1

FIRST DIVISION
[G.R. No. 83609. October 26, 1989.]
DIRECTOR OF LANDS, petitioner, vs.
COURT OF APPEALS, IBARRA BISNAR and
AMELIA BISNAR, respondents.
Ibarra L. Bisnar for himself and for and in
behalf of co-private respondent Amelia Bisnar.
SYLLABUS
1. LAND REGISTRATION: ALIENABLE OR DISPOSABLE
PUBLIC LANDS; CLASSIFICATION OR
RECLASSIFICATION THEREOF AS PREROGATIVE OF
THE EXECUTIVE DEPARTMENT. In the case of
Bureau of Forestry vs. Court of Appeals, 153 SCRA
351, we ruled: "As provided for under Section 6 of
Commonwealth Act 141, which was lifted from Act
2874, the classification or reclassification of public
lands into alienable or disposable, mineral or forest
lands is now a prerogative of the Executive
Department of the government and not the courts.
With these rules, there should be no more room for
doubt that it is not the court which determines the
classification of lands of the public domain into
agricultural, forest or mineral but the Executive
Branch of the government, through the Office of the
President.
2. ID.; POSITIVE ACT OF THE GOVERNMENT NEEDED
TO DECLASSIFY LAND INTO ALIENABLE LAND FOR
AGRICULTURAL OR OTHER PURPOSES. It bears
emphasizing that a positive act of the government is
needed to declassify land which is classified as forest
and to convert it into alienable or disposable land for
agricultural or other purposes (Republic vs. Animas,
56 SCRA 499). Unless and until the land classified as
forest is released in an official proclamation to that
effect so that it may form part of the disposable
agricultural lands of the public domain, the rules on
confirmation of imperfect title do not apply
(Amunategui vs. Director of Forestry, 126 SCRA 69;

Director of Lands vs. Court of Appeals, 129 SCRA 689;

Director of Lands vs. Court of Appeals, 133 SCRA 701;
Republic vs. Court of Appeals, 148 SCRA 480; Vallarta
vs. Intermediate Appellate Court, 151 SCRA 679).
3. ID.; POSSESSION HOWEVER LONG OF FOREST
LANDS CANNOT RIPEN INTO PRIVATE OWNERSHIP.
Possession of forest lands, however long, cannot ripen
into private ownership (Vano vs. Government, 41 Phil.
161 [1920]; Adorable vs. Director of Forestry, 107 Phil.
401 [1960]).
4. ID.; FOREST LAND; BEYOND JURISDICTION OF THE
CADASTRAL COURT TO REGISTER UNDER THE
TORRENS SYSTEM. A parcel of forest land is within
the exclusive jurisdiction of the Bureau of Forestry
and beyond the power and jurisdiction of the
cadastral court to register under the Torrens System
(Republic vs. Court of Appeals, 89 SCRA 648; Republic
vs. Vera, 120 SCRA 210 [1983]; Director of Lands vs.
Court of Appeals, 129 SCRA 689 [1984]).
5. ID.; SECTION 48 (b) OF C.A. NO. 141; APPLICABLE
EXCLUSIVELY TO PUBLIC AGRICULTURAL LAND.
Section 48 (b) of Commonwealth Act No. 141, as
amended, applies exclusively to public agricultural
land. Forest lands or areas covered with forests are
excluded.
6. ID.; ID.; APPLICANT TASKED WITH THE BURDEN OF
PROOF THAT HE MEETS THE LEGAL REQUIREMENTS.
"In confirmation of imperfect title cases, the
applicant shoulders the burden of proving that he
meets the requirements of Section 48,
Commonwealth Act No. 141, as amended by Republic
Act 1942. He must overcome the presumption that
the land he is applying for is part of the public domain
but that he has an interest therein sufficient to
warrant registration in his name because of an
imperfect title such as those derived from old Spanish
grants or that he has had continuous, open and
notorious possession and occupation of agricultural
lands of the public domain under a bona fide claim of
acquisition of ownership for at least thirty (30) years
preceding the filing of his application." (Heirs of
Amunategui vs. Director of Forestry, 126 SCRA 69.)

DECISION
GRIO-AQUINO, J p:
Petitioner Director of Lands, through the Solicitor
General, seeks a review of the decision dated May 27,
1988, of the Court of Appeals in CA-G.R. CV No.
66426, entitled "Ibarra Bisnar, et al. vs. Director of
Lands," affirming in toto the decision of the Court of
First Instance of Capiz, granting the private
respondents' application for confirmation and
registration of their title to two (2) parcels of land in
LRC Cad. Rec. 1256. cdll
In their joint application for registration of title to two
(2) parcels of land filed on July 20, 1976, the
applicants Ibarra and Amelia Bisnar claimed to be the
owners in fee simple of Lots 866 and 870 of the Pilar
Cadastre Plan AP-06-000869, respectively containing
an area of 28 hectares (284,424 sq.m.) and 34
hectares (345,385 sq.m.) situated in barrio Gen.
Hizon, Municipality of President Roxas, Province of
Capiz (p. 14, Rollo). The applicants alleged that they
inherited those parcels of land (p. 41, Rollo) and they
had been paying the taxes thereon (p. 40, Rollo).
On December 16, 1976, the Director of Lands and the
Director of the Bureau of Forest Development,
opposed the application on the grounds that:
"1. Neither the applicants nor their predecessors-ininterest possess sufficient title to acquire ownership in
fee simple of the land or lots applied for, the same not
having been acquired by any of the various types of
title issued by the Spanish Government, such as, (1)
'titulo real' or royal grant, (2) the 'concession especial'
or special grant, (3) the 'composicion con el estado
titulo' or adjustment title, (4) the 'titulo de compra' or
title by purchase, and (5) the 'informacion
possessoria' or possessory information under the
Royal Decree of 13 February 1894, or any other
recognized mode of acquisition of title over realty
under pertinent applicable laws.
"2. Neither the applicants nor their predecessors-ininterest have been in open, continuous, exclusive and
notorious possession and occupation of the land in

2
question for at least thirty (30) years immediately
preceding the filing of the application.
"3. The properties in question are a portion of the
public domain belonging to the Republic of the
Philippines, not subject to private appropriation, (pp
17-19, Record on Appeal)." (pp. 14-15, Rollo.)
On February 24, 1977, the applicants filed an
amended application, which was approved on March
14, 1977, and included the following allegation:

cannot ripen into private ownership; and

679).

3. that an applicant for registration of title has the

burden of proving that he meets the requirements of
Section 48 of Com. Act No. 141, as amended. (p. 19,
Rollo.)

Thus, possession of forest lands, however long,

cannot ripen into private ownership (Vano vs.
Government, 41 Phil. 161 [1920]; Adorable vs.
Director of Forestry, 107 Phil. 401 [1960]). A parcel of
forest land is within the exclusive jurisdiction of the
Bureau of Forestry and beyond the power and
jurisdiction of the cadastral court to register under the
Torrens System (Republic vs. Court of Appeals, 89
SCRA 648; Republic vs. Vera, 120 SCRA 210 [1983];
Director of Lands vs. Court of Appeals, 129 SCRA 689
[1984]). Cdpr

The principal issue in this appeal is whether the lots in

question may be registered under Section 48 (b) of CA
141, as amended.
The petition is impressed with merit.

"Should the Land Registration Act invoked be not

applicable to the case, they hereby apply for the
benefits of Chapter 8, Commonwealth Act 141, as
amended, as they and their predecessors-in-interest
have been in possession of the land as owners for
more than fifty (50) years." (p. 16, Rollo.)
After hearing, the trial court ordered the registration
of the title of the lots in the names of the applicants,
herein private respondents. It found that applicants
and their predecessors-in-interest have been in open,
public, continuous, peaceful and adverse possession
of the subject parcels of land under bona fide claims
of ownership for more than eighty (80) years (not only
30) prior to the filing of the application for
registration, introduced improvements on the lands by
planting coconuts, bamboos and other plants, and
converted a part of the land into productive fishponds
(p. 68, Rollo).
On appeal, the Appellate Court affirmed the trial
court's decision. It held that the classification of the
lots as timberland by the Director of Forestry cannot
prevail in the absence of proof that the said lots are
indeed more valuable as forest land than as
agricultural land, citing as authority the case of
Ankron vs. Government of the Philippine Islands (40
Phil. 10). In this petition, the government alleges that:
1. the classification or reclassification of public lands
into alienable or disposable agricultural land, mineral
land or forest land is a prerogative of the Executive
Department of the government and not of the courts;
2. that possession of forest lands, no matter how long,

In the case of Bureau of Forestry vs. Court of Appeals,

153 SCRA 351, we ruled:
"As provided for under Section 6 of Commonwealth
Act 141, which was lifted from Act 2874, the
classification or reclassification of public lands into
alienable or disposable, mineral or forest lands is now
a prerogative of the Executive Department of the
government and not the courts. With these rules,
there should be no more room for doubt that it is not
the court which determines the classification of lands
of the public domain into agricultural, forest or
mineral but the Executive Branch of the government,
through the Office of the President. Hence, it was
grave error and/or abuse of discretion for respondent
court to ignore the uncontroverted facts that (1) the
disputed area is within a timberland block, and (2) as
certified to by the then Director of Forestry, the area
is needed for forest purposes." (pp. 21-22, Rollo.)
It bears emphasizing that a positive act of the
government is needed to declassify land which is
classified as forest and to convert it into alienable or
disposable land for agricultural or other purposes
(Republic vs. Animas, 56 SCRA 499). Unless and until
the land classified as forest is released in an official
proclamation to that effect so that it may form part of
the disposable agricultural lands of the public domain,
the rules on confirmation of imperfect title do not
apply (Amunategui vs. Director of Forestry, 126 SCRA
69; Director of Lands vs. Court of Appeals, 129 SCRA
689; Director of Lands vs. Court of Appeals, 133 SCRA
701; Republic vs. Court of Appeals, 148 SCRA 480;
Vallarta vs. Intermediate Appellate Court, 151 SCRA

Section 48 (b) of Commonwealth Act No. 141, as

amended, applies exclusively to public agricultural
land. Forest lands or areas covered with forests are
excluded (p. 26, Rollo). We reiterate our ruling in
Amunategiu that:
"In confirmation of imperfect title cases, the applicant
shoulders the burden of proving that he meets the
requirements of Section 48, Commonwealth Act No.
141, as amended by Republic Act 1942. He must
overcome the presumption that the land he is
applying for is part of the public domain but that he
has an interest therein sufficient to warrant
registration in his name because of an imperfect title
such as those derived from old Spanish grants or that
he has had continuous, open and notorious
possession and occupation of agricultural lands of the
public domain under a bona fide claim of acquisition
of ownership for at least thirty (30) years preceding
the filing of his application." (Heirs of Amunategui vs.
Director of Forestry, 126 SCRA 69.)
WHEREFORE, the appealed decision is reversed and
set aside. The application for registration in LRC Cad.
Rec. 1256 of the former Court of First Instance, is
hereby dismissed without costs.
SO ORDERED.
Narvasa, Cruz, Gancayco and Medialdea, JJ ., concur.

3
||| (Director of Lands v. Court of Appeals, G.R. No.
83609, [October 26, 1989], 258-A PHIL 492-497)

FIRST DIVISION
[G.R. No. 155450. August 6, 2008.]
REPUBLIC OF THE PHILIPPINES
represented by the Regional Executive Director,
Department of Environment and Natural
Resources, Regional Office No. 2, petitioner, vs.
COURT OF APPEALS, HEIRS OF ANTONIO
CARAG AND VICTORIA TURINGAN, THE
REGISTER OF DEEDS OF CAGAYAN, and
the COURT OF FIRST INSTANCE OF
CAGAYAN, respondents.
DECISION
CARPIO, J p:
The Case
This is a petition for review 1 of the 21 May 2001 2
and 25 September 2002 3 Resolutions of the Court of
Appeals in CA-G.R. SP No. 47965. The 21 May 2001
Resolution dismissed petitioner Republic of the
Philippines' (petitioner) amended complaint for
reversion, annulment of decree, cancellation and
declaration of nullity of titles. The 25 September 2002
Resolution denied petitioner's motion for
reconsideration.
The Facts
On 2 June 1930, the then Court of First Instance of
Cagayan (trial court) issued Decree No. 381928 4 in
favor of spouses Antonio Carag and Victoria Turingan
(spouses Carag), predecessors-in-interest of private
respondents Heirs of Antonio Carag and Victoria
Turingan (private respondents), covering a parcel of
land identified as Lot No. 2472, Cad. 151, containing
an area of 7,047,673 square meters (subject
property), situated in Tuguegarao, Cagayan. On 19
July 1938, pursuant to said Decree, the Register of
Deeds of Cagayan issued Original Certificate of Title
No. 11585 5 (OCT No. 11585) in the name of spouses
Carag. DcICEa

On 2 July 1952, OCT No. 11585 was cancelled to

discharge the encumbrance expressly stated in
Decree No. 381928. Two transfer certificates of title
were issued: Transfer Certificate of Title No. T-1277, 6
issued in the name of the Province of Cagayan,
covering Lot 2472-B consisting of 100,000 square
meters and Transfer Certificate of Title No. T-1278, 7
issued in the name of the private respondents,
covering Lot 2472-A consisting of 6,997,921 square
meters.
On 19 May 1994, Bienvenida Taguiam Vda. De Dayag
and others filed with the Regional Office No. 2 of the
Department of Environment and Natural Resources
(DENR), Tuguegarao, Cagayan, a letter-petition
requesting the DENR to initiate the filing of an action
for the annulment of Decree No. 381928 on the
ground that the trial court did not have jurisdiction to
adjudicate a portion of the subject property which was
allegedly still classified as timber land at the time of
the issuance of Decree No. 381928. SEHTAC
The Regional Executive Director of the DENR created
an investigating team to conduct ground verification
and ocular inspection of the subject property.
The investigating team reported that:
A) The portion of Lot 2472 Cad-151 as shown in the
Plan prepared for spouses Carag, and covered under
LC Project 3-L of Tuguegarao, Cagayan, was found to
be still within the timberland area at the time of the
issuance of the Decree and O.C.T. of the spouses
Antonio Carag and Victoria Turingan, and the same
was only released as alienable and disposable on
February 22, 1982, as certified by USEC Jose G. Solis
of the NAMRIA on 27 May 1994.
B) Petitioner Bienvenida Taguiam Vda. De Dayag and
others have possessed and occupied by themselves
and thru their predecessors-in-interest the portion of
Lot 2472 Cad-151, covered by LC Project 3-L of LC
Map 2999, since time immemorial. 8
Thus, the investigating team claimed that "a portion
of Lot 2472 Cad-151" was "only released as alienable

4
and disposable on 22 February 1982".
In a Memorandum dated 9 September 1996, the Legal
Division of the Land Management Bureau
recommended to the Director of Lands that an action
for the cancellation of OCT No. 11585, as well as its
derivative titles, be filed with the proper court. The
Director of Lands approved the recommendation.
On 10 June 1998, or 68 years after the issuance of
Decree No. 381928, petitioner filed with the Court of
Appeals a complaint for annulment of judgment,
cancellation and declaration of nullity of titles 9 on
the ground that in 1930 the trial court had no
jurisdiction to adjudicate a portion of the subject
property, which portion consists of 2,640,000 square
meters (disputed portion). The disputed portion was
allegedly still classified as timber land at the time of
issuance of Decree No. 381928 and, therefore, was
not alienable and disposable until 22 February 1982
when the disputed portion was classified as alienable
and disposable.
On 19 October 1998, private respondents filed a
motion to dismiss. 10 Private respondents alleged
that petitioner failed to comply with Rule 47 of the
Rules of Court because the real ground for the
complaint was mistake, not lack of jurisdiction, and
that petitioner, as a party in the original proceedings,
could have availed of the ordinary remedies of new
trial, appeal, petition for relief or other appropriate
remedies but failed to do so. Private respondents
added that petitioner did not attach to the complaint
a certified true copy of the decision sought to be
annulled. Private respondents also maintained that
the complaint was barred by the doctrines of res
judicata and law of the case and by Section 38 of Act
No. 496. 11 Private respondents also stated that not
all the heirs of spouses Carag were brought before the
Court of Appeals for an effective resolution of the
case. Finally, private respondents claimed that the
real party in interest was not petitioner but a certain
Alfonso Bassig, who had an ax to grind against private
respondents. 12 DHEACI
On 3 March 1999, petitioner filed an amended
complaint for reversion, annulment of decree,
cancellation and declaration of nullity of titles. 13

5
no longer available;
The Ruling of the Court of Appeals
On 21 May 2001, the Court of Appeals dismissed the
complaint because of lack of jurisdiction over the
subject matter of the case. The Court of Appeals
declared:
The rule is clear that such judgments, final orders and
resolutions in civil actions which this court may annul
are those which the "ordinary remedies of new trial,
appeal, petition for relief or other appropriate
remedies are no longer available". The Amended
Complaint contains no such allegations which are
jurisdictional neither can such circumstances be
divined from its allegations. Furthermore, such actions
for Annulment may be based only on two (2) grounds:
extrinsic fraud and lack of jurisdiction. Neither ground
is alleged in the Amended Complaint which is for
Reversion/Annulment of Decree, Cancellation and
Declaration of Nullity of Titles. It merely alleges that
around 2,640,000 square meters of timberland area
within Lot 2472 Cad. 151, had been erroneously
included in the title of the Spouses Antonio Carag and
Victoria Turingan under Decree No. 381928 and O.C.T.
No. 11585 issued on June 2, 1930 and July 19, 1938,
respectively; that hence, such adjudication and/or
Decree and Title covering a timberland area is null
and void ab initio under the provisions of the 1935,
1973 and 1987 Constitutions.
Finally, it is clear that the issues raised in the
Amended Complaint as well as those in the Motion to
dismiss are factual in nature and should be threshed
out in the proper trial court in accordance with
Section 101 of the Public Land Act. 14 (Citations
omitted)
Petitioner filed a motion for reconsideration. In its 25
September 2002 Resolution, the Court of Appeals
denied the motion for reconsideration. IcSADC
Hence, this petition.
The Issues
Petitioner raises the following issues:
1. Whether the allegations of the complaint clearly
stated that the ordinary remedies of new trial, appeal,
petition for relief and other appropriate remedies are

2. Whether the amended complaint clearly alleged

the ground of lack of jurisdiction;
3. Whether the Court of Appeals may try the factual
issues raised in the amended complaint and in the
motion to dismiss;
4. Whether the then Court of First Instance of
Cagayan had jurisdiction to adjudicate a tract of
timberland in favor of respondent spouses Antonio
Carag and Victoria Turingan;
5. Whether the fact that the Director of Lands was a
party to the original proceedings changed the nature
of the land and granted jurisdiction to the then Court
of First Instance over the land; SAHaTc
6. Whether the doctrine of res judicata applies in this
case; and
7. Whether Section 38 of Act No. 496 is applicable in
this case.
The Ruling of the Court
While the Court of Appeals erred in dismissing the
complaint on procedural grounds, we will still deny
the petition because the complaint for annulment of
decree has no merit.
Petitioner Complied with Rule 47 of the Rules of Court
First, the Court of Appeals ruled that petitioner failed
to allege either of the grounds of extrinsic fraud or
lack of jurisdiction in the complaint for annulment of
decree. 15
We find otherwise. In its complaint and amended
complaint, petitioner stated:
11. In view of the fact that in 1930 or in 1938, only
the Executive Branch of the Government had the
authority and power to declassify or reclassify land of
the public domain, the Court did not, therefore, have
the power and authority to adjudicate in favor of the
spouses Antonio Carag and Victoria Turingan the said
tract of timberland, portion of the Lot 2472 Cad-151,

at the time of the issuance of the Decree and the

Original Certificate of Title of the said spouses; and
such adjudication and/or Decree and Title issued
covering the timberland area is null and void ab initio
considering the provisions of the 1935, 1973 and
1987 Philippine constitution.
xxx xxx xxx
15. The issuance of Decree No. 381928 and O.C.T. No.
11585 in the name of spouses Antonio Carag and
Victoria Turingan, and all the derivative titles thereto
in the name of the Heirs and said spouses, specifically
with respect to the inclusion thereto of timberland
area, by the then Court of First Instance (now the
Regional Trial Court), and the Register of Deeds of
Cagayan is patently illegal and erroneous for the
reason that said Court and/or the Register of Deeds of
Cagayan did not have any authority or jurisdiction to
decree or adjudicate the said timberland area of Lot
2472 Cad-151, consequently, the same are null and
void ab initio, and of no force and effect whatsoever.
16 (Emphasis supplied; citations omitted) CHDTEA

Petitioner clearly alleged in the complaint and

amended complaint that it was seeking to annul
Decree No. 381928 on the ground of the trial court's
lack of jurisdiction over the subject land, specifically
over the disputed portion, which petitioner
maintained was classified as timber land and was not
alienable and disposable.
Second, the Court of Appeals also dismissed the
complaint on the ground of petitioner's failure to
allege that the "ordinary remedies of new trial,
appeal, petition for relief or other appropriate
remedies are no longer available".
In Ancheta v. Ancheta, 17 we ruled:
In a case where a petition for annulment of judgment
or final order of the RTC filed under Rule 47 of the
Rules of Court is grounded on lack of jurisdiction over
the person of the defendant/respondent or over the
nature or subject of the action, the petitioner need

6
not allege in the petition that the ordinary remedy of
new trial or reconsideration of the final order or
judgment or appeal therefrom are no longer available
through no fault of her own. This is so because a
judgment rendered or final order issued by the RTC
without jurisdiction is null and void and may be
assailed any time either collaterally or in a direct
action or by resisting such judgment or final order in
any action or proceeding whenever it is invoked,
unless barred by laches. 18
Since petitioner's complaint is grounded on lack of
jurisdiction over the subject of the action, petitioner
need not allege that the ordinary remedies of new
trial, appeal, petition for relief or other appropriate
remedies are no longer available through no fault of
petitioner.
Third, the Court of Appeals ruled that the issues
raised in petitioner's complaint were factual in nature
and should be threshed out in the proper trial court in
accordance with Section 101 of the Public Land Act.
19
Section 6, Rule 47 of the Rules of Court provides:
SEC. 6. Procedure. The procedure in ordinary civil
cases shall be observed. Should a trial be necessary,
the reception of evidence may be referred to a
member of the court or a judge of a Regional Trial
Court.
Therefore, the Court of Appeals may try the factual
issues raised in the complaint for the complete and
proper determination of the case.
However, instead of remanding the complaint to the
Court of Appeals for further proceedings, we shall
decide the case on the merits.
Complaint for Annulment of Decree Has No Merit
Petitioner contends that the trial court had no
jurisdiction to adjudicate to spouses Carag the
disputed portion of the subject property. Petitioner
claims that the disputed portion was still classified as
timber land, and thus not alienable and disposable,
when Decree No. 381928 was issued in 1930. In
effect, petitioner admits that the adjacent 4,407,673

square meters of the subject property, outside of the

disputed portion, were alienable and disposable in
1930. Petitioner argues that in 1930 or in 1938, only
the Executive Branch of the Government, not the trial
courts, had the power to declassify or reclassify lands
of the public domain. IEAHca

issued in 1930 was Act No. 2874, 26 which provides:

Lack of jurisdiction, as a ground for annulment of

judgment, refers to either lack of jurisdiction over the
person of the defending party or over the subject
matter of the claim. 20 Jurisdiction over the subject
matter is conferred by law and is determined by the
statute in force at the time of the filing of the action.
21

(a) Alienable or disposable

Under the Spanish regime, all Crown lands were per

se alienable. In Aldecoa v. Insular Government, 22 we
ruled:
From the language of the foregoing provisions of law,
it is deduced that, with the exception of those
comprised within the mineral and timber zone, all
lands owned by the State or by the sovereign nation
are public in character, and per se alienable and,
provided they are not destined to the use of the
public in general or reserved by the Government in
accordance with law, they may be acquired by any
private or juridical person . . . 23 (Emphasis supplied)
Thus, unless specifically declared as mineral or forest
zone, or reserved by the State for some public
purpose in accordance with law, all Crown lands were
deemed alienable.
In this case, petitioner has not alleged that the
disputed portion had been declared as mineral or
forest zone, or reserved for some public purpose in
accordance with law, during the Spanish regime or
thereafter. The land classification maps 24 petitioner
attached to the complaint also do not show that in
1930 the disputed portion was part of the forest zone
or reserved for some public purpose. The certification
of the National Mapping and Resources Information
Authority, dated 27 May 1994, contained no
statement that the disputed portion was declared and
classified as timber land. 25 HcDSaT
The law prevailing when Decree No. 381928 was

SECTION 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

(b) Timber and

(c) Mineral lands
and may at any time and in a like manner transfer
such lands from one class to another, for the purposes
of their government and disposition.
Petitioner has not alleged that the Governor-General
had declared the disputed portion of the subject
property timber or mineral land pursuant to Section 6
of Act No. 2874.
It is true that Section 8 of Act No. 2874 opens to
disposition only those lands which have been declared
alienable or disposable. Section 8 provides:
SECTION 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, not 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.
However, the Governor-General may, for reasons of
public interest, declare lands of the public domain
open to disposition before the same have had their
boundaries established or been surveyed, or may, for
the same reasons, suspend their concession or
disposition by proclamation duly published or by Act
of the Legislature. (Emphasis supplied) IEHDAT
However, Section 8 provides that lands which are
already private lands, as well as lands on which a
private claim may be made under any law, are not
covered by the classification requirement in Section 8

7
for purposes of disposition. This exclusion in Section 8
recognizes that during the Spanish regime, Crown
lands were per se alienable unless falling under
timber or mineral zones, or otherwise reserved for
some public purpose in accordance with law.
Clearly, with respect to lands excluded from the
classification requirement in Section 8, trial courts
had jurisdiction to adjudicate these lands to private
parties. Petitioner has not alleged that the disputed
portion had not become private property prior to the
enactment of Act No. 2874. Neither has petitioner
alleged that the disputed portion was not land on
which a private right may be claimed under any
existing law at that time.
In Republic of the Philippines v. Court of Appeals, 27
the Republic sought to annul the judgment of the
Court of First Instance (CFI) of Rizal, sitting as a land
registration court, because when the application for
land registration was filed in 1927 the land was
alleged to be unclassified forest land. The Republic
also alleged that the CFI of Rizal had no jurisdiction to
determine whether the land applied for was forest or
agricultural land since the authority to classify lands
was then vested in the Director of Lands as provided
in Act Nos. 926 28 and 2874. The Court ruled:
We are inclined to agree with the respondent that it is
legally doubtful if the authority of the Governor
General to declare lands as alienable and disposable
would apply to lands that have become private
property or lands that have been impressed with a
private right authorized and recognized by Act 2874
or any valid law. By express declaration of Section 45
(b) of Act 2874 which is quoted above, those who
have been in open, continuous, exclusive and
notorious possession and occupation of agricultural
lands of the public domain under a bona fide claim of
acquisition of ownership since July 26, 1894 may file
an application with the Court of First Instance of the
province where the land is located for confirmation of
their claims and these applicants shall be conclusively
presumed to have performed all the conditions
essential to a government grant and shall be entitled
to a certificate of title. When the land registration
court issued a decision for the issuance of a decree

which was the basis of an original certificate of title to

the land, the court had already made a determination
that the land was agricultural and that the applicant
had proven that he was in open and exclusive
possession of the subject land for the prescribed
number of years. It was the land registration court
which had the jurisdiction to determine whether the
land applied for was agricultural, forest or timber
taking into account the proof or evidence in each
particular case. (Emphasis supplied) CSIHDA
As with this case, when the trial court issued the
decision for the issuance of Decree No. 381928 in
1930, the trial court had jurisdiction to determine
whether the subject property, including the disputed
portion, applied for was agricultural, timber or mineral
land. The trial court determined that the land was
agricultural and that spouses Carag proved that they
were entitled to the decree and a certificate of title.
The government, which was a party in the original
proceedings in the trial court as required by law, did
not appeal the decision of the trial court declaring the
subject land as agricultural. Since the trial court had
jurisdiction over the subject matter of the action, its
decision rendered in 1930, or 78 years ago, is now
final and beyond review.

