CHAVEZ vs PEA and AMARI
a. government stands to lose billions of pesos in the sale by PEA of the
FACTS:
Government signed a contract with CDCP to reclaim certain foreshore and
offshore areas of Manila Bay which 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.
Pres. Marcos created and tasked PEA to reclaim land, including foreshore and
submerged areas and to develop, improve, acquire, lease and sell any and all
kinds of lands. By virtue of PD No. 1085, he transferred to PEA the lands
reclaimed in the foreshore and offshore of the Manila Bay.
Then President Aquino issued Special Patent granting and transferring to PEA
the parcels of land so reclaimed under MCCRR Project. Subsequently, the
Register of Deeds of Parañaque issued Transfer Certificates of Titles in the
name of PEA, covering the three reclaimed islands known as the Freedom
Islands.
PEA entered into a JVA with AMARI, a private corporation, to develop the
Freedom Islands through negotiation without public bidding. 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. The BOD of PEA and Pres. Ramos approved the JVA.
Senate President Ernesto Maceda delivered a privilege speech in the Senate and
denounced the JVA as the "grandmother of all scams. As a result joint
investigation was conducted and found out that JVA is illegal for alienating
reclaimed lands which is land of public domain.
Pres. Ramos created a task force to investigate the legality of JVA, which tasked
force upheld the legality of JVA contrary to conclusions reached by Senate
committees. 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.
Chavez, petitioner as a taxpayer, filed the instant Petition for Mandamus with
Prayer for the Issuance of a Writ of Preliminary Injunction and Temporary
Restraining Order contending that:
reclaimed lands to AMARI
b. praying public disclosure of terms of any negotiation pursuant to right of
people to information on matters of public concern.
c. assailing also the sale of PEA 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.
PEA and AMARI signed the Amended JVA and the office of the Pres. approved
under the administration of then Pres. Estrada approved the Amended JVA.
Due to the approval of the Amended JVA petitioner now prays that on
"constitutional and statutory grounds the renegotiated contract be declared null
and void.
ISSUES:
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.
HELD:
First issue: whether the principal reliefs prayed for in the petition are moot
and academic because of subsequent events.
● 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.
● Supervening events, whether intended or accidental, cannot prevent the
Court from rendering a decision if there is a grave violation of the
Constitution.
● 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.
● The instant petition is a case of first impression.
● 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.
Second issue: whether the petition merits dismissal for failing to observe the
principle governing the hierarchy of courts.
● Principle of hierarchy of courts applies generally to cases involving
factual questions.
● The instant case raises constitutional issues of transcendental
importance to the public. The Court can resolve this case without
determining any factual issue related to the case.
Third issue: whether the petition merits dismissal for non-exhaustion of
administrative remedies.
● We rule that the principle of exhaustion of administrative remedies
does not apply in the instant case.
● The principle of exhaustion of administrative remedies does not apply
when the issue involved is a purely legal or constitutional question.
● 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.
Fourth issue: whether petitioner has locus standi to bring this suit
● 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 Art. III and Section 28 Art. II 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.
● The court 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.
● Gov’t Auditing Code requires public bidding on matters relating to the
disposition of property of PEA.
● So PEA must on its own and without demand from anyone, disclose to
the public matters relating to the disposition of its property.
● If PEA fails to make this disclosure, any citizen can demand from PEA
this information at any time during the bidding process.
● Information 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.
● 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.
 ● The right to information, however, does not extend to matters
recognized as privileged information.
● Since there is no claim by PEA that the information demanded by
petitioner is privileged information, we rule, therefore, that the
constitutional right to information includes official information on on-
going negotiations before a final contract.
Sixth issue: whether stipulations in the Amended JVA for the transfer to
AMARI of lands, reclaimed or to be reclaimed, violate the Constitution.
● The ownership of lands reclaimed from foreshore and submerged areas
is rooted in the Regalian doctrine.
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 provides that 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.
Article 341 of the Civil Code of 1889, a not self-executing provision; declare
that 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
upon declaration of the executive and passing of a law by the legislative.
Act No. 1654 mandated that the government should retain title to all lands
reclaimed by the government. It also vests 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 and mandated
public bidding in the lease of government reclaimed lands.
● This act 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.
● This act did not repeal the provision of Spanish Law of Waters
allowing private parties to reclaim parts of the sea with government’s
permission and such reclaimed lands remained private lands.
Act No. 2874 the Public Land Act authorized the Governor-General to
"classify lands of the public domain, to "declare what lands are open to
disposition or concession and also limited alienable or disposable lands only to
those lands which have been "officially delimited and classified.
● This act 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.
● 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.
● 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
● It did not prohibit private parties from reclaiming parts of the sea
pursuant to Spanish Law of Waters and lands reclaimed from the sea by
private parties with government permission remained private lands.
