Legal standing

CHAVEZ V PUBLIC ESTATES AUTHORITY AND

AMARI COASTAL BAY
GR. No. 133250 July 9, 2002
FACTS:
Nature:
original Petition for Mandamus
with prayer for writ of preliminary
injunction and a temporary restraining
order. Petition also seeks to compel the
Public Estates Authority (PEA) to disclose
all facts on PEAs then on-going
renegotiations with Amari Coastal Bay and
Development Corporation to reclaim
portions of Manila Bay. The petition further
seeks to enjoin PEA from signing a new
agreement with AMARI involving such
reclamation.

1973: The government through the

Commission of Public Highways signed a
contract with the Construction and
Development Corporation of the
Philippines (CDCP) to reclaim certain
foreshore and offshore areas of Manila Bay

1977: President Marcos issued PD No.

1084 creating the PEA, which was
tasked to reclaim land, including foreshore
and submerged areas and to develop,
improve, acquire x xx lease and sell any
and all kinds of lands. On the same date,
President Marcos
issued PD.
1085
transferring to PEA the lands reclaimed in
the foreshore and offshore of the Manila
Bay under the Manila-Cavite Coastal
Road
and
Reclamation
Project
(MCCRRP)

1981: Pres. Marcos issued a memorandum

ordering PEA to amend its contract with
CDCP which stated that CDCP shall
transfer in favor of PEA the areas
reclaimed by CDCP in the MCCRRP

1988: Pres. Aquino issued Special Patent

granting and transferring to PEA parcels of
land so reclaimed under the MCCRRP.
Subsequently she transferred in the name
of PEA the three reclaimed islands known
as the Freedom Islands

1995: PEA entered into a Joint Venture

Agreement (JVA) with AMARI, a
private corporation, to develop the
Freedom Islands and this was done
without public bidding

Pres. Ramos through Executive Secretary

Ruben Torres approved the JVA

1996: Senate Pres.Maceda delivered a

privileged speech in the Senate and
denounced the JVA as the grandmother
of all scams. As a result, the Senate
conducted investigations. Among the
conclusions were:
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 the title covering
the Freedom Islands are thus void,
and
3. The JVA itself is illegal

1997: Pres. Ramos created the Legal Task

Force to conduct a study on the legality of
the JVA in view of the Senate Committee
report.

1998: The Philippine Daily Inquirer

published
reports
on
on-going
renegotiations between PEA and AMARI

PEA Director Nestor Kalaw and PEA

Chairman ArsenioYulo and former navy
officer Sergio Cruz were members of the
negotiating panel

Frank Chavez filed petition for Mandamus

stating that the government stands to lose
billions of pesos in the sale by PEA of the
reclaimed lands to AMARI and prays that
PEA publicly disclose the terms of the
renegotiations of JVA. He cited that the
sale to AMARI is in violation of Article 12,
Sec. 3 prohibiting sale of alienable lands of
the public domain to private corporations
and Article 2 Section 28 and Article 3 Sec.
7 of the Constitution on the right to
information on matters of public concern

1999: PEA and AMARI signed Amended JVA

which Pres. Estrada approved

ISSUES:
1. WON the principal reliefs prayed for in the
petition are moot and academic because
of the subsequent events
2. WON the petition merits dismissal for
failure to observe the principle governing
the hierarchy of courts
3. WON the petition merits dismissal for nonexhaustion of administrative remedies
4. WON petitioner has locus standi to bring
this suit
5. WON
the
constitutional
right
to
information includes official information on
on-going negotiations before a final
agreement
6. WON the stipulations in the amended joint
venture agreement for the transfer to
AMARI of certain lands, reclaimed and still
to be reclaimed, violate the 1987
constitution; and
7. WON the court is the proper forum for
raising the issue of whether the amended
joint venture agreement is grossly
disadvantageous to the government.
o Threshold
issue:
whether
AMARI, a private corporation,
can acquire and own under the
amended JVA 367.5 has. of
reclaimed
foreshore
and
submerged area in Manila Bay
in view of Sections 2 & 3, Art.
12 of the 1987 constitution
HELD
(1) 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 and if already implemented, to annul
the effects of an unconstitutional contract
(2) The principle of hierarchy of courts applies
generally to cases involving factual questions
Reasoning: the instant case raises constitutional
issues of transcendental importance to the public

