought by a citizen, involves the enforcement of constitutional rights - to
information and to the equitable diffusion of natural resources - matters of transcendental public importance, the
petitioner has the requisite locus standi.
Fifth issue: whether the constitutional right to information includes official information on on-going
negotiations before a final agreement.
Section 7, Article III of the Constitution explains the people's right to information on matters of public concern in this
manner:
"Sec. 7. The right of the people to information on matters of public concern shall be recognized. Access to
official records, and to documents, and papers pertaining to official acts, transactions, or decisions,
as well as to government research data used as basis for policy development, shall be afforded the citizen,
subject to such limitations as may be provided by law." (Emphasis supplied)
The State policy of full transparency in all transactions involving public interest reinforces the people's right to
information on matters of public concern. This State policy is expressed in Section 28, Article II of the Constitution,
thus:
"Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of
full public disclosure of all its transactions involving public interest." (Emphasis supplied)
These twin provisions of the Constitution seek to promote transparency in policy-making and in the operations of the
government, as well as provide the people sufficient information to exercise effectively other constitutional rights.
These twin provisions are essential to the exercise of freedom of expression. If the government does not disclose its
official acts, transactions and decisions to citizens, whatever citizens say, even if expressed without any restraint,
will be speculative and amount to nothing. These twin provisions are also essential to hold public officials "at all
times x x x accountable to the people,"
29
for unless citizens have the proper information, they cannot hold public
officials accountable for anything. Armed with the right information, citizens can participate in public discussions
leading to the formulation of government policies and their effective implementation. An informed citizenry is
essential to the existence and proper functioning of any democracy. As explained by the Court inValmonte v.
Belmonte, J r.
30

6

"An essential element of these freedoms is to keep open a continuing dialogue or process of communication
between the government and the people. It is in the interest of the State that the channels for free political
discussion be maintained to the end that the government may perceive and be responsive to the people's
will. Yet, this open dialogue can be effective only to the extent that the citizenry is informed and thus able to
formulate its will intelligently. Only when the participants in the discussion are aware of the issues and have
access to information relating thereto can such bear fruit."
PEA asserts, citing Chavez v. PCGG,
31
that in cases of 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)
AMARI argues there must first be a consummated contract before petitioner can invoke the right. Requiring
government officials to reveal their deliberations at the pre-decisional stage will degrade the quality of decision-
making in government agencies. Government officials will hesitate to express their real sentiments during
deliberations if there is immediate public dissemination of their discussions, putting them under all kinds of pressure
before they decide.
We must first distinguish between information the law on public bidding requires PEA to disclose publicly, and
information the constitutional right to information requires PEA to release to the public. Before the consummation of
the contract, PEA must, on its own and without demand from anyone, disclose to the public matters relating to the
disposition of its property. These include the size, location, technical description and nature of the property being
disposed of, the terms and conditions of the disposition, the parties qualified to bid, the minimum price and similar
information. PEA must prepare all these data and disclose them to the public at the start of the disposition process,
long before the consummation of the contract, because the Government Auditing Code requires public bidding. If
PEA fails to make this disclosure, any citizen can demand from PEA this information at any time during the bidding
process.
Information, however, on on-going evaluation or review of bids or proposals being undertaken by the bidding or
review committee is not immediately accessible under the right to information. While the evaluation or review is still
on-going, there are no "official acts, transactions, or decisions" on the bids or proposals. However, once the
committee makes its official recommendation, there arises a "definite proposition" on the part of the
government. From this moment, the public's right to information attaches, and any citizen can access all the non-
proprietary information leading to such definite proposition. In Chavez v. PCGG,
33
the Court ruled as follows:
"Considering the intent of the framers of the Constitution, we believe that it is incumbent upon the PCGG
and its officers, as well as other government representatives, to disclose sufficient public information on any
proposed settlement they have decided to take up with the ostensible owners and holders of ill-gotten
wealth. Such information, though, must pertain to definite propositions of the government, not
necessarily to intra-agency or inter-agency recommendations or communications during the stage when
common assertions are still in the process of being formulated or are in the "exploratory" stage. There is
need, of course, to observe the same restrictions on disclosure of information in general, as discussed
earlier such as on matters involving national security, diplomatic or foreign relations, intelligence and other
classified information." (Emphasis supplied)
Contrary to AMARI's contention, the commissioners of the 1986 Constitutional Commission understood that the right
to information "contemplates inclusion of negotiations leading to the consummation of the
transaction." Certainly, a consummated contract is not a requirement for the exercise of the right to information.
Otherwise, the people can never exercise the right if no contract is consummated, and if one is consummated, it
may be too late for the public to expose its defects.1wphi1.nt
7

Requiring a consummated contract will keep the public in the dark until the contract, which may be grossly
disadvantageous to the government or even illegal, becomes a fait accompli. This negates the State policy of full
transparency on matters of public concern, a situation which the framers of the Constitution could not have intended.
Such a requirement will prevent the citizenry from participating in the public discussion of any proposedcontract,
effectively truncating a basic right enshrined in the Bill of Rights. We can allow neither an emasculation of a
constitutional right, nor a retreat by the State of its avowed "policy of full disclosure of all its transactions involving
public interest."
The right covers three categories of information which are "matters of public concern," namely: (1) official records;
(2) documents and papers pertaining to official acts, transactions and decisions; and (3) government research data
used in formulating policies. The first category refers to any document that is part of the public records in the
custody of government agencies or officials. The second category refers to documents and papers recording,
evidencing, establishing, confirming, supporting, justifying or explaining official acts, transactions or decisions of
government agencies or officials. The third category refers to research data, whether raw, collated or processed,
owned by the government and used in formulating government policies.
The information that petitioner may access on the renegotiation of the JVA includes evaluation reports,
recommendations, legal and expert opinions, minutes of meetings, terms of reference and other documents
attached to such reports or minutes, all relating to the JVA. However, the right to information does not compel PEA
to prepare lists, abstracts, summaries and the like relating to the renegotiation of the JVA.
34
The right only affords
access to records, documents and papers, which means the opportunity to inspect and copy them. One who
exercises the right must copy the records, documents and papers at his expense. The exercise of the right is also
subject to reasonable regulations to protect the integrity of the public records and to minimize disruption to
government operations, like rules specifying when and how to conduct the inspection and copying.
35

The right to information, however, does not extend to matters recognized as privileged information under the
separation of powers.
36
The right does not also apply to information on military and diplomatic secrets, information
affecting national security, and information on investigations of crimes by law enforcement agencies before the
prosecution of the accused, which courts have long recognized as confidential.
37
The right may also be subject to
other limitations that Congress may impose by law.
There is no claim by PEA that the information demanded by petitioner is privileged information rooted in the
separation of powers. The information does not cover Presidential conversations, correspondences, or discussions
during closed-door Cabinet meetings which, like internal deliberations of the Supreme Court and other collegiate
courts, or executive sessions of either house of Congress,
38
are recognized as confidential. This kind of information
cannot be pried open by a co-equal branch of government. A frank exchange of exploratory ideas and assessments,
free from the glare of publicity and pressure by interested parties, is essential to protect the independence of
decision-making of those tasked to exercise Presidential, Legislative and Judicial power.
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 J VA for the transfer to AMARI of lands, reclaimed or to be
reclaimed, violate the Constitution.
The Regalian Doctrine
The ownership of lands reclaimed from foreshore and submerged areas is rooted in the Regalian doctrine which
holds that the State owns all lands and waters of the public domain. Upon the Spanish conquest of the Philippines,
ownership of all "lands, territories and possessions" in the Philippines passed to the Spanish Crown.
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
8

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.
9

(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.
x x x
(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
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.
x x x
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
10

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 publ ic
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
"Section 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal, petroleum,
and other mineral oils, all forces of potential energy and other natural resources of the Philippines belong to
the State, and their disposition, exploitation, development, or utilization shall be limited to citizens of the
Philippines or to corporations or associations at least sixty per centum of the capital of which is owned by
such citizens, subject to any existing right, grant, lease, or concession at the time of the inauguration of the
Government established under this Constitution. Natural resources, with the exception of public
agricultural land, shall not be alienated, and no license, concession, or lease for the exploitation,
development, or utilization of any of the natural resources shall be granted for a period exceeding twenty-
five years, renewable for another twenty-five years, except as to water rights for irrigation, water supply,
fisheries, or industrial uses other than the development of water power, in which cases beneficial use may
be the measure and limit of the grant." (Emphasis supplied)
The 1935 Constitution barred the alienation of all natural resources except public agricultural lands, which were the
only natural resources the State could alienate. Thus, foreshore lands, considered part of the State's natural
resources, became inalienable by constitutional fiat, available only for lease for 25 years, renewable for another 25
years. The government could alienate foreshore lands only after these lands were reclaimed and classified as
alienable agricultural lands of the public domain. Government reclaimed and marshy lands of the public domain,
being neither timber nor mineral lands, fell under the classification of public agricultural lands.
50
However,
government reclaimed and marshy lands, although subject to classification as disposable public agricultural lands,
could only be leased and not sold to private parties because of Act No. 2874.
11