The finality of the trial court's decision is further

recognized in Section 1, Article XII of the 1935
Constitution which provides:
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.
(Emphasis supplied)

Thus, even as the 1935 Constitution declared that all

agricultural, timber and mineral lands of the public
domain belong to the State, it recognized that these
lands were "subject to any existing right, grant, lease
or concession at the time of the inauguration of the
Government established under this Constitution". 29
When the Commonwealth Government was
established under the 1935 Constitution, spouses
Carag had already an existing right to the subject
land, including the disputed portion, pursuant to
Decree No. 381928 issued in 1930 by the trial court.
IaAEHD
WHEREFORE, we DENY the petition. We DISMISS
petitioner Republic of the Philippines' complaint for
reversion, annulment of decree, cancellation and
declaration of nullity of titles for lack of merit.
SO ORDERED.
Puno, C.J., Carpio, Austria-Martinez, * Corona and
Leonardo-de Castro, JJ., concur.
||| (Republic v. Court of Appeals, G.R. No. 155450,
[August 6, 2008], 583 PHIL 157-174)

EN BANC

DECISION

[G.R. No. 167707. October 8, 2008.]

REYES, R.T., J p:

THE SECRETARY OF THE DEPARTMENT

OF ENVIRONMENT AND NATURAL
RESOURCES, THE REGIONAL EXECUTIVE
DIRECTOR, DENR-REGION VI, REGIONAL
TECHNICAL DIRECTOR FOR LANDS,
LANDS MANAGEMENT BUREAU, REGION
VI PROVINCIAL ENVIRONMENT AND
NATURAL RESOURCES OFFICER OF
KALIBO, AKLAN, REGISTER OF DEEDS,
DIRECTOR OF LAND REGISTRATION
AUTHORITY, DEPARTMENT OF TOURISM
SECRETARY, DIRECTOR OF PHILIPPINE
TOURISM AUTHORITY, petitioners, vs.
MAYOR JOSE S. YAP, LIBERTAD
TALAPIAN, MILA Y. SUMNDAD, and
ANICETO YAP, in their behalf and in behalf of
all those similarly situated, respondents.

At stake in these consolidated cases is the right of the

present occupants of Boracay Island to secure titles
over their occupied lands.

[G.R. No. 173775. October 8, 2008.]

DR. ORLANDO SACAY and WILFREDO
GELITO, joined by THE LANDOWNERS OF
BORACAY SIMILARLY SITUATED NAMED
IN A LIST, ANNEX "A" OF THIS PETITION,
petitioners, vs. THE SECRETARY OF THE
DEPARTMENT OF ENVIRONMENT AND
NATURAL RESOURCES, THE REGIONAL
TECHNICAL DIRECTOR FOR LANDS,
LANDS MANAGEMENT BUREAU, REGION
VI, PROVINCIAL ENVIRONMENT AND
NATURAL RESOURCES OFFICER,
KALIBO, AKLAN, respondents.

There are two consolidated petitions. The first is G.R.

No. 167707, a petition for review on certiorari of the
Decision 1 of the Court of Appeals (CA) affirming that
2 of the Regional Trial Court (RTC) in Kalibo, Aklan,
which granted the petition for declaratory relief filed
by respondents-claimants Mayor Jose Yap, et al. and
ordered the survey of Boracay for titling purposes.
The second is G.R. No. 173775, a petition for
prohibition, mandamus, and nullification of
Proclamation No. 1064 3 issued by President Gloria
Macapagal-Arroyo classifying Boracay into reserved
forest and agricultural land.
The Antecedents
G.R. No. 167707
Boracay Island in the Municipality of Malay, Aklan,
with its powdery white sand beaches and warm
crystalline waters, is reputedly a premier Philippine
tourist destination. The island is also home to 12,003
inhabitants 4 who live in the bone-shaped island's
three barangays. 5
On April 14, 1976, the Department of Environment
and Natural Resources (DENR) approved the National
Reservation Survey of Boracay Island, 6 which
identified several lots as being occupied or claimed by
named persons. 7
On November 10, 1978, then President Ferdinand
Marcos issued Proclamation No. 1801 8 declaring
Boracay Island, among other islands, caves and
peninsulas in the Philippines, as tourist zones and
marine reserves under the administration of the
Philippine Tourism Authority (PTA). President Marcos
later approved the issuance of PTA Circular 3-82 9
dated September 3, 1982, to implement Proclamation
No. 1801. CTHaSD

Claiming that Proclamation No. 1801 and PTA Circular

No 3-82 precluded them from filing an application for
judicial confirmation of imperfect title or survey of
land for titling purposes, respondents-claimants
Mayor Jose S. Yap, Jr., Libertad Talapian, Mila Y.
Sumndad, and Aniceto Yap filed a petition for
declaratory relief with the RTC in Kalibo, Aklan.
In their petition, respondents-claimants alleged that
Proclamation No. 1801 and PTA Circular No. 3-82
raised doubts on their right to secure titles over their
occupied lands. They declared that they themselves,
or through their predecessors-in-interest, had been in
open, continuous, exclusive, and notorious possession
and occupation in Boracay since June 12, 1945, or
earlier since time immemorial. They declared their
lands for tax purposes and paid realty taxes on them.
10
Respondents-claimants posited that Proclamation No.
1801 and its implementing Circular did not place
Boracay beyond the commerce of man. Since the
Island was classified as a tourist zone, it was
susceptible of private ownership. Under Section 48 (b)
of Commonwealth Act (CA) No. 141, otherwise known
as the Public Land Act, they had the right to have the
lots registered in their names through judicial
confirmation of imperfect titles.
The Republic, through the Office of the Solicitor
General (OSG), opposed the petition for declaratory
relief. The OSG countered that Boracay Island was an
unclassified land of the public domain. It formed part
of the mass of lands classified as "public forest",
which was not available for disposition pursuant to
Section 3 (a) of Presidential Decree (PD) No. 705 or
the Revised Forestry Code, 11 as amended.
The OSG maintained that respondents-claimants'
reliance on PD No. 1801 and PTA Circular No. 3-82 was
misplaced. Their right to judicial confirmation of title
was governed by CA No. 141 and PD No. 705. Since
Boracay Island had not been classified as alienable
and disposable, whatever possession they had cannot
ripen into ownership. ASIETa
During pre-trial, respondents-claimants and the OSG

stipulated on the following facts: (1) respondentsclaimants were presently in possession of parcels of
land in Boracay Island; (2) these parcels of land were
planted with coconut trees and other natural growing
trees; (3) the coconut trees had heights of more or
less twenty (20) meters and were planted more or
less fifty (50) years ago; and (4) respondentsclaimants declared the land they were occupying for
tax purposes. 12
The parties also agreed that the principal issue for
resolution was purely legal: whether Proclamation No.
1801 posed any legal hindrance or impediment to the
titling of the lands in Boracay. They decided to forego
with the trial and to submit the case for resolution
upon submission of their respective memoranda. 13
The RTC took judicial notice 14 that certain parcels of
land in Boracay Island, more particularly Lots 1 and
30, Plan PSU-5344, were covered by Original
Certificate of Title No. 19502 (RO 2222) in the name
of the Heirs of Ciriaco S. Tirol. These lots were
involved in Civil Case Nos. 5222 and 5262 filed before
the RTC of Kalibo, Aklan. 15 The titles were issued on
August 7, 1933. 16
RTC and CA Dispositions
On July 14, 1999, the RTC rendered a decision in favor
of respondents-claimants, with a fallo reading:
WHEREFORE, in view of the foregoing, the Court
declares that Proclamation No. 1801 and PTA Circular
No. 3-82 pose no legal obstacle to the petitioners and
those similarly situated to acquire title to their lands
in Boracay, in accordance with the applicable laws
and in the manner prescribed therein; and to have
their lands surveyed and approved by respondent
Regional Technical Director of Lands as the approved
survey does not in itself constitute a title to the land.
CITcSH

or could not be the subject of disposition. 18 The

Circular itself recognized private ownership of lands.
19 The trial court cited Sections 87 20 and 53 21 of
the Public Land Act as basis for acknowledging private
ownership of lands in Boracay and that only those
forested areas in public lands were declared as part of
the forest reserve. 22
The OSG moved for reconsideration but its motion
was denied. 23 The Republic then appealed to the CA.
On December 9, 2004, the appellate court affirmed in
toto the RTC decision, disposing as follows: cADEHI
WHEREFORE, in view of the foregoing premises,
judgment is hereby rendered by us DENYING the
appeal filed in this case and AFFIRMING the decision
of the lower court. 24
The CA held that respondents-claimants could not be
prejudiced by a declaration that the lands they
occupied since time immemorial were part of a forest
reserve.
Again, the OSG sought reconsideration but it was
similarly denied. 25 Hence, the present petition under
Rule 45.
G.R. No. 173775
On May 22, 2006, during the pendency of G.R. No.
167707, President Gloria Macapagal-Arroyo issued
Proclamation No. 1064 26 classifying Boracay Island
into four hundred (400) hectares of reserved forest
land (protection purposes) and six hundred twentyeight and 96/100 (628.96) hectares of agricultural
land (alienable and disposable). The Proclamation
likewise provided for a fifteen-meter buffer zone on
each side of the centerline of roads and trails,
reserved for right-of-way and which shall form part of
the area reserved for forest land protection purposes.
ITECSH

SO ORDERED. 17
The RTC upheld respondents-claimants' right to have
their occupied lands titled in their name. It ruled that
neither Proclamation No. 1801 nor PTA Circular No. 382 mentioned that lands in Boracay were inalienable

On August 10, 2006, petitioners-claimants Dr. Orlando

Sacay, 27 Wilfredo Gelito, 28 and other landowners 29
in Boracay filed with this Court an original petition for
prohibition, mandamus, and nullification of
Proclamation No. 1064. 30 They allege that the

9
Proclamation infringed on their "prior vested rights"
over portions of Boracay. They have been in continued
possession of their respective lots in Boracay since
time immemorial. They have also invested billions of
pesos in developing their lands and building
internationally renowned first class resorts on their
lots. 31
Petitioners-claimants contended that there is no need
for a proclamation reclassifying Boracay into
agricultural land. Being classified as neither mineral
nor timber land, the island is deemed agricultural
pursuant to the Philippine Bill of 1902 and Act No.
926, known as the first Public Land Act. 32 Thus, their
possession in the concept of owner for the required
period entitled them to judicial confirmation of
imperfect title.
Opposing the petition, the OSG argued that
petitioners-claimants do not have a vested right over
their occupied portions in the island. Boracay is an
unclassified public forest land pursuant to Section 3
(a) of PD No. 705. Being public forest, the claimed
portions of the island are inalienable and cannot be
the subject of judicial confirmation of imperfect title. It
is only the executive department, not the courts,
which has authority to reclassify lands of the public
domain into alienable and disposable lands. There is a
need for a positive government act in order to release
the lots for disposition. HEcaIC

On November 21, 2006, this Court ordered the

consolidation of the two petitions as they principally
involve the same issues on the land classification of
Boracay Island. 33
Issues
G.R. No. 167707
The OSG raises the lone issue of whether
Proclamation No. 1801 and PTA Circular No. 3-82 pose
any legal obstacle for respondents, and all those
similarly situated, to acquire title to their occupied
lands in Boracay Island. 34
G.R. No. 173775

Petitioners-claimants hoist five (5) issues, namely:

BORACAY? 35 (Underscoring supplied)

I.

In capsule, the main issue is whether private

claimants (respondents-claimants in G.R. No. 167707
and petitioners-claimants in G.R. No. 173775) have a
right to secure titles over their occupied portions in
Boracay. The twin petitions pertain to their right, if
any, to judicial confirmation of imperfect title under
CA No. 141, as amended. They do not involve their
right to secure title under other pertinent laws.
DCIEac

AT THE TIME OF THE ESTABLISHED POSSESSION OF

PETITIONERS IN CONCEPT OF OWNER OVER THEIR
RESPECTIVE AREAS IN BORACAY, SINCE TIME
IMMEMORIAL OR AT THE LATEST SINCE 30 YRS. PRIOR
TO THE FILING OF THE PETITION FOR DECLARATORY
RELIEF ON NOV. 19, 1997, WERE THE AREAS
OCCUPIED BY THEM PUBLIC AGRICULTURAL LANDS AS
DEFINED BY LAWS THEN ON JUDICIAL CONFIRMATION
OF IMPERFECT TITLES OR PUBLIC FOREST AS DEFINED
BY SEC. 3a, PD 705? HcTSDa
II.
HAVE PETITIONERS OCCUPANTS ACQUIRED PRIOR
VESTED RIGHT OF PRIVATE OWNERSHIP OVER THEIR
OCCUPIED PORTIONS OF BORACAY LAND, DESPITE
THE FACT THAT THEY HAVE NOT APPLIED YET FOR
JUDICIAL CONFIRMATION OF IMPERFECT TITLE?
III.
IS THE EXECUTIVE DECLARATION OF THEIR AREAS AS
ALIENABLE AND DISPOSABLE UNDER SEC 6, CA 141
[AN] INDISPENSABLE PRE-REQUISITE FOR
PETITIONERS TO OBTAIN TITLE UNDER THE TORRENS
SYSTEM?
IV.
IS THE ISSUANCE OF PROCLAMATION 1064 ON MAY
22, 2006, VIOLATIVE OF THE PRIOR VESTED RIGHTS
TO PRIVATE OWNERSHIP OF PETITIONERS OVER THEIR
LANDS IN BORACAY, PROTECTED BY THE DUE
PROCESS CLAUSE OF THE CONSTITUTION OR IS
PROCLAMATION 1064 CONTRARY TO SEC. 8, CA 141,
OR SEC. 4(a) OF RA 6657. IHCacT
V.
CAN RESPONDENTS BE COMPELLED BY MANDAMUS
TO ALLOW THE SURVEY AND TO APPROVE THE
SURVEY PLANS FOR PURPOSES OF THE APPLICATION
FOR TITLING OF THE LANDS OF PETITIONERS IN

Our Ruling
Regalian Doctrine and power of the executive to
reclassify lands of the public domain
Private claimants rely on three (3) laws and executive
acts in their bid for judicial confirmation of imperfect
title, namely: (a) Philippine Bill of 1902 36 in relation
to Act No. 926, later amended and/or superseded by
Act No. 2874 and CA No. 141; 37 (b) Proclamation No.
1801 38 issued by then President Marcos; and (c)
Proclamation No. 1064 39 issued by President Gloria
Macapagal-Arroyo. We shall proceed to determine
their rights to apply for judicial confirmation of
imperfect title under these laws and executive acts.
But first, a peek at the Regalian principle and the
power of the executive to reclassify lands of the public
domain.
The 1935 Constitution classified lands of the public
domain into agricultural, forest or timber. 40
Meanwhile, the 1973 Constitution provided the
following divisions: agricultural, industrial or
commercial, residential, resettlement, mineral, timber
or forest and grazing lands, and such other classes as
may be provided by law, 41 giving the government
great leeway for classification. 42 Then the 1987
Constitution reverted to the 1935 Constitution
classification with one addition: national parks. 43 Of
these, only agricultural lands may be alienated. 44
Prior to Proclamation No. 1064 of May 22, 2006,
Boracay Island had never been expressly and
administratively classified under any of these grand
divisions. Boracay was an unclassified land of the
public domain. cCTIaS

10
The Regalian Doctrine dictates that all lands of the
public domain belong to the State, that the State is
the source of any asserted right to ownership of land
and charged with the conservation of such patrimony.
45 The doctrine has been consistently adopted under
the 1935, 1973, and 1987 Constitutions. 46
All lands not otherwise appearing to be clearly within
private ownership are presumed to belong to the
State. 47 Thus, all lands that have not been acquired
from the government, either by purchase or by grant,
belong to the State as part of the inalienable public
domain. 48 Necessarily, it is up to the State to
determine if lands of the public domain will be
disposed of for private ownership. The government,
as the agent of the state, is possessed of the plenary
power as the persona in law to determine who shall
be the favored recipients of public lands, as well as
under what terms they may be granted such privilege,
not excluding the placing of obstacles in the way of
their exercise of what otherwise would be ordinary
acts of ownership. 49
Our present land law traces its roots to the Regalian
Doctrine. Upon the Spanish conquest of the
Philippines, ownership of all lands, territories and
possessions in the Philippines passed to the Spanish
Crown. 50 The Regalian doctrine was first introduced
in the Philippines through the Laws of the Indies and
the Royal Cedulas, which laid the foundation that "all
lands that were not acquired from the Government,
either by purchase or by grant, belong to the public
domain." 51
The Laws of the Indies was followed by the Ley
Hipotecaria or the Mortgage Law of 1893. The Spanish
Mortgage Law provided for the systematic registration
of titles and deeds as well as possessory claims. 52
The Royal Decree of 1894 or the Maura Law 53 partly
amended the Spanish Mortgage Law and the Laws of
the Indies. It established possessory information as
the method of legalizing possession of vacant Crown
land, under certain conditions which were set forth in
said decree. 54 Under Section 393 of the Maura Law,
an informacion posesoria or possessory information
title, 55 when duly inscribed in the Registry of

Property, is converted into a title of ownership only

after the lapse of twenty (20) years of uninterrupted
possession which must be actual, public, and adverse,
56 from the date of its inscription. 57 However,
possessory information title had to be perfected one
year after the promulgation of the Maura Law, or until
April 17, 1895. Otherwise, the lands would revert to
the State. 58
In sum, private ownership of land under the Spanish
regime could only be founded on royal concessions
which took various forms, namely: (1) titulo real or
royal grant; (2) concesion especial or special grant;
(3) composicion con el estado or adjustment title; (4)
titulo de compra or title by purchase; and (5)
informacion posesoria or possessory information title.
59
The first law governing the disposition of public lands
in the Philippines under American rule was embodied
in the Philippine Bill of 1902. 60 By this law, lands of
the public domain in the Philippine Islands were
classified into three (3) grand divisions, to wit:
agricultural, mineral, and timber or forest lands. 61
The act provided for, among others, the disposal of
mineral lands by means of absolute grant (freehold
system) and by lease (leasehold system). 62 It also
provided the definition by exclusion of "agricultural
public lands". 63 Interpreting the meaning of
"agricultural lands" under the Philippine Bill of 1902,
the Court declared in Mapa v. Insular Government: 64
THADEI
. . . In other words, that the phrase "agricultural land"
as used in Act No. 926 means those public lands
acquired from Spain which are not timber or mineral
lands. . . . 65 (Emphasis Ours)
On February 1, 1903, the Philippine Legislature
passed Act No. 496, otherwise known as the Land
Registration Act. The act established a system of
registration by which recorded title becomes absolute,
indefeasible, and imprescriptible. This is known as the
Torrens system. 66
Concurrently, on October 7, 1903, the Philippine
Commission passed Act No. 926, which was the first

Public Land Act. The Act introduced the homestead

system and made provisions for judicial and
administrative confirmation of imperfect titles and for
the sale or lease of public lands. It permitted
corporations regardless of the nationality of persons
owning the controlling stock to lease or purchase
lands of the public domain. 67 Under the Act, open,
continuous, exclusive, and notorious possession and
occupation of agricultural lands for the next ten (10)
years preceding July 26, 1904 was sufficient for
judicial confirmation of imperfect title. 68
On November 29, 1919, Act No. 926 was superseded
by Act No. 2874, otherwise known as the second
Public Land Act. This new, more comprehensive law
limited the exploitation of agricultural lands to
Filipinos and Americans and citizens of other countries
which gave Filipinos the same privileges. For judicial
confirmation of title, possession and occupation en
concepto dueo since time immemorial, or since July
26, 1894, was required. 69
After the passage of the 1935 Constitution, CA No.
141 amended Act No. 2874 on December 1, 1936. To
this day, CA No. 141, as amended, remains as the
existing general law governing the classification and
disposition of lands of the public domain other than
timber and mineral lands, 70 and privately owned
lands which reverted to the State. 71
Section 48 (b) of CA No. 141 retained the requirement
under Act No. 2874 of possession and occupation of
lands of the public domain since time immemorial or
since July 26, 1894. However, this provision was
superseded by Republic Act (RA) No. 1942, 72 which
provided for a simple thirty-year prescriptive period
for judicial confirmation of imperfect title. The
provision was last amended by PD No. 1073, 73 which
now provides for possession and occupation of the
land applied for since June 12, 1945, or earlier. 74

The issuance of PD No. 892 75 on February 16, 1976

discontinued the use of Spanish titles as evidence in
land registration proceedings. 76 Under the decree,
all holders of Spanish titles or grants should apply for

11
registration of their lands under Act No. 496 within six
(6) months from the effectivity of the decree on
February 16, 1976. Thereafter, the recording of all
unregistered lands 77 shall be governed by Section
194 of the Revised Administrative Code, as amended
by Act No. 3344. TAcSaC
On June 11, 1978, Act No. 496 was amended and
updated by PD No. 1529, known as the Property
Registration Decree. It was enacted to codify the
various laws relative to registration of property. 78 It
governs registration of lands under the Torrens
system as well as unregistered lands, including
chattel mortgages. 79
A positive act declaring land as alienable and
disposable is required. In keeping with the
presumption of State ownership, the Court has time
and again emphasized that there must be a positive
act of the government, such as an official
proclamation, 80 declassifying inalienable public land
into disposable land for agricultural or other purposes.
81 In fact, Section 8 of CA No. 141 limits alienable or
disposable lands only to those lands which have been
"officially delimited and classified." 82
The burden of proof in overcoming the presumption of
State ownership of the lands of the public domain is
on the person applying for registration (or claiming
ownership), who must prove that the land subject of
the application is alienable or disposable. 83 To
overcome this presumption, incontrovertible evidence
must be established that the land subject of the
application (or claim) is alienable or disposable. 84
There must still be a positive act declaring land of the
public domain as alienable and disposable. To prove
that the land subject of an application for registration
is alienable, the applicant must establish the
existence of a positive act of the government such as
a presidential proclamation or an executive order; an
administrative action; investigation reports of Bureau
of Lands investigators; and a legislative act or a
statute. 85 The applicant may also secure a
certification from the government that the land
claimed to have been possessed for the required
number of years is alienable and disposable. 86
aITECA

12
In the case at bar, no such proclamation, executive
order, administrative action, report, statute, or
certification was presented to the Court. The records
are bereft of evidence showing that, prior to 2006, the
portions of Boracay occupied by private claimants
were subject of a government proclamation that the
land is alienable and disposable. Absent such wellnigh incontrovertible evidence, the Court cannot
accept the submission that lands occupied by private
claimants were already open to disposition before
2006. Matters of land classification or reclassification
cannot be assumed. They call for proof. 87
Ankron and de Aldecoa did not make the whole of
Boracay Island, or portions of it, agricultural lands.
Private claimants posit that Boracay was already an
agricultural land pursuant to the old cases Ankron v.
Government of the Philippine Islands (1919) 88 and
de Aldecoa v. The Insular Government (1909). 89
These cases were decided under the provisions of the
Philippine Bill of 1902 and Act No. 926. There is a
statement in these old cases that "in the absence of
evidence to the contrary, that in each case the lands
are agricultural lands until the contrary is shown." 90
Private claimants' reliance on Ankron and de Aldecoa
is misplaced. These cases did not have the effect of
converting the whole of Boracay Island or portions of
it into agricultural lands. It should be stressed that the
Philippine Bill of 1902 and Act No. 926 merely
provided the manner through which land registration
courts would classify lands of the public domain.
Whether the land would be classified as timber,
mineral, or agricultural depended on proof presented
in each case.
Ankron and De Aldecoa were decided at a time when
the President of the Philippines had no power to
classify lands of the public domain into mineral,
timber, and agricultural. At that time, the courts were
free to make corresponding classifications in
justiciable cases, or were vested with implicit power
to do so, depending upon the preponderance of the
evidence. 91 This was the Court's ruling in Heirs of
the Late Spouses Pedro S. Palanca and Soterranea
Rafols Vda. de Palanca v. Republic, 92 in which it

stated, through Justice Adolfo Azcuna, viz.:

long-entrenched Regalian doctrine. aESIDH

. . . Petitioners furthermore insist that a particular land

need not be formally released by an act of the
Executive before it can be deemed open to private
ownership, citing the cases of Ramos v. Director of
Lands and Ankron v. Government of the Philippine
Islands. HCDaAS

The presumption in Ankron and De Aldecoa attaches

only to land registration cases brought under the
provisions of Act No. 926, or more specifically those
cases dealing with judicial and administrative
confirmation of imperfect titles. The presumption
applies to an applicant for judicial or administrative
conformation of imperfect title under Act No. 926. It
certainly cannot apply to landowners, such as private
claimants or their predecessors-in-interest, who failed
to avail themselves of the benefits of Act No. 926. As
to them, their land remained unclassified and, by
virtue of the Regalian doctrine, continued to be owned
by the State.

xxx xxx xxx

Petitioner's reliance upon Ramos v. Director of Lands
and Ankron v. Government is misplaced. These cases
were decided under the Philippine Bill of 1902 and the
first Public Land Act No. 926 enacted by the Philippine
Commission on October 7, 1926, under which there
was no legal provision vesting in the Chief Executive
or President of the Philippines the power to classify
lands of the public domain into mineral, timber and
agricultural so that the courts then were free to make
corresponding classifications in justiciable cases, or
were vested with implicit power to do so, depending
upon the preponderance of the evidence. 93
To aid the courts in resolving land registration cases
under Act No. 926, it was then necessary to devise a
presumption on land classification. Thus evolved the
dictum in Ankron that "the courts have a right to
presume, in the absence of evidence to the contrary,
that in each case the lands are agricultural lands until
the contrary is shown." 94
But We cannot unduly expand the presumption in
Ankron and De Aldecoa to an argument that all lands
of the public domain had been automatically
reclassified as disposable and alienable agricultural
lands. By no stretch of imagination did the
presumption convert all lands of the public domain
into agricultural lands.
If We accept the position of private claimants, the
Philippine Bill of 1902 and Act No. 926 would have
automatically made all lands in the Philippines, except
those already classified as timber or mineral land,
alienable and disposable lands. That would take these
lands out of State ownership and worse, would be
utterly inconsistent with and totally repugnant to the

