Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. 92013 July 25, 1990

SALVADOR H. LAUREL, petitioner, vs.RAMON GARCIA, as head of the Asset Privatization Trust, RAUL MANGLAPUS, as Secretary of Foreign Affairs, and CATALINO MACARAIG, as Executive Secretary, respondents.

G.R. No. 92047 July 25, 1990

DIONISIO S. OJEDA, petitioner, vs.EXECUTIVE SECRETARY MACARAIG, JR., ASSETS PRIVATIZATION TRUST CHAIRMAN RAMON T. GARCIA, AMBASSADOR RAMON DEL ROSARIO, et al., as members of the PRINCIPAL AND BIDDING COMMITTEES ON THE UTILIZATION/DISPOSITION PETITION OF PHILIPPINE GOVERNMENT PROPERTIES IN JAPAN, respondents.

Arturo M. Tolentino for petitioner in 92013.

 

GUTIERREZ, JR., J.:

These are two petitions for prohibition seeking to enjoin respondents, their representatives and agents from proceeding with the bidding for the sale of the 3,179 square meters of land at 306 Roppongi, 5-Chome Minato-ku Tokyo, Japan scheduled on February 21, 1990. We granted the prayer for a temporary restraining order effective February 20, 1990. One of the petitioners (in G.R. No. 92047) likewise prayes for a writ of mandamus to compel the respondents to fully disclose to the public the basis of their decision to push through with the sale of the Roppongi property inspire of strong public opposition and to explain the proceedings which effectively prevent the participation of Filipino citizens and entities in the bidding process.

The oral arguments in G.R. No. 92013, Laurel v. Garcia, et al. were heard by the Court on March 13, 1990. After G.R. No. 92047, Ojeda v. Secretary Macaraig, et al. was filed, the respondents were required to file a comment by the Court's resolution dated February 22, 1990. The two petitions were consolidated on March 27, 1990 when the memoranda of the parties in the Laurel case were deliberated upon.

The Court could not act on these cases immediately because the respondents filed a motion for an extension of thirty (30) days to file comment in G.R. No. 92047, followed by a second motion for an extension of another thirty (30) days which we granted on May 8, 1990, a third motion for extension of time granted on May 24, 1990 and a fourth motion for extension of time which we granted on June 5, 1990 but calling the attention of the respondents to the length of time the petitions have been pending. After the comment was filed, the petitioner in

G.R. No. 92047 asked for thirty (30) days to file a reply. We noted his motion and resolved to decide the two (2) cases.

I

The subject property in this case is one of the four (4) properties in Japan acquired by the Philippine government under the Reparations Agreement entered into with Japan on May 9, 1956, the other lots being:

(1) The Nampeidai Property at 11-24 Nampeidai-machi, Shibuya-ku, Tokyo which has an area of approximately 2,489.96 square meters, and is at present the site of the Philippine Embassy Chancery;

(2) The Kobe Commercial Property at 63 Naniwa-cho, Kobe, with an area of around 764.72 square meters and categorized as a commercial lot now being used as a warehouse and parking lot for the consulate staff; and

(3) The Kobe Residential Property at 1-980-2 Obanoyama-cho, Shinohara, Nada-ku, Kobe, a residential lot which is now vacant.

The properties and the capital goods and services procured from the Japanese government for national development projects are part of the indemnification to the Filipino people for their losses in life and property and their suffering during World War II.

The Reparations Agreement provides that reparations valued at $550 million would be payable in twenty (20) years in accordance with annual schedules of procurements to be fixed by the Philippine and Japanese governments (Article 2, Reparations Agreement). Rep. Act No. 1789, the Reparations Law, prescribes the national policy on procurement and utilization of reparations and development loans. The procurements are divided into those for use by the government sector and those for private parties  in projects as the then National Economic Council shall determine. Those intended for the private sector shall be made available by sale to Filipino citizens or to one hundred (100%) percent Filipino-owned entities in national development projects.

The Roppongi property was acquired from the Japanese government under the Second Year Schedule and listed under the heading "Government Sector", through Reparations Contract No. 300 dated June 27, 1958. The Roppongi property consists of the land and building "for the Chancery of the Philippine Embassy" (Annex M-D to Memorandum for Petitioner, p. 503). As intended, it became the site of the Philippine Embassy until the latter was transferred to Nampeidai on July 22, 1976 when the Roppongi building needed major repairs. Due to the failure of our government to provide necessary funds, the Roppongi property has remained undeveloped since that time.

A proposal was presented to President Corazon C. Aquino by former Philippine Ambassador to Japan, Carlos J. Valdez, to make the property the subject of a lease agreement with a Japanese firm - Kajima Corporation — which shall construct two (2) buildings in Roppongi and one (1) building in Nampeidai and renovate the present Philippine Chancery in Nampeidai. The consideration of the construction would be the lease to the foreign corporation of one (1) of the buildings to be constructed in Roppongi and the two (2) buildings in Nampeidai. The other building in Roppongi shall then be used as the Philippine Embassy Chancery. At the end of the lease period, all the three leased buildings shall be occupied and used by the Philippine government. No change of ownership or title shall

occur. (See Annex "B" to Reply to Comment) The Philippine government retains the title all throughout the lease period and thereafter. However, the government has not acted favorably on this proposal which is pending approval and ratification between the parties. Instead, on August 11, 1986, President Aquino created a committee to study the disposition/utilization of Philippine government properties in Tokyo and Kobe, Japan through Administrative Order No. 3, followed by Administrative Orders Numbered 3-A, B, C and D.

On July 25, 1987, the President issued Executive Order No. 296 entitling non-Filipino citizens or entities to avail of separations' capital goods and services in the event of sale, lease or disposition. The four properties in Japan including the Roppongi were specifically mentioned in the first "Whereas" clause.

Amidst opposition by various sectors, the Executive branch of the government has been pushing, with great vigor, its decision to sell the reparations properties starting with the Roppongi lot. The property has twice been set for bidding at a minimum floor price of $225 million. The first bidding was a failure since only one bidder qualified. The second one, after postponements, has not yet materialized. The last scheduled bidding on February 21, 1990 was restrained by his Court. Later, the rules on bidding were changed such that the $225 million floor price became merely a suggested floor price.

The Court finds that each of the herein petitions raises distinct issues. The petitioner in G.R. No. 92013 objects to the alienation of the Roppongi property to anyone while the petitioner in G.R. No. 92047 adds as a principal objection the alleged unjustified bias of the Philippine government in favor of selling the property to non-Filipino citizens and entities. These petitions have been consolidated and are resolved at the same time for the objective is the same - to stop the sale of the Roppongi property.

The petitioner in G.R. No. 92013 raises the following issues:

(1) Can the Roppongi property and others of its kind be alienated by the Philippine Government?; and

(2) Does the Chief Executive, her officers and agents, have the authority and jurisdiction, to sell the Roppongi property?

Petitioner Dionisio Ojeda in G.R. No. 92047, apart from questioning the authority of the government to alienate the Roppongi property assails the constitutionality of Executive Order No. 296 in making the property available for sale to non-Filipino citizens and entities. He also questions the bidding procedures of the Committee on the Utilization or Disposition of Philippine Government Properties in Japan for being discriminatory against Filipino citizens and Filipino-owned entities by denying them the right to be informed about the bidding requirements.

II

In G.R. No. 92013, petitioner Laurel asserts that the Roppongi property and the related lots were acquired as part of the reparations from the Japanese government for diplomatic and consular use by the Philippine government. Vice-President Laurel states that the Roppongi property is classified as one of public dominion, and not of private ownership under Article 420 of the Civil Code (See infra).

The petitioner submits that the Roppongi property comes under "property intended for public service" in paragraph 2 of the above provision. He states that being one of public dominion, no ownership by any one can attach to it, not even by the State. The Roppongi and related properties were acquired for "sites for chancery, diplomatic, and consular quarters, buildings and other improvements" (Second Year Reparations Schedule). The petitioner states that they continue to be intended for a necessary service. They are held by the State in anticipation of an opportune use. (Citing 3 Manresa 65-66). Hence, it cannot be appropriated, is outside the commerce of man, or to put it in more simple terms, it cannot be alienated nor be the subject matter of contracts (Citing Municipality of Cavite v. Rojas, 30 Phil. 20 [1915]). Noting the non-use of the Roppongi property at the moment, the petitioner avers that the same remains property of public dominion so long as the government has not used it for other purposes nor adopted any measure constituting a removal of its original purpose or use.

The respondents, for their part, refute the petitioner's contention by saying that the subject property is not governed by our Civil Code but by the laws of Japan where the property is located. They rely upon the rule of lex situs which is used in determining the applicable law regarding the acquisition, transfer and devolution of the title to a property. They also invoke Opinion No. 21, Series of 1988, dated January 27, 1988 of the Secretary of Justice which used the lex situs  in explaining the inapplicability of Philippine law regarding a property situated in Japan.

The respondents add that even assuming for the sake of argument that the Civil Code is applicable, the Roppongi property has ceased to become property of public dominion. It has become patrimonial property because it has not been used for public service or for diplomatic purposes for over thirteen (13) years now (Citing Article 422, Civil Code) and because the intention by the Executive Department and the Congress to convert it to private use has been manifested by overt acts, such as, among others: (1) the transfer of the Philippine Embassy to Nampeidai (2) the issuance of administrative orders for the possibility of alienating the four government properties in Japan; (3) the issuance of Executive Order No. 296; (4) the enactment by the Congress of Rep. Act No. 6657 [the Comprehensive Agrarian Reform Law] on June 10, 1988 which contains a provision stating that funds may be taken from the sale of Philippine properties in foreign countries; (5) the holding of the public bidding of the Roppongi property but which failed; (6) the deferment by the Senate in Resolution No. 55 of the bidding to a future date; thus an acknowledgment by the Senate of the government's intention to remove the Roppongi property from the public service purpose; and (7) the resolution of this Court dismissing the petition in Ojeda v. Bidding Committee, et al., G.R. No. 87478 which sought to enjoin the second bidding of the Roppongi property scheduled on March 30, 1989.

III

In G.R. No. 94047, petitioner Ojeda once more asks this Court to rule on the constitutionality of Executive Order No. 296. He had earlier filed a petition in G.R. No. 87478 which the Court dismissed on August 1, 1989. He now avers that the executive order contravenes the constitutional mandate to conserve and develop the national patrimony stated in the Preamble of the 1987 Constitution. It also allegedly violates:

(1) The reservation of the ownership and acquisition of alienable lands of the public domain to Filipino citizens. (Sections 2 and 3, Article XII, Constitution; Sections 22 and 23 of Commonwealth Act 141). i•t•c-aüsl

(2) The preference for Filipino citizens in the grant of rights, privileges and concessions covering the national economy and patrimony (Section 10, Article VI, Constitution);

(3) The protection given to Filipino enterprises against unfair competition and trade practices;

(4) The guarantee of the right of the people to information on all matters of public concern (Section 7, Article III, Constitution);

(5) The prohibition against the sale to non-Filipino citizens or entities not wholly owned by Filipino citizens of capital goods received by the Philippines under the Reparations Act (Sections 2 and 12 of Rep. Act No. 1789); and

(6) The declaration of the state policy of full public disclosure of all transactions involving public interest (Section 28, Article III, Constitution).

Petitioner Ojeda warns that the use of public funds in the execution of an unconstitutional executive order is a misapplication of public funds He states that since the details of the bidding for the Roppongi property were never publicly disclosed until February 15, 1990 (or a few days before the scheduled bidding), the bidding guidelines are available only in Tokyo, and the accomplishment of requirements and the selection of qualified bidders should be done in Tokyo, interested Filipino citizens or entities owned by them did not have the chance to comply with Purchase Offer Requirements on the Roppongi. Worse, the Roppongi shall be sold for a minimum price of $225 million from which price capital gains tax under Japanese law of about 50 to 70% of the floor price would still be deducted.

IV

The petitioners and respondents in both cases do not dispute the fact that the Roppongi site and the three related properties were through reparations agreements, that these were assigned to the government sector and that the Roppongi property itself was specifically designated under the Reparations Agreement to house the Philippine Embassy.

The nature of the Roppongi lot as property for public service is expressly spelled out. It is dictated by the terms of the Reparations Agreement and the corresponding contract of procurement which bind both the Philippine government and the Japanese government.

There can be no doubt that it is of public dominion unless it is convincingly shown that the property has become patrimonial. This, the respondents have failed to do.

As property of public dominion, the Roppongi lot is outside the commerce of man. It cannot be alienated. Its ownership is a special collective ownership for general use and enjoyment, an application to the satisfaction of collective needs, and resides in the social group. The purpose is not to serve the State as a juridical person, but the citizens; it is intended for the common and public welfare and cannot be the object of appropration. (Taken from 3 Manresa, 66-69; cited in Tolentino, Commentaries on the Civil Code of the Philippines, 1963 Edition, Vol. II, p. 26).

The applicable provisions of the Civil Code are:

ART. 419. Property is either of public dominion or of private ownership.

ART. 420. The following things are property of public dominion

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks shores roadsteads, and others of similar character;

(2) Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth.

ART. 421. All other property of the State, which is not of the character stated in the preceding article, is patrimonial property.

The Roppongi property is correctly classified under paragraph 2 of Article 420 of the Civil Code as property belonging to the State and intended for some public service.

Has the intention of the government regarding the use of the property been changed because the lot has been Idle for some years? Has it become patrimonial?

The fact that the Roppongi site has not been used for a long time for actual Embassy service does not automatically convert it to patrimonial property. Any such conversion happens only if the property is withdrawn from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA 481 [1975]). A property continues to be part of the public domain, not available for private appropriation or ownership until there is a formal declaration on the part of the government to withdraw it from being such (Ignacio v. Director of Lands, 108 Phil. 335 [1960]).

The respondents enumerate various pronouncements by concerned public officials insinuating a change of intention. We emphasize, however, that an abandonment of the intention to use the Roppongi property for public service and to make it patrimonial property under Article 422 of the Civil Code must be definite Abandonment cannot be inferred from the non-use alone specially if the non-use was attributable not to the government's own deliberate and indubitable will but to a lack of financial support to repair and improve the property (See Heirs of Felino Santiago v. Lazaro, 166 SCRA 368 [1988]). Abandonment must be a certain and positive act based on correct legal premises.

A mere transfer of the Philippine Embassy to Nampeidai in 1976 is not relinquishment of the Roppongi property's original purpose. Even the failure by the government to repair the building in Roppongi is not abandonment since as earlier stated, there simply was a shortage of government funds. The recent Administrative Orders authorizing a study of the status and conditions of government properties in Japan were merely directives for investigation but did not in any way signify a clear intention to dispose of the properties.

Executive Order No. 296, though its title declares an "authority to sell", does not have a provision in its text expressly authorizing the sale of the four properties procured from Japan for the government sector. The executive order does not declare that the properties lost their public character. It merely intends to make the properties available to foreigners and not to Filipinos alone in case of a sale, lease or other disposition. It merely eliminates the restriction under Rep. Act No. 1789 that reparations goods may be sold only to Filipino citizens and one hundred (100%) percent Filipino-owned entities. The text of Executive Order No. 296 provides:

Section 1. The provisions of Republic Act No. 1789, as amended, and of other laws to the contrary notwithstanding, the above-mentioned properties can be made available for sale, lease or any other manner of disposition to non-Filipino citizens or to entities owned by non-Filipino citizens.

Executive Order No. 296 is based on the wrong premise or assumption that the Roppongi and the three other properties were earlier converted into alienable real properties. As earlier stated, Rep. Act No. 1789 differentiates the procurements for the government sector and the private sector (Sections 2 and 12, Rep. Act No. 1789). Only the private sector properties can be sold to end-users who must be Filipinos or entities owned by Filipinos. It is this nationality provision which was amended by Executive Order No. 296.

Section 63 (c) of Rep. Act No. 6657 (the CARP Law) which provides as one of the sources of funds for its implementation, the proceeds of the disposition of the properties of the Government in foreign countries, did not withdraw the Roppongi property from being classified as one of public dominion when it mentions Philippine properties abroad. Section 63 (c) refers to properties which are alienable and not to those reserved for public use or service. Rep Act No. 6657, therefore, does not authorize the Executive Department to sell the Roppongi property. It merely enumerates possible sources of future funding to augment (as and when needed) the Agrarian Reform Fund created under Executive Order No. 299. Obviously any property outside of the commerce of man cannot be tapped as a source of funds.

The respondents try to get around the public dominion character of the Roppongi property by insisting that Japanese law and not our Civil Code should apply.

It is exceedingly strange why our top government officials, of all people, should be the ones to insist that in the sale of extremely valuable government property, Japanese law and not Philippine law should prevail. The Japanese law - its coverage and effects, when enacted, and exceptions to its provision — is not presented to the Court It is simply asserted that the lex loci rei sitae or Japanese law should apply without stating what that law provides. It is a ed on faith that Japanese law would allow the sale.

We see no reason why a conflict of law rule should apply when no conflict of law situation exists. A conflict of law situation arises only when: (1) There is a dispute over the title or ownership of an immovable, such that the capacity to take and transfer immovables, the formalities of conveyance, the essential validity and effect of the transfer, or the interpretation and effect of a conveyance, are to be determined (See Salonga, Private International Law, 1981 ed., pp. 377-383); and (2) A foreign law on land ownership and its conveyance is asserted to conflict with a domestic law on the same matters. Hence, the need to determine which law should apply.

In the instant case, none of the above elements exists.

The issues are not concerned with validity of ownership or title. There is no question that the property belongs to the Philippines. The issue is the authority of the respondent officials to validly dispose of property belonging to the State. And the validity of the procedures adopted to effect its sale. This is governed by Philippine Law. The rule of lex situs does not apply.

The assertion that the opinion of the Secretary of Justice sheds light on the relevance of the lex situsrule is misplaced. The opinion does not tackle the alienability of the real properties procured through reparations nor the existence in what body of the authority to

sell them. In discussing who are capableof acquiring the lots, the Secretary merely explains that it is the foreign law which should determinewho can acquire the properties so that the constitutional limitation on acquisition of lands of the public domain to Filipino citizens and entities wholly owned by Filipinos is inapplicable. We see no point in belaboring whether or not this opinion is correct. Why should we discuss who can acquire the Roppongi lot when there is no showing that it can be sold?

The subsequent approval on October 4, 1988 by President Aquino of the recommendation by the investigating committee to sell the Roppongi property was premature or, at the very least, conditioned on a valid change in the public character of the Roppongi property. Moreover, the approval does not have the force and effect of law since the President already lost her legislative powers. The Congress had already convened for more than a year.

Assuming for the sake of argument, however, that the Roppongi property is no longer of public dominion, there is another obstacle to its sale by the respondents.

There is no law authorizing its conveyance.

Section 79 (f) of the Revised Administrative Code of 1917 provides

Section 79 (f ) Conveyances and contracts to which the Government is a party. —  In cases in which the Government of the Republic of the Philippines is a party to any deed or other instrument conveying the title to real estate or to any other property the value of which is in excess of one hundred thousand pesos, the respective Department Secretary shall prepare the necessary papers which, together with the proper recommendations, shall be submitted to the Congress of the Philippines for approval by the same. Such deed, instrument, or contract shall be executed and signed by the President of the Philippines on behalf of the Government of the Philippines unless the Government of the Philippines unless the authority therefor be expressly vested by law in another officer. (Emphasis supplied)

The requirement has been retained in Section 48, Book I of the Administrative Code of 1987 (Executive Order No. 292).

SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the Government is authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following:

(1) For property belonging to and titled in the name of the Republic of the Philippines, by the President, unless the authority therefor is expressly vested by law in another officer.

(2) For property belonging to the Republic of the Philippines but titled in the name of any political subdivision or of any corporate agency or instrumentality, by the executive head of the agency or instrumentality. (Emphasis supplied)

It is not for the President to convey valuable real property of the government on his or her own sole will. Any such conveyance must be authorized and approved by a law enacted by the Congress. It requires executive and legislative concurrence.

Resolution No. 55 of the Senate dated June 8, 1989, asking for the deferment of the sale of the Roppongi property does not withdraw the property from public domain much less authorize its sale. It is a mere resolution; it is not a formal declaration abandoning the public character of the Roppongi property. In fact, the Senate Committee on Foreign Relations is conducting hearings on Senate Resolution No. 734 which raises serious policy considerations and calls for a fact-finding investigation of the circumstances behind the decision to sell the Philippine government properties in Japan.

The resolution of this Court in Ojeda v. Bidding Committee, et al., supra, did not pass upon the constitutionality of Executive Order No. 296. Contrary to respondents' assertion, we did not uphold the authority of the President to sell the Roppongi property. The Court stated that the constitutionality of the executive order was not the real issue and that resolving the constitutional question was "neither necessary nor finally determinative of the case." The Court noted that "[W]hat petitioner ultimately questions is the use of the proceeds of the disposition of the Roppongi property." In emphasizing that "the decision of the Executive to dispose of the Roppongi property to finance the CARP ... cannot be questioned" in view of Section 63 (c) of Rep. Act No. 6657, the Court did not acknowledge the fact that the property became alienable nor did it indicate that the President was authorized to dispose of the Roppongi property. The resolution should be read to mean that in case the Roppongi property is re-classified to be patrimonial and alienable by authority of law, the proceeds of a sale may be used for national economic development projects including the CARP.

Moreover, the sale in 1989 did not materialize. The petitions before us question the proposed 1990 sale of the Roppongi property. We are resolving the issues raised in these petitions, not the issues raised in 1989.

Having declared a need for a law or formal declaration to withdraw the Roppongi property from public domain to make it alienable and a need for legislative authority to allow the sale of the property, we see no compelling reason to tackle the constitutional issues raised by petitioner Ojeda.

The Court does not ordinarily pass upon constitutional questions unless these questions are properly raised in appropriate cases and their resolution is necessary for the determination of the case (People v. Vera, 65 Phil. 56 [1937]). The Court will not pass upon a constitutional question although properly presented by the record if the case can be disposed of on some other ground such as the application of a statute or general law (Siler v. Louisville and Nashville R. Co., 213 U.S. 175, [1909], Railroad Commission v. Pullman Co., 312 U.S. 496 [1941]).

The petitioner in G.R. No. 92013 states why the Roppongi property should not be sold:

The Roppongi property is not just like any piece of property. It was given to the Filipino people in reparation for the lives and blood of Filipinos who died and suffered during the Japanese military occupation, for the suffering of widows and orphans who lost their loved ones and kindred, for the homes and other properties lost by countless Filipinos during the war. The Tokyo properties are a monument to the bravery and sacrifice of the Filipino people in the face of an invader; like the monuments of Rizal, Quezon, and other Filipino heroes, we do not expect economic or financial benefits from them. But who would think of selling these monuments? Filipino honor and national dignity dictate that we keep our properties in Japan as memorials to the countless Filipinos who died and suffered. Even if we should become paupers we should not think of selling

them. For it would be as if we sold the lives and blood and tears of our countrymen. (Rollo- G.R. No. 92013, p.147)

The petitioner in G.R. No. 92047 also states:

Roppongi is no ordinary property. It is one ceded by the Japanese government in atonement for its past belligerence for the valiant sacrifice of life and limb and for deaths, physical dislocation and economic devastation the whole Filipino people endured in World War II.

It is for what it stands for, and for what it could never bring back to life, that its significance today remains undimmed, inspire of the lapse of 45 years since the war ended, inspire of the passage of 32 years since the property passed on to the Philippine government.

Roppongi is a reminder that cannot — should not — be dissipated ... (Rollo-92047, p. 9)

It is indeed true that the Roppongi property is valuable not so much because of the inflated prices fetched by real property in Tokyo but more so because of its symbolic value to all Filipinos — veterans and civilians alike. Whether or not the Roppongi and related properties will eventually be sold is a policy determination where both the President and Congress must concur. Considering the properties' importance and value, the laws on conversion and disposition of property of public dominion must be faithfully followed.

WHEREFORE, IN VIEW OF THE FOREGOING, the petitions are GRANTED. A writ of prohibition is issued enjoining the respondents from proceeding with the sale of the Roppongi property in Tokyo, Japan. The February 20, 1990 Temporary Restraining Order is made PERMANENT.

SO ORDERED.

Melencio-Herrera, Paras, Bidin, Griño-Aquino and Regalado, JJ., concur.

 

 

Separate Opinions

 

CRUZ, J., concurring:

I concur completely with the excellent ponencia of Mr. Justice Gutierrez and will add the following observations only for emphasis.

It is clear that the respondents have failed to show the President's legal authority to sell the Roppongi property. When asked to do so at the hearing on these petitions, the Solicitor General was at best ambiguous, although I must add in fairness that this was not his fault.

The fact is that there is -no such authority. Legal expertise alone cannot conjure that statutory permission out of thin air.

Exec. Order No. 296, which reads like so much legislative, double talk, does not contain such authority. Neither does Rep. Act No. 6657, which simply allows the proceeds of the sale of our properties abroad to be used for the comprehensive agrarian reform program. Senate Res. No. 55 was a mere request for the deferment of the scheduled sale of tile Roppongi property, possibly to stop the transaction altogether; and ill any case it is not a law. The sale of the said property may be authorized only by Congress through a duly enacted statute, and there is no such law.

Once again, we have affirmed the principle that ours is a government of laws and not of men, where every public official, from the lowest to the highest, can act only by virtue of a valid authorization. I am happy to note that in the several cases where this Court has ruled against her, the President of the Philippines has submitted to this principle with becoming grace.

 

PADILLA, J., concurring:

I concur in the decision penned by Mr. Justice Gutierrez, Jr., I only wish to make a few observations which could help in further clarifying the issues.

Under our tripartite system of government ordained by the Constitution, it is Congress that lays down or determines policies. The President executes such policies. The policies determined by Congress are embodied in legislative enactments that have to be approved by the President to become law. The President, of course, recommends to Congress the approval of policies but, in the final analysis, it is Congress that is the policy - determining branch of government.

The judiciary interprets the laws and, in appropriate cases, determines whether the laws enacted by Congress and approved by the President, and presidential acts implementing such laws, are in accordance with the Constitution.

The Roppongi property was acquired by the Philippine government pursuant to the reparations agreement between the Philippine and Japanese governments. Under such agreement, this property was acquired by the Philippine government for a specific purpose, namely, to serve as the site of the Philippine Embassy in Tokyo, Japan. Consequently, Roppongi is a property of public dominion and intended for public service, squarely falling within that class of property under Art. 420 of the Civil Code, which provides:

Art. 420. The following things are property of public dominion :

(1) ...

(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. (339a)

Public dominion property intended for public service cannot be alienated unless the property is first transformed into private property of the state otherwise known as patrimonial property

of the state. 1The transformation of public dominion property to state patrimonial property involves, to my mind, a policy decision. It is a policy decision because the treatment of the property varies according to its classification. Consequently, it is Congress which can decide and declare the conversion of Roppongi from a public dominion property to a state patrimonial property. Congress has made no such decision or declaration.

Moreover, the sale of public property (once converted from public dominion to state patrimonial property) must be approved by Congress, for this again is a matter of policy (i.e. to keep or dispose of the property). Sec. 48, Book 1 of the Administrative Code of 1987 provides:

SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the Government is authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following:

(1) For property belonging to and titled in the name of the Republic of the Philippines, by the President, unless the authority therefor is expressly vested by law in another officer.

(2) For property belonging to the Republic of the Philippines but titled in the name of any political subdivision or of any corporate agency or instrumentality, by the executive head of the agency or instrumentality. (Emphasis supplied)

But the record is bare of any congressional decision or approval to sell Roppongi. The record is likewise bare of any congressional authority extended to the President to sell Roppongi thru public bidding or otherwise.

It is therefore, clear that the President cannot sell or order the sale of Roppongi thru public bidding or otherwise without a prior congressional approval, first, converting Roppongi from a public dominion property to a state patrimonial property, and, second, authorizing the President to sell the same.

ACCORDINGLY, my vote is to GRANT the petition and to make PERMANENT the temporary restraining order earlier issued by this Court.

 

SARMIENTO, J., concurring:

The central question, as I see it, is whether or not the so-called "Roppongi property' has lost its nature as property of public dominion, and hence, has become patrimonial property of the State. I understand that the parties are agreed that it was property intended for "public service" within the contemplation of paragraph (2), of Article 430, of the Civil Code, and accordingly, land of State dominion, and beyond human commerce. The lone issue is, in the light of supervening developments, that is non-user thereof by the National Government (for diplomatic purposes) for the last thirteen years; the issuance of Executive Order No. 296 making it available for sale to any interested buyer; the promulgation of Republic Act No. 6657, the Comprehensive Agrarian Reform Law, making available for the program's financing, State assets sold; the approval by the President of the recommendation of the investigating committee formed to study the property's utilization; and the issuance of Resolution No. 55

of the Philippine Senate requesting for the deferment of its disposition it, "Roppongi", is still property of the public dominion, and if it is not, how it lost that character.

When land of the public dominion ceases to be one, or when the change takes place, is a question our courts have debated early. In a 1906 decision, 1 it was held that property of the public dominion, a public plaza in this instance, becomes patrimonial upon use thereof for purposes other than a plaza. In a later case, 2 this ruling was reiterated. Likewise, it has been held that land, originally private property, has become of public dominion upon its donation to the town and its conversion and use as a public plaza. 3 It is notable that under these three cases, the character of the property, and any change occurring therein, depends on the actual use to which it is dedicated. 4

Much later, however, the Court held that "until a formal declaration on the part of the Government, through the executive department or the Legislative, to the effect that the land . . . is no longer needed for [public] service- for public use or for special industries, [it] continue[s] to be part of the public [dominion], not available for private expropriation or ownership." 5 So also, it was ruled that a political subdivision (the City of Cebu in this case) alone may declare (under its charter) a city road abandoned and thereafter, to dispose of it. 6

In holding that there is "a need for a law or formal declaration to withdraw the Roppongi property from public domain to make it alienable and a land for legislative authority to allow the sale of the property"7 the majority lays stress to the fact that: (1) An affirmative act — executive or legislative — is necessary to reclassify property of the public dominion, and (2) a legislative decree is required to make it alienable. It also clears the uncertainties brought about by earlier interpretations that the nature of property-whether public or patrimonial is predicated on the manner it is actually used, or not used, and in the same breath, repudiates the Government's position that the continuous non-use of "Roppongi", among other arguments, for "diplomatic purposes", has turned it into State patrimonial property.

I feel that this view corresponds to existing pronouncements of this Court, among other things, that: (1) Property is presumed to be State property in the absence of any showing to the contrary; 8 (2) With respect to forest lands, the same continue to be lands of the public dominion unless and until reclassified by the Executive Branch of the Government; 9 and (3) All natural resources, under the Constitution, and subject to exceptional cases, belong to the State. 10

I am elated that the Court has banished previous uncertainties.

 

FELICIANO, J., dissenting

With regret, I find myself unable to share the conclusions reached by Mr. Justice Hugo E. Gutierrez, Jr.

For purposes of this separate opinion, I assume that the piece of land located in 306 Roppongi, 5-Chome, Minato-ku Tokyo, Japan (hereinafter referred to as the "Roppongi property") may be characterized as property of public dominion, within the meaning of Article 420 (2) of the Civil Code:

[Property] which belong[s] to the State, without being for public use, and are intended for some public service -.

It might not be amiss however, to note that the appropriateness of trying to bring within the confines of the simple threefold classification found in Article 420 of the Civil Code ("property for public use property "intended for some public service" and property intended "for the development of the national wealth") all property owned by the Republic of the Philippines whether found within the territorial boundaries of the Republic or located within the territory of another sovereign State, is notself-evident. The first item of the classification property intended for public use — can scarcely be properly applied to property belonging to the Republic but found within the territory of another State. The third item of the classification property intended for the development of the national wealth is illustrated, in Article 339 of the Spanish Civil Code of 1889, by mines or mineral properties. Again, mineral lands owned by a sovereign State are rarely, if ever, found within the territorial base of another sovereign State. The task of examining in detail the applicability of the classification set out in Article 420 of our Civil Code to property that the Philippines happens to own outside its own boundaries must, however, be left to academicians.

For present purposes, too, I agree that there is no question of conflict of laws that is, at the present time, before this Court. The issues before us relate essentially to authority to sell the Roppongi property so far as Philippine law is concerned.

The majority opinion raises two (2) issues: (a) whether or not the Roppongi property has been converted into patrimonial property or property of the private domain of the State; and (b) assuming an affirmative answer to (a), whether or not there is legal authority to dispose of the Roppongi property.

I

Addressing the first issue of conversion of property of public dominion intended for some public service, into property of the private domain of the Republic, it should be noted that the Civil Code does not address the question of who has authority to effect such conversion. Neither does the Civil Code set out or refer to any procedure for such conversion.

Our case law, however, contains some fairly explicit pronouncements on this point, as Justice Sarmiento has pointed out in his concurring opinion. In Ignacio v. Director of Lands (108 Phils. 335 [1960]), petitioner Ignacio argued that if the land in question formed part of the public domain, the trial court should have declared the same no longer necessary for public use or public purposes and which would, therefore, have become disposable and available for private ownership. Mr. Justice Montemayor, speaking for the Court, said:

Article 4 of the Law of Waters of 1866 provides that when a portion of the shore is no longer washed by the waters of the sea and is not necessary for purposes of public utility, or for the establishment of special industries, or for coast-guard service, the government shall declare it to be the property of the owners of the estates adjacent thereto and as an increment thereof. We believe that only the executive and possibly the legislative departments have the authority and the power to make the declaration that any land so gained by the sea, is not necessary for purposes of public utility, or for the establishment of special industries, or for coast-guard service. If no such declaration has been made by said departments, the lot in question forms part of the public domain. (Natividad v. Director of Lands, supra.)

The reason for this pronouncement, according to this Tribunal in the case of Vicente Joven y Monteverde v. Director of Lands, 93 Phil., 134 (cited in Velayo's Digest, Vol. 1, p. 52).

... is undoubtedly that the courts are neither primarily called upon, nor indeed in a position to determine whether any public land are to be used for the purposes specified in Article 4 of the Law of Waters. Consequently, until a formal declaration on the part of the Government, through the executive department or the Legislature, to the effect that the land in question is no longer needed for coast-guard service, for public use or for special industries, they continue to be part of the public domain not available for private appropriation or ownership. (108 Phil. at 338-339; emphasis supplied)

Thus, under Ignacio, either the Executive Department or the Legislative Department may convert property of the State of public dominion into patrimonial property of the State. No particular formula or procedure of conversion is specified either in statute law or in case law. Article 422 of the Civil Code simply states 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". I respectfully submit, therefore, that the only requirement which is legitimately imposable is that the intent to convert must be reasonably clear from a consideration of the acts or acts of the Executive Department or of the Legislative Department which are said to have effected such conversion.

The same legal situation exists in respect of conversion of property of public dominion belonging to municipal corporations, i.e., local governmental units, into patrimonial property of such entities. InCebu Oxygen Acetylene v. Bercilles (66 SCRA 481 [1975]), the City Council of Cebu by resolution declared a certain portion of an existing street as an abandoned road, "the same not being included in the city development plan". Subsequently, by another resolution, the City Council of Cebu authorized the acting City Mayor to sell the land through public bidding. Although there was no formal and explicit declaration of conversion of property for public use into patrimonial property, the Supreme Court said:

xxx xxx xxx

(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 of 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 registrable title over the lot in question. (66 SCRA at 484-; emphasis supplied)

Thus, again as pointed out by Sarmiento J., in his separate opinion, in the case of property owned by municipal corporations simple non-use or the actual dedication of public property to some use other than "public use" or some "public service", was sufficient legally to convert such property into patrimonial property (Municipality of Oas v. Roa, 7 Phil. 20 [1906]- Municipality of Hinunganan v. Director of Lands 24 Phil. 124 [1913]; Province of Zamboanga del Norte v. City of Zamboanga, 22 SCRA 1334 (1968).

I would also add that such was the case not only in respect of' property of municipal corporations but also in respect of property of the State itself. Manresa in commenting on Article 341 of the 1889 Spanish Civil Code which has been carried over verbatim into our Civil Code by Article 422 thereof, wrote:

La dificultad mayor en todo esto estriba, naturalmente, en fijar el momento en que los bienes de dominio publico dejan de serlo. Si la Administracion o la autoridad competente legislative realizan qun acto en virtud del cual cesa el destino o uso publico de los bienes de que se trata naturalmente la dificultad queda desde el primer momento resuelta. Hay un punto de partida cierto para iniciar las relaciones juridicas a que pudiera haber lugar Pero puede ocurrir que no haya taldeclaracion expresa, legislativa or administrativa, y, sin embargo, cesar de hecho el destino publico de los bienes; ahora bien, en este caso, y para los efectos juridicos que resultan de entrar la cosa en el comercio de los hombres,' se entedera que se ha verificado la conversion de los bienes patrimoniales?

El citado tratadista Ricci opina, respecto del antiguo Codigo italiano, por la afirmativa, y por nuestra parte creemos que tal debe ser la soluciion. El destino de las cosas no depende tanto de una declaracion expresa como del uso publico de las mismas, y cuanda el uso publico cese con respecto de determinados bienes, cesa tambien su situacion en el dominio publico. Si una fortaleza en ruina se abandona y no se repara, si un trozo de la via publica se abandona tambien por constituir otro nuevo an mejores condiciones....ambos bienes cesan de estar Codigo, y leyes especiales mas o memos administrativas. (3 Manresa, Comentarios al Codigo Civil Espanol, p. 128 [7a ed.; 1952) (Emphasis supplied)

The majority opinion says that none of the executive acts pointed to by the Government purported, expressly or definitely, to convert the Roppongi property into patrimonial property — of the Republic. Assuming that to be the case, it is respectfully submitted that cumulative effect of the executive acts here involved was to convert property originally intended for and devoted to public service into patrimonial property of the State, that is, property susceptible of disposition to and appropration by private persons. These executive acts, in their totality  if not each individual act, make crystal clear the intent of the Executive Department to effect such conversion. These executive acts include:

(a) Administrative Order No. 3 dated 11 August 1985, which created a Committee to study the disposition/utilization of the Government's property in Japan, The Committee was composed of officials of the Executive Department: the Executive Secretary; the Philippine Ambassador to Japan; and representatives of the Department of Foreign Affairs and the Asset Privatization Trust. On 19 September 1988, the Committee recommended to the President the sale of one of the lots (the lot specifically in Roppongi) through public bidding. On 4 October 1988, the President approved the recommendation of the Committee.

On 14 December 1988, the Philippine Government by diplomatic note informed the Japanese Ministry of Foreign Affairs of the Republic's intention to dispose of the property in Roppongi. The Japanese Government through its Ministry of Foreign Affairs replied that it interposed no objection to such disposition by the Republic. Subsequently, the President and the Committee informed the leaders of the House of Representatives and of the Senate of the Philippines of the proposed disposition of the Roppongi property.