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:
12

(a) Lands reclaimed by the Government by dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or banks of navigable
lakes or rivers;
(d) Lands not included in any of the foregoing classes.
Sec. 60. Any tract of land comprised under this title may be leased or sold, as the case may be, to any
person, corporation, or association authorized to purchase or lease public lands for agricultural purposes. x
x x.
Sec. 61. The lands comprised in classes (a), (b), and (c) of section fifty-nine shall be disposed of to
private parties by lease only and not otherwise, as soon as the President, upon recommendation by the
Secretary of Agriculture, shall declare that the same are not necessary for the public service and are
open to disposition under this chapter. The lands included in class (d) may be disposed of by sale or
lease under the provisions of this Act." (Emphasis supplied)
Section 61 of CA No. 141 readopted, after the effectivity of the 1935 Constitution, Section 58 of Act No. 2874
prohibiting the sale of government reclaimed, foreshore and marshy disposable lands of the public domain. All these
lands are intended for residential, commercial, industrial or other 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.
13

Moreover, Section 60 of CA No. 141 expressly requires congressional authority before lands under Section 59 that
the government previously transferred to government units or entities could be sold to private parties. Section 60 of
CA No. 141 declares that
"Sec. 60. x x x The area so leased or sold shall be such as shall, in the judgment of the Secretary of
Agriculture and Natural Resources, be reasonably necessary for the purposes for which such sale or lease
is requested, and shall not exceed one hundred and forty-four hectares: Provided, however, That this
limitation shall not apply to grants, donations, or transfers made to a province, municipality or branch or
subdivision of the Government for the purposes deemed by said entities conducive to the public interest;but
the land so granted, donated, or transferred to a province, municipality or branch or subdivision of
the Government shall not be alienated, encumbered, or otherwise disposed of in a manner affecting
its title, except when authorized by Congress: x x x." (Emphasis supplied)
The congressional authority required in Section 60 of CA No. 141 mirrors the legislative authority required in Section
56 of Act No. 2874.
One reason for the congressional authority is that Section 60 of CA No. 141 exempted government units and entities
from the maximum area of public lands that could be acquired from the State. These government units and entities
should not just turn around and sell these lands to private parties in violation of constitutional or statutory limitations.
Otherwise, the transfer of lands for non-agricultural purposes to government units and entities could be used to
circumvent constitutional limitations on ownership of alienable or disposable lands of the public domain. In the same
manner, such transfers could also be used to evade the statutory prohibition in CA No. 141 on the sale of
government reclaimed and marshy lands of the public domain to private parties. Section 60 of CA No. 141
constitutes by operation of law a lien on these lands.
57

In case of sale or lease of disposable lands of the public domain falling under Section 59 of CA No. 141, Sections
63 and 67 require a public bidding. Sections 63 and 67 of CA No. 141 provide as follows:
"Sec. 63. Whenever it is decided that lands covered by this chapter are not needed for public purposes, the
Director of Lands shall ask the Secretary of Agriculture and Commerce (now the Secretary of Natural
Resources) for authority to dispose of the same. Upon receipt of such authority, the Director of Lands shall
give notice by public advertisement in the same manner as in the case of leases or sales of agricultural
public land, x x x.
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
14

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:
"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;
15

(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.
x x x
(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.
x x x
(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
16

than five hundred hectares, or acquire not more than twelve hectares thereof by purchase, homestead, or
grant.
Taking into account the requirements of conservation, ecology, and development, and subject to the
requirements of agrarian reform, the Congress shall determine, by law, the size of lands of the public
domain which may be acquired, developed, held, or leased and the conditions therefor." (Emphasis
supplied)
The 1987 Constitution continues the State policy in the 1973 Constitution banning private corporations
fromacquiring any kind of alienable land of the public domain. Like the 1973 Constitution, the 1987 Constitution
allows private corporations to hold alienable lands of the public domain only through lease. As in the 1935 and
1973 Constitutions, the general law governing the lease to private corporations of reclaimed, foreshore and marshy
alienable lands of the public domain is still CA No. 141.
The Rationale behind the Constitutional Ban
The rationale behind the constitutional ban on corporations from acquiring, except through lease, alienable lands of
the public domain is not well understood. During the deliberations of the 1986 Constitutional Commission, the
commissioners probed the rationale behind this ban, thus:
"FR. BERNAS: Mr. Vice-President, my questions have reference to page 3, line 5 which says:
`No private corporation or association may hold alienable lands of the public domain except by lease, not to
exceed one thousand hectares in area.'
If we recall, this provision did not exist under the 1935 Constitution, but this was introduced in the 1973
Constitution. In effect, it prohibits private corporations from acquiring alienable public lands. But it has not
been very clear in jurisprudence what the reason for this is. In some of the cases decided in 1982 and
1983, it was indicated that the purpose of this is to prevent large landholdings. Is that the intent of this
provision?
MR. VILLEGAS: I think that is the spirit of the provision.
FR. BERNAS: In existing decisions involving the Iglesia ni Cristo, there were instances where the Iglesia ni
Cristo was not allowed to acquire a mere 313-square meter land where a chapel stood because the
Supreme Court said it would be in violation of this." (Emphasis supplied)
In Ayog v. Cusi,
64
the Court explained the rationale behind this constitutional ban in this way:
"Indeed, one purpose of the constitutional prohibition against purchases of public agricultural lands by
private corporations is to equitably diffuse land ownership or to encourage 'owner-cultivatorship and the
economic family-size farm' and to prevent a recurrence of cases like the instant case. Huge landholdings by
corporations or private persons had spawned social unrest."
However, if the constitutional intent is to prevent huge landholdings, the Constitution could have simply limited the
size of alienable lands of the public domain that corporations could acquire. The Constitution could have followed
the limitations on individuals, who could acquire not more than 24 hectares of alienable lands of the public domain
under the 1973 Constitution, and not more than 12 hectares under the 1987 Constitution.
If the constitutional intent is to encourage economic 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
17

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 J oint Venture Agreement
The subject matter of the Amended JVA, as stated in its second Whereas clause, consists of three properties,
namely:
1. "[T]hree partially reclaimed and substantially eroded islands along Emilio Aguinaldo Boulevard in
Paranaque and Las Pinas, Metro Manila, with a combined titled area of 1,578,441 square meters;"
2. "[A]nother area of 2,421,559 square meters contiguous to the three islands;" and
3. "[A]t AMARI's option as approved by PEA, an additional 350 hectares more or less to regularize the
configuration of the reclaimed area."
65

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 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 all the other areas, totaling 592.15
hectares, still to be reclaimed. AMARI and PEA will share, in the proportion of 70 percent and 30 percent,
respectively, the total net usable area which is defined in the Amended JVA as the total reclaimed area less 30
percent earmarked for common areas. Title to AMARI's share in the net usable area, totaling 367.5 hectares, will be
issued in the name of AMARI. Section 5.2 (c) of the Amended JVA provides that
"x x x, PEA shall have the duty to execute without delay the necessary deed of transfer or conveyance of the
title pertaining to AMARI's Land share based on the Land Allocation Plan. PEA, when requested in writing
by AMARI, shall then cause the issuance and delivery of the proper certificates of title covering
AMARI's Land Share in the name of AMARI, x x x; provided, that if more than seventy percent (70%) of
the titled area at any given time pertains to AMARI, PEA shall deliver to AMARI only seventy percent (70%)
of the titles pertaining to AMARI, until such time when a corresponding proportionate area of additional land
pertaining to PEA has been titled." (Emphasis supplied)
Indisputably, under the Amended J VA 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 PEA's statutory
authority, rights and privileges to reclaim foreshore and submerged areas in Manila Bay. Section 3.2.a of the
Amended JVA states that
"PEA hereby contributes to the joint venture its rights and privileges to perform Rawland Reclamation and
Horizontal Development as well as own the Reclamation Area, thereby granting the Joint Venture the full
and exclusive right, authority and privilege to undertake the Project in accordance with the Master
Development Plan."
The Amended JVA is the product of a renegotiation of the original JVA dated April 25, 1995 and its supplemental
agreement dated August 9, 1995.
The Threshold Issue
The threshold issue is whether AMARI, a private corporation, can acquire and own under the Amended JVA 367.5
hectares of reclaimed foreshore and submerged areas in Manila Bay in view of Sections 2 and 3, Article XII of the
1987 Constitution which state that:
"Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces
of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are
owned by the State. With the exception of agricultural lands, all other natural resources shall not be
alienated. x x x.
18