In any case, the assumption in Ankron and De Aldecoa

was not absolute. Land classification was, in the end,
dependent on proof. If there was proof that the land
was better suited for non-agricultural uses, the courts
could adjudge it as a mineral or timber land despite
the presumption. In Ankron, this Court stated:
In the case of Jocson vs. Director of Forestry (supra),
the Attorney-General admitted in effect that whether
the particular land in question belongs to one class or
another is a question of fact. The mere fact that a
tract of land has trees upon it or has mineral within it
is not of itself sufficient to declare that one is forestry
land and the other, mineral land. There must be some
proof of the extent and present or future value of the
forestry and of the minerals. While, as we have just
said, many definitions have been given for
"agriculture", "forestry", and "mineral" lands, and that
in each case it is a question of fact, we think it is safe
to say that in order to be forestry or mineral land the
proof must show that it is more valuable for the
forestry or the mineral which it contains than it is for
agricultural purposes. (Sec. 7, Act No. 1148.) It is not
sufficient to show that there exists some trees upon
the land or that it bears some mineral. Land may be
classified as forestry or mineral today, and, by reason
of the exhaustion of the timber or mineral, be
classified as agricultural land tomorrow. And viceversa, by reason of the rapid growth of timber or the
discovery of valuable minerals, lands classified as
agricultural today may be differently classified

tomorrow. Each case must be decided upon the proof

in that particular case, having regard for its present or
future value for one or the other purposes. We
believe, however, considering the fact that it is a
matter of public knowledge that a majority of the
lands in the Philippine Islands are agricultural lands
that the courts have a right to presume, in the
absence of evidence to the contrary, that in each case
the lands are agricultural lands until the contrary is
shown. Whatever the land involved in a particular
land registration case is forestry or mineral land must,
therefore, be a matter of proof. Its superior value for
one purpose or the other is a question of fact to be
settled by the proof in each particular case. The fact
that the land is a manglar [mangrove swamp] is not
sufficient for the courts to decide whether it is
agricultural, forestry, or mineral land. It may
perchance belong to one or the other of said classes
of land. The Government, in the first instance, under
the provisions of Act No. 1148, may, by reservation,
decide for itself what portions of public land shall be
considered forestry land, unless private interests have
intervened before such reservation is made. In the
latter case, whether the land is agricultural, forestry,
or mineral, is a question of proof. Until private
interests have intervened, the Government, by virtue
of the terms of said Act (No. 1148), may decide for
itself what portions of the "public domain" shall be set
aside and reserved as forestry or mineral land.
(Ramos vs. Director of Lands, 39 Phil. 175; Jocson vs.
Director of Forestry, supra) 95 (Emphasis ours)
ACSaHc

Since 1919, courts were no longer free to determine

the classification of lands from the facts of each case,
except those that have already became private lands.
96 Act No. 2874, promulgated in 1919 and
reproduced in Section 6 of CA No. 141, gave the
Executive Department, through the President, the
exclusive prerogative to classify or reclassify public
lands into alienable or disposable, mineral or forest.
96-a Since then, courts no longer had the authority,
whether express or implied, to determine the
classification of lands of the public domain. 97

Here, private claimants, unlike the Heirs of Ciriaco

Tirol who were issued their title in 1933, 98 did not
present a justiciable case for determination by the
land registration court of the property's land
classification. Simply put, there was no opportunity
for the courts then to resolve if the land the Boracay
occupants are now claiming were agricultural lands.
When Act No. 926 was supplanted by Act No. 2874 in
1919, without an application for judicial confirmation
having been filed by private claimants or their
predecessors-in-interest, the courts were no longer
authorized to determine the property's land
classification. Hence, private claimants cannot bank
on Act No. 926.
We note that the RTC decision 99 in G.R. No. 167707
mentioned Krivenko v. Register of Deeds of Manila,
100 which was decided in 1947 when CA No. 141,
vesting the Executive with the sole power to classify
lands of the public domain was already in effect.
Krivenko cited the old cases Mapa v. Insular
Government, 101 De Aldecoa v. The Insular
Government, 102 and Ankron v. Government of the
Philippine Islands. 103
Krivenko, however, is not controlling here because it
involved a totally different issue. The pertinent issue
in Krivenko was whether residential lots were included
in the general classification of agricultural lands; and
if so, whether an alien could acquire a residential lot.
This Court ruled that as an alien, Krivenko was
prohibited by the 1935 Constitution 104 from
acquiring agricultural land, which included residential
lots. Here, the issue is whether unclassified lands of
the public domain are automatically deemed
agricultural. ASIETa
Notably, the definition of "agricultural public lands"
mentioned in Krivenko relied on the old cases decided
prior to the enactment of Act No. 2874, including
Ankron and De Aldecoa. 105 As We have already
stated, those cases cannot apply here, since they
were decided when the Executive did not have the
authority to classify lands as agricultural, timber, or
mineral.
Private claimants' continued possession under Act No.

13
926 does not create a presumption that the land is
alienable. Private claimants also contend that their
continued possession of portions of Boracay Island for
the requisite period of ten (10) years under Act No.
926 106 ipso facto converted the island into private
ownership. Hence, they may apply for a title in their
name. EHSADc
A similar argument was squarely rejected by the Court
in Collado v. Court of Appeals. 107 Collado, citing the
separate opinion of now Chief Justice Reynato S. Puno
in Cruz v. Secretary of Environment and Natural
Resources, 107-a ruled:
"Act No. 926, the first Public Land Act, was passed in
pursuance of the provisions of the Philippine Bill of
1902. The law governed the disposition of lands of the
public domain. It prescribed rules and regulations for
the homesteading, selling and leasing of portions of
the public domain of the Philippine Islands, and
prescribed the terms and conditions to enable persons
to perfect their titles to public lands in the Islands. It
also provided for the "issuance of patents to certain
native settlers upon public lands", for the
establishment of town sites and sale of lots therein,
for the completion of imperfect titles, and for the
cancellation or confirmation of Spanish concessions
and grants in the Islands". In short, the Public Land
Act operated on the assumption that title to public
lands in the Philippine Islands remained in the
government; and that the government's title to public
land sprung from the Treaty of Paris and other
subsequent treaties between Spain and the United
States. The term "public land" referred to all lands of
the public domain whose title still remained in the
government and are thrown open to private
appropriation and settlement, and excluded the
patrimonial property of the government and the friar
lands."
Thus, it is plain error for petitioners to argue that
under the Philippine Bill of 1902 and Public Land Act
No. 926, mere possession by private individuals of
lands creates the legal presumption that the lands are
alienable and disposable. 108 (Emphasis Ours)
Except for lands already covered by existing titles,

Boracay was an unclassified land of the public domain

prior to Proclamation No. 1064. Such unclassified
lands are considered public forest under PD No. 705.
The DENR 109 and the National Mapping and
Resource Information Authority 110 certify that
Boracay Island is an unclassified land of the public
domain. SEHTIc
PD No. 705 issued by President Marcos categorized all
unclassified lands of the public domain as public
forest. Section 3 (a) of PD No. 705 defines a public
forest as "a mass of lands of the public domain which
has not been the subject of the present system of
classification for the determination of which lands are
needed for forest purpose and which are not".
Applying PD No. 705, all unclassified lands, including
those in Boracay Island, are ipso facto considered
public forests. PD No. 705, however, respects titles
already existing prior to its effectivity.
The Court notes that the classification of Boracay as a
forest land under PD No. 705 may seem to be out of
touch with the present realities in the island. Boracay,
no doubt, has been partly stripped of its forest cover
to pave the way for commercial developments. As a
premier tourist destination for local and foreign
tourists, Boracay appears more of a commercial island
resort, rather than a forest land.
Nevertheless, that the occupants of Boracay have
built multi-million peso beach resorts on the island;
111 that the island has already been stripped of its
forest cover; or that the implementation of
Proclamation No. 1064 will destroy the island's
tourism industry, do not negate its character as public
forest. AaIDCS
Forests, in the context of both the Public Land Act and
the Constitution 112 classifying lands of the public
domain into "agricultural, forest or timber, mineral
lands, and national parks", do not necessarily refer to
large tracts of wooded land or expanses covered by
dense growths of trees and underbrushes. 113 The
discussion in Heirs of Amunategui v. Director of
Forestry 114 is particularly instructive:
A forested area classified as forest land of the public

domain does not lose such classification simply

because loggers or settlers may have stripped it of its
forest cover. Parcels of land classified as forest land
may actually be covered with grass or planted to
crops by kaingin cultivators or other farmers. "Forest
lands" do not have to be on mountains or in out of the
way places. Swampy areas covered by mangrove
trees, nipa palms, and other trees growing in brackish
or sea water may also be classified as forest land. The
classification is descriptive of its legal nature or status
and does not have to be descriptive of what the land
actually looks like. Unless and until the land classified
as "forest" is released in an official proclamation to
that effect so that it may form part of the disposable
agricultural lands of the public domain, the rules on
confirmation of imperfect title do not apply. 115
(Emphasis supplied)
There is a big difference between "forest" as defined
in a dictionary and "forest or timber land" as a
classification of lands of the public domain as
appearing in our statutes. One is descriptive of what
appears on the land while the other is a legal status, a
classification for legal purposes. 116 At any rate, the
Court is tasked to determine the legal status of
Boracay Island, and not look into its physical layout.
Hence, even if its forest cover has been replaced by
beach resorts, restaurants and other commercial
establishments, it has not been automatically
converted from public forest to alienable agricultural
land. AHDacC
Private claimants cannot rely on Proclamation No.
1801 as basis for judicial confirmation of imperfect
title. The proclamation did not convert Boracay into
an agricultural land. However, private claimants argue
that Proclamation No. 1801 issued by then President
Marcos in 1978 entitles them to judicial confirmation
of imperfect title. The Proclamation classified Boracay,
among other islands, as a tourist zone. Private
claimants assert that, as a tourist spot, the island is
susceptible of private ownership.
Proclamation No. 1801 or PTA Circular No. 3-82 did
not convert the whole of Boracay into an agricultural
land. There is nothing in the law or the Circular which
made Boracay Island an agricultural land. The

14
reference in Circular No. 3-82 to "private lands" 117
and "areas declared as alienable and disposable" 118
does not by itself classify the entire island as
agricultural. Notably, Circular No. 3-82 makes
reference not only to private lands and areas but also
to public forested lands. Rule VIII, Section 3 provides:
No trees in forested private lands may be cut without
prior authority from the PTA. All forested areas in
public lands are declared forest reserves. (Emphasis
supplied) AHDacC
Clearly, the reference in the Circular to both private
and public lands merely recognizes that the island can
be classified by the Executive department pursuant to
its powers under CA No. 141. In fact, Section 5 of the
Circular recognizes the then Bureau of Forest
Development's authority to declare areas in the island
as alienable and disposable when it provides:

Subsistence farming, in areas declared as alienable

and disposable by the Bureau of Forest Development.
Therefore, Proclamation No. 1801 cannot be deemed
the positive act needed to classify Boracay Island as
alienable and disposable land. If President Marcos
intended to classify the island as alienable and
disposable or forest, or both, he would have identified
the specific limits of each, as President Arroyo did in
Proclamation No. 1064. This was not done in
Proclamation No. 1801. HEISca
The Whereas clauses of Proclamation No. 1801 also
explain the rationale behind the declaration of
Boracay Island, together with other islands, caves and
peninsulas in the Philippines, as a tourist zone and
marine reserve to be administered by the PTA to
ensure the concentrated efforts of the public and
private sectors in the development of the areas'
tourism potential with due regard for ecological
balance in the marine environment. Simply put, the
proclamation is aimed at administering the islands for
tourism and ecological purposes. It does not address
the areas' alienability. 119

More importantly, Proclamation No. 1801 covers not

only Boracay Island, but sixty-four (64) other islands,
coves, and peninsulas in the Philippines, such as
Fortune and Verde Islands in Batangas, Port Galera in
Oriental Mindoro, Panglao and Balicasag Islands in
Bohol, Coron Island, Puerto Princesa and surrounding
areas in Palawan, Camiguin Island in Cagayan de Oro,
and Misamis Oriental, to name a few. If the
designation of Boracay Island as tourist zone makes it
alienable and disposable by virtue of Proclamation No.
1801, all the other areas mentioned would likewise be
declared wide open for private disposition. That could
not have been, and is clearly beyond, the intent of the
proclamation.
It was Proclamation No. 1064 of 2006 which positively
declared part of Boracay as alienable and opened the
same to private ownership. Sections 6 and 7 of CA No.
141 120 provide that it is only the President, upon the
recommendation of the proper department head, who
has the authority to classify the lands of the public
domain into alienable or disposable, timber and
mineral lands. 121
In issuing Proclamation No. 1064, President Gloria
Macapagal-Arroyo merely exercised the authority
granted to her to classify lands of the public domain,
presumably subject to existing vested rights.
Classification of public lands is the exclusive
prerogative of the Executive Department, through the
Office of the President. Courts have no authority to do
so. 122 Absent such classification, the land remains
unclassified until released and rendered open to
disposition. 123
Proclamation No. 1064 classifies Boracay into 400
hectares of reserved forest land and 628.96 hectares
of agricultural land. The Proclamation likewise
provides for a 15-meter buffer zone on each side of
the center line of roads and trails, which are reserved
for right of way and which shall form part of the area
reserved for forest land protection purposes. HCSEIT
Contrary to private claimants' argument, there was
nothing invalid or irregular, much less
unconstitutional, about the classification of Boracay
Island made by the President through Proclamation

No. 1064. It was within her authority to make such

classification, subject to existing vested rights.
Proclamation No. 1064 does not violate the
Comprehensive Agrarian Reform Law. Private
claimants further assert that Proclamation No. 1064
violates the provision of the Comprehensive Agrarian
Reform Law (CARL)or RA No. 6657 barring conversion
of public forests into agricultural lands. They claim
that since Boracay is a public forest under PD No. 705,
President Arroyo can no longer convert it into an
agricultural land without running afoul of Section 4 (a)
of RA No. 6657, thus:
SEC. 4. Scope. The Comprehensive Agrarian Reform
Law of 1988 shall cover, regardless of tenurial
arrangement and commodity produced, all public and
private agricultural lands as provided in Proclamation
No. 131 and Executive Order No. 229, including other
lands of the public domain suitable for agriculture.
aEHASI
More specifically, the following lands are covered by
the Comprehensive Agrarian Reform Program:
(a) All alienable and disposable lands of the public
domain devoted to or suitable for agriculture. 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 determined by law, the
specific limits of the public domain.
That Boracay Island was classified as a public forest
under PD No. 705 did not bar the Executive from later
converting it into agricultural land. Boracay Island still
remained an unclassified land of the public domain
despite PD No. 705.
In Heirs of the Late Spouses Pedro S. Palanca and
Soterranea Rafols v. Republic, 124 the Court stated
that unclassified lands are public forests.
While it is true that the land classification map does
not categorically state that the islands are public
forests, the fact that they were unclassified lands

15
leads to the same result. In the absence of the
classification as mineral or timber land, the land
remains unclassified land until released and rendered
open to disposition. 125 (Emphasis supplied)
Moreover, the prohibition under the CARL applies only
to a "reclassification" of land. If the land had never
been previously classified, as in the case of Boracay,
there can be no prohibited reclassification under the
agrarian law. We agree with the opinion of the
Department of Justice 126 on this point:
Indeed, the key word to the correct application of the
prohibition in Section 4 (a) is the word
"reclassification". Where there has been no previous
classification of public forest [referring, we repeat, to
the mass of the public domain which has not been the
subject of the present system of classification for
purposes of determining which are needed for forest
purposes and which are not] into permanent forest or
forest reserves or some other forest uses under the
Revised Forestry Code, there can be no
"reclassification of forest lands" to speak of within the
meaning of Section 4(a). DcCIAa
Thus, obviously, the prohibition in Section 4(a) of the
CARL against the reclassification of forest lands to
agricultural lands without a prior law delimiting the
limits of the public domain, does not, and cannot,
apply to those lands of the public domain,
denominated as "public forest" under the Revised
Forestry Code, which have not been previously
determined, or classified, as needed for forest
purposes in accordance with the provisions of the
Revised Forestry Code. 127
Private claimants are not entitled to apply for judicial
confirmation of imperfect title under CA No. 141.
Neither do they have vested rights over the occupied
lands under the said law. There are two requisites for
judicial confirmation of imperfect or incomplete title
under CA No. 141, namely: (1) open, continuous,
exclusive, and notorious possession and occupation of
the subject land by himself or through his
predecessors-in-interest under a bona fide claim of
ownership since time immemorial or from June 12,
1945; and (2) the classification of the land as

alienable and disposable land of the public domain.

128
As discussed, the Philippine Bill of 1902, Act No. 926,
and Proclamation No. 1801 did not convert portions of
Boracay Island into an agricultural land. The island
remained an unclassified land of the public domain
and, applying the Regalian doctrine, is considered
State property.
Private claimants' bid for judicial confirmation of
imperfect title, relying on the Philippine Bill of 1902,
Act No. 926, and Proclamation No. 1801, must fail
because of the absence of the second element of
alienable and disposable land. Their entitlement to a
government grant under our present Public Land Act
presupposes that the land possessed and applied for
is already alienable and disposable. This is clear from
the wording of the law itself. 129 Where the land is
not alienable and disposable, possession of the land,
no matter how long, cannot confer ownership or
possessory rights. 130
Neither may private claimants apply for judicial
confirmation of imperfect title under Proclamation No.
1064, with respect to those lands which were
classified as agricultural lands. Private claimants
failed to prove the first element of open, continuous,
exclusive, and notorious possession of their lands in
Boracay since June 12, 1945.
We cannot sustain the CA and RTC conclusion in the
petition for declaratory relief that private claimants
complied with the requisite period of possession.
The tax declarations in the name of private claimants
are insufficient to prove the first element of
possession. We note that the earliest of the tax
declarations in the name of private claimants were
issued in 1993. Being of recent dates, the tax
declarations are not sufficient to convince this Court
that the period of possession and occupation
commenced on June 12, 1945. IEAHca
Private claimants insist that they have a vested right
in Boracay, having been in possession of the island for
a long time. They have invested millions of pesos in

developing the island into a tourist spot. They say

their continued possession and investments give
them a vested right which cannot be unilaterally
rescinded by Proclamation No. 1064.
The continued possession and considerable
investment of private claimants do not automatically
give them a vested right in Boracay. Nor do these give
them a right to apply for a title to the land they are
presently occupying. This Court is constitutionally
bound to decide cases based on the evidence
presented and the laws applicable. As the law and
jurisprudence stand, private claimants are ineligible
to apply for a judicial confirmation of title over their
occupied portions in Boracay even with their
continued possession and considerable investment in
the island.

One Last Note

The Court is aware that millions of pesos have been
invested for the development of Boracay Island,
making it a by-word in the local and international
tourism industry. The Court also notes that for a
number of years, thousands of people have called the
island their home. While the Court commiserates with
private claimants' plight, We are bound to apply the
law strictly and judiciously. This is the law and it
should prevail. Ito ang batas at ito ang dapat umiral.
HScCEa
All is not lost, however, for private claimants. While
they may not be eligible to apply for judicial
confirmation of imperfect title under Section 48 (b) of
CA No. 141, as amended, this does not denote their
automatic ouster from the residential, commercial,
and other areas they possess now classified as
agricultural. Neither will this mean the loss of their
substantial investments on their occupied alienable
lands. Lack of title does not necessarily mean lack of
right to possess.
For one thing, those with lawful possession may claim
good faith as builders of improvements. They can take
steps to preserve or protect their possession. For
another, they may look into other modes of applying

16
for original registration of title, such as by homestead
131 or sales patent, 132 subject to the conditions
imposed by law.
More realistically, Congress may enact a law to entitle
private claimants to acquire title to their occupied lots
or to exempt them from certain requirements under
the present land laws. There is one such bill 133 now
pending in the House of Representatives. Whether
that bill or a similar bill will become a law is for
Congress to decide.
In issuing Proclamation No. 1064, the government has
taken the step necessary to open up the island to
private ownership. This gesture may not be sufficient
to appease some sectors which view the classification
of the island partially into a forest reserve as absurd.
That the island is no longer overrun by trees,
however, does not becloud the vision to protect its
remaining forest cover and to strike a healthy balance
between progress and ecology. Ecological
conservation is as important as economic progress.
EacHCD
To be sure, forest lands are fundamental to our
nation's survival. Their promotion and protection are
not just fancy rhetoric for politicians and activists.
These are needs that become more urgent as
destruction of our environment gets prevalent and
difficult to control. As aptly observed by Justice
Conrado Sanchez in 1968 in Director of Forestry v.
Munoz: 134
The view this Court takes of the cases at bar is but in
adherence to public policy that should be followed
with respect to forest lands. Many have written much,
and many more have spoken, and quite often, about
the pressing need for forest preservation,
conservation, protection, development and
reforestation. Not without justification. For, forests
constitute a vital segment of any country's natural
resources. It is of common knowledge by now that
absence of the necessary green cover on our lands
produces a number of adverse or ill effects of serious
proportions. Without the trees, watersheds dry up;
rivers and lakes which they supply are emptied of
their contents. The fish disappear. Denuded areas

17
become dust bowls. As waterfalls cease to function,
so will hydroelectric plants. With the rains, the fertile
topsoil is washed away; geological erosion results.
With erosion come the dreaded floods that wreak
havoc and destruction to property crops, livestock,
houses, and highways not to mention precious
human lives. Indeed, the foregoing observations
should be written down in a lumberman's decalogue.
135
WHEREFORE, judgment is rendered as follows:
1. The petition for certiorari in G.R. No. 167707 is
GRANTED and the Court of Appeals Decision in CAG.R. CV No. 71118 REVERSED AND SET ASIDE.
2. The petition for certiorari in G.R. No. 173775 is
DISMISSED for lack of merit.
SO ORDERED. HTCaAD
Puno, C.J., Quisumbing, Ynares-Santiago, Carpio,
Austria-Martinez, Carpio-Morales, Azcuna, Tinga,
Chico-Nazario, Velasco, Jr., Leonardo-de Castro and
Brion, JJ., concur.
Corona, J., is on official leave per Special Order No.
520 dated September 19, 2008.
Nachura, J., took no part. Justice Nachura participated
in the present case as Solicitor General.

||| (Secretary of the Department of Environment and

Natural Resources v. Yap, G.R. No. 167707, 173775,
[October 8, 2008], 589 PHIL 156-201)

FIRST DIVISION
[G.R. No. 154953. June 26, 2008.]
REPUBLIC OF THE PHILIPPINES,
petitioner, vs. T.A.N. PROPERTIES, INC.,
respondent.
DECISION
CARPIO, J p:
The Case
Before the Court is a petition for review 1 assailing
the 21 August 2002 Decision 2 of the Court of Appeals
in CA-G.R. CV No. 66658. The Court of Appeals
affirmed in toto the 16 December 1999 Decision 3 of
the Regional Trial Court of Tanauan, Batangas, Branch
6 (trial court) in Land Registration Case No. T-635.
AcISTE
The Antecedent Facts
This case originated from an Application for Original
Registration of Title filed by T.A.N. Properties, Inc.
covering Lot 10705-B of the subdivision plan Csd-04019741 which is a portion of the consolidated Lot
10705, Cad-424, Sto. Tomas Cadastre. The land, with
an area of 564,007 square meters, or 56.4007
hectares, is located at San Bartolome, Sto. Tomas,
Batangas.
On 31 August 1999, the trial court set the case for
initial hearing at 9:30 a.m. on 11 November 1999. The
Notice of Initial Hearing was published in the Official
Gazette, 20 September 1999 issue, Volume 95, No.
38, pages 6793 to 6794, 4 and in the 18 October
1999 issue of People's Journal Taliba, 5 a newspaper
of general circulation in the Philippines. The Notice of
Initial Hearing was also posted in a conspicuous place
on the bulletin board of the Municipal Building of Sto.
Tomas, Batangas, as well as in a conspicuous place on
the land. 6 All adjoining owners and all government
agencies and offices concerned were notified of the
initial hearing. 7

On 11 November 1999, when the trial court called the

case for initial hearing, there was no oppositor other
than the Opposition dated 7 October 1999 of the
Republic of the Philippines represented by the
Director of Lands (petitioner). On 15 November 1999,
the trial court issued an Order 8 of General Default
against the whole world except as against petitioner.
During the hearing on 19 November 1999, Ceferino
Carandang (Carandang) appeared as oppositor. The
trial court gave Carandang until 29 November 1999
within which to file his written opposition. 9
Carandang failed to file his written opposition and to
appear in the succeeding hearings. In an Order 10
dated 13 December 1999, the trial court reinstated
the Order of General Default. CDISAc
During the hearings conducted on 13 and 14
December 1999, respondent presented three
witnesses: Anthony Dimayuga Torres (Torres),
respondent's Operations Manager and its authorized
representative in the case; Primitivo Evangelista
(Evangelista), a 72-year old resident of San
Bartolome, Sto. Tomas, Batangas since birth; and
Regalado Marquez, Records Officer II of the Land
Registration Authority (LRA), Quezon City.
The testimonies of respondent's witnesses showed
that Prospero Dimayuga (Kabesang Puroy) had
peaceful, adverse, open, and continuous possession
of the land in the concept of an owner since 1942.
Upon his death, Kabesang Puroy was succeeded by
his son Antonio Dimayuga (Antonio). On 27
September 1960, Antonio executed a Deed of
Donation covering the land in favor of one of his
children, Fortunato Dimayuga (Fortunato). Later,
however, Antonio gave Fortunato another piece of
land. Hence, on 26 April 1961, Antonio executed a
Partial Revocation of Donation, and the land was
adjudicated to one of Antonio's children, Prospero
Dimayuga (Porting). 11 On 8 August 1997, Porting
sold the land to respondent.
The Ruling of the Trial Court
In its 16 December 1999 Decision, the trial court
adjudicated the land in favor of respondent.

