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CHAVEZ V PUBLIC ESTATES AUTHORITY AND AMARI COASTAL BAY CARPIO; July 9, 2002

FACTS - Nature original Petition for Mandamus with prayer for writ of preliminary injunction and a temporary restraining order. Petition also seeks to compel the Public Estates Authority (PEA) to disclose all facts on PEAs then on-going renegotiations with Amari Coastal Bay and Development Corporation to reclaim portions of Manila Bay. The petition further seeks to enjoin PEA from signing a new agreement with AMARI involving such recalamtion. - 1973-The government through the Commission of Public Highways signed a contract with the Construction and Development Corporation of the Philippines (CDCP) to reclaim certain foreshore and offshore areas of Manila Bay - 1977-President Marcos issued Presidential Decree No. 1084 creating the PEA. And was tasked to reclaim land, including foreshore and submerged areas and to develop, improve, acquire x x x lease and sell any and all kinds of lands. On the same date, President Marcos issued PD. 1085 transferring to PEA the lands reclaimed in the foreshore and offshore of the Manila Bay under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP) - 1981-Pres. Marcos issued a memorandum ordering PEA to amend its contract with CDCP which stated that CDCP shall transfer in favor of PEA the areas reclaimed by CDCP in the MCCRRP - 1988-President Aquino issued Special Patent granting and transferring to PEA parcels of land so reclaimed under the MCCRRP. Subsequently she transferred in the name of PEA the three reclaimed islands known as the Freedom Islands - 1995-PEA entered into a Joint Venture Agreement (JVA) with AMARI, a private corporation, to develop the Freedom Islands and this was done without public bidding - President Ramos through Executive Secretary Ruben Torres approved the JVA - 1996-Senate President Maceda delivered a privileged speech in the Senate and denounced the JVA as the grandmother of all scams. As a result, investigations were conducted by the Senate. Among the conclusions were: (1) the reclaimed lands PEA seeks to transfer to AMARI under the JVA are lands of the public domain which the government has not classified as alienable lands and therefore PEA cannot alienate these lands; (2) the certificates of the title covering the Freedom Islands are thus void, and (3) the JVA itself is illegal - 1997-President Ramos created the Legal Task Force to conduct a study on the legality of the JVA in view of the Senate Committee report.1998-The Philippine Daily Inquirer published reports on on-going renegotiations between PEA and AMARI - PEA Director Nestor Kalaw and PEA Chairman Arsenio Yulo and former navy officer Sergio Cruz were members of the negotiating panel - Frank Chavez filed petition for Mandamus stating that the government stands to lose billions of pesos in the sale by PEA of the reclaimed lands to AMARI and prays that PEA publicly disclose the terms of the renegotiations of JVA. He cited that the sale to AMARI is in violation of Article 12, Sec. 3 prohibiting sale of alienable lands of the public domain to private corporations and Article 2 Section 28 and Article 3 Sec. 7 of the Constitution on the right to information on matters of public concern

- 1999-PEA and AMARI signed Amended JVA which Pres. Estrada approved

ISSUES 1. WON the principal reliefs prayed for in the petition are moot and academic because subsequent events 2. WON the petition merits dismissal for failure to observe the principle governing the hierarchy of courts 3. WON the petition merits dismissal for non-exhaustion of administrative-remedies 4. WON petitioner has locus standi to bring this suit 5. WON the constitutional right to information includes official information on on-going negotiations before a final agreement 6. WON the stipulations in the amended joint venture agreement for the transfer to amari of certain lands, reclaimed and still to be reclaimed, violate the 1987 consitution; and 7. WON the court is the proper forum for raising the issue of whether the amended joint venture agreement is grossly disadvantageuos to the government. o threshold issue: whether amari, a private corporation, can acquire and own under the amended jva 367.5 hectares of reclaimed froeshore and submerged area in manila bay in view of sections 2 and 3, article 12 of the 1987 constitution HELD (1) The prayer to enjoin the signing of the Amended JVA on constitutional grounds necessarily includes preventing its implementation if in the meantime PEA and AMARI have signed one in violation of the Constitution and if already implemented, to annul the effects of an unconstitutional contract (2) The principle of hierarchy of courts applies generally to cases involving factual questions Reasoning the instant case raises constitutional issues of transcendental importance to the public (3) The principle of exhaustion of administrative remedies does not apply when the issue involved is a purely legal or constitutional question (4) Petitioner has standing if petition is of transcendental public importance and as such, there is the right of a citizen to bring a taxpayers suit on these matters of transcendental public importance (5) The constitutional right to information includes official information on on-going negotiations before a final contract and must therefore constitute definite propositions by the government and should not cover recognized exceptions like privileged information, military and diplomatic secrets and similar matters affecting national security and public order Reasoning The State policy of full transparency in all transactions involving public interest reinforces the peoples right to information on matters of public concern. PEA must prepare all the data and disclose them to the public at the start of the disposition process, long before the consummation of the contract. While the evaluation or review is on-going, there are no