(b) Executive Order No. 296, which was issued by the President on 25 July 1987. Assuming that the majority opinion is right in saying that Executive Order No. 296 is insufficient to authorize the sale of the Roppongi property, it is here submitted with respect that Executive Order No. 296 is more than sufficient to indicate an intention to convert the property previously devoted to public service into patrimonial property that is capable of being sold or otherwise disposed of

(c) Non-use of the Roppongi lot for fourteen (14) years for diplomatic or for any other public purposes. Assuming (but only arguendo) that non-use does not, by itself, automatically convert the property into patrimonial property. I respectfully urge that prolonged non-use, conjoined with the other factors here listed, was legally effective to convert the lot in Roppongi into patrimonial property of the State. Actually, as already pointed out, case law involving property of municipal corporations is to the effect that simple non-use or the actual dedication of public property to some use other than public use or public service, was sufficient to convert such property into patrimonial property of the local governmental entity concerned. Also as pointed out above, Manresa reached the same conclusion in respect of conversion of property of the public domain of the State into property of the private domain of the State.

The majority opinion states that "abandonment cannot be inferred from the non-use alone especially if the non-use was attributable not to the Government's own deliberate and indubitable will but to lack of financial support to repair and improve the property" (Majority Opinion, p. 13). With respect, it may be stressed that there is no abandonment involved here, certainly no abandonment of property or of property rights. What is involved is the charge of the classification of the property from property of the public domain into property of the private domain of the State. Moreover, if for fourteen (14) years, the Government did not see fit to appropriate whatever funds were necessary to maintain the property in Roppongi in a condition suitable for diplomatic representation purposes, such circumstance may, with equal logic, be construed as a manifestation of the crystalizing intent to change the character of the property.

(d) On 30 March 1989, a public bidding was in fact held by the Executive Department for the sale of the lot in Roppongi. The circumstance that this bidding was not successful certainly does not argue against an intent to convert the property involved into property that is disposable by bidding.

The above set of events and circumstances makes no sense at all if it does not, as a whole, show at least the intent on the part of the Executive Department (with the knowledge of the Legislative Department) to convert the property involved into patrimonial property that is susceptible of being sold.

II

Having reached an affirmative answer in respect of the first issue, it is necessary to address the second issue of whether or not there exists legal authority for the sale or disposition of the Roppongi property.

The majority opinion refers to Section 79(f) of the Revised Administrative Code of 1917 which reads as follows:

SEC. 79 (f). Conveyances and contracts to which the Government is a party. — In cases in which the Government of the Republic of the Philippines is a party to any deed or other instrument conveying the title to real estate or to any other property the value of which is in excess of one hundred thousand pesos, the respective Department Secretary shall prepare the necessary papers which, together with the proper recommendations, shall besubmitted to the Congress of the Philippines for approval by the same. Such deed, instrument, or contract shall be executed and signed by the President of the Philippines on behalf of the Government of the Philippines unless the authority therefor be expressly vested by law in another officer. (Emphasis supplied)

The majority opinion then goes on to state that: "[T]he requirement has been retained  in Section 4, Book I of the Administrative Code of 1987 (Executive Order No. 292)" which reads:

SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the Government is authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following:

(1) For property belonging to and titled in the name of the Republic of the Philippines, by the President, unless the authority therefor is expressly vested by law in another officer.

(2) For property belonging to the Republic of the Philippines but titled in the name of any political subdivision or of any corporate agency or instrumentality, by the executive head of the agency or instrumentality. (Emphasis supplied)

Two points need to be made in this connection. Firstly,  the requirement of obtaining specific approval of Congress when the price of the real property being disposed of is in excess of One Hundred Thousand Pesos (P100,000.00) under the Revised Administrative Code of 1917, has been deleted from Section 48 of the 1987 Administrative Code. What Section 48 of the present Administrative Code refers to isauthorization by law for the conveyance. Section 48 does not purport to be itself a source of legal authority for conveyance of real property of the Government. For Section 48 merely specifies the official authorized to execute and sign on behalf of the Government the deed of conveyance in case of such a conveyance.

Secondly, examination of our statute books shows that authorization by law for disposition of real property of the private domain of the Government, has been granted by Congress both in the form of (a) a general, standing authorization for disposition of patrimonial property of the Government; and (b) specific legislation authorizing the disposition of particular pieces of the Government's patrimonial property.

Standing legislative authority for the disposition of land of the private domain of the Philippines is provided by Act No. 3038, entitled "An Act Authorizing the Secretary of Agriculture and Natural Resources to Sell or Lease Land of the Private Domain of the

Government of the Philippine Islands (now Republic of the Philippines)", enacted on 9 March 1922. The full text of this statute is as follows:

Be it enacted by the Senate and House of Representatives of the Philippines in Legislature assembled and by the authority of the same:

SECTION 1. The Secretary of Agriculture and Natural Resources (now Secretary of the Environment and Natural Resources) is hereby authorized to sell or lease land of the private domain of the Government of the Philippine Islands, or any part thereof, to such persons, corporations or associations as are, under the provisions of Act Numbered Twenty-eight hundred and seventy-four, (now Commonwealth Act No. 141, as amended) known as the Public Land Act, entitled to apply for the purchase or lease or agricultural public land.

SECTION 2. The sale of the land referred to in the preceding section shall, if such land is agricultural, be made in the manner and subject to the limitations prescribed in chapters five and six, respectively, of said Public Land Act, and if it be classified differently, in conformity with the provisions of chapter nine of said Act: Provided, however, That the land necessary for the public service shall be exempt from the provisions of this Act.

SECTION 3. This Act shall take effect on its approval.

Approved, March 9, 1922. (Emphasis supplied)

Lest it be assumed that Act No. 3038 refers only to agricultural lands of the private domain of the State, it must be noted that Chapter 9 of the old Public Land Act (Act No. 2874) is now Chapter 9 of the present Public Land Act (Commonwealth Act No. 141, as amended) and that both statutes refer to: "any tract of land of the public domain which being neither timber nor mineral land, is intended to be used forresidential purposes or for commercial or industrial purposes other than agricultural" (Emphasis supplied). i•t•c-aüsl In other words, the statute covers the sale or lease or residential, commercial or industrial land of the private domain of the State.

Implementing regulations have been issued for the carrying out of the provisions of Act No. 3038. On 21 December 1954, the then Secretary of Agriculture and Natural Resources promulgated Lands Administrative Orders Nos. 7-6 and 7-7 which were entitled, respectively: "Supplementary Regulations Governing the Sale of the Lands of the Private Domain of the Republic of the Philippines"; and "Supplementary Regulations Governing the Lease of Lands of Private Domain of the Republic of the Philippines" (text in 51 O.G. 28-29 [1955]).

It is perhaps well to add that Act No. 3038, although now sixty-eight (68) years old, is still in effect and has not been repealed. 1

Specific legislative authorization for disposition of particular patrimonial properties of the State is illustrated by certain earlier statutes. The first of these was Act No. 1120, enacted on 26 April 1904, which provided for the disposition of the friar lands, purchased by the Government from the Roman Catholic Church, to bona fide settlers and occupants thereof or to other persons. In Jacinto v. Director of Lands (49 Phil. 853 [1926]), these friar lands were held to be private and patrimonial properties of the State. Act No. 2360, enacted on -28 February 1914, authorized the sale of the San Lazaro Estate  located in the City of Manila, which had also been purchased by the Government from the Roman Catholic Church. In January 1916, Act No. 2555 amended Act No. 2360 by including therein all lands and

buildings owned by the Hospital and the Foundation of San Lazaro theretofor leased by private persons, and which were also acquired by the Philippine Government.

After the enactment in 1922 of Act No. 3038, there appears, to my knowledge, to be only one statute authorizing the President to dispose of a specific piece of property. This statute is Republic Act No. 905, enacted on 20 June 1953, which authorized the

President to sell an Identified parcel of land of the private domain of the National Government to the National Press Club of the Philippines, and to other recognized national associations of professionals with academic standing, for the nominal price of P1.00. It appears relevant to note that Republic Act No. 905 was not an outright disposition in perpetuity of the property involved- it provided for reversion of the property to the National Government in case the National Press Club stopped using it for its headquarters. What Republic Act No. 905 authorized was really a donation, and not a sale.

The basic submission here made is that Act No. 3038 provides standing legislative authorization for disposition of the Roppongi property which, in my view, has been converted into patrimonial property of the Republic. 2

To some, the submission that Act No. 3038 applies not only to lands of the private domain of the State located in the Philippines but also to patrimonial property found outside the Philippines, may appear strange or unusual. I respectfully submit that such position is not any more unusual or strange than the assumption that Article 420 of the Civil Code applies not only to property of the Republic located within Philippine territory but also to property found outside the boundaries of the Republic.

It remains to note that under the well-settled doctrine that heads of Executive Departments are alter egos of the President (Villena v. Secretary of the Interior, 67 Phil. 451 [1939]), and in view of the constitutional power of control exercised by the President over department heads (Article VII, Section 17,1987 Constitution), the President herself may carry out the function or duty that is specifically lodged in the Secretary of the Department of Environment and Natural Resources (Araneta v. Gatmaitan101 Phil. 328 [1957]). At the very least, the President retains the power to approve or disapprove the exercise of that function or duty when done by the Secretary of Environment and Natural Resources.

It is hardly necessary to add that the foregoing analyses and submissions relate only to the austere question of existence of legal power or authority. They have nothing to do with much debated questions of wisdom or propriety or relative desirability either of the proposed disposition itself or of the proposed utilization of the anticipated proceeds of the property involved. These latter types of considerations He within the sphere of responsibility of the political departments of government the Executive and the Legislative authorities.

For all the foregoing, I vote to dismiss the Petitions for Prohibition in both G.R. Nos. 92013 and 92047.

Fernan, C.J., Narvasa, Gancayco, Cortes and Medialdea, JJ., concurring.

 

 

Separate Opinions

CRUZ, J., concurring:

I concur completely with the excellent ponencia of Mr. Justice Gutierrez and will add the following observations only for emphasis.

It is clear that the respondents have failed to show the President's legal authority to sell the Roppongi property. When asked to do so at the hearing on these petitions, the Solicitor General was at best ambiguous, although I must add in fairness that this was not his fault. The fact is that there is -no such authority. Legal expertise alone cannot conjure that statutory permission out of thin air.

Exec. Order No. 296, which reads like so much legislative, double talk, does not contain such authority. Neither does Rep. Act No. 6657, which simply allows the proceeds of the sale of our properties abroad to be used for the comprehensive agrarian reform program. Senate Res. No. 55 was a mere request for the deferment of the scheduled sale of tile Roppongi property, possibly to stop the transaction altogether; and ill any case it is not a law. The sale of the said property may be authorized only by Congress through a duly enacted statute, and there is no such law.

Once again, we have affirmed the principle that ours is a government of laws and not of men, where every public official, from the lowest to the highest, can act only by virtue of a valid authorization. I am happy to note that in the several cases where this Court has ruled against her, the President of the Philippines has submitted to this principle with becoming grace.

 

PADILLA, J., concurring:

I concur in the decision penned by Mr. Justice Gutierrez, Jr., I only wish to make a few observations which could help in further clarifying the issues.

Under our tripartite system of government ordained by the Constitution, it is Congress that lays down or determines policies. The President executes such policies. The policies determined by Congress are embodied in legislative enactments that have to be approved by the President to become law. The President, of course, recommends to Congress the approval of policies but, in the final analysis, it is Congress that is the policy - determining branch of government.

The judiciary interprets the laws and, in appropriate cases, determines whether the laws enacted by Congress and approved by the President, and presidential acts implementing such laws, are in accordance with the Constitution.

The Roppongi property was acquired by the Philippine government pursuant to the reparations agreement between the Philippine and Japanese governments. Under such agreement, this property was acquired by the Philippine government for a specific purpose, namely, to serve as the site of the Philippine Embassy in Tokyo, Japan. Consequently, Roppongi is a property of public dominion and intended for public service, squarely falling within that class of property under Art. 420 of the Civil Code, which provides:

Art. 420. The following things are property of public dominion :

(1) ...

(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. (339a)

Public dominion property intended for public service cannot be alienated unless the property is first transformed into private property of the state otherwise known as patrimonial property of the state. 1The transformation of public dominion property to state patrimonial property involves, to my mind, a policy decision. It is a policy decision because the treatment of the property varies according to its classification. Consequently, it is Congress which can decide and declare the conversion of Roppongi from a public dominion property to a state patrimonial property. Congress has made no such decision or declaration.

Moreover, the sale of public property (once converted from public dominion to state patrimonial property) must be approved by Congress, for this again is a matter of policy (i.e. to keep or dispose of the property). Sec. 48, Book 1 of the Administrative Code of 1987 provides:

SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the Government is authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following:

(1) For property belonging to and titled in the name of the Republic of the Philippines, by the President, unless the authority therefor is expressly vested by law in another officer.

(2) For property belonging to the Republic of the Philippines but titled in the name of any political subdivision or of any corporate agency or instrumentality, by the executive head of the agency or instrumentality. (Emphasis supplied)

But the record is bare of any congressional decision or approval to sell Roppongi. The record is likewise bare of any congressional authority extended to the President to sell Roppongi thru public bidding or otherwise.

It is therefore, clear that the President cannot sell or order the sale of Roppongi thru public bidding or otherwise without a prior congressional approval, first, converting Roppongi from a public dominion property to a state patrimonial property, and, second, authorizing the President to sell the same.

ACCORDINGLY, my vote is to GRANT the petition and to make PERMANENT the temporary restraining order earlier issued by this Court.

 

SARMIENTO, J., concurring:

The central question, as I see it, is whether or not the so-called "Roppongi property' has lost its nature as property of public dominion, and hence, has become patrimonial property of the State. I understand that the parties are agreed that it was property intended for "public service" within the contemplation of paragraph (2), of Article 430, of the Civil Code, and accordingly, land of State dominion, and beyond human commerce. The lone issue is, in the light of supervening developments, that is non-user thereof by the National Government (for diplomatic purposes) for the last thirteen years; the issuance of Executive Order No. 296 making it available for sale to any interested buyer; the promulgation of Republic Act No. 6657, the Comprehensive Agrarian Reform Law, making available for the program's financing, State assets sold; the approval by the President of the recommendation of the investigating committee formed to study the property's utilization; and the issuance of Resolution No. 55 of the Philippine Senate requesting for the deferment of its disposition it, "Roppongi", is still property of the public dominion, and if it is not, how it lost that character.

When land of the public dominion ceases to be one, or when the change takes place, is a question our courts have debated early. In a 1906 decision, 1 it was held that property of the public dominion, a public plaza in this instance, becomes patrimonial upon use thereof for purposes other than a plaza. In a later case, 2 this ruling was reiterated. Likewise, it has been held that land, originally private property, has become of public dominion upon its donation to the town and its conversion and use as a public plaza. 3 It is notable that under these three cases, the character of the property, and any change occurring therein, depends on the actual use to which it is dedicated. 4

Much later, however, the Court held that "until a formal declaration on the part of the Government, through the executive department or the Legislative, to the effect that the land . . . is no longer needed for [public] service- for public use or for special industries, [it] continue[s] to be part of the public [dominion], not available for private expropriation or ownership." 5 So also, it was ruled that a political subdivision (the City of Cebu in this case) alone may declare (under its charter) a city road abandoned and thereafter, to dispose of it. 6

In holding that there is "a need for a law or formal declaration to withdraw the Roppongi property from public domain to make it alienable and a land for legislative authority to allow the sale of the property"7 the majority lays stress to the fact that: (1) An affirmative act — executive or legislative — is necessary to reclassify property of the public dominion, and (2) a legislative decree is required to make it alienable. It also clears the uncertainties brought about by earlier interpretations that the nature of property-whether public or patrimonial is predicated on the manner it is actually used, or not used, and in the same breath, repudiates the Government's position that the continuous non-use of "Roppongi", among other arguments, for "diplomatic purposes", has turned it into State patrimonial property.

I feel that this view corresponds to existing pronouncements of this Court, among other things, that: (1) Property is presumed to be State property in the absence of any showing to the contrary; 8 (2) With respect to forest lands, the same continue to be lands of the public dominion unless and until reclassified by the Executive Branch of the Government; 9 and (3) All natural resources, under the Constitution, and subject to exceptional cases, belong to the State. 10

I am elated that the Court has banished previous uncertainties.

 

FELICIANO, J., dissenting

With regret, I find myself unable to share the conclusions reached by Mr. Justice Hugo E. Gutierrez, Jr.

For purposes of this separate opinion, I assume that the piece of land located in 306 Roppongi, 5-Chome, Minato-ku Tokyo, Japan (hereinafter referred to as the "Roppongi property") may be characterized as property of public dominion, within the meaning of Article 420 (2) of the Civil Code:

[Property] which belong[s] to the State, without being for public use, and are intended for some public service -.

It might not be amiss however, to note that the appropriateness of trying to bring within the confines of the simple threefold classification found in Article 420 of the Civil Code ("property for public use property "intended for some public service" and property intended "for the development of the national wealth") all property owned by the Republic of the Philippines whether found within the territorial boundaries of the Republic or located within the territory of another sovereign State, is notself-evident. The first item of the classification property intended for public use — can scarcely be properly applied to property belonging to the Republic but found within the territory of another State. The third item of the classification property intended for the development of the national wealth is illustrated, in Article 339 of the Spanish Civil Code of 1889, by mines or mineral properties. Again, mineral lands owned by a sovereign State are rarely, if ever, found within the territorial base of another sovereign State. The task of examining in detail the applicability of the classification set out in Article 420 of our Civil Code to property that the Philippines happens to own outside its own boundaries must, however, be left to academicians.

For present purposes, too, I agree that there is no question of conflict of laws that is, at the present time, before this Court. The issues before us relate essentially to authority to sell the Roppongi property so far as Philippine law is concerned.

The majority opinion raises two (2) issues: (a) whether or not the Roppongi property has been converted into patrimonial property or property of the private domain of the State; and (b) assuming an affirmative answer to (a), whether or not there is legal authority to dispose of the Roppongi property.

I

Addressing the first issue of conversion of property of public dominion intended for some public service, into property of the private domain of the Republic, it should be noted that the Civil Code does not address the question of who has authority to effect such conversion. Neither does the Civil Code set out or refer to any procedure for such conversion.

Our case law, however, contains some fairly explicit pronouncements on this point, as Justice Sarmiento has pointed out in his concurring opinion. In Ignacio v. Director of Lands (108 Phils. 335 [1960]), petitioner Ignacio argued that if the land in question formed part of the public domain, the trial court should have declared the same no longer necessary for public use or public purposes and which would, therefore, have become disposable and available for private ownership. Mr. Justice Montemayor, speaking for the Court, said:

Article 4 of the Law of Waters of 1866 provides that when a portion of the shore is no longer washed by the waters of the sea and is not necessary for purposes of public utility, or for the establishment of special industries, or for

coast-guard service, the government shall declare it to be the property of the owners of the estates adjacent thereto and as an increment thereof. We believe that only the executive and possibly the legislative departments have the authority and the power to make the declaration that any land so gained by the sea, is not necessary for purposes of public utility, or for the establishment of special industries, or for coast-guard service. If no such declaration has been made by said departments, the lot in question forms part of the public domain. (Natividad v. Director of Lands, supra.)

The reason for this pronouncement, according to this Tribunal in the case of Vicente Joven y Monteverde v. Director of Lands, 93 Phil., 134 (cited in Velayo's Digest, Vol. 1, p. 52).

... is undoubtedly that the courts are neither primarily called upon, nor indeed in a position to determine whether any public land are to be used for the purposes specified in Article 4 of the Law of Waters. Consequently, until a formal declaration on the part of the Government, through the executive department or the Legislature, to the effect that the land in question is no longer needed for coast-guard service, for public use or for special industries, they continue to be part of the public domain not available for private appropriation or ownership. (108 Phil. at 338-339; emphasis supplied)

Thus, under Ignacio, either the Executive Department or the Legislative Department may convert property of the State of public dominion into patrimonial property of the State. No particular formula or procedure of conversion is specified either in statute law or in case law. Article 422 of the Civil Code simply states 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". I respectfully submit, therefore, that the only requirement which is legitimately imposable is that the intent to convert must be reasonably clear from a consideration of the acts or acts of the Executive Department or of the Legislative Department which are said to have effected such conversion.

The same legal situation exists in respect of conversion of property of public dominion belonging to municipal corporations, i.e., local governmental units, into patrimonial property of such entities. InCebu Oxygen Acetylene v. Bercilles (66 SCRA 481 [1975]), the City Council of Cebu by resolution declared a certain portion of an existing street as an abandoned road, "the same not being included in the city development plan". Subsequently, by another resolution, the City Council of Cebu authorized the acting City Mayor to sell the land through public bidding. Although there was no formal and explicit declaration of conversion of property for public use into patrimonial property, the Supreme Court said:

xxx xxx xxx

(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 of 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 registrable title over the lot in question. (66 SCRA at 484-; emphasis supplied)

Thus, again as pointed out by Sarmiento J., in his separate opinion, in the case of property owned by municipal corporations simple non-use or the actual dedication of public property to some use other than "public use" or some "public service", was sufficient legally to convert such property into patrimonial property (Municipality of Oas v. Roa, 7 Phil. 20 [1906]- Municipality of Hinunganan v. Director of Lands 24 Phil. 124 [1913]; Province of Zamboanga del Norte v. City of Zamboanga, 22 SCRA 1334 (1968).

I would also add that such was the case not only in respect of' property of municipal corporations but also in respect of property of the State itself. Manresa in commenting on Article 341 of the 1889 Spanish Civil Code which has been carried over verbatim into our Civil Code by Article 422 thereof, wrote:

La dificultad mayor en todo esto estriba, naturalmente, en fijar el momento en que los bienes de dominio publico dejan de serlo. Si la Administracion o la autoridad competente legislative realizan qun acto en virtud del cual cesa el destino o uso publico de los bienes de que se trata naturalmente la dificultad queda desde el primer momento resuelta. Hay un punto de partida cierto para iniciar las relaciones juridicas a que pudiera haber lugar Pero puede ocurrir que no haya taldeclaracion expresa, legislativa or administrativa, y, sin embargo, cesar de hecho el destino publico de los bienes; ahora bien, en este caso, y para los efectos juridicos que resultan de entrar la cosa en el comercio de los hombres,' se entedera que se ha verificado la conversion de los bienes patrimoniales?

El citado tratadista Ricci opina, respecto del antiguo Codigo italiano, por la afirmativa, y por nuestra parte creemos que tal debe ser la soluciion. El destino de las cosas no depende tanto de una declaracion expresa como del uso publico de las mismas, y cuanda el uso publico cese con respecto de determinados bienes, cesa tambien su situacion en el dominio publico. Si una fortaleza en ruina se abandona y no se repara, si un trozo de la via publica se abandona tambien por constituir otro nuevo an mejores condiciones....ambos bienes cesan de estar Codigo, y leyes especiales mas o memos administrativas. (3 Manresa, Comentarios al Codigo Civil Espanol, p. 128 [7a ed.; 1952) (Emphasis supplied)

The majority opinion says that none of the executive acts pointed to by the Government purported, expressly or definitely, to convert the Roppongi property into patrimonial property — of the Republic. Assuming that to be the case, it is respectfully submitted that cumulative effect of the executive acts here involved was to convert property originally intended for and devoted to public service into patrimonial property of the State, that is, property susceptible of disposition to and appropration by private persons. These executive acts, in their totality  if not each individual act, make crystal clear the intent of the Executive Department to effect such conversion. These executive acts include:

(a) Administrative Order No. 3 dated 11 August 1985, which created a Committee to study the disposition/utilization of the Government's property in Japan, The Committee was composed of officials of the Executive Department: the Executive Secretary; the Philippine Ambassador to Japan; and representatives of the Department of Foreign Affairs and the Asset Privatization Trust. On 19 September 1988, the Committee recommended to the President the sale of one of the lots (the lot specifically in Roppongi) through public bidding. On 4 October 1988, the President approved the recommendation of the Committee.

On 14 December 1988, the Philippine Government by diplomatic note informed the Japanese Ministry of Foreign Affairs of the Republic's intention to dispose of the property in Roppongi. The Japanese Government through its Ministry of Foreign Affairs replied that it interposed no objection to such disposition by the Republic. Subsequently, the President and the Committee informed the leaders of the House of Representatives and of the Senate of the Philippines of the proposed disposition of the Roppongi property.

(b) Executive Order No. 296, which was issued by the President on 25 July 1987. Assuming that the majority opinion is right in saying that Executive Order No. 296 is insufficient to authorize the sale of the Roppongi property, it is here submitted with respect that Executive Order No. 296 is more than sufficient to indicate an intention to convert the property previously devoted to public service into patrimonial property that is capable of being sold or otherwise disposed of

(c) Non-use of the Roppongi lot for fourteen (14) years for diplomatic or for any other public purposes. Assuming (but only arguendo) that non-use does not, by itself, automatically convert the property into patrimonial property. I respectfully urge that prolonged non-use, conjoined with the other factors here listed, was legally effective to convert the lot in Roppongi into patrimonial property of the State. Actually, as already pointed out, case law involving property of municipal corporations is to the effect that simple non-use or the actual dedication of public property to some use other than public use or public service, was sufficient to convert such property into patrimonial property of the local governmental entity concerned. Also as pointed out above, Manresa reached the same conclusion in respect of conversion of property of the public domain of the State into property of the private domain of the State.

The majority opinion states that "abandonment cannot be inferred from the non-use alone especially if the non-use was attributable not to the Government's own deliberate and indubitable will but to lack of financial support to repair and improve the property" (Majority Opinion, p. 13). With respect, it may be stressed that there is no abandonment involved here, certainly no abandonment of property or of property rights. What is involved is the charge of the classification of the property from property of the public domain into property of the private domain of the State. Moreover, if for fourteen (14) years, the Government did not see fit to appropriate whatever funds were necessary to maintain the property in Roppongi in a condition suitable for diplomatic representation purposes, such circumstance may, with equal logic, be construed as a manifestation of the crystalizing intent to change the character of the property.

(d) On 30 March 1989, a public bidding was in fact held by the Executive Department for the sale of the lot in Roppongi. The circumstance that this bidding was not successful certainly does not argue against an intent to convert the property involved into property that is disposable by bidding.

The above set of events and circumstances makes no sense at all if it does not, as a whole, show at least the intent on the part of the Executive Department (with the knowledge of the Legislative Department) to convert the property involved into patrimonial property that is susceptible of being sold.

II

Having reached an affirmative answer in respect of the first issue, it is necessary to address the second issue of whether or not there exists legal authority for the sale or disposition of the Roppongi property.

The majority opinion refers to Section 79(f) of the Revised Administrative Code of 1917 which reads as follows:

SEC. 79 (f). Conveyances and contracts to which the Government is a party. — In cases in which the Government of the Republic of the Philippines is a party to any deed or other instrument conveying the title to real estate or to any other property the value of which is in excess of one hundred thousand pesos, the respective Department Secretary shall prepare the necessary papers which, together with the proper recommendations, shall besubmitted to the Congress of the Philippines for approval by the same. Such deed, instrument, or contract shall be executed and signed by the President of the Philippines on behalf of the Government of the Philippines unless the authority therefor be expressly vested by law in another officer. (Emphasis supplied)

The majority opinion then goes on to state that: "[T]he requirement has been retained  in Section 4, Book I of the Administrative Code of 1987 (Executive Order No. 292)" which reads:

SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the Government is authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following:

(1) For property belonging to and titled in the name of the Republic of the Philippines, by the President, unless the authority therefor is expressly vested by law in another officer.

(2) For property belonging to the Republic of the Philippines but titled in the name of any political subdivision or of any corporate agency or instrumentality, by the executive head of the agency or instrumentality. (Emphasis supplied)

Two points need to be made in this connection. Firstly,  the requirement of obtaining specific approval of Congress when the price of the real property being disposed of is in excess of One Hundred Thousand Pesos (P100,000.00) under the Revised Administrative Code of 1917, has been deleted from Section 48 of the 1987 Administrative Code. What Section 48 of the present Administrative Code refers to isauthorization by law for the conveyance. Section 48 does not purport to be itself a source of legal authority for conveyance of real property of the Government. For Section 48 merely specifies the official authorized to execute and sign on behalf of the Government the deed of conveyance in case of such a conveyance.

Secondly, examination of our statute books shows that authorization by law for disposition of real property of the private domain of the Government, has been granted by Congress both in the form of (a) a general, standing authorization for disposition of patrimonial property of the Government; and (b) specific legislation authorizing the disposition of particular pieces of the Government's patrimonial property.

Standing legislative authority for the disposition of land of the private domain of the Philippines is provided by Act No. 3038, entitled "An Act Authorizing the Secretary of Agriculture and Natural Resources to Sell or Lease Land of the Private Domain of the Government of the Philippine Islands (now Republic of the Philippines)", enacted on 9 March 1922. The full text of this statute is as follows:

Be it enacted by the Senate and House of Representatives of the Philippines in Legislature assembled and by the authority of the same:

SECTION 1. The Secretary of Agriculture and Natural Resources (now Secretary of the Environment and Natural Resources) is hereby authorized to sell or lease land of the private domain of the Government of the Philippine Islands, or any part thereof, to such persons, corporations or associations as are, under the provisions of Act Numbered Twenty-eight hundred and seventy-four, (now Commonwealth Act No. 141, as amended) known as the Public Land Act, entitled to apply for the purchase or lease or agricultural public land.

SECTION 2. The sale of the land referred to in the preceding section shall, if such land is agricultural, be made in the manner and subject to the limitations prescribed in chapters five and six, respectively, of said Public Land Act, and if it be classified differently, in conformity with the provisions of chapter nine of said Act: Provided, however, That the land necessary for the public service shall be exempt from the provisions of this Act.

SECTION 3. This Act shall take effect on its approval.

Approved, March 9, 1922. (Emphasis supplied)

Lest it be assumed that Act No. 3038 refers only to agricultural lands of the private domain of the State, it must be noted that Chapter 9 of the old Public Land Act (Act No. 2874) is now Chapter 9 of the present Public Land Act (Commonwealth Act No. 141, as amended) and that both statutes refer to: "any tract of land of the public domain which being neither timber nor mineral land, is intended to be used forresidential purposes or for commercial or industrial purposes other than agricultural" (Emphasis supplied). In other words, the statute covers the sale or lease or residential, commercial or industrial land of the private domain of the State.

Implementing regulations have been issued for the carrying out of the provisions of Act No. 3038. On 21 December 1954, the then Secretary of Agriculture and Natural Resources promulgated Lands Administrative Orders Nos. 7-6 and 7-7 which were entitled, respectively: "Supplementary Regulations Governing the Sale of the Lands of the Private Domain of the Republic of the Philippines"; and "Supplementary Regulations Governing the Lease of Lands of Private Domain of the Republic of the Philippines" (text in 51 O.G. 28-29 [1955]).

It is perhaps well to add that Act No. 3038, although now sixty-eight (68) years old, is still in effect and has not been repealed. 1

Specific legislative authorization for disposition of particular patrimonial properties of the State is illustrated by certain earlier statutes. The first of these was Act No. 1120, enacted on 26 April 1904, which provided for the disposition of the friar lands, purchased by the Government from the Roman Catholic Church, to bona fide settlers and occupants thereof or to other persons. In Jacinto v. Director of Lands (49 Phil. 853 [1926]), these friar lands were held to be private and patrimonial properties of the State. Act No. 2360, enacted on -28 February 1914, authorized the sale of the San Lazaro Estate  located in the City of Manila, which had also been purchased by the Government from the Roman Catholic Church. In January 1916, Act No. 2555 amended Act No. 2360 by including therein all lands and buildings owned by the Hospital and the Foundation of San Lazaro theretofor leased by private persons, and which were also acquired by the Philippine Government.

After the enactment in 1922 of Act No. 3038, there appears, to my knowledge, to be only one statute authorizing the President to dispose of a specific piece of property. This statute is Republic Act No. 905, enacted on 20 June 1953, which authorized the

President to sell an Identified parcel of land of the private domain of the National Government to the National Press Club of the Philippines, and to other recognized national associations of professionals with academic standing, for the nominal price of P1.00. It appears relevant to note that Republic Act No. 905 was not an outright disposition in perpetuity of the property involved- it provided for reversion of the property to the National Government in case the National Press Club stopped using it for its headquarters. What Republic Act No. 905 authorized was really a donation, and not a sale.

The basic submission here made is that Act No. 3038 provides standing legislative authorization for disposition of the Roppongi property which, in my view, has been converted into patrimonial property of the Republic. 2

To some, the submission that Act No. 3038 applies not only to lands of the private domain of the State located in the Philippines but also to patrimonial property found outside the Philippines, may appear strange or unusual. I respectfully submit that such position is not any more unusual or strange than the assumption that Article 420 of the Civil Code applies not only to property of the Republic located within Philippine territory but also to property found outside the boundaries of the Republic.

It remains to note that under the well-settled doctrine that heads of Executive Departments are alter egos of the President (Villena v. Secretary of the Interior, 67 Phil. 451 [1939]), and in view of the constitutional power of control exercised by the President over department heads (Article VII, Section 17,1987 Constitution), the President herself may carry out the function or duty that is specifically lodged in the Secretary of the Department of Environment and Natural Resources (Araneta v. Gatmaitan101 Phil. 328 [1957]). At the very least, the President retains the power to approve or disapprove the exercise of that function or duty when done by the Secretary of Environment and Natural Resources.

It is hardly necessary to add that the foregoing analyses and submissions relate only to the austere question of existence of legal power or authority. They have nothing to do with much debated questions of wisdom or propriety or relative desirability either of the proposed disposition itself or of the proposed utilization of the anticipated proceeds of the property involved. These latter types of considerations He within the sphere of responsibility of the political departments of government the Executive and the Legislative authorities.

For all the foregoing, I vote to dismiss the Petitions for Prohibition in both G.R. Nos. 92013 and 92047.

Fernan, C.J., Narvasa, Gancayco, Cortes and Medialdea, JJ., concurring.

Footnotes

Padilla, J.

1 Art. 422 of the Civil Code provides:

"Property of public dominion, when no longer intended for public use or public service, shall form part of the patrimonial property of the State. (341a)

Sarmiento, J.

1 Municipality of Oas v. Roa, 7 Phil. 20 (1906).

2 Municipality of Hinunangan v. Director of Lands, 24 Phil. 124 (11913). The property involved here was a fortress.

3 Harty v. Municipality of Victoria, 13 Phil. 152 (1909).

4 See also II TOLENTINO, CIVIL CODE OF THE PHILIPPINES 39 (1972 ed.), citing 3 Manresa III. See also Province of Zamboanga del Norte v. City of Zamboanga, No. L-24440, March 28, 1968, 22 SCRA 1334.

5 Ignacio v. Director of Lands, 108 Phil. 335, 339 (1960).

6 Cebu Oxygen & Acetylene Co., Inc. vs. Bercilles, No. L-40474, August 29, 1975, 66 SCRA 481.

7 G.R. Nos. 92013 & 92047, 21.

8 Salas v. Jarencio, No. L-29788, August 30, 1972, 46 SCRA 734; Rabuco v. Villegas, No. L-24916, February 28, 1974, 55 SCRA 658.

9 See Lianga Bay Logging Co., Inc. v. Lopez Enage, No. L-30637, July 16, 1987, 152 SCRA 80.

10 CONST., art. XII, sec. 2.

Feliciano, J.

1 We are orally advised by the Office of the Director of Lands that Act No. 3038 is very much in effect and that the Bureau of Lands continues to date to act under it. See also, in this connection, Sections 2 and 4 of Republic Act No. 477, enacted 9 June 1950 and as last amended by B.P. Blg 233. This statute government the disposition of lands of the public domain and of the private

domain of the State, including lands previously vested in the United States Alien Property Custodian and transferred to the Republic of the Philippines.

2 Since Act No. 3038 established certain qualifications for applicants for purchase or lease of land of private domain of the government, it is relevant to note that Executive Order No. 296, promulgated at a time when the President was still exercising legislative authority, provides as follows:

"Sec. 1. The provisions of Republic Act No. 1789, as amended, and of other laws, to the contrary notwithstanding, the above mentioned properties can be made available for sale, lease or any other manner of disposition to non-Filipino citizens." (Emphasis supplied)

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

 

G.R. No. L-24661 February 28, 1974

BENJAMIN RABUCO, VENANCIO G. GUIRNALDA, LEODEGARIO ALOBA, ELEUTERIO IBAÑES, ROGELIO ARAGONES, ASENCIO ABANCO, BENEDICTO BAUTISTA, MAXIMO AQUINO, PAULINA DALUMIAS, NENITA RAMOS, GUILLERMO VARIAS, EMELDA ARELLANO, PEDRO BILBAO, ERNESTO BONBALES, ROSITA OCA BAUTISTA, TERESITA ESTEBAN, JOSE BENJAMIN, LORENZO BELDEVER, LEODEGARIO TUMLOS, PATRICIO MALATE, ANSELMO CORTEJOS, ANACLETA ADUCA, SALOME BARCELONA, ENRICO CELSO, IRENE CAMBA, MARIA COLLADO, RUFINO CANTIL, ANANIAS CANILLO, MAXIMO DE CASTRO, CEFERINO SALAZAR, PATRIA ANAYA, FELISA VELASCO, IGNACIO SARASPI, FLAVIO DINAGUIT, REMEDIOS BAROMETRO, PEDRO GEBANIA, RUBEN GEGABALEN, EMETRIO EDAÑO, LUCIANO ARAGONES, ADRIANO ESTRELLADO, BONIFACIO EVARISTO, ISIDORO EDORIA, TIMOTEA ECARUAN, BIENVENIDO COLLADO, CENON DAJUYA, RAFAELA FERNANDEZ, ALFONSO FAUSTINO, AVELINO GARCIA, RICARDO GUIRNALDA, FRANCISCO HENERAL, CARMEN KIONESALA, FELICIANO LUMACTOD, DOLORES VILLACAMPA, NARCISO LIM, EUFEMIO LEGASPI, MATILDE MABAQUIAO, EULOGIO VIÑA, MACARIO ANTONIO, JEREMIAS DE LA CRUZ, MARTIN MANGABAN, SIMEON MANGABA T., CARIDAD MER MILLA, FELIX MAHINAY, NAPOLEON MARZAN, ISAIAS MANALASTAS, JOSEFA CORVERA, JOSE APRUEDO, ARSENIO REYES, EUGENIA A. ONO, CORNELIO OPOLENCIA, SEDECIAS PASCUA, ABUNDIO PAGUNTALAN, ESPERANZA DE QUIROS, CRESENCIO SALEM, MOISES FERNANDEZ, FORTUNATO GONZALES, SOCORRO R. VALEN, RODOLFO COLLADO, VENERIO CELSO, GREGORIO DE LA CRUZ, CELSO ALCERA, NICOLAS ARAGONES, JOSEFINA MANANSALA, ADELAIDA CALASIN , JOSE AGUSTIN, TOMAS JOSEPH, MANUEL DADOR, SERGIO LIPATON, ERNESTO SUMAYDING, MARCELINO DIOSO, MIGUEL ALCERA, CRISANTA ENAMER, JUAN VIADO HILARION CHIOCO, EUROPIA CABAHUG, VICTORIA DUERO, CONSORCIO ENOC, MAMERTO GAMONIDO, BONIFACIO SABADO, MARIA INTROLIZO, HENRY ENOLBA, REYNALDO LIM, FORTUNATO LIPON, ERNESTO MALLOS, FLORENTINA PATRICIO, MAMERTO PALAPALA, RAMON DE PERALTA,

JOSE PARRAS, APOLINARIO YAP, JUAN ROQUE, FELIX ROQUE, GLICERIA SALAZAR, MIGUELA SABIO, AGAPITO SAYAS, PAULINO SARROZA, PACIFICO JUANICO, LIBERADO TULAWAN, LIGAYA LAUS, ERNESTO VERZOSA, LEOPOLDO BERNALES, JAIME VISTA, ISAIAS AMURAO, BENITA M. BARENG, and BRIGIDA SANCHEZ, petitioners, vs.HON. ANTONIO J. VILLEGAS substituted by HON. RAMON BAGATSING as CITY MAYOR OF MANILA, HON. LADISLAO J. TOLENTINO, City Engineer of Manila, their agents, employees, assistants and all persons acting under them; HON. BENJAMIN GOZON, Administrator, Land Reform Authority substituted by HON CONRADO ESTRELLA as Secretary of the Department of Agrarian Reforms and his agents, employees, assistants and all persons acting under his orders, respondent. 1

G.R. No. L-24915 February 28, 1974

BENJAMIN RABUCO, et al., (the same co-petitioners in L-24661), petitioners, vs.HON. ANTONIO J. VILLEGAS substituted by HON. RAMON BAGATSING as CITY MAYOR OF MANILA, et al., (the same co-respondents in L-24661), respondents.