18
The trial court ruled that a juridical person or a
corporation could apply for registration of land
provided such entity and its predecessors-in-interest
have possessed the land for 30 years or more. The
trial court ruled that the facts showed that
respondent's predecessors-in-interest possessed the
land in the concept of an owner prior to 12 June 1945,
which possession converted the land to private
property. cEaCAH
The dispositive portion of the trial court's Decision
reads:
WHEREFORE, and upon previous confirmation of the
Order of General Default, the Court hereby
adjudicates and decrees Lot 10705-B, identical to Lot
13637, Cad-424, Sto. Tomas Cadastre, on plan Csd-04019741, situated in Barangay of San Bartolome,
Municipality of Sto. Tomas, Province of Batangas, with
an area of 564,007 square meters, in favor of and in
the name of T.A.N. Properties, Inc., a domestic
corporation duly organized and existing under
Philippine laws with principal office at 19th Floor,
PDCP Bank Building, 8737 Paseo de Roxas, Makati
City.
Once this Decision shall have become final, let the
corresponding decree of registration be issued.
SO ORDERED. 12
Petitioner appealed from the trial court's Decision.
Petitioner alleged that the trial court erred in granting
the application for registration absent clear evidence
that the applicant and its predecessors-in-interest
have complied with the period of possession and
occupation as required by law. Petitioner alleged that
the testimonies of Evangelista and Torres are general
in nature. Considering the area involved, petitioner
argued that additional witnesses should have been
presented to corroborate Evangelista's testimony.
IESDCH
The Ruling of the Court of Appeals
In its 21 August 2002 Decision, the Court of Appeals
affirmed in toto the trial court's Decision.

The Court of Appeals ruled that Evangelista's

knowledge of the possession and occupation of the
land stemmed not only from the fact that he worked
there for three years but also because he and
Kabesang Puroy were practically neighbors. On
Evangelista's failure to mention the name of his uncle
who continuously worked on the land, the Court of
Appeals ruled that Evangelista should not be faulted
as he was not asked to name his uncle when he
testified. The Court of Appeals also ruled that at the
outset, Evangelista disclaimed knowledge of
Fortunato's relation to Kabesang Puroy, but this did
not affect Evangelista's statement that Fortunato took
over the possession and cultivation of the land after
Kabesang Puroy's death. The Court of Appeals further
ruled that the events regarding the acquisition and
disposition of the land became public knowledge
because San Bartolome was a small community. On
the matter of additional witnesses, the Court of
Appeals ruled that petitioner failed to cite any law
requiring the corroboration of the sole witness'
testimony.
The Court of Appeals further ruled that Torres was a
competent witness since he was only testifying on the
fact that he had caused the filing of the application
for registration and that respondent acquired the land
from Porting.
Petitioner comes to this Court assailing the Court of
Appeals' Decision. Petitioner raises the following
grounds in its Memorandum: IATHaS
The Court of Appeals erred on a question of law in
allowing the grant of title to applicant corporation
despite the following:
1. Absence of showing that it or its predecessors-ininterest had open, continuous, exclusive, and
notorious possession and occupation in the concept of
an owner since 12 June 1945 or earlier; and
2. Disqualification of applicant corporation to acquire
the subject tract of land. 13
The Issues
The issues may be summarized as follows:

19
Batangas certified on Dec. 31, 1925 per LC No. 582."
1. Whether the land is alienable and disposable;
2. Whether respondent or its predecessors-in-interest
had open, continuous, exclusive, and notorious
possession and occupation of the land in the concept
of an owner since June 1945 or earlier; and SAHIaD
3. Whether respondent is qualified to apply for
registration of the land under the Public Land Act.
The Ruling of this Court
The petition has merit.
Respondent Failed to Prove that the Land is Alienable
and Disposable
Petitioner argues that anyone who applies for
registration has the burden of overcoming the
presumption that the land forms part of the public
domain. Petitioner insists that respondent failed to
prove that the land is no longer part of the public
domain.
The well-entrenched rule is that all lands not
appearing to be clearly of private dominion
presumably belong to the State. 14 The onus to
overturn, by incontrovertible evidence, the
presumption that the land subject of an application
for registration is alienable and disposable rests with
the applicant. 15 AHDacC
In this case, respondent submitted two certifications
issued by the Department of Environment and Natural
Resources (DENR). The 3 June 1997 Certification by
the Community Environment and Natural Resources
Offices (CENRO), Batangas City, 16 certified that "lot
10705, Cad-424, Sto. Tomas Cadastre situated at
Barangay San Bartolome, Sto. Tomas, Batangas with
an area of 596,116 square meters falls within the
ALIENABLE AND DISPOSABLE ZONE under Project No.
30, Land Classification Map No. 582 certified [on] 31
December 1925." The second certification 17 in the
form of a memorandum to the trial court, which was
issued by the Regional Technical Director, Forest
Management Services of the DENR (FMS-DENR),
stated "that the subject area falls within an alienable
and disposable land, Project No. 30 of Sto. Tomas,

The certifications are not sufficient. DENR

Administrative Order (DAO) No. 20, 18 dated 30 May
1988, delineated the functions and authorities of the
offices within the DENR. Under DAO No. 20, series of
1988, the CENRO issues certificates of land
classification status for areas below 50 hectares. The
Provincial Environment and Natural Resources Offices
(PENRO) issues certificate of land classification status
for lands covering over 50 hectares. DAO No. 38, 19
dated 19 April 1990, amended DAO No. 20, series of
1988. DAO No. 38, series of 1990 retained the
authority of the CENRO to issue certificates of land
classification status for areas below 50 hectares, as
well as the authority of the PENRO to issue certificates
of land classification status for lands covering over 50
hectares. 20 In this case, respondent applied for
registration of Lot 10705-B. The area covered by Lot
10705-B is over 50 hectares (564,007 square meters).
The CENRO certificate covered the entire Lot 10705
with an area of 596,116 square meters which, as per
DAO No. 38, series of 1990, is beyond the authority of
the CENRO to certify as alienable and disposable.
AcISTE

The Regional Technical Director, FMS-DENR, has no

authority under DAO Nos. 20 and 38 to issue
certificates of land classification. Under DAO No. 20,
the Regional Technical Director, FMS-DENR:
1. Issues original and renewal of ordinary minor
products (OM) permits except rattan;
2. Approves renewal of resaw/mini-sawmill permits;
3. Approves renewal of special use permits covering
over five hectares for public infrastructure projects;
and
4. Issues renewal of certificates of registration for
logs, poles, piles, and lumber dealers.
Under DAO No. 38, the Regional Technical Director,
FMS-DENR:

1. Issues original and renewal of ordinary minor

[products] (OM) permits except rattan; EcSCAD
2. Issues renewal of certificate of registration for logs,
poles, and piles and lumber dealers;
3. Approves renewal of resaw/mini-sawmill permits;
4. Issues public gratuitous permits for 20 to 50 cubic
meters within calamity declared areas for public
infrastructure projects; and
5. Approves original and renewal of special use
permits covering over five hectares for public
infrastructure projects. ASIDTa
Hence, the certification issued by the Regional
Technical Director, FMS-DENR, in the form of a
memorandum to the trial court, has no probative
value.
Further, it is not enough for the PENRO or CENRO to
certify that a land is alienable and disposable. The
applicant for land registration must prove that the
DENR Secretary had approved the land classification
and released the land of the public domain as
alienable and disposable, and that the land subject of
the application for registration falls within the
approved area per verification through survey by the
PENRO or CENRO. In addition, the applicant for land
registration must present a copy of the original
classification approved by the DENR Secretary and
certified as a true copy by the legal custodian of the
official records. These facts must be established to
prove that the land is alienable and disposable.
Respondent failed to do so because the certifications
presented by respondent do not, by themselves,
prove that the land is alienable and disposable.
Only Torres, respondent's Operations Manager,
identified the certifications submitted by respondent.
The government officials who issued the certifications
were not presented before the trial court to testify on
their contents. The trial court should not have
accepted the contents of the certifications as proof of
the facts stated therein. Even if the certifications are
presumed duly issued and admissible in evidence,
they have no probative value in establishing that the

land is alienable and disposable. DSATCI

Public documents are defined under Section 19, Rule
132 of the Revised Rules on Evidence as follows:
(a) The written official acts, or records of the official
acts of the sovereign authority, official bodies and
tribunals, and public officers, whether of the
Philippines, or of a foreign country;
(b) Documents acknowledged before a notary public
except last wills and testaments; and
(c) Public records, kept in the Philippines, of private
documents required by law to be entered therein.
Applying Section 24 of Rule 132, the record of public
documents referred to in Section 19 (a), when
admissible for any purpose, may be evidenced by an
official publication thereof or by a copy attested by
the officer having legal custody of the record, or by
his deputy . . . . The CENRO is not the official
repository or legal custodian of the issuances of the
DENR Secretary declaring public lands as alienable
and disposable. The CENRO should have attached an
official publication 21 of the DENR Secretary's
issuance declaring the land alienable and disposable.
cASTED
Section 23, Rule 132 of the Revised Rules on Evidence
provides:
Sec. 23. Public documents as evidence. Documents
consisting of entries in public records made in the
performance of a duty by a public officer are prima
facie evidence of the facts stated therein. All other
public documents are evidence, even against a third
person, of the fact which gave rise to their execution
and of the date of the latter.
The CENRO and Regional Technical Director, FMSDENR, certifications do not fall within the class of
public documents contemplated in the first sentence
of Section 23 of Rule 132. The certifications do not
reflect "entries in public records made in the
performance of a duty by a public officer", such as
entries made by the Civil Registrar 22 in the books of
registries, or by a ship captain in the ship's logbook.

20
23 The certifications are not the certified copies or
authenticated reproductions of original official records
in the legal custody of a government office. The
certifications are not even records of public
documents. 24 The certifications are conclusions
unsupported by adequate proof, and thus have no
probative value. 25 Certainly, the certifications cannot
be considered prima facie evidence of the facts stated
therein.
The CENRO and Regional Technical Director, FMSDENR, certifications do not prove that Lot 10705-B
falls within the alienable and disposable land as
proclaimed by the DENR Secretary. Such government
certifications do not, by their mere issuance, prove
the facts stated therein. 26 Such government
certifications may fall under the class of documents
contemplated in the second sentence of Section 23 of
Rule 132. As such, the certifications are prima facie
evidence of their due execution and date of issuance
but they do not constitute prima facie evidence of the
facts stated therein. EHIcaT
The Court has also ruled that a document or writing
admitted as part of the testimony of a witness does
not constitute proof of the facts stated therein. 27
Here, Torres, a private individual and respondent's
representative, identified the certifications but the
government officials who issued the certifications did
not testify on the contents of the certifications. As
such, the certifications cannot be given probative
value. 28 The contents of the certifications are
hearsay because Torres was incompetent to testify on
the veracity of the contents of the certifications. 29
Torres did not prepare the certifications, he was not
an officer of CENRO or FMS-DENR, and he did not
conduct any verification survey whether the land falls
within the area classified by the DENR Secretary as
alienable and disposable.
Petitioner also points out the discrepancy as to when
the land allegedly became alienable and disposable.
The DENR Secretary certified that based on Land
Classification Map No. 582, the land became alienable
and disposable on 31 December 1925. However, the
certificate on the blue print plan states that it became
alienable and disposable on 31 December 1985.
We agree with petitioner that while the certifications

submitted by respondent show that under the Land

Classification Map No. 582, the land became alienable
and disposable on 31 December 1925, the blue print
plan states that it became alienable and disposable
on 31 December 1985. Respondent alleged that "the
blue print plan merely serves to prove the precise
location and the metes and bounds of the land
described therein . . . and does not in any way certify
the nature and classification of the land involved." 30
It is true that the notation by a surveyor-geodetic
engineer on the survey plan that the land formed part
of the alienable and disposable land of the public
domain is not sufficient proof of the land's
classification. 31 However, respondent should have at
least presented proof that would explain the
discrepancy in the dates of classification. Marquez,
LRA Records Officer II, testified that the documents
submitted to the court consisting of the tracing cloth
plan, the technical description of Lot 10705-B, the
approved subdivision plan, and the Geodetic
Engineer's certification were faithful reproductions of
the original documents in the LRA office. He did not
explain the discrepancy in the dates. Neither was the
Geodetic Engineer presented to explain why the date
of classification on the blue print plan was different
from the other certifications submitted by respondent.
DAcaIE
There was No Open, Continuous, Exclusive, and
Notorious Possession and Occupation in the Concept
of an Owner
Petitioner alleges that the trial court's reliance on the
testimonies of Evangelista and Torres was misplaced.
Petitioner alleges that Evangelista's statement that
the possession of respondent's predecessors-ininterest was open, public, continuous, peaceful, and
adverse to the whole world was a general conclusion
of law rather than factual evidence of possession of
title. Petitioner alleges that respondent failed to
establish that its predecessors-in-interest had held
the land openly, continuously, and exclusively for at
least 30 years after it was declared alienable and
disposable.

possession of the land before 1945. Yet, Evangelista

only worked on the land for three years. Evangelista
testified that his family owned a lot near Kabesang
Puroy's land. The Court of Appeals took note of this
and ruled that Evangelista's knowledge of Kabesang
Puroy's possession of the land stemmed "not only
from the fact that he had worked thereat but more so
that they were practically neighbors." 32 The Court of
Appeals observed:
In a small community such as that of San Bartolome,
Sto. Tomas, Batangas, it is not difficult to understand
that people in the said community knows each and
everyone. And, because of such familiarity with each
other, news or events regarding the acquisition or
disposition for that matter, of a vast tract of land
spreads like wildfire, thus, the reason why such an
event became of public knowledge to them. 33
Evangelista testified that Kabesang Puroy was
succeeded by Fortunato. However, he admitted that
he did not know the exact relationship between
Kabesang Puroy and Fortunato, which is rather
unusual for neighbors in a small community. He did
not also know the relationship between Fortunato and
Porting. In fact, Evangelista's testimony is contrary to
the factual finding of the trial court that Kabesang
Puroy was succeeded by his son Antonio, not by
Fortunato who was one of Antonio's children. Antonio
was not even mentioned in Evangelista's testimony.
EHcaDT

We agree with petitioner.

The Court of Appeals ruled that there is no law that

requires that the testimony of a single witness needs
corroboration. However, in this case, we find
Evangelista's uncorroborated testimony insufficient to
prove that respondent's predecessors-in-interest had
been in possession of the land in the concept of an
owner for more than 30 years. We cannot consider
the testimony of Torres as sufficient corroboration.
Torres testified primarily on the fact of respondent's
acquisition of the land. While he claimed to be related
to the Dimayugas, his knowledge of their possession
of the land was hearsay. He did not even tell the trial
court where he obtained his information.

Evangelista testified that Kabesang Puroy had been in

The tax declarations presented were only for the

21
years starting 1955. While tax declarations are not
conclusive evidence of ownership, they constitute
proof of claim of ownership. 34 Respondent did not
present any credible explanation why the realty taxes
were only paid starting 1955 considering the claim
that the Dimayugas were allegedly in possession of
the land before 1945. The payment of the realty taxes
starting 1955 gives rise to the presumption that the
Dimayugas claimed ownership or possession of the
land only in that year.
Land Application by a Corporation
Petitioner asserts that respondent, a private
corporation, cannot apply for registration of the land
of the public domain in this case. cHDEaC
We agree with petitioner.
Section 3, Article XII of the 1987 Constitution
provides:
Sec. 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
to 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. aCSHDI
The 1987 Constitution absolutely prohibits private
corporations from acquiring any kind of alienable land
of the public domain. In Chavez v. Public Estates
Authority, 35 the Court traced the law on disposition

of lands of the public domain. Under the 1935

Constitution, there was no prohibition against private
corporations from acquiring agricultural land. The
1973 Constitution limited the alienation of lands of
the public domain to individuals who were citizens of
the Philippines. Under the 1973 Constitution, private
corporations, even if wholly owned by Filipino citizens,
were no longer allowed to acquire alienable lands of
the public domain. The present 1987 Constitution
continues the prohibition against private corporations
from acquiring any kind of alienable land of the public
domain. 36 The Court explained in Chavez:
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. . . .
[I]f 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. ISCaTE
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 evergrowing 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. 37
In Director of Lands v. IAC, 38 the Court allowed the
land registration proceeding filed by Acme Plywood &
Veneer Co., Inc. (Acme) for five parcels of land with an
area of 481,390 square meters, or 48.139 hectares,
which Acme acquired from members of the Dumagat
tribe. The issue in that case was whether the title
could be confirmed in favor of Acme when the
proceeding was instituted after the effectivity of the
1973 Constitution which prohibited private
corporations or associations from holding alienable
lands of the public domain except by lease not to
exceed 1,000 hectares. The Court ruled that the land
was already private land when Acme acquired it from
its owners in 1962, and thus Acme acquired a
registrable title. Under the 1935 Constitution, private
corporations could acquire public agricultural lands
not exceeding 1,024 hectares while individuals could
acquire not more than 144 hectares. 39 HAISEa
In Director of Lands, the Court further ruled that open,
exclusive, and undisputed possession of alienable
land for the period prescribed by law created the legal

22
fiction whereby the land, upon completion of the
requisite period, ipso jure and without the need of
judicial or other sanction ceases to be public land and
becomes private property. The Court ruled:
Nothing can more clearly demonstrate the logical
inevitability of considering possession of public land
which is of the character and duration prescribed by
statute as the equivalent of an express grant from the
State than the dictum of the statute itself that the
possessor(s) ". . . shall be conclusively presumed to
have performed all the conditions essential to a
Government grant and shall be entitled to a
certificate of title . . . ." No proof being admissible to
overcome a conclusive presumption, confirmation
proceedings would, in truth be little more than a
formality, at the most limited to ascertaining whether
the possession claimed is of the required character
and length of time; and registration thereunder would
not confer title, but simply recognize a title already
vested. The proceedings would not originally convert
the land from public to private land, but only confirm
such a conversion already effected by operation of
law from the moment the required period of
possession became complete.
. . . [A]lienable public land held by a possessor,
personally or through his predecessors-in-interest,
openly, continuously and exclusively for the
prescribed statutory period of (30 years under The
Public Land Act, as amended) is converted to private
property by the mere lapse or completion of said
period, ipso jure. Following that rule and on the basis
of the undisputed facts, the land subject of this
appeal was already private property at the time it was
acquired from the Infiels by Acme. Acme thereby
acquired a registrable title, there being at the time no
prohibition against said corporation's holding or
owning private land. . . . . 40 (Emphasis supplied)
HTCIcE
Director of Lands is not applicable to the present
case. In Director of Lands, the "land . . . was already
private property at the time it was acquired . . . by
Acme". In this case, respondent acquired the land on
8 August 1997 from Porting, who, along with his
predecessors-in-interest, has not shown to have been,

as of that date, in open, continuous, and adverse

possession of the land for 30 years since 12 June
1945. In short, when respondent acquired the land
from Porting, the land was not yet private property.
For Director of Lands to apply and enable a
corporation to file for registration of alienable and
disposable land, the corporation must have acquired
the land when its transferor had already a vested
right to a judicial confirmation of title to the land by
virtue of his open, continuous and adverse possession
of the land in the concept of an owner for at least 30
years since 12 June 1945. Thus, in Natividad v. Court
of Appeals, 41 the Court declared:

Under the facts of this case and pursuant to the

above rulings, the parcels of land in question had
already been converted to private ownership through
acquisitive prescription by the predecessors-ininterest of TCMC when the latter purchased them in
1979. All that was needed was the confirmation of the
titles of the previous owners or predecessors-ininterest of TCMC.
Being already private land when TCMC bought them in
1979, the prohibition in the 1973 Constitution against
corporations acquiring alienable lands of the public
domain except through lease (Article XIV, Section 11,
1973 Constitution) did not apply to them for they
were no longer alienable lands of the public domain
but private property.
What is determinative for the doctrine in Director of
Lands to apply is for the corporate applicant for land
registration to establish that when it acquired the
land, the same was already private land by operation
of law because the statutory acquisitive prescriptive
period of 30 years had already lapsed. The length of
possession of the land by the corporation cannot be
tacked on to complete the statutory 30 years
acquisitive prescriptive period. Only an individual can
avail of such acquisitive prescription since both the
1973 and 1987 Constitutions prohibit corporations
from acquiring lands of the public domain. EASCDH

Admittedly, a corporation can at present still apply for

original registration of land under the doctrine in
Director of Lands. Republic Act No. 9176 42 (R.A.
9176) further amended the Public Land Act 43 and
extended the period for the filing of applications for
judicial confirmation of imperfect and incomplete
titles to alienable and disposable lands of the public
domain until 31 December 2020. Thus:
Sec. 2. Section 47, Chapter VIII of the same Act, as
amended, is hereby further amended to read as
follows:
Sec. 47. The persons specified in the next following
section are hereby granted time, not to extend
beyond December 31, 2020 within which to avail of
the benefits of this Chapter: Provided, That this period
shall apply only where the area applied for does not
exceed twelve (12) hectares: Provided, further, That
the several periods of time designated by the
President in accordance with Section Forty-five of this
Act shall apply also to the lands comprised in the
provisions of this Chapter, but this Section shall not
be construed as prohibiting any of said persons from
acting under this Chapter at any time prior to the
period fixed by the President.
Sec. 3. All pending applications filed before the
effectivity of this amendatory Act shall be treated as
having been filed in accordance with the provisions of
this Act. HacADE
Under R.A. 9176, the application for judicial
confirmation is limited only to 12 hectares, consistent
with Section 3, Article XII of the 1987 Constitution that
a private individual may only acquire not more than
12 hectares of alienable and disposable land. Hence,
respondent, as successor-in-interest of an individual
owner of the land, cannot apply for registration of
land in excess of 12 hectares. Since respondent
applied for 56.4007 hectares, the application for the
excess area of 44.4007 hectares is contrary to law,
and thus void ab initio. In applying for land
registration, a private corporation cannot have any
right higher than its predecessor-in-interest from
whom it derived its right. This assumes, of course,
that the corporation acquired the land, not exceeding

23
12 hectares, when the land had already become
private land by operation of law. In the present case,
respondent has failed to prove that any portion of the
land was already private land when respondent
acquired it from Porting in 1997.
WHEREFORE, we SET ASIDE the 21 August 2002
Decision of the Court of Appeals in CA-G.R. CV No.
66658 and the 16 December 1999 Decision of the
Regional Trial Court of Tanauan, Batangas, Branch 6 in
Land Registration Case No. T-635. We DENY the
application for registration filed by T.A.N. Properties,
Inc. HcSCED
SO ORDERED.
Puno, C.J., Corona, Azcuna and Leonardo-de Castro, JJ.,
concur.
||| (Republic v. T.A.N. Properties, Inc., G.R. No. 154953,
[June 26, 2008], 578 PHIL 441-464)

THIRD DIVISION
[G.R. No. 195026. February 22, 2016.]
CENTRAL MINDANAO UNIVERSITY,
represented by its President, DR. MARIA
LUISA R. SOLIVEN, petitioner, vs.
REPUBLIC OF THE PHILIPPINES,
represented by the Department of Environment
and Natural Resources, respondent.
DECISION
PERALTA, J p:
For this Court's resolution is a petition for review on
certiorari dated January 14, 2011 filed by petitioner
Central Mindanao University (CMU), seeking to
reverse and set aside the Decision 1 dated December
30, 2010 of the Court of Appeals (CA), which annulled
the Decision 2 dated December 22, 1971, the
Amended Decision 3 dated October 7, 1972 and the
Second Amended Decision 4 dated September 12,
1974 rendered by the then Court of First Instance
(CFI), 15th Judicial District, Branch II of Bukidnon and
annulled the Decrees No. N-154065, N-154066 and N154067 issued in favor of petitioner and the Original
Certificate of Title (OCT) No. 0-160, OCT No. 0-161
and OCT No. 0-162 registered in petitioner's name on
January 29, 1975.
The facts follow:
Petitioner Central Mindanao University (CMU) is an
agricultural educational institution owned and run by
the State established by virtue of Republic Act No.
4498. 5 It is represented by its President, Dr. Maria
Luisa R. Soliven in accordance with CMU Board of
Regents Resolution No. 02, s. 2011. 6
The subjects of the controversy are two parcels of
land situated at Musuan, Maramag, Bukidnon
identified as "Sheet 1, Lot 1 of Ir-1031-D" consisting of
20,619,175 square meters, and "Sheet 2, Lot 2 of Ir1031-D" consisting of 13,391,795 square meters,
more or less. 7
In 1946, CMU took possession of the subject parcels
of land and started construction for the school site
upon the confirmation of the Secretary of Public

Instruction. 8 However, during the final survey in

1952, CMU discovered that there were several
adverse claimants, holders, possessors and occupants
of the portions of lots identified as school sites. 9
On January 16, 1958, upon the recommendation of
the Secretary of Agriculture and Natural Resources
and pursuant to the provisions of Section 83 10 of
Commonwealth Act (C.A.) No. 141, otherwise known
as Public Land Act, President Carlos P. Garcia issued
Proclamation No. 476 11 which reserved certain
portions of the public domain in Musuan, Maramag,
Bukidnon for petitioner CMU's (formerly Mindanao
Agricultural College) site purposes. 12 The said
parcels of land were withdrawn from sale or
settlement and reserved for CMU's school site
purposes, "subject to private rights, if any there be."
CAIHTE
In a letter dated October 27, 1960, the Director of
Lands Zoilo Castrillo formally requested the Secretary
of Agriculture and Natural Resources that he be
authorized under Section 87 of C.A. No. 141, to file in
the CFI of Bukidnon an application for the compulsory
registration of the parcels of land reserved by
President Garcia under Proclamation No. 476 as CMU's
school site purposes. 13
In the first indorsement dated November 9, 1960, the
Office of the Secretary of Agriculture and Natural
Resources, through its Undersecretary Salvador F.
Cunanan, forwarded to the Executive Secretary a
recommendation that the Director of Lands be
authorized to file the said application. 14
Thereafter, the Office of the President, through the
Assistant Executive Secretary Enrique C. Quema, in
the second indorsement dated December 12, 1960,
authorized and directed the Director of Lands to file
the necessary petition in the CFI of Bukidnon for the
compulsory registration of the parcels of land
reserved for CMU. 15
Department Legal Counsel Alejandro V. Recto, in the
indorsement dated December 28, 1960,
communicated the said directive and authority
granted to the Director of Lands to file the application
for compulsory registration. 16
On January 31, 1961, the Director of Lands filed a
petition with the then Court of First Instance of
Bukidnon for the settlement and adjudication of the
title of the parcels of land reserved in favor of CMU,