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(3)
The
principle
of
exhaustion
of
administrative remedies does not apply when
the issue involved is a purely legal or
constitutional question
(4) Petitioner has standing if petition is of
transcendental public importance and as
such, there is the right of a citizen to bring a
taxpayers suit on these matters of
transcendental public importance
(5) The constitutional right to information
includes official information on on-going
negotiations before a final contract and must
therefore constitute definite propositions by
the government and should not cover
recognized
exceptions
like
privileged
information, military and diplomatic secrets
and similar matters affecting national
security and public order
Reasoning The State policy of full
transparency in all transactions involving
public interest reinforces the peoples right to
information on matters of public concern. PEA
must prepare all the data and disclose them
to the public at the start of the disposition
process, long before the consummation of the
contract. While the evaluation or review is ongoing, there are no official acts, transactions,
or decisions on the bids or proposals but
once the committee makes its official
recommendation, there arises a definite
proposition on the part of the government
(6) In a form of a summary:
o The 157.84 has.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 ownership limitations
in the 1987 Constitution and existing
laws.
o

The 592.15 has.of submerged areas of

Manila Bay remain inalienable natural
resources of the public domain and
outside the commerce of man 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
o

Since the Amended JVA seeks to transfer

to AMARI, a private corporation,
ownership of 77.34 has.of the Freedom
Islands, such transfer is void for being
contrary to Section 3, Article 12 of the
1987
Constitution
which
prohibits
private corporations from acquiring any
kind of alienable land of the public
domain
Since the Amended JVA also seeks to
transfer to AMARI ownership of 290.156
has.of still submerged areas of Manila
Bay, such transfer is void for being
contrary to Section 2, Article 12 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 services. Still, the transfer of
such reclaimed alienable lands of the
public domain to AMARI will be void in
view of Section 3, Article 12 that
prohibits private corporations from
acquiring any kind of alienable land of
the public domain.

Reasoning:
CA 141 of the Philippine National
Assembly empowers the president to
classify lands of the public domain into
alienable or disposable (Sec. 6).The
President, upon recommendation of
the Secretary of Agriculture and
Commerce, shall from time to time
classify the lands of the public domain
into(a) Alienable of disposable, (b)
timber, and (c) mineral lands.
The President must first officially
classify these lands as alienable or
disposable, and then declare them
open to disposition or concession.
Sec. 59 states that 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 (d) Lands
not included in any of the foregoing
classes.
Sec. 61 states that the lands
comprised in classes (a), (b) and (c) of
section 59 shall be disposed f to
private parties by lease only and not
otherwise
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.
These lands remained suis generic as
the only alienable or disposable lands
of the public domain the government
could not sell to private parties. The
only way that 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.
PD No. 1085, coupled with President
Aquinos actual issuance of a special
patent covering the Freedom Islands, is
equivalent to an official proclamation
classifying the Freedom Islands as
alienable or disposable lands of the public
domain.
PD No. 1085 and President
Aquinos issuance of a land patent also
constitute a declaration that the Freedom
Islands are no longer needed for public
service. The Freedom Islands are thus
alienable or disposable lands of the
public domain, open to disposition or
concession to qualified parties.
in case of sale or lease of
disposable lands of the public
domain, a public bidding is
required
1987 Constitution declares that all
natural resources are owned by the
State.
With
the
exception
of
agricultural lands, all other natural
resources shall not be alienated.
Article 12, Sec. 3 states that 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 25 years, renewable for

not more than 25 years, and not to
exceed 1,000 has.in area.
ration behind the ban on corporations
from acquiring except through lease is
not well understood. If the purpose is
to equitably diffuse lands ownership
then the Consti could have simply
limited the size of alienable lands of
the public domain that corporations
could acquire. If the intent were to
encourage owner-cultivatorship
and the economic family-size farm
and to prevent a recurrence of
cases like the instant case, then
placing the land in the name of a
corporation
would
be
more
effective in preventing the breakup of farmlands. If the farmland
were 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 then,
this ban strengthens the consti
limitation on individuals from
acquiring more than the allowed
area of alienable lands of the
public domain. Without the 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. He could even hide
his ownership of a corporation by
putting his nominees as stockholders
of the corporation.