G.R. No. L-24916 February 28, 1974

BENJAMIN RABUCO, et al. (the same co-petitioners in L-24661), petitioners-appellants, vs.HON. ANTONIO J. VILLEGAS substituted by HON. RAMON BAGATSING as CITY MAYOR OF MANILA, et al., (the same co-respondents in L-24661), respondents-appellees.

Manuel D. Melotindos and Ricardo M. Guirnalda for petitioners.

Second Assistant City Fiscal Manuel T. Reyes for respondents.

 

TEEHANKEE, J.:p

The Court herein upholds the constitutionality of Republic Act 3120 on the strength of the established doctrine that the subdivision of communal land of the State (although titled in the name of the municipal corporation) and conveyance of the resulting subdivision lots by sale on installment basis to bona fide occupants by Congressional authorization and disposition does not constitute infringements of the due process clause or the eminent domain provisions of the Constitution but operates simply as a manifestation of the legislature's right of control and power to deal with State property.

The origin and background of the cases at bar which deal with the decisive issue of constitutionality of Republic Act 3120 enacted on June 17, 1961, as raised by respondent mayor of Manila in resisting petitioners' pleas that respondent mayor not only lacks the authority to demolish their houses or eject them as tenants and bona fide occupants of a parcel of land in San Andres, Malate 2 but is also expressly prohibited from doing so by section 2 of the Act, may be summarized from the Court of Appeals' 3 certification of resolution of May 31, 1965 as follows:

Case L-24916 involves petitioners' appeal to the Court of Appeals 4 from the decision of the Manila court of first instance dismissing their petition for injunction and mandamus to enjoin the demolition of

their houses and the ejectment from the public lots in question and to direct respondent administrator of the Land Authority (now Secretary of Agrarian Reform) to implement the provisions of Republic Act 3120 for the subdivision and sale on installment basis of the subdivided lots to them as the tenants and bona fide occupants thereof, and instead ordering their ejectment.

Case L-24915 involves petitioners' independent petition for injunction filed directly with the Court of Appeals January 29, 1965 5 to forestall the demolition overnight of their houses pursuant to the order of demolition set for January 30, 1965 at 8 a.m. issued by respondents city officials pending the elevation of their appeal. The appellate court gave due course thereto and issued the writ of preliminary injunction as prayed for.

The two cases were ordered "consolidated into one" since they were "unavoidably interlaced." The appellate court, finding that the constitutionality of Republic Act 3120 was "the dominant and inextricable issue in the appeal" over which it had no jurisdiction and that the trial court incorrectly "sidetracked" the issue, thereafter certified the said cases to this Court, as follows:

The validity of Republic Act 3120 which was seasonably posed in issue in the court below was sidetracked by the trial court, thus:

The constitutionality of Republic Act No. 3120 need not be passed upon as the principal question in issue is whether the houses of the petitioners are public nuisances, which the court resolved in the affirmative. As a matter of fact even if the petitioners were already the owners of the land on which their respected houses are erected, the respondent city officials could cause the removal thereof as they were constructed in violation of city ordinances and constitute public nuisance.

It is significant to note, however, that what is sought by the respondent City Mayor and City Engineer of Manila is not only the demolition of the petitioners' houses in the premises in controversy, but their ejectment as well. Moreover, Republic Act 3120 does intend not only the dismissal of the ejectment proceedings against the petitioners from the land in controversy upon their motion, but as well that any demolition order issued against them shall also have to be dismissed. The law says:

Upon approval of this Act no ejectment proceedings against any tenants or bona fide occupant shall be instituted and any proceedings against any such tenant or bona fideoccupant shall be dismissed upon motion of the defendant. Provided, That any demolition order directed against any tenant or bona fide occupant thereof, shall be dismissed. (Sec. 2, R. A. 3120).

Indeed, the petitioners-appellants, who contended in the court below that it was not necessary to decide on the validity or constitutionality of the law, now asseverate that 'Republic Act No. 3120 expressly prohibits ejectment and demolition of petitioners' home.' The petitioners' argument in their appeal to this Court runs as follows:

1. Petitioners-appellants are entitled to the remedies of injunction and mandamus, being vested with lawful possession over Lot 21-B, Block 610, granted by law, Republic Act No. 3120.

2. Civil Case No. 56092 has not been barred by any prior judgment, as wrongly claimed by respondents-appellees.

3. Ejectment and demolition against petitioners-appellants are unlawful and clearly prohibited by Republic Act No. 3120.

The defense of the respondents Mayor and City Engineer of Manila to arguments 2 and 3 is the invalidity of the said Republic Act 3120 for being in violation of the Constitutional prohibition against the deprivation of property without due process of law and without just compensation. So that even if argument 2 interposed by the petitioners-appellants should be rejected, still they may claim a right, by virtue of the aforesaid provisions of Republic Act 3120, to continue possession and occupation of the premises and the lifting of the order of demolition issued against them. The constitutionality of the said Republic Act 3120, therefore, becomes the dominant and inextricable issue of the appeal.

Case L-24661 for the continuation and maintenance of the writ of preliminary injunction previously issued by the Court of Appeals for preservation of the status quo was filed by petitioners directly with this Court on June 21, 1965, pending transmittal of the records of Cases L-24915 and L-24916 to this Court as certified by the Court of Appeals which declared itself without jurisdiction over the principal and decisive issue of constitutionality of Republic Act 3120.

The Court gave due course thereto and on August 17, 1965 issued upon a P1,000 — bond the writ of preliminary injunction as prayed for enjoining respondents "from demolishing and/or continuing to demolish the houses of herein petitioners situated in Lot No. 21-B, Block No. 610 of the Cadastral Survey of the City of Manila, or from performing any act constituting an interference in or disturbance of their present possession."

The records of two cases certified by the appellate court, L-24915 and L-24916, were eventually forwarded to this Court which per its resolution of August 24, 1965 ordered that they be docketed and be considered together with case L-24661.

In the early morning of April 19, 1970, a large fire of undetermined origin gutted the Malate area including the lot on which petitioners had built their homes and dwellings. Respondents city officials then took over the lot and kept petitioners from reconstructing or repairing their burned dwellings. At petitioners' instance, the Court issued on June 17, 1970 a temporary restraining order enjoining respondents city officials "from performing any act constituting an interference in or disturbance of herein petitioners' possession of Lot No. 21-B, Block No. 610, of the Cadastral Survey of the City of Manila" as safeguarded them under the Court's subsisting preliminary injunction of August 17, 1965.

The "dominant and inextricable issue" at bar, as correctly perceived by the appellate court is the constitutionality of Republic Act 3120 whereby Congress converted the lot in question together with another lot in San Andres, Malate "which are reserved as communal property" into "disposable or alienable lands of the State to be placed under the administration and disposal of the Land Tenure Administration" for subdivision into small lots not exceeding 120 square meters per lot for sale on installment basis to the tenants or bona fide occupants thereof 6and expressly prohibited ejectment and demolition of petitioners' homes under section 2 of the Act as quoted in the appellate court's certification resolution, supra.

The incidental issue seized upon by the trial court as a main issue for "sidetracking" the decisive issue of constitutionality, to wit, that petitioners' houses as they stood at the time of its judgment in 1965 "were constructed in violation of city ordinances and constituted public nuisances" whose

removal could be ordered "even if petitioners were already the owners of the land on which their respective houses are erected" has become moot with the burning down of the petitioners' houses in the fire of April 19, 1970.

If the Act is invalid and unconstitutional for constituting deprivation of property without due process of law and without just compensation as contended by respondents city officials, then the trial court's refusal to enjoin ejectment and demolition of petitioners' houses may be upheld. Otherwise, petitioners' right under the Act to continue possession and occupation of the premises and to the lifting and dismissal of the order of demolition issued against them must be enforced and the trial court's judgment must be set aside.

Respondents city officials' contention that the Act must be stricken down as unconstitutional for depriving the city of Manila of the lots in question and providing for their sale in subdivided small lots to bona fide occupants or tenants without payment of just compensation is untenable and without basis, since the lots in question are manifestly owned by the city in its public and governmental capacity and are therefore public property over which Congress had absolute control as distinguished from patrimonial property owned by it in its private or proprietarycapacity of which it could not be deprived without due process and without just compensation. 7

Here, Republic Act 3120 expressly declared that the properties were "reserved as communal property" and ordered their conversion into "disposable and alienable lands of the State" for sale in small lots to the bona fide occupants thereof. It is established doctrine that the act of classifying State property calls for the exercise of wide discretionary legislative power which will not be interfered with by the courts.

The case of Salas vs. Jarencio 8 wherein the Court upheld the constitutionality of Republic Act 4118 whereby Congress in identical terms as in Republic Act 3120 likewise converted another city lot (Lot 1-B-2-B of Block 557 of the cadastral survey of Manila also in Malate) which was reserved as communal property into disposable land of the State for resale in small lots by the Land Tenure, Administration to the bona fide occupants is controlling in the case at bar.

The Court therein reaffirmed the established 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" 9 and stressed that "the property, as has been previously shown, was not acquired by the City of Manila with its own funds in its private or proprietary capacity. That it has in its name a registered title is not questioned, but this title should be deemed to be held in trust for the State as the land covered thereby was part of the territory of the City of Manila granted by the sovereign upon its creation." 10

There as here, the Court holds that the Acts in question (Republic Acts 4118 in Salas and Republic Act 3120 in the case at bar) were intended to implement the social justice policy of the Constitution and the government program of land for the landless and that they were not "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: ... The subdivision of the land and conveyane 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, 11 but simply as a manifestation of its right and power to deal with state property." 12

Since the challenge of respondents city officials against the constitutionality of Republic Act 3120 must fail as the City was not deprived thereby of anything it owns by acquisition with its private or corporate funds either under the due process clause or under the eminent domain provisions of the Constitution, the provisions of said Act must be enforced and petitioners are entitled to the injunction as prayed for implementing the Act's prohibition against their ejectment and demolition of their houses.

WHEREFORE, the appealed decision of the lower court (in Case No. L-24916) is hereby set aside, and the preliminary injunction heretofore issued on August 17, 1965 is hereby made permanent. The respondent Secretary of Agrarian Reform as successor agency of the Land Tenure Administration may now proceed with the due implementation of Republic Act 3120 in accordance with its terms and provisions. No costs.

Makalintal, C.J., Zaldivar, Castro, Barredo, Makasiar, Antonio, Esguerra, Muñoz Palma and Aquino, JJ., concur.

Fernandez, J., took no part.

 

 

 

Separate Opinions

 

FERNANDO, J., concurring:

It is undoubted that the opinion of the Court penned by Justice Teehankee, with his customary lucidity and thoroughness, is in accordance with our past decisions on the matter. Reflection on the innovation introduced by the present Constitution on local government, did, however, give rise to doubts on my part as to the continuing authoritativeness of Province of Zamboanga del Norte v. City of Zamboanga 1 and Salas v. Jarencio, 2 the two principal opinions relied upon, both of which decisions were promulgated before the effectivity of the new fundamental law. Hence this separate opinion setting forth the reasons why I join the rest of my brethren.

1. In the declaration of principles and state policies 3 it is specifically provided: "The State shall guarantee and promote the autonomy of local government units, especially the barrio, to ensure their fullest development as self-reliant communities." 4 What was succinctly expressed therein was made more definite in the article on local government. 5 Its first section reads: "The territorial and political subdivisions of the Philippines are the provinces, cities, municipalities, and barrios." 6 Then comes this provision: "The National Assembly shall enact a local government code which may not thereafter be amended except by a majority vote of all its Members, defining a more responsive and accountable local government structure with an effective system of recall, allocating among the different local government units their powers, responsibilities, and resources, and providing for the qualifications, election and removal, term, salaries, powers, functions, and duties of local officials, and all other matters relating to the organization and operation of the local units. However, any change in the existing form of local government shall not

take effect until ratified by a majority of the votes cast in a plebiscite called for the purpose."  7 After which there is this limitation on the power of local government: "No province, city, municipality, or barrio may be created, divided, merged, abolished, or its boundary substantially altered, except in accordance with the criteria established in the local government code, and subject to the approval by a majority of the votes cast in a plebiscite in the unit or units affected." 8 The autonomy of cities and municipalities is guaranteed in these words: "(1) Provinces with respect to component cities and municipalities, and cities and municipalities with respect to component barrios, shall ensure that the acts of their component units are with the scope of their assigned powers and functions. Highly urbanized cities, as determined by standards established in the local government code, shall be independent of province."  9 Then comes the last section: "Each local government unit shall have the power to create its own sources of revenue and to levy taxes, subject to such limitations as may be provided by law." 10

The objective is thus crystal-clear and well-defined. The goal is the fullest autonomy to local government units consistent with the basic theory of a unitary, not a federal, polity. It is the hope that thereby they will attain "their fullest development as self-reliant communities." 11 It is more than just the expression of an aspiration as attest by one of the articles of the Constitution devoted to such a subject. 12 It was not so under the 1935 charter. On this point, all that appeared therein was: "The President shall ... exercise general supervision over all local governments as may be provided by law ... . 13 According toJustice Laurel in Planas v. Gil, 14 "the deliberation of the Constitutional Convention show that the grant of the supervisory authority to the Chief Executive in this regard was in the nature of a compromise resulting from the conflict of views in that body, mainly between the historical view which recognizes the right of local self-government ... and the legal theory which sanctions the possession by the state of absolute control over local governments .. . The result was the recognition of the power of supervision and all its implications and the rejection of what otherwise would be an imperium in imperio to the detriment of a strong national government." 15 For the above provision starts with the vesting of control in the President "of all the executive departments, bureaus, or offices," as distinguished from "general supervision over all local governments as may be provided by law." 16 The difference in wording is highly significant. So it was stressed by the then Justice, later Chief Justice, Concepcion in Pelaez v. Auditor General: 17 "The power of control under this provision implies the right of the President to interfere in the exercise of such discretion as may be vested by law in the officers of the executive departments, bureaus, or offices of the national government, as well as to act in lieu of such officers. This power is denied by the Constitution to the Executive, insofar as local governments are concerned. With respect to the latter, the fundamental law permits him to wield no more authority than that of checking whether said local governments or the officers thereof perform their duties as provided by statutory enactments. Hence, the President cannot interfere with local governments, so long as the same or its officers act within the scope of their authority. He may not enact an ordinance which the municipal council has failed or refused to pass, even if it had thereby violated a duty imposed thereto by law, although he may see to it that the corresponding provincial officials take appropriate disciplinary action therefor. Neither may he vote, set aside or annul an ordinance passed by said council within the scope of its jurisdiction, no matter how patently unwise it may be. He may not even suspend an elective official of a regular municipality or take any disciplinary action against him, except on appeal from a decision of the corresponding provincial board." 18

2. So it was that under the 1935 Constitution, the national government when acting through the executive had only such general supervisory authority as was provided by statute. There was no restriction, however, on the legislative body to create or to abolish local government units. What was more, the powers vested in them could be expanded or diminished depending on the will of Congress. It could hardly be assumed therefore that under the previous charter, they could justifiably lay claim to real autonomy. For so long as the legislation itself took care of delineating the matters that were appropriately within the scope of their competence, there could be no objection to its validity. No constitutional problem arose. Things have changed radically. We start with the declared principle of the State guaranteeing and promoting the autonomy of local government units. 19 We have likewise noted the earnestness of the framers as to the attainment of such declared objective as set forth in the specific article 20on the matter. It is made obligatory on the National Assembly to enact a local government code. What is more, unlike the general run of statutes, it cannot be amended except by a

majority vote of all its members. It is made to include "a more responsive and accountable local government structure with an effective system of recall," with an expressed reference to "qualifications, election and removal, term, salaries, powers, functions, and duties of local officials, [as well as] all other matters relating to the organization and operation of local units." 21 Mention is likewise made of the "powers, responsibilities, and resources," 22 items that are identified with local autonomy. As if that were not enough, the last sentence of this particular provision reads: "However, any change in the existing form of local government shall not take effect until ratified by a majority of the votes cast in a plebiscite called for the purpose." 23 To the extent that the last section requires that the creation, division, merger, abolition or alteration of a boundary of a province, city, municipality, or barrio, must be in accordance with the criteria established in the local government code and subject to the approval by a majority of the votes cast in a plebiscite in such unit or units, the adherence to the basic principle of local self-government is quite clear. 24 Equally significant is the stress on the competence of a province, city, municipality or barrio "to create its own sources of revenue and to levy taxes subject to such limitations as may be provided by law." 25 The care and circumspection with which the framers saw to the enjoyment of real local self-government not only in terms of administration but also in terms of resources is thus manifest. Their intent is unmistakable. Unlike the case under the 1935 Constitution, there is thus a clear manifestation of the presumption now in favor of a local government unit. It is a well-nigh complete departure from what was. Nor should it be ignored that a highly urbanized city "shall be independent" not only of the national government but also of a province. 26 Would it not follow then that under the present dispensation, the moment property is transferred to it by the national government, its control over the same should be as extensive and as broad as possible. Considerations of the above nature gave rise to doubts on my part as to the decisions in the Zamboanga del Norte and Salas cases still retaining unimpaired their doctrinal force. Would this be a case of Republic Act No. 3120 being rendered inoperative by virtue of its repugnancy to the present Constitution? 27

3. Nonetheless, such doubts were set at rest by two considerations. The opinion of Justice Teehankee makes reference to the ratio decidendi of Salas v. Jarencio as to the trust character impressed on communal property of a municipal corporation, even if already titled. As set forth in the opinion: "The Court [in Salas v. Jarencio] reaffirmed the established general rule that 'regardless of the source of 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 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 agent for the performance of a part of its public work, 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' and stressed that 'the property, as has been previously shown, was not acquired by the City of Manila with its own funds in its private or proprietary capacity. That it has in its name 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." 28

This is a doctrine which to my mind is unaffected by grant of extensive local autonomy under the present Constitution. Its basis is the regalian doctrine. It is my view that under the Constitution, as was the case under the 1935 charter, the holding of a municipal corporation as a unit of state does not impair the plenary power of the national government exercising dominical rights to dispose of it in a manner it sees fit, subject to applicable constitutional limitations as to the citizenship of the grantee. An excerpt from Lee Hong Hok v. David 29 is relevant: "As there are overtones indicative of skepticism, if not of outright rejection, of the well-known distinction in public law between the government authority possessed by the state which is appropriately embraced in the concept of sovereignty, and its capacity to own or acquire property, it is not inappropriate to pursue the matter further. The former comes under the heading of imperium and the latter of dominium. The use of this term is appropriate with reference to lands held by the state in its proprietary character. In such capacity, it may provide for the exploitation and use of lands and other natural resources, including their disposition, except as limited by the Constitution. Dean Pound did speak of the confusion that existed during the medieval era between

such two concepts, but did note the existence of res publicae as a corollary to dominium. As far as the Philippines was concerned, there was a recognition by Justice Holmes in Cariño v. Insular Government, a case of Philippine origin, that 'Spain in its earlier decrees embodied the universal feudal theory that all lands were held from the Crown ... .' That was a manifestation of the concept of  jura regalia, which was adopted by the present Constitution, ownership however being vested in the state as such rather than the head thereof." 30

4. Much more compelling is the reliance on the opinion of Justice Teehankee on the even more fundamental principle of social justice, which was given further stress and a wider scope in the present Constitution. According to the opinion of the Court: "There as here, the Court holds that the Acts in question (Republic Act 4118 in Salasand Republic Act 3120 in the case at bar) were intended to implement the social justice policy of the Constitution and the government program of land for the landless and that they were not '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: ... 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." 31 It is true of course, that a local government unit, if expressly authorized by statute, could make use of its property in the same manner. It does appear, however, that there was no such grant of authority. Moreover, the national government is not only in a better position to make a reality of the social justice principle but also is subject to less pressure on the part of the affluent, at least where the distribution of state property is concerned. It is thus a more efficient instrument than a province, city or municipality to attain this highly desirable goal. In an economy essentially based on capitalism, where the power of concentrated wealth cannot be underestimated, the countervailing force exerted by a strong national government sensitive to the needs of our countrymen, deeply mired in the morass of poverty, the disinherited of fortune, can make itself much more effectively felt. If only for that cogent reason then, I am prepared to ignore whatever doubts or misgivings I did entertain at the outset.

Hence this concurrence.

 

 

Separate Opinions

FERNANDO, J., concurring:

It is undoubted that the opinion of the Court penned by Justice Teehankee, with his customary lucidity and thoroughness, is in accordance with our past decisions on the matter. Reflection on the innovation introduced by the present Constitution on local government, did, however, give rise to doubts on my part as to the continuing authoritativeness of Province of Zamboanga del Norte v. City of Zamboanga 1 and Salas v. Jarencio, 2 the two principal opinions relied upon, both of which decisions were promulgated before the effectivity of the new fundamental law. Hence this separate opinion setting forth the reasons why I join the rest of my brethren.

1. In the declaration of principles and state policies 3 it is specifically provided: "The State shall guarantee and promote the autonomy of local government units, especially the barrio, to ensure their fullest development as self-reliant communities." 4 What was succinctly expressed therein was made more definite in the article on local government. 5 Its first section reads: "The territorial and political subdivisions of the Philippines are the provinces, cities, municipalities, and barrios." 6 Then comes this provision: "The National Assembly shall enact a local government code which may not thereafter be amended except by

a majority vote of all its Members, defining a more responsive and accountable local government structure with an effective system of recall, allocating among the different local government units their powers, responsibilities, and resources, and providing for the qualifications, election and removal, term, salaries, powers, functions, and duties of local officials, and all other matters relating to the organization and operation of the local units. However, any change in the existing form of local government shall not take effect until ratified by a majority of the votes cast in a plebiscite called for the purpose."  7 After which there is this limitation on the power of local government: "No province, city, municipality, or barrio may be created, divided, merged, abolished, or its boundary substantially altered, except in accordance with the criteria established in the local government code, and subject to the approval by a majority of the votes cast in a plebiscite in the unit or units affected." 8 The autonomy of cities and municipalities is guaranteed in these words: "(1) Provinces with respect to component cities and municipalities, and cities and municipalities with respect to component barrios, shall ensure that the acts of their component units are with the scope of their assigned powers and functions. Highly urbanized cities, as determined by standards established in the local government code, shall be independent of province."  9 Then comes the last section: "Each local government unit shall have the power to create its own sources of revenue and to levy taxes, subject to such limitations as may be provided by law." 10

The objective is thus crystal-clear and well-defined. The goal is the fullest autonomy to local government units consistent with the basic theory of a unitary, not a federal, polity. It is the hope that thereby they will attain "their fullest development as self-reliant communities." 11 It is more than just the expression of an aspiration as attest by one of the articles of the Constitution devoted to such a subject. 12 It was not so under the 1935 charter. On this point, all that appeared therein was: "The President shall ... exercise general supervision over all local governments as may be provided by law ... . 13 According toJustice Laurel in Planas v. Gil, 14 "the deliberation of the Constitutional Convention show that the grant of the supervisory authority to the Chief Executive in this regard was in the nature of a compromise resulting from the conflict of views in that body, mainly between the historical view which recognizes the right of local self-government ... and the legal theory which sanctions the possession by the state of absolute control over local governments .. . The result was the recognition of the power of supervision and all its implications and the rejection of what otherwise would be an imperium in imperio to the detriment of a strong national government." 15 For the above provision starts with the vesting of control in the President "of all the executive departments, bureaus, or offices," as distinguished from "general supervision over all local governments as may be provided by law." 16 The difference in wording is highly significant. So it was stressed by the then Justice, later Chief Justice, Concepcion in Pelaez v. Auditor General: 17 "The power of control under this provision implies the right of the President to interfere in the exercise of such discretion as may be vested by law in the officers of the executive departments, bureaus, or offices of the national government, as well as to act in lieu of such officers. This power is denied by the Constitution to the Executive, insofar as local governments are concerned. With respect to the latter, the fundamental law permits him to wield no more authority than that of checking whether said local governments or the officers thereof perform their duties as provided by statutory enactments. Hence, the President cannot interfere with local governments, so long as the same or its officers act within the scope of their authority. He may not enact an ordinance which the municipal council has failed or refused to pass, even if it had thereby violated a duty imposed thereto by law, although he may see to it that the corresponding provincial officials take appropriate disciplinary action therefor. Neither may he vote, set aside or annul an ordinance passed by said council within the scope of its jurisdiction, no matter how patently unwise it may be. He may not even suspend an elective official of a regular municipality or take any disciplinary action against him, except on appeal from a decision of the corresponding provincial board." 18

2. So it was that under the 1935 Constitution, the national government when acting through the executive had only such general supervisory authority as was provided by statute. There was no restriction, however, on the legislative body to create or to abolish local government units. What was more, the powers vested in them could be expanded or diminished depending on the will of Congress. It could hardly be assumed therefore that under the previous charter, they could justifiably lay claim to real autonomy. For so long as the legislation itself took care of delineating the matters that were appropriately within the scope of their competence, there could be no objection to its

validity. No constitutional problem arose. Things have changed radically. We start with the declared principle of the State guaranteeing and promoting the autonomy of local government units. 19 We have likewise noted the earnestness of the framers as to the attainment of such declared objective as set forth in the specific article 20on the matter. It is made obligatory on the National Assembly to enact a local government code. What is more, unlike the general run of statutes, it cannot be amended except by a majority vote of all its members. It is made to include "a more responsive and accountable local government structure with an effective system of recall," with an expressed reference to "qualifications, election and removal, term, salaries, powers, functions, and duties of local officials, [as well as] all other matters relating to the organization and operation of local units." 21 Mention is likewise made of the "powers, responsibilities, and resources," 22 items that are identified with local autonomy. As if that were not enough, the last sentence of this particular provision reads: "However, any change in the existing form of local government shall not take effect until ratified by a majority of the votes cast in a plebiscite called for the purpose." 23 To the extent that the last section requires that the creation, division, merger, abolition or alteration of a boundary of a province, city, municipality, or barrio, must be in accordance with the criteria established in the local government code and subject to the approval by a majority of the votes cast in a plebiscite in such unit or units, the adherence to the basic principle of local self-government is quite clear. 24 Equally significant is the stress on the competence of a province, city, municipality or barrio "to create its own sources of revenue and to levy taxes subject to such limitations as may be provided by law." 25 The care and circumspection with which the framers saw to the enjoyment of real local self-government not only in terms of administration but also in terms of resources is thus manifest. Their intent is unmistakable. Unlike the case under the 1935 Constitution, there is thus a clear manifestation of the presumption now in favor of a local government unit. It is a well-nigh complete departure from what was. Nor should it be ignored that a highly urbanized city "shall be independent" not only of the national government but also of a province. 26 Would it not follow then that under the present dispensation, the moment property is transferred to it by the national government, its control over the same should be as extensive and as broad as possible. Considerations of the above nature gave rise to doubts on my part as to the decisions in the Zamboanga del Norte and Salas cases still retaining unimpaired their doctrinal force. Would this be a case of Republic Act No. 3120 being rendered inoperative by virtue of its repugnancy to the present Constitution? 27

3. Nonetheless, such doubts were set at rest by two considerations. The opinion of Justice Teehankee makes reference to the ratio decidendi of Salas v. Jarencio as to the trust character impressed on communal property of a municipal corporation, even if already titled. As set forth in the opinion: "The Court [in Salas v. Jarencio] reaffirmed the established general rule that 'regardless of the source of 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 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 agent for the performance of a part of its public work, 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' and stressed that 'the property, as has been previously shown, was not acquired by the City of Manila with its own funds in its private or proprietary capacity. That it has in its name 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." 28

This is a doctrine which to my mind is unaffected by grant of extensive local autonomy under the present Constitution. Its basis is the regalian doctrine. It is my view that under the Constitution, as was the case under the 1935 charter, the holding of a municipal corporation as a unit of state does not impair the plenary power of the national government exercising dominical rights to dispose of it in a manner it sees fit, subject to applicable constitutional limitations as to the citizenship of the grantee. An excerpt from Lee Hong Hok v. David 29 is relevant: "As there are overtones indicative of skepticism, if not of outright rejection, of the well-known distinction in public law between the government authority possessed by the state which is appropriately embraced in the concept of sovereignty, and its

capacity to own or acquire property, it is not inappropriate to pursue the matter further. The former comes under the heading of imperium and the latter of dominium. The use of this term is appropriate with reference to lands held by the state in its proprietary character. In such capacity, it may provide for the exploitation and use of lands and other natural resources, including their disposition, except as limited by the Constitution. Dean Pound did speak of the confusion that existed during the medieval era between such two concepts, but did note the existence of res publicae as a corollary to dominium. As far as the Philippines was concerned, there was a recognition by Justice Holmes in Cariño v. Insular Government, a case of Philippine origin, that 'Spain in its earlier decrees embodied the universal feudal theory that all lands were held from the Crown ... .' That was a manifestation of the concept of  jura regalia, which was adopted by the present Constitution, ownership however being vested in the state as such rather than the head thereof." 30

4. Much more compelling is the reliance on the opinion of Justice Teehankee on the even more fundamental principle of social justice, which was given further stress and a wider scope in the present Constitution. According to the opinion of the Court: "There as here, the Court holds that the Acts in question (Republic Act 4118 in Salasand Republic Act 3120 in the case at bar) were intended to implement the social justice policy of the Constitution and the government program of land for the landless and that they were not '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: ... 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." 31 It is true of course, that a local government unit, if expressly authorized by statute, could make use of its property in the same manner. It does appear, however, that there was no such grant of authority. Moreover, the national government is not only in a better position to make a reality of the social justice principle but also is subject to less pressure on the part of the affluent, at least where the distribution of state property is concerned. It is thus a more efficient instrument than a province, city or municipality to attain this highly desirable goal. In an economy essentially based on capitalism, where the power of concentrated wealth cannot be underestimated, the countervailing force exerted by a strong national government sensitive to the needs of our countrymen, deeply mired in the morass of poverty, the disinherited of fortune, can make itself much more effectively felt. If only for that cogent reason then, I am prepared to ignore whatever doubts or misgivings I did entertain at the outset.

Hence this concurrence.

Footnotes

1 Substitution of respondents was made as per the Court's resolution of July 26, 1973 granting petitioners' motion for such substitution.

2 Lot 21-B, Block 610 of the cadastral survey of the City of Manila with an area of 10,198 square meters described as located in the San Andres Playground. The Act also makes the same disposition of another lot known as Lot 62 of Block 573, with which petitioners are not involved.

3 Third Division then composed of Castro, Capistrano & Villamor, JJ.

4 Docketed as CA-G.R. No. 35453.

5 Docketed as CA-G.R. No. 35269.

6 Section 1 of the Act thus provides: "Section 1. lot 62 of Block 573 and Lot 21-B of Block 610 of the cadastral survey of the City of Manila, all situated in the District of Malate, City of Manila, which are reserved as communal property are hereby converted into disposable or alienable lands of the State, to be placed under the administration and 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, fix the price of each lot 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 to 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, further, 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, further, That in the event of lease, the rentals which may be charged shall not exceed eight per cent per annum of the assessed valuation of the property leased: Provided, finally, That in fixing the price of each lot, the cost of subdivision and survey shall not be included."

7 Prov. of Zamboanga del Norte vs. City of Zamboanga, 22 SCRA 1334 (1968). Cf. Nawasa cases where the municipality' waterworks system was held patrimonial property of the municipality that established it, of which it cannot be deprive except by the exercise of eminent domain with the payment of full compensation as held in Mun. of Paete vs. Nawasa, 33 SCRA 122 (May 29, 1970) and cases cited; Mun. of Compostela, Cebu vs. Nawasa, 18 SCRA 988 (1966); and City of Baguio vs. Nawasa, 18 SCRA 988 (1966); and City of Baguio vs. Nawasa, 106 PHIL. 144 (1959).

8 46 SCRA 734 (1972), per Esguerra, J.

9 Idem, at page 747, emphasis added.

10 Idem, at page 750.

11 Reproduced in Art. IV, section 2 of the 1973 Constitution.

12 46 SCRA at pages 751-752, emphasis added.

FERNANDO, J., concurring:

1 L-24440, March 28, 1968, 22 SCRA 1334.

2 L-29788, August 30, 1972, 46 SCRA 734.

3 Article II of the Constitution.

4 Section 10 of Article II.

5 Article XI.

6 Section 1 of Article XI.

7 Section 2 of Article XI.

8 Section 3 of Article XI.

9 Section 4 of Article XI.

10 Section 5 of Article XI.

11 Section 10 of Article II of the Constitution.

12 Article XI.

13 Article VII, Section 10, par. 1 of the 1935 Constitution.

14 67 Phil. 62 (1939).

15 Ibid, 78.

16 Section 10, par. 1 of Article VII of the 1935 Constitution reads in full: "The President shall have control of all the executive departments, bureaus, or offices, exercise general supervision over all local governments as may be provided by law, and take care that all laws be faithfully executed."

17 L-23825, December 24, 1965, 15 SCRA 569.

18 Ibid, 582-583.

19 Cf. Section 10 of Article II.

20 Cf. Article XI.

21 Cf. Section 2 of Article XI.

22 Ibid.

23 Ibid.

24 Cf. Section 3 of Article XI.

25 Cf. Section 5 of Article XI.

26 Cf. Section 4 of Article XI.

27 Cf. People v. Linsangan. 62 Phil. 646 (1935); De los Santos v. Mallare, 87 Phil. 289 (1950) ; Martinez v. Morfe, L-34022, March 24, 1972, 44 SCRA 22.

28 Opinion of Justice Teehankee, 9.

29 L-30389, December 27, 1972, 48 SCRA 372.

30 Ibid, 377.

31 Opinion of Justice Teehankee, 9.

The Lawphil Project - Arellano Law Foundation

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

 

G.R. No. 97764 August 10, 1992

LEVY D. MACASIANO, Brigadier General/PNP Superintendent, Metropolitan Traffic Command, petitioner,vs.HONORABLE ROBERTO C. DIOKNO, Presiding Judge, Branch 62, Regional Trial Court of Makati, Metro Manila, MUNICIPALITY OF PARAÑAQUE, METRO MANILA, PALANYAG KILUSANG BAYAN FOR SERVICE, respondents.

Ceferino, Padua Law Office for Palanyag Kilusang Bayan for service.

Manuel de Guia for Municipality of Parañaque.

 

MEDIALDEA, J.:

This is a petition for certiorari under Rule 65 of the Rules of Court seeking the annulment of the decision of the Regional Trial Court of Makati, Branch 62, which granted the writ of preliminary injunction applied for by respondents Municipality of Parañaque and Palanyag Kilusang Bayan for Service (Palanyag for brevity) against petitioner herein.

The antecedent facts are as follows:

On June 13, 1990, the respondent municipality passed Ordinance No. 86, Series of 1990 which authorized the closure of J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena Streets located at Baclaran, Parañaque, Metro Manila and the establishment of a flea market thereon. The said ordinance was approved by the municipal council pursuant to MMC Ordinance No. 2, Series of 1979, authorizing and regulating the use of certain city and/or municipal streets, roads and open spaces within Metropolitan Manila as sites for flea market and/or vending areas, under certain terms and conditions.

On July 20, 1990, the Metropolitan Manila Authority approved Ordinance No. 86, s. 1990 of the municipal council of respondent municipality subject to the following conditions:

1. That the aforenamed streets are not used for vehicular traffic, and that the majority of the residents do not oppose the establishment of the flea market/vending areas thereon;

2. That the 2-meter middle road to be used as flea market/vending area shall be marked distinctly, and that the 2 meters on both sides of the road shall be used by pedestrians;

3. That the time during which the vending area is to be used shall be clearly designated;

4. That the use of the vending areas shall be temporary and shall be closed once the reclaimed areas are developed and donated by the Public Estate Authority.

On June 20, 1990, the municipal council of Parañaque issued a resolution authorizing Parañaque Mayor Walfrido N. Ferrer to enter into contract with any service cooperative for the establishment, operation, maintenance and management of flea markets and/or vending areas.

On August 8, 1990, respondent municipality and respondent Palanyag, a service cooperative, entered into an agreement whereby the latter shall operate, maintain and manage the flea market in the aforementioned streets with the obligation to remit dues to the treasury of the municipal government of Parañaque. Consequently, market stalls were put up by respondent Palanyag on the said streets.

On September 13, 1990, petitioner Brig. Gen. Macasiano, PNP Superintendent of the Metropolitan Traffic Command, ordered the destruction and confiscation of stalls along G.G. Cruz and J. Gabriel St. in Baclaran. These stalls were later returned to respondent Palanyag.

On October 16, 1990, petitioner Brig. General Macasiano wrote a letter to respondent Palanyag giving the latter ten (10) days to discontinue the flea market; otherwise, the market stalls shall be dismantled.

Hence, on October 23, 1990, respondents municipality and Palanyag filed with the trial court a joint petition for prohibition and mandamus with damages and prayer for preliminary injunction, to which the petitioner filed his memorandum/opposition to the issuance of the writ of preliminary injunction.

On October 24, 1990, the trial court issued a temporary restraining order to enjoin petitioner from enforcing his letter-order of October 16, 1990 pending the hearing on the motion for writ of preliminary injunction.

On December 17, 1990, the trial court issued an order upholding the validity of Ordinance No. 86 s. 1990 of the Municipality' of Parañaque and enjoining petitioner Brig. Gen. Macasiano from enforcing his letter-order against respondent Palanyag.

Hence, this petition was filed by the petitioner thru the Office of the Solicitor General alleging grave abuse of discretion tantamount to lack or excess of jurisdiction on the part of the trial judge in issuing the assailed order.

The sole issue to be resolved in this case is whether or not an ordinance or resolution issued by the municipal council of Parañaque authorizing the lease and use of public streets or thoroughfares as sites for flea markets is valid.