24
and for the determination of the rights of adverse
claimants in relation to the reservation of the land. 17
The cadastral court, in its Decision dated December
22, 1971 in Land Registration Case Cadastral Rec. No.
414, declared that the subject parcels of land as
public land included in the reservation for CMU, and
be registered in its name, except for specified
portions adjudicated to other persons. 18 The court
also gave the other 18 claimants an opportunity to
acquire full ownership in the subject parcels of land.
19 Hence, the court reduced the claim of CMU to
3,041 hectares of total land area. 20 The dispositive
portion of the decision reads:
In view of the foregoing considerations, judgment is
hereby rendered declaring Lot No. 1 containing an
approximate area of 20,619,175 square meters and
Lot No. 2 containing an area of 13,391,795 square
meters, both situated in the barrio of Musuan,
municipality of Maramag, Bukidnon, as described in
the survey plans and technical descriptions approved
by the Director of Lands as IR-1031-D, marked as
Exhibits "D" and "D-1" of the Central Mindanao
University, as public land included in the reservation
in favor of said University by virtue of Proclamation
No. 476, series of 1958, of the President of the
Philippines, which may be registered in its name,
except such portions hereinbelow specified which are
adjudicated in favor of the following:
1. Venancio Olohoy, married, and Esmeralda Lauga,
married to Julio Sagde, both of legal ages and
residents of Valencia, Bukidnon 17.75 hectares of
Lot No. 1 as shown in the survey plan (Exh. "D");
2. Martina Songkit, of legal age, married to Martin
Binanos and resident of Maramag, Bukidnon 3
hectares of Lot No. 2 as shown in the plan Exh. "D-1";
3. Pablo Saldivar, widower, of legal age and resident
of Dologon, Maramag, Bukidnon 12 hectares of Lot
No. 2 as indicated in the survey plan Exh. "D-1"
above-mentioned;
4. Fernando Bungcas, married to Feliciana Gayonan
and resident of Dologon, Maramag 6 hectares of
Lot No. 2;
5. Cerilo Salicubay, married to Valentina Bento, and
Virginia Salicubay, married to Ricardo Tunasan, both
of legal ages and residents of Panalsalan, Maramag,
Bukidnon, share and share alike 4 hectares of Lot
No. 2;

6. Rosita Lupiahan, of legal age, married to Simplicio

Alba and resident of Maramag, Bukidnon 4 hectares
of Lot No. 2.
The areas herein adjudicated to the above-named
private individuals should be surveyed and each lot
given a separate number with their corresponding
technical descriptions.
Considering, however, that the Court rejected most of
the claim due to the dubious nature of the occupation
of the claimants prior to the take-over by the College,
now University, in 1946 but most of them remained
on the land up to the present time, in order to avoid
possible injustice and in line with the national
objective of providing land for the landless, it is
hereby recommended that the claimants enumerated
hereunder who filed answers and presented evidence
which, nevertheless, was found short of the
requirements for a decree of registration, be given the
opportunity to acquire full ownership thereof through
a homestead, or free patent application if they are
landless persons, otherwise by means of a sales
application if they are already owners of other pieces
of real estate, after a corresponding amendment of
the Executive Proclamation through the avenues
allowed by law. The following claimants may be
considered for that purpose, namely:
1. Geronimo Aniceto and his sister Francisca Aniceto
12 hectares of Lot No. 2;
2. Bonifacio Aniceto 6 hectares of Lot No. 2;
DETACa
3. Julita Aniceto 12 hectares of Lot No. 2;
4. Maximo Nulo 5 hectares of Lot No. 2;
5. Magno Sepada 3 hectares of Lot No. 1;
6. Eulogio Guimba 12 hectares of Lot No. 2;
7. Mario Baguhin and his wife, Treponia Dagoplo 18
hectares of Lot No. 2;
8. Aniceto Nayawan 12 hectares of Lot No. 2;
9. Eduardo Saloay-ay 13 hectares of Lot No. 2;
10. Arcadio Belmis and his wife Beatriz Lauga 24
hectares of Lot No. 1;
11. Vitaliano Lauga 24 hectares of Lot No. 1;
12. Procopio Abellar 12 hectares of Lot No. 1;
13. Rufino Dador 12 hectares of Lot No. 1;
14. Roque Larayan 12 hectares of Lot No. 1;
15. Benito Lutad 12 hectares of Lot No. 1;
16. Juliana Pasamonte 11 hectares of Lot No. 1;
17. Tirso Pimentel 19 hectares of Lot No. 1; and

18. Dativa P. Velez 18 hectares of Lot No. 1.

Should the above recommendation be given due
course, it is further suggested that those claimants
included in the said recommendation who are now
occupying portions of Lot No. 2 situated above the
university grounds on the hillside which they have
already denuded, should be transferred to the lower
portions of the land near or along the Pulangi river in
order to enable the University to reforest the hillside
to protect the watershed of its irrigation system and
water supply.
After this decision become final and the portions
adjudicated to private persons have been segregated
and their corresponding technical descriptions
provided, the order of the issuance of the
corresponding decree and the certificates of title shall
be issued.
SO ORDERED. 21
Upon the submission of the parties of the compromise
agreement through a Joint Manifestation, the
cadastral court rendered its Amended Decision dated
October 7, 1972 adjudicating in full ownership of
some portions of the subject lots to the 29 groups of
claimants. 22 A portion of the fallo of the amended
decision reads:
WHEREFORE, pursuant to the evidence presented and
the compromise agreement submitted by the parties,
the decision rendered by this Court on December 22,
1971 is hereby AMENDED and another one entered
ADJUDICATING in full ownership to the claimants
hereinbelow specified the following portions of the
lots in question, to wit:
xxx xxx xxx
The remaining portions of Lots 1 and 2 not otherwise
adjudicated to any of the above-named private
claimants are hereby ADJUDICATED in full ownership
to the Central Mindanao State University. It is hereby
directed that the different portions of Lots 1 and 2
hereinabove granted to private claimants must [be
segregated] by a competent surveyor and given their
technical descriptions and corresponding lot numbers
for purposes of the issuance of certificates of title in
their favor.
It is, however, ordered that the area adjacent and
around or near the watersheds or sources of Lot No. 2
adjudicated to any of the private claimants specified
in the foregoing paragraph may be replaced or

25
substituted to the Central Mindanao State University
with other areas of equal extent in either Lot 1 or 2,
should said University desire to do so in order to
protect and conserve the watersheds.
The findings and resolutions made by the Court in its
original decision not affected by the amendments
incorporated elsewhere herein shall stand.
The petition from relief from judgment presented by
Lucio Butad which the Court finds without merit is
hereby denied.
Once the decision becomes final and the subdivision
directed in the preceding paragraph has been
accomplished, the order for the issuance of the
corresponding decree of registration and the
certificates of title in favor of each and every
adjudicatee shall likewise issue.
SO ORDERED. 23
Based on the Order made by the court that those
portions of the private claimants in the area adjacent
and around, or near the watersheds of Lot No. 2 may
be replaced or substituted by CMU with areas of equal
extent, the 16 grantees entered into an agreement
with CMU for the replacement of the areas
adjudicated to them with those outside the watershed
vicinity or beyond the area necessary for the proper
development, administration, supervision and
utilization of the portion adjudicated to CMU. 24
Thereafter, the cadastral court, in its second
amendment of the Decision dated September 12,
1974, ordered that the specific portions of the subject
lots be adjudicated to the 33 claimants as indicated in
their agreement. 25 It also awarded to CMU Lot 1-S
(18,531,671 square meters), Lot 2-A (10,001 square
meters), and Lot 2-Q (12,266,524 square meters). 26
On January 25, 1975, the court issued Decrees No. N154065, N-154066, and N-154067 in favor of CMU. 27
Consequently, OCT Nos. 0-160, 0-161 and 0-162 were
registered in the name of CMU on January 29, 1975.
28 The decretal portion of the decision reads:
WHEREFORE, finding said manifestation and
agreement of the parties in order, the dispositive
portions of the amended decision rendered by this
Court on October 7, 1972 aforementioned is further
amended such that the lots specified hereunder and
more particularly indicated in the revised plans and
technical descriptions above-mentioned are hereby
adjudicated as follows: aDSIHc

1. To Roque Larayan, Lot 1-A with an area of 120.001

square meters;
2. To Fernanda Bungcas, Lot 1-B with an area of 60.00
square meters;
3. To Tirso Pimentel, Lot 1-C with an area of 190.000
square meters;
4. To Juliana Pasamonte, Lot 1-D with an area of
109.999 square meters;
5. To Dativa Velez, Lot 1-E with an area of 180.00
square meters;
6. To Mario Bagubin, Lot 1-F with an area of 60.00
square meters;
7. To Triponia Dagoplo, Lot 1-G with an area of 60.001
square meters;
8. To Mario Baguhin, Lot 1-H with an area of 60.001
square meters;
9. To Celerina Guimba, Lot 1-I with an area of 30.001
square meters;
10. To Constantino Baston, Lot 1-J with an area of
30.001 square meters;
11. To Maximo Nulo, Lot 1-K with an area of 49.999
square meters;
12. To Beatriz Lauga, Lot 1-L with an area of 100.00
square meters;
13. To Evorcio Olohoy, Lot 1-M with an area of
177.500 square meters;
14. To Arcadio Belmis, Lot 1-N with an area of 140.000
square meters;
15. To Luciano Namuag, Lot 1-O with an area of
240.000 square meters;
16. To Vitaliano Lauga, Lot 1-P with an area of 240.000
square meters;
17. To Rufino Dador, Lot 1-Q with an area of 120.00
square meters;
18. To Procopio Abellar, Lot 1-B with an area of
120.001 square meters;
19. To Eduardo Saloay-ay, Lot 2-B with an area of
130.000 square meters;
20. To Francisco Anecito, Lot 2-C with an area of
120.000 square meters;
21. To Julita Anecito, Lot 2-D with an area of 60.000
square meters;
22. To Vicente Buntan, Lot 2-E with an area of 30.000
square meters;
23. To Victoriano Lacorda, Lot 2-F with an area of
130.000 square meters;
24. To Cerilo Salicubay, Lot 2-G with an area of 40.000

square meters;
25. To Julita Anecito, Lot 2-H with an area of 60.000
square meters;
26. To Benito Butad, Lot 2-I with an area of 120.000
square meters;
27. To Pablo Zaldivar, Lot 2-J with an area of 120.000
square meters;
28. To Magno Sepada, Lot 2-K with an area of 30.000
square meters;
29. To Anecito Nayawan, Lot 2-L with an area of
120.000 square meters;
30. To Bonifacio Anecito, Lot 2-M with an area of
60.001 square meters;
31. To Eulogio Guimba, Lot 2-N with an area of
120.001 square meters;
32. To Martina Songkit, Lot 2-O with an area of 30.000
square meters;
33. To Rosita Lapianan, Lot 2-P with an area of 40.000
square meters;
34. To Central Mindanao State University; Lot 1-S with
an area of 18,531.671 square meters;
35. To Central Mindanao State University; Lot 2-A with
an area of 10.001 square meters;
36. To Central Mindanao State University, Lot 2-Q with
an area of 12,266,524 square meters;
The findings and resolutions made by this Court in its
original decision not affected by the amendments
incorporated herein shall remain in force.
Once this decision becomes final, the order for the
issuance of the corresponding decrees of registration
and the certification of title in favor of each and every
adjudicates shall likewise issue. ETHIDa
SO ORDERED. 29
On December 15, 2003, the Republic of the
Philippines, represented by the Department of
Environment and Natural Resources through the
Office of the Solicitor General (OSG), filed before the
CA a petition for annulment of the Decision dated
September 12, 1974 by the cadastral court granting
in favor of CMU the title to the subject parcels of land.
The Republic argued that the cadastral court should
have summarily dismissed the registration
proceedings since the Solicitor General did not sign or
file the petition for compulsory registration of the
parcels of land, as provided in Sections 53 30 and 87
31 of Commonwealth Act No. 141. 32 It also alleged
that the subject parcels of land are inalienable lands

26
of public domain. 33 It maintained that the cadastral
court did not acquire jurisdiction over the res; hence,
the entire proceedings of the case should be null and
void.
Accordingly, the CA ruled in favor of the respondent.
The dispositive portion of the decision reads:
ACCORDINGLY, the instant petition is GRANTED. The
1) Decision dated December 22, 1971, 2) Amended
Decision dated October 7, 1972 and 3) Second
Amended Decision dated September 12, 1974, all
rendered by the Court of First Instance, 15th Judicial
District, Branch II, Bukidnon Province, in "L.R.C. Cad.
Rec. No. 414, Sec. 87 of Commonwealth Act 141, Ir1031-D (Lots 1 & 2), Maramag, Bukidnon, insofar as
they adjudicated a portion of the land covered by
Proclamation No. 476 to the Central Mindanao
University, are declared NULL and VOID.
Consequently, 1) Decrees No. N-154065, N-154066
and N-154067 issued in favor of the University on
January 24, 1975; and 2) Original Certificates of Title
(OCT) No. 0-160 (covering Lot 1-S), No. 0-161 (for Lot
2-A) and No. 0-162 (for Lot 2-Q) registered in the
University's name on January 29, 1975, are likewise
declared NULL AND VOID.
SO ORDERED. 34
The CA ruled that there was no sufficient proof of a
positive act by the government, such as presidential
proclamation, executive order, administrative action,
investigation reports of Bureau of Lands investigators,
or a legislative act or statute, which declared the land
of the public domain alienable and disposable. 35 The
documents adduced by CMU did not expressly declare
that the covered land is already alienable and
disposable and that one of such documents was
merely signed by the Assistant Executive Secretary.
36
According to the CA, CMU was unable to prove that
the subject land ceased to have the status of a
reservation. 37 However, the CA clarified that despite
nullification of the titles in its favor, CMU is still the
rightful possessor of the subject property by virtue of
Proclamation No. 476. 38
Hence, the petitioner CMU filed the present petition
before this Court raising the sole issue:
Whether or not the Court of Appeals:
1. committed a serious and grave error and gravely
abused its discretion on a question of law, and

2. ruled and decided a question of substance in a way

and manner not in accord with law and applicable
decisions of this Honorable Court.
in granting the petition for annulment of judgment
filed by respondent on the ground that the cadastral
court has no jurisdiction over the subject matter or
the specific res of the subject matter of the petition
below for the reason that the subject lands are
inalienable and non-disposable lands of the public
domain. 39
CMU maintains that the CA has completely
misconstrued the facts of the cadastral proceedings
since the documents it presented showed that the
subject property has already been declared,
classified, and certified by the Office of the President
as alienable and disposable lands. 40
Particularly, CMU alleges that the specific and express
authorization and the directive, as embodied in the
Second Indorsement 41 dated December 12, 1960,
from the President, through the then Assistant
Executive Secretary Enrique C. Quema, authorizing
the Director of Lands to file the necessary petition in
the CFI of Bukidnon for compulsory registration of the
parcels of land reserved for CMU's site purposes is
equivalent to a declaration and certification by the
Office of the President that the subject parcels of land
are alienable and disposable. 42
CMU has cited the case of Republic v. Judge De la
Rosa 43 wherein the then President Quirino issued on
June 22, 1951 a directive authorizing the Director of
Lands to file the necessary petition in the CFI of
Isabela for the settlement and adjudication of the
titles to the tract of land involved in the Gamu Public
Lands Subdivision, Pls-62, Case 5. This Court held that
the said presidential directive was equivalent to a
declaration and certification that the subject land area
is alienable and disposable. 44
This Court finds the instant petition without merit.
Under the Regalian doctrine, all lands of the public
domain belong to the State, and that the State is the
source of any asserted right to ownership of land and
charged with the conservation of such patrimony. 45
Also, the doctrine states that all lands not otherwise
appearing to be clearly within private ownership are
presumed to belong to the State. 46 Consequently,
the person applying for registration has the burden of
proof to overcome the presumption of ownership of

lands of the public domain. 47

To prove that a land is alienable, the existence of a
positive act of the government, such as presidential
proclamation or an executive order; an administrative
action; investigation reports of Bureau of Lands
investigators; and a legislative act or a statute
declaring the land as alienable and disposable must
be established. 48 Hence, a public land remains part
of the inalienable public domain unless it is shown to
have been reclassified and alienated by the State to a
private person. 49 cSEDTC
As noted, Proclamation No. 476 issued by then
President Garcia, decreeing certain portions of the
public domain in Musuan, Maramag, Bukidnon for
CMU's site purposes, was issued pursuant to Section
83 of C.A. No. 141. Being reserved as CMU's school
site, the said parcels of land were withdrawn from
sale and settlement, and reserved for CMU. Under
Section 88 of the same Act, the reserved parcels of
land would ordinarily be inalienable and not subject to
occupation, entry, sale, lease or other disposition,
subject to an exception, viz.:
Section 88. The tract or tracts of land reserved under
the provisions of section eighty-three shall be nonalienable and shall not be subject to occupation,
entry, sale, lease, or other disposition until again
declared alienable under the provisions of this Act or
by proclamation of the President. (Emphasis supplied)
In the case of Navy Officers' Village Association, Inc. v.
Republic, 50 it was held that parcels of land classified
as reservations for public or quasi-public uses: (1) are
non-alienable and non-disposable in view of Section
88 (in relation with Section 8) of C.A. No. 141,
specifically declaring them as non-alienable and not
subject to disposition; and (2) they remain public
domain lands until they are actually disposed of in
favor of private persons. 51 In other words, lands of
the public domain classified as reservations remain to
be property of the public dominion until withdrawn
from the public or quasi-public use for which they
have been reserved, by act of Congress or by
proclamation of the President, or otherwise positively
declared to have been converted to patrimonial
property. 52
In the case at bar, CMU relies on the Court's ruling in
the De la Rosa 53 case that the directive from the
President authorizing the Director of Lands to file the

27
necessary petition for the compulsory registration of
the parcels of land so reserved is the equivalent of the
declaration and certification that the subject land is
alienable and disposable. As such, CMU avows that
the subject lots, as declared alienable and disposable,
are properly registered in its name.
This Court finds that the De la Rosa case does not
apply in the instant petition because of the varying
factual settings, to wit:
a. In De la Rosa, the Mallig Plains Reservation was
reserved by the President for settlement purposes
under the administration of National Land Settlement
Administration (NLSA), later replaced by Land
Settlement and Development Corporation
(LASEDECO), while the subject lots in the present case
was reserved for educational purposes, e.g., as CMU's
school site, under the administration of the Board of
Trustees of CMU.
b. The National Resettlement and Rehabilitation
Administration, when it replaced LASEDECO, excluded
the Mallig Plains Reservation among the properties it
needed in carrying out the purposes and objectives of
Republic Act No. 1160, 54 thus, the Reservation
eventually reverted to and became public agricultural
land. There was no evidence that CMU ceased to use
and occupy the reserved lots in Musuan, Maramag,
Bukidnon as its school site or that its public purpose is
abandoned, for the lots to revert to and become
public agricultural land.
c. At the time that President Quirino issued the
directive, the Gamu Public Land Subdivision in the
Mallig Plains Reservation was not reserved for public
or quasi-public purpose or has ceased to be so. On the
other hand, the subject lots in Bukidnon are reserved
for public purpose when the President, through the
Assistant Executive Secretary, issued the said
directive.
d. In the De la Rosa case, the private respondent was
a qualified private claimant with the requisite period
of possession of the subject residential lot in his favor.
Meanwhile, CMU is not a private claimant of the land
so reserved.
It was explicated in De la Rosa 55 that the authority of
the President to issue such a directive, held as
equivalent to a declaration and certification that the
subject land area is alienable and disposable, finds
support in Section 7 of C.A. No. 141, to wit:

Sec. 7. 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. (Emphasis supplied).
However, the said directive by the President is limited
to those enumerated in Section 8 of C.A. No. 141,
which provides that:
Section 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.
However, the President may, for reasons of public
interest, declare lands of the public domain open to
disposition before the same have had their
boundaries established or been surveyed, or may, for
the same reason, suspend their concession or
disposition until they are again declared open to
concession or disposition by proclamation duly
published or by Act of the National Assembly.
(Emphases supplied) SDAaTC
As can be gleaned from the above provision, the lands
which can be declared open to disposition or
concession are those which have been officially
delimited and classified, or when practicable
surveyed; those not reserved for public or quasipublic purpose; those not appropriated by the
Government; those which have not become private
property in any manner; those which have no private
right authorized and recognized by C.A. No. 141 or
any other valid law may be claimed; or those which
have ceased to be reserved or appropriated.
For the said President's directive to file the necessary
petition for compulsory registration of parcels of land
be considered as an equivalent of a declaration that
the land is alienable and disposable, the subject land,
among others, should not have been reserved for
public or quasi-public purposes.
Therefore, the said directive on December 12, 1960
cannot be considered as a declaration that said land

is alienable and disposable. Unlike in De la Rosa, the

lands, having been reserved for public purpose by
virtue of Proclamation No. 476, have not ceased to be
so at the time the said directive was made. Hence,
the lots did not revert to and become public
agricultural land for them to be the subject of a
declaration by the President that the same are
alienable and disposable.
We have ruled in the case of CMU v. DARAB 56 that
the CMU land reservation is not alienable and
disposable land of public domain, viz.:
It is our opinion that the 400 hectares ordered
segregated by the DARAB and affirmed by the Court
of Appeals in its Decision dated August 20, 1990, is
not covered by the [Comprehensive Agrarian Reform
Program] CARP because:
(1) It is not alienable and disposable land of the public
domain;
(2) The CMU land reservation is not in excess of
specific limits as determined by Congress;
(3) It is private land registered and titled in the name
of its lawful owner, the CMU;
(4) It is exempt from coverage under Section 10 of
R.A. 6657 because the lands are actually, directly and
exclusively used and found to be necessary for school
site and campus, including experimental farm stations
for educational purposes, and for establishing seed
and seedling research and pilot production centers.
The inalienable character of the lands as part of the
long term functions of autonomous agricultural
educational institution is reiterated in CMU v.
Executive Secretary: 57
It did not matter that it was President Arroyo who, in
this case, attempted by proclamation to appropriate
the lands for distribution to indigenous peoples and
cultural communities. As already stated, the lands by
their character have become inalienable from the
moment President Garcia dedicated them for CMU's
use in scientific and technological research in the field
of agriculture. They have ceased to be alienable
public lands. 58
This Court is not unmindful of its earlier
pronouncement in CMU v. DARAB that the land
reservation is a private land registered and titled in
the name of its lawful owner, the CMU. This
pronouncement, which is now being argued by CMU
as one of its bases in convincing this Court that the

28
subject property is owned by it and already alienable,
is specious. The 1992 CMU case merely enumerated
the reasons why the said portion of the property is
beyond the coverage of CARP. Moreover, the fact that
the Court had already settled the inalienable
character of the subject property as part of the long
term functions of the autonomous agricultural
educational institution in the case of CMU v. DARAB
and reiterated in CMU v. Executive Secretary, belies
CMU's contention that this Court has recognized that
the said land is a private property or that the land is
alienable and disposable.
As to what constitutes alienable and disposable land
of the public domain, this Court expounds in its
pronouncements in Secretary of the Department of
Environment and Natural Resources v. Yap: 59
xxx xxx xxx
A positive act declaring land as alienable and
disposable is required. In keeping with the
presumption of State ownership, the Court has time
and again emphasized that there must be a positive
act of the government, such as an official
proclamation, declassifying inalienable public land
into disposable land for agricultural or other purposes.
In fact, Section 8 of CA No. 141 limits alienable or
disposable lands only to those lands which have been
"officially delimited and classified."
The burden of proof in overcoming the presumption of
State ownership of the lands of the public domain is
on the person applying for registration (or claiming
ownership), who must prove that the land subject of
the application is alienable or disposable. To
overcome this presumption, incontrovertible evidence
must be established that the land subject of the
application (or claim) is alienable or disposable. There
must still be a positive act declaring land of the public
domain as alienable and disposable. To prove that the
land subject of an application for registration is
alienable, the applicant must establish the existence
of a positive act of the government such as a
presidential proclamation or an executive order; an
administrative action; investigation reports of Bureau
of Lands investigators; and a legislative act or a
statute. The applicant may also secure a certification
from the government that the land claimed to have
been possessed for the required number of years is
alienable and disposable. 60

29
In the case at bar, CMU failed to establish, through
incontrovertible evidence, that the land reservations
registered in its name are alienable and disposable
lands of public domain. Aside from the series of
indorsements regarding the filing of the application
for the compulsory registration of the parcels of land
and the said directive from the President, CMU did not
present any proof of a positive act of the government
declaring the said lands alienable and disposable.
acEHCD
For lack of proof that the said land reservations have
been reclassified as alienable and disposable, the said
lands remain part of inalienable public domain, hence;
they are not registrable under Torrens system.
This Court will not discuss the other issue raised by
CMU, e.g., the filing of the petition for cadastral
proceeding was pursuant to the written consent,
authorization and directive of the OSG, as the same
was not discussed in the assailed Decision of the CA.
This Court also dismisses the other issue raised
that the titles in CMU's name were singled out by
respondent for lack of evidence.
WHEREFORE, the petition for review on certiorari
dated January 14, 2011 filed by petitioner Central
Mindanao University is hereby DENIED. The Decision
dated December 30, 2010 of the Court of Appeals in
CA-G.R. SP No. 81301 is hereby AFFIRMED. The
proceedings in the Court of First Instance, 15th
Judicial District, Branch II of Bukidnon is NULL and
VOID. Accordingly, Original Certificate of Title Nos. 0160, OCT No. 0-161 and OCT No. 0-162 issued in the
name of petitioner, are CANCELLED. Sheet 1, Lot 1 of
Ir-1031-D and Sheet 2, Lot 2 of Ir-1031-D are
ORDERED REVERTED to the public domain.
SO ORDERED.
Velasco, Jr., Perez, Reyes and Jardeleza, JJ., concur.
||| (Central Mindanao University v. Republic, G.R. No.
195026, [February 22, 2016])

SECOND DIVISION
[G.R. No. L-28021. December 15, 1977.]
JULIAN SANTULAN, substituted by his
children named PATROCINIO, ADORACION,
ARTURO, CONSTANCIA, and PEPITA, all
surnamed SANTULAN, and minor
grandchildren, JOCELYN, ROSAURO and
ROBERTO, all surnamed SANTULAN,
assisted by their guardian ad litem,
PATROClNlO SANTULAN, petitionersappellants, vs. THE EXECUTIVE
SECRETARY, THE SECRETARY OF
AGRICULTURE AND NATURAL
RESOURCES, THE DIRECTOR OF LANDS,
and ANTONIO LUSIN, substituted by his Heirs
named TEODOSIA BALANZA (widow) and
Children LEOPOLDO, ARMANDO,
ALFONSO, EMILIANO, MAGDALENA,
ERLINDA and ESTRELLA (ESTER), all
surnamed LUSIN, and Heirs of CAROLINA
LUSIN-LUCERO named MANOLITO
LUCERO and MARIO LUCERO, respondentsappellees.
Isidoro Crisostomo for appellants Heirs of Julian
Santulan.
Romulo C. Felizmea for appellees Heirs of Antonio
Lusin.
Solicitor General Arturo A. Alafriz, Assistant Solicitor
General Esmeraldo Umali and Solicitor Conrado T.
Limcaoco for The Executive Secretary, etc.
DECISION
AQUINO, J p:

This case is about the lease of a parcel of foreshore

land of the public domain with an area of about four
and one-half hectares located at Barrio Kaigin, Kawit,
Cavite abutting on Bacoor Bay and the Ankaw Creek.
It is a protracted controversy that has been pending
for more than thirty years between the rival
claimants, Julian Santulan and Antonio Lusin, who
have been succeeded by their heirs.
Santulan claimed that foreshore land was an
extension of his land, Lot No. 986 of the Kawit
cadastre, with an area of 17,301 square meters,
registered in his name in 1937 under Original
Certificate of Title No. 6 which was issued by virtue of
a free patent. The northern boundary of Lot No. 986 is
Bacoor (Manila) Bay (Exh. A). The said foreshore land
was allegedly formed by soil deposits accumulated by
the alluvial action of the sea.
On December 5, 1942 Santulan caused the said land
to be surveyed. The survey plan was approved by the
Director of Lands in 1944 (Exh. B). On December 29,
1942 Santulan, pursuant to Lands Administrative
Order No. 7-1, filed an application, F.L.A. No. V-562, to
lease for five years for agricultural purposes an area
of 36,120 square meters of the said foreshore land
(Exh. F).
On that same date, December 29, 1942, Santulan,
pursuant to Act No. 3077 and Lands Administrative
Order No. 8-3, filed with the Bureau of Lands an
application for a revocable permit to occupy the said
land. He indicated therein that he would use the land
for "capiz beds and oyster beds, the planting of
bakawan and pagatpat and later to be developed into
a fishpond" (Exh. G).
Seven years later, or on December 22, 1949, Santulan
filed with the Bureau of Fisheries an application for an
ordinary fishpond permit or lease of the said foreshore
land (Special Use Permit Fp. A. No. 5114, Exh. H).
At the instance of the Director of Fisheries, the
Director of Forestry investigated the condition of the
said foreshore land. The latter in his first indorsement

30
dated June 19, 1950 found that it was swampy "and
not an improved fishpond as alleged by Antonio Lusin"
and that it is within the disposable areas for
agricultural purposes under the jurisdiction of the
Bureau of Lands (Exh. L-1).
The chief of the division of commercial fisheries sent a
letter to Lusin dated April 28, 1950 apprising him that
he was reported to have illegally entered the area
covered by Santulan's fishpond permit application and
directing him to refrain from introducing
improvements, with the warning that court
proceedings would be taken against him (Exh. J).
On January 12, 1951 an attorney, acting for the
Director of Lands wrote the following letter to Lusin
advising him to vacate the disputed land and
maintain the status quo:
"Mr. Antonio Lusin
Caigin, Kawit, Cavite
"Sir:
"We have been informed that the area which is
presently controverted by and between you and Julian
Santulan, under the applications noted above, was
recently entered by you and some companions and
that you are destroying the dikes and other
improvements previously constructed thereon by said
Julian Santulan.
"If this information is true, and inasmuch as you are
aware that the controversy is still pending final
adjudgment in this Office, it is desired that you take
proper advice and leave the area and its existing
improvements in status quo in order to avoid possible
confusion of rights which may delay the final
disposition of the area in question.
"You are advised further that the acts imputed to you
may make you liable to prosecution and punishment
under the law; and that whatever improvements you
may make for yourself in the premises will not legally
accrue to your benefit, nor will they serve as basis for
a claim to preferential rights." (Paragraphing supplied,
Exh. J-1)

Santulan declared the said foreshore land in his name

for tax purposes. Tax Declaration No. 2923, which
took effect in 1948 and which cancelled Tax
Declaration No. 13816 also in Santulan's name, shows
that the land was assessed at P460. He paid the
realty taxes due on the said land for the years 194546, 1948-55 and 1957-60 (Exh. C, D and E, et seq.)
On the other hand, Antonio Lusin in 1942 and 1945
(he died in 1962) filed with the Bureau of Lands
applications for a revocable permit and lease of a
foreshore land, respectively, for the purpose of
producing salt on the said land. He claimed that he
had been in the continuous and exclusive possession
of the land since 1920, when it was still under water,
and that he had used it as a site of his fish corrals.
He allegedly converted two hectares of the said land
into a fishpond. The entire area was enclosed with
mud dikes and provided with a concrete sluice gate
and another sluice gate made of wood On the
northern part of the land bordering the bay were
bamboo stakes placed at close intervals to serve as
water breakers to protect the mud dikes from being
washed away by the action of the sea. Lusin
introduced the alleged improvements from 1951 to
1953.
The 1942 foreshore lease applications of Santulan and
Lusin gave rise to Bureau of Lands Conflict No. 8 (N).
The Director of Lands in his decision in that case
dated February 1, 1951 found that the disputed land
is foreshore land covered and uncovered by the flow
and ebb of the ordinary tides; that it is an extension of
Santulan's Lot No. 986 and it was formerly a part of
the sea; that Santulan was the first to enter the land
and to make dikes thereon, and that Lusin entered the
land later and made dikes also (Exh. K made a part
hereof for reference as Annex A).
The Director ruled that the disputed foreshore land
was subject "to reparian rights which may be invoked
by Santulan as owner of the upland in accordance
with section 32 of Lands Administrative Order No. 7-1"
(Exh. K). Hence, the Director rejected Lusin's
application for a foreshore lease and for a revocable
permit and gave due course to Santulan's foreshore

lease application.
Lusin filed a motion for reconsideration. The Director
in his order of October 19, 1951 denied that motion.
He found that Lusin was a possessor in bad faith; that
it is not true that Lusin had improved and possessed
the said foreshore land for twenty years; that the
disputed area is covered by water, two to three feet
deep during ordinary tides and is exposed land after
the ebb of the tides, and that Lusin's alleged
possession and improvements could not nullify
Santulan's preferential right to lease the land by
reason of his riparian rights. The Director ordered
Lusin to vacate the land within sixty days from notice
(Exh. L made a part hereof for reference as Annex B).
Lusin appealed to the Acting Secretary of Agriculture
and Natural Resources who in his decision of October
13, 1952 dismissed the appeal and affirmed the
Director's 1951 decision (Exh. M made a part hereof
for reference as Annex C). Lusin's motion for
reconsideration was denied in the Secretary's order of
February 28, 1953 (Exh. N made a part hereof for
reference as Annex D).
Lusin asked for a reinvestigation of the Case. His
request was granted. The Department ordered a
reinvestigation on May 12, 1953.
After receipt of the report of reinvestigation, the
Undersecretary of Agriculture and Natural Resources,
by authority of the Secretary, in his order of
December 14, 1954, reaffirmed the rejection of
Lusin's revocable permit and foreshore lease
applications but ordered Santulan to reimburse to
Lusin the appraised value of his improvements (Exh.
O made a part hereof for reference as Annex E).
Lusin appealed to the President of the Philippines
after his motion for reconsideration was denied in the
Undersecretary's order of May 19, 1955 (Exh. OO
made a part hereof for reference as Annex F).
Executive Secretary Juan C. Pajo, by authority of the
President, held in his decision of April 10, 1958 that
section 32 of Lands Administrative Order No. 7-1
(promulgated by the Secretary of Agriculture and

31
Natural Resources on April 30, 1936 pursuant to Acts
Nos. 2874 and 3038) was "rendered obsolete" by
section 67 of the Public Land Law which took effect on
December 1, 1936 (Exh. P made a part hereof for
reference as Annex G).
On the basis of the foregoing ruling and since the
record is silent as to whether or not the land in
question has been declared by the President as not
necessary for the public service and as open to
disposition (Sec. 61, Public Land Law), the Executive
Secretary sustained Lusin's appeal and reversed the
orders of the Director of Lands and the Secretary of
Agriculture and Natural Resources in favor of
Santulan. Secretary Pajo decided the case in the
alternative as follows:
"On the assumption that the land in question has
been declared open for disposition and is not
necessary for the public service, this Office directs
that an oral bidding for the leasing thereof to
interested parties pursuant to the provisions of
Section 67 of Commonwealth Act No. 141 be
conducted and the contract of lease awarded to the
highest bidder. Whoever shall be the highest bidder, if
other than the appellant, shall be required to pay to
the appellant the appraised value of the
improvements introduced by him on the land to be
determined by that Department.

"If the land in question has not been so declared, this

Office directs that a revocable permit under Section
68 of Commonwealth Act No. 141 be issued to the
appellant requiring him to pay permit fees since the
year 1951.
"Accordingly, the orders and decisions of that
Department and the Bureau of Lands are hereby
revoked."
Santulan's case was distinguished from that of
Gonzalo Monzon whose Lot No. 987 adjoins Santulan's
Lot No. 986. Executive Secretary Fred Ruiz Castro
(now Chief Justice) in his decision of May 10, 1954
upheld the preferential right of Monzon to lease the

foreshore land north of his lot, which foreshore land is

adjacent to the foreshore land now in dispute in this
case (Exh. Q made a part hereof for reference as
Annex H).
Santulan's motion for reconsideration was denied in
the letter of the Acting Executive Secretary dated
August 20, 1959 (Exh. W).
On October 22, 1959 Santulan filed in the Court of
First Instance of Cavite a petition for certiorari
wherein he alleged that the Executive Secretary
committed a grave abuse of discretion in
misinterpreting certain provisions of Act No. 2874,
Commonwealth Act No. 141, and Lands Administrative
Order No. 7-1.
In the lower court the parties agreed that the case
involves only a question of law. On August 18, 1961
the lower court dismissed the petition and affirmed
the Executive Secretary's decision. Santulan appealed
to the Court of Appeals which in its resolution of July
21, 1967 elevated the record to this Court on the
ground that Santulan in his brief raised only the legal
questions of whether the Public Land Law repealed
section 32 of Lands Administrative Order No. 7-1 and
whether the Executive Secretary's decision is "legally
sound and correct" (CA-G. R. No. 30708-R).
It should be emphasized that, as found by the
investigators of the Bureau of Lands, Santulan was
the prior possessor of the foreshore land in question.
He had it surveyed in 1942. The survey plan (Psu115357) was approved by the Director of Lands in
1944. Santulan paid the realty taxes on that land.
It should further be underscored that the regulations
give him a preferential right to lease the land as a
riparian owner. Lands Administrative Order No. 7-1
dated April 30, 1936, which was issued by the
Secretary of Agriculture and Natural Resources upon
the recommendation of the Director of Lands for the
disposition of alienable lands of the public domain,
provides:
"32. Preference of Riparian Owner. The owner of
the property adjoining foreshore lands, marshy lands

or lands covered with water bordering upon shores or

banks of navigable lakes or rivers, shall be given
preference to apply for such lands adjoining his
property as may not be needed for the public service,
subject to the laws and regulations governing lands of
this nature, provided that he applies therefor within
sixty (60) days from the date he receives a
communication from the Director of Lands advising
him of his preferential right."
Paragraph 32 quoted above is a substantial copy of
paragraph 4 of Lands Administrative Order No. 8-3
dated April 20, 1936, which was promulgated by the
Secretary of Agriculture and Natural Resources upon
the recommendation of the Director of Lands for
issuance of temporary permits of occupation and use
of agricultural lands of the public domain.
The word "riparian" in paragraphs 32 and 4 of the
departmental regulations is used in a broad sense as
referring to any property having a water frontage
(Shepard's Point Land Co. vs. Atlantic Hotel, 44 S. E.
39, 45, 132 N. C. 517, 65 C. J. S. 143, note 84). Strictly
speaking, "riparian" refers to rivers. A riparian owner
is a person who owns land situated on the bank of a
river.
But in paragraphs 32 and 4, the term "riparian owner"
embraces not only the owners of lands on the banks
of rivers but also the littoral owners, meaning the
owners of lands bordering the shore of the sea or lake
or other tidal waters. The littoral is the coastal region
including both the land along the coast and the water
near the coast or the shore zone between the high
and low watermarks.
Therefore, on the basis of paragraphs 32 and 4 of the
said administrative regulations, Santulan or his heirs
should be allowed to leased or occupy the said
foreshore land.
But the Executive Secretary ruled that paragraph 32
was rendered obsolete by Commonwealth Act No. 141
or, as held by the trial court, Lands Administrative
Order No. 7-1 was repealed by the Public Land Law. Is
that conclusion correct? We hold that it is wrong.

32
It is true that Lands Administrative Orders Nos. 7-1
and 8-3 were issued when the 1919 Public Land Act
was in force or before the present Public Land Law
took effect on December 1, 1936. But that
circumstance would not necessarily mean that the
said departmental regulations are not good under the
1936 Public Land Law.
In rationalizing the alleged repeal of paragraph 32,
the Executive Secretary cited the following provisions
of Act No. 2874, the 1919 Public Land Act (15 Public
Land Laws 24):
"SEC. 64. The lease or sale shall be adjudicated to the
highest bidder; and if there is no bidder besides the
applicant, it shall be adjudicated to him. The
provisions of section twenty-seven of this Act shall be
applied wherever 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
otherwise the lease or sale of those lots, if necessary."
(Section 27 refers to sealed bidding)
The Executive Secretary held that the above-quoted
section 64 was repealed by the following provisions of
Commonwealth Act No. 141 which took effect on
December 1, 1936:
"SEC. 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 wherever 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 or sale of those lots, if necessary." (Section 26,
like section 27 of Act No. 2874, refers to sealed
bidding)
The Executive Secretary noted that under section 64
of Act No. 2874 sealed bidding was the general rule of
procedure in determining an award of a lease of
foreshore land and that the applicant is entitled to

equal the bid of the highest bidder. On the other

hand, under section 67, oral bidding is the general
rule.
Hence, the Executive Secretary assumed that, while
under section 64 of the 1919 old Public Land Act, the
fact that the applicant has a preferential right to lease
foreshore land was a crucial factor, it is unimportant
under section 67 of the 1936 Public Land Law because
in oral bidding the applicant is not entitled to equal
the bid of the highest bidder.
The Executive Secretary concluded that, because the
preferential right of the applicant to lease foreshore
land was immaterial under section 67 of the present
Public Land Law, paragraph 32 of Lands
Administrative Order No. 7-1, which gives such
preference, had become "idle and useless".
That conclusion is wrong because it is based on the
erroneous hypothesis that section 64 of the 1919
Public Land Act is different from section 67 of the
1936 Public Land Law. They are not different. The
truth is that section 64 was amended by Act No. 3517
which took effect on February 4, 1929 (24 Public Laws
416). Section 64, as thus amended, is substantially
the same as section 67 of the 1936 Public Land Law.
That fact was overlooked by the Executive Secretary.
Hence, his conclusion, that paragraph 32 of Lands
Administrative Order No. 7-1 was repealed or
rendered obsolete by section 67 of the present Public
Land Law, is wrong because its premise is wrong.
In other words, paragraph 32 of Lands Administrative
Order No. 7-1, issued on April 30, 1936, was
promulgated under section 64 of the old Public Land
Law, as amended. And since the amended section 64
was substantially reproduced in section 67 of the
present Public Land Law, it is glaringly incorrect to say
that section 67 rendered obsolete the said paragraph
32. Paragraph 32 is still in force and is good under the
existing Public Land Law.
The foregoing discussion reveals that the Executive
Secretary's rationalization of the alleged repeal of
paragraph 32 of Lands Administrative Order No. 7-1

(identical to paragraph 4 of Lands Administrative

Order No. 8-3) is not only deficient in clarity and
cogency but is predicated on the false assumption
that section 64 of the 1919 Public Land Act is different
from section 67 of the present Public Land Law.
Consequently, the aforementioned decision of
Executive Secretary Juan C. Pajo under review has to
be set aside.
This case is governed by the precedent established in
the case of Gonzalo Monzon, which, as already noted,
is similar to this case since the foreshore land
involved in the Monzon case is adjacent to the
foreshore land involved in this case.
In the Monzon case, the Office of the President,
applying the oftcited paragraph 32 of Lands
Administrative Order No. 7-1 held that Monzon, the
littoral owner of the registered land abutting upon the
foreshore land, has the preferential right to lease the
foreshore land.
The location of the lots of Santulan and Monzon and
the foreshore lands abutting thereon is shown in the
following sketch based on the plan, Psu-115357 (Exh.
B):
[image]
Considering that the foreshore land abutting upon
Santulan's lot is in the same situation as the foreshore
land abutting upon Monzon's lot, there is no reason
why Santulan should not enjoy, with respect to the
disputed foreshore land, the rights given to Monzon
over the foreshore land adjacent to his lot.
Now, then, is there any justification for giving to the
littoral owner the preferential right to lease the
foreshore land abutting on his land?

That rule in paragraph 32 is in consonance with article

4 of the Spanish Law of Waters of 1866 which
provides that, while lands added to the shores by
accretions and alluvial deposits caused by the action
of the sea forth part of the public domain, such lands,
"when they are no longer washed by the waters of the

33
sea and are not necessary for purposes of public
utility, or for the establishment of special industries,
or for the coast guard service", shall be declared by
the Government "to be the property of the owners of
the estates adjacent thereto and as increment thereof
." (cited in Ignacio vs. Director of Lands, 108 Phil. 335,
338).
In other words, article 4 recognizes the preferential
right of the littoral owner (riparian according to
paragraph 32) to the foreshore land formed by
accretions or alluvial deposits due to the action of the
sea (Ker & Co. vs. Cauden, 6 Phil. 732, 736, 223 U. S.
268, 56 L. Ed. 432, 435; Jover vs. Insular Government,
10 Phil. 522, 40 Phil. 1094, 1100, 221 U. S. 623, 55 L.
Ed. 884).
The reason for that preferential right is the same as
the justification for giving accretions to the riparian
owner, which is that accretion compensates the
riparian owner for the diminutions which his land
suffers by reason of the destructive force of the
waters (Cortes vs. City of Manila, 10 Phil. 567). So, in
the case of littoral lands, he who loses by the
encroachments of the sea should gain by its recession
(Banks vs. Ogden, 2 Wall. 57, 67, 17 L Ed. 818, 821).
That preferential right is recognized in American
jurisprudence where the rule is that the owner of the
land adjacent to navigable waters has certain riparian
or littoral rights of a proprietary nature not possessed
by the general public which rights are incident to the
ownership of the banks or the uplands: riparian as
respects the waters of a river and littoral as to sea
waters or the waters of a lake (65 C. J. S. 143-145).
It may be mentioned that the Director of Lands stated
in his manifestation of October 26, 1977 that Lands
Administrative Orders Nos. 7-1 and 8-3 are still in
force and have not been superseded by any later
regulations and that the directive of the President of
the Philippines to the Director of Lands dated May 24,
1966, stopping the grant of foreshore leases all along
Manila Bay, towards Cavite and Bataan, has not
rendered the instant case moot and academic
"because the foreshore lease application involved is
pending award."

34
In view of the foregoing considerations, the trial
court's decision and the decision of the Executive
Secretary dated April 10, 1958 are reversed and set
aside and the order of the Undersecretary of
Agriculture and Natural Resources dated December
14, 1954 and the orders of the Director of Lands
dated February 1 and October 19, 1951 are affirmed.
The lease application of Julian Santulan mentioned in
the order of February 1, 1951 should be recorded in
the names of his heirs and the obligation to make
reimbursement mentioned in the dispositive part of
the Undersecretary's order should now devolve upon
the heirs of Santulan. The reimbursement should be
made to the heirs of the late Antonio Lusin. The
obligation to vacate the disputed land, as required in
the Director's order of October 19, 1951 devolves
upon the heirs of Lusin. Costs in both instances
against respondent heirs of Lusin. (As amended by
Resolution of February 17, 1977.
SO ORDERED.
Barredo, Antonio, Concepcion Jr. and Guerrero, JJ.,
concur.
Guerrero, J., was designated to sit in the Second
Division.
Fernando and Santos, JJ., are on leave.
Annexes to Opinion in L-28021, Julian Santulan
vs. Executive Secretary, et al.
F.L.A. No. V-562, R.P.A. (New). Julian Santulan,
Applicant & Contestant vs. F.L.A. (New), R.P.A. (New),
B.L. Conflict No. 8 (N) Psu-115357, Kawit, Cavite.
Julian Santulan, Applicant-Appellee vs. Antonio Lusin,
Applicant-Appellant, D.A.N.R. Case No. 625, Psu115357, Kawit, Cavite.
Annex A Order of Director of Lands dated February
1, 1951.
Annex B Order of Director of Lands dated October
19, 1951.

Annex C Decision of Acting Secretary of Agriculture

and Natural Resources dated October 13, 1952.
Annex D Order of Secretary of Agriculture and
Natural Resources dated February 28, 1953.
Annex E Order of Undersecretary of Agriculture and
Natural Resources dated December 14, 1954.
Annex F Order of Undersecretary of Agriculture and
Natural Resources dated May 19, 1955.
Annex G Decision of Executive Secretary Juan C.
Pajo dated April 10, 1958.
Annex H Decision of Executive Secretary Fred Ruiz
Castro dated May 10, 1954 in Emiliano del Rosario vs.
Gonzalo Monzon.
ANNEX A
ORDER
Julian Santolan, who owns Lot No. 986 of the Kawit
Cadastre, under a free patent grant with Original
Certificate of Title No. 6 issued to him on June 9,
1937, claims preferential rights to all the areas
extending seaward from the said lot. He caused the
said areas to be surveyed for him in 1942, and the
survey plan thereof was approved in 1944, as may be
seen in the Survey Plan Psu-115357 of this Office
which is reproduced in the sketch drawn on the back
of the last page hereof. Except the portion marked "A"
in the sketch, he made a foreshore lease application
and a revocable permit application for these areas in
1942 to devote the areas applied for to fishpond
purposes. Presently, he now includes the portion "A"
in his applications herein mentioned to be devoted to
the same purposes, in fact, he now intends to
utilize the entire area comprised in his Survey Psu115357 for fishery purposes and has filed therefor
with the Bureau of Fisheries fishpond permit
application No. 5114. Upon this claim he contests the
revocable permit (new) application and the foreshore
lease (new) application for the portion of these areas
marked "X" in the sketch which were filed by Antonio
Lusin in 1942 and 1945, respectively, for saltproducing purposes.

Lot No. 986 of the Kawit Cadastre, mentioned above

as owned by Julian Santolan, appears to be bounded
on the north by the Bacoor Bay. It is evident therefore
that the areas now comprised in Santolan's Survey
Psu-115357 were formerly parts of the bay, and that
presently they exist as a result of the recession of the
waters of the sea. Investigation disclosed that these
areas are now foreshore lands, covered and
uncovered by the flow and ebb of the ordinary tides.
Santolan was found to have entered the areas first
and made dikes. Lusin was found to have entered
lately and made dikes also. None of them, however,
has obtained from this Office any permit of occupancy
and use, and their applications are not yet approved.
On the basis alone of actual occupancy or introduction
of improvements neither of the parties here may
claim preferential rights, for under the law and
regulations, it is only such occupancy and introduction
of improvements as are made upon the authority of
an official permit issued by this Office which could
serve as a reason for holding a sealed bidding in a
public auction of the right to lease at which the
permittee is given the preferred right to equal the
highest bid that might be put by any other party. This
is the rule prescribed by Section 67 of Commonwealth
Act No. 141 (the Public Land Act). It appears,
however, that the areas, portions "A", "X" and the
parts extending up to the Bacoor Bay now, as may be
seen in the sketch, which are comprised by
Santolan's Survey Plan Psu-115357, are immediately
adjoining Lot No. 986, which is his private property,
and are extensions of the said lot to the sea. The
areas, being foreshore lands, are therefore subject to
riparian rights which may be invoked by Santolan as
owner of the upland in accordance with Section 32 of
Lands Administrative Order No. 7-1 which provides
the following:
"Sec. 32. The owner of the property adjoining
foreshore lands, marshy lands, or lands covered with
water bordering upon the shores or banks of
navigable lakes or rivers, shall be given preference to
apply for such lands adjoining his property as may not
be needed for the public service, subject to the laws
and regulations governing lands of this nature,

provided that he applies therefor within 60 days from

the date he receives a communication from the
Director of Lands advising him of his preferential
right."
As Julian Santolan is interested in utilizing the entire
areas covered by his Survey Psu-115357 over which
he is fully entitled to exercise his riparian rights, the
above-noted foreshore lease (new) application and
revocable (new) application of Antonio Lusin, both
covering the portion marked "X" in the sketch, are
hereby rejected. The base application of Santolan,
shall be recorded as Foreshore Lease Application No.
562 and given due course for the whole area
(including portion "A") shown in the said sketch.
SO ORDERED.
Manila, Philippines, February 1, 1951.
JOSE P. DANS
Director of Lands
ANNEX B
ORDER
Counsel for respondent Antonio Lusin has filed in due
time a motion for the reconsideration of our Order of
February 1, 1951, which resolved this case in favor of
contestant Julian Santolan, praying that the said order
be set aside and the case, reopened for purposes of a
formal hearing for the submission of evidence.
Substantially stated, respondent Lusin claims that he
is entitled to preference because he has been in
possession of the premises for a period of over twenty
years, placing stakes and planting aquatic trees for
the raising and cultivation of shell fish and sea shells,
besides constructing dikes for ponding fish and
making salt beds, all these works undertaken by
him being the cause for the gradual filling of the area
and its conversion into a productive state. He
contends that the areas under question had been
formed thru "artificial accretion" caused by his own
labor and, consequently, he has the right of preemption.
There is no question, however, that the areas under
question are parts of the foreshore. Under Section 61
of Commonwealth Act No. 141 (Public Land Act), they

are disposable to private parties by lease only and not

otherwise; and under Section 67 of the same Act, the
lease shall be made thru oral bidding, the
adjudication to be made to the highest bidder.