x x x
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.
19

PD No. 1085, coupled with President Aquino's actual issuance of a special patent covering the Freedom Islands, is
equivalent to an official proclamation classifying the Freedom Islands as alienable or disposable lands of the public
domain. PD No. 1085 and President Aquino's issuance of a land patent also constitute a declaration that the
Freedom Islands are no longer needed for public service. The Freedom Islands are thus alienable or disposable
lands of the public domain, open to disposition or concession to qualified parties.
At the time then President Aquino issued Special Patent No. 3517, PEA had already reclaimed the Freedom Islands
although subsequently there were partial erosions on some areas. The government had also completed the
necessary surveys on these islands. Thus, the Freedom Islands were no longer part of Manila Bay but part of the
land mass. Section 3, Article XII of the 1987 Constitution classifies lands of the public domain into "agricultural,
forest or timber, mineral lands, and national parks." Being neither timber, mineral, nor national park lands, the
reclaimed Freedom Islands necessarily fall under the classification of agricultural lands of the public domain. Under
the 1987 Constitution, agricultural lands of the public domain are the only natural resources that the State may
alienate to qualified private parties. All other natural resources, such as the seas or bays, are "waters x x x owned
by the State" forming part of the public domain, and are inalienable pursuant to Section 2, Article XII of the 1987
Constitution.
AMARI claims that the Freedom Islands are private lands because CDCP, then a private corporation, reclaimed the
islands under a contract dated November 20, 1973 with the Commissioner of Public Highways. AMARI, citing Article
5 of the Spanish Law of Waters of 1866, argues that "if the ownership of reclaimed lands may be given to the party
constructing the works, then it cannot be said that reclaimed lands are lands of the public domain which the State
may not alienate."
75
Article 5 of the Spanish Law of Waters reads as follows:
"Article 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the
provinces, pueblos or private persons, with proper permission, shall become the property of the party
constructing such works, unless otherwise provided by the terms of the grant of authority." (Emphasis
supplied)
Under Article 5 of the Spanish Law of Waters of 1866, private parties could reclaim from the sea only with "proper
permission" from the State. Private parties could own the reclaimed land only if not "otherwise provided by the terms
of the grant of authority." This clearly meant that no one could reclaim from the sea without permission from the
State because the sea is property of public dominion. It also meant that the State could grant or withhold ownership
of the reclaimed land because any reclaimed land, like the sea from which it emerged, belonged to the State. Thus,
a private person reclaiming from the sea without permission from the State could not acquire ownership of the
reclaimed land which would remain property of public dominion like the sea it replaced.
76
Article 5 of the Spanish
Law of Waters of 1866 adopted the time-honored principle of land ownership that "all lands that were not acquired
from the government, either by purchase or by grant, belong to the public domain."
77

Article 5 of the Spanish Law of Waters must be read together with laws subsequently enacted on the disposition of
public lands. In particular, CA No. 141 requires that lands of the public domain must first be classified as alienable or
disposable before the government can alienate them. These lands must not be reserved for public or quasi-public
purposes.
78
Moreover, the contract between CDCP and the government was executed after the effectivity of the
1973 Constitution which barred private corporations from acquiring any kind of alienable land of the public domain.
This contract could not have converted the Freedom Islands into private lands of a private corporation.
Presidential Decree No. 3-A, issued on January 11, 1973, revoked all laws authorizing the reclamation of areas
under water and revested solely in the National Government the power to reclaim lands. Section 1 of PD No. 3-A
declared that
"The provisions of any law to the contrary notwithstanding, the reclamation of areas under water,
whether foreshore or inland, shall be limited to the National Government or any person authorized by it
under a proper contract. (Emphasis supplied)
x x x."
PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866 because reclamation of areas under water
could now be undertaken only by the National Government or by a person contracted by the National Government.
Private parties may reclaim from the sea only under a contract with the National Government, and no longer by
grant or permission as provided in Section 5 of the Spanish Law of Waters of 1866.
Executive Order No. 525, issued on February 14, 1979, designated PEA as the National Government's
implementing arm to undertake "all reclamation projects of the government," which "shall be undertaken by the
PEA or through a proper contract executed by it with any person or entity." Under such contract, a private
party receives compensation for reclamation services rendered to PEA. Payment to the contractor may be in cash,
or in kind consisting of portions of the reclaimed land, subject to the constitutional ban on private corporations from
acquiring alienable lands of the public domain. The reclaimed land can be used as payment in kind only if the
20

reclaimed land is first classified as alienable or disposable land open to disposition, and then declared no longer
needed for public service.
The Amended JVA covers not only the Freedom Islands, but also an additional 592.15 hectares which are still
submerged and forming part of Manila Bay. There is no legislative or Presidential act classifying these
submerged areas as alienable or disposable lands of the public domain open to disposition. These
submerged areas are not covered by any patent or certificate of title. There can be no dispute that these submerged
areas form part of the public domain, and in their present state are inalienable and outside the commerce of
man. Until reclaimed from the sea, these submerged areas are, under the Constitution, "waters x x x owned by the
State," forming part of the public domain and consequently inalienable. Only when actually reclaimed from the sea
can these submerged areas be classified as public agricultural lands, which under the Constitution are the only
natural resources that the State may alienate. Once reclaimed and transformed into public agricultural lands, the
government may then officially classify these lands as alienable or disposable lands open to disposition. Thereafter,
the government may declare these lands no longer needed for public service. Only then can these reclaimed lands
be considered alienable or disposable lands of the public domain and within the commerce of man.
The classification of PEA's reclaimed foreshore and submerged lands into alienable or disposable lands open to
disposition is necessary because PEA is tasked under its charter to undertake public services that require the use of
lands of the public domain. Under Section 5 of PD No. 1084, the functions of PEA include the following: "[T]o own or
operate railroads, tramways and other kinds of land transportation, x x x; [T]o construct, maintain and operate such
systems of sanitary sewers as may be necessary; [T]o construct, maintain and operate such storm drains as may be
necessary." PEA is empowered to issue "rules and regulations as may be necessary for the proper use by private
parties of any or all of the highways, roads, utilities, buildings and/or any of its properties and to impose or
collect fees or tolls for their use." Thus, part of the reclaimed foreshore and submerged lands held by the PEA would
actually be needed for public use or service since many of the functions imposed on PEA by its charter constitute
essential public services.
Moreover, Section 1 of Executive Order No. 525 provides that PEA "shall be primarily responsible for integrating,
directing, and coordinating all reclamation projects for and on behalf of the National Government." The same section
also states that "[A]ll reclamation projects shall be approved by the President upon recommendation of the PEA,
and shall be undertaken by the PEA or through a proper contract executed by it with any person or entity; x x x."
Thus, under EO No. 525, in relation to PD No. 3-A and PD No.1084, PEA became the primary implementing agency
of the National Government to reclaim foreshore and submerged lands of the public domain. EO No. 525 recognized
PEA as the government entity "to undertake the reclamation of lands and ensure their maximum utilization
in promoting public welfare and interests."
79
Since large portions of these reclaimed lands would obviously be
needed for public service, there must be a formal declaration segregating reclaimed lands no longer needed for
public service from those still needed for public service.1wphi1.nt
Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA "shall belong to or be owned by the PEA,"
could not automatically operate to classify inalienable lands into alienable or disposable lands of the public domain.
Otherwise, reclaimed foreshore and submerged lands of the public domain would automatically become alienable
once reclaimed by PEA, whether or not classified as alienable or disposable.
The Revised Administrative Code of 1987, a later law than either PD No. 1084 or EO No. 525, vests in the
Department of Environment and Natural Resources ("DENR" for brevity) the following powers and functions:
"Sec. 4. Powers and Functions. The Department shall:
(1) x x x
x x x
(4) Exercise supervision and control over forest lands, alienable and disposable public lands, mineral
resources and, in the process of exercising such control, impose appropriate taxes, fees, charges, rentals
and any such form of levy and collect such revenues for the exploration, development, utilization or
gathering of such resources;
x x x
(14) Promulgate rules, regulations and guidelines on the issuance of licenses, permits, concessions,
lease agreements and such other privileges concerning the development, exploration and utilization
of the country's marine, freshwater, and brackish water and over all aquatic resources of the country
and shall continue to oversee, supervise and police our natural resources; cancel or cause to cancel
such privileges upon failure, non-compliance or violations of any regulation, order, and for all other causes
which are in furtherance of the conservation of natural resources and supportive of the national interest;
21

