Legal library › Case digests › Political Law
Case digest · Reclaimed foreshore and submerged areas; classification as alienable; the ban on private corporations acquiring alienable lands of the public domain
Chavez vs. Public Estates Authority
The Public Estates Authority held three islands reclaimed from Manila Bay, the Freedom Islands. While a taxpayer’s petition was pending in the Supreme Court, it signed an amended contract under which a private corporation would own up to 367.5 hectares of reclaimed and still-submerged areas, titled in its name.
Facts
1973–1977
On November 20, 1973, the government, through the Commissioner of Public Highways, contracted with the Construction and Development Corporation of the Philippines (CDCP) to reclaim foreshore and offshore areas of Manila Bay and build the Manila-Cavite Coastal Road, in consideration of fifty percent of the total reclaimed land. On February 4, 1977, P.D. No. 1084 created the Public Estates Authority (PEA), and P.D. No. 1085 transferred to PEA the lands reclaimed in the foreshore and offshore of Manila Bay under the Manila-Cavite Coastal Road and Reclamation Project.
1988
On January 19, 1988, President Corazon C. Aquino issued Special Patent No. 3517 to PEA. On April 9, 1988, the Register of Deeds of Parañaque issued three transfer certificates of title in PEA’s name covering the three reclaimed islands known as the Freedom Islands, with a total area of 157.841 hectares.
1991–1995
PEA set a public bidding for the Freedom Islands on December 10, 1991, but no one submitted a bid. On April 25, 1995, PEA entered into a Joint Venture Agreement (JVA) with Amari Coastal Bay Development Corporation (Amari), a private corporation, to develop the Freedom Islands and reclaim 250 more hectares of submerged areas around them, through negotiation without public bidding. President Ramos, through Executive Secretary Ruben Torres, approved the JVA on June 8, 1995.
1996–1997
On November 29, 1996, then Senate President Ernesto Maceda denounced the JVA in a privilege speech, and two Senate committees investigated. Senate Committee Report No. 560, dated September 16, 1997, concluded that the lands were lands of the public domain that PEA could not alienate, that the titles covering the Freedom Islands were void, and that the JVA was illegal. A Legal Task Force created by President Ramos upheld the legality of the JVA.
April 27, 1998
Francisco I. Chavez, as a taxpayer, filed an original petition for mandamus in the Supreme Court. He asked the Court to compel PEA to disclose all facts on its on-going renegotiations with Amari, and to enjoin PEA from signing a new agreement with Amari.
1999
While the case was pending, PEA and Amari signed the Amended JVA on March 30, 1999, and the Office of the President under President Joseph E. Estrada approved it on May 28, 1999. It covered 750 hectares: 157.84 hectares already reclaimed and 592.15 hectares still submerged. Amari would reimburse PEA’s cost of partially reclaiming the Freedom Islands, shoulder the rest of the reclamation, and receive 70 percent of the net usable area, a maximum of 367.5 hectares to be titled in its name.
Issue
May Amari, a private corporation, acquire and own under the Amended JVA 367.5 hectares of reclaimed foreshore and submerged areas of Manila Bay, in view of Sections 2 and 3, Article XII of the 1987 Constitution?
Ruling
No. The Court granted the petition, permanently enjoined PEA and Amari from implementing the Amended JVA, and declared it null and void ab initio. In 2003, it denied the motions for reconsideration with finality, then denied the second motions as prohibited pleadings.
The Court held that the case was not moot, that Chavez had standing as a citizen, and that the right to information includes official information on on-going negotiations before a final contract, once the government makes definite propositions. On the merits, the foreshore and submerged areas of Manila Bay are owned by the State, and their reclamation by PEA did not make them alienable. P.D. No. 1085, together with the special patent, classified the 157.84 hectares of the Freedom Islands as alienable or disposable lands of the public domain, which PEA may lease to private corporations but may sell only to Philippine citizens. The 592.15 hectares still under Manila Bay remained inalienable natural resources, which the government may classify only after they are reclaimed. The transfer to Amari of 77.34 hectares of the Freedom Islands therefore violated Sec. 3, Art. XII, and the transfer of about 290 hectares of still-submerged areas violated Sec. 2. PEA’s titles did not make the lands private, and under the BOT Law a corporate contractor can be paid only with leaseholds on portions of the reclaimed land. Under Art. 1409 of the Civil Code, the Amended JVA was void from the beginning. Since it was void, the Court found no need to rule on whether it was grossly disadvantageous to the government, a question of fact. The Decision was unanimous. In its Resolution of May 6, 2003, with eight Justices voting to deny, the Court denied the motions for reconsideration with finality, and likewise denied Amari’s Motion to Inhibit and for Re-Deliberation and its Motion to Set Case for Hearing on Oral Argument. It held that the Decision merely reiterated the law in force since the 1973 Constitution, that the absence of public bidding was not a ground of the Decision, and that Amari could not claim good faith, because it signed the Amended JVA after the petition was filed; Amari was not precluded from recovering from PEA, in the proper proceedings, on a quantum meruit basis. In its Resolution of November 11, 2003, with seven Justices voting to deny, the Court denied the second motions for reconsideration of PEA and Amari for being prohibited pleadings, added that in any event they had no merit, and allowed no further pleadings from any of the parties. It discussed the land’s value, citing the Commission on Audit’s appraisal attached to Senate Committee Report No. 560, but held that the price was not the contract’s major defect: the fatal flaw was that the contract violated the Constitution.
“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.”
Doctrine
Foreshore and submerged areas are natural resources of the State: “Foreshore and submerged areas indisputably belong to the public domain and are inalienable unless reclaimed, classified as alienable lands open to disposition, and further declared no longer needed for public service.” Even then, while the land remains alienable land of the public domain, PEA may sell it only to individuals, not to private corporations: “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.” A title in the name of the government agency does not make the land private: “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.”
Compare: reclaimed land titled to the NHA
In Chavez vs. National Housing Authority, G.R. No. 164527, August 15, 2007, the Court found that this case “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”, and it upheld the Smokey Mountain reclamation: “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.”
Bar tip
Reclamation alone does not make land alienable. Look for the law or presidential proclamation classifying the reclaimed land and the declaration that it is no longer needed for public service; then ask who will acquire it. A private corporation may hold alienable lands of the public domain only by lease, and a title in PEA’s name does not make the land private. Note what the 2002 Decision did not decide: whether the contract was grossly disadvantageous to the government.
Hear it explained
Land Titles Jurisprudence Ep. 7, at 4:13
Follow Forlawssake
Get the next case explainer when it’s out.
New videos and episodes come out on YouTube, Spotify and TikTok. Follow there, and the app tells you when the next one is posted. It’s free.
This digest is general legal information for education, not legal advice, and it is not a substitute for reading the decision. Quoted passages are taken word for word from the full text.