There is no question also that the areas under

question extend to the sea from Lot No. 986 of the
Kawit Cadastre, which is actually owned by
respondent Santolan under Original Certificate of Title
No. 6 of the land records of Cavite. Undoubtedly,
respondent has riparian rights to the foreshore in
question which he can invoke against contestant
Lusin under the provisions of Section 32 of Lands
Administrative Order No. 7-1, quoted in toto in the
order sought to be reconsidered.
Records show that the areas under question are also
involved in the Fishpond Application No. 5114 of Julian
Santolan with the Bureau of Fisheries which is also
contested by Antonio. It appears that upon request of
the Director of Fisheries to the Bureau of Forestry for
certification as to the availability of the areas for
fishery purposes, the latter made investigation,
inquiring at the same time into the claim of Antonio
Lusin, made formally in writing, that he has improved
the areas into a fishpond and has been in occupation
thereof for more than 20 years. The Bureau of
Forestry made the findings that those areas are within
the disposable areas for agricultural purposes under
the jurisdiction of the Bureau of Lands; and that they
are swampy lands, formerly under sea water of the
Bacoor Bay, "and not an improved fishpond as alleged
by Antonio Lusin". These findings were transmitted to
the Director of Fisheries under first indorsement dated
June 19, 1950.
Our own investigating officer, reporting on this case
on January 25, 1951, stated the following: "On
December 15, 1950, when I conducted the first ocular
inspection of the premises in the presence of both
parties, the only visible improvements found thereon
are the newly constructed dikes made thereon by
Julian Santolan, a few bacauan and ape-ape trees of
about two to three years old, bamboo stakes placed
thereon at intervals, and a small old hut located at

35
almost the middle of the land in question. All these
improvements were claimed to have been introduced
by Julian Santolan. Antonio Lusin, however, claimed
that those bamboo stakes found therein were his."
It is evident from the findings of both the inspecting
officer of the Bureau of Forestry and our own
investigating officer that the areas under question are
foreshore lands, and that they have not been really
improved and possessed by respondent Lusin for over
twenty years as he alleged. The improvements found
therein have been recently made, and they are not of
such nature and extent as would have changed the
character of the areas as foreshore. In fact, according
to the investigating officer, the areas have been seen
by him on different occasions, and he found that the
same, as well as the neighboring areas in the same
belt, were covered by tidal waters of from 2 to 3 feet
deep during ordinary rise of the tides, and uncovered
by the tides at ebb.
There is, therefore, no reason for changing our
disposition in our order of February 1, 1951. It is not
necessary to re-open the case to receive evidence on
respondent's allegation that he has been in
possession of the premises for over 20 years and has
gradually improved them because, aside from the fact
that the allegation is belied by the physical condition
of the premises, whatever evidence may be gathered
on that allegation could not change the nature of the
areas as foreshore, nor would it avoid the rights of
contestant as riparian owner. The presence of the
respondent in the premises has not been authorized
by competent authorities, and his introduction of
improvements thereon was not done with proper
permit of temporary occupancy and use such as is
prescribed in our administrative practice. The
circumstances under which he made improvements
cannot justify his claim for a preferred right under
Section 67 of the Public Land Act; on the contrary, he
stands to forfeit the improvements to the Government
for, as reported by our investigating officer, he
entered the premises and commenced making the
improvements after contestant Santolan himself has
already made improvements, and after he has been
warned on December 15, 1950 by the investigating
officer not to continue working, which warning was

confirmed by us in our letter to him of January 12,

1951. His bad faith is quite evident, and he cannot
avail of his presence in the premises now to demand
the issuance to him of a provisional or revocable
permit of temporary occupancy and use under our
rules and regulations in order to legalize his entry and
give validity to his improvements. The right to
demand issuance of such a permit is concomittant to
the right of contestant Santolan to be a preferred
applicant by virtue of his riparian right recognized in
Section 32 of Land Administrative Order No. 7-1 cited
hereinabove.
IN VIEW HEREOF, the instant motion for
reconsideration and reinvestigation of respondent
Antonio Lusin is hereby denied, and he shall vacate
the premises within 60 days from receipt of notice
hereof.
SO ORDERED.

lease application for the entire tract entervening

between his property and Bacoor Bay. So he caused
Psu-115357 to be executed and same was approved
in 1944 by the Director of Lands.
On November 26, 1945, Antonio Lusin applied for
permit for an area of 4.5 hectares for salt bed
purposes. The area for which permit was asked, is
covered by his F.L.A. (New) filed on November 17,
1945, the boundaries of which are as follows:
NE V. del Rosario and E. del Rosario
SE Julian Santolan
SW Ankaw River
NW Bacoor Bay.
The two applications of Santolan and Lusin cover the
same area. Julian Santolan duly protested in 1946
against Lusin's application. The question to be
decided in this appeal is: Which of the two applicants,
Julian Santolan or Antonio Lusin, has right of
preference to the land in controversy?

Manila, Philippines, October 19, 1951.

JOSE P. DANS
Director of Lands
ANNEX C
DECISION
The order of the Director of Lands dated February 1,
1951, rejected Foreshore Lease Application (New) and
Revocable Permit Application (New) of Antonio Lusin
and gave due course to the Foreshore Lease
Application No. 562 of Julian Santolan. Antonio Lusin
claims that the order is against the fact and the law.
He presented three (3) motions for reconsideration:
one on October 19, 1951; the other on December 12,
1951; and the last on April 9, 1952. Said motions were
all denied. Hence, the present appeal.
The subject of contention is the strip of land having
an area of 4 1/2 hectares from Lot No. 986 of the
Kawit Cadastre No. 203 to the waters of Bacoor Bay.
Lot No. 986 is covered by Original Certificate of Title
No. 6 issued to Julian Santolan on June 9, 1937.
Santolan's titled property is bounded on the north by
Bacoor Bay.
On December 5, 1942, Santolan filed his foreclosure

By virtue of the fact that he is a riparian owner, Julian

Santolan has the right of preference pursuant to the
provisions of Section 32 of Administrative Order No. 71, which reads as follows:
"Sec. 32. The owner of the property adjoining
foreshore lands, marshy lands, or lands covered with
water bordering upon the shores or banks of
navigable lakes or rivers, shall be given preference to
apply for such lands adjoining his property as may not
be needed for the public service, subject to the laws
and regulations governing lands of this nature,
provided that he applies therefor within sixty (60)
days from the date he receives a communication from
the Director of Lands advising him of his preferential
right."
It is true that applicant Lusin introduced
improvements on the land in question, but that fact
does not give him preferential right thereto, not only
because he had not acquired any permit from the
Bureau of Lands before doing so, but also because his
entry on the premises was duly protested by
Santolan.

36
IN VIEW OF ALL THE FOREGOING, and finding that the
order of the Director of Lands on February 1, 1951, is
in accordance with the facts of record and the
provisions of the law on the matter, the herein appeal
from said order should be, as hereby it is, dismissed.
SO ORDERED.
Manila, Philippines, October 13, 1952.
JOSE S. CAMUS
Acting Secretary of Agriculture
and Natural Resources
ANNEX D
ORDER
This is a motion filed by Antonio Lusin, thru counsel,
for the reconsideration of the decision of this Office
dated October 13, 1952, dismissing his appeal from
the decision of the Director of Lands under date of
February 1, 1951.
In support of the said motion for reconsideration,
Lusin substantially alleges that he has been improving
the land in question since 1920, spending for such
improvements no less than P20,000.00, and for that
reason, he should be given the preferential right to
acquire the said land. To reinforce his allegation,
movant cites the case of Rosalia Vida Vda. de Tirona
vs. Magdaleno Tragico, TA-G.R. No. 9050, decided by
the Court of Appeals on June 30, 1943, wherein it was
held that because Tragico has constructed fishpond
on a portion of the land in question by means of the
improvements he has introduced thereon and has
possessed the land for sufficient time to acquire the
land by right of prescription, he was awarded the land
in dispute.
We have found this allegation of movant to be far
from the truth. It is the finding of the investigating
officer who made an investigation of this case that it
is Julian Santolan and not movant Lusin who has been
actually occupying the land in question and
introducing improvements thereon. The pertinent
portion of his report reads as follows:
"On December 16, 1950, when I conducted the first
ocular inspection of the premises in the presence of

37
both parties, the only visible improvements found
thereon were the newly constructed dikes made
thereon by Julian Santolan, a few bacauan and apeape trees of about two to three years old, bamboo
stakes placed thereon as intervals and a small old hut
located at almost the middle of the land in question.
All these improvements were claimed to have been
introduced thereon by Julian Santolan. Antonio Lusin,
however, claimed that the bamboo stakes found
thereon were his."

Moreover, according to the further finding of the said

investigating officer, the land in question falls under
the category of foreshore land. That portion of his
report referring to this finding is hereby quoted as
follows:
"It may not be amiss to state in this connection that I
have on different occasions, the opportunity to
inspect the land subject hereof on both high and low
tides. During ordinary low tide, the whole areas and
further seaward, is entirely exposed to the surface
while during ordinary high tide, it is wholly covered
with tidal water with an approximate depth of two to
three feet. The land in question in its entirety is
marshy covered and uncovered by the ebb and flow
of tidal water."
As the land is a foreshore land, the same is
susceptible to the riparian right of the owner of the
adjoining land. According to Section 32 of Lands
Administrative Order No. 7-1, the owner of the
property adjoining foreshore land, shall be given
preference to apply for such land adjoining his
property as may not be needed for the public service.
Inasmuch as the land in question adjoins Lot No. 980,
Kawit Cadastre, which is a private property of Julian
Santolan, said Julian Santolan shall have the
preference right to apply therefor over and above any
other applicant. It may be mentioned, in this
connection, that the said case of Rosalia Vida Vda. de
Tirona vs. Magdaleno Tragico who had possessed and
improved the land claimed by him, it is Santolan and
not movant Lusin who has been actually occupying
and improving the land subject of the present

controversy.
WHEREFORE, the instant motion for reconsideration
filed by Antonio Lusin, as well as his request for
reinvestigation of this case, should be, as hereby it is,
denied.
SO ORDERED.
Manila, Philippines, February 28, 1953.
FERNANDO LOPEZ
Secretary of Agriculture
and Natural Resources
ANNEX E
ORDER
On October 13, 1952, this Office rendered a decision
in connection with the above entire case, the
dispositive portion of which reads as follows:
"In view of all the foregoing and finding that the order
of the Director of Lands on February 1, 1951, is in
accordance with the facts of record and the provisions
of law on the matter, the herein appeal from the said
order should be, as hereby it is dismissed."
From the said decision Antonio Lusin filed a motion for
reconsideration which was denied as per order of this
Office dated February 28, 1953. Still not satisfied with
the aforementioned order, Lusin again filed a second
motion for reconsideration predicating his motion on
the following grounds:
1. That he (Lusin) is in actual possession of the land in
question since 1920;
2. That said area is an agricultural land actually
devoted to fishpond and, therefore, is not a foreshore
land;
3. That even granting without admitting that Santolan
is a riparian owner, Santolan had lost his riparian right
thereto in view of the continuous possession by Lusin
of the area since 1920; and
4. That in the investigation relied upon by the Director
of Lands in his decision and confirmed by this Office,
the movant herein was not given opportunity to be

heard because the said investigation was never

completed, and as a result, the conclusions of the
investigator thereat were one sided.
Adhering to its policy of giving party litigants the
outmost opportunity to present their respective sides
of the case, this Office ordered a reinvestigation of the
case to determine whether is not the allegations of
Antonio Lusin are true.
From the said reinvestigation, the facts of this case
may be stated as follows:
The disputed area is a strip of land containing an
approximate area of 4-1/2 hectares located at the
Barrio of Kaingin, Municipality of Kawit, Province of
Cavite. It is bounded on the North by Bacoor Bay, on
the East by the property occupied by Vicente del
Rosario and E. del Rosario, on the South by Lot No.
896 of Kawit Cadastre No. 203; and on the West by
Ankaw River. Lot 986, mentioned above as the
boundary of the area in question on the South, is
owned and possessed by Julian Santolan, his
ownership thereof being evidenced by a free patent
grant with Original Certificate of Title No. 6 issued on
June 9, 1937. The only issue to be resolved in this
case is whether or not Julian Santolan, as riparian
owner, is entitled to the preference provided for in
Section 32, Lands Administrative Order No. 7-1, which
reads as follows:
"32. Preference of Riparian Order. The owner of the
property adjoining foreshore lands, marshy lands, or
lands covered with water bordering upon the shores
or banks of navigable lakes or rivers, shall be given
preference to apply or such lands adjoining his
property as may not be needed for the public service,
subject to the laws and regulations governing lands of
this nature, provided that he applies therefor within
sixty (60) days from the date he receives a
communication from the Director of Lands advising
him of his preferential right."
During the reinvestigation of this case by a
representative of this Office, it was disclosed that
Antonio Lusin is the actual occupant of the area in
question his present possession thereof dating

38
back as of 1951. During his occupation, Lusin has
introduced considerable improvements in the area
investing his life savings therein. Today, a portion of
approximately two hectares of the said area is a
complete fishpond surrounded with dikes. A concrete
gate was constructed or the western side of the
fishpond in 1951. Water breakers were constructed
around the dikes to protect them from the action of
the waves. The remaining portion of the area in
question is fenced with bamboo stakes. LibLex
On the other hand, it is apparent that the area in
question is an extension of Lot 986 to the sea and
that its present existence is the result of the
continuous recission of the water of the sea. There is
no doubt that the area in question is a foreshore, it
being situated along the shore lying between medium
high and low water marks and is covered and
uncovered by the flow and ebb of ordinary tide.
Both parties claim prior possession of the disputed
area, Santolan's claim dating way back in 1907, the
year he claims said area was donated to him by his
father-in-law, while Lusin alleges that he was already
in possession of the same since 1920. The evidence
presented by both parties during the reinvestigation
were so diametrically opposed with each other that
they only create doubts as to the veracity of the
respective claims of said parties. From the testimonies
of witnesses for both sides, there could be gathered
sufficient grounds to believe that prior to 1942,
neither party possessed the area to the exclusion of
the other. Rather, there are good reasons to believe
that both parties fished in the premises jointly and/or
simultaneously without claiming the property
exclusively for themselves because then the area was
covered with water which at that time was still deep.
It was only in 1942 that Julian Santolan took positive
step to claim the property by filing a foreshore lease
and a revocable permit application for said area with
the intention of converting the same into a fishpond.
Santolan caused said area to be surveyed in 1942, the
survey plan thereof was approved in 1944 as may be
seen in survey Plan Psu-115357 of the Bureau of
Lands. Since 1942, Santolan exercised dominion over
the property although Lusin occasionally entered the
premises with a similar intention of claiming the area

for himself. In January of 1951 Lusin entered the area

in question and wrested the possession thereof from
Santolan. Since then up to the present, Lusin is in
continuous possession of the same notwithstanding
the vigorous opposition of Santolan.

The use of the alternative "or" instead of the

conjunction "and" shows the intention of the law in
segregating foreshore lands from marshy lands and
those two from lands covered with water bordering
upon shores of navigable lakes or rivers.

Lusin alleges that the area in question does not fall

within the purview of the above quoted Section 32 of
Lands Administrative Order No. 7-1 on the theory that
the lands enumerated in said provision, whether
foreshore lands, marshy lands, or lands covered with
water, must be bordering upon the shores or banks of
navigable lakes or rivers. And it is argued that since
the area in question is bordering the shores of Manila
Bay, which is neither a lake nor a river, the owner of
the adjoining property is not entitled to the
preferential right accorded by said Lands
Administrative Order.

It is also alleged that even granting that Santolan was

entitled to the preferential rights accorded to a
riparian owner, said right has prescribed on the
ground that Lusin has been in continuous possession
of the said area since 1920. This allegation was not
duly proven during the reinvestigation. While Lusin
claims possession of the disputed area since 1920, on
the other hand. Santolan claims that he possessed
the same since 1907 when it was donated to him by
his father-in-law. As we have already stated, it is the
finding of this Office that prior to 1942, neither party
possessed the premises exclusively. It was only in
1942 when Santolan took positive steps to claim the
area for himself. There are even evidence on record
that Santolan paid the land taxes for the area in 1936.
In 1951, Lusin effected his entry to the area up to the
present. It may be recalled, however, that these
actuations of Lusin had been the subject of a criminal
complaint filed by Santolan before the Justice of the
Peace Court of Kawit, Cavite, wherein Lusin was
acquitted on the ground that his guilt was not proven
beyond reasonable doubt.

We cannot agree with this contention. This Office is of

the opinion and so holds that the said provision of
Lands Administrative Order No. 7-1, Section 32 speaks
of the following kinds of lands, distinct and separate
from one another:
(1) Foreshore lands
(2) Marshy lands, or
(3) Land covered with water bordering upon the
shores of navigable lakes or rivers.
The phrase "bordering upon the shores of navigable
lakes or river" in said provision modifies only the third
classification, that is, "lands covered with water", for if
the law intends that said phrase should modify the
three types of land enumerated above, then the
punctuation mark, comma, should not have been
placed before the alternative "or" but instead
between the words "water" and "bordering", making
said provision to appear as follows:
"The owner of the property adjoining foreshore lands,
marshy lands or lands covered with water, bordering
upon the shores or banks of navigable lakes or rivers .
. ."

Needless to say, proof beyond reasonable doubt is

absolutely necessary before conviction in criminal
cases could be had. On the other hand,
preponderance of evidence is sufficient to prove a
matter of fact in civil and/or administrative cases. The
preponderance of evidence adduced at the
reinvestigation of this case conducted by a
representative of this Office, shows that the present
occupation of Lusin of the area in question was
effected by force, although there are good reasons to
believe that such force was employed by Lusin to
assert what he believed was his right over the
property in question.
From the foregoing facts and circumstances, it is
therefore, apparent that the area in question is a

foreshore land, and Santolan, being the riparian

owner, is entitled to the preferential rights accorded
by the provision of Section 32 of Lands Administrative
Order No. 7-1. Considering, however, the fact that
during the reinvestigation of this case, it was
disclosed that Antonio Lusin had introduced
considerable improvements in the premises and had
invested his life savings therefor, and considering
further that if Santolan were the one who converted
the area into a fishpond, as he intends to do, he would
have incurred the same expenses as was incurred by
Lusin in the premises in question, it is the belief of
this Office that justice would be fully served if
Santolan he required to reimburse Lusin of the value
of the improvements now existing in the area as may
be appraised by the Committee on Appraisal of the
Bureau of Lands.

Undersecretary of Agriculture
and Natural Resources
ANNEX F
ORDER
On December 14, 1954, this Office issued an order in
connection with the above-entitled case wherein the
rejection of the foreshore lease application and
revocable permit (both new) of Antonio Lusin was
upheld and Foreshore Lease Application No. V-62 of
Julian Santolan given due course provided he
reimburses Antonio Lusin of the appraised value of
the improvements now existing in the area within
sixty (60) days after notification of said appraisal.

WHEREFORE, the above-noted foreshore lease (New)

application and revocable permit (New) application of
Antonio Lusin should remain, as hereby it is,
REJECTED; and Foreshore Lease Application No. V-65
of Julian Santolan given due course, PROVIDED, he
reimburses Antonio Lusin of the appraised value of
the improvements now existing in the area within
sixty (60) days after notification of said appraisal.

Santolan premised his motion on the theory that as

far as that portion of the order which requires him to
reimburse Lusin of the appraised value of the
improvements within sixty (60) days after notification
of said appraisal is concerned, same is contrary to the
provisions of Commonwealth Act No. 141 and of the
New Civil Code. LexLib

The Director of Lands is hereby directed to instruct

the Committee on Appraisal concerned to make the
necessary appraisal of the value of the improvements
now existing in the area in question within thirty (30)
days from receipt of this order and to notify Julian
Santolan of the result of said appraisal.
In the event that Julian Santolan fails to reimburse
Antonio Lusin of the appraisal value of the said
improvements within the period specified in this
order, he shall lose his preferential rights over the
area and Antonio Lusin will be allowed to file an
appropriate public land application therefor.
SO ORDERED.
Manila, Philippines, December 14, 1954.
By Authority of the Secretary:
JAIME M. FERRER

From said order, both parties to this conflict filed

separate motions seeking reconsideration of the
same.

Santolan argues that the best procedure that should

have been followed in the disposition of this case was
for the Government to forfeit all the improvements
introduced by Lusin in the area in question in its
(Government's) favor and then let Santolan pay to the
Government the appraised value of said
improvements within ten (10) years after notification
of said appraisal. He further argues that the "law does
not authorize the Secretary of Agriculture and Natural
Resources to dispose of the proceeds of the sale of
the improvement to any person whomsoever", and
"certainly the Secretary does not claim the
prerogative of disbursing government funds without
authority of law."
In the first place, the order sought to be reconsidered
does not contemplate any sale from which proceeds
could be disposed of by the Secretary "to any person
whomsoever". In the second place, in the issuance of
the order sought to be reconsidered, this Office has
taken into consideration the provisions of

39
Commonwealth Act No. 141 and those of the Civil
Code cited by movant Santolan with respect to the
forfeiture in favor of the government of the
improvements found in the areas covered by rejected
applications. However, this Office is also fully aware of
that cardinal principle that "no man shall enrich
himself at the expense of another."
During the reinvestigation of this case by a
representative of this Office, it was found that Lusin
was the actual occupant of the disputed area since
1951. During his occupation, Lusin was introduced
considerable improvements in the area, investing his
life savings therein. At the time of inspection,
approximately two (2) hectares of the said area was a
veritable fishpond complete with dikes and water
breakers, and the remaining portion was surrounded
with bamboo stakes. While this Office found Lusin's
occupation as having effected by force, this Office
also believes that such force was employed by Lusin
only to enforce what he believed was his right over
the property in question. This being the case, justice
and equity demands that Lusin should be
compensated of the improvements introduced by him
in the area in question by whomsoever shall enjoy the
fruits of his (Lusin's) toil. Julian Santolan, being the
person who shall benefit from said improvements, it is
only his and just that he should reimburse Lusin of the
value of said improvements, especially considering
that the said area adjudicated to Santolan is already a
producing fishpond.
Antonio Lusin, on the other hand, contends that the
order sought to be reconsidered is contrary to the
facts of the case and to the law applicable thereto.
Lusin assigns the following errors as having been
allegedly committed by this Office:
(1) In holding that the possession of Lusin dated only
as of 1951;
(2) In holding that the possession of Lusin was
effected through force;
(3) In holding that Section 32 of Lands Administrative
Order No. 7-1 is applicable in the instant case;

40
(4) In not holding that the preferential rights of Julian
Santolan, granting that he has any, has already
prescribed; and
(5) In giving due course to the foreshore lease
application of Santolan for the entire area in question.
With respect to the first two assignments of errors, a
review of the records of this case shows that the
findings of this Office are in accordance with the facts
of the case as deduced from the reinvestigation of
this conflict, and as supported by previous records of
this case. This Office, therefore, finds no sufficient
ground to disturb its findings of facts.
Anent the next two assignments of errors, which are
mere reiteration of movant's allegation in his previous
memorandum, and which were thoroughly passed
upon by this office, it is believed that discussing them
further is no longer necessary since after another
close examination of the case, this office finds its
disposition in this particular respect well justified and
in accordance with the law and regulations applicable
thereto.
Now coming to the last allegation, Lusin contends that
the foreshore lease application of Julian Santolan, if
given the course, should not cover the entire area in
question. Movant Lusin advances the theory that
since the reason behind the law in granting
preferential rights to reparian owners is to
compensate for whatever loss said riparian owner
may suffer from the actions of the water, said riparian
owner cannot stand to lose more than what he owns,
and therefore, since Santolan's property, which
adjoins the area in question, is only two (2) hectares,
Santolan can never lose more than two hectares.
Section 32 of Lands Administrative Order No. 71, the
particular point of law involved, provides as follows:
"32. Preference of Riparian Owner. The owner of
the property adjoining foreshore lands, marshy lands,
or lands covered with water bordering upon the
shores or banks of navigable lakes or rivers, shall be
given preference to apply for such lands, adjoining his

property as may not be needed for the public service,

subject to the laws and regulations governing lands of
this nature, provided that he applied therefor within
sixty (60) days from the date he receives a
communication from the Director of Lands advising
him of his preferential right."
The above-quoted provision of the Lands
Administrative Order does not impose any restriction
or limitation with respect to the extent of the area to
which a riparian owner is preferred as long as said
area is not needed for public service. The said order,
being clear on this point, this Office has no other
alternative but to interpret said regulation in the
meaning it clearly conveys.
IN VIEW OF ALL THE FOREGOING CONSIDERATIONS,
the instant motion for reconsideration filed
respectively by the conflicting parties herein. should
be, as hereby they are, denied.
SO ORDERED.
Manila, Philippines, May 19, 1955.
By authority of the Secretary:
JAIME N. FERRER
Undersecretary of Agriculture
and Natural Resources
ANNEX G
4th Indorsement
Manila, April 10, 1958.
Respectfully returned to the Secretary of Agriculture
and Natural Resources, Manila.
This is with reference to the appeal by Antonio Lusin
from the order of that Department in DANR Case No.
625 (Julian Santolan vs. Antonio Lusin) dated May 19,
1955, whereby his motion for reconsideration of the
order of that office of December 14, 1954, rejecting
his foreshore lease application for the disputed land
but awarding to him the right of reimbursement for
the improvements he had introduced thereon and
giving due course to appellee's application therefor,
was denied.