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In the instant case, the only patent and
certificates of title issued are those in the name of
PEA, a wholly government owned corporation
performing public as well as proprietary functions.
No patent or certificate of title has been issued to
any private party. No one is asking the Director of
Lands to cancel PEAs patent or certificates of title.
In fact, the thrust of the instant petition is that PEAs
certificates of title should remain with PEA, and the
land covered by these certificates, being alienable
lands of the public domain, should not be sold to a
private corporation.
Registration of land under Act No. 496 or PD
No. 1529 does not vest in the registrant private or
public ownership of the land. Registration is not a
mode of acquiring ownership but is merely evidence
of ownership previously conferred by any of the
recognized modes of acquiring ownership.
Registration does not give the registrant a better
right than what the registrant had prior to the
registration.i[102] The registration of lands of the
public domain under the Torrens system, by itself,
cannot convert public lands into private lands.ii[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. iii[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
As the central implementing agency tasked to
undertake reclamation projects nationwide, with
authority to sell reclaimed lands, PEA took the place
of DENR as the government agency charged with
leasing or selling reclaimed lands of the public
domain. The reclaimed lands being leased or sold
by PEA are not private lands, in the same manner
that DENR, when it disposes of other alienable
lands, does not dispose of private lands but
alienable lands of the public domain. Only when
qualified private parties acquire these lands will the
lands become private lands. In the hands of the
government agency tasked and authorized to
dispose of alienable of disposable lands of the
public domain, these lands are still public, not
private lands.
Furthermore, PEAs charter expressly states
that PEA shall hold lands of the public domain
as well as any and all kinds of lands. PEA can hold
both lands of the public domain and private lands.
Thus, the mere fact that alienable lands of the
public domain like the Freedom Islands are
transferred to PEA and issued land patents or
certificates of title in PEAs name does not
automatically make such lands private.
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

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also inalienable, unless converted pursuant to law
into alienable or disposable lands of the public
domain.
Historically, lands reclaimed by the
government are sui generis, not available for sale
to private parties unlike other alienable public lands.
Reclaimed lands retain their inherent potential as
areas for public use or public service. Alienable
lands of the public domain, increasingly becoming
scarce natural resources, are to be distributed
equitably among our ever-growing population. To
insure such equitable distribution, the 1973 and
1987 Constitutions have barred private corporations
from acquiring any kind of alienable land of the
public domain. Those who attempt to dispose of
inalienable natural resources of the State, or seek to
circumvent the constitutional ban on alienation of
lands of the public domain to private corporations,
do so at their own risk.
We can now summarize our conclusions as
follows:
1.The 157.84 hectares of reclaimed lands
comprising the Freedom Islands, now
covered by certificates of title in the
name of PEA, are alienable lands of
the public domain. PEA may lease
these lands to private corporations but
may not sell or transfer ownership of
these lands to private corporations.
PEA may only sell these lands to
Philippine citizens, subject to the
ownership limitations in the 1987
Constitution and existing laws.
2. The 592.15 hectares of submerged
areas of Manila Bay remain inalienable
natural resources of the public domain
until classified as alienable or
disposable lands open to disposition
and declared no longer needed for
public service. The government can
make
such
classification
and
declaration only after PEA has
reclaimed these submerged areas.
Only then can these lands qualify as
agricultural lands of the public domain,
which are the only natural resources
the government can alienate. In their

present state, the 592.15 hectares of

submerged areas are inalienable and
outside the commerce of man.
3. Since the Amended JVA seeks to
transfer
to
AMARI,
a
private
corporation, ownership of 77.34
hectaresiv[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 hectaresv[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 1409vi[112] of the Civil
Code, contracts whose object or purpose is
contrary to law, or whose object is outside the
commerce of men, are inexistent and void from
the beginning. The Court must perform its duty to
defend and uphold the Constitution, and therefore
declares the Amended JVA null and void ab initio.

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iii
iv
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vi