(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

PEA's Authority to Sell Reclaimed Lands
PEA, like the Legal Task Force, argues that as alienable or disposable lands of the public domain, the reclaimed
lands shall be disposed of in accordance with CA No. 141, the Public Land Act. PEA, citing Section 60 of CA No.
141, admits that reclaimed lands transferred to a branch or subdivision of the government "shall not be alienated,
encumbered, or otherwise disposed of in a manner affecting its title, except when authorized by Congress: x x
x."
85
(Emphasis by PEA)
In Laurel vs. Garcia,
86
the Court cited Section 48 of the Revised Administrative Code of 1987, which states that
"Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the Government is
authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government
by the following: x x x."
Thus, the Court concluded that a law is needed to convey any real property belonging to the Government. The Court
declared that -
"It is not for the President to convey real property of the government on his or her own sole will. Any such
conveyance must be authorized and approved by a law enacted by the Congress. It requires executive
and legislative concurrence." (Emphasis supplied)
PEA contends that PD No. 1085 and EO No. 525 constitute the legislative authority allowing PEA to sell its
reclaimed lands. PD No. 1085, issued on February 4, 1977, provides that
"The land reclaimed in the foreshore and offshore area of Manila Bay pursuant to the contract for the
reclamation and construction of the Manila-Cavite Coastal Road Project between the Republic of the
Philippines and the Construction and Development Corporation of the Philippines dated November 20, 1973
and/or any other contract or reclamation covering the same area is hereby transferred, conveyed and
assigned to the ownership and administration of the Public Estates Authority established pursuant to
PD No. 1084; Provided, however, That the rights and interests of the Construction and Development
Corporation of the Philippines pursuant to the aforesaid contract shall be recognized and respected.
22

Henceforth, the Public Estates Authority shall exercise the rights and assume the obligations of the Republic
of the Philippines (Department of Public Highways) arising from, or incident to, the aforesaid contract
between the Republic of the Philippines and the Construction and Development Corporation of the
Philippines.
In consideration of the foregoing transfer and assignment, the Public Estates Authority shall issue in favor of
the Republic of the Philippines the corresponding shares of stock in said entity with an issued value of said
shares of stock (which) shall be deemed fully paid and non-assessable.
The Secretary of Public Highways and the General Manager of the Public Estates Authority shall execute
such contracts or agreements, including appropriate agreements with the Construction and Development
Corporation of the Philippines, as may be necessary to implement the above.
Special land patent/patents shall be issued by the Secretary of Natural Resources in favor of the
Public Estates Authority without prejudice to the subsequent transfer to the contractor or his
assignees of such portion or portions of the land reclaimed or to be reclaimed as provided for in the
above-mentioned contract. On the basis of such patents, the Land Registration Commission shall
issue the corresponding certificate of title." (Emphasis supplied)
On the other hand, Section 3 of EO No. 525, issued on February 14, 1979, provides that -
"Sec. 3. All lands reclaimed by PEA shall belong to or be owned by the PEA which shall be responsible
for its administration, development, utilization or disposition in accordance with the provisions of Presidential
Decree No. 1084. Any and all income that the PEA may derive from the sale, lease or use of reclaimed
lands shall be used in accordance with the provisions of Presidential Decree No. 1084."
There is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell its reclaimed lands. PD No.
1085 merely transferred "ownership and administration" of lands reclaimed from Manila Bay to PEA, while EO No.
525 declared that lands reclaimed by PEA "shall belong to or be owned by PEA." EO No. 525 expressly states that
PEA should dispose of its reclaimed lands "in accordance with the provisions of Presidential Decree No. 1084," the
charter of PEA.
PEA's charter, however, expressly tasks PEA "to develop, improve, acquire, administer, deal in, subdivide, dispose,
lease and sell any and all kinds of lands x x x owned, managed, controlled and/or operated by the
government."
87
(Emphasis supplied) There is, therefore, legislative authority granted to PEA to sell its lands,
whether patrimonial or alienable lands of the public domain. PEA may sell to private parties 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 PEA's patrimonial
lands.
PEA may also sell its alienable or disposable lands of the public domain to private individuals since, with the
legislative authority, there is no longer any statutory prohibition against such sales and the constitutional ban does
not apply to individuals. PEA, however, cannot sell any of its alienable or disposable lands of the public domain to
private corporations since Section 3, Article XII of the 1987 Constitution expressly prohibits such sales. The
legislative authority benefits only individuals. Private corporations remain barred from acquiring any kind of alienable
land of the public domain, including government reclaimed lands.
The provision in PD No. 1085 stating that portions of the reclaimed lands could be transferred by PEA to the
"contractor or his assignees" (Emphasis supplied) would not apply to private corporations but only to individuals
because of the constitutional ban. Otherwise, the provisions of PD No. 1085 would violate both the 1973 and 1987
Constitutions.
The requirement of public auction in the sale of reclaimed lands
Assuming the reclaimed lands of PEA are classified as alienable or disposable lands open to disposition, and further
declared no longer needed for public service, PEA would have to conduct a public bidding in sell ing 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
23

"Section 79. When government property has become unserviceable for any cause, or is no longer needed,
it shall, upon application of the officer accountable therefor, be inspected by the head of the agency or his
duly authorized representative in the presence of the auditor concerned and, if found to be valueless or
unsaleable, it may be destroyed in their presence. If found to be valuable, it may be sold at public
auction to the highest bidder under the supervision of the proper committee on award or similar body in
the presence of the auditor concerned or other authorized representative of the Commission, after
advertising by printed notice in the Official Gazette, or for not less than three consecutive days in
any newspaper of general circulation, or where the value of the property does not warrant the expense of
publication, by notices posted for a like period in at least three public places in the locality where the
property is to be sold. In the event that the public auction fails, the property may be sold at a private
sale at such price as may be fixed by the same committee or body concerned and approved by the
Commission."
It is only when the public auction fails that a negotiated sale is allowed, in which case the Commission on Audit must
approve the selling price.
90
The Commission on Audit implements Section 79 of the Government Auditing Code
through Circular No. 89-296
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 PEA's reclaimed foreshore and submerged
alienable lands of the public domain. Private corporations are barred from bidding at the auction sale of any kind of
alienable land of the public domain.
PEA originally scheduled a public bidding for the Freedom Islands on December 10, 1991. PEA imposed a condition
that the winning bidder should reclaim another 250 hectares of submerged areas to regularize the shape of the
Freedom Islands, under a 60-40 sharing of the additional reclaimed areas in favor of the winning bidder.
92
No one,
however, submitted a bid. On December 23, 1994, the Government Corporate Counsel advised PEA it could sell the
Freedom Islands through negotiation, without need of another public bidding, because of the failure of the public
bidding on December 10, 1991.
93

However, the original JVA dated April 25, 1995 covered not only the Freedom Islands and the additional 250
hectares still to be reclaimed, it also granted an option to AMARI to reclaim another 350 hectares. The original JVA,
a negotiated contract, enlarged the reclamation area to 750 hectares.
94
The failure of public bidding on December
10, 1991, involving only 407.84 hectares,
95
is not a valid justification for a negotiated sale of 750 hectares, almost
double the area publicly auctioned. Besides, the failure of public bidding happened on December 10, 1991, more
than three years before the signing of the original JVA on April 25, 1995. The economic situation in the country had
greatly improved during the intervening period.
Reclamation under the BOT Law and the Local Government Code
The constitutional prohibition in Section 3, Article XII of the 1987 Constitution is absolute and clear: "Private
corporations or associations may not hold such alienable lands of the public domain except by lease, x x x." Even
Republic Act No. 6957 ("BOT Law," for brevity), cited by PEA and AMARI as legislative authority to sell reclaimed
lands to private parties, recognizes the constitutional ban. Section 6 of RA No. 6957 states
"Sec. 6. Repayment Scheme. - For the financing, construction, operation and maintenance of any
infrastructure projects undertaken through the 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
x x x
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."
24