The land in question is a foreshore land of about 4-1/2

hectares located along Bacoor Bay in barrio Kaingin,
Kawit, Cavite. A preferential right to lease it is claimed
by the appellant on the ground that he has been in
the continuous and exclusive possession thereof since
1920, when said land was still under water and used
as a site of his fish corals. On the other hand, it is
alleged by the appellee that the disputed lot is an
extension of his property into the sea, as he is the
owner of Lot No. 986 which, according to its technical
description, borders Bacoor Bay on the North; that the
present foreshore land was formed by soil deposits
brought by the action of the sea; and that he has the
right of preference to apply for the land in question in
accordance with Section 32 of Lands Administrative
Order No. 7-1.
Upon the foregoing facts, the Director of Lands in an
order dated February 1, 1951, rejected the appellant's
foreshore lease application and forfeited the
improvements he had introduced thereon in favor of
the appellee. From this order, Lusin appealed to the
Secretary of Agriculture and Natural Resources after
his three motions for reconsideration had been
denied. On October 13, 1952, the Secretary dismissed
his appeal. Thereafter, the appellant moved for a
reconsideration of the Secretary's decision but his
motion was denied on February 28, 1953. He then
filed another motion requesting a formal
reinvestigation of the case. The motion was granted
and that Department ordered a reinvestigation of the
case on May 12, 1953.
In the reinvestigation of the case, the following facts
were established: That Lusin had converted two (2)
hectares of the area in dispute into a veritable
fishpond; and that the entire area in question was
enclosed with dikes and provided with two (2) sluice
gates, one of which was made of concrete and the
other of lumber; that on the northern part of the
disputed land bordering Bacoor Bay were bamboo
poles placed at close intervals serving as water
breakers to protect the mud dikes from being washed
away by the action of the sea; that all of these
improvements were introduced by Lusin in 1951 up to
the time of the reinvestigation; that the disputed land

41
was, as it still is, bounded on the South by Lot No. 986
of Julian Santolan; that said land was formed by soil
deposits brought by the action of the sea; that in
December 1942, Santulan caused the survey of the
land, and the survey plan was approved by the
Director of Lands in 1944; that on December 29,
1942, Santulan filed a foreshore lease application
covering an area of 36,120 square meters of the land
in dispute; that the filing of Santulan's foreshore lease
application resulted in the investigation of the case in
March 1943, involving the parties herein; and that
said investigation was not finally terminated for
unknown reasons.
After receiving and considering the report of the
reinvestigation, that office on December 14, 1954,
issued an order modifying its previous stand by giving
the appellant the right to reimbursement for the
improvements he had introduced on the disputed lot,
the dispositive part of which reads:
"Wherefore, the above noted foreshore lease (New)
application and revocable permit (New) application of
Antonio Lusin should remain, as hereby it is,
REJECTED; and Foreshore Lease application No. V-62
of Julian Santulan given due course, PROVIDED, he
reimburse Antonio Lusin of the appraised value of the
improvements now existing in the area within sixty
(60) days after notification of said appraisal.
"xxx xxx xxx
"In the event that Julian Santulan fails to reimburse
Antonio Lusin of the appraised value of the said
improvements within the period specified in this
order, he shall lose his preferential rights over the
area and Antonio Lusin will be allowed to file an
appropriate public and application therefor".
The appellant moved for a reconsideration of the
foregoing order but his motion was denied on May 19,
1955. Dissatisfied, he appealed to this Office, averring
that the Department erred in finding the following:
That the possession of Antonio Lusin of the land in
question began only in 1951; that since 1942, Julian
Santulan had been exercising dominion over the
property in question; that the area in question is

apparently an extension of lot No. 986 into the sea

and that its present existence was the result of the
continuous recession of the sea; that the possession
of Antonio Lusin over the property in question was
effected through force; that Section 32, Lands
Administrative Order No. 7-1, is applicable to the
instant case; and that the preferential rights of Julian
Santulan, granting he has any, has not prescribed. He
contends further that the Department erred in
rejecting his foreshore lease application and in giving
due course to that of the appellee. LLpr
The main issue presented by the parties to be
resolved in this controversy is, which of them has a
better right to lease the foreshore land under
consideration? For a clear resolution of the question, it
is necessary to look into the legal provisions
governing the administration and disposition of
foreshore lands. As correctly held by that Department
and the Bureau of Lands, the administration and
disposition of foreshore lands are governed by
Chapter IX, Title III of Commonwealth Act No. 141,
(Secs. 58 and 59), otherwise known as the Public Land
Act.
Section 61 of said law provides that foreshore lands
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 and
Natural Resources, shall declare that the same are not
necessary for the public service and are open to
disposition. The procedure for the award of a lease of
foreshore land, is found in Section 67 of the same law
which provides, as a general rule, that the award of
the right to lease a foreshore land shall be determined
by oral bidding, except where improvements were
introduced thereon by reason of a permit issued by
competent authority, in which case the award thereof
shall be determined by sealed bidding pursuant to the
provisions of section 26, whereby the permittee is
granted the right to equal the highest bidder.
Noteworthy is the fact that both parties herein claim
to have been in prior possession of the land in
controversy than the other. Not one of them, however,
was granted a permit by competent authority to
occupy and use the land and introduce improvements

thereon. Since not one of them was granted such a

permit, the fact that one or the other had been in
prior possession of the premises in question is
immaterial, as will be seen hereafter, in the
determination of the instant controversy. Neither is
the alleged finding that one of the parties herein
entered the premises and introduced improvements
thereon in bad faith material to the resolution of the
case.
It is likewise significant to note that while the Bureau
held that none of the parties herein was entitled to a
preferential right to lease the land in question "on the
basis alone of actual occupancy or introduction of
improvements," it ruled that the appellee, Julian
Santulan, by reason of the fact that he was, as he still
is, a riparian owner of the disputed area, had a
preferential right to apply for a lease therefor, citing
Section 32 of Lands Administrative Order No. 7-1,
which reads:
"Sec. 32. The owner of the property adjoining
foreshore lands marshy lands, or lands covered with
water bordering upon the shores or banks of
navigable lakes or rivers, shall be given preference to
apply for such lands adjoining his property as may not
be needed for the public service, subject to the laws
and regulations governing lands of this nature,
provided that he applies therefor within 60 days from
the date he receives a communication from the
Director of Lands advising him of his preferential
right."
In this appeal, the appellant reiterates his contention
before that Department that the foregoing is not
applicable to the instant case "because the property
in question borders upon the shores or banks of the
Manila Bay and not upon navigable lakes or rivers."
The fallacy of the argument is too obvious to require
any discussion since the provision expressly speaks of
foreshore lands. At any rate, this Office finds that
Section 32 of Lands Administrative Order No. 7-1 has
been rendered obsolete by Commonwealth Act No.
141.
Lands Administrative Order No. 7-1, dated April 30,
1936, but made effective on January 1, 1936, was

42
promulgated before the passage of Commonwealth
Act No. 141. Its provisions which have not been
altered, modified or amended, particularly Section 32
thereof, were promulgated pursuant to the existing
public land law at the time of its promulgation,
namely, Act No. 2874. A perusal of Section 32 of
Lands Administrative Order No. 7-1 will show that
while it speaks of a preferential right to apply for a
foreshore land, it does not specify the mode of
application, i.e., whether by sale, lease, homestead,
permit, etc., contemplated by it. Nevertheless, it is
clear under Act No. 2874 that a foreshore land may be
the subject only of a lease (Sec. 58), or of a revocable
permit to occupy and use it (Sec. 65). Seemingly
therefore Section 32 of Lands Administrative Order
No. 7-1 contemplates an application for a lease of
foreshore land or a revocable permit to use or occupy
it. However, Section I of said order provides, among
other things, the following:
". . . Those rules and regulations shall not apply to
applications for temporary occupation or provisional
use of said lands and property which shall be
governed by the provisions of Section 1844 of the
Administrative Code, as amended, by Acts Nos. 3077
and 3852, Lands Administrative Order No. 8 and other
regulations promulgated thereunder."
Since Lands Administrative Order No. 7-1 expressly
exempts from its operation temporary permits for the
use and occupation of public lands, the conclusion is
inescapable that Section 32 thereof contemplates an
application for a lease under Section 58 of Act No.
2874 only and does not include a revocable permit
application under Section 65 of said Act.

The procedure for the award of the right to lease a

foreshore land under Act No. 2874 is found in Section
64 thereof, which reads: Cdpr
"Sec. 64. The lease or sale shall be adjudicated to the
highest bidder; and if there is no bidder besides the
applicant, it shall be adjudicated to him. The
provisions of Section twenty-seven of this Act shall be
applied wherever applicable. . . ."

Section 67 of Commonwealth Act No. 141, repealing

the foregoing provisions, provides:
"Sec. 67. The lease or sale shall be made through oral
bidding; and adjudication shall be made to the
highest bidder. However, where an 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 wherever applicable. . ." (Emphasis supplied).
While Section 64 of Act No. 2874 makes a reference to
Section 27 of the same Act, Section 67 of
Commonwealth Act No. 141 also makes a reference to
Section 26 of the latter law, Section 26 of
Commonwealth Act No. 141 is practically a
reproduction of Section 27 of Act No. 2874 and
prescribes the manner or procedure of determining an
award through sealed bidding in the sale of a public
land. Under its provision, an applicant is given the
option or right to equal the highest bidder.

equal the highest bid; hence, the applicability of

Section 32 of Lands Administrative Order No. 7-1.
On the other hand, under Section 67 of
Commonwealth Act No. 141, a foreshore land may be
leased, as a general rule, by oral bidding only. In such
a case, the award of the foreshore lease shall always
be made to the highest bidder, notwithstanding the
fact that one among the bidders is an applicant, as no
one in an oral bidding is entitled to equal the highest
bid, unlike in the case of a sealed bidding either under
Section 27 of Act No. 2874 or under Section 26 of
Commonwealth Act No. 141. Since the award of a
foreshore lease shall be given to the highest bidder in
an oral bidding, the necessity of determining who
among several interested parties has a preferential
right to apply for the land has been obviated under
the present law, because the mere fact that one is an
applicant does not entitle him to equal the highest
bid, rendering the provisions of Section 32 of Lands
Administrative Order No. 7-1 idle and useless.

Section 67 of Commonwealth Act No. 141 differs,

however, from Section 64 of Act No. 2874 in that
while the latter provides that "section twenty-seven of
this Act shall be applied wherever applicable," making
sealed bidding the general rule of procedure in
determining an award of a lease of foreshore land, the
former provides the contrary, as under its provisions
sealed bidding is not the general rule of procedure in
the determination of lease awards of foreshore lands
but may be resorted to only when the conditions
specified therein are present.

Parenthetically, it may be stated that the appellee

brought to the attention of this Office its previous
decision in DANR Case No. 694 (Del Rosario vs.
Monzon), where the facts involved therein are more or
less similar to those in the present controversy. While
this Office in that case relied on Section 32 of Lands
Administrative Order No. 7-1 in resolving the appeal
therein, it did not touch on the question of whether or
not said provision is still enforceable, as the same was
not squarely placed in issue. For this reason, the
ruling in that case can not be availed of as a
precedent in the adjudication of the one under
consideration. Cdpr

Since Section 64 of Act No. 2874 provides that Section

27 thereof should be applied wherever applicable in
determining an award of a lease of foreshore land, the
mere fact that the land is covered by a lease
application therefor warrants the holding of a sealed
bidding for its disposition, whereby the applicant
therefor should be granted the option or right to equal
the highest bid. In such a legal setup, the question of
preference in the right to apply for a lease of
foreshore land became a necessary consequence, as
one need only apply to be entitled to the right to

In the instant case the parties are vying for the

preferential right to apply for a lease of the disputed
land, as if by the mere fact of application the land
should be disposed of by sealed bidding, whereby the
recognized applicant therefor should be given the
right accorded to applicants under Section 26 of
Commonwealth Act No. 141. The only instance under
Section 67 of Commonwealth Act No. 141 when a
foreshore land may be leased through sealed bidding
is when the conditions specified therein namely, (a)
that improvements had been introduced on the land

and (b) that said improvements were introduced

thereon by reason of a permit issued by competent
authority are present, in which case the permittee
shall be granted the right to equal the highest bid. In
the absence of these conditions, the land should be
leased through oral bidding only and, as stated
earlier, the question of preference in the right to apply
therefor is immaterial.
As the conditions specified in Section 67 of
Commonwealth Act No. 141 are not present in the
instant case, the land in question can be leased only
through oral bidding, if it can be disposed of under
the provisions of Section 61 of said Act, which
requires as a condition sine qua non in the lease of
foreshore lands that the same have been declared by
the President not necessary for the public service and
are open for disposition. Without such a declaration, a
foreshore land may only be occupied and used by
private persons for lawful purposes upon the issuance
of a revocable permit therefor under Section 68 of
Commonwealth Act No. 141. Since the record is silent
as to whether or not the land under consideration has
been so declared, this Office is constrained to render
two alternative resolutions of the instant case.
On the assumption that the land in question has been
declared open for disposition and is not necessary for
the public service, this Office directs that an oral
bidding for the leasing thereof to interested parties
pursuant to the provisions of Section 67 of
Commonwealth Act No. 141 be conducted and the
contract of lease awarded to the highest bidder.
Whoever shall be the highest bidder, if other than the
appellant, shall be required to pay to the appellant
the appraised value of the improvements introduced
by him on the land to be determined by that
Department.
If the land in question has not been so declared, this
Office directs that a revocable permit under Section
68 of Commonwealth Act No. 141 be issued to the
appellant requiring him to pay permit fees since the
year 1951.
Accordingly, the orders and decisions of that
Department and the Bureau of Lands are hereby

revoked.
The record of the case is returned herewith.
By authority of the President:
(SGD) JUAN C. PAJO
Executive Secretary
ANNEX H
5th Indorsement
Manila, May 10, 1954
Respectfully returned to the Honorable, the Secretary
of Agriculture and Natural Resources, Manila.
In his decision of February 4, 1952, the Director of
Lands amended the miscellaneous sales application of
Emiliano del Rosario by excluding therefrom portion
"B" and adjudicating the same to Gonzalo Monzon
under his foreshore lease application. On appeal by
Del Rosario, the decision of the Director of Lands was
affirmed by the Secretary of Agriculture and Natural
Resources on February 6, 1953. Del Rosario now
appeals to this Office.
The question presented for determination is, which of
the parties has a better right to the area in question?.
It appears that the area in dispute, portion "B", is a
foreshore land, an extension of portion "A", which lies
immediately adjacent to lot No. 987, private property
of Monzon. The record shows that Monzon and his
predecessor in interest have been in possession of
said area since before the war, using it as site for
their oyster and "kapis" beds and for their fish corral.
It was only in 1951 that Del Rosario through stealth
occupied a portion of the area in question, building
earthen dikes preparatory to converting the land into
a fishpond. His entry upon the area was duly
protested by Monzon with the Bureau of Lands and
the Bureau of Fisheries, both of which advised Del
Rosario to vacate the premises and to refrain, from
introducing further improvements thereon. cdphil
Upon the facts and circumstances narrated above,
and pursuant to Section 32 of Lands Administrative
Order No. 7-1, which gives to the owner of the
property adjoining foreshore lands the preferential
right to apply therefor under the provisions of the

43
Public Land Act, it is evident that Monzon has a better
right than Del Rosario to the area in dispute which, as
stated above, is a foreshore land.
In view of the foregoing, the decision appealed from is
hereby affirmed.
The record of the case is returned herewith.
By authority of the President:
(SGD.) FRED RUIZ CASTRO
Executive Secretary
||| (Santulan v. Executive Secretary, G.R. No. L-28021,
[December 15, 1977], 170 PHIL 567-609)

FIRST DIVISION
[G.R. No. L-39473. April 30, 1979.]
REPUBLIC OF THE PHILIPPINES,
petitioner, vs. HON. COURT OF APPEALS and
ISABEL LASTIMADO, respondents.
Eduardo G. Makalintal for private respondent.
SYNOPSIS
Within one year from the entry of the decree of
registration, the Republic of the Philippines filed a
petition for review pursuant to Section 38, Act 496, on
the ground of fraud alleging that during the alleged
adverse possession by private respondent, the parcel
of land in question was part of the U.S. Military
Reservation which was turned over to the Republic,
and that the same is inside a public forest. The trial
court dismissed the petition on the ground that the
Solicitor General had failed to file opposition to the
original. Petition for reopening the cadastral
proceedings, and was therefore estopped from
questioning the decree of registration. The Court of
Appeals upheld the trial court's dismissal.
The Supreme Court set aside the decision of the Court
of Appeals as well as the order of the trial court, and
held that the trial court should have afforded
petitioner an opportunity to present evidence in
support of the facts alleged to constitute actual and
extrinsic fraud committed by private respondent.
Moreover, the inaction of the Solicitor General cannot
operate to bar the action of the State as it cannot be
estopped by the mistake or error of its official or
agents.
Case remanded to the lower court for further
proceedings.
SYLLABUS
1. LAND REGISTRATION; PETITION FOR REVIEW,

ESSENTIAL ELEMENTS. The essential elements for

the allowance of the reopening or review of a decree
are: (1) that the petitioner has a real and dominical
right; (2) that he has been deprived thereof; (c)
through fraud; (d) that the petition is filed within one
year from the issuance of the decree; and (e) that the
property has not as yet been transferred to an
innocent purchaser.
2. ID.; ID.; FRAUD. For fraud to justify the review of
a degree, it must be extrinsic or collateral and the
facts upon which it is based have not been
controverted or resolved in the case where the
judgment sought to be annulled was rendered. The
fraud is one that affects and goes into the jurisdiction
of the Court.
3. ID.; ID.; TRIAL COURT SHOULD AFFORD PETITIONER
OPPORTUNITY TO PROVE ALLEGATION OF FRAUD. It
is error for the lower court to deny the petition for
review of a decree of registration filed within one year
from the entry of the decree, without hearing the
evidence in support of the allegation and claim that
actual and extrinsic fraud has been committed by the
applicants. The lower court should afford the
petitioner an opportunity to prove it.
4. ID.; ID.; JURISDICTION. If the allegation of the
government that the land in question was inside the
military reservation at the time it was claimed is true,
then, it cannot be the object of any cadastral
proceeding nor can it be the object of reopening
under Republic Act No. 931. Similarly, if the land in
question, indeed, forms part of the public forest, then,
possession thereof, however long, cannot convert it
into private property as it is within the exclusive
jurisdiction of the Bureau of Forestry and beyond the
power and jurisdiction of the cadastral Court to
register under the Torrens System.
5. POLITICAL LAW; ESTOPPEL; STATE CANNOT BE
ESTOPPED BY THE MISTAKE OF ITS OFFICIALS. The
inaction or neglect of government agencies cannot
operate to bar the action by the State as it cannot be
estopped by the mistake or error of its officials or
agents. The State as a persona in law is the juridical
entity, which is the source of any asserted right to

44
ownership in land under basic Constitutional precepts,
and is charged with the conversation of such
patrimony.
DECISION
MELENCIO-HERRERA, J p:
This is a Petition for Review (Appeal) by Certiorari filed
by the Republic of the Philippines from the Decision of
the Court of Appeals promulgated on September 30,
1974 in CA-G.R. No. Sp-01504 denying the State's
Petition for Certiorari and Mandamus.
Briefly, the facts of the case are as follows:
Private respondent, Isabel Lastimado, filed on
September 11, 1967, in the Court of First Instance of
Bataan, Branch I, a Petition for the reopening of
cadastral proceedings over a portion of Lot No. 626 of
the Mariveles Cadastre, consisting of 971.0569
hectares, pursuant to Republic Act No. 931, as
amended by Republic Act No. 2061, docketed as Cad
Case No. 19, LRC Cad. Rec. No. 1097. In the absence
of any opposition, whether from the Government or
from private individuals, private respondent was
allowed to present her evidence ex-parte. On October
14, 1967, the trial Court rendered a Decision granting
the Petition and adjudicating the land in favor of
private respondent. The trial Court issued an order for
the issuance of a decree of registration on November
20, 1967, and on November 21, 1967, the Land
Registration Commission issued Decree No. N-117573
in favor of private respondent. Eventually, Original
Certificate of Title No. N-144 was also issued in her
favor. Private respondent thereafter subdivided the
land into ten lots, and the corresponding titles.
Transfer Certificates of Title Nos. 18905 to 18914
inclusive, were issued by the Register of Deeds.
LibLex
On June 3, 1968, or within one year from the entry of
the decree of registration, petitioner filed a Petition
for Review pursuant to Sec. 38, Act No. 496, on the
ground of fraud alleging that during the period of
alleged adverse possession by private respondent,
said parcel of land was part of the U.S. Military

45
Reservation in Bataan, which was formally turned
over to the Republic of the Philippines only on
December 22, 1965, and that the same is inside the
public forest of Mariveles, Bataan and, therefore, not
subject to disposition or acquisition under the Public
Land Law. Respondent field an Opposition thereto,
which was considered by the trial Court, as a Motion
to Dismiss, and on December 20, 1968, said Court
(Judge Tito V. Tizon, presiding) issued an Order
dismissing the Petition for Review mainly on the
ground that the Solicitor General had failed to file
opposition to the original Petition for reopening of the
cadastral proceedings and was, therefore, estopped
from questioning the decree of registration ordered
issued therein. On January 28, 1969, petitioner moved
for reconsideration, which was denied by the trial
Court in its Order dated May 20, 1969, for lack of
merit.
Petitioner seasonably filed a Notice of Appeal and a
Record on Appeal, which was objected to by private
respondent. On July 15, 1972, or three years later, *
the trial Court (Judge Abraham P. Vera, presiding)
refused to give due course to the appeal. Petitioner
filed a Motion for Reconsideration but the trial Court
denied it in its Order of October 14, 1972 on the
ground that the proper remedy of petitioner was a
Certiorari petition, not an ordinary appeal and that
the Order sought to be appealed from had long
become final and executory as petitioner's Motion for
Reconsideration was pro-forma and did not suspend
the running of the reglementary period of appeal.
On November 9, 1972, petitioner filed a Petition for
Certiorari and Mandamus with the Court of Appeals
claiming that the trial Court gravely abused its
discretion, amounting to lack of jurisdiction when,
without the benefit of hearing, it summarily dismissed
the Petition for Review; and since said Petition raised
certain issues of fact which cannot be decided except
in a trial on the merits, the dismissal of the Petition on
the basis of private respondent's Opposition,
considered as a Motion to Dismiss, constituted a
denial of due process of law. Petitioner then prayed
that the Order of the trial Court, dated December 20,
1968 dismissing the Petition for Review, be declared
null and void, and that said trial Court be directed to

give due course to the Petition for Review; or, in the

alternative, to give due course to petitioner's appeal.
On September 30, 1974, the Court of Appeals upheld
the trial Court's dismissal of the Petition for Review
stating:
". . . We cannot find any allegation in the petition for
review which shows that private respondent had
committed fraud against petitioner. Its
representations and officials were duly notified of
private respondent's petition for reopening and
registration of title in her name. In said petition, the
technical descriptions of the portion of Lot No. 626 of
the Mariveles (Bataan) Cadastre, subject-matter of
the petition were expressly stated, the boundaries,
specifically delineated. The alleged ground that the
land forms part of a forest land exists at the time
petitioner was duly notified of said petition. Failure to
file opposition is in effect, an admission that the
petition is actually not part of a forest land.
Indubitably, therefore, no justifiable reason exists for
the annulment of the Order, dated December 20,
1968 (Annex D-Petition) of the lower court dismissing
herein petitioner's petition for review of the decree
issued in favor of private respondent Lastimado." 1
The Court of Appeals then disposed as follows:
"WHEREFORE, finding that the respondent Judge has
not committed any grave abuse of discretion
amounting to lack of jurisdiction in the issuance of an
Order, dated December 20, 1968 (Annex D-Petition)
dismissing herein petitioner's petition for review, the
present petition for review is hereby denied.
The issuance of the writ of mandamus as prayed for in
the petition is no longer necessary as this Court, in
the exercise of its appellate jurisdiction and authority
to supervise orderly administration of justice, has
already resolved on the merits the question whether
or not the dismissal of the petition for review had
been done with grave abuse of discretion amounting
to lack of jurisdiction." 2
From this Decision, petitioner filed the present Petition
for Review (Appeal) by Certiorari assigning the
following errors to the Court of Appeals and to the

trial Court:

1. The Lower Court as well us the Court of Appeals

erred in finding that there can he possession, even for
the purpose of claiming title, of land which at the time
of possession is subject to a military reservation.
2. The Lower Court as well as the Court of Appeals
erred in finding that such land which is subject to a
government reservation, may appropriately be the
subject of cadastral proceedings, and hence, also of a
petition to reopen cadastral proceedings.
3. The Lower Court as well as the Court of Appeals
erred in finding that a parcel of land which is part of
the public forest is susceptible of occupation and
registration in favor of private individual.
4. The Lower Court as well as the Court of Appeals
erred in not finding that the Republic of the
Philippines is not estopped from questioning the
decree of registration and the title issued pursuant
thereto in favor of respondent Lastimado over the
parcel of land in question.
5. The Lower Court erred in dismissing the petition for
review of the Republic of the Philippines.
6. The Court of Appeals erred in denying Petitioner's
petition for certiorari and mandamus.
Section 38 of the Land Registration Act (Act 496)
provides:
"Section 38. Decree of registration, and remedies
after entry of decree.
If the court after hearing finds that the applicant or
adverse claimant has title as stated in his application
or adverse claim and proper for registration, a decree
of confirmation and registration shall be entered.
Every decree of registration shall bind the land, and
quiet title thereto, subject only to the exceptions
stated in the following section. It shall be conclusive
upon and against all persons, including the Insular

Government and all the branches thereof, whether

mentioned by name in the application, notice of
citation, or included in the general description 'To all
whom it may concern'. Such decree shall not be
opened by reason of the absence, infancy, or other
disability of any person affected thereby, nor by any
proceeding in any court for reversing judgments or
decrees; subject, however, to the right of any person
deprived of land or of any estate or interest therein by
decree of registration obtained by fraud to file in the
competent Court of First Instance a petition for review
within one year after entry of the decree provided no
innocent purchaser for value has acquired an interest.
. . . ." 3
The essential elements for the allowance of the
reopening or review of a decree are: a) that the
petitioner has a real and dominical right; b) that he
has been deprived thereof; c) through fraud; d) that
the petition is filed within one year from the issuance
of the decree; and e) that the property has not as yet
been transferred to an innocent purchaser. 4
However, for fraud to justify the review of a decree, it
must be extrinsic or collateral and the facts upon
which it is based have not been controverted or
resolved in the case where the judgment sought to be
annulled was rendered. 5 The following ruling spells
out the difference between extrinsic and intrinsic
fraud: LLpr
"Extrinsic or collateral fraud, as distinguished from
intrinsic fraud connotes any fraudulent scheme
executed by a prevailing litigant "outside the trial of a
case against the defeated party, or his agents,
attorneys or witnesses, whereby said defeated party
is prevented from presenting fully and fairly his side
of the case." But intrinsic fraud takes the form of "acts
of a party in a litigation during the trial, such as the
use of forged instruments or perjured testimony,
which did not affect the present action of the case,
but did prevent a fair and just determination of the
case." 6
The fraud is one that affects and goes into the
jurisdiction of the Court. 7
In its Petition for Review filed before the trial Court,

petitioner alleged that fraud was committed by

private respondent when she misrepresented that she
and her predecessors-in-interest had been in
possession of the land publicly, peacefully, exclusively
and adversely against the whole world as owner for
more than forty years when, in fact, the subject land
was inside the former U.S. Military Reservation, which
was formally turned over to the Republic of the
Philippines only on December 22, 1965, and that she
likewise contended that her rights, as derived from
the original and primitive occupants of the land in
question, are capable of judicial confirmation under
existing laws, when the truth is, said parcel of land is
within the public forest of Mariveles, Bataan, and is
not subject to disposition or acquisition by private
persons under the Public Land Law.
The trial Court ruled, and was upheld by the Court of
Appeals, that no fraud was committed by private
respondent, which deprived petitioner of its day in
Court as there was no showing that she was aware of
the facts alleged by the Government, so that she
could not have suppressed them with intent to
deceive. The trial Court also noted that petitioner had
failed to file an opposition to the reopening of the
cadastral proceedings despite notices sent not only to
the Solicitor General as required by Republic Act No.
931, but to the Bureau of Lands and the Bureau of
Forestry as well. It then concluded that "the remedy
granted by section 38 of the Land Registration Act is
designed to give relief to victims of fraud, not to those
who are victims of their own neglect, inaction or
carelessness, especially when no attempt is ever
made to excuse or justify the neglect." With the
foregoing as the essential basis, the trial Court
dismissed the Petition for Review.
We find reversible error. Although there was an
agreement by the parties to submit for resolution the
Opposition to the Petition for Review, which was
treated as a motion to dismiss, the trial Court, in the
exercise of sound judicial discretion, should not have
dismissed the Petition outright but should have
afforded petitioner an opportunity to present evidence
in support of the facts alleged to constitute actual and
extrinsic fraud committed by private respondent.
Thus, in the case of Republic vs. Sioson, et al., 8 it

46
was held that "the action of the lower Court in
denying the petition for review of a decree of
registration filed within one year from entry of the
decree, without hearing the evidence in support of the
allegation and claim that actual and extrinsic fraud
upon which the petition is predicated, is held to be in
error, because the lower Court should have afforded
the petitioner an opportunity to prove it."
If the allegation of petitioner that the land in question
was inside the military reservation at the time it was
claimed is true, then, it cannot be the object of any
cadastral proceeding nor can it be the object of
reopening under Republic Act No. 931. 9 Similarly, if
the land in question, indeed, forms part of the public
forest, then, possession thereof, however long, cannot
convert it into private property as it is within the
exclusive jurisdiction of the Bureau of Forestry and
beyond the power and jurisdiction of the Cadastral
Court to register under the Torrens System. 10
Even assuming that the government agencies can be
faulted for inaction and neglect (although the Solicitor
General claims that it received no notice), yet, the
same cannot operate to bar action by the State as it
cannot be estopped by the mistake or error of its
officials or agents. 11 Further, we cannot lose