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.
● 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.
● But the legislature did not repeal Act 2874 but 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 readopted
the prohibition in 1935 Constitution of 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.
 ● The government could sell to private parties only those lands for non-
agricultural purposes not classified as government reclaimed, foreshore
and marshy disposable lands of the public domain.
● This act 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."
● 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.
● 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.
● In case of sale or lease of disposable lands of the public domain, CA
No. 141 mandates the Government to put to public auction all leases or
sales.
● CA No. 141 did not repeal Spanish Law of Waters provision allowing
private parties to reclaim portions of the sea with government
permission. However, this time the reclaimed is not automatically a
private land.
● It could become private land only after being classified as alienable
agricultural land of the public domain open to disposition.
The Civil Code of 1950 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.
● It also included as property of public dominion those properties 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.
1973 Constitutions prohibited the alienation of all natural resources except
agricultural lands of the public domain.
● Under 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
● 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.
● 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 in view of CA 141.
● 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.
The 1987 Constitution continues the State policy in the 1973 Constitution
banning private corporations from acquiring 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 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.
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 acquire and own a maximum of
367.5 hectares of reclaimed land which will be titled in its name in line
of 70-30% of total net usable area.
● 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.
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.
● 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 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.
● 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.
● CA No. 141 provides that "only those lands shall be declared open to
disposition or concession which have been officially delimited and
classified.
● There must be a law or presidential proclamation officially classifying
these reclaimed lands as alienable or disposable and open to disposition
or concession and must not been reserved for some public or quasi-
public use.
● PD No. 1085 authorized the issuance of special land patents for lands
reclaimed by PEA from the foreshore or submerged areas of Manila
Bay 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.
● The Freedom Islands are thus alienable or disposable lands of the
public domain, open to disposition or concession to qualified parties.
● 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.
● 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.
● 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.
● PEA must observe the provisions of CA No. 141 requiring public
auction, in the absence of a law exempting PEA from holding a public
auction.
● For the Special Patent issued to PEA expressly acknowledge 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 which authorizes PEA "to determine the kind ● Several laws authorize lands of the public domain to be registered
and manner of payment in contracts it entered into for reclamation does under the Torrens System without losing their character as public lands.
not exempt PEA from the requirement of public auction. ● Such registration, however, is expressly subject to the condition in CA
● No. 1445, the Government Auditing Code required sale of valuable No. 141 that the land "shall not be alienated, encumbered or otherwise
government property through public bidding. disposed of in a manner affecting its title, except when authorized by
Congress."
● It is only when the public auction fails that a negotiated sale is allowed, ● The need for legislative authority prevents the registered land of the
in which case the Commission on Audit must approve the selling price. public domain from becoming private land that can be disposed of to
● At the public auction sale, only Philippine citizens are qualified to bid qualified private parties.
for PEA's reclaimed foreshore and submerged alienable lands of the ● Whether the Amended JVA is a sale or a joint venture, the fact remains
public domain. Private corporations are barred from bidding at the that the Amended JVA requires PEA to "cause the issuance and
auction sale of any kind of alienable land of the public domain. delivery of the certificates of title conveying AMARI's Land Share in
● The failure of public bidding conducted on December 10, 1991, by the name of AMARI.
PEA involving only 407.84 hectares is not a valid justification for a ● This stipulation still contravenes Section 3, Article XII of the 1987
negotiated sale of 750 hectares, almost double the area publicly Constitution which provides that private corporations "shall not hold
auctioned. such alienable lands of the public domain except by lease.
● Besides, the failure of public bidding happened more than three years ● The Court must perform its duty to defend and uphold the Constitution,
before the signing of the original JVA on April 25, 1995. The economic and therefore declares the Amended JVA null and void ab initio.
situation in the country had greatly improved during the intervening
period. Seventh issue: whether the Court is the proper forum to raise the issue of
● The Ban on Private corporations or associations holding alienable lands whether the Amended JVA is grossly disadvantageous to the government.
of the public domain except by lease is clear and absolute.
● A private corporation, even one that undertakes the physical ● Considering that the Amended JVA is null and void ab initio, there is
reclamation of a government project, cannot acquire reclaimed no necessity to rule on this last issue. Besides, the Court is not a trier of
alienable lands of the public domain in view of the constitutional ban. facts, and this last issue involves a determination of factual matters
● Thus whatever repayment Scheme in the contract entered by PEA if the
contractor or developer is a private corporation like AMARI can only
be paid with leaseholds on portions of the reclaimed lands to avoid a
direct collision with the Constitution.
● The issuance of special patent and certificate of title to PEA does
convert the FREEDOM ISLAND into private land contrary to what
defendants contended.
● 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.
● The registration of lands of the public domain under the Torrens
system, by itself, cannot convert public lands into private lands.