The Solicitor General, in behalf of petitioner, contends that municipal roads are used for public service and are therefore public properties; that as such, they cannot be subject to private appropriation or private contract by any person, even by the respondent Municipality of Parañaque. Petitioner submits that a property already dedicated to public use cannot be used for another public purpose and that absent a clear showing that the Municipality of Parañaque has been granted by the legislature specific authority to convert a property already in public use to another public use, respondent municipality is, therefore, bereft of any authority to close municipal roads for the establishment of a flea market. Petitioner also submits that assuming that the respondent municipality is authorized to close streets, it failed to comply with the conditions set forth by the Metropolitan Manila Authority for the approval of the ordinance providing for the establishment of flea markets on public streets. Lastly, petitioner contends that by allowing the municipal streets to be used by market vendors the municipal council of respondent municipality violated its duty under the Local Government Code to promote the general welfare of the residents of the municipality.

In upholding the legality of the disputed ordinance, the trial court ruled:

. . . that Chanter II Section 10 of the Local Government Code is a statutory grant of power given to local government units, the Municipality of Parañaque as such, is empowered under that law to close its roads, streets or alley subject to limitations stated therein (i.e., that it is in accordance with existing laws and the provisions of this code).

xxx xxx xxx

The actuation of the respondent Brig. Gen. Levi Macasiano, though apparently within its power is in fact an encroachment of power legally vested to the municipality, precisely because when the municipality enacted the ordinance in question — the authority of the respondent as Police Superintendent ceases to be operative on the ground that the streets covered by the ordinance ceases to be a public thoroughfare. (pp. 33-34, Rollo)

We find the petition meritorious. In resolving the question of whether the disputed municipal ordinance authorizing the flea market on the public streets is valid, it is necessary to examine the laws in force during the time the said ordinance was enacted, namely, Batas Pambansa Blg. 337, otherwise known as Local Government Code, in connection with established principles embodied in the Civil Code an property and settled jurisprudence on the matter.

The property of provinces, cities and municipalities is divided into property for public use and patrimonial property (Art. 423, Civil Code). As to what consists of property for public use, Article 424 of Civil Code states:

Art. 424. Property for public use, in the provinces, cities and municipalities, consists of the provincial roads, city streets, the squares, fountains, public waters, promenades, and public works for public service paid for by said provinces, cities or municipalities.

All other property possessed by any of them is patrimonial and shall be governed by this Code, without prejudice to the provisions of special laws.

Based on the foregoing, J. Gabriel G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena streets are local roads used for public service and are therefore considered public properties of respondent municipality. Properties of the local government which are devoted to public service are deemed

public and are under the absolute control of Congress (Province of Zamboanga del Norte v. City of Zamboanga, L-24440, March 28, 1968, 22 SCRA 1334). Hence, local governments have no authority whatsoever to control or regulate the use of public properties unless specific authority is vested upon them by Congress. One such example of this authority given by Congress to the local governments is the power to close roads as provided in Section 10, Chapter II of the Local Government Code, which states:

Sec. 10. Closure of roads. — A local government unit may likewise, through its head acting pursuant to a resolution of its sangguniang and in accordance with existing law and the provisions of this Code, close any barangay, municipal, city or provincial road, street, alley, park or square. No such way or place or any part of thereof shall be close without indemnifying any person prejudiced thereby. A property thus withdrawn from public use may be used or conveyed for any purpose for which other real property belonging to the local unit concerned might be lawfully used or conveyed. (Emphasis ours).

However, the aforestated legal provision which gives authority to local government units to close roads and other similar public places should be read and interpreted in accordance with basic principles already established by law. These basic principles have the effect of limiting such authority of the province, city or municipality to close a public street or thoroughfare. Article 424 of the Civil Code lays down the basic principle that properties of public dominion devoted to public use and made available to the public in general are outside the commerce of man and cannot be disposed of or leased by the local government unit to private persons. Aside from the requirement of due process which should be complied with before closing a road, street or park, the closure should be for the sole purpose of withdrawing the road or other public property from public use when circumstances show that such property is no longer intended or necessary for public use or public service. When it is already withdrawn from public use, the property then becomes patrimonial property of the local government unit concerned (Article 422, Civil Code; Cebu Oxygen, etc. et al. v. Bercilles, et al., G.R. No. L-40474, August 29, 1975, 66 SCRA 481). It is only then that the respondent municipality can "use or convey them for any purpose for which other real property belonging to the local unit concerned might be lawfully used or conveyed" in accordance with the last sentence of Section 10, Chapter II of Blg. 337, known as Local Government Code. In one case, the City Council of Cebu, through a resolution, declared the terminal road of M. Borces Street, Mabolo, Cebu City as an abandoned road, the same not being included in the City Development Plan. Thereafter, the City Council passes another resolution authorizing the sale of the said abandoned road through public bidding. We held therein that the City of Cebu is empowered to close a city street and to vacate or withdraw the same from public use. Such withdrawn portion becomes patrimonial property which can be the object of an ordinary contract (Cebu Oxygen and Acetylene Co., Inc. v. Bercilles, et al., G.R. No.L-40474, August 29, 1975, 66 SCRA 481). However, those roads and streets which are available to the public in general and ordinarily used for vehicular traffic are still considered public property devoted to public use. In such case, the local government has no power to use it for another purpose or to dispose of or lease it to private persons. This limitation on the authority of the local government over public properties has been discussed and settled by this Court en banc in "Francisco V. Dacanay, petitioner v. Mayor Macaria Asistio, Jr., et al., respondents, G.R. No. 93654, May 6, 1992." This Court ruled:

There is no doubt that the disputed areas from which the private respondents' market stalls are sought to be evicted are public streets, as found by the trial court in Civil Case No. C-12921. A public street is property for public use hence outside the commerce of man (Arts. 420, 424, Civil Code). Being outside the commerce of man, it may not be the subject of lease or others contract (Villanueva, et al. v. Castañeda and Macalino, 15 SCRA 142 citing the Municipality of Cavite v. Rojas, 30 SCRA 602;

Espiritu v. Municipal Council of Pozorrubio, 102 Phil. 869; And Muyot v. De la Fuente, 48 O.G. 4860).

As the stallholders pay fees to the City Government for the right to occupy portions of the public street, the City Government, contrary to law, has been leasing portions of the streets to them. Such leases or licenses are null and void for being contrary to law. The right of the public to use the city streets may not be bargained away through contract. The interests of a few should not prevail over the good of the greater number in the community whose health, peace, safety, good order and general welfare, the respondent city officials are under legal obligation to protect.

The Executive Order issued by acting Mayor Robles authorizing the use of Heroes del '96 Street as a vending area for stallholders who were granted licenses by the city government contravenes the general law that reserves city streets and roads for public use. Mayor Robles' Executive Order may not infringe upon the vested right of the public to use city streets for the purpose they were intended to serve: i.e., as arteries of travel for vehicles and pedestrians.

Even assuming,  in gratia argumenti, that respondent municipality has the authority to pass the disputed ordinance, the same cannot be validly implemented because it cannot be considered approved by the Metropolitan Manila Authority due to non-compliance by respondent municipality of the conditions imposed by the former for the approval of the ordinance, to wit:

1. That the aforenamed streets are not used for vehicular traffic, and that the majority of the residents do(es) not oppose the establishment of the flea market/vending areas thereon;

2. That the 2-meter middle road to be used as flea market/vending area shall be marked distinctly, and that the 2 meters on both sides of the road shall be used by pedestrians;

3. That the time during which the vending area is to be used shall be clearly designated;

4. That the use of the vending areas shall be temporary and shall be closed once the reclaimed areas are developed and donated by the Public Estate Authority. (p. 38, Rollo)

Respondent municipality has not shown any iota of proof that it has complied with the foregoing conditions precedent to the approval of the ordinance. The allegations of respondent municipality that the closed streets were not used for vehicular traffic and that the majority of the residents do not oppose the establishment of a flea market on said streets are unsupported by any evidence that will show that this first condition has been met. Likewise, the designation by respondents of a time schedule during which the flea market shall operate is absent.

Further, it is of public notice that the streets along Baclaran area are congested with people, houses and traffic brought about by the proliferation of vendors occupying the streets. To license and allow the establishment of a flea market along J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena streets in Baclaran would not help in solving the problem of congestion. We take note of the other observations of the Solicitor General when he said:

. . . There have been many instances of emergencies and fires where ambulances and fire engines, instead of using the roads for a more direct access to the fire area, have to maneuver and look for other streets which are not occupied by stalls and vendors thereby losing valuable time which could, otherwise, have been spent in saving properties and lives.

Along G.G. Cruz Street is a hospital, the St. Rita Hospital. However, its ambulances and the people rushing their patients to the hospital cannot pass through G.G. Cruz because of the stalls and the vendors. One can only imagine the tragedy of losing a life just because of a few seconds delay brought about by the inaccessibility of the streets leading to the hospital.

The children, too, suffer. In view of the occupancy of the roads by stalls and vendors, normal transportation flow is disrupted and school children have to get off at a distance still far from their schools and walk, rain or shine.

Indeed one can only imagine the garbage and litter left by vendors on the streets at the end of the day. Needless to say, these cause further pollution, sickness and deterioration of health of the residents therein. (pp. 21-22, Rollo)

Respondents do not refute the truth of the foregoing findings and observations of petitioners. Instead, respondents want this Court to focus its attention solely on the argument that the use of public spaces for the establishment of a flea market is well within the powers granted by law to a local government which should not be interfered with by the courts.

Verily, the powers of a local government unit are not absolute. They are subject to limitations laid down by toe Constitution and the laws such as our Civil Code. Moreover, the exercise of such powers should be subservient to paramount considerations of health and well-being of the members of the community. Every local government unit has the sworn obligation to enact measures that will enhance the public health, safety and convenience, maintain peace and order, and promote the general prosperity of the inhabitants of the local units. Based on this objective, the local government should refrain from acting towards that which might prejudice or adversely affect the general welfare.

As what we have said in the Dacanay case, the general public have a legal right to demand the demolition of the illegally constructed stalls in public roads and streets and the officials of respondent municipality have the corresponding duty arising from public office to clear the city streets and restore them to their specific public purpose.

The instant case as well as the Dacanay case, involves an ordinance which is void and illegal for lack of basis and authority in laws applicable during its time. However, at this point, We find it worthy to note that Batas Pambansa Blg. 337, known as Local Government Lode, has already been repealed by Republic Act No. 7160 known as Local Government Code of 1991 which took effect on January 1, 1992. Section 5(d) of the new Code provides that rights and obligations existing on the date of effectivity of the new Code and arising out of contracts or any other source of prestation involving a local government unit shall be governed by the original terms and conditions of the said contracts or the law in force at the time such rights were vested.

ACCORDINGLY, the petition is GRANTED and the decision of the respondent Regional Trial Court dated December 17, 1990 which granted the writ of preliminary injunction enjoining petitioner as PNP Superintendent, Metropolitan Traffic Command from enforcing the demolition of market stalls along J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena streets is hereby RESERVED and SET ASIDE.

SO ORDERED.

Narvasa, C.J., Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin, Griño-Aquino, Regalado, Davide, Jr., Romero, Nocon and Bellosillo, JJ., concur.

The Lawphil Project - Arellano Law Foundation

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

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 Use1 ................................................ Capitol Site3 ................................................ School Site3 ................................................ Hospital Site3 ................................................ Leprosarium1 ................................................ Curuan School1 ................................................ Trade School2 ................................................ Burleigh School2 ................................................ High School Playground

9 ................................................ Burleighs1 ................................................ Hydro-Electric Site (Magay)1 ................................................ San Roque

23 ................................................ vacant

          It appears that in 1945, the capital of Zamboanga Province was transferred to Dipolog. 2 Subsequently, or on June 16, 1948, Republic Act 286 was approved creating the municipality of Molave and making it the capital of Zamboanga Province.

          On May 26, 1949, the Appraisal Committee formed by the Auditor General, pursuant to Commonwealth Act 39, fixed the value of the properties and buildings in question left by Zamboanga Province in Zamboanga City at P1,294,244.00. 3

          On June 6, 1952, Republic Act 711 was approved dividing the province of Zamboanga into two (2): Zamboanga del Norte and Zamboanga del Sur. As to how the assets and obligations of the old province were to be divided between the two new ones, Sec. 6 of that law provided:

          Upon the approval of this Act, the funds, assets and other properties and the obligations of the province of Zamboanga shall be divided equitably between the Province of Zamboanga del Norte and the Province of Zamboanga del Sur by the President of the Philippines, upon the recommendation of the Auditor General.

          Pursuant thereto, the Auditor General, on January 11, 1955, apportioned the assets and obligations of the defunct Province of Zamboanga as follows: 54.39% for Zamboanga del Norte and 45.61% for Zamboanga del Sur. Zamboanga del Norte therefore became entitled to 54.39% of P1,294,244.00, the total value of the lots and buildings in question, or P704,220.05 payable by Zamboanga City.

          On March 17, 1959, the Executive Secretary, by order of the President, issued a ruling 4 holding that Zamboanga del Norte had a vested right as owner (should be co-owner pro-indiviso) of the properties mentioned in Sec. 50 of Commonwealth Act 39, and is entitled to the price thereof, payable by Zamboanga City. This ruling revoked the previous Cabinet Resolution of July 13, 1951 conveying all the said 50 lots and buildings thereon to Zamboanga City for P1.00, effective as of 1945, when the provincial capital of the then Zamboanga Province was transferred to Dipolog.

          The Secretary of Finance then authorized the Commissioner of Internal Revenue to deduct an amount equal to 25% of the regular internal revenue allotment for the City of Zamboanga for the quarter ending March 31, 1960, then for the quarter ending June 30, 1960, and again for the first quarter of the fiscal year 1960-1961. The deductions, all aggregating P57,373.46, was credited to the province of Zamboanga del Norte, in partial payment of the P764,220.05 due it.

          However, on June 17, 1961, Republic Act 3039 was approved amending Sec. 50 of Commonwealth Act 39 by providing that —

          All buildings, properties and assets belonging to the former province of Zamboanga and located within the City of Zamboanga are hereby transferred, free of charge, in favor of the said City of Zamboanga. (Stressed for emphasis).

          Consequently, the Secretary of Finance, on July 12, 1961, ordered the Commissioner of Internal Revenue to stop from effecting further payments to Zamboanga del Norte and to return to Zamboanga City the sum of P57,373.46 taken from it out of the internal revenue allotment of Zamboanga del Norte. Zamboanga City admits that since the enactment of Republic Act 3039, P43,030.11 of the P57,373.46 has already been returned to it.

          This constrained plaintiff-appellee Zamboanga del Norte to file on March 5, 1962, a complaint entitled "Declaratory Relief with Preliminary Mandatory Injunction" in the Court of First Instance of Zamboanga del Norte against defendants-appellants Zamboanga City, the Secretary of Finance and the Commissioner of Internal Revenue. It was prayed that: (a) Republic Act 3039 be declared unconstitutional for depriving plaintiff province of property without due process and just compensation; (b) Plaintiff's rights and obligations under said law be declared; (c) The Secretary of Finance and the Internal Revenue Commissioner be enjoined from reimbursing the sum of P57,373.46 to defendant City; and (d) The latter be ordered to continue paying the balance of P704,220.05 in quarterly installments of 25% of its internal revenue allotments.

          On June 4, 1962, the lower court ordered the issuance of preliminary injunction as prayed for. After defendants filed their respective answers, trial was held. On August 12, 1963, judgment was rendered, the dispositive portion of which reads:

          WHEREFORE, judgment is hereby rendered declaring Republic Act No. 3039 unconstitutional insofar as it deprives plaintiff Zamboanga del Norte of its private properties, consisting of 50 parcels of land and the improvements thereon under certificates of title (Exhibits "A" to "A-49") in the name of the defunct province of Zamboanga; ordering defendant City of Zamboanga to pay to the plaintiff the sum of P704,220.05 payment thereof to be deducted from its regular quarterly internal revenue allotment equivalent to 25% thereof every quarter until said amount shall have been fully paid; ordering defendant Secretary of Finance to direct defendant Commissioner of Internal Revenue to deduct 25% from the regular quarterly internal revenue allotment for defendant City of Zamboanga and to remit the same to plaintiff Zamboanga del Norte until said sum of P704,220.05 shall have been fully paid; ordering plaintiff Zamboanga del Norte to execute through its proper officials the corresponding public instrument deeding to defendant City of Zamboanga the 50 parcels of land and the improvements thereon under the certificates of title (Exhibits "A" to "A-49") upon payment by the latter of the aforesaid sum of P704,220.05 in full; dismissing the counterclaim of defendant City of Zamboanga; and declaring permanent the preliminary mandatory injunction issued on June 8, 1962, pursuant to the order of the Court dated June 4, 1962. No costs are assessed against the defendants.

          It is SO ORDERED.

          Subsequently, but prior to the perfection of defendants' appeal, plaintiff province filed a motion to reconsider praying that Zamboanga City be ordered instead to pay the P704,220.05 in lump sum with 6% interest per annum. Over defendants' opposition, the lower court granted plaintiff province's motion.

          The defendants then brought the case before Us on appeal.

          Brushing aside the procedural point concerning the property of declaratory relief filed in the lower court on the assertion that the law had already been violated and that plaintiff sought to give it coercive effect, since assuming the same to be true, the Rules anyway authorize the

conversion of the proceedings to an ordinary action, 5 We proceed to the more important and principal question of the validity of Republic Act 3039.

          The validity of the law ultimately depends on the nature of the 50 lots and buildings thereon in question. For, the matter involved here is the extent of legislative control over the properties of a municipal corporation, of which a province is one. The principle itself is simple: If the property is owned by the municipality (meaning municipal corporation) in its public and governmental capacity, the property is public and Congress has absolute control over it. But if the property is owned in its private or proprietary capacity, then it is patrimonial and Congress has no absolute control. The municipality cannot be deprived of it without due process and payment of just compensation. 6

          The capacity in which the property is held is, however, dependent on the use to which it is intended and devoted. Now, which of two norms, i.e., that of the Civil Code or that obtaining under the law of Municipal Corporations, must be used in classifying the properties in question?

          The Civil Code classification is embodied in its Arts. 423 and 424 which provide: 1äwphï1.ñët

          ART. 423. The property of provinces, cities, and municipalities is divided into property for public use and patrimonial property.

          ART. 424. Property for public use, in the provinces, cities, and municipalities, consists of the provincial roads, city streets, municipal streets, the squares, fountains, public waters, promenades, and public works for public service paid for by said provinces, cities, or municipalities.

All other property possessed by any of them is patrimonial and shall be governed by this Code, without prejudice to the provisions of special laws. (Stressed for emphasis).

          Applying the above cited norm, all the properties in question, except the two (2) lots used as High School playgrounds, could be considered as patrimonial properties of the former Zamboanga province. Even the capital site, the hospital and leprosarium sites, and the school sites will be considered patrimonial for they are not for public use. They would fall under the phrase "public works for public service" for it has been held that under 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 Site2816 ...................................... 149 ...................................... School Site3281 ...................................... 1224 ...................................... Hospital Site3282 ...................................... 1226 ...................................... Hospital Site3283 ...................................... 1225 ...................................... Hospital Site3748 ...................................... 434-A-1 ...................................... School Site5406 ...................................... 171 ...................................... School Site

5564 ...................................... 168 ...................................... High School Play-ground

5567 ...................................... 157 & 158 ...................................... Trade School

5583 ...................................... 167 ...................................... High School Play-ground

6181 ...................................... (O.C.T.) ...................................... Curuan School11942 ...................................... 926 ...................................... Leprosarium11943 ...................................... 927 ...................................... Leprosarium11944 ...................................... 925 ...................................... Leprosarium5557 ...................................... 170 ...................................... Burleigh School5562 ...................................... 180 ...................................... Burleigh School5565 ...................................... 172-B ...................................... Burleigh5570 ...................................... 171-A ...................................... Burleigh5571 ...................................... 172-C ...................................... Burleigh5572 ...................................... 174 ...................................... Burleigh

5573 ...................................... 178 ...................................... Burleigh5585 ...................................... 171-B ...................................... Burleigh5586 ...................................... 173 ...................................... Burleigh5587 ...................................... 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 e5577 ...................................... 177 ...................................... Mydro, Magay13198 ...................................... 127-0 ...................................... San Roque5569 ...................................... 169 ...................................... Burleigh 15

5558 ...................................... 175 ...................................... Vacant5559 ...................................... 188 ...................................... "5560 ...................................... 183 ...................................... "5561 ...................................... 186 ...................................... "5563 ...................................... 191 ...................................... "5566 ...................................... 176 ...................................... "5568 ...................................... 179 ...................................... "5574 ...................................... 196 ...................................... "5575 ...................................... 181-A ...................................... "5576 ...................................... 181-B ...................................... "5578 ...................................... 182 ...................................... "5579 ...................................... 197 ...................................... "5580 ...................................... 195 ...................................... "5581 ...................................... 159-B ...................................... "

5582 ...................................... 194 ...................................... "5584 ...................................... 190 ...................................... "5588 ...................................... 184 ...................................... "5589 ...................................... 187 ...................................... "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.

Reyes, J.B.L., Actg. C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.Concepcion, C.J., is on leave.

Footnotes

1See Record on Appeal, pp. 4-6.

2See Exhibit C.

3The Committee report itself was not submitted as evidence

4Exhibit C.

5Rule 64, Sec. 6, Rules of Court.

62 McQuillin, Municipal Corporations, 3rd ed., 191-196; Martin Public Corporation, 5th ed., 31-32; Gonzales, Law on Public Corporations, 1962 ed., 29-30; Municipality of Naguilian v. NWSA, L-18452, Nov. 29, 1963.

7Cebu City v. NWSA, L-12892, Apr. 30, 1962.

817 Phil. 216.

917 Phil. 426.

10Martin, op. cit., supra.; Gonzales, op cit., supra.; 62 C.J. 8. 437-439.

1124 Phil. 124.

1249 Phil. 52.

1391 Phil. 514.

14It was only in Republic Act 2264, Sec. 3, last paragraph, that provinces, cities and municipalities were "... authorized to undertake and carry out any public works projects,  financed by the provincial city and municipal  funds or any other fund borrowed from or advanced by private third parties .. without the intervention of the Department of Public Works and Communications." (Stressed for emphasis) This law was approved and took effect on June 19, 1959.

15This could not be considered as forming part of the appurtenant grounds of the Burleigh school sites since the records here and in the Bureau of Lands show that this lot is set apart from the other Burleigh lots.

16Republic v. Sioson, L-13687, Nov. 29, 1963; Hodges V. City of Iloilo, L-17573, June 30, 1962.

17Record on Appeal, pp. 8-9, 13.

The Lawphil Project - Arellano Law Foundation

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. 133250           July 9, 2002

FRANCISCO I. CHAVEZ, petitioner, vs.PUBLIC ESTATES AUTHORITY and AMARI 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 Parañaque 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, Parañaque 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.5On June 8, 1995, then President Fidel V. Ramos, through then Executive Secretary Ruben Torres, approved the JVA.6

On November 29, 1996, then Senate President Ernesto Maceda delivered a privilege speech in the Senate and denounced the JVA as the "grandmother of all scams." As a result, the Senate Committee on Government Corporations and Public Enterprises, and the Committee on Accountability of Public Officers and Investigations, conducted a joint investigation. The Senate Committees reported the results of their investigation in Senate Committee Report No. 560 dated September 16, 1997.7 Among the conclusions of their report are: (1) the reclaimed lands PEA seeks to transfer to AMARI under the JVA are lands of the public domain which the government has not classified as alienable lands and therefore PEA cannot alienate these lands; (2) the certificates of title covering the Freedom Islands are thus void, and (3) the JVA itself is illegal.

On December 5, 1997, then President Fidel V. Ramos issued Presidential Administrative Order No. 365 creating a Legal Task Force to conduct a study on the legality of the JVA in view of Senate Committee Report No. 560. The members of the Legal Task Force were the Secretary of Justice,8 the Chief Presidential Legal Counsel,9 and the Government Corporate Counsel.10 The Legal Task Force upheld the legality of the JVA, contrary to the conclusions reached by the Senate Committees.11

On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published reports that there were on-going renegotiations between PEA and AMARI under an order issued by then President Fidel V. Ramos. According to these reports, PEA Director Nestor Kalaw, PEA Chairman Arsenio Yulo and retired Navy Officer Sergio Cruz composed the negotiating panel of PEA.

On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition for Prohibition with Application for the Issuance of a Temporary Restraining Order and Preliminary Injunction docketed as G.R. No. 132994 seeking to nullify the JVA. The Court dismissed the petition "for unwarranted disregard of judicial hierarchy, without prejudice to the refiling of the case before the proper court."12

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, PEA15 and AMARI16 are as follows:

I. WHETHER THE PRINCIPAL RELIEFS PRAYED FOR IN THE PETITION ARE MOOT AND ACADEMIC BECAUSE OF SUBSEQUENT EVENTS;

II. WHETHER THE PETITION MERITS DISMISSAL FOR FAILING TO OBSERVE THE PRINCIPLE GOVERNING THE HIERARCHY OF COURTS;

III. WHETHER THE PETITION MERITS DISMISSAL FOR NON-EXHAUSTION OF ADMINISTRATIVE REMEDIES;

IV. WHETHER PETITIONER HAS LOCUS STANDI TO BRING THIS SUIT;

V. WHETHER THE CONSTITUTIONAL RIGHT TO INFORMATION INCLUDES OFFICIAL INFORMATION ON ON-GOING NEGOTIATIONS BEFORE A FINAL AGREEMENT;

VI. WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE AGREEMENT FOR THE TRANSFER TO AMARI OF CERTAIN LANDS, RECLAIMED AND STILL TO BE RECLAIMED, VIOLATE THE 1987 CONSTITUTION; AND

VII. WHETHER THE COURT IS THE PROPER FORUM FOR RAISING THE ISSUE OF WHETHER THE AMENDED JOINT VENTURE AGREEMENT IS GROSSLY DISADVANTAGEOUS TO THE GOVERNMENT.

The 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 Constitution, which prohibits the government from alienating lands of the public domain to private corporations. If the Amended JVA indeed violates the Constitution, it is the duty of the Court to enjoin its implementation, and if already implemented, to annul the effects of such unconstitutional contract.

The Amended JVA is not an ordinary commercial contract but one which seeks to transfer title and ownership to 367.5 hectares of reclaimed lands and submerged areas of Manila Bay to a single private corporation. It now becomes more compelling for the Court to resolve the issue to insure the government itself does not violate a provision of the Constitution intended to safeguard the national patrimony. Supervening events, whether intended or accidental, cannot prevent the Court from rendering a decision if there is a grave violation of the Constitution. In the instant case, if the Amended JVA runs counter to the Constitution, the Court can still prevent the transfer of title and ownership of alienable lands of the public domain in the name of AMARI. Even in cases where supervening events had made the cases moot, the Court did not hesitate to resolve the legal or constitutional issues raised to formulate controlling principles to guide the bench, bar, and the public.17

Also, the instant petition is a case of first impression. All previous decisions of the Court involving Section 3, Article XII of the 1987 Constitution, or its counterpart provision in the 1973 Constitution,18 covered agricultural lands sold to private 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 titles19 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 entire reclaimed area to raise financing for the reclamation project.21

Second issue: whether the petition merits dismissal for failing to observe the principle governing the hierarchy of courts.

PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief directly from the Court. The principle of hierarchy of courts applies generally to cases involving factual questions. As it is not a trier of facts, the Court cannot entertain cases involving factual issues. The instant case, however, raises constitutional issues of transcendental importance to the public.22 The Court can resolve this case without determining any factual issue related to the case. Also, the instant case is a petition for mandamus which falls under the 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 Tañada v. Tuvera23 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 Tañada, the Executive Department had an affirmative statutoryduty under Article 2 of the Civil Code24 and Section 1 of Commonwealth Act No. 63825 to publish the presidential decrees. There was, therefore, no need for the petitioners in Tañada 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.'

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 Tañada 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 Tañada, 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 in Valmonte v. Belmonte, Jr.30 –

"An essential element of these freedoms is to keep open a continuing dialogue or process of communication between the government and the people. It is in the interest of the State that the channels for free political discussion be maintained to the end that the government may perceive and be responsive to the 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.1âwphi1.nêt

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 anyproposed contract, effectively truncating a basic right enshrined in the Bill of Rights. We can allow neither an emasculation of a constitutional right, nor a retreat by the State of its avowed "policy of full disclosure of all its transactions involving public interest."

The right covers three categories of information which are "matters of public concern," namely: (1) official records; (2) documents and papers pertaining to official acts, transactions and decisions; and (3) government research data used in formulating policies. The first category refers to any document that is part of the public records in the custody of government agencies

or officials. The second category refers to documents and papers recording, evidencing, establishing, confirming, supporting, justifying or explaining official acts, transactions or decisions of government agencies or officials. The third category refers to research data, whether raw, collated or processed, owned by the government and used in formulating government policies.

The information that petitioner may access on the renegotiation of the JVA includes evaluation reports, recommendations, legal and expert opinions, minutes of meetings, terms of reference and other documents attached to such reports or minutes, all relating to the JVA. However, the right to information does not compel PEA to prepare lists, abstracts, summaries and the like relating to the renegotiation of the JVA.34 The right only affords access to records, documents and papers, which means the opportunity to inspect and copy them. One who exercises the right must copy the records, documents and papers at his expense. The exercise of the right is also subject to reasonable regulations to protect the integrity of the public records and to minimize disruption to government operations, like rules specifying when and how to conduct the inspection and copying.35

The right to information, however, does not extend to matters recognized as privileged information under the separation of powers.36 The right does not also apply to information on military and diplomatic secrets, information affecting national security, and information on investigations of crimes by law enforcement agencies before the prosecution of the accused, which courts have long recognized as confidential.37 The right may also be subject to other limitations that Congress may impose by law.

There is no claim by PEA that the information demanded by petitioner is privileged information rooted in the separation of powers. The information does not cover Presidential conversations, correspondences, or discussions during closed-door Cabinet meetings which, like internal deliberations of the Supreme Court and other collegiate courts, or executive sessions of either house of Congress,38 are recognized as confidential. This kind of information cannot be pried open by a co-equal branch of government. A frank exchange of exploratory ideas and assessments, free from the glare of publicity and pressure by interested parties, is essential to protect the independence of decision-making of those tasked to exercise Presidential, Legislative and Judicial power.39This is not the situation in the instant case.

We rule, therefore, that the constitutional right to information includes official information on on-going negotiations before a final contract. The information, however, must constitute definite propositions by the government and should not cover recognized exceptions like privileged information, military and diplomatic secrets and similar matters affecting national security and public order.40 Congress has also prescribed other limitations on the right to information in several legislations.41

Sixth issue: whether stipulations in the Amended JVA for the transfer to AMARI of lands, reclaimed or to be reclaimed, violate the Constitution.

The Regalian Doctrine

The ownership of lands reclaimed from foreshore and submerged areas is rooted in the Regalian doctrine which holds that the State owns all lands and waters of the public domain. Upon the Spanish conquest of the Philippines, ownership of all "lands, territories and possessions" in the Philippines passed to the Spanish Crown.42 The King, as the sovereign ruler

and representative of the people, acquired and owned all lands and territories in the Philippines except those he disposed of by grant or sale to private individuals.

The 1935, 1973 and 1987 Constitutions adopted the Regalian doctrine substituting, however, the State, in lieu of the King, as the owner of all lands and waters of the public domain. The Regalian doctrine is the foundation of the time-honored principle of land ownership that "all lands that were not acquired from the Government, either by purchase or by grant, belong to the public domain."43 Article 339 of the Civil Code of 1889, which is now Article 420 of the Civil Code of 1950, incorporated the Regalian doctrine.

Ownership and Disposition of Reclaimed Lands

The Spanish Law of Waters of 1866 was the first statutory law governing the ownership and disposition of reclaimed lands in the Philippines. On May 18, 1907, the Philippine Commission enacted Act No. 1654 which provided for the lease, but not the sale, of reclaimed lands of the government to corporations and individuals. Later, on November 29, 1919, the Philippine Legislature approved Act No. 2874, the Public Land Act, which authorized the lease, but not the sale, of reclaimed lands of the government to corporations and individuals. On November 7, 1936, the National Assembly passed Commonwealth Act No. 141, also known as the Public Land Act, which authorized the lease, but not the sale, of reclaimed lands of the government to corporations and individuals. CA No. 141 continues to this day as the general law governing the classification and disposition of lands of the public domain.

The Spanish Law of Waters of 1866 and the Civil Code of 1889

Under the Spanish Law of Waters of 1866, the shores, bays, coves, inlets and all waters within the maritime zone of the Spanish territory belonged to the public domain for public use.44 The Spanish Law of Waters of 1866 allowed the reclamation of the sea under Article 5, which provided as follows:

"Article 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the provinces, pueblos or private persons, with proper permission, shall become the property of the party constructing such works, unless otherwise provided by the terms of the grant of authority."

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

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

"Art. 339. Property of public dominion is –

1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, riverbanks, shores, roadsteads, and that of a similar character;

2. That belonging exclusively to the State which, without being of general public use, is employed in some public service, or in the development of the national wealth, such as walls, fortresses, and other works for the defense of the territory, and mines, until granted to private individuals."

Property devoted to public use referred to property open for use by the public. In contrast, property devoted to public service referred to property used for some specific public service and open only to those authorized to use the property.

Property of public dominion referred not only to property devoted to public use, but also to property not so used but employed to develop the national wealth. This class of property constituted property of public dominion although employed for some economic or commercial activity to increase the national wealth.

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

"Art. 341. Property of public dominion, when no longer devoted to public use or to the defense of the territory, shall become a part of the private property of the State."

This provision, however, was not self-executing. The legislature, or the executive department pursuant to law, must declare the property no longer needed for public use or territorial defense before the government could lease or alienate the property to private parties.45

Act No. 1654 of the Philippine Commission

On May 8, 1907, the Philippine Commission enacted Act No. 1654 which regulated the lease of reclaimed and foreshore lands. The salient provisions of this law were as follows:

"Section 1. The control and disposition of the foreshore as defined in existing law, and the title to all Government or public lands made or reclaimed by the Government by dredging or filling or otherwise throughout the Philippine Islands, shall be retained by the Government without prejudice to vested rights and without prejudice to rights conceded to the City of Manila in the Luneta Extension.

Section 2. (a) The Secretary of the Interior shall cause all Government or public lands made or reclaimed by the Government by dredging or filling or otherwise to be divided into lots or blocks, with the necessary streets and alleyways located thereon, and shall cause plats and plans of such surveys to be prepared and filed with the Bureau of Lands.

(b) Upon completion of such plats and plans the Governor-General shall give notice to the public that such parts of the lands so made or reclaimed as are not needed for public purposes will be leased for commercial and business purposes, x x x.

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 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 title48 shall be classified" as government reclaimed, foreshore and marshy lands, as well as other lands. All these lands, however, must be suitable for residential, commercial, industrial or other productive non-agricultural purposes. These provisions vested upon the Governor-General the power to classify inalienable lands of the public domain into disposable lands of the public domain. These provisions also empowered the Governor-General to classify further such disposable lands of the public domain into government reclaimed, foreshore or marshy lands of the public domain, as well as other non-agricultural lands.

Section 58 of Act No. 2874 categorically mandated that disposable lands of the public domain classified as government reclaimed, foreshore and marshy lands "shall be disposed of to private parties by lease only and not otherwise." The Governor-General, before allowing the lease of these lands to private parties, must formally declare that the lands were "not necessary for the public service." Act No. 2874 reiterated the State policy to lease and not to sell government reclaimed, foreshore and marshy lands of the public domain, a policy first enunciated in 1907 in Act No. 1654. Government reclaimed, foreshore and marshy lands remained sui generis, as the only alienable or disposable lands of the public domain that the government could not sell to private parties.

The rationale behind this State policy is obvious. Government reclaimed, foreshore and marshy public lands for non-agricultural purposes retain their inherent potential as areas for public service. This is the reason the government prohibited the sale, and only allowed the lease, of these lands to private parties. The State always reserved these lands for some future public service.

Act No. 2874 did not authorize the reclassification of government reclaimed, foreshore and marshy lands into other non-agricultural lands under Section 56 (d). Lands falling under Section 56 (d) were the only lands for non-agricultural purposes the government could sell to private parties. Thus, under Act No. 2874, the government could not sell government reclaimed, foreshore and marshy lands to private parties, unless the legislature passed a law allowing their sale.49

Act No. 2874 did not prohibit private parties from reclaiming parts of the sea pursuant to Section 5 of the Spanish Law of Waters of 1866. Lands reclaimed from the sea by private parties with government permission remained private lands.

Dispositions under the 1935 Constitution

On May 14, 1935, the 1935 Constitution took effect upon its ratification by the Filipino people. The 1935 Constitution, in adopting the Regalian doctrine, declared in Section 1, Article XIII, that –

"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.

The prohibition on private parties from acquiring ownership of government reclaimed and marshy lands of the public domain was only a statutory prohibition and the legislature could therefore remove such prohibition. The 1935 Constitution did not prohibit individuals and corporations from acquiring government reclaimed and marshy lands of the public domain that were classified as agricultural lands under existing public land laws. Section 2, Article XIII of the 1935 Constitution provided as follows:

"Section 2. No private corporation or association may acquire, lease, or hold public agricultural lands in excess of one thousand and twenty four hectares, nor may any individual acquire such lands by purchase in excess of one hundred and forty hectares, or by lease in excess of one thousand and twenty-four hectares, or by homestead in excess of twenty-four hectares. Lands adapted to grazing, not exceeding two thousand hectares, may be leased to an individual, private corporation, or association." (Emphasis supplied)

Still, after the effectivity of the 1935 Constitution, the legislature did not repeal Section 58 of Act No. 2874 to open for sale to private parties government reclaimed and marshy lands of the public domain. On the contrary, the legislature continued the long established State policy of retaining for the government title and ownership of government reclaimed and marshy lands of the public domain.

Commonwealth Act No. 141 of the Philippine National Assembly

On November 7, 1936, the National Assembly approved Commonwealth Act No. 141, also known as the Public Land Act, which compiled the then existing laws on lands of the public domain. CA No. 141, as amended, remains to this day the existing general law governing the classification and disposition of lands of the public domain other than timber and mineral lands.51

Section 6 of CA No. 141 empowers the President to classify lands of the public domain into "alienable or disposable"52 lands of the public domain, which prior to such classification are inalienable and outside the commerce of man. Section 7 of CA No. 141 authorizes the President to "declare what lands are open to disposition or concession." Section 8 of CA No. 141 states that the government can declare open for disposition or concession only lands that are "officially delimited and classified." Sections 6, 7 and 8 of CA No. 141 read as follows:

"Sec. 6. The President, upon the recommendation of the Secretary of Agriculture and Commerce, shall from time to time classify the lands of the public domain into –

(a) Alienable or disposable,

(b) Timber, and

(c) Mineral lands,

and may at any time and in like manner transfer such lands from one class to another,53 for the purpose of their administration and disposition.

Sec. 7. For the purposes of the administration and disposition of alienable or disposable public lands, the President, upon recommendation by the Secretary of Agriculture and Commerce, shall from time to time declare what lands are open to disposition or concession under this Act.

Sec. 8. Only those lands shall be declared open to disposition or concession which have been officially delimited and classified and, when practicable, surveyed, and which have not been reserved for public or quasi-public uses, nor appropriated by the Government, nor in any manner become private property, nor those on which a private right authorized and recognized by this Act or any other valid law may be claimed, or which, having been reserved or appropriated, have ceased to be so. x x x."