official acts, transactions, or decisions on the bids or proposals but once the committee makes its official recommendation, there arises a definite proposition on the part of the government (6) In a form of a summary: o The 157.84 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 ownership limitations in the 1987 Constitution and existing laws. o The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural resources of the public domain and outside the commerce of man until classified as alienable or disposable lands open to disposition and declared no longer needed for public service. The government can make such classification and declaration only after PEA has reclaimed these submerged areas. Only then can these lands qualify as agricultural lands of the public domain, which are the only natural resources the government can alienate. o Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of 77.34 hectares of the Freedom Islands, such transfer is void for being contrary to Section 3, Article 12 of the 1987 Constitution which prohibits private corporations from acquiring any kind of alienable land of the public domain o Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 hectares of still submerged areas of Manila Bay, such transfer is void for being contrary to Section 2, Article 12 of the 1987 Constitution which prohibits the alienation of natural resources other than agricultural lands of the public domain. PEA may reclaim these submerged areas. Thereafter, the government can classify the reclaimed lands as alienable or disposable, and further declare them no longer needed for public services. Still, the transfer of such reclaimed alienable lands of the public domain to AMARI will be void in view of Section 3, Article 12 which prohibits private corporations from acquiring any kind of alienable land of the public domain. Reasoning Commonwealth Act 141 of the Philippine National Assembly empowers the president to classify lands of the public domain into alienable or disposable sec. 6. The President, upon recommendation of the Secretary of Agriculture and Commerce, shall from time to time classify the lands of the public domain into(a) Alienable of disposable, (b) timber, and (c) mineral lands.-The President must first officially classify these lands as alienable or disposable, and then declare them open to disposition or concession. -Sec. 59 states that the lands disposable under this title shall be classified as follows: (a) Lands reclaimed by the Government by dredging, filling, or other means; (b) Foreshore; (c) Marshy lands (d) Lands not included in any of the foregoing classes. -Sec. 61 states that the lands comprised in classes (a), (b) and (c) of section 59 shall be disposed f to private parties by lease only and not otherwise -After the effectivity of the 1935 Constitution, government reclaimed and marshy disposable lands of the public domain continued to be only leased and not sold to private parties. These lands remained suis generic as the only alienable or disposable lands of the public domain the government could not sell to private parties. The only way that the government can sell to private parties government reclaimed and marshy disposable lands of the public domain is for the legislature to pass a law authorizing such sale. -in case of sale or lease of disposable lands of the public domain, a public bidding is required -1987 Constitution declares that all natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. Article 12, Sec. 3 states that alienable lands of the public domain shall be limited to agricultural lands. Private corporations or associations may not hold such alienable lands of the public domain except by lease, for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and not to exceed one thousand hectares in area.

-ration behind the ban on corporations from acquiring except through lease is not well understood. If the purpose is to equitably diffuse lands ownership then the Consti could have simply limited the size of alienable lands of the public domain that corporations could acquire. If the intent was to encourage owner-cultivatorship and the economic family-size farm and to prevent a recurrence of cases like the instant case, then placing the land in the name of a corporation would be more effective in preventing the 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 then, this ban strengthens the consti limitation on individuals from acquiring more than the allowed area of alienable lands of the public domain. Without the ban, individuals who already acquired the maximum area of alienable lands of the public domain could easily set up corporations to acquire more alienable public lands. An individual could own as many corporations as his means would allow him. He could even hide his ownership of a corporation by putting his nominees as stockholders of the corporation.