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 i n 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."
4. Manalo v. Intermediate Appellate Court,
100
where the Court held
"When the lots in dispute were certified as disposable on May 19, 1971, and free patents were issued
covering the same in favor of the private respondents, the said lots ceased to be part of the public domain
and, therefore, the Director of Lands lost jurisdiction over the same."
5.Republic v. Court of Appeals,
101
where the Court stated
"Proclamation No. 350, dated October 9, 1956, of President Magsaysay legally effected a land grant to the
Mindanao Medical Center, Bureau of Medical Services, Department of Health, of the whole lot, validly
sufficient for initial registration under the Land Registration Act. Such land grant is constitutive of a 'fee
simple' title or absolute title in favor of petitioner Mindanao Medical Center. Thus, Section 122 of the Act,
which governs the registration of grants or patents involving public lands, provides that 'Whenever public
lands in the Philippine Islands belonging to the Government of the United States or to the Government of the
Philippines are alienated, granted or conveyed to persons or to public or private corporations, the same shall
be brought forthwith under the operation of this Act (Land Registration Act, Act 496) and shall become
registered lands.'"
The first four cases cited involve petitions to cancel the land patents and the corresponding certificates of
titlesissued to private parties. These four cases uniformly hold that the Director of Lands has no jurisdiction over
private lands or that upon issuance of the certificate of title the land automatically comes under the Torrens System.
The fifth case cited involves the registration under the Torrens System of a 12.8-hectare public land granted by the
National Government to Mindanao Medical Center, a government unit under the Department of Health. The National
Government transferred the 12.8-hectare public land to serve as the site for the hospital buildings and other facilities
of Mindanao Medical Center, which performed a public service. The Court affirmed the registration of the 12.8-
hectare public land in the name of Mindanao Medical Center under Section 122 of Act No. 496. This fifth case is an
example of a public land being registered under Act No. 496 without the land losing its character as a property of
public dominion.
25

In the instant case, the only patent and certificates of title issued are those in the name of PEA, a wholly government
owned corporation performing public as well as proprietary functions. No patent or certificate of title has been issued
to any private party. No one is asking the Director of Lands to cancel PEA's patent or certificates of title. In fact, the
thrust of the instant petition is that PEA's certificates of title should remain with PEA, and the land covered by these
certificates, being alienable lands of the public domain, should not be sold to a private corporation.
Registration of land under Act No. 496 or PD No. 1529 does not vest in the registrant private or public ownership of
the land. Registration is not a mode of acquiring ownership but is merely evidence of ownership previously
conferred by any of the recognized modes of acquiring ownership. Registration does not give the registrant a better
right than what the registrant had prior to the registration.
102
The registration of lands of the public domain under the
Torrens system, by itself, cannot convert public lands into private lands.
103

Jurisprudence holding that upon the grant of the patent or issuance of the certificate of title the alienable land of the
public domain automatically becomes private land cannot apply to government units and entities like PEA. The
transfer of the Freedom Islands to PEA was made subject to the provisions of CA No. 141 as expressly stated in
Special Patent No. 3517 issued by then President Aquino, to wit:
"NOW, THEREFORE, KNOW YE, that by authority of the Constitution of the Philippines and in conformity
with the provisions of Presidential Decree No. 1084, supplemented by Commonwealth Act No. 141, as
amended, there are hereby granted and conveyed unto the Public Estates Authority the aforesaid tracts of
land containing a total area of one million nine hundred fifteen thousand eight hundred ninety four
(1,915,894) square meters; the technical description of which are hereto attached and made an integral part
hereof." (Emphasis supplied)
Thus, the provisions of CA No. 141 apply to the Freedom Islands on matters not covered by PD No. 1084. Section
60 of CA No. 141 prohibits, "except when authorized by Congress," the sale of alienable lands of the public domain
that are transferred to government units or entities. Section 60 of CA No. 141 constitutes, under Section 44 of PD
No. 1529, a "statutory lien affecting title" of the registered land even if not annotated on the certificate of
title.
104
Alienable lands of the public domain held by government entities under Section 60 of CA No. 141 remain
public lands because they cannot be alienated or encumbered unless Congress passes a law authorizing their
disposition. Congress, however, cannot authorize the sale to private corporations of reclaimed alienable lands of the
public domain because of the constitutional ban. Only individuals can benefit from such law.
The grant of legislative authority to sell public lands in accordance with Section 60 of CA No. 141 does not
automatically convert alienable lands of the public domain into private or patrimonial lands. The alienable lands of
the public domain must be transferred to qualified private parties, or to government entities not tasked to dispose of
public lands, before these lands can become private or patrimonial lands. Otherwise, the constitutional ban will
become illusory if Congress can declare lands of the public domain as private or patrimonial lands in the hands of a
government agency tasked to dispose of public lands. This will allow private corporations to acquire directly from
government agencies limitless areas of lands which, prior to such law, are concededly public lands.
Under EO No. 525, PEA became the central implementing agency of the National Government to reclaim
foreshore and submerged areas of the public domain. Thus, EO No. 525 declares that
"EXECUTIVE ORDER NO. 525
Designating the Public Estates Authority as the Agency Primarily Responsible for all Reclamation Projects
Whereas, there are several reclamation projects which are ongoing or being proposed to be undertaken in
various parts of the country which need to be evaluated for consistency with national programs;
Whereas, there is a need to give further institutional support to the Government's declared policy to provide
for a coordinated, economical and efficient reclamation of lands;
Whereas, Presidential Decree No. 3-A requires that all reclamation of areas shall be limited to the National
Government or any person authorized by it under proper contract;
Whereas, a central authority is needed to act on behalf of the National Government which shall
ensure a coordinated and integrated approach in the reclamation of lands;
Whereas, Presidential Decree No. 1084 creates the Public Estates Authority as a government
corporation to undertake reclamation of lands and ensure their maximum utilization in promoting
public welfare and interests; and
Whereas, Presidential Decree No. 1416 provides the President with continuing authority to reorganize the
national government including the transfer, abolition, or merger of functions and offices.
26

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers
vested in me by the Constitution and pursuant to Presidential Decree No. 1416, do hereby order and direct
the following:
Section 1. The Public Estates Authority (PEA) shall be primarily responsible for integrating, directing,
and coordinating all reclamation projects for and on behalf of the National Government. All
reclamation projects shall be approved by the President upon recommendation of the PEA, and shall be
undertaken by the PEA or through a proper contract executed by it with any person or entity; Provided, that,
reclamation projects of any national government agency or entity authorized under its charter shall be
undertaken in consultation with the PEA upon approval of the President.
x x x ."
As the central implementing agency tasked to undertake reclamation projects nationwide, with authority to sell
reclaimed lands, PEA took the place of DENR as the government agency charged with leasing or selling reclaimed
lands of the public domain. The reclaimed lands being leased or sold by PEA are not private lands, in the same
manner that DENR, when it disposes of other alienable lands, does not dispose of private lands but alienable lands
of the public domain. Only when qualified private parties acquire these lands will the lands become private lands. In
the hands of the government agency tasked and authorized to dispose of alienable of disposable lands of
the public domain, these lands are still public, not private lands.
Furthermore, PEA's charter expressly states that PEA "shall hold lands of the public domain" as well as "any and
all kinds of lands." PEA can hold both lands of the public domain and private lands. Thus, the mere fact that
alienable lands of the public domain like the Freedom Islands are transferred to PEA and issued land patents or
certificates of title in PEA's name does not automatically make such lands private.
To allow vast areas of reclaimed lands of the public domain to be transferred to PEA as private lands will sanction a
gross violation of the constitutional ban on private corporations from acquiring any kind of alienable land of the
public domain. PEA will simply turn around, as PEA has now done under the Amended J VA, 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
27

affecting its title, except when authorized by Congress." This provision refers to government reclaimed,
foreshore and marshy lands of the public domain that have been titled but still cannot be alienated or encumbered
unless expressly authorized by Congress. The need for legislative authority prevents the registered land of the
public domain from becoming private land that can be disposed of to qualified private parties.
The Revised Administrative Code of 1987 also recognizes that lands of the public domain may be registered under
the Torrens System. Section 48, Chapter 12, Book I of the Code states
"Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the Government is
authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by
the following:
(1) x x x
(2) For property belonging to the Republic of the Philippines, but titled in the name of any political
subdivision or of any corporate agency or instrumentality, by the executive head of the agency or
instrumentality." (Emphasis supplied)
Thus, private property purchased by the National Government for expansion of a public wharf may be titled in the
name of a government corporation regulating port operations in the country. Private property purchased by the
National Government for expansion of an airport may also be titled in the name of the government agency tasked to
administer the airport. Private property donated to a municipality for use as a town plaza or public school site may
likewise be titled in the name of the municipality.
106
All these properties become properties of the public domain, and
if already registered under Act No. 496 or PD No. 1529, remain registered land. There is no requirement or provision
in any existing law for the de-registration of land from the Torrens System.
Private lands taken by the Government for public use under its power of eminent domain become unquestionably
part of the public domain. Nevertheless, Section 85 of PD No. 1529 authorizes the Register of Deeds to issue in the
name of the National Government new certificates of title covering such expropriated lands. Section 85 of PD No.
1529 states
"Sec. 85. Land taken by eminent domain. Whenever any registered land, or interest therein, is expropriated
or taken by eminent domain, the National Government, province, city or municipality, or any other agency or
instrumentality exercising such right shall file for registration in the proper Registry a certified copy of the
judgment which shall state definitely by an adequate description, the particular property or interest
expropriated, the number of the certificate of title, and the nature of the public use. A memorandum of the
right or interest taken shall be made on each certificate of title by the Register of Deeds, and where the fee
simple is taken, a new certificate shall be issued in favor of the National Government, province, city,
municipality, or any other agency or instrumentality exercising such right for the land so taken. The legal
expenses incident to the memorandum of registration or issuance of a new certificate of title shall be for the
account of the authority taking the land or interest therein." (Emphasis supplied)
Consequently, lands registered under Act No. 496 or PD No. 1529 are not exclusively private or patrimonial lands.
Lands of the public domain may also be registered pursuant to existing laws.
AMARI makes a parting shot that the Amended JVA is not a sale to AMARI of the Freedom Islands or of the lands to
be reclaimed from submerged areas of Manila Bay. In the words of AMARI, the Amended JVA "is not a sale but a
joint venture with a stipulation for reimbursement of the original cost incurred by PEA for the earlier reclamation and
construction works performed by the CDCP under its 1973 contract with the Republic." Whether the Amended JVA
is a sale or a joint venture, the fact remains that the Amended JVA requires PEA to "cause the issuance and
delivery of the certificates of title conveying AMARI's Land Share in the name of AMARI."
107