Thus, before the government could alienate or dispose of lands of the public domain, the President must first officially classify these lands as alienable or disposable, and then declare them open to disposition or concession. There must be no law reserving these lands for public or quasi-public uses.

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

"Sec. 58. Any tract of land of the public domain which, being neither timber nor mineral land, is intended to be used for residential purposes or for commercial, industrial, or other productive purposes other than agricultural, and is open to

disposition or concession, shall be disposed of under the provisions of this chapter and not otherwise.

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

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

(b) Foreshore;

(c) Marshy lands or lands covered with water bordering upon the shores or banks of navigable lakes or rivers;

(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,55Justice Reynato S. Puno summarized succinctly the law on this matter, as follows:

"Foreshore lands are lands of public dominion intended for public use. So too are lands reclaimed by the government by dredging, filling, or other means. Act 1654 mandated that the control and disposition of the foreshore and lands under water remained in the national government. Said law allowed only the 'leasing' of reclaimed land. The Public Land Acts of 1919 and 1936 also declared that the foreshore and lands reclaimed by the government

were to be "disposed of to private parties by lease only and not otherwise." Before leasing, however, the Governor-General, upon recommendation of the Secretary of Agriculture and Natural Resources, had first to determine that the land reclaimed was not necessary for the public service. This requisite must have been met before the land could be disposed of. But even then, the foreshore and lands under water were not to be alienated and sold to private parties. The disposition of the reclaimed land was only by lease. The land remained property of the State." (Emphasis supplied)

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

The State policy prohibiting the sale to private parties of government reclaimed, foreshore and marshy alienable lands of the public domain, first implemented in 1907 was thus reaffirmed in CA No. 141 after the 1935 Constitution took effect. The prohibition on the sale of foreshore lands, however, became a constitutional edict under the 1935 Constitution. Foreshore lands became inalienable as natural resources of the State, unless reclaimed by the government and classified as agricultural lands of the public domain, in which case they would fall under the classification of government reclaimed lands.

After the effectivity of the 1935 Constitution, government reclaimed and marshy disposable lands of the public domain continued to be only leased and not sold to private parties.56 These lands remained sui generis, as the only alienable or disposable lands of the public domain the government could not sell to private parties.

Since then and until now, the only way the government can sell to private parties government reclaimed and marshy disposable lands of the public domain is for the legislature to pass a law authorizing such sale. CA No. 141 does not authorize the President to reclassify government reclaimed and marshy lands into other non-agricultural lands under Section 59 (d). Lands classified under Section 59 (d) are the only alienable or disposable lands for non-agricultural purposes that the government could sell to private parties.

Moreover, Section 60 of CA No. 141 expressly requires congressional authority before lands under Section 59 that the government previously transferred to government units or entities could be sold to private parties. Section 60 of CA No. 141 declares that –

"Sec. 60. x x x The area so leased or sold shall be such as shall, in the judgment of the Secretary of Agriculture and Natural Resources, be reasonably necessary for the purposes for which such sale or lease is requested, and shall not exceed one hundred and forty-four hectares: Provided, however, That this limitation shall not apply to grants, donations, or transfers made to a province, municipality or branch or subdivision of the Government for the purposes deemed by said entities conducive to the public interest;but the land so granted, donated, or transferred to a province, municipality or branch or subdivision of the Government shall not be alienated, encumbered, or otherwise disposed of in a manner affecting its title, except when authorized by Congress: x x x." (Emphasis supplied)

The congressional authority required in Section 60 of CA No. 141 mirrors the legislative authority required in Section 56 of Act No. 2874.

One reason for the congressional authority is that Section 60 of CA No. 141 exempted government units and entities from the maximum area of public lands that could be acquired

from the State. These government units and entities should not just turn around and sell these lands to private parties in violation of constitutional or statutory limitations. Otherwise, the transfer of lands for non-agricultural purposes to government units and entities could be used to circumvent constitutional limitations on ownership of alienable or disposable lands of the public domain. In the same manner, such transfers could also be used to evade the statutory prohibition in CA No. 141 on the sale of government reclaimed and marshy lands of the public domain to private parties. Section 60 of CA No. 141 constitutes by operation of law a lien on these lands.57

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

"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, thereclaimed land could become private land only if classified as alienable agricultural land of the public domain open to disposition under CA No. 141. The 1935 Constitution prohibited the alienation of all natural resources except public agricultural lands.

The Civil Code of 1950

The Civil Code of 1950 readopted substantially the definition of property of public dominion found in the Civil Code of 1889. Articles 420 and 422 of the Civil Code of 1950 state that –

"Art. 420. The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others of similar character;

(2) Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth.

x x x.

Art. 422. Property of public dominion, when no longer intended for public use or for public service, shall form part of the patrimonial property of the State."

Again, the government must formally declare that the property of public dominion is no longer needed for public use or public service, before the same could be classified as patrimonial property of the State.59 In the case of government reclaimed and marshy lands of the public domain, the declaration of their being disposable, as well as the manner of their disposition, is governed by the applicable provisions of CA No. 141.

Like the Civil Code of 1889, the Civil Code of 1950 included as property of public dominion those properties of the State which, without being for public use, are intended for public service or the "development of the national wealth." Thus, government reclaimed and marshy lands of the State, even if not employed for public use or public service, if developed to enhance the national wealth, are classified as property of public dominion.

Dispositions under the 1973 Constitution

The 1973 Constitution, which took effect on January 17, 1973, likewise adopted the Regalian doctrine. Section 8, Article XIV of the 1973 Constitution stated that –

"Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, wildlife, and other natural resources of the Philippines belong to the State. With the exception of agricultural, industrial or commercial, residential, and resettlement lands of the public domain, natural resources shall not be alienated, and no license, concession, or lease for the exploration, development, exploitation, or utilization of any of the natural resources shall be granted for a period exceeding twenty-five years, renewable for not more than twenty-five years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, in which cases, beneficial use may be the measure and the limit of the grant." (Emphasis supplied)

The 1973 Constitution prohibited the alienation of all natural resources with the exception of "agricultural, industrial or commercial, residential, and resettlement lands of the public domain." In contrast, the 1935 Constitution barred the alienation of all natural resources except "public agricultural lands." However, the term "public agricultural lands" in the 1935 Constitution encompassed industrial, commercial, residential and resettlement lands of the public domain.60 If the land of public domain were neither timber nor mineral land, it would fall under the classification of agricultural land of the public domain. Both the 1935 and 1973 Constitutions, therefore, prohibited the alienation of all natural resources except agricultural lands of the public domain.

The 1973 Constitution, however, limited the alienation of lands of the public domain to individuals who were citizens of the Philippines. Private corporations, even if wholly owned by Philippine citizens, were no longer allowed to acquire alienable lands of the public domain unlike in the 1935 Constitution. Section 11, Article XIV of the 1973 Constitution declared that –

"Sec. 11. The Batasang Pambansa, taking into account conservation, ecological, and development requirements of the natural resources, shall determine by law the size of land of the public domain which may be developed, held or acquired by, or leased to, any qualified individual, corporation, or association, and the conditions therefor. No private corporation or association may hold alienable lands of the public domain except by lease not to exceed one thousand hectares in area nor may any citizen hold such lands by lease in excess of five hundred hectares or acquire by purchase, homestead or grant, in excess of twenty-four hectares. No private corporation or association may hold by lease,

concession, license or permit, timber or forest lands and other timber or forest resources in excess of one hundred thousand hectares. However, such area may be increased by the Batasang Pambansa upon recommendation of the National Economic and Development Authority." (Emphasis supplied)

Thus, under the 1973 Constitution, private corporations could hold alienable lands of the public domain only through lease. Only individuals could now acquire alienable lands of the public domain, and private corporations became absolutely barred from acquiring any kind of alienable land of the public domain. The constitutional ban extended to all kinds of alienable lands of the public domain, while the statutory ban under CA No. 141 applied only to government reclaimed, foreshore and marshy alienable lands of the public domain.

PD No. 1084 Creating the Public Estates Authority

On February 4, 1977, then President Ferdinand Marcos issued Presidential Decree No. 1084 creating PEA, a wholly government owned and controlled corporation with a special charter. Sections 4 and 8 of PD No. 1084, vests PEA with the following purposes and powers:

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

(a) To reclaim land, including foreshore and submerged areas, by dredging, filling or other means, or to acquire reclaimed land;

(b) To develop, improve, acquire, administer, deal in, subdivide, dispose, lease and sell any and all kinds of lands, buildings, estates and other forms of real property, owned, managed, controlled and/or operated by the government;

(c) To provide for, operate or administer such service as may be necessary for the efficient, economical and beneficial utilization of the above properties.

Sec. 5. Powers and functions of the Authority. The Authority shall, in carrying out the purposes for which it is created, have the following powers and functions:

(a)To prescribe its by-laws.

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 domain63 and are inalienable unless reclaimed, classified as alienable lands open to disposition, and further declared no longer needed for public service.

The ban in the 1973 Constitution on private corporations from acquiring alienable lands of the public domain did not apply to PEA since it was then, and until today, a fully owned government corporation. The constitutional ban applied then, as it still applies now, only to "private corporations and associations." PD No. 1084 expressly empowers PEA "to hold lands of the public domain" even "in excess of the area permitted to private corporations by statute." Thus, PEA can hold title to private lands, as well as title to lands of the public domain.

In order for PEA to sell its reclaimed foreshore and submerged alienable lands of the public domain, there must be legislative authority empowering PEA to sell these lands. This legislative authority is necessary in view of Section 60 of CA No.141, which states –

"Sec. 60. x x x; but the land so granted, donated or transferred to a province, municipality, or branch or subdivision of the Government shall not be alienated, encumbered or otherwise disposed of in a manner affecting its title, except when authorized by Congress; x x x." (Emphasis supplied)

Without such legislative authority, PEA could not sell but only lease its reclaimed foreshore and submerged alienable lands of the public domain. Nevertheless, any legislative authority granted to PEA to sell its reclaimed alienable lands of the public domain would be subject to the constitutional ban on private corporations from acquiring alienable lands of the public domain. Hence, such legislative authority could only benefit private individuals.

Dispositions under the 1987 Constitution

The 1987 Constitution, like the 1935 and 1973 Constitutions before it, has adopted the Regalian doctrine. The 1987 Constitution declares that all natural resources are "owned by the State," and except for alienable agricultural lands of the public domain, natural resources cannot be alienated. Sections 2 and 3, Article XII of the 1987 Constitution state that –

"Section 2. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. x x x.

Section 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands, and national parks. Agricultural lands of the public domain may be further classified by law according to the uses which they may be devoted. Alienable lands of the public domain shall be limited to agricultural lands. Private corporations or associations may not hold such alienable lands of the public domain except by lease, for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and not to exceed one thousand hectares in area. Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more than twelve hectares thereof by purchase, homestead, or grant.

Taking into account the requirements of conservation, ecology, and development, and subject to the requirements of agrarian reform, the Congress shall determine, by law, the size of lands of the public domain which may be acquired, developed, held, or leased and the conditions therefor." (Emphasis supplied)

The 1987 Constitution continues the State policy in the 1973 Constitution banning private corporations 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 constitutional intent is removed. The available alienable public lands are gradually decreasing in the face of an ever-growing population. The most effective way to insure faithful adherence to this constitutional intent is to grant or sell alienable lands of the public domain only to individuals. This, it would seem, is the practical benefit arising from the constitutional ban.

The Amended Joint Venture Agreement

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

1. "[T]hree partially reclaimed and substantially eroded islands along Emilio Aguinaldo Boulevard in Paranaque and Las Pinas, Metro Manila, with a combined titled area of 1,578,441 square meters;"

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

3. "[A]t 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 JVA AMARI will acquire and own a maximum of 367.5 hectares of reclaimed land which will be titled in its name.

To implement the Amended JVA, PEA delegated to the unincorporated PEA-AMARI joint venture 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.

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 Force68 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 42274 of the Civil Code, a property of public dominion retains such character until formally declared otherwise. The Court ruled that –

"The fact that the Roppongi site has not been used for a long time for actual Embassy service does not automatically convert it to patrimonial property. Any such conversion

happens only if the property is withdrawn from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA 481 [1975]. A property continues to be part of the public domain, not available for private appropriation or ownership 'until there is a formal declaration on the part of the government to withdraw it from being such' (Ignacio v. Director of Lands, 108 Phil. 335 [1960]." (Emphasis supplied)

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

PD No. 1085, coupled with President 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 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.1âwphi1.nêt

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;

(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 681 and 782 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 III83of 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.

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 itspatrimonial 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 selling or leasing these lands. PEA must observe the provisions of Sections 63 and 67 of CA No. 141 requiring public auction, in the absence of a law exempting PEA from holding a public auction.88 Special Patent No. 3517 expressly states that the patent is issued by authority of the Constitution and PD No. 1084, "supplemented by Commonwealth Act No. 141, as amended." This is an acknowledgment that the provisions of CA No. 141 apply to the disposition of reclaimed alienable lands of the public domain unless otherwise provided by law. Executive Order No. 654,89 which authorizes PEA "to determine the kind and manner of payment for the transfer" of its assets and properties, does not exempt PEA from the requirement of public auction. EO No. 654 merely authorizes PEA to decide the mode of payment, whether in kind and in installment, but does not authorize PEA to dispense with public auction.

Moreover, under Section 79 of PD No. 1445, otherwise known as the Government Auditing Code, the government is required to sell valuable government property through public bidding. Section 79 of PD No. 1445 mandates that –

"Section 79. When government property has become unserviceable for any cause, or is no longer needed, it shall, upon application of the officer accountable therefor, be inspected by the head of the agency or his duly authorized representative in the presence of the auditor concerned and, if found to be valueless or unsaleable, it may be destroyed in their presence. If found to be valuable, it may be sold at public auction to the highest bidder under the supervision of the proper committee on award or similar body in the presence of the auditor concerned or other authorized representative of the Commission, after advertising by printed notice in the Official Gazette, or for not less than three consecutive days in any newspaper of general circulation, or where the value of the property does not warrant the expense of publication, by notices posted for a like period in at least three public places in the locality where the property is to be sold. In the event that the public auction fails, the property may be sold at a private sale at such price as may be fixed by the same committee or body concerned and approved by the Commission."

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. 89-29691 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."

Although Section 302 of the Local Government Code does not contain a proviso similar to that of the BOT Law, the constitutional restrictions on land ownership automatically apply even though not expressly mentioned in the Local Government Code.

Thus, under either the BOT Law or the Local Government Code, the contractor or developer, if a corporate entity, can only be paid with leaseholds on portions of the reclaimed land. If the contractor or developer is an individual, portions of the reclaimed land, not exceeding 12 hectares96 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.

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.

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 JVA, and transfer several hundreds of hectares of these reclaimed and still to be reclaimed lands to a single private corporation in only one transaction. This scheme will effectively nullify the constitutional ban in Section 3, Article XII of the 1987 Constitution which was intended to diffuse equitably the ownership of alienable lands of the public domain among Filipinos, now numbering over 80 million strong.

This scheme, if allowed, can even be applied to alienable agricultural lands of the public domain since PEA can "acquire x x x any and all kinds of lands." This will open the floodgates to corporations and even individuals acquiring hundreds of hectares of alienable lands of the public domain under the guise that in the hands of PEA these lands are private lands. This will result in corporations amassing huge landholdings never before seen in this country - creating the very evil that the constitutional ban was designed to prevent. This will completely reverse the clear direction of constitutional development in this country. The 1935 Constitution allowed private corporations to acquire not more than 1,024 hectares of public lands.105 The 1973 Constitution prohibited private corporations from acquiring any kind of public land, and the 1987 Constitution has unequivocally reiterated this prohibition.

The contention of PEA and AMARI that public lands, once registered under Act No. 496 or PD No. 1529, automatically become private lands is contrary to existing laws. Several laws authorize lands of the public domain to be registered under the Torrens System or Act No. 496,

now PD No. 1529, without losing their character as public lands. Section 122 of Act No. 496, and Section 103 of PD No. 1529, respectively, provide as follows:

Act No. 496

"Sec. 122. Whenever public lands in the Philippine Islands belonging to the x x x Government of the Philippine Islands are alienated, granted, or conveyed to persons or the public or private corporations, the same shall be brought forthwith under the operation of this Act and shall become registered lands."

PD No. 1529

"Sec. 103. Certificate of Title to Patents. Whenever public land is by the Government alienated, granted or conveyed to any person, the same shall be brought forthwith under the operation of this Decree." (Emphasis supplied)

Based on its legislative history, the phrase "conveyed to any person" in Section 103 of PD No. 1529 includes conveyances of public lands to public corporations.

Alienable lands of the public domain "granted, donated, or transferred to a province, municipality, or branch or subdivision of the Government," as provided in Section 60 of CA No. 141, may be registered under the Torrens System pursuant to Section 103 of PD No. 1529. Such registration, however, is expressly subject to the condition in Section 60 of CA No. 141 that the land "shall not be alienated, encumbered or otherwise disposed of in a manner affecting its title, except when authorized by Congress." This provision refers to government reclaimed, foreshore and marshy lands of the public domain that have been titled but still cannot be alienated or encumbered unless expressly authorized by Congress. The need for legislative authority prevents the registered land of the public domain from becoming private land that can be disposed of to qualified private parties.

The Revised Administrative Code of 1987 also recognizes that lands of the public domain may be registered under the Torrens System. Section 48, Chapter 12, Book I of the Code states –

"Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the Government is authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following:

(1) x x x

(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 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 hectares110 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 hectares111 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 1409112 of the Civil Code, contracts whose "object or purpose is contrary to law," or whose "object is outside the commerce of men," are "inexistent and void from the beginning." The Court must perform its duty to defend and uphold the Constitution, and therefore declares the Amended JVA null and void ab initio.

Seventh issue: whether the Court is the proper forum to raise the issue of whether the Amended JVA is grossly disadvantageous to the government.

Considering that the Amended JVA is null and void ab initio, there is no necessity to rule on this last issue. Besides, the Court is not a trier of facts, and this last issue involves a determination of factual matters.

WHEREFORE, the petition is GRANTED. The Public Estates Authority and Amari Coastal Bay Development Corporation are PERMANENTLY ENJOINED from implementing the Amended Joint Venture Agreement which is hereby declared NULL and VOID ab initio.

SO ORDERED.

Davide, Jr., C.J., Bellosillo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Austria-Martinez, and Corona, JJ., concur.

Footnote

1 Section 4 of PD No. 1084.

2 PEA's Memorandum dated August 4, 1999, p. 3.

3 PEA's Memorandum, supra note 2 at 7. PEA's Memorandum quoted extensively, in its Statement of Facts and the Case, the Statement of Facts in Senate Committee Report No. 560 dated September 16, 1997.

4 In Opinion No. 330 dated December 23, 1994, the Government Corporate Counsel, citing COA Audit Circular No. 89-296, advised PEA that PEA could negotiate the sale of the 157.84-hectare Freedom Islands in view of the failure of the public bidding held on December 10, 1991 where there was not a single bidder. See also Senate Committee Report No. 560, p. 12.

5 PEA's Memorandum, supra note 2 at 9.

6 Ibid.

7 The existence of this report is a matter of judicial notice pursuant to Section 1, Rule 129 of the Rules of Court which provides, "A court shall take judicial notice, without the introduction of evidence, of x x x the official acts of the legislature x x x."

8 Teofisto Guingona, Jr.

9 Renato Cayetano.

10 Virgilio C. Abejo.

11 Report and Recommendation of the Legal Task Force, Annex "C", AMARI's Memorandum dated June 19, 1999.

12 AMARI's Comment dated June 24, 1998, p. 3; Rollo, p. 68.

13 AMARI filed three motions for extension of time to file comment (Rollo, pp. 32, 38, 48), while PEA filed nine motions for extension of time (Rollo, pp. 127, 139).

14 Petitioner's Memorandum dated July 6, 1999, p. 42.

15 Represented by the Office of the Solicitor General, with Solicitor General Ricardo P. Galvez, Assistant Solicitor General Azucena R. Balanon-Corpuz, and Associate Solicitor Raymund I. Rigodon signing PEA's Memorandum.

16 Represented by Azcuna Yorac Arroyo & Chua Law Offices, and Romulo Mabanta Sayoc & De los Angeles Law Offices.

17 Salonga v. Paño, 134 SCRA 438 (1985); Gonzales v. Marcos, 65 SCRA 624 (1975 ); Aquino v. Enrile, 59 SCRA 183 (1974 ); Dela Camara v. Enage, 41 SCRA 1 (1971 ).

18 Section 11, Article XIV.

19 Manila Electric Co. v. Judge F. Castro-Bartolome, 114 SCRA 799 (1982); Republic v. CA and Iglesia, and Republic v. Cendana and Iglesia ni Cristo, 119 SCRA 449 (1982); Republic v. Villanueva and Iglesia ni Cristo, 114 SCRA 875 (1982); Director of Lands v. Lood, 124 SCRA 460 (1983); Republic v. Iglesia ni Cristo, 128 SCRA 44 (1984); Director of Lands v. Hermanos y Hermanas de Sta. Cruz de Mayo, Inc., 141 SCRA 21 (1986); Director of Lands v. IAC and Acme Plywood & Veneer Co., 146 SCRA 509 (1986); Republic v. IAC and Roman Catholic Bishop of Lucena, 168 SCRA 165 (1988); Natividad v. CA, 202 SCRA 493 (1991); Villaflor v. CA and Nasipit Lumber Co., 280 SCRA 297 (1997). In Ayog v. Cusi, 118 SCRA 492 (1982), the Court did not apply the constitutional ban in the 1973 Constitution because the applicant corporation, Biñan Development Co., Inc., had fully complied with all its obligations and even paid the full purchase price before the effectivity of the 1973 Constitution, although the sales patent was issued after the 1973 Constitution took effect.

20 PD No. 1073.

21 Annex "B", AMARI's Memorandum dated June 19, 1999, Section 5.2 (c) and (e) of the Amended JVA, pp. 16-17.

22 Chavez v. PCGG, 299 SCRA 744 (1998).

23 136 SCRA 27 (1985).

24 Article 2 of the Civil Code (prior to its amendment by EO No. 200) provided as follows: "Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is provided otherwise, x x x."

25 Section 1 of CA No. 638 provides as follows: "There shall be published in the Official Gazette all important legislative acts and resolutions of the Congress of the Philippines; all executive and administrative orders and proclamations, except such as have no general applicability; x x x."

26 Section 79 of the Government Auditing Codes provides as follows: "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."

27 Paat v. Court of Appeals, 266 SCRA 167 (1997); Quisumbing v. Judge Gumban, 193 SCRA 520 (1991); Valmonte v. Belmonte, Jr., 170 SCRA 256 (1989).

28 See note 22.

29 Section 1, Article XI of the 1987 Constitution states as follows: "Public office is a public trust. Public officers and employees must at all times be accountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency, act with patriotism and justice, and lead modest lives."

30 170 SCRA 256 (1989).

31 See note 22.

32 Record of the Constitutional Commission, Vol. V, pp. 24-25, (1986).

33 Supra, Note 22.

34 Ibid.

35 Legaspi v. Civil Service Commission, 150 SCRA 530 (1987).

36 Almonte v. Vasquez, 244 SCRA 286 (1995).

37 See Note 22.

38 Chavez v. PCGG, see note 22; Aquino-Sarmiento v. Morato, 203 SCRA 515 (1991).

39 Almonte v. Vasquez, see note 36.

40 People's Movement for Press Freedom, et al. v. Hon. Raul Manglapus, G.R. No. 84642, En Banc Resolution dated April 13, 1988; Chavez v. PCGG, see note 22.

41 Section 270 of the National Internal Revenue Code punishes any officer or employee of the Bureau of Internal Revenue who divulges to any person, except as allowed by law, information regarding the business, income, or estate of any taxpayer, the secrets, operation, style of work, or apparatus of any manufacturer or producer, or confidential information regarding the business of any taxpayer, knowledge of which was acquired by him in the discharge of his official duties. Section 14 of R.A. No. 8800 (Safeguard Measures Act) prohibits the release to the public of confidential information submitted in evidence to the Tariff Commission. Section 3 (n) of R.A. No. 8504 (Philippine AIDS Prevention and Control Act) classifies as confidential the medical records of HIV patients. Section 6 (j) of R.A. No. 8043 (Inter-Country Adoption Act) classifies as confidential the records of the adopted child, adopting parents, and natural parents. Section 94 (f) of R.A. No. 7942

(Philippine Mining Act) requires the Department of Environment and Natural Resources to maintain the confidentiality of confidential information supplied by contractors who are parties to mineral agreements or financial and technical assistance agreements.

42 The Recopilacion de Leyes de las Indias declared that: "We, having acquired full sovereignty over the Indies, and all lands, territories, and possessions not heretofore ceded away by our royal predecessors, or by us, or in our name, still pertaining to the royal crown and patrimony, it is our will that all lands which are held without proper and true deeds of grant be restored to us according as they belong to us, in order that after reserving before all what to us or to our viceroys, audiencias, and governors may seem necessary for public squares, ways, pastures, and commons in those places which are peopled, taking into consideration not only their present condition, but also their future and their probable increase, and after distributing to the natives what may be necessary for tillage and pasturage, confirming them in what they now have and giving them more if necessary, all the rest of said lands may remain free and unencumbered for us to dispose of as we may wish." See concurring opinion of Justice Reynato S. Puno in Republic Real Estate Corporation v. Court of Appeals, 299 SCRA 199 (1998).

43 Cariño v. Insular Government, 41 Phil. 935 (1909). The exception mentioned in Cariño, referring to lands in the possession of an occupant and of his predecessors-in-interest, since time immemorial, is actually a species of a grant by the State. The United States Supreme Court, speaking through Justice Oliver Wendell Holmes, Jr., declared in Cariño: "Prescription is mentioned again in the royal cedula of October 15, 1754, cited in 3 Philippine, 546; 'Where such possessors shall not be able to produce title deeds, it shall be sufficient if they shall show that ancient possession, as a valid title by prescription.' It may be that this means possession from before 1700; but, at all events, the principle is admitted. As prescription, even against the Crown lands, was recognized by the laws of Spain, we see no sufficient reason for hesitating to admit that it was recognized in the Philippines in regard to lands over which Spain had only a paper sovereignty." See also Republic v. Lee, 197 SCRA 13 (1991).

44 Article 1 of the Spanish Law of Waters of 1866.

45 Ignacio v. Director of Lands, 108 Phil. 335 (1960); Joven v. Director of Lands, 93 Phil. 134 (1953); Laurel v. Garcia, 187 SCRA 797 (1990). See concurring opinion of Justice Reynato S. Puno in Republic Real Estate Corporation v. Court of Appeals, 299 SCRA 199 (1998).

46 Act No. 926, enacted on October 7, 1903, was also titled the Public Land Act. This Act, however, did not cover reclaimed lands. Nevertheless, Section 23 of this Act provided as follows: "x x x In no case may lands leased under the provisions of this chapter be taken so as to gain control of adjacent land, water, stream, shore line, way, roadstead, or other valuable right which in the opinion of the Chief of the Bureau of Public Lands would be prejudicial to the interests of the public."

47 Section 10 of Act No. 2874 provided as follows: "The words "alienation," "disposition," or "concession" as used in this Act, shall mean any of the methods authorized by this Act for the acquisition, lease, use, or benefit of the lands of the public domain other than timber or mineral lands."

48 Title II of Act No. 2874 governed alienable lands of the public domain for agricultural purposes, while Title III of the same Act governed alienable lands of the public domain for non-agricultural purposes.

49 Section 57 of Act No. 2874 provided as follows: "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 the legislature; x x x."

50 Krivenko v. Register of Deeds, 79 Phil. 461 (1947).

51 Section 2 of CA No. 141 states as follows: "The provisions of this Act shall apply to the lands of the public domain; but timber and mineral lands shall be governed by special laws and nothing in this Act provided shall be understood or construed to change or modify the administration and disposition of the lands commonly called "friar lands" and those which, being privately owned, have reverted to or become the property of the Commonwealth of the Philippines, which administration and disposition shall be governed by the laws at present in force or which may hereafter be enacted."

52 Like Act No. 2874, Section 10 of CA No. 141 defined the terms "alienation" and "disposition" as follows: "The words "alienation," "disposition," or "concession" as used in this Act, shall mean any of the methods authorized by this Act for the acquisition, lease, use, or benefit of the lands of the public domain other than timber or mineral lands."

53 R.A. No. 6657 has suspended the authority of the President to reclassify forest or mineral lands into agricultural lands. Section 4 (a) of RA No. 6657 (Comprehensive Agrarian Reform Law of 1988) states, "No reclassification of forest or mineral lands to agricultural lands shall be undertaken after the approval of this Act until Congress, taking into account ecological, developmental and equity considerations, shall have delimited by law, the specific limits of the public domain."

54 Covering Sections 58 to 68 of CA No. 141.

55 299 SCRA 199 (1998).

56 Section 1, Article XIII of the 1935 Constitution limited the disposition and utilization of public agricultural lands to Philippine citizens or to corporations at least sixty percent owned by Philippine citizens. This was, however, subject to the original Ordinance appended to the 1935 Constitution stating, among others, that until the withdrawal of United States sovereignty in the Philippines, "Citizens and corporations of the United States shall enjoy in the Commonwealth of the Philippines all the civil rights of the citizens and corporations, respectively, thereof."

57 Section 44 of PD No. 1529 (previously Section 39 of Act No. 496) provides that "liens, claims or rights arising or existing under the laws and the Constitution of the Philippines which are not by law required to appear of record in the Registry of Deeds in order to be valid against subsequent purchasers or encumbrancers of record" constitute statutory liens affecting the title.1âwphi1.nêt

58 RA No. 730, which took effect on June 18, 1952, authorized the private sale of home lots to actual occupants of public lands not needed for public service. Section 1 of RA No. 730 provided as follows: "Notwithstanding the provisions of Sections 61 and 67 of Commonwealth Act No. 141, as amended by RA No. 293, any Filipino citizen of legal age who is not the owner of a home lot in the municipality or city in which he resides and who had in good faith established his residence on a parcel of land of the Republic of the Philippines which is not needed for public service, shall be given preference to purchase at a

private sale of which reasonable notice shall be given to him, not more than one thousand square meters at a price to be fixed by the Director of Lands with the approval of the Secretary of Agriculture and Natural Resources. x x x." In addition, on June 16, 1948, Congress enacted R.A. No. 293 allowing the private sale of marshy alienable or disposable lands of the public domain to lessees who have improved and utilized the same as farms, fishponds or other similar purposes for at least five years from the date of the lease contract with the government. R.A. No. 293, however, did not apply to marshy lands under Section 56 (c), Title III of CA No. 141 which refers to marshy lands leased for residential, commercial, industrial or othernon-agricultural purposes.

59 See note 49.

60 See note 60.

61 Republic Real Estate Corporation v. Court of Appeals, see note 56.

62 Ibid.

63 Insular Government v. Aldecoa, 19 Phil. 505 (1911); Government v. Cabangis, 53 Phil. 112 (1929).

64 118 SCRA 492 (1982).

65 Annex "B", AMARI's Memorandum, see note 2 at 1 & 2.

66 PEA's Memorandum, see note 6.

67 Ibid., p. 44.

68 See notes 9, 10 & 11.

69 Annex "C", p. 3, AMARI's Memorandum, see note 12 at 3.

70 This should read Article XII.

71 Section 8 of CA No. 141.

72 Emphasis supplied.

73 187 SCRA 797 (1990).

74 Article 422 of the Civil Code states as follows: "Property of public dominion, when no longer needed for public use or public service, shall form part of the patrimonial property of the State."

75 AMARI's Comment dated June 24, 1998, p. 20; Rollo, p. 85.

76 Dizon v. Rodriguez, 13 SCRA 705 (1965); Republic v. Lat Vda. de Castillo, 163 SCRA 286 (1988).

77 Cariño v. Insular Government, 41 Phil. 935 (1909).

78 Proclamation No. 41, issued by President Ramon Magsaysay on July 5, 1954, reserved for "National Park purposes" 464.66 hectares of the public domain in Manila Bay "situated in the cities of Manila and Pasay and the municipality of Paranaque, Province of Rizal, Island of Luzon," which area, as described in detail in the Proclamation, is "B]ounded on the North, by Manila Bay; on the East, by Dewey Boulevard; and on the south and west, by Manila Bay." See concurring opinion of Justice Reynato S. Puno in Republic Real Estate Corporation v. Court of Appeals, 299 SCRA 1999 (1998). Under Sections 2 and 3, Article XII of the 1987 Constitution, "national parks" are inalienable natural resources of the State.

79 Fifth Whereas clause of EO No. 525.

80 Section 4, Chapter I, Title XIV, Book IV.

81 Section 6 of CA No 141 provides as follows: "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, x x x."

82 Section 7 of CA No. 141 provides as follows: "For 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."

83 On "Lands for Residential, Commercial, or Industrial and other Similar Purposes."

84 RA No. 293, enacted on June 16, 1948, authorized the sale of marshy lands under certain conditions. Section 1 of RA No. 293 provided as follows: "The provisions of section sixty-one of Commonwealth Act Numbered One hundred and forty-one to the contrary notwithstanding, marshy lands and lands under water bordering on shores or banks or navigable lakes or rivers which are covered by subsisting leases or leases which may hereafter be duly granted under the provisions of the said Act and are already improved and have been utilized for farming, fishpond, or similar purposes for at least five years from the date of the contract of lease, may be sold to the lessees thereof under the provisions of Chapter Five of the said Act as soon as the President, upon recommendation of the Secretary of Agriculture and Natural Resources, shall declare that the same are not necessary for the public service."

85 PEA's Memorandum, see note 2 at 45.

86 See note 73.

87 Section 4 (b) of PD No. 1084

88 R.A. No. 730 allows the private sale of home lots to actual occupants of public lands. See note 63.

89 Issued on February 26, 1981.

90 While PEA claims there was a failure of public bidding on December 10, 1991, there is no showing that the Commission on Audit approved the price or consideration stipulated in the

negotiated Amended JVA as required by Section 79 of the Government Auditing Code. Senate Committee Report No. 560 did not discuss this issue.

91 Paragraph 2 (a) of COA Circular No. 89-296, on "Sale Thru Negotiation," states that disposal through negotiated sale may be resorted to if "[T]here was a failure of public auction."

92 Senate Committee Report No. 560, Statement of Facts, p. 7, citing PEA Board Resolution No. 835, as appearing in the Minutes of the PEA Board of Directors Meeting held on May 30, 1991, per Certification of Jaime T. De Veyra, Corporate Secretary, dated June 11, 1991.

93 Opinion No. 330, citing COA Audit Circular No. 89-296. See note 5.

94 PEA's Memorandum, see note 2.

95 Senate Committee Report No. 560, pp. 7-8, citing the Minutes of Meeting of the PEA Board of Directors held on December 19, 1991.

96 Section 3, Article XII of the 1987 Constitution provides as follows: "x x x Citizens of the Philippines may x x x acquire not more than twelve hectares thereof by purchase, homestead or grant." However, Section 6 of R.A. No. 6657 (Comprehensive Agrarian Reform Law) limits the ownership of "public or private agricultural land" to a maximum of five hectares per person.

97 96 Phil. 946 (1955).

98 48 SCRA 372 (1977).

99 168 SCRA 198 (1988).

100 172 SCRA 795 (1989).

101 73 SCRA 146 (1976).

102 Avila v. Tapucar, 201 SCRA 148 (1991).

103 Republic v. Ayala Cia, et al., 14 SCRA 259 (1965); Dizon v. Rodriguez, 13 SCRA 705 (1965).

104 Section 44 of PD No. 1529 states as follows: "Every registered owner receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land taking a certificate of title for value and in good faith, shall hold the same free from all encumbrances except those noted on said certificate and any of the following encumbrances which may be subsisting, namely: First.Liens, claims or rights arising or existing under the laws and Constitution of the Philippines which are not by law required to appear of record in the Registry of Deeds in order to be valid against subsequent purchasers or encumbrancers of record. x x x." Under Section 103 of PD No. 1529, Section 44 applies to certificates of title issued pursuant to a land patent granted by the government.

105 Section 2, Article XIII of the 1935 Constitution.

106 Harty v. Municipality of Victoria, 13 Phil. 152 (1909).

107 Annex "B", AMARI's Memorandum, see note 21 at 16, Section 5.2 (c) of the Amended JVA.

108 Section 10 of CA No. 141 provides as follows: "Sec. 10. The words "alienation," "disposition," or "concession" as used in this Act, shall mean any of the methods authorized by this Act for the acquisition, lease, use, or benefit of the lands of the public domain other than timber or mineral lands."

109 Section 79 of the Government Auditing Code, which requires public auction in the sale of government assets, includes all kinds of disposal or divestment of government assets. Thus, COA Audit Circular No. 86-264 dated October 16, 1986 speaks of "guidelines (which) shall govern the general procedures on thedivestment or disposal of assets of government-owned and/or controlled corporations and their subsidiaries." Likewise, COA Audit Circular No. 89-296 dated January 27, speaks of "guidelines (which) shall be observed and adhered to in the divestment or disposal of property and other assets of all government entities/instrumentalities" and that "divestment shall refer to the manner or scheme of taking away, depriving, withdrawing of an authority, power or title." These COA Circulars implement Section 79 of the Government Auditing Code.

110 The share of AMARI in the Freedom Islands is 77.34 hectares, which is 70 percent of the net usable area of 110.49 hectares. The net usable area is the total land area of the Freedom Islands less 30 percent allocated for common areas.

111 The share of AMARI in the submerged areas for reclamation is 290.129 hectares, which is 70 percent of the net usable area of 414.47 hectares.

112 Article 1409 of the Civil Code provides as follows: "The following contracts are inexistent and void from the beginning: (1) Those whose cause, object or purpose is contrary to law; x x x; (4) Those whose object is outside the commerce of men; x x x."

