Chavez v.

Public Estates Authority

Justice Carpio
Regalian Doctrine

“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..”

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) 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.
President Ferdinand E. Marcos then 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.” 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”
under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP).

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. On April 9, 1988, the Register of Deeds issued TCT 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, Parañaque City. Thereafter, PEA entered into a Joint
Venture Agreement with AMARI, a private corporation, to develop the Freedom Islands.

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.

On March 30, 1999, PEA and AMARI signed the Amended Joint Venture Agreement. On May 28,
1999, the Office of the President under the administration of then President Joseph E. Estrada approved
the Amended JVA.

Several motions for reconsideration of the Supreme Court’s July 9, 2002 decision which declared
the amended JVA null and void ab initio were filed. The conclusions of said decision were summarized by
the Court as follows:

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.

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.

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.

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.

Issue:

Whether or not the 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.

Ruling:

NO. 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.

PD No. 1085, issued on February 4, 1977, authorized the issuance of special land patents for lands
reclaimed by PEA from the foreshore or submerged areas of Manila Bay. On January 19, 1988 then
President Corazon C. Aquino issued Special Patent No. 3517 in the name of PEA for the 157.84 hectares
comprising the partially reclaimed Freedom Islands. Subsequently, on April 9, 1999 the Register of Deeds
of the Municipality of Paranaque issued TCT Nos. 7309, 7311 and 7312 in the name of PEA pursuant to
Section 103 of PD No. 1529 authorizing the issuance of certificates of title corresponding to land patents.
To this day, these certificates of title are still in the name of PEA.

PD No. 1085, coupled with President Aquinos actual issuance of a special patent covering the
Freedom Islands, is equivalent to an official proclamation classifying the Freedom Islands as alienable or
disposable lands of the public domain. PD No. 1085 and President Aquinos issuance of a land patent also
constitute a declaration that the Freedom Islands are no longer needed for public service. The Freedom
Islands are thus alienable or disposable lands of the public domain, open to disposition or concession to
qualified parties.

At the time then President Aquino issued Special Patent No. 3517, PEA had already reclaimed the
Freedom Islands although subsequently there were partial erosions on some areas. The government had
also completed the necessary surveys on these islands. Thus, the Freedom Islands were no longer part of
Manila Bay but part of the land mass. Section 3, Article XII of the 1987 Constitution classifies lands of the
public domain into agricultural, forest or timber, mineral lands, and national parks. Being neither timber,
mineral, nor national park lands, the reclaimed Freedom Islands necessarily fall under the classification of
agricultural lands of the public domain. Under the 1987 Constitution, agricultural lands of the public
domain are the only natural 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.

The Amended JVA covers not only the Freedom Islands, but also an additional 592.15 hectares
which are still submerged and forming part of Manila Bay. There is no legislative or Presidential act
classifying these submerged areas as alienable or disposable lands of the public domain open to
disposition. These submerged areas are not covered by any patent or certificate of title. There can be no
dispute that these submerged areas form part of the public domain, and in their present state are
inalienable and outside the commerce of man. Until reclaimed from the sea, these submerged areas are,
under the Constitution, waters x x x owned by the State, forming part of the public domain and
consequently inalienable. Only when actually reclaimed from the sea can these submerged areas be
classified as public agricultural lands, which under the Constitution are the only natural resources that the
State may alienate. Once reclaimed and transformed into public agricultural lands, the government may
then officially classify these lands as alienable or disposable lands open to disposition. Thereafter, the
government may declare these lands no longer needed for public service. Only then can these reclaimed
lands be considered alienable or disposable lands of the public domain and within the commerce of man.

The classification of PEAs reclaimed foreshore and submerged lands into alienable or disposable
lands open to disposition is necessary because PEA is tasked under its charter to undertake public services
that require the use of lands of the public domain.

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. EO No. 525 recognized PEA as the government
entity to undertake the reclamation of lands and ensure their maximum utilization in promoting public
welfare and interests. Since large portions of these reclaimed lands would obviously be needed for public
service, there must be a formal declaration segregating reclaimed lands no longer needed for public
service from those still needed for public service.

Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA shall belong to or be owned
by the PEA, could not automatically operate to classify inalienable lands into alienable or disposable lands
of the public domain. Otherwise, reclaimed foreshore and submerged lands of the public domain would
automatically become alienable once reclaimed by PEA, whether or not classified as alienable or
disposable.

The Revised Administrative Code of 1987, a later law than either PD No. 1084 or EO No. 525, vests
in the Department of Environment and Natural Resources certain powers. 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.