This stipulation still contravenes Section 3, Article XII of the 1987 Constitution which provides that private
corporations "shall not hold such alienable lands of the public domain except by lease." The transfer of title and
ownership to AMARI clearly means that AMARI will "hold" the reclaimed lands other than by lease. The transfer of
title and ownership is a "disposition" of the reclaimed lands, a transaction considered a sale or alienation under CA
No. 141,
108
the Government Auditing Code,
109
and Section 3, Article XII of the 1987 Constitution.
The Regalian doctrine is deeply implanted in our legal system. Foreshore and submerged areas form part of the
public domain and are inalienable. Lands reclaimed from foreshore and submerged areas also form part of the
public domain and are also inalienable, unless converted pursuant to law into alienable or disposable lands of the
public domain. Historically, lands reclaimed by the government are sui generis, not available for sale to private
parties unlike other alienable public lands. Reclaimed lands retain their inherent potential as areas for public use or
public service. Alienable lands of the public domain, increasingly becoming scarce natural resources, are to be
distributed equitably among our ever-growing population. To insure such equitable distribution, the 1973 and 1987
Constitutions have barred private corporations from acquiring any kind of alienable land of the public domain. Those
28

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.
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 J VA null and void ab initio.
Seventh issue: whether the Court is the proper forum to raise the issue of whether the Amended J VA 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.









29

G.R. No. 133250 May 6, 2003
FRANCISCO I. CHAVEZ, petitioner,
vs.
PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT CORPORATION, respondents.
RESOLUTION
CARPIO, J .:
For resolution of the Court are the following motions: (1) Motion to Inhibit and for Re-Deliberation filed by respondent
Amari Coastal Bay Development Corporation ("Amari" for brevity) on September 13, 2002; (2) Motion to Set Case
for Hearing on Oral Argument filed by Amari on August 20, 2002; (3) Motion for Reconsideration and Supplement to
Motion for Reconsideration filed by Amari on July 26, 2002 and August 20, 2002, respectively; (4) Motion for
Reconsideration and Supplement to Motion for Reconsideration filed by respondent Public Estates Authority ("PEA"
for brevity) on July 26, 2002 and August 8, 2002, respectively; and (5) Motion for Reconsideration and/or
Clarification filed by the Office of the Solicitor General on July 25, 2002. Petitioner Francisco I. Chavez filed on
November 13, 2002 his Consolidated Opposition to the main and supplemental motions for reconsideration.
To recall, the Courts decision of July 9, 2002 ("Decision" for brevity) on the instant case states in its summary:
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
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 of still
submerged areas of Manila Bay, such transfer is void for being contrary to Section 2, Article XII of the 1987
Constitution which prohibits the alienation of natural resources other than agricultural lands of the public
domain. PEA may reclaim these submerged areas. Thereafter, the government can classify the reclaimed
lands as alienable or disposable, and further declare them no longer needed for public service. Still, the
transfer of such reclaimed alienable lands of the public domain to AMARI will be void in view of Section 3,
Article XII of the 1987 Constitution which prohibits private corporations from acquiring any kind of alienable
land of the public domain.
Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987 Constitution. Under Article
1409 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.
Amari seeks the inhibition of Justice Antonio T. Carpio, ponente of the Decision, on the ground that Justice Carpio,
before his appointment to the Court, wrote in his Manila Times column of July 1, 1997, "I have always maintained
that the law requires the public bidding of reclamation projects." Justice Carpio, then a private law practitioner, also
stated in the same column, "The Amari-PEA reclamation contract is legally flawed because it was not bid out by the
PEA." Amari claims that because of these statements Justice Carpio should inhibit himself "on the grounds of bias
and prejudgment" and that the instant case should be "re-deliberated" after being assigned to a new ponente.
The motion to inhibit Justice Carpio must be denied for three reasons. First, the motion to inhibit came after Justice
Carpio had already rendered his opinion on the merits of the case. The rule is that a motion to inhibit must be denied
if filed after a member of the Court had already given an opinion on the merits of the case,
1
the rationale being that
"a litigant cannot be permitted to speculate upon the action of the Court xxx (only to) raise an objection of this sort
after a decision has been rendered." Second, as can be readily gleaned from the summary of the Decision quoted
30

above, the absence of public bidding is not one of the ratio decidendi of the Decision which is anchored on violation
of specific provisions of the Constitution. The absence of public bidding was not raised as an issue by the parties.
The absence of public bidding was mentioned in the Decision only to complete the discussion on the law affecting
reclamation contracts for the guidance of public officials. At any rate, the Office of the Solicitor General in its Motion
for Reconsideration concedes that the absence of public bidding in the disposition of the Freedom Islands rendered
the Amended JVA null and void.
2
Third, judges and justices are not disqualified from participating in a case just
because they have written legal articles on the law involved in the case. As stated by the Court in Republic v.
Cocofed,
3
-
The mere fact that, as a former columnist, Justice Carpio has written on the coconut levy will not disqualify
him, in the same manner that jurists will not be disqualified just because they may have given their opinions
as textbook writers on the question involved in a case.
Besides, the subject and title of the column in question was "The CCP reclamation project" and the column referred
to the Amari-PEA contract only in passing in one sentence.
Amaris motion to set the case for oral argument must also be denied since the pleadings of the parties have
discussed exhaustively the issues involved in the case.
The motions for reconsideration reiterate mainly the arguments already discussed in the Decision. We shall consider
in this Resolution only the new arguments raised by respondents.
In its Supplement to Motion for Reconsideration, Amari argues that the Decision should be made to apply
prospectively, not retroactively to cover the Amended JVA. Amari argues that the existence of a statute or executive
order prior to its being adjudged void is an operative fact to which legal consequences are attached, citing De
Agbayani v. PNB,
4
thus:
x x x. It does not admit of doubt that prior to the declaration of nullity such challenged legislative or executive
act must have been in force and had to be complied with. This is so as until after the judiciary, in an
appropriate case, declares its invalidity, it is entitled to obedience and respect. Parties may have acted
under it and may have changed their positions. What could be more fitting than that in a subsequent
litigation regard be had to what has been done while such legislative or executive act was in operation and
presumed to be valid in all respects. It is now accepted as a doctrine that prior to its being nullified, its
existence as a fact must be reckoned with. This is merely to reflect awareness that precisely because the
judiciary is the governmental organ which has the final say on whether or not a legislative or executive
measure is valid, a period of time may have elapsed before it can exercise the power of judicial review that
may lead to a declaration of nullity. It would be to deprive the law of its quality of fairness and justice then, if
there be no recognition of what had transpired prior to such adjudication.
In the language of an American Supreme Court decision: "The actual existence of a statute, prior to such a
determination [of unconstitutionality], is an operative fact and may have consequences which cannot justly
be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent
ruling as to invalidity may have to be considered in various aspects, - with respect to particular relations,
individual and corporate, and particular conduct, private and official." This language has been quoted with
approval in a resolution in Araneta v. Hill and the decision in Manila Motor Co., Inc. v. Flores. x x x.
x x x
x x x That before the decision they were not constitutionally infirm was admitted expressly. There is all the
more reason then to yield assent to the now prevailing principle that the existence of a statute or executive
order prior to its being adjudged void is an operative fact to which legal consequences are attached.
Amari now claims that "assuming arguendo that Presidential Decree Nos. 1084 and 1085, and Executive
Order Nos. 525 and 654 are inconsistent with the 1987 Constitution, the limitation imposed by the Decision
on these decrees and executive orders should only be applied prospectively from the finality of the
Decision."
Amari likewise asserts that a new doctrine of the Court cannot operate retroactively if it impairs vested rights. Amari
maintains that the new doctrine embodied in the Decision cannot apply retroactively on those who relied on the old
doctrine in good faith, citing Spouses Benzonan v. Court of Appeals,
5
thus:
At that time, the prevailing jurisprudence interpreting section 119 of R.A. 141 as amended was that
enunciated in Monge and Tupas cited above. The petitioners Benzonan and respondent Pe and the DBP
are bound by these decisions for pursuant to Article 8 of the Civil Code "judicial decisions applying or
interpreting the laws or the Constitution shall form a part of the legal system of the Philippines." But while our
decisions form part of the law of the land, they are also subject to Article 4 of the Civil Code which provides
that "laws shall have no retroactive effect unless the contrary is provided." This is expressed in the familiar
31