The Lawphil Project - Arellano Law Foundation

Republic of the PhilippinesSUPREME COURT

Manila  

EN BANC  FRANCISCO I. CHAVEZ,                     G.R. No. 164527                                    Petitioner,                                                                 Present: 

                                                                 PUNO, CJ,                                                                 QUISUMBING,                                                                 YNARES-SANTIAGO,                                                                 SANDOVAL-GUTIERREZ,              - versus -                                     CARPIO,                                                                 AUSTRIA-MARTINEZ,                                                                 CORONA,                                                                 CARPIO MORALES,                                                                 AZCUNA,                                                                 TINGA,                                                                 CHICO-NAZARIO,                                                                 GARCIA,NATIONAL HOUSING                          VELASCO,AUTHORITY, R-II BUILDERS,            NACHURA, andINC., R-II HOLDINGS, INC.,                REYES, JJ.HARBOUR CENTRE PORT                TERMINAL, INC., and                          Promulgated:MR. REGHIS ROMERO II,

Respondents.               August 15, 2007x-----------------------------------------------------------------------------------------x 

D E C I S I O N         

VELASCO, JR., J.: 

             In this Petition for Prohibition and Mandamus with Prayer for Temporary Restraining Order and/or Writ of Preliminary Injunction under Rule 65, petitioner, in his capacity as taxpayer, seeks:

 to declare NULL AND VOID the Joint Venture Agreement (JVA) dated March 9, 1993 between the National Housing Authority and R-II Builders, Inc. and the Smokey Mountain Development and Reclamation Project embodied therein; the subsequent amendments to the said JVA; and all other agreements signed and executed in relation thereto – including, but not limited to the Smokey Mountain Asset Pool Agreement dated 26 September 1994 and the separate agreements for Phase I and Phase II of the Project––as well as all other transactions which emanated therefrom, for being UNCONSTITUTIONAL and INVALID; to enjoin respondents—particularly respondent NHA—from further implementing and/or enforcing the said project and other agreements related thereto, and from

further deriving and/or enjoying any rights, privileges and interest therefrom x x x; and to compel respondents to disclose all documents and information relating to the project––including, but not limited to, any subsequent agreements with respect to the different phases of the project, the revisions over the original plan, the additional works incurred thereon, the current financial condition of respondent R-II Builders, Inc., and the transactions made respecting the project.[1]

  

                                                The Facts           On March 1, 1988, then President Corazon C. Aquino issued Memorandum Order No. (MO) 161[2] approving and directing the implementation of the Comprehensive and Integrated Metropolitan Manila Waste Management Plan (the Plan).  The Metro Manila Commission, in coordination with various government agencies, was tasked as the lead agency to implement the Plan as formulated by the Presidential Task Force on Waste Management created by Memorandum Circular No. 39.  A day after, on March 2, 1988, MO 161-A[3] was issued, containing the guidelines which prescribed the functions and responsibilities of fifteen (15) various government departments and offices tasked to implement the Plan, namely:  Department of Public Works and Highway (DPWH), Department of Health (DOH), Department of Environment and Natural Resources (DENR), Department of Transportation and Communication, Department of Budget and Management, National Economic and Development Authority (NEDA), Philippine Constabulary Integrated National Police, Philippine Information Agency and the Local Government Unit (referring to the City of Manila), Department of Social Welfare and Development, Presidential Commission for Urban Poor, National Housing Authority (NHA), Department of Labor and Employment, Department of Education, Culture and Sports (now Department of Education), and Presidential Management Staff.           Specifically, respondent NHA was ordered to “conduct feasibility studies and develop low-cost housing projects at the dumpsite and absorb scavengers in NHA resettlement/low-cost housing projects.”[4]  On the other hand, the DENR was tasked to “review and evaluate proposed projects under the Plan with regard to their environmental impact, conduct regular monitoring of activities of the Plan to

ensure compliance with environmental standards and assist DOH in the conduct of the study on hospital waste management.”[5]

           At the time MO 161-A was issued by President Aquino, Smokey Mountain was a wasteland in Balut, Tondo, Manila, where numerous Filipinos resided in subhuman conditions, collecting items that may have some monetary value from the garbage.  TheSmokey Mountain dumpsite is bounded on the north by the Estero Marala, on the south by the property of the National Government, on the east by the property of B and I Realty Co., and on the west by Radial Road 10 (R-10).           Pursuant to MO 161-A, NHA prepared the feasibility studies of the Smokey Mountain low-cost housing project which resulted in the formulation of the “Smokey Mountain Development Plan and Reclamation of the Area Across R-10” or the Smokey Mountain Development and Reclamation Project (SMDRP; the Project).  The Project aimed to convert the Smokey Mountain dumpsite into a habitable housing project, inclusive of the reclamation of the area across R-10, adjacent to the Smokey Mountain as the enabling component of the project.[6]  Once finalized, the Plan was submitted to President Aquino for her approval.           On July 9, 1990, the Build-Operate-and-Transfer (BOT) Law (Republic Act No. [RA] 6957) was enacted.[7]  Its declared policy under Section 1 is “[t]o recognize the indispensable role of the private sector as the main engine for national growth and development and provide the most appropriate favorable incentives to mobilize private resources for the purpose.” Sec. 3 authorized and empowered “[a]ll government infrastructure agencies, including government-owned and controlled corporations and local government units x x x to enter into contract with any duly pre-qualified private contractor for the financing, construction, operation and maintenance of any financially viable infrastructure facilities through the build-operate-transfer or build and transfer scheme.”           RA 6957 defined “build-and-transfer” scheme as “[a] contractual arrangement whereby the contractor undertakes the construction, including financing, of a given infrastructure facility, and its turnover after the completion to the government agency or local government unit concerned which shall pay the contractor its total investment expended on the project, plus reasonable rate of

return thereon.”  The last paragraph of Sec. 6 of the BOT Law provides that the repayment scheme in the case of “land reclamation or the building of industrial estates” may consist of “[t]he grant of a portion or percentage of the reclaimed land or industrial estate built, subject to the constitutional requirements with respect to the ownership of lands.” 

On February 10, 1992, Joint Resolution No. 03[8] was passed by both houses of Congress.  Sec. 1 of this resolution provided, among other things, that:

           Section 1. There is hereby approved the following national infrastructure projects for implementation under the provisions of Republic Act No. 6957 and its implementing rules and regulations:             x x x x             (d)        Port infrastructure like piers, wharves, quays, storage handling, ferry service and related facilities;             x x x x             (k)        Land reclamation, dredging and other related development facilities;             (l)         Industrial estates, regional industrial centers and export processing zones including steel mills, iron-making and petrochemical complexes and related infrastructure and utilities;             x x x x             (p)        Environmental and solid waste management-related facilities such as collection equipment, composting plants, incinerators, landfill and tidal barriers, among others; and             (q)        Development of new townsites and communities and related facilities.

   

          This resolution complied with and conformed to Sec. 4 of the BOT Law requiring the approval of all national infrastructure projects by the Congress. 

          On January 17, 1992, President Aquino proclaimed MO 415[9] approving and directing the implementation of the SMDRP. Secs. 3 and 4 of the Memorandum Order stated: 

          Section 3.  The National Housing Authority is hereby directed to implement the Smokey Mountain Development Plan and Reclamation of the Area Across R-10 through a private sector joint venture scheme at the least cost to the government.             Section 4.  The land area covered by the Smokey Mountain dumpsite is hereby conveyed to the National Housing Authority as well as the area to be reclaimed across R-10.  (Emphasis supplied.)

            In addition, the Public Estates Authority (PEA) was directed to assist in the evaluation of proposals regarding the technical feasibility of reclamation, while the DENR was directed to (1) facilitate titling of Smokey Mountain and of the area to be reclaimed and (2) assist in the technical evaluation of proposals regarding environmental impact statements.[10]

           In the same MO 415, President Aquino created an Executive Committee (EXECOM) to oversee the implementation of the Plan, chaired by the National Capital Region-Cabinet Officer for Regional Development (NCR-CORD) with the heads of the NHA, City of Manila, DPWH, PEA, Philippine Ports Authority (PPA), DENR, and Development Bank of the Philippines (DBP) as members.[11]  The NEDA subsequently became a member of the EXECOM.  Notably, in a September 2, 1994 Letter,[12] PEA General Manager Amado Lagdameo approved the plans for the reclamation project prepared by the NHA.           In conformity with Sec. 5 of MO 415, an inter-agency technical committee (TECHCOM) was created composed of the technical representatives of the EXECOM “[t]o assist the NHA in the evaluation of the project proposals, assist in the resolution of all issues and problems in the project to ensure that all aspects of the development from squatter relocation, waste management, reclamation, environmental protection, land and house construction meet governing regulation of the region and to facilitate the completion of the project.”[13]

 

          Subsequently, the TECHCOM put out the Public Notice and Notice to Pre-Qualify and Bid for the right to become NHA’s joint venture partner in the implementation of the SMDRP.  The notices were published in newspapers of general circulation on January 23 and 26 and February 1, 14, 16, and 23, 1992, respectively.  Out of the thirteen (13) contractors who responded, only five (5) contractors fully complied with the required pre-qualification documents.  Based on the evaluation of the pre-qualification documents, the EXECOM declared the New San Jose Builders, Inc. and R-II Builders, Inc. (RBI) as the top two contractors.[14]

           Thereafter, the TECHCOM evaluated the bids (which include the Pre-feasibility Study and Financing Plan) of the top two (2) contractors in this manner:           (1)     The DBP, as financial advisor to the Project, evaluated their Financial Proposals;           (2)     The DPWH, PPA, PEA and NHA evaluated the Technical Proposals for the Housing Construction and Reclamation;           (3)     The DENR evaluated Technical Proposals on Waste Management and Disposal by conducting the Environmental Impact Analysis; and           (4)     The NHA and the City of Manila evaluated the socio-economic benefits presented by the proposals.           On June 30, 1992, Fidel V. Ramos assumed the Office of the President (OP) of the Philippines.           On August 31, 1992, the TECHCOM submitted its recommendation to the EXECOM to approve the R-II Builders, Inc. (RBI) proposal which garnered the highest score of 88.475%.  

Subsequently, the EXECOM made a Project briefing to President Ramos.  As a result, President Ramos issued Proclamation No. 39[15] on September 9, 1992, which reads:

           WHEREAS, the National Housing Authority has presented a viable conceptual plan to convert the Smokey Mountain dumpsite into a habitable housing project, inclusive of the reclamation of the area across Road Radial 10 (R-10) adjacent to the Smokey Mountain as the enabling component of the project;                        x x x x                       These parcels of land of public domain are hereby placed under the administration and disposition of the National Housing Authority to develop, subdivide and dispose to qualified beneficiaries, as well as its development for mix land use (commercial/industrial) to provide employment opportunities to on-site families and additional areas for port-related activities.             In order to facilitate the early development of the area for disposition, the Department of Environment and Natural Resources, through the Lands and Management Bureau, is hereby directed to approve the boundary and subdivision survey and to issue a special patent and title in the name of the National Housing Authority, subject to final survey and private rights, if any there be.  (Emphasis supplied.)

            On October 7, 1992, President Ramos authorized NHA to enter into a Joint Venture Agreement with RBI “[s]ubject to final review and approval of the Joint Venture Agreement by the Office of the President.”[16]

           On March 19, 1993, the NHA and RBI entered into a Joint Venture Agreement[17] (JVA) for the development of the SmokeyMountain dumpsite and the reclamation of the area across R-10 based on Presidential Decree No. (PD) 757[18] which mandated NHA “[t]o undertake the physical and socio-economic upgrading and development of lands of the public domain identified for housing,” MO 161-A which required NHA to conduct the feasibility studies and develop a low-cost housing project at the Smokey Mountain, and MO 415 as amended by MO 415-A which approved the Conceptual Plan for Smokey Mountain and creation of the EXECOM and TECHCOM.  Under the JVA, the Project “involves the clearing of Smokey Mountain for eventual development into a low cost medium rise housing complex and industrial/commercial site with the reclamation of the area directly across [R-10] to act as the enabling component of the Project.”[19]  The JVA covered a lot in Tondo, Manila with an area of two hundred

twelve thousand two hundred thirty-four (212,234) square meters and another lot to be reclaimed also in Tondo with an area of four hundred thousand (400,000) square meters.           The Scope of Work of RBI under Article II of the JVA is as follows: 

          a)         To fully finance all aspects of development of Smokey Mountain and reclamation of no more than 40 hectares of Manila Bay area across Radial Road 10.             b)         To immediately commence on the preparation of feasibility report and detailed engineering with emphasis to the expedient acquisition of the Environmental Clearance Certificate (ECC) from the DENR.             c)         The construction activities will only commence after the acquisition of the ECC, and             d)         Final details of the contract, including construction, duration and delivery timetables, shall be based on the approved feasibility report and detailed engineering. 

           Other obligations of RBI are as follows: 

          2.02     The [RBI] shall develop the PROJECT based on the Final Report and Detailed Engineering as approved by the Office of the President. All costs and expenses for hiring technical personnel, date gathering, permits, licenses, appraisals, clearances, testing and similar undertaking shall be for the account of the [RBI].             2.03     The [RBI] shall undertake the construction of 3,500 temporary housing units complete with basic amenities such as plumbing, electrical and sewerage facilities within the temporary housing project as staging area to temporarily house the squatter families from the SmokeyMountain while development is being undertaken.  These temporary housing units shall be turned over to the [NHA] for disposition.             2.04     The [RBI] shall construct 3,500 medium rise low cost permanent housing units on the leveled Smokey Mountain complete with basic utilities and amenities, in accordance with the plans and specifications set forth in the Final Report approved by the [NHA].  Completed units ready for mortgage take out shall be turned over by the [RBI] to NHA on agreed schedule. 

            2.05     The [RBI] shall reclaim forty (40) hectares of Manila Bay area directly across [R-10] as contained in Proclamation No. 39 as the enabling component of the project and payment to the [RBI] as its asset share.             2.06     The [RBI] shall likewise furnish all labor materials and equipment necessary to complete all herein development works to be undertaken on a phase to phase basis in accordance with the work program stipulated therein.

            The profit sharing shall be based on the approved pre-feasibility report submitted to the EXECOM, viz:           For the developer (RBI):

               1.         To own the forty (40) hectares of reclaimed land.             2.         To own the commercial area at the Smokey Mountain area composed of 1.3 hectares, and             3.         To own all the constructed units of medium rise low cost permanent housing units beyond the 3,500 units share of the [NHA].  For the NHA:                   1.         To own the temporary housing consisting of 3,500 units.             2.         To own the cleared and fenced incinerator site consisting of 5 hectares situated at the Smokey Mountain area.             3.         To own the 3,500 units of permanent housing to be constructed by [RBI] at the Smokey Mountain area to be awarded to qualified on site residents.             4.         To own the Industrial Area site consisting of 3.2 hectares, and             5.         To own the open spaces, roads and facilities within the Smokey Mountain area.

            In the event of “extraordinary increase in labor, materials, fuel and non-recoverability of total project expenses,”[20] the OP, upon recommendation of the NHA, may approve a corresponding adjustment in the enabling component.

           The functions and responsibilities of RBI and NHA are as follows:           For RBI: 

          4.01     Immediately commence on the preparation of the FINAL REPORT with emphasis to the expedient acquisition, with the assistance of the [NHA] of Environmental Compliance Certificate (ECC) from the Environmental Management Bureau (EMB) of the [DENR].  Construction shall only commence after the acquisition of the ECC.  The Environment Compliance Certificate (ECC) shall form part of the FINAL REPORT.             The FINAL REPORT shall provide the necessary subdivision and housing plans, detailed engineering and architectural drawings, technical specifications and other related and required documents relative to the Smokey Mountain area.             With respect to the 40-hectare reclamation area, the [RBI] shall have the discretion to develop the same in a manner that it deems necessary to recover the [RBI’s] investment, subject to environmental and zoning rules.             4.02     Finance the total project cost for land development, housing construction and reclamation of the PROJECT.             4.03     Warrant that all developments shall be in compliance with the requirements of the FINAL REPORT.             4.04     Provide all administrative resources for the submission of project accomplishment reports to the [NHA] for proper evaluation and supervision on the actual implementation.             4.05     Negotiate and secure, with the assistance of the [NHA] the grant of rights of way to the PROJECT, from the owners of the adjacent lots for access road, water, electrical power connections and drainage facilities.             4.06     Provide temporary field office and transportation vehicles (2 units), one (1) complete set of computer and one (1) unit electric typewriter for the [NHA’s] field personnel to be charged to the PROJECT.

  

          For the NHA: 

          4.07     The [NHA] shall be responsible for the removal and relocation of all squatters within Smokey Mountain to the Temporary Housing Complex or to other areas prepared as relocation areas with the assistance of the [RBI].  The

[RBI] shall be responsible in releasing the funds allocated and committed for relocation as detailed in the FINAL REPORT.             4.08     Assist the [RBI] and shall endorse granting of exemption fees in the acquisition of all necessary permits, licenses, appraisals, clearances and accreditations for the PROJECT subject to existing laws, rules and regulations.             4.09     The [NHA] shall inspect, evaluate and monitor all works at the Smokey Mountain and Reclamation Area while the land development and construction of housing units are in progress to determine whether the development and construction works are undertaken in accordance with the FINAL REPORT.  If in its judgment, the PROJECT is not pursued in accordance with the FINAL REPORT, the [NHA] shall require the [RBI] to undertake necessary remedial works.  All expenses, charges and penalties incurred for such remedial, if any, shall be for the account of the [RBI].             4.10     The [NHA] shall assist the [RBI] in the complete electrification of the PROJECT.  x x x                4.11     Handle the processing and documentation of all sales transactions related to its assets shares from the venture such as the 3,500 units of permanent housing and the allotted industrial area of 3.2 hectares.             4.12     All advances outside of project costs made by the [RBI] to the [NHA] shall be deducted from the proceeds due to the [NHA].             4.13     The [NHA] shall be responsible for the acquisition of the Mother Title for the Smokey Mountain and Reclamation Area within 90 days upon submission of Survey returns to the Land Management Sector.  The land titles to the 40-hectare reclaimed land, the 1.3 hectare commercial area at the Smokey Mountain area and the constructed units of medium-rise permanent housing units beyond the 3,500 units share of the [NHA] shall be issued in the name of the [RBI] upon completion of the project.  However, the [RBI] shall have the authority to pre-sell its share as indicated in this agreement.

          The final details of the JVA, which will include the construction duration, costs, extent of reclamation, and delivery timetables, shall be based on the FINAL REPORT which will be contained in a Supplemental Agreement to be executed later by the parties. 

          The JVA may be modified or revised by written agreement between the NHA and RBI specifying the clauses to be revised or modified and the corresponding amendments.           If the Project is revoked or terminated by the Government through no fault of RBI or by mutual agreement, the Government shall compensate RBI for its actual expenses incurred in the Project plus a reasonable rate of return not exceeding that stated in the feasibility study and in the contract as of the date of such revocation, cancellation, or termination on a schedule to be agreed upon by both parties.           As a preliminary step in the project implementation, consultations and dialogues were conducted with the settlers of the Smokey Mountain Dumpsite Area.  At the same time, DENR started processing the application for the Environmental Clearance Certificate (ECC) of the SMDRP.  As a result however of the consultative dialogues, public hearings, the report on the on-site field conditions, the Environmental Impact Statement (EIS) published on April 29 and May 12, 1993 as required by the Environmental Management Bureau of DENR, the evaluation of the DENR, and the recommendations from other government agencies, it was discovered that design changes and additional work have to be undertaken to successfully implement the Project.[21]

           Thus, on February 21, 1994, the parties entered into another agreement denominated as the Amended and Restated Joint Venture Agreement[22] (ARJVA) which delineated the different phases of the Project.  Phase I of the Project involves the construction of temporary housing units for the current residents of the Smokey Mountain dumpsite, the clearing and leveling-off of the dumpsite, and the construction of medium-rise low-cost housing units at the cleared and leveled dumpsite.[23]  Phase II of the Project involves the construction of an incineration area for the on-site disposal of the garbage at the dumpsite.[24]  The enabling component or consideration for Phase I of the Project was increased from 40 hectares of reclaimed lands across R-10 to 79 hectares.[25]  The revision also provided for the enabling component for Phase II of 119 hectares of reclaimed lands contiguous to the 79 hectares of reclaimed lands for Phase I.[26]  Furthermore, the amended contract delineated the scope of works and the terms and conditions of Phases I and II, thus:

 The PROJECT shall consist of Phase I and Phase II. Phase I shall involve the following: a.                   the construction of 2,992 units of temporary housing for the       affected residents while clearing and development of Smokey          Mountain [are] being undertaken b.                  the clearing of Smokey Mountain and the subsequent     construction of 3,520 units of medium rise housing and the             development of the industrial/commercial site within the Smokey Mountain area c.                   the reclamation and development of a 79 hectare area directly   across Radial Road 10 to serve as the enabling component of         Phase I Phase II shall involve the following: a.                   the construction and operation of an incinerator plant that will     conform to the emission standards of the DENR b.         the reclamation and development of 119-hectare area    contiguous to that to be reclaimed under Phase I to serve as the enabling component of Phase II. 

          Under the ARJVA, RBI shall construct 2,992 temporary housing units, a reduction from 3,500 units under the JVA.[27] However, it was required to construct 3,520 medium-rise low-cost permanent housing units instead of 3,500 units under the JVA. There was a substantial change in the design of the permanent housing units such that a “loft shall be incorporated in each unit so as to increase the living space from 20 to 32 square meters. The additions and changes in the Original Project Component are as follows:

                    ORIGINAL                       CHANGES/REVISIONS 1.    TEMPORARY HOUSING                  

Wood/Plywood, ga. 31 G.I.           Concrete/Steel Frame Structure Sheet usable life of 3 years,                                                      gauge 26 G.I. roofing sheets future 12 SM floor area.                                                      use as permanent structures for       factory and warehouses mixed                                             17 sm & 12 sm floor area.

 2.    MEDIUM RISE MASS

       HOUSING 

Box   type  precast   Shelter            Conventional and precast component 20 square meter                                                       concrete structures, 32 square floor  area  with  2.4  meter                                                       meter floor area with loft floor height; bare type, 160 units/                                                      (sleeping quarter) 3.6 m. floor building.                                                      height,  painted  and  improved                                                        architectural  façade,  80  units/                                                      building.

                                                            3. MITIGATING MEASURES 

3.1 For reclamation work               Use of clean dredgefill material below the MLLW and SM material mixed with dredgefill above MLLW.

 a.  100% use of Smokey                      Mountain material as                      dredgefill                                  Use of Steel Sheet Piles needed                                                      for longer depth of embedment.b.   Concrete Sheet Piles                      short depth of      embedment                                      c.   Silt removal approximately        Need to remove more than 3.0

                              1.0 meter only                          meters of silt after sub-soil investigation.[28]

                                These material and substantial modifications served as justifications for the

increase in the share of RBI from 40 hectares to 79 hectares of reclaimed land.                              Under the JVA, the specific costs of the Project were not

stipulated but under the ARJVA, the stipulated cost for Phase I was pegged at six billion six hundred ninety-three million three hundred eighty-seven thousand three hundred sixty-four pesos (PhP 6,693,387,364).

 In his February 10, 1994 Memorandum, the Chairperson of the SMDRP

EXECOM submitted the ARJVA for approval by the OP.  After review of said agreement, the OP directed that certain terms and conditions of the ARJVA be

further clarified or amended preparatory to its approval.  Pursuant to the President’s directive, the parties reached an agreement on the clarifications and amendments required to be made on the ARJVA.

             On August 11, 1994, the NHA and RBI executed an Amendment To the Amended and Restated Joint Venture Agreement (AARJVA)[29] clarifying certain terms and condition of the ARJVA, which was submitted to President Ramos for approval, to wit:

  

Phase II shall involve the following: a.       the construction and operation of an incinerator plant that will conform to the

emission  standards of the DENR 

b.   the reclamation and development of 119-hectare area contiguous to that to be reclaimed under Phase I to serve as the enabling component of Phase II, the exact size and configuration of which shall be approved by the SMDRP Committee[30]

                                    Other substantial amendments are the following:

      

            4. Paragraph 2.05 of Article II of the ARJVA is hereby amended to read as follows:

       2.05.    The DEVELOPER shall reclaim seventy nine (79) hectares of the Manila Bay area directly across Radial Road 10 (R-10) to serve as payment to the DEVELOPER as its asset share for Phase I and to develop such land into commercial area with port facilities; provided, that the port plan shall be integrated with the Philippine Port Authority’s North Harbor plan for the Manila Bay area and provided further, that the final reclamation and port plan for said reclaimed area shall be submitted for approval by the Public Estates Authority and the Philippine Ports Authority, respectively: provided finally, that subject to par. 2.02 above, actual reclamation work may commence upon approval of the final reclamation plan by the Public Estates Authority.

        x x x x 

            9. A new paragraph to be numbered 5.05 shall be added to Article V of the ARJVA, and shall read as follows:

 5.05.   In the event this Agreement is revoked, cancelled or terminated

by the AUTHORITY through no fault of the DEVELOPER, the AUTHORITY shall compensate the DEVELOPER for the value of the completed portions of, and actual expenditures on the PROJECT plus a reasonable rate of return thereon, not exceeding that stated in the Cost Estimates  of Items of Work previously approved by the SMDRP Executive Committee and the AUTHORITY and stated in this Agreement, as of the date of such revocation, cancellation, or termination, on a schedule to be agreed upon by the parties, provided that said completed portions of Phase I are in accordance with the approved FINAL REPORT.

   Afterwards, President Ramos issued Proclamation No. 465 dated August 31,

1994[31] increasing the proposed area for reclamation across R-10 from 40 hectares to 79 hectares,[32] to wit:

  

NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the Philippines, by virtue of the powers vested in me by the law, and as recommended by the SMDRP Executive Committee, do hereby authorize the increase of the area of foreshore or submerged lands of Manila Bay to be reclaimed, as previously authorized under Proclamation No. 39 (s. 1992) and Memorandum Order No. 415 (s. 1992), from Four Hundred Thousand (400,000) square meters, more or less, to Seven Hundred Ninety Thousand (790,000) square meters, more or less.  

 On September 1, 1994, pursuant to Proclamation No. 39, the DENR issued

Special Patent No. 3591 conveying in favor of NHA an area of 211,975 square meters covering the Smokey Mountain Dumpsite.

 In its September 7, 1994 letter to the EXECOM, the OP through then

Executive Secretary Teofisto T. Guingona, Jr., approved the ARJVA as amended by the AARJVA. 

 On September 8, 1994, the DENR issued Special Patent 3592 pursuant to

Proclamation No. 39, conveying in favor of NHA a 401,485-square meter area. On September 26, 1994, the NHA, RBI, Home Insurance and Guaranty

Corporation (HIGC), now known as the Home Guaranty Corporation, and the Philippine National Bank (PNB)[33] executed the Smokey Mountain Asset Pool

Formation Trust Agreement (Asset Pool Agreement).[34]  Thereafter, a Guaranty Contract was entered into by NHA, RBI, and HIGC. 

On June 23, 1994, the Legislature passed the Clean Air Act.[35] The Act made the establishment of an incinerator illegal and effectively barred the implementation of the planned incinerator project under Phase II.  Thus, the off-site disposal of the garbage at the Smokey Mountain became necessary.[36]

           The land reclamation was completed in August 1996.[37]

 Sometime later in 1996, pursuant likewise to Proclamation No. 39, the

DENR issued Special Patent No. 3598 conveying in favor of NHA an additional 390,000 square meter area. 

During the actual construction and implementation of Phase I of the SMDRP, the Inter-Agency Technical Committee found and recommended to the EXECOM on December 17, 1997 that additional works were necessary for the completion and viability of the Project. The EXECOM approved the recommendation and so, NHA instructed RBI to implement the change orders or necessary works.[38]

 Such necessary works comprised more than 25% of the original contract

price and as a result, the Asset Pool incurred direct and indirect costs.  Based on C1 12 A of the Implementing Rules and Regulations of PD 1594, a supplemental agreement is required for “all change orders and extra work orders, the total aggregate cost of which being more than twenty-five (25%) of the escalated original contract price.” 

 The EXECOM requested an opinion from the Department of Justice (DOJ)

to determine whether a bidding was required for the change orders and/or necessary works.  The DOJ, through DOJ Opinion Nos. 119 and 155 dated August 26, 1993 and November 12, 1993, opined that “a rebidding, pursuant to the aforequoted provisions of the implementing rules (referring to PD 1594) would not be necessary where the change orders inseparable from the original scope of the project, in which case, a negotiation with the incumbent contractor may be allowed.”

 Thus, on February 19, 1998, the EXECOM issued a resolution directing

NHA to enter into a supplemental agreement covering said necessary works. On March 20, 1998, the NHA and RBI entered into a Supplemental

Agreement covering the aforementioned necessary works and submitted it to the President on March 24, 1998 for approval.

 Outgoing President Ramos decided to endorse the consideration of the

Supplemental Agreement to incoming President Joseph E. Estrada.  On June 30, 1998, Estrada became the 13th Philippine President.

 However, the approval of the Supplemental Agreement was unacted upon

for five months.  As a result, the utilities and the road networks were constructed to cover only the 79-hectare original enabling component granted under the ARJVA.  The 220-hectare extension of the 79-hectare area was no longer technically feasible.  Moreover, the financial crises and unreliable real estate situation made it difficult to sell the remaining reclaimed lots.  The devaluation of the peso and the increase in interest cost led to the substantial increase in the cost of reclamation.

 On August 1, 1998, the NHA granted RBI’s request to suspend work on the

SMDRP due to “the delay in the approval of the Supplemental Agreement, the consequent absence of an enabling component to cover the cost of the necessary works for the project, and the resulting inability to replenish the Asset Pool funds partially used for the completion of the necessary works.”[39]

 As of August 1, 1998 when the project was suspended, RBI had “already

accomplished a portion of the necessary works and change orders which resulted in [RBI] and the Asset Pool incurring advances for direct and indirect cost which amount can no longer be covered by the 79-hectare enabling component under the ARJVA.”[40]

 Repeated demands were made by RBI in its own capacity and on behalf of

the asset pool on NHA for payment for the advances for direct and indirect costs subject to NHA validation.

 In November 1998, President Estrada issued Memorandum Order No. 33

reconstituting the SMDRP EXECOM and further directed it to review the Supplemental Agreement and submit its recommendation on the completion of the SMDRP.

 The reconstituted EXECOM conducted a review of the project and

recommended the amendment of the March 20, 1998 Supplemental Agreement “to make it more feasible and to identify and provide new sources of funds for the project and provide for a new enabling component to cover the payment for the necessary works that cannot be covered by the 79-hectare enabling component under the ARJVA.”[41]

 The EXECOM passed Resolution Nos. 99-16-01 and 99-16-02[42] which

approved the modification of the Supplemental Agreement, to wit: a)         Approval of 150 hectares additional reclamation in order to       make the reclamation feasible as part of the enabling       component. b)         The conveyance of the 15-hectare NHA Vitas property (actually           17 hectares based on surveys) to the SMDRP Asset Pool. c)         The inclusion in the total development cost of other additional,   necessary and indispensable infrastructure works and the      revision of the original cost stated in the Supplemental    Agreement dated March 20, 1998 from PhP 2,953,984,941.40   to PhP 2,969,134,053.13. d)         Revision in the sharing agreement between the parties.

  In the March 23, 2000 OP Memorandum, the EXECOM was authorized to

proceed and complete the SMDRP subject to certain guidelines and directives. After the parties in the case at bar had complied with the March 23, 2000

Memorandum, the NHA November 9, 2000 Resolution No. 4323 approved “the conveyance of the 17-hectare Vitas property in favor of the existing or a newly created Asset Pool of the project to be developed into a mixed commercial-industrial area, subject to certain conditions.”

 

On January 20, 2001, then President Estrada was considered resigned.  On the same day, President Gloria M. Arroyo took her oath as the 14th President of the Philippines.

 As of February 28, 2001, “the estimated total project cost of the SMDRP has

reached P8.65 billion comprising of P4.78 billion in direct cost and P3.87 billion in indirect cost,”[43] subject to validation by the NHA.

 On August 28, 2001, NHA issued Resolution No. 4436 to pay for “the

various necessary works/change orders to SMDRP, to effect the corresponding enabling component consisting of the conveyance of the NHA’s Vitas Property and an additional 150-hectare reclamation area” and to authorize the release by NHA of PhP 480 million “as advance to the project to make the Permanent Housing habitable, subject to reimbursement from the proceeds of the expanded enabling component.”[44]

 On November 19, 2001, the Amended Supplemental Agreement (ASA) was

signed by the parties, and on February 28, 2002, the Housing and Urban Development Coordinating Council (HUDCC) submitted the agreement to the OP for approval.

In the July 20, 2002 Cabinet Meeting, HUDCC was directed “to submit the works covered by the PhP 480 million [advance to the Project] and the ASA to public bidding.”[45]  On August 28, 2002, the HUDCC informed RBI of the decision of the Cabinet.

 In its September 2, 2002 letter to the HUDCC Chairman, RBI lamented the

decision of the government “to bid out the remaining works under the ASA thereby unilaterally terminating the Project with RBI and all the agreements related thereto.”  RBI demanded the payment of just compensation “for all accomplishments and costs incurred in developing the SMDRP plus a reasonable rate of return thereon pursuant to Section 5.05 of the ARJVA and Section 6.2 of the ASA.”[46]

 Consequently, the parties negotiated the terms of the termination of the JVA

and other subsequent agreements. 

On August 27, 2003, the NHA and RBI executed a Memorandum of Agreement (MOA) whereby both parties agreed to terminate the JVA and other subsequent agreements, thus:

  

1.    TERMINATION 

1.1       In compliance with the Cabinet directive dated 30 July 2002 to submit the works covered by the P480 Million and the ASA to public bidding, the following agreements executed by and between the NHA and the DEVELOPER are hereby terminated, to wit:

 a.         Joint Venture Agreement (JVA) dated 19 March 1993b.         Amended and Restated Joint Venture Agreement

(ARJVA) dated 21 February 1994c.         Amendment and Restated Joint Venture Agreement

dated 11 August 1994d.         Supplemental Agreement dated 24 March 1998e.         Amended Supplemental Agreement (ASA) dated 19

November 2001.x x x x 

5.    SETTLEMENT OF CLAIMS 

5.1       Subject to the validation of the DEVELOPER’s claims, the NHA hereby agrees to initially compensate the Developer for the abovementioned costs as follows:

 a.      Direct payment to DEVELOPER of the amounts herein

listed in the following manner: 

         a.1    P250 Million in cash from the escrow account in accordance with Section 2 herewith;

 a.2    Conveyance of a 3 hectare portion of the Vitas

Industrial area immediately after joint determination of the appraised value of the said property in accordance with the procedure herein set forth in the last paragraph of Section 5.3. For purposes of all payments to be made through conveyance of real properties, the parties shall secure from the NHA Board of Directors all documents necessary and sufficient to effect the transfer of title over the properties to be conveyed to RBI, which documents shall be issued within a reasonable period.

 5.2       Any unpaid balance of the DEVELOPERS claims determined

after the validation process referred to in Section 4 hereof, may be paid in cash, bonds or through the conveyance of properties or any combination thereof.  The manner, terms and conditions of payment of the balance shall be specified and agreed upon later within a period of three months from the time a substantial amount representing the unpaid balance has been validated pursuant hereto including, but not limited to the programming of quarterly cash payments to be sourced by the NHA from its budget for debt servicing, from its income or from any other sources.

 5.3       In any case the unpaid balance is agreed to be paid, either

partially or totally through conveyance of properties, the parties shall agree on which properties shall be subject to conveyance. The NHA and DEVELOPER hereby agree to determine the valuation of the properties to be conveyed by getting the average of the appraisals to be made by two (2) mutually acceptable independent appraisers. 

              Meanwhile, respondent Harbour Centre Port Terminal, Inc. (HCPTI) entered into an agreement with the asset pool for the development and operations of a port in the Smokey Mountain Area which is a major component of SMDRP to provide a source of livelihood and employment for Smokey Mountain residents and spur economic growth.  A Subscription Agreement was executed between the Asset Pool and HCPTI whereby the asset pool subscribed to 607 million common shares and 1,143 million preferred shares of HCPTI.  The HCPTI preferred shares had a premium and penalty interest of 7.5% per annum and a mandatory redemption feature.  The asset pool paid the subscription by conveying to HCPTI a 10-hectare land which it acquired from the NHA being a portion of the reclaimed land of the SMDRP.  Corresponding certificates of titles were issued to HCPTI, namely: TCT Nos. 251355, 251356, 251357, and 251358.           Due to HCPTI’s failure to obtain a license to handle foreign containerized cargo from PPA, it suffered a net income loss of PhP 132,621,548 in 2002 and a net loss of PhP 15,540,063 in 2003.  The Project Governing Board of the Asset Pool later conveyed by way of dacion en pago a number of HCPTI shares to RBI in lieu of cash payment for the latter’s work in SMDRP. 

          On August 5, 2004, former Solicitor General Francisco I. Chavez, filed the instant petition which impleaded as respondents the NHA, RBI, R-II Holdings, Inc. (RHI), HCPTI, and Mr. Reghis Romero II, raising constitutional issues.           The NHA reported that thirty-four (34) temporary housing structures and twenty-one (21) permanent housing structures had been turned over by respondent RBI.  It claimed that 2,510 beneficiary-families belonging to the poorest of the poor had been transferred to their permanent homes and benefited from the Project.

   

The Issues 

          The grounds presented in the instant petition are:I 

NEITHER RESPONDENT NHA NOR RESPONDENT R-II BUILDERS MAY VALIDLY RECLAIM FORESHORE AND SUBMERGED LAND BECAUSE: 1.         RESPONDENT NHA AND R-II BUILDERS WERE NEVER           GRANTED ANY POWER AND AUTHORITY TO RECLAIM   LANDS OF THE PUBLIC DOMAIN AS THIS POWER IS             VESTED EXCLUSIVELY WITH THE PEA. 2.         EVEN ASSUMING THAT RESPONDENTS NHA AND R-II          BUILDERS WERE GIVEN THE POWER AND AUTHORITY   TO RECLAIM FORESHORE AND SUBMERGED LAND,            THEY WERE NEVER GIVEN THE AUTHORITY BY THE DENR TO DO SO. 

II 

RESPONDENT R-II BUILDERS CANNOT ACQUIRE THE RECLAIMED FORESHORE AND SUBMERGED LAND AREAS BECAUSE: 1.         THE RECLAIMED FORESHORE AND SUBMERGED        PARCELS OF LAND ARE INALIENABLE PUBLIC LANDS     WHICH ARE BEYOND THE COMMERCE OF MAN. 2.         ASSUMING ARGUENDO THAT THE SUBJECT    RECLAIMED

FORESHORE AND SUBMERGED PARCELS OF LAND WERE ALREADY DECLARED ALIENABLE LANDS OF THE PUBLIC DOMAIN, RESPONDENT R-II BUILDERS STILL COULD NOT

ACQUIRE THE SAME BECAUSE THERE WAS NEVER ANY DECLARATION THAT THE SAID LANDS WERE NO LONGER NEEDED FOR PUBLIC USE.

 3.         EVEN ASSUMING THAT THE SUBJECT RECLAIMED     LANDS ARE ALIENABLE AND NO LONGER NEEDED         FOR PUBLIC USE, RESPONDENT R-II BUILDERS STILL             CANNOT ACQUIRE THE SAME BECAUSE THERE WAS            NEVER ANY LAW AUTHORIZING THE SALE THEREOF. 4.         THERE WAS NEVER ANY PUBLIC BIDDING AWARDING         OWNERSHIP OF THE SUBJECT LAND TO RESPONDENT          R-II BUILDERS. 5.         ASSUMING THAT ALL THE REQUIREMENTS FOR A VALID

TRANSFER OF ALIENABLE PUBLIC HAD BEEN PERFORMED, RESPONDENT R-II BUILDERS, BEING PRIVATE CORPORATION IS NONETHELESS EXPRESSLYPROHIBITED BY THE PHILIPPINE CONSTITUTION TO ACQUIRE LANDS OF THE PUBLIC DOMAIN.

 III

 RESPONDENT HARBOUR, BEING A PRIVATE CORPORATION WHOSE MAJORITY STOCKS ARE OWNED AND CONTROLLED BY RESPONDENT ROMERO’S CORPORATIONS – R-II BUILDERS AND R-II HOLDINGS – IS DISQUALIFIED FROM BEING A TRANSFEREE OF PUBLIC LAND. 

IV RESPONDENTS MUST BE COMPELLED TO DISCLOSE ALL INFORMATION RELATED TO THE SMOKEY MOUNTAIN DEVELOPMENT AND RECLAMATION PROJECT.

 The Court’s Ruling

           Before we delve into the substantive issues raised in this petition, we will first deal with several procedural matters raised by respondents. Whether petitioner has the requisite locus standi to file this case

           Respondents argue that petitioner Chavez has no legal standing to file the petition.

 Only a person who stands to be benefited or injured by the judgment in the

suit or entitled to the avails of the suit can file a complaint or petition.[47]  Respondents claim that petitioner is not a proper party-in-interest as he was unable to show that “he has sustained or is in immediate or imminent danger of sustaining some direct and personal injury as a result of the execution and enforcement of the assailed contracts or agreements.”[48]  Moreover, they assert that not all government contracts can justify a taxpayer’s suit especially when no public funds were utilized in contravention of the Constitution or a law.

We explicated in Chavez v. PCGG[49] that in cases where issues of transcendental public importance are presented, there is no necessity to show that petitioner has experienced or is in actual danger of suffering direct and personal injury as the requisite injury is assumed.  We find our ruling in Chavez v. PEA[50] as conclusive authority on locus standi in the case at bar since the issues raised in this petition are averred to be in breach of the fair diffusion of the country’s natural resources and the constitutional right of a citizen to information which have been declared to be matters of transcendental public importance.  Moreover, the pleadings especially those of respondents readily reveal that public funds have been indirectly utilized in the Project by means of Smokey Mountain Project Participation Certificates (SMPPCs) bought by some government agencies.                                               Hence, petitioner, as a taxpayer, is a proper party to the instant petition before the court. Whether petitioner’s direct recourse to this Court was proper           Respondents are one in asserting that petitioner circumvents the principle of hierarchy of courts in his petition.  Judicial hierarchy was made clear in the case of People v. Cuaresma, thus:

 There is after all a hierarchy of courts. That hierarchy is determinative of the venue of appeals, and should also serve as a general determinant of the appropriate forum for petitions for the extraordinary writs.  A becoming regard for that judicial hierarchy most certainly indicates that petitions for the issuance of extraordinary writs against first level (“inferior”) courts should be filed with the Regional Trial Court, and those against the latter, with the Court of Appeals.  A direct invocation of the Supreme Court’s original jurisdiction to issue these writs should be allowed only when there are special and important reasons therefor,

clearly and specifically set out in the petition. This is established policy. It is a policy that is necessary to prevent inordinate demands upon the Court’s time and attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of the Court’s docket.[51] x x x

 The OSG claims that the jurisdiction over petitions for prohibition and

mandamus is concurrent with other lower courts like the Regional Trial Courts and the Court of Appeals.  Respondent NHA argues that the instant petition is misfiled because it does not introduce special and important reasons or exceptional and compelling circumstances to warrant direct recourse to this Court and that the lower courts are more equipped for factual issues since this Court is not a trier of facts.  Respondents RBI and RHI question the filing of the petition as this Court should not be unduly burdened with “repetitions, invocation of jurisdiction over constitutional questions it had previously resolved and settled.”           In the light of existing jurisprudence, we find paucity of merit in respondents’ postulation.           While direct recourse to this Court is generally frowned upon and discouraged, we have however ruled in Santiago v. Vasquez that such resort to us may be allowed in certain situations, wherein this Court ruled that petitions for certiorari, prohibition, or mandamus, though cognizable by other courts, may directly be filed with us if “the redress desired cannot be obtained in the appropriate courts or where exceptional compelling circumstances justify availment of a remedy within and calling for the exercise of [this Court’s] primary jurisdiction.”[52]

           The instant petition challenges the constitutionality and legality of the SMDRP involving several hectares of government land and hundreds of millions of funds of several government agencies.  Moreover, serious constitutional challenges are made on the different aspects of the Project which allegedly affect the right of Filipinos to the distribution of natural resources in the country and the right to information of a citizen—matters which have been considered to be of extraordinary significance and grave consequence to the public in general.  These concerns in the instant action compel us to turn a blind eye to the judicial structure meant to provide an orderly dispensation of justice and consider the instant petition as a justified deviation from an established precept.

 Core factual matters undisputed           Respondents next challenge the projected review by this Court of the alleged factual issues intertwined in the issues propounded by petitioner.  They listed a copious number of questions seemingly factual in nature which would make this Court a trier of facts.[53]

           We find the position of respondents bereft of merit.                   For one, we already gave due course to the instant petition in our January 18, 2005 Resolution.[54]  In said issuance, the parties were required to make clear and concise statements of established facts upon which our decision will be based.           Secondly, we agree with petitioner that there is no necessity for us to make any factual findings since the facts needed to decide the instant petition are well established from the admissions of the parties in their pleadings[55] and those derived from the documents appended to said submissions.  Indeed, the core facts which are the subject matter of the numerous issues raised in this petition are undisputed. 

Now we will tackle the issues that prop up the instant petition. Since petitioner has cited our decision in PEA as basis for his postulations in

a number of issues, we first resolve the query—is PEA applicable to the case at bar?           A juxtaposition of the facts in the two cases constrains the Court to rule in the negative.           The Court finds that PEA  is not a binding precedent to the instant petition because the facts in said case are substantially different from the facts and circumstances in the case at bar, thus:           (1)     The reclamation project in PEA was undertaken through a JVA entered into between PEA and AMARI.  The reclamation project in the instant NHA case

was undertaken by the NHA, a national government agency in consultation with PEA and with the approval of two Philippine Presidents;           (2)     In PEA, AMARI and PEA executed a JVA to develop the Freedom Islands and reclaim submerged areas without public bidding on April 25, 1995.  In the instant NHA case, the NHA and RBI executed a JVA after RBI was declared the winning bidder onAugust 31, 1992 as the JVA partner of the NHA in the SMDRP after compliance with the requisite public bidding.           (3)     In PEA, there was no law or presidential proclamation classifying the lands to be reclaimed as alienable and disposal lands of public domain.  In this RBI case, MO 415 of former President Aquino and Proclamation No. 39 of then President Ramos, coupled with Special Patents Nos. 3591, 3592, and 3598, classified the reclaimed lands as alienable and disposable;           (4)     In PEA, the Chavez petition was filed before the amended JVA was executed by PEA and AMARI. In this NHA case, the JVA and subsequent amendments were already substantially implemented.  Subsequently, the Project was terminated through a MOA signed on August 27, 2003.  Almost one year later on August 5, 2004, the Chavez petition was filed;           (5)     In PEA, AMARI was considered to be in bad faith as it signed the amended JVA after the Chavez petition was filed with the Court and after Senate Committee Report No. 560 was issued finding that the subject lands are inalienable lands of public domain.  In the instant petition, RBI and other respondents are considered to have signed the agreements in good faith as the Project was terminated even before the Chavez petition was filed;           (6)     The PEA-AMARI JVA was executed as a result of direct negotiation between the parties and not in accordance with the BOT Law.  The NHA-RBI JVA and subsequent amendments constitute a BOT contract governed by the BOT Law; and           (7)     In PEA, the lands to be reclaimed or already reclaimed were transferred to PEA, a government entity tasked to dispose of public lands under Executive Order No. (EO) 525.[56]  In the NHA case, the reclaimed lands were

transferred to NHA, a government entity NOT tasked to dispose of public land and therefore said alienable lands were converted to patrimonial lands upon their transfer to NHA.[57]

         Thus the PEA Decision[58] cannot be considered an authority or precedent to

the instant case.  The principle of stare decisis[59] has no application to the different factual setting of the instant case. 

We will now dwell on the substantive issues raised by petitioner.  After a perusal of the grounds raised in this petition, we find that most of these issues are moored on our PEA Decision which, as earlier discussed, has no application to the instant petition.  For this reason alone, the petition can already be rejected.  Nevertheless, on the premise of the applicability of said decision to the case at bar, we will proceed to resolve said issues.  First Issue:  Whether respondents NHA and RBI have been grantedthe power and authority to reclaim lands of the public domain asthis power is vested exclusively in PEA as claimed by petitioner            Petitioner contends that neither respondent NHA nor respondent RBI may validly reclaim foreshore and submerged land because they were not given any power and authority to reclaim lands of the public domain as this power was delegated by law to PEA.

           Asserting that existing laws did not empower the NHA and RBI to reclaim lands of public domain, the Public Estates Authority (PEA), petitioner claims, is “the primary authority for the reclamation of all foreshore and submerged lands of public domain,” and relies on PEA where this Court held:

  

            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.” 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.[60]

  In the Smokey Mountain Project, petitioner clarifies that the reclamation was

not done by PEA or through a contract executed by PEA with another person or entity but by the NHA through an agreement with respondent RBI.  Therefore, he concludes that the reclamation is null and void.

 Petitioner’s contention has no merit. 

          EO 525 reads:  

            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.  (Emphasis supplied.)

  

          The aforequoted provision points to three (3) requisites for a legal and valid reclamation project, viz:           (1)     approval by the President;          (2)     favorable recommendation of PEA; and          (3)     undertaken by any of the following:                    a.       by PEA                   b.       by any person or entity pursuant to a contract it executed                               with PEA

                   c.       by the National Government agency or entity authorized                                 under its charter to reclaim lands subject to consultation                                with PEA           Without doubt, PEA under EO 525 was designated as the agency primarily responsible for integrating, directing, and coordinating all reclamation projects. Primarily means “mainly, principally, mostly, generally.” Thus, not all reclamation projects fall under PEA’s authority of supervision, integration, and coordination.  The very charter of PEA, PD 1084,[61] does not mention that PEA has the exclusive and sole power and authority to reclaim lands of public domain.  EO 525 even reveals the exception—reclamation projects by a national government agency or entity authorized by its charter to reclaim land.  One example is EO 405 which authorized the Philippine Ports Authority (PPA) to reclaim and develop submerged areas for port related purposes.  Under its charter, PD 857, PPA has the power “to reclaim, excavate, enclose or raise any of the lands” vested in it.

  

          Thus, while PEA under PD 1084 has the power to reclaim land and under EO 525 is primarily responsible for integrating, directing and coordinating reclamation projects, such authority is NOT exclusive and such power to reclaim may be granted or delegated to another government agency or entity or may even be undertaken by the National Government itself, PEA being only an agency and a part of the National Government.           Let us apply the legal parameters of Sec. 1, EO 525 to the reclamation phase of SMDRP.  After a scrutiny of the facts culled from the records, we find that the project met all the three (3) requirements, thus:           1.       There was ample approval by the President of the Philippines; as a matter of fact, two Philippine Presidents approved the same, namely:  Presidents Aquino and Ramos.  President Aquino sanctioned the reclamation of both the SMDRP housing and commercial-industrial sites through MO 415 (s. 1992) which approved the SMDRP under Sec. 1 and directed NHA “x x x to implement the Smokey Mountain Development Plan and Reclamation of the Area across R-

10 through a private sector joint venture scheme at the least cost to government” under Section 3.            For his part, then President Ramos issued Proclamation No. 39 (s. 1992) which expressly reserved the Smokey Mountain Area and the Reclamation Area for a housing project and related commercial/industrial development. 

Moreover, President Ramos issued Proclamation No. 465 (s. 1994) which authorized the increase of the Reclamation Area from 40 hectares of foreshore and submerged land of the Manila Bay to 79 hectares. It speaks of the reclamation of 400,000 square meters, more or less, of the foreshore and submerged lands of Manila Bay adjoining R-10 as an enabling component of the SMDRP.

           As a result of Proclamations Nos. 39 and 465, Special Patent No. 3591 covering 211,975 square meters of Smokey Mountain, Special Patent No. 3592 covering 401,485 square meters of reclaimed land, and Special Patent No. 3598 covering another 390,000 square meters of reclaimed land were issued by the DENR.           Thus, the first requirement of presidential imprimatur on the SMDRP has been satisfied.           2.       The requisite favorable endorsement of the reclamation phase was impliedly granted by PEA.  President Aquino saw to it that there was coordination of the project with PEA by designating its general manager as member of the EXECOM tasked to supervise the project implementation.  The assignment was made in Sec. 2 of MO 415 which provides: 

            Section 2.  An Executive Committee is hereby created to oversee the implementation of the Plan, chaired by the NCR-CORD, with the heads of the following agencies as members: The National Housing Authority, the City of Manila, the Department of Public Works and Highways,the Public Estates Authority, the Philippine Ports Authority, the Department of Environment and Natural Resources and the Development Bank of the Philippines.  (Emphasis supplied.)

 

           The favorable recommendation by PEA of the JVA and subsequent amendments were incorporated as part of the recommendations of the EXECOM created under MO 415. While there was no specific recommendation on the SMDRP emanating solely from PEA, we find that the approbation of the Project and the land reclamation as an essential component by the EXECOM of which PEA is a member, and its submission of the SMDRP and the agreements on the Project to the President for approval amply met the second requirement of EO 525.

               3.       The third element was also present—the reclamation was undertaken either by PEA or any person or entity under contract with PEA or by the National Government agency or entity authorized under its charter to reclaim lands subject to consultation with PEA.  It cannot be disputed that the reclamation phase was not done by PEA or any person or entity under contract with PEA.  However, the reclamation was implemented by the NHA, a national government agency whose authority to reclaim lands under consultation with PEA is derived from its charter—PD 727 and other pertinent laws—RA 7279[62] and RA 6957 as amended by RA 7718.           While the authority of NHA to reclaim lands is challenged by petitioner, we find that the NHA had more than enough authority to do so under existing laws.  While PD 757, the charter of NHA, does not explicitly mention “reclamation” in any of the listed powers of the agency, we rule that the NHA has an implied power to reclaim land as this is vital or incidental to effectively, logically, and successfully implement an urban land reform and housing program enunciated in Sec. 9 of Article XIII of the 1987 Constitution.           Basic in administrative law is the doctrine that a government agency or office has express and implied powers based on its charter and other pertinent statutes.  Express powers are those powers granted, allocated, and delegated to a government agency or office by express provisions of law.  On the other hand, implied powers are those that can be inferred or are implicit in the wordings of the law[63] or conferred by necessary or fair implication in the enabling act.[64]  In Angara v. Electoral Commission, the Court clarified and stressed that when a general grant of power is conferred or duty enjoined, every particular power necessary for the exercise of the one or the performance of the other is also

conferred by necessary implication.[65]  It was also explicated that when the statute does not specify the particular method to be followed or used by a government agency in the exercise of the power vested in it by law, said agency has the authority to adopt any reasonable method to carry out its functions.[66]

           The power to reclaim on the part of the NHA is implicit from PD 757, RA 7279, MO 415, RA 6957, and PD 3-A,[67] viz: 1.       NHA’s power to reclaim derived from PD 757 provisions:           a.       Sec. 3 of PD 757 implies that reclamation may be resorted to in order to attain the goals of NHA:

             Section 3.  Progress and Objectives.  The Authority shall have the following purposes and objectives:             x x x x b)                  To undertake housing, development, resettlement or other activities as

would enhance the provision of housing to every Filipino; 

c)                  To harness and promote private participation in housing ventures in terms of capital expenditures, land, expertise, financing and other facilities for the sustained growth of the housing industry.  (Emphasis supplied.)

  

           Land reclamation is an integral part of the development of resources for some of the housing requirements of the NHA. Private participation in housing projects may also take the form of land reclamation.           b.       Sec. 5 of PD 757 serves as proof that the NHA, as successor of the Tondo Foreshore Development Authority (TFDA), has the power to reclaim, thus:

           Section 5. Dissolution of Existing Housing Agencies. The People's

Homesite and Housing Corporation (PHHC), the Presidential Assistant on Housing Resettlement Agency (PAHRA), the Tondo Foreshore Development Authority (TFDA), the Central Institute for the Training and Relocation of Urban Squatters (CITRUS), the Presidential Committee for Housing and Urban Resettlement (PRECHUR), Sapang Palay Development Committee, Inter-Agency Task Force to Undertake the Relocation of Families in Barrio Nabacaan,

Villanueva, Misamis Oriental and all other existing government housing and resettlement agencies, task forces and ad-hoc committees, are hereby dissolved.  Their powers and functions, balance of appropriations, records, assets, rights, and choses in action, are transferred to, vested in, and assumed by the Authority.  x x x  (Emphasis supplied.)

         PD 570 dated October 30, 1974 created the TFDA, which defined its

objectives, powers, and functions.  Sec. 2 provides:  

            Section 2.  Objectives and Purposes.  The Authority shall have the following purposes and objectives:             a) To undertake all manner of activity, business or development projects for the establishment of harmonious, comprehensive, integrated and healthy living community in the Tondo Foreshoreland and its resettlement site;             b) To undertake and promote the physical and socio-economic amelioration of the Tondo Foreshore residents in particular and the nation in general (Emphasis supplied.) 

            The powers and functions are contained in Sec. 3, to wit:

           a) To develop and implement comprehensive and integrated urban renewal programs for the Tondo Foreshore and Dagat-dagatan lagoonand/or any other additional/alternative resettlement site and to formulate and enforce general and specific policies for its development which shall ensure reasonable degree of compliance with environmental standards.             b) To prescribe guidelines and standards for the reservation, conservation and utilization of public lands covering the Tondo Foreshore land and its resettlement sites;             c) To construct, acquire, own, lease, operate and maintain infrastructure facilities, housing complex, sites and services;             d) To determine, regulate and supervise the establishment and operation of housing, sites, services and commercial and industrial complexes and any other enterprises to be constructed or established within the Tondo Foreshore and its resettlement sites;             e) To undertake and develop, by itself or through joint ventures with other public or private entities, all or any of the different phases of development of the Tondo Foreshore land and its resettlement sites;

             f) To acquire and own property, property-rights and interests, and encumber or otherwise dispose of the same as it may deem appropriate (Emphasis supplied.)

            From the foregoing provisions, it is readily apparent that the TFDA has the explicit power to develop public lands covering the Tondo foreshore land and any other additional and alternative resettlement sites under letter b, Sec. 3 of PD 570.  Since the additional and/or alternative sites adjacent to Tondo foreshore land cover foreshore and submerged areas, the reclamation of said areas is necessary in order to convert them into a comprehensive and integrated resettlement housing project for the slum dwellers and squatters of Tondo.  Since the powers of TFDA were assumed by the NHA, then the NHA has the power to reclaim lands in the Tondo foreshore area which covers the 79-hectare land subject of Proclamations Nos. 39 and 465 and Special Patents Nos. 3592 and 3598.           c.       Sec. 6 of PD 757 delineates the functions and powers of the NHA which embrace the authority to reclaim land, thus: 

          Sec. 6.  Powers and functions of the Authority.—The Authority shall have the following powers and functions to be exercised by the Board in accordance with its established national human settlements plan prepared by the Human Settlements Commission:             (a)        Develop and implement the comprehensive and integrated housing program provided for in Section hereof;             x x x x             (c)        Prescribe guidelines and standards for the reservation, conservation and utilization of public lands identified for housing and resettlement;             x x x x             (e)        Develop and undertake housing development and/or resettlement projects through joint ventures or other arrangements with public and private entities;            x x x x 

            (k)        Enter into contracts whenever necessary under such terms and conditions as it may deem proper and reasonable;             (l)         Acquire property rights and interests and encumber or otherwise dispose the same as it may deem appropriate;             x x x x             (s)        Perform such other acts not inconsistent with this Decree, as may be necessary to effect the policies and objectives herein declared.  (Emphasis supplied.)

          

The NHA’s authority to reclaim land can be inferred from the aforequoted provisions.  It can make use of public lands under letter (c) of Sec. 6 which includes reclaimed land as site for its comprehensive and integrated housing projects under letter (a) which can be undertaken through joint ventures with private entities under letter (e).  Taken together with letter (s) which authorizes NHA to perform such other activities “necessary to effect the policies and objectives” of PD 757, it is safe to conclude that the NHA’s power to reclaim lands is a power that is implied from the exercise of its explicit powers under Sec. 6 in order to effectively accomplish its policies and objectives under Sec. 3 of its charter.  Thus, the reclamation of land is an indispensable component for the development and construction of the SMDRP housing facilities. 2.       NHA’s implied power to reclaim land is enhanced by RA 7279.           PD 757 identifies NHA’s mandate to “[d]evelop and undertake housing development and/or resettlement projects through joint ventures or other arrangements with public and private entities.”           The power of the NHA to undertake reclamation of land can be inferred from Secs. 12 and 29 of RA 7279, which provide:  

            Section 12. Disposition of Lands for Socialized Housing.—The National Housing Authority, with respect to lands belonging to the National Government, and the local government units with respect to other lands within their respective localities, shall coordinate with each other to formulate and make

available various alternative schemes for the disposition of lands to the beneficiaries of the Program. These schemes shall not be limited to those involving transfer of ownership in fee simple but shall include lease, with option to purchase, usufruct or such other variations as the local government units or the National Housing Authority may deem most expedient in carrying out the purposes of this Act.             x x x x             Section 29. Resettlement.—With two (2) years from the effectivity of this Act, the local government units, in coordination with the National Housing Authority, shall implement the relocation and resettlement of persons living in danger areas such as esteros, railroad tracks, garbage dumps, riverbanks, shorelines, waterways, and in other public places as sidewalks, roads, parks, and playgrounds. The local government unit, in coordination with the National Housing Authority, shall provide relocation or resettlement sites with basic services and facilities and access to employment and livelihood opportunities sufficient to meet the basic needs of the affected families.  (Emphasis supplied.)

   

          Lands belonging to the National Government include foreshore and submerged lands which can be reclaimed to undertake housing development and resettlement projects. 3.       MO 415 explains the undertaking of the NHA in SMDRP:

  

          WHEREAS, Memorandum Order No. 161-A mandated the National Housing Authority to conduct feasibility studies and develop low-cost housing projects at the dumpsites of Metro Manila;             WHEREAS, the National Housing Authority has presented a viable Conceptual Plan to convert the Smokey Mountain dumpsite into a habitable housing project inclusive of the reclamation area across R-10 as enabling component of the Project;             WHEREAS, the said Plan requires the coordinated and synchronized efforts of the City of Manila and other government agencies and instrumentalities to ensure effective and efficient implementation;             WHEREAS, the government encourages private sector initiative in the implementation of its projects.  (Emphasis supplied.)  

 Proceeding from these “whereas” clauses, it is unequivocal that reclamation

of land in the Smokey Mountain area is an essential and vital power of the NHA to effectively implement its avowed goal of developing low-cost housing units at the SmokeyMountain dumpsites. The interpretation made by no less than the President of the Philippines as Chief of the Executive Branch, of which the NHA is a part, must necessarily command respect and much weight and credit. 4.       RA 6957 as amended by RA 7718—the BOT Law—serves as an exception to PD 1084 and EO 525.         

Based on the provisions of the BOT Law and Implementing Rules and Regulations, it is unequivocal that all government infrastructure agencies like the NHA can undertake infrastructure or development projects using the contractual arrangements prescribed by the law, and land reclamation is one of the projects that can be resorted to in the BOT project implementation under the February 10, 1992 Joint Resolution No. 3 of the 8th Congress.           From the foregoing considerations, we find that the NHA has ample implied authority to undertake reclamation projects.           Even without an implied power to reclaim lands under NHA’s charter, we rule that the authority granted to NHA, a national government agency, by the President under PD 3-A reinforced by EO 525 is more than sufficient statutory basis for the reclamation of lands under the SMDRP.            PD 3-A is a law issued by then President Ferdinand E. Marcos under his martial law powers on September 23, 1972. It provided that “[t]he provisions of any law to the contrary notwithstanding, the reclamation of areas, underwater, whether foreshore or inland, shall be limited to the National Government or any person authorized by it under the proper contract.” It repealed, in effect, RA 1899 which previously delegated the right to reclaim lands to municipalities and chartered cities and revested it to the National Government.[68]  Under PD 3-A, “national government” can only mean the Executive Branch headed by the President.  It cannot refer to Congress as it was dissolved and abolished at the time of the issuance of PD 3-A on September 23, 1972.  Moreover, the Executive

Branch is the only implementing arm in the government with the equipment, manpower, expertise, and capability by the very nature of its assigned powers and functions to undertake reclamation projects.  Thus, under PD 3-A, the Executive Branch through the President can implement reclamation of lands through any of its departments, agencies, or offices.           Subsequently, on February 4, 1977, President Marcos issued PD 1084 creating the PEA, which was granted, among others, the power “to reclaim land, including foreshore and submerged areas by dredging, filling or other means or to acquire reclaimed lands.” The PEA’s power to reclaim is not however exclusive as can be gleaned from its charter, as the President retained his power under PD 3-A to designate another agency to reclaim lands.           On February 14, 1979, EO 525 was issued.  It granted PEA primary responsibility for integrating, directing, and coordinating reclamation projects for and on behalf of the National Government although other national government agencies can be designated by the President to reclaim lands in coordination with the PEA.  Despite the issuance of EO 525, PD 3-A remained valid and subsisting. Thus, the National Government through the President still retained the power and control over all reclamation projects in the country.           The power of the National Government through the President over reclamation of areas, that is, underwater whether foreshore or inland, was made clear in EO 543[69] which took effect on June 24, 2006.  Under EO 543, PEA was renamed the Philippine Reclamation Authority (PRA) and was granted the authority to approve reclamation projects, a power previously reposed in the President under EO 525.  EO 543 reads:

           Section 1.  The power of the President to approve reclamation projects is hereby delegated to the Philippine Reclamation Authority [formerly PEA], through its governing board, subject to compliance with existing laws and rules and subject to the condition that reclamation contracts to be executed with any person or entity go through public bidding.

             Section 2.  Nothing in the Order shall be construed as diminishing the President’s authority to modify, amend or nullify PRA’s action.

 

            Section 3.  All executive issuances inconsistent with this Executive Order are hereby repealed or amended accordingly.  (Emphasis supplied.) 

 Sec. 2 of EO 543 strengthened the power of control and supervision of the

President over reclamation of lands as s/he can modify, amend, or nullify the action of PEA (now PRA).

 From the foregoing issuances, we conclude that the President’s delegation to

NHA, a national government agency, to reclaim lands under the SMDRP, is legal and valid, firmly anchored on PD 3-A buttressed by EO 525 notwithstanding the absence of any specific grant of power under its charter, PD 757.  Second Issue:  Whether respondents NHA and RBI were given thepower and authority by DENR to reclaim foreshore and submergedlands            Petitioner Chavez puts forth the view that even if the NHA and RBI were granted the authority to reclaim, they were not authorized to do so by the DENR.

Again, reliance is made on our ruling in PEA where it was held that the DENR’s authority is necessary in order for the government to validly reclaim foreshore and submerged lands.  In PEA, we expounded in this manner:

              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 and 7 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.[70]

  

Despite our finding that PEA is not a precedent to the case at bar, we find after all that under existing laws, the NHA is still required to procure DENR’s authorization before a reclamation project in Manila Bay or in any part of the Philippines can be undertaken.  The requirement applies to PEA, NHA, or any other government agency or office granted with such power under the law. 

Notwithstanding the need for DENR permission, we nevertheless find petitioner’s position bereft of merit.            The DENR is deemed to have granted the authority to reclaim in the Smokey Mountain Project for the following reasons:           1.       Sec. 17, Art. VII of the Constitution provides that “the President shall have control of all executive departments, bureaus and offices.”  The President is assigned the task of seeing to it that all laws are faithfully executed.  “Control,” in administrative law, means “the power of an officer to alter, modify, nullify or set aside what a subordinate officer has done in the performance of his duties and to substitute the judgment of the former for that of the latter.”[71]

           As such, the President can exercise executive power motu proprio and can supplant the act or decision of a subordinate with the President’s own.  The DENR is a department in the executive branch under the President, and it is only an alter ego of the latter. Ordinarily the proposed action and the staff work are initially done by a department like the DENR and then submitted to the President for approval.  However, there is nothing infirm or unconstitutional if the President

decides on the implementation of a certain project or activity and requires said department to implement it.  Such is a presidential prerogative as long as it involves the department or office authorized by law to supervise or execute the Project.  Thus, as in this case, when the President approved and ordered the development of a housing project with the corresponding reclamation work, making DENR a member of the committee tasked to implement the project, the required authorization from the DENR to reclaim land can be deemed satisfied.  It cannot be disputed that the ultimate power over alienable and disposable public lands is reposed in the President of the Philippines and not the DENR Secretary.  To still require a DENR authorization on the Smokey Mountain when the President has already authorized and ordered the implementation of the Project would be a derogation of the powers of the President as the head of the executive branch. Otherwise, any department head can defy or oppose the implementation of a project approved by the head of the executive branch, which is patently illegal and unconstitutional. 

In Chavez v. Romulo, we stated that when a statute imposes a specific duty on the executive department, the President may act directly or order the said department to undertake an activity, thus:

           [A]t the apex of the entire executive officialdom is the President.  Section 17, Article VII of the Constitution specifies [her] power as Chief executive departments, bureaus and offices.  [She] shall ensure that the laws be faithfully executed.  As Chief Executive, President Arroyo holds the steering wheel that controls the course of her government.  She lays down policies in the execution of her plans and programs.  Whatever policy she chooses, she has her subordinates to implement them.  In short, she has the power of control.  Whenever a specific function is entrusted by law or regulation to her subordinate, she may act directly or merely direct the performance of a duty x x x.  Such act is well within the prerogative of her office (emphasis supplied).[72] 

   

          Moreover, the power to order the reclamation of lands of public domain is reposed first in the Philippine President. The Revised Administrative Code of 1987 grants authority to the President to reserve lands of public domain for settlement for any specific purpose, thus:

      

            Section 14.  Power to Reserve Lands of the Public and Private Domain of the Government.—(1) The President shall have the power toreserve for settlement or public use, and for specific public purposes, any of the lands of the public domain, the use of which is not otherwise directed by law.  The reserved land shall thereafter remain subject to the specific public purpose indicated until otherwise provided by law or proclamation.  (Emphasis supplied.) 

         President Aquino reserved the area of the Smokey Mountain dumpsite for

settlement and issued MO 415 authorizing the implementation of the Smokey Mountain Development Project plus the reclamation of the area across R-10.  Then President Ramos issued Proclamation No. 39 covering the 21-hectare dumpsite and the 40-hectare commercial/industrial area, and Proclamation No. 465 and MO 415 increasing the area of foreshore and submerged lands of Manila Bay to be reclaimed from 40 to 79 hectares. Having supervision and control over the DENR, both Presidents directly assumed and exercised the power granted by the Revised Administrative Code to the DENR Secretary to authorize the NHA to reclaim said lands.  What can be done indirectly by the DENR can be done directly by the President.  It would be absurd if the power of the President cannot be exercised simply because the head of a department in the executive branch has not acted favorably on a project already approved by the President.  If such arrangement is allowed then the department head will become more powerful than the President.           2.       Under Sec. 2 of MO 415, the DENR is one of the members of the EXECOM chaired by the NCR-CORD to oversee the implementation of the Project.  The EXECOM was the one which recommended approval of the project plan and the joint venture agreements.  Clearly, the DENR retained its power of supervision and control over the laws affected by the Project since it was tasked to “facilitate the titling of the Smokey Mountain and of the area to be reclaimed,” which shows that it had tacitly given its authority to the NHA to undertake the reclamation.           3.       Former DENR Secretary Angel C. Alcala issued Special Patents Nos. 3591 and 3592 while then Secretary Victor O. Ramos issued Special Patent No. 3598 that embraced the areas covered by the reclamation.  These patents conveyed the lands to be reclaimed to the NHA and granted to said agency the administration and disposition of said lands for subdivision and disposition to qualified

beneficiaries and for development for mix land use (commercial/industrial) “to provide employment opportunities to on-site families and additional areas for port related activities.”  Such grant of authority to administer and dispose of lands of public domain under the SMDRP is of course subject to the powers of the EXECOM of SMDRP, of which the DENR is a member.           4.       The issuance of ECCs by the DENR for SMDRP is but an exercise of its power of supervision and control over the lands of public domain covered by the Project.           Based on these reasons, it is clear that the DENR, through its acts and issuances, has ratified and confirmed the reclamation of the subject lands for the purposes laid down in Proclamations Nos. 39 and 465.  Third Issue:  Whether respondent RBI can acquire reclaimedforeshore and submerged lands considered as inalienable andoutside the commerce of man            Petitioner postulates that respondent RBI cannot acquire the reclaimed foreshore and submerged areas as these are inalienable public lands beyond the commerce of man based on Art. 1409 of the Civil Code which provides: 

          Article 1409.  The following contracts are inexistent and void from the beginning:             (1)        Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy;             x x x x             (7)        Those expressly prohibited or declared void by law.             These contracts cannot be ratified.  Neither can the right to set up the defense of illegality be waived.

  

          Secs. 2 and 3, Art. XII of the Constitution declare that all natural resources are owned by the State and they cannot be alienated except for alienable agricultural lands of the public domain.  One of the State’s natural resources are lands of public domain which include reclaimed lands.

Petitioner contends that for these reclaimed lands to be alienable, there must be a law or presidential proclamation officially classifying these reclaimed lands as alienable and disposable and open to disposition or concession.  Absent such law or proclamation, the reclaimed lands cannot be the enabling component or consideration to be paid to RBI as these are beyond the commerce of man.           We are not convinced of petitioner’s postulation.            The reclaimed lands across R-10 were classified alienable and disposable lands of public domain of the State for the following reasons, viz:           First, there were three (3) presidential proclamations classifying the reclaimed lands across R-10 as alienable or disposable hence open to disposition or concession, to wit:           (1)     MO 415 issued by President Aquino, of which Sec. 4 states that “[t]he land covered by the Smokey Mountain Dumpsite is hereby conveyed to the National Housing Authority as well as the area to be reclaimed across R-10.”

  

          The directive to transfer the lands once reclaimed to the NHA implicitly carries with it the declaration that said lands are alienable and disposable.  Otherwise, the NHA cannot effectively use them in its housing and resettlement project.                            (2)     Proclamation No. 39 issued by then President Ramos by which the reclaimed lands were conveyed to NHA for subdivision and disposition to qualified beneficiaries and for development into a mixed land use (commercial/industrial) to provide employment opportunities to on-site families and additional areas for port-related activities.  Said directive carries with it the pronouncement that said lands have been transformed to alienable and disposable lands.  Otherwise, there is no legal way to convey it to the beneficiaries.

           (3)     Proclamation No. 465 likewise issued by President Ramos enlarged the reclaimed area to 79 hectares to be developed and disposed of in the implementation of the SMDRP.  The authority put into the hands of the NHA to dispose of the reclaimed lands tacitly sustains the conversion to alienable and disposable lands.                             Secondly, Special Patents Nos. 3591, 3592, and 3598 issued by the DENR anchored on Proclamations Nos. 39 and 465 issued by President Ramos, without doubt, classified the reclaimed areas as alienable and disposable.           Admittedly, it cannot be said that MO 415, Proclamations Nos. 39 and 465 are explicit declarations that the lands to be reclaimed are classified as alienable and disposable.  We find however that such conclusion is derived and implicit from the authority given to the NHA to transfer the reclaimed lands to qualified beneficiaries.           The query is, when did the declaration take effect? It did so only after the special patents covering the reclaimed areas were issued.  It is only on such date that the reclaimed lands became alienable and disposable lands of the public domain.  This is in line with the ruling in PEA where said issue was clarified and stressed: 

          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.[73]  (Emphasis supplied.)

  

Thus, MO 415 and Proclamations Nos. 39 and 465 cumulatively and jointly taken together with Special Patent Nos. 3591, 3592, and 3598 more than satisfy the requirement in PEA  that “[t]here must be a law or presidential

proclamation officially classifying these reclaimed lands as alienable or disposable and open to disposition or concession (emphasis supplied).”[74]

                   Apropos the requisite law categorizing reclaimed land as alienable or disposable, we find that RA 6957 as amended by RA 7718 provides ample authority for the classification of reclaimed land in the SMDRP for the repayment scheme of the BOT project as alienable and disposable lands of public domain.  Sec. 6 of RA 6957 as amended by RA 7718 provides:

           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.  (Emphasis supplied.)

            While RA 6957 as modified by RA 7718 does not expressly declare that the reclaimed lands that shall serve as payment to the project proponent have become alienable and disposable lands and opened for disposition; nonetheless, this conclusion is necessarily implied, for how else can the land be used as the enabling component for the Project if such classification is not deemed made?           It may be argued that the grant of authority to sell public lands, pursuant to PEA, does not convert alienable lands of public domain into private or patrimonial lands.  We ruled in PEA that “alienable lands of 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 (emphasis supplied).”[75]  To lands reclaimed by PEA or through a contract with a private person or entity, such reclaimed lands still remain alienable lands of public domain which can be transferred only to Filipino citizens but not to a private corporation.  This is because PEA under PD 1084 and EO 525 is tasked to hold and dispose of alienable lands of public domain and it is only when it is transferred to Filipino citizens that it becomes patrimonial property.  On the other hand, the NHA is a government agency not tasked to dispose of public lands under its charter—The Revised Administrative Code of 1987.  The NHA is

an “end-user agency” authorized by law to administer and dispose of reclaimed lands.  The moment titles over reclaimed lands based on the special patents are transferred to the NHA by the Register of Deeds, they are automatically converted to patrimonial properties of the State which can be sold to Filipino citizens and private corporations, 60% of which are owned by Filipinos.  The reason is obvious:  if the reclaimed land is not converted to patrimonial land once transferred to NHA, then it would be useless to transfer it to the NHA since it cannot legally transfer or alienate lands of public domain.  More importantly, it cannot attain its avowed purposes and goals since it can only transfer patrimonial lands to qualified beneficiaries and prospective buyers to raise funds for the SMDRP.            From the foregoing considerations, we find that the 79-hectare reclaimed land has been declared alienable and disposable land of the public domain; and in the hands of NHA, it has been reclassified as patrimonial property.           Petitioner, however, contends that the reclaimed lands were inexistent prior to the three (3) Presidential Acts (MO 415 and Proclamations Nos. 39 and 465) and hence, the declaration that such areas are alienable and disposable land of the public domain, citing PEA, has no legal basis. 

Petitioner’s contention is not well-taken.           Petitioner’s sole reliance on Proclamations Nos. 39 and 465 without taking into consideration the special patents issued by the DENR demonstrates the inherent weakness of his proposition.  As was ruled in PEA cited by petitioner himself, “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 public domain.”  In a similar vein, the combined and collective effect of Proclamations Nos. 39 and 465 with Special Patents Nos. 3592 and 3598 is tantamount to and can be considered to be an official declaration that the reclaimed lots are alienable or disposable lands of the public domain. 

The reclaimed lands covered by Special Patents Nos. 3591, 3592, and 3598, which evidence transfer of ownership of reclaimed lands to the NHA, are official acts of the DENR Secretary in the exercise of his power of supervision and control

over alienable and disposable public lands and his exclusive jurisdiction over the management and disposition of all lands of public domain under the Revised Administrative Code of 1987.  Special Patent No. 3592 speaks of the transfer of Lots 1 and 2, and RI-003901-000012-D with an area of 401,485 square meters based on the survey and technical description approved by the Bureau of Lands.  Lastly, Special Patent No. 3598 was issued in favor of the NHA transferring to said agency a tract of land described in Plan RL-00-000013 with an area of 390,000 square meters based on the survey and technical descriptions approved by the Bureau of Lands. 

           The conduct of the survey, the preparation of the survey plan, the computation of the technical description, and the processing and preparation of the special patent are matters within the technical area of expertise of administrative agencies like the DENR and the Land Management Bureau and are generally accorded not only respect but at times even finality.[76]  Preparation of special patents calls for technical examination and a specialized review of calculations and specific details which the courts are ill-equipped to undertake; hence, the latter defer to the administrative agency which is trained and knowledgeable on such matters.[77]

           Subsequently, the special patents in the name of the NHA were submitted to the Register of Deeds of the City of Manila for registration, and corresponding certificates of titles over the reclaimed lots were issued based on said special patents.  The issuance of certificates of titles in NHA’s name automatically converts the reclaimed lands to patrimonial properties of the NHA.  Otherwise, the lots would not be of use to the NHA’s housing projects or as payment to the BOT contractor as the enabling component of the BOT contract.  The laws of the land have to be applied and interpreted depending on the changing conditions and times.  Tempora mutantur et legis mutantur in illis (time changes and laws change with it).  One such law that should be treated differently is the BOT Law (RA 6957) which brought about a novel way of implementing government contracts by allowing reclaimed land as part or full payment to the contractor of a government project to satisfy the huge financial requirements of the undertaking.  The NHA holds the lands covered by Special Patents Nos. 3592 and 3598 solely for the purpose of the SMDRP undertaken by authority of the BOT Law and for disposition in accordance with said special law.  The lands become alienable and

disposable lands of public domain upon issuance of the special patents and become patrimonial properties of the Government from the time the titles are issued to the NHA.          As early as 1999, this Court in Baguio v. Republic laid down the jurisprudence that: 

          It is true that, once a patent is registered and the corresponding certificate of title is issued, the land covered by them ceases to be part of the public domain and becomes private property, and the Torrens Title issued pursuant to the patent becomes indefeasible upon the expiration of one year from the date of issuance of such patent.[78]

            The doctrine was reiterated in Republic v. Heirs of Felipe Alijaga, Sr.,[79] Heirs of Carlos Alcaraz v. Republic,[80] and the more recent case of Doris Chiongbian-Oliva v. Republic of the Philippines.[81]  Thus, the 79-hectare reclaimed land became patrimonial property after the issuance of certificates of titles to the NHA based on Special Patents Nos. 3592 and 3598.           One last point. The ruling in PEA cannot even be applied retroactively to the lots covered by Special Patents Nos. 3592 (40 hectare reclaimed land) and 3598 (39-hectare reclaimed land).  The reclamation of the land under SMDRP was completed in August 1996 while the PEA decision was rendered on July 9, 2002.  In the meantime, subdivided lots forming parts of the reclaimed land were already sold to private corporations for value and separate titles issued to the buyers.  The Project was terminated through a Memorandum of Agreement signed on August 27, 2003.  The PEA decision became final through the November 11, 2003Resolution.  It is a settled precept that decisions of the Supreme Court can only be applied prospectively as they may prejudice vested rights if applied retroactively.           In Benzonan v. Court of Appeals, the Court trenchantly elucidated the prospective application of its decisions based on considerations of equity and fair play, 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 of 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 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.             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.[82]

  Fourth Issue:  Whether respondent RBI can acquire reclaimedlands when there was no declaration that said lands are nolonger needed for public use           Petitioner Chavez avers that despite the declaration that the reclaimed areas are alienable lands of the public domain, still, the reclamation is flawed for there was never any declaration that said lands are no longer needed for public use.           We are not moved by petitioner’s submission.           Even if it is conceded that there was no explicit declaration that the lands are no longer needed for public use or public service, there was however an implicit executive declaration that the reclaimed areas R-10 are not necessary anymore for public use or public service when President Aquino through MO 415 conveyed the same to the NHA partly for housing project and related commercial/industrial development intended for disposition to and enjoyment of certain beneficiaries and not the public in general and partly as enabling component to finance the project. 

President Ramos, in issuing Proclamation No. 39, declared, though indirectly, that the reclaimed lands of the Smokey Mountain project are no longer required for public use or service, thus: 

          These parcels of land of public domain are hereby placed under the administration and disposition of the National Housing Authority to develop, subdivide and dispose to qualified beneficiaries, as well as its development for mix land use (commercial/industrial) to provide employment opportunities to on-site families and additional areas for port related activities.  (Emphasis supplied.)

            While numerical count of the persons to be benefited is not the determinant whether the property is to be devoted to public use, the declaration in Proclamation No. 39 undeniably identifies only particular individuals as beneficiaries to whom the reclaimed lands can be sold, namely—the Smokey Mountain dwellers.  The rest of the Filipinos are not qualified; hence, said lands are no longer essential for the use of the public in general. 

In addition, President Ramos issued on August 31, 1994 Proclamation No. 465 increasing the area to be reclaimed from forty (40) hectares to seventy-nine (79) hectares, elucidating that said lands are undoubtedly set aside for the beneficiaries of SMDRP and not the public—declaring the power of NHA to dispose of land to be reclaimed, thus:  “The authority to administer, develop, or dispose lands identified and reserved by this Proclamation and Proclamation No. 39 (s.1992), in accordance with the SMDRP, as enhance, is vested with the NHA, subject to the provisions of existing laws.” (Emphasis supplied.)

  

          MO 415 and Proclamations Nos. 39 and 465 are declarations that proclaimed the non-use of the reclaimed areas for public use or service as the Project cannot be successfully implemented without the withdrawal of said lands from public use or service. Certainly, the devotion of the reclaimed land to public use or service conflicts with the intended use of the Smokey Mountain areas for housing and employment of the Smokey Mountain scavengers and for financing the Project because the latter cannot be accomplished without abandoning the public use of the subject land.  Without doubt, the presidential proclamations on SMDRP together with the issuance of the special patents had effectively removed the reclaimed lands from public use.           More decisive and not in so many words is the ruling in PEA which we earlier cited, that “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.” Consequently, we ruled in that case that the reclaimed lands are “open to disposition or concession to qualified parties.”[83]

           In a similar vein, presidential Proclamations Nos. 39 and 465 jointly with the special patents have classified the reclaimed lands as alienable and disposable and open to disposition or concession as they would be devoted to units for Smokey Mountainbeneficiaries.  Hence, said lands are no longer intended for public use or service and shall form part of the patrimonial properties of the State under Art. 422 of the Civil Code.[84]  As discussed a priori, the lands were classified as patrimonial properties of the NHA ready for disposition when the titles were registered in its name by the Register of Deeds.           Moreover, reclaimed lands that are made the enabling components of a BOT infrastructure project are necessarily reclassified as alienable and disposable lands under the BOT Law; otherwise, absurd and illogical consequences would naturally result.  Undoubtedly, the BOT contract will not be accepted by the BOT contractor since there will be no consideration for its contractual obligations.  Since reclaimed land will be conveyed to the contractor pursuant to the BOT Law, then there is an implied declaration that such land is no longer intended for public use or public service and, hence, considered patrimonial property of the State. Fifth Issue:  Whether there is a law authorizing sale ofreclaimed lands 

 

          Petitioner next claims that RBI cannot acquire the reclaimed lands because there was no law authorizing their sale.  He argues that unlike PEA, no legislative authority was granted to the NHA to sell reclaimed land.           This position is misplaced.           Petitioner relies on Sec. 60 of Commonwealth Act (CA) 141 to support his view that the NHA is not empowered by any law to sell reclaimed land, thus:

  

            Section 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.  The area of the land 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 if requested and shall in no case exceed one hundred and forty-four hectares:  Provided, however, That this limitation shall not apply to grants, donations, 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; Provided, further, That any person, corporation, association or partnership disqualified from purchasing public land for agricultural purposes under the provisions of this Act, may lease land included under this title suitable for industrial or residential purposes, but the lease granted shall only be valid while such land is used for the purposes referred to.  (Emphasis supplied.)

            Reliance on said provision is incorrect as the same applies only to “a province, municipality or branch or subdivision of the Government.”  The NHA is not a government unit but a government corporation performing governmental and proprietary functions.           In addition, PD 757 is clear that the NHA is empowered by law to transfer properties acquired by it under the law to other parties, thus: 

          Section 6.         Powers and functions of the Authority.  The Authority shall have the following powers and functions to be exercised by the Boards in accordance with the established national human settlements plan prepared by the Human Settlements Commission:             x x x x             (k)        Enter into contracts whenever necessary under such terms and conditions as it may deem proper and reasonable;             (l)         Acquire property rights and interests, and encumber or otherwise dispose the same as it may deem appropriate (Emphasis supplied.) 

  

          Letter (l) is emphatic that the NHA can acquire property rights and interests and encumber or otherwise dispose of them as it may deem appropriate.  The transfer of the reclaimed lands by the National Government to the NHA for housing, commercial, and industrial purposes transformed them into patrimonial lands which are of course owned by the State in its private or proprietary capacity.  Perforce, the NHA can sell the reclaimed lands to any Filipino citizen or qualified corporation.    Sixth Issue:  Whether the transfer of reclaimed lands to RBIwas done by public bidding 

 

          Petitioner also contends that there was no public bidding but an awarding of ownership of said reclaimed lands to RBI.  Public bidding, he says, is required under Secs. 63 and 67 of CA 141 which read:

         Section 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 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, that the Government will lease or sell, as the case may be, the lots or blocks specified in the advertisement, for the purpose stated in the notice and subject to the conditions specified in this chapter.             x x x x             Section 67.  The lease or sale shall be made through oral bidding; and adjudication shall be made to the highest bidder.  However, where an applicant has made improvements on the land by virtue of a permit issued to him by competent authority, the sale or lease shall be made by sealed bidding as prescribed in section twenty-six of this Act, the provisions of which shall be applied whenever applicable.  If all or part of the lots remain unleased or unsold, the Director of Lands shall from time to time announce in the Official Gazette or in any other newspapers of general circulation, the lease of sale of those lots, if necessary. 

 

            He finds that the NHA and RBI violated Secs. 63 and 67 of CA 141, as the reclaimed lands were conveyed to RBI by negotiated contract and not by public bidding as required by law.           This stand is devoid of merit.           There is no doubt that respondent NHA conducted a public bidding of the right to become its joint venture partner in the Smokey Mountain Project.  Notices or Invitations to Bid were published in the national dailies on January 23 and 26, 1992 and February 1, 14, 16, and 23, 1992.  The bidding proper was done by the Bids and Awards Committee (BAC) on May 18, 1992.  On August 31, 1992, the Inter-Agency Techcom made up of the NHA, PEA, DPWH, PPA, DBP, and DENR opened the bids and evaluated them, resulting in the award of the contract to respondent RBI on October 7, 1992.           On March 19, 1993, respondents NHA and RBI signed the JVA.  On February 23, 1994, said JVA was amended and restated into the ARJVA.  On August 11, 1994, the ARJVA was again amended.  On September 7, 1994, the OP approved the ARJVA and the amendments to the ARJVA.  From these factual settings, it cannot be gainsaid that there was full compliance with the laws and regulations governing public biddings involving a right, concession, or property of the government.           Petitioner concedes that he does not question the public bidding on the right to be a joint venture partner of the NHA, but the absence of bidding in the sale of alienable and disposable lands of public domain pursuant to CA 141 as amended.           Petitioner’s theory is incorrect.            Secs. 63 and 67 of CA 141, as amended, are in point as they refer to government sale by the Director of Lands of alienable and disposable lands of public domain.  This is not present in the case at bar.  The lands reclaimed by and conveyed to the NHA are no longer lands of public domain.  These lands became proprietary lands or patrimonial properties of the State upon transfer of the titles over the reclaimed lands to the NHA and hence outside the ambit of CA 141.  The NHA can therefore legally transfer patrimonial land to RBI or to any other

interested qualified buyer without any bidding conducted by the Director of Lands because the NHA, unlike PEA, is a government agency not tasked to sell lands of public domain.  Hence, it can only hold patrimonial lands and can dispose of such lands by sale without need of public bidding.         

Petitioner likewise relies on Sec. 79 of PD 1445 which requires public bidding “when government property has become unserviceable for any cause or is no longer needed.”  It appears from the Handbook on Property and Supply Management System, Chapter 6, that reclaimed lands which have become patrimonial properties of the State, whose titles are conveyed to government agencies like the NHA, which it will use for its projects or programs, are not within the ambit of Sec. 79.  We quote the determining factors in the Disposal of Unserviceable Property, thus: 

Determining Factors in the Disposal of Unserviceable Property         Property, which can no longer be repaired or reconditioned;

         Property whose maintenance costs of repair more than outweigh the benefits

and services that will be derived from its continued use; 

        Property that has become obsolete or outmoded because of changes in technology; 

        Serviceable property that has been rendered unnecessary due to change in the agency’s function or mandate; 

        Unused supplies, materials and spare parts that were procured in excess of requirements; and

         Unused supplies and materials that [have] become dangerous to use because

of long storage or use of which is determined to be hazardous.[85]

  

Reclaimed lands cannot be considered unserviceable properties.  The reclaimed lands in question are very much needed by the NHA for the Smokey Mountain Project because without it, then the projects will not be successfully implemented.  Since the reclaimed lands are not unserviceable properties and are very much needed by NHA, then Sec. 79 of PD 1445 does not apply. 

          More importantly, Sec. 79 of PD 1445 cannot be applied to patrimonial properties like reclaimed lands transferred to a government agency like the NHA which has entered into a BOT contract with a private firm.  The reason is obvious.  If the patrimonial property will be subject to public bidding as the only way of disposing of said property, then Sec. 6 of RA 6957 on the repayment scheme is almost impossible or extremely difficult to implement considering the uncertainty of a winning bid during public auction.  Moreover, the repayment scheme of a BOT contract may be in the form of non-monetary payment like the grant of a portion or percentage of reclaimed land.  Even if the BOT partner participates in the public bidding, there is no assurance that he will win the bid and therefore the payment in kind as agreed to by the parties cannot be performed or the winning bid prize might be below the estimated valuation of the land.  The only way to harmonize Sec. 79 of PD 1445 with Sec. 6 of RA 6957 is to consider Sec. 79 of PD 1445 as inapplicable to BOT contracts involving patrimonial lands.  The law does not intend anything impossible (lex non intendit aliquid impossibile).  Seventh Issue:  Whether RBI, being a private corporation,is barred by the Constitution to acquire lands of public domain  

Petitioner maintains that RBI, being a private corporation, is expressly prohibited by the 1987 Constitution from acquiring lands of public domain.           Petitioner’s proposition has no legal mooring for the following reasons:           1.       RA 6957 as amended by RA 7718 explicitly states that a contractor can be paid “a portion as percentage of the reclaimed land” subject to the constitutional requirement that only Filipino citizens or corporations with at least 60% Filipino equity can acquire the same.  It cannot be denied that RBI is a private corporation, where Filipino citizens own at least 60% of the stocks. Thus, the transfer to RBI is valid and constitutional.

2.       When Proclamations Nos. 39 and 465 were issued, inalienable lands covered by said proclamations were converted to alienable and disposable lands of public domain.  When the titles to the reclaimed lands were transferred to the NHA, said alienable and disposable lands of public domain were automatically

classified as lands of the private domain or patrimonial properties of the State because the NHA is an agency NOT tasked to dispose of alienable or disposable lands of public domain.  The only way it can transfer the reclaimed land in conjunction with its projects and to attain its goals is when it is automatically converted to patrimonial properties of the State.  Being patrimonial or private properties of the State, then it has the power to sell the same to any qualified person—under the Constitution, Filipino citizens as private corporations, 60% of which is owned by Filipino citizens like RBI.           3.       The NHA is an end-user entity such that when alienable lands of public domain are transferred to said agency, they are automatically classified as patrimonial properties.  The NHA is similarly situated as BCDA which was granted the authority to dispose of patrimonial lands of the government under RA 7227.  The nature of the property holdings conveyed to BCDA is elucidated and stressed in the May 6, 2003 Resolution in Chavez v. PEA,  thus:

  

BCDA is an entirely different government entity.  BCDA is authorized by law to sell specific government 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.  BCDA’s mandate is specific and limited in area, while PEA’s 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.”              x x x 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.              Government owned lands, as long as 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 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.[86]  (Emphasis supplied.)

            The foregoing Resolution makes it clear that the SMDRP was a program adopted by the Government under Republic Act No. 6957 (An Act Authorizing the Financing, Construction, Operation and Maintenance of Infrastructure Projects by the Private Sector, and For Other Purposes), as amended by RA 7718, which is a special law similar to RA 7227.  Moreover, since the implementation was assigned to the NHA, an end-user agency under PD 757 and RA 7279, the reclaimed lands registered under the NHA are automatically classified as patrimonial lands ready for disposition to qualified beneficiaries.           The foregoing reasons likewise apply to the contention of petitioner that HCPTI, being a private corporation, is disqualified from being a transferee of public land.  What was transferred to HCPTI is a 10-hectare lot which is already classified as patrimonial property in the hands of the NHA.  HCPTI, being a qualified corporation under the 1987 Constitution, the transfer of the subject lot to it is valid and constitutional. Eighth Issue:  Whether respondents can be compelled to discloseall information related to the SMDRP   

          Petitioner asserts his right to information on all documents such as contracts, reports, memoranda, and the like relative to SMDRP.           Petitioner asserts that matters relative to the SMDRP have not been disclosed to the public like the current stage of the Project, the present financial capacity of RBI, the complete list of investors in the asset pool, the exact amount of investments in the asset pool and other similar important information regarding the Project. 

He prays that respondents be compelled to disclose all information regarding the SMDRP and furnish him with originals or at least certified true copies of all

relevant documents relating to the said project including, but not limited to, the original JVA, ARJVA, AARJVA, and the Asset Pool Agreement.           This relief must be granted. 

The right of the Filipino people to information on matters of public concern is enshrined in the 1987 Constitution, thus:

  

ARTICLE II             x x x x             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. 

ARTICLE III             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.

              In Valmonte v. Belmonte, Jr., this Court explicated this way:

               [A]n 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.[87]

  

          In PEA, this Court elucidated the rationale behind the right to information: 

          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,” 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.[88]

  

Sec. 28, Art. II compels the State and its agencies to fully disclose “all of its transactions involving public interest.”  Thus, the government agencies, without need of demand from anyone, must bring into public view all the steps and negotiations leading to the consummation of the transaction and the contents of the perfected contract.[89]  Such information must pertain to “definite propositions of the government,” meaning official recommendations or final positions reached on the different matters subject of negotiation.  The government agency, however, need not disclose “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.”  The limitation also covers privileged communication like information on military and diplomatic secrets; information affecting national security; information on investigations of crimes by law enforcement agencies before the prosecution of the accused; information on foreign relations, intelligence, and other classified information. 

It is unfortunate, however, that after almost twenty (20) years from birth of the 1987 Constitution, there is still no enabling law that provides the mechanics for the compulsory duty of government agencies to disclose information on government transactions. Hopefully, the desired enabling law will finally see the light of day if and when Congress decides to approve the proposed “Freedom of Access to Information Act.”  In the meantime, it would suffice that government agencies post on their bulletin boards the documents incorporating the information on the steps and negotiations that produced the agreements and the agreements themselves, and if finances permit, to upload said information on their respective

websites for easy access by interested parties.  Without any law or regulation governing the right to disclose information, the NHA or any of the respondents cannot be faulted if they were not able to disclose information relative to the SMDRP to the public in general.

 The other aspect of the people’s right to know apart from the duty to

disclose is the duty to allow access to information on matters of public concern under Sec. 7, Art. III of the Constitution.  The gateway to information opens to the public the following: (1) official records; (2) documents and papers pertaining to official acts, transactions, or decisions; and (3) government research data used as a basis for policy development.           Thus, the duty to disclose information should be differentiated from the duty to permit access to information.  There is no need to demand from the government agency disclosure of information as this is mandatory under the Constitution; failing that, legal remedies are available.  On the other hand, the interested party must first request or even demand that he be allowed access to documents and papers in the particular agency.  A request or demand is required; otherwise, the government office or agency will not know of the desire of the interested party to gain access to such papers and what papers are needed.  The duty to disclose covers only transactions involving public interest, while the duty to allow access has a broader scope of information which embraces not only transactions involving public interest, but any matter contained in official communications and public documents of the government agency.           We find that although petitioner did not make any demand on the NHA to allow access to information, we treat the petition as a written request or demand.  We order the NHA to allow petitioner access to its official records, documents, and papers relating to official acts, transactions, and decisions that are relevant to the said JVA and subsequent agreements relative to the SMDRP. Ninth Issue:  Whether the operative fact doctrine applies to theinstant petition  

          Petitioner postulates that the “operative fact” doctrine is inapplicable to the present case because it is an equitable doctrine which could not be used to countenance an inequitable result that is contrary to its proper office.           On the other hand, the petitioner Solicitor General argues that the existence of the various agreements implementing the SMDRP is an operative fact that can no longer be disturbed or simply ignored, citing Rieta v. People of the Philippines.[90]

           The argument of the Solicitor General is meritorious.           The “operative fact” doctrine is embodied in De Agbayani v. Court of Appeals, wherein it is stated that a legislative or executive act, prior to its being declared as unconstitutional by the courts, is valid and must be complied with, thus: 

As the new Civil Code puts it: “When the courts declare a law to be inconsistent with the Constitution, the former shall be void and the latter shall govern. Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws of the Constitution.”  It is understandable why it should be so, the Constitution being supreme and paramount. Any legislative or executive act contrary to its terms cannot survive.             Such a view has support in logic and possesses the merit of simplicity.  It may not however be sufficiently realistic.  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.  An even more recent instance is the opinion of Justice Zaldivar speaking for the Court in Fernandez v. Cuerva and Co.[91] (Emphasis supplied.)

           This doctrine was reiterated in the more recent case of City of Makati v. Civil Service Commission, wherein we ruled that: 

          Moreover, we certainly cannot nullify the City Government’s order of suspension, as we have no reason to do so, much less retroactively apply such nullification to deprive private respondent of a compelling and valid reason for not filing the leave application.  For as we have held, a void act though in law a mere scrap of paper nonetheless confers legitimacy upon past acts or omissions done in reliance thereof. Consequently, the existence of a statute or executive order prior to its being adjudged void is an operative fact to which legal consequences are attached.  It would indeed be ghastly unfair to prevent private respondent from relying upon the order of suspension in lieu of a formal leave application.[92] (Emphasis supplied.)

            The principle was further explicated in the case of Rieta v. People of the Philippines, thus:

  In similar situations in the past this Court had taken the pragmatic and realistic course set forth in Chicot County Drainage District vs. Baxter Bank to wit:

       The courts below have proceeded on the theory that the Act of Congress, having been found to be unconstitutional, was not a law; that it was inoperative, conferring no rights and imposing no duties, and hence affording no basis for the challenged decree. x x x It is quite clear, however, that such broad statements as to the effect of a determination of unconstitutionality must be taken with qualifications.  The actual existence of a statute, prior to [the determination of its invalidity], 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 conduct, private and official.  Questions of rights claimed to have become vested, of status, of prior determinations

deemed to have finality and acted upon accordingly, of public policy in the light of the nature both of the statute and of its previous application, demand examination.  These questions are among the most difficult of those which have engaged the attention of courts, state and federal, and it is manifest from numerous decisions that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be justified.

   

          In the May 6, 2003 Resolution in Chavez v. PEA,[93] we ruled that De Agbayani[94] is not applicable to the case considering that the prevailing law did not authorize private corporations from owning land.  The prevailing law at the time was the 1935 Constitution as no statute dealt with the same issue. 

In the instant case, RA 6957 was the prevailing law at the time that the joint venture agreement was signed.  RA 6957, entitled “An Act Authorizing The Financing, Construction, Operation And Maintenance Of Infrastructure Projects By The Private Sector And For Other Purposes,” which was passed by Congress on July 24, 1989, allows repayment to the private contractor of reclaimed lands.[95]  Such law was relied upon by respondents, along with the above-mentioned executive issuances in pushing through with the Project.  The existence of such law and issuances is an “operative fact” to which legal consequences have attached.  This Court is constrained to give legal effect to the acts done in consonance with such executive and legislative acts; to do otherwise would work patent injustice on respondents.           Further, in the May 6, 2003 Resolution in Chavez v. PEA, we ruled that in certain cases, the transfer of land, although illegal or unconstitutional, will not be invalidated on considerations of equity and social justice.  However, in that case, we did not apply the same considering that PEA, respondent in said case, was not entitled to equity principles there being bad faith on its part, thus: 

          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 had already approved on September 16, 1997 Senate Committee Report No. 560.  This Report concluded, after a well-publicized investigation into

PEA’s 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.[96]

            Such indicia of bad faith are not present in the instant case.  When the ruling in PEA was rendered by this Court on July 9, 2002, the JVAs were all executed.  Furthermore, when petitioner filed the instant case against respondents on August 5, 2004, the JVAs were already terminated by virtue of the MOA between the NHA and RBI.  The respondents had no reason to think that their agreements were unconstitutional or even questionable, as in fact, the concurrent acts of the executive department lent validity to the implementation of the Project.  The SMDRP agreements have produced vested rights in favor of the slum dwellers, the buyers of reclaimed land who were issued titles over said land, and the agencies and investors who made investments in the project or who bought SMPPCs.  These properties and rights cannot be disturbed or questioned after the passage of around ten (10) years from the start of the SMDRP implementation. Evidently, the “operative fact” principle has set in.  The titles to the lands in the hands of the buyers can no longer be invalidated.

The Court’s Dispositions           Based on the issues raised in this petition, we find that the March 19, 1993 JVA between NHA and RBI and the SMDRP embodied in the JVA, the subsequent amendments to the JVA and all other agreements signed and executed in relation to it, including, but not limited to, the September 26, 1994 Smokey Mountain Asset Pool Agreement and the agreement on Phase I of the Project as well as all other transactions which emanated from the Project, have been shown to be valid, legal, and constitutional. Phase II has been struck down by the Clean Air Act.           With regard to the prayer for prohibition, enjoining respondents particularly respondent NHA from further implementing and/or enforcing the said Project and other agreements related to it, and from further deriving and/or enjoying any rights, privileges and interest from the Project, we find the same prayer meritless.           Sec. 2 of Rule 65 of the 1997 Rules of Civil Procedure provides:

             Sec. 2.  Petition for prohibition.—When the proceedings of any tribunal, corporation, board, officer or person, whether exercising judicial, quasi-judicial or ministerial functions, are without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the respondent to desist from further proceedings in the action or matter specified therein, or otherwise granting such incidental reliefs as law and justice may require.

          It has not been shown that the NHA exercised judicial or quasi-judicial

functions in relation to the SMDRP and the agreements relative to it. Likewise, it has not been shown what ministerial functions the NHA has with regard to the SMDRP.

                   A ministerial duty is one which is so clear and specific as to leave no room for the exercise of discretion in its performance.  It is a duty which an officer performs in a given state of facts in a prescribed manner in obedience to the mandate of legal authority, without regard to the exercise of his/her own judgment upon the propriety of the act done.[97]

                       Whatever is left to be done in relation to the August 27, 2003 MOA, terminating the JVA and other related agreements, certainly does not involve ministerial functions of the NHA but instead requires exercise of judgment.  In fact, Item No. 4 of the MOA terminating the JVAs provides for validation of the developer’s (RBI’s) claims arising from the termination of the SMDRP through the various government agencies.[98]  Such validation requires the exercise of discretion.           In addition, prohibition does not lie against the NHA in view of petitioner’s failure to avail and exhaust all administrative remedies.  Clear is the rule that prohibition is only available when there is no adequate remedy in the ordinary course of law. 

          More importantly, prohibition does not lie to restrain an act which is already a fait accompli.   The “operative fact” doctrine protecting vested rights bars the grant of the writ of prohibition to the case at bar. It should be remembered that petitioner was the Solicitor General at the time SMDRP was formulated and implemented.   He had the opportunity to question the SMDRP and the agreements on it, but he did not.  The moment to challenge the Project had passed.

 On the prayer for a writ of mandamus, petitioner asks the Court to compel

respondents to disclose all documents and information relating to the project, including, but not limited to, any subsequent agreements with respect to the different phases of the Project, the revisions of the original plan, the additional works incurred on the Project, the current financial condition of respondent RBI, and the transactions made with respect to the project.  We earlier ruled that petitioner will be allowed access to official records relative to the SMDRP.  That would be adequate relief to satisfy petitioner’s right to the information gateway.

 WHEREFORE, the petition is PARTIALLY GRANTED. The prayer for a writ of prohibition is DENIED for lack of merit. 

          The prayer for a writ of mandamus is GRANTED.  Respondent NHA is ordered to allow access to petitioner to all public documents and official records relative to the SMDRP—including, but not limited to, the March 19, 1993 JVA between the NHA and RBI and subsequent agreements related to the JVA, the revisions over the original plan, and the additional works incurred on and the transactions made with respect to the Project. 

No costs. SO ORDERED.  

                                                            PRESBITERO J. VELASCO, JR.                                                                        Associate Justice

          WE CONCUR:  

REYNATO S. PUNOChief Justice

  

 LEONARDO A. QUISUMBING     CONSUELO YNARES-SANTIAGO               Associate Justice                                  Associate Justice    ANGELINA SANDOVAL-GUTIERREZ              ANTONIO T. CARPIO                 Associate Justice                                          Associate Justice                MA. ALICIA AUSTRIA-MARTINEZ                RENATO C. CORONA                          Associate Justice                                      Associate Justice                CONCHITA CARPIO MORALES                    ADOLFO S. AZCUNA                 Associate Justice                                          Associate Justice

   

    DANTE O. TINGA                    MINITA V. CHICO-NAZARIO

                 Associate Justice                                    Associate Justice                                                          CANCIO C. GARCIA          ANTONIO EDUARDO B. NACHURA                       Associate Justice                                Associate Justice 

   

RUBEN T. REYESAssociate Justice

   

C E R T I F I C A T I O N           Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.                                                                        REYNATO S. PUNO                                                                            Chief Justice 

                [1] Rollo, pp. 3-4.                [2] Id. at 513.                [3] Id. at 513-514.                [4] Id. at 515.                [5] Id. at 513.                [6] Id. at 297; Proclamation No. 39 dated September 9, 1992.

                [7] RA 7718 was later enacted on May 5, 1994, amending certain sections of the BOT Law.                 [8] “Joint Resolution Approving the List of National Projects to be Undertaken by the Private Sector Pursuant to Republic Act No. 6957.”                [9] Rollo, pp. 519-521.                [10] Id. at 296.                [11] Id. at 295.                [12] Id. at 436.                [13] Id. at 476.                [14] Id. at 477.                [15] Id. at 297-298.                [16] Id. at 479.                [17] Id. at 69-79.

[18] “Creating the National Housing Authority and Dissolving the Existing Housing Agencies, Defining its Powers and Functions, Providing Funds Therefor, and for Other Purposes” (1975).

                 [19] Rollo, p. 70.                [20] Id. at 73.                [21] Id. at 479.                [22] Id. at 80-94.                [23] Id. at 83.                [24] Id.                [25] Id.                [26] Id.                [27] Id. at 84.                [28] Id. at 93.                [29] Id. at 95-104.                [30] Id. at 98.                [31] Id. at 526-533.                [32] Id. at 435.                [33] The PNB was later replaced by the Planters Development Bank.                [34] Rollo, p. 105.                [35] Id. at 18. RA 8749, “The Clean Air Act of 1999.”                [36] Id.                [37] Id. at 244.                [38] Id. at 747-751.                [39] Id. at 858.                [40] Id. at 860.                [41] Id. at 859.                [42] Id.                [43] Id. at 860.                [44] Id.                [45] Id. at 861.                [46] Id.                [47] 1997 RULES OF CIVIL PROCEDURE, Rule 3, Sec. 2.                [48] Bayan (Bagong Alyansang Makabayan) v. Zamora, G.R. Nos. 138570, 138572, 138587, 138680 & 138698, October 10, 2000, 342 SCRA 449, 478.

[49] G.R. No. 130716, December 9, 1998, 299 SCRA 744.[50] G.R. No. 133250, July 9, 2002, 384 SCRA 152.[51] G.R. No. 67787, April 18, 1989, 172 SCRA 415, 424.

                [52] G.R. Nos. 99289-90, January 27, 1993, 217 SCRA 633, 652.[53]  1. Petitioner claimed that NHA awarded the Smokey Mountain project to R-II Builders through contract negotiations and that there was no public bidding awarding ownership of the subject land to respondent R-II Builders, while respondents alleged that NHA publicly bidded out the right to become NHA’s joint venture partner in the prosecution of the SMDRP;

                     2. Petitioner averred that “PEA had no participation whatsoever in the reclamation of the               subject lands” while respondents stated PEA had a name therein;                     3. Petitioner alleged that “neither respondent NHA nor respondent R-II Builders was given the    authority [by DENR] to reclaim the subject lands” while respondents claimed such authority was             granted;                     4. Mr. Chavez claimed “that there is no legislative or Presidential act classifying the        submerged areas around Smokey Mountain as alienable or disposable lands of the public domain                open to disposition” while respondents said that Presidents Aquino and Ramos made the           classification;                     5. Whether respondent R-II Builders complied with its obligation to “fully finance” the Project;                     6. Whether the Project has been terminated by agreements of the parties;                     7. Whether respondents Harbour Centre and Romero fraudulently caused the dilution of the        Asset Pool’s Holdings in HCPTI;                     8. Whether Harbour Centre contracts attached to the Petition are genuine.                [54] Rollo, p. 871.                [55] Petition, Comments, Reply, and Memoranda.

[56] “Designating the Public Estates Authority as the Agency Primarily Responsible for All Reclamation Projects” (1979).                [57] Rollo, p. 235.

[58] The July 9, 2002 Decision entitled Chavez v. PEA was concurred in by 13 members of this Court who voted to grant the petition. However, in the May 6, 2003 Resolution, the Court was divided when it voted 8-5 to affirm the Decision. And in the most recent November 11, 2003 Resolution of this Court, a 7-7 vote was arrived at. Thus, the July 9, 2002 Decision is still the valid case law.

[59] The doctrine of stare decisis provides that a conclusion reached in one case should, for the sake of certainty, be applied to those which follow if the facts are substantially the same even though the parties may be different.

[60] Supra note 50, at 221.[61] “Creating the Public Estates Authority, Defining its Power and Functions, Providing Funds Therefor and

for Other Purposes” (1977).[62] “An Act to Provide for a Comprehensive and Continuing Urban Development and Housing Program,

Establish the Mechanism for its Implementation, and for Other Purposes” (1992).                [63] Radio Communications of the Philippines, Inc. v. Santiago, Nos. L-29236 & L-29247, 58 SCRA 493, August 21, 1974, 58 SCRA 493, 497.                [64] Azarcon v. Sandiganbayan, G.R. No. 116033, February 26, 1997, 268 SCRA 747, 761.                [65] 63 Phil. 139, 177 (1936).                [66] Provident Tree Farms, Inc. v. Batario, Jr., G.R. No. 92285, March 28, 1994, 231 SCRA 463, 469; cited in Agpalo, ADMINISTRATIVE CODE 14.

[67] “Amending Section 7 of Presidential Decree No. 3 dated September 26, 1972, by Providing for the Exclusive Prosecution by Administration or by Contract of Reclamation Projects” (2005).                [68] Republic v. Court of Appeals, G.R. No. 103882, November 25, 1998, 299 SCRA 199, 303.

[69] “Delegating to the Philippine Reclamation Authority the Power to Approve Reclamation Projects” (2006).                [70] Supra note 50, at 222-223.                [71] Taule v. Santos, G.R. No. 90336, August 12, 1991, 200 SCRA 512, 521-522.                [72] G.R. No. 157036, June 9, 2004, 431 SCRA 534, 555; citing EO 292, Book IV, Chapter 7.                [73] Supra note 50, at 217.                [74] Id. at 216.

[75] Id. at 235.                [76] Republic of the Philippines v. Manila Electric Company, G.R. No. 141314, April 9, 2003, 401 SCRA 130, 141.                [77] Id. at 142.                [78] G.R. No. 119682, January 21, 1999, 301 SCRA 450, 454-455.                [79] G.R. No. 146030, December 3, 2002, 393 SCRA 361, 373.                [80] G.R. No. 131667, July 28, 2005, 464 SCRA 280, 291.                [81] G.R. No. 163118, April 27, 2007.                [82] G.R. No. 97973, January 27, 1992, 205 SCRA 515, 527.                [83] Supra note 73.

                [84] Article 422.  Property of public dominion, when no longer intended for public use or public service, shall form part of the patrimonial property of the State.

[85] Commission on Audit, Professional Development Center, HANDBOOK ON PROPERTY & SUPPLY MANAGEMENT SYSTEM 91-92 (2003).

[86] G.R. No. 133250, May 6, 2003, 403 SCRA 1, 31-32.                [87] G.R. No. 74930, February 13, 1989, 170 SCRA 256, 265.                [88] Supra note 50, at 184.                [89] Id. at 185; citing V RECORD OF THE CONSTITUTIONAL COMMISSION 24-25 (1986).                [90] G.R. No. 147817, August 12, 2004, 436 SCRA 273, 291-292.                [91] No. L-23127, April 29, 1971, 38 SCRA 429, 434-435.                [92] G.R. No. 131392, February 6, 2002, 376 SCRA 248, 257.                [93] Supra note 86, at 26.                [94] Supra note 91.                [95] RA 6957, Sec. 6 provides:                                 Section 6.  Repayment Scheme.—For the financing, construction, operation, and maintenance of any infrastructure project undertaken pursuant to the provisions of this Act, the                constructor shall be entitled to a reasonable return of its investment and operating and maintenance                costs in accordance with its bid proposal as accepted by the concerned contracting infrastructure                 agency or local government unit and incorporated in the contract’s terms and conditions.  In the      case of a build-operate-and-transfer arrangement, this repayment scheme is to be affected by              authorizing the contractor to charge for the use of the project facility not exceeding those proposed          in the bid and incorporated in the contract: Provided, That the government infrastructure agency or                 local government unit concerned shall approve the fairness and equity of the tolls, fees, rentals and                charges except in case of tolls for national highways, roads, bridges and public thoroughfares   which shall be approved by the Toll Regulatory Board: Provided,further, That the imposition and       collection of tolls, fees, rentals and charges shall be for a fixed term as proposed in the bid and                 incorporated in the contract but in no case shall this term exceed fifty (50) years: Provided, finally, That during the lifetime of the franchise, the contractor shall undertake the necessary maintenance        and repair of the facility in accordance with standards prescribed in the bidding documents and in           the contract.  In the case of a build-and-transfer arrangements, the repayment scheme is to be                affected through amortization payments by the government unit concerned to the contractor            according to the scheme proposed in the bid and incorporated in the contract.                                 In the case of land reclamation or the building of industrial estates, the repayment scheme                 may consist of the grant of a portion of percentage of the reclaimed land or industrial estate built,      subject to the constitutional requirements with respect to the ownership of lands.                 [96] Supra note 86, at 29-30.            [97] Symaco v. Hon. Aquino, etc., 106 Phil. 1130, 1135 (1960).                [98] Rollo, p. 866.