legal maxim lex prospicit, non respicit, the law looks forward not backward. The rationale against
retroactivity is easy to perceive. The retroactive application of a law usually divests rights that have already
become vested or impairs the obligations of contract and hence, is unconstitutional (Francisco v. Certeza, 3
SCRA 565 [1961]).
The same consideration underlies our rulings giving only prospective effect to decisions enunciating new doctrines.
Thus, we emphasized in People v. Jabinal, 55 SCRA 607 [1974] "x x x when a doctrine of this Court is overruled
and a different view is adopted, the new doctrine should be applied prospectively and should not apply to parties
who had relied on the old doctrine and acted on the faith thereof.
There may be special cases where weighty considerations of equity and social justice will warrant a retroactive
application of doctrine to temper the harshness of statutory law as it applies to poor farmers or their widows and
orphans. In the present petitions, however, we find no such equitable considerations. Not only did the private
respondent apply for free agricultural land when he did not need it and he had no intentions of applying it to the
noble purposes behind the law, he would now repurchase for only P327,995.00, the property purchased by the
petitioners in good faith for P1,650,000.00 in 1979 and which, because of improvements and the appreciating value
of land must be worth more than that amount now.
The buyers in good faith from DBP had a right to rely on our rulings in Monge and Tupas when they purchased the
property from DBP in 1979 or thirteen (13) years ago. Under the rulings in these two cases, the period to repurchase
the disputed lot given to respondent Pe expired on June 18, 1982. He failed to exercise his right. His lost right
cannot be revived by relying on the 1988 case of Belisario. The right of petitioners over the subject lot had already
become vested as of that time and cannot be impaired by the retroactive application of the Belisario ruling.
Amaris reliance on De Agbayani and Spouses Benzonan is misplaced. These cases would apply if the prevailing
law or doctrine at the time of the signing of the Amended JVA was that a private corporation could acquire alienable
lands of the public domain, and the Decision annulled the law or reversed this doctrine. Obviously, this is not the
case here.
Under the 1935 Constitution, private corporations were allowed to acquire alienable lands of the public domain. But
since the effectivity of the 1973 Constitution, private corporations were banned from holding, except by lease,
alienable lands of the public domain. The 1987 Constitution continued this constitutional prohibition. The prevailing
law before, during and after the signing of the Amended JVA is that private corporations cannot hold, except by
lease, alienable lands of the public domain. The Decision has not annulled or in any way changed the law on this
matter. The Decision, whether made retroactive or not, does not change the law since the Decision merely reiterates
the law that prevailed since the effectivity of the 1973 Constitution. Thus, De Agbayani, which refers to a law that is
invalidated by a decision of the Court, has no application to the instant case.
Likewise, Spouses Benzonan is inapplicable because it refers to a doctrine of the Court that is overruled by a
subsequent decision which adopts a new doctrine. In the instant case, there is no previous doctrine that is overruled
by the Decision. Since the case of Manila Electric Company v. Judge Castro-Bartolome,
6
decided on June 29, 1982,
the Court has applied consistently the constitutional provision that private corporations cannot hold, except by lease,
alienable lands of the public domain. The Court reiterated this in numerous cases, and the only dispute in the
application of this constitutional provision is whether the land in question had already become private property
before the effectivity of the 1973 Constitution.
7
If the land was already private land before the 1973 Constitution
because the corporation had possessed it openly, continuously, exclusively and adversely for at least thirty years
since June 12, 1945 or earlier, then the corporation could apply for judicial confirmation of its imperfect title. But if
the land remained public land upon the effectivity of the 1973 Constitution, then the corporation could never hold,
except by lease, such public land. Indisputably, the Decision does not overrule any previous doctrine of the Court.
The prevailing doctrine before, during and after the signing of the Amended JVA is that private corporations cannot
hold, except by lease, alienable lands of the public domain. This is one of the two main reasons why the Decision
annulled the Amended JVA. The other main reason is that submerged areas of Manila Bay, being part of the sea,
are inalienable and beyond the commerce of man, a doctrine that has remained immutable since the Spanish Law
on Waters of 1886. Clearly, the Decision merely reiterates, and does not overrule, any existing judicial doctrine.
Even on the characterization of foreshore lands reclaimed by the government, the Decision does not overrule
existing law or doctrine. Since the adoption of the Regalian doctrine in this jurisdiction, the sea and its foreshore
areas have always been part of the public domain. And since the enactment of Act No. 1654 on May 18, 1907 until
the effectivity of the 1973 Constitution, statutory law never allowed foreshore lands reclaimed by the government to
be sold to private corporations. The 1973 and 1987 Constitution enshrined and expanded the ban to include any
alienable land of the public domain.
There are, of course, decisions of the Court which, while recognizing a violation of the law or Constitution, hold that
the sale or transfer of the land may no longer be invalidated because of "weighty considerations of equity and social
justice."
8
The invalidation of the sale or transfer may also be superfluous if the purpose of the statutory or
constitutional ban has been achieved. But none of these cases apply to Amari.
32

Thus, the Court has ruled consistently that where a Filipino citizen sells land to an alien who later sells the land to a
Filipino, the invalidity of the first transfer is corrected by the subsequent sale to a citizen.
9
Similarly, where the alien
who buys the land subsequently acquires Philippine citizenship, the sale is validated since the purpose of the
constitutional ban to limit land ownership to Filipinos has been achieved.
10
In short, the law disregards the
constitutional disqualification of the buyer to hold land if the land is subsequently transferred to a qualified party, or
the buyer himself becomes a qualified party. In the instant case, however, Amari has not transferred the Freedom
Islands, or any portion of it, to any qualified party. In fact, Amari admits that title to the Freedom Islands still remains
with PEA.
11

The Court has also ruled consistently that a sale or transfer of the land may no longer be questioned under the
principle of res judicata, provided the requisites for res judicata are present.
12
Under this principle, the courts and the
parties are bound by a prior final decision, otherwise there will be no end to litigation. As the Court declared in
Toledo-Banaga v. Court of Appeals,
13
"once a judgement has become final and executory, it can no longer be
disturbed no matter how erroneous it may be." In the instant case, there is no prior final decision adjudicating the
Freedom Islands to Amari.
There are, moreover, special circumstances that disqualify Amari from invoking equity principles. Amari cannot
claim good faith because even before Amari signed the Amended JVA on March 30, 1999, petitioner had already
filed the instant case on April 27, 1998 questioning precisely the qualification of Amari to acquire the Freedom
Islands. Even before the filing of this petition, two Senate Committees
14
had already approved on September 16,
1997 Senate Committee Report No. 560. This Report concluded, after a well-publicized investigation into PEAs sale
of the Freedom Islands to Amari, that the Freedom Islands are inalienable lands of the public domain. Thus, Amari
signed the Amended JVA knowing and assuming all the attendant risks, including the annulment of the Amended
JVA.
Amari has also not paid to PEA the full reimbursement cost incurred by PEA in reclaiming the Freedom Islands.
Amari states that it has paid PEA only P300,000,000.00
15
out of the P1,894,129,200.00 total reimbursement cost
agreed upon in the Amended JVA. Moreover, Amari does not claim to have even initiated the reclamation of the
592.15 hectares of submerged areas covered in the Amended JVA, or to have started to construct any permanent
infrastructure on the Freedom Islands. In short, Amari does not claim to have introduced any physical improvement
or development on the reclamation project that is the subject of the Amended JVA. And yet Amari claims that it had
already spent a "whopping P9,876,108,638.00" as its total development cost as of June 30, 2002.
16
Amari does not
explain how it spent the rest of the P9,876,108,638.00 total project cost after paying PEA P300,000,000.00.
Certainly, Amari cannot claim to be an innocent purchaser in good faith and for value.
In its Supplement to Motion for Reconsideration, PEA claims that it is "similarly situated" as the Bases Conversion
Development Authority (BCDA) which under R.A. No. 7227 is tasked to sell portions of the Metro Manila military
camps and other military reservations. PEAs comparison is incorrect. The Decision states as follows:
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 or disposable lands of the public domain, these lands are still public, not private lands.
PEA is the central implementing agency tasked to undertake reclamation projects nationwide. PEA took the
place of Department of Environment and Natural Resources ("DENR" for brevity) as the government agency
charged with leasing or selling all reclaimed lands of the public domain. In the hands of PEA, which took
over the leasing and selling functions of DENR, reclaimed foreshore lands are public lands in the
same manner that these same lands would have been public lands in the hands of DENR. BCDA is an
entirely different government entity. BCDA is authorized by law to sell specificgovernment lands that have
long been declared by presidential proclamations as military reservations for use by the different services of
the armed forces under the Department of National Defense. BCDAs mandate is specific and limited in
area, while PEAs mandate is general and national. BCDA holds government lands that have been granted
to end-user government entities the military services of the armed forces. In contrast, under Executive
Order No. 525, PEA holds the reclaimed public lands, not as an end-user entity, but as the government
agency "primarily responsible for integrating, directing, and coordinating all reclamation projects for and on
behalf of the National Government."
In Laurel v. Garcia,
17
cited in the Decision, the Court ruled that land devoted to public use by the Department of
Foreign Affairs, when no longer needed for public use, may be declared patrimonial property for sale to private
parties provided there is a law authorizing such act. Well-settled is the doctrine that public land granted to an end-
user government agency for a specific public use may subsequently be withdrawn by Congress from public use and
declared patrimonial property to be sold to private parties. R.A. No. 7227 creating the BCDA is a law that declares
specific military reservations no longer needed for defense or military purposes and reclassifies such lands as
patrimonial property for sale to private parties.
33

Government owned lands, as long they are patrimonial property, can be sold to private parties, whether Filipino
citizens or qualified private corporations. Thus, the so-called Friar Lands acquired by the government under Act No.
1120 are patrimonial property
18
which even private corporations can acquire by purchase. Likewise, reclaimed
alienable lands of the public domain if sold or transferred to a public or municipal corporation for a monetary
consideration become patrimonial property in the hands of the public or municipal corporation. Once converted to
patrimonial property, the land may be sold by the public or municipal corporation to private parties, whether Filipino
citizens or qualified private corporations.
We reiterate what we stated in the Decision is the rationale for treating PEA in the same manner as DENR with
respect to reclaimed foreshore lands, thus:
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, if not thousands, 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. The 1973 Constitution prohibited
private corporations from acquiring any kind of public land, and the 1987 Constitution has unequivocally reiterated
this prohibition.
Finally, the Office of the Solicitor General and PEA argue that the cost of reclaiming deeply submerged areas is
"enormous" and "it would be difficult for PEA to accomplish such project without the participation of private
corporations."
19
The Decision does not bar private corporations from participating in reclamation projects and being
paid for their services in reclaiming lands. What the Decision prohibits, following the explicit constitutional mandate,
is for private corporations to acquire reclaimed lands of the public domain. There is no prohibition on the directors,
officers and stockholders of private corporations, if they are Filipino citizens, from acquiring at public auction
reclaimed alienable lands of the public domain. They can acquire not more than 12 hectares per individual, and the
land thus acquired becomes private land.
Despite the nullity of the Amended JVA, Amari is not precluded from recovering from PEA in the proper
proceedings, on a quantum meruit basis, whatever Amari may have incurred in implementing the Amended JVA
prior to its declaration of nullity.
WHEREFORE, finding the Motions for Reconsideration to be without merit, the same are hereby DENIED with
FINALITY. The Motion to Inhibit and for Re-Deliberation and the Motion to Set Case for Hearing on Oral Argument
are likewise DENIED.
SO ORDERED.









34

G.R. No. L-28379 March 27, 1929
THE GOVERNMENT OF THE PHILIPPINE ISLANDS, applicant-appellant,
vs.
CONSORCIA CABANGIS, ET AL., claimants-appellees.
Attorney-General Jaranilla for appellant.
Abad Santos, Camus & Delgado for 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.
In view of the facts just stated, as proved by a preponderance of the evidence, the 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.
x x x x x x x x x
35

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:
x x x x x x x x x
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 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.
36

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.




37

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.
38

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.




















39

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
40

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."
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.
41

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.)
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
42

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.
























43

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
44

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 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
45

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 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
46

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 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.
47

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 t his
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).
48

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.
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
49

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; 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.




50

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)
51

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. 629 "that they are held in trust for the people, intended and
used for the accomplishment of the purposes for which municipal corporations are created, and that 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.
52

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.




























53

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
54

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. 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
55

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 publ ic
use. They would fall under the phrase "public works for public service" for it has been held that under theejusdem
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,
11
where 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
governmental purposes are public in nature. Thus, the auto trucks used by the municipality for street sprinkling, the
police patrol automobile, police stations and concrete structures with the corresponding lots used as markets were
declared exempt from execution and attachment since they were not patrimonial properties. (3) MUNICIPALITY OF
BATANGAS VS. CANTOS
13
held squarely that a municipal lot which had always been devoted to school purposes
is one dedicated to public use and is not patrimonial property of a municipality.
Following this classification, Republic Act 3039 is valid insofar as it affects the 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 the former Zamboanga province in its governmental capacity and therefore are subject to
the absolute control of Congress. Said lots considered as public property are the following:
TCT Number Lot Number U s e
2200 ...................................... 4-B ...................................... Capitol Site
2816 ...................................... 149 ...................................... School Site
3281 ...................................... 1224 ...................................... Hospital Site
3282 ...................................... 1226 ...................................... Hospital Site
3283 ...................................... 1225 ...................................... Hospital Site
3748 ...................................... 434-A-1 ...................................... School Site
5406 ...................................... 171 ...................................... School Site
5564 ...................................... 168 ...................................... High School Play-ground
5567 ...................................... 157 & 158 ...................................... Trade School
56

5583 ...................................... 167 ...................................... High School Play-ground
6181 ...................................... (O.C.T.) ...................................... Curuan School
11942 ...................................... 926 ...................................... Leprosarium
11943 ...................................... 927 ...................................... Leprosarium
11944 ...................................... 925 ...................................... Leprosarium
5557 ...................................... 170 ...................................... Burleigh School
5562 ...................................... 180 ...................................... Burleigh School
5565 ...................................... 172-B ...................................... Burleigh
5570 ...................................... 171-A ...................................... Burleigh
5571 ...................................... 172-C ...................................... Burleigh
5572 ...................................... 174 ...................................... Burleigh
5573 ...................................... 178 ...................................... Burleigh
5585 ...................................... 171-B ...................................... Burleigh
5586 ...................................... 173 ...................................... Burleigh
5587 ...................................... 172-A ...................................... Burleigh
We noticed that the eight Burleigh lots above described are adjoining each other 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 for holding that said eight lots constitute the appurtenant grounds of the Burleigh schools,
and partake of the nature of the same.
Regarding the several buildings existing on the lots above-mentioned, the records do not disclose whether
they were constructed at the expense of the former Province of Zamboanga. Considering however the fact that said
buildings must have been erected even before 1936 when Commonwealth Act 39 was enacted and the further fact
that provinces then had no power to authorize construction of buildings such as those in the case at bar at their own
expense,
14
it can be assumed that said buildings were erected by the National Government, using national funds.
Hence, Congress could very well dispose of said buildings in the same manner that it did with the lots in question.
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 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 the provincial residents. The province then and its successors-in-interest are not really deprived of the
benefits thereof.
But Republic Act 3039 cannot be applied to deprive Zamboanga del Norte of its 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:
TCT Number Lot Number U s e
5577 ...................................... 177 ...................................... Mydro, Magay

13198 ...................................... 127-0 ...................................... San Roque

5569 ...................................... 169 ...................................... Burleigh
15


5558 ...................................... 175 ...................................... Vacant

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 ...................................... "

57

5589 ...................................... 187 ...................................... "

5590 ...................................... 189 ...................................... "

5591 ...................................... 192 ...................................... "

5592 ...................................... 193 ...................................... "

5593 ...................................... 185 ...................................... "

7379 ...................................... 4147 ...................................... "

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 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 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
17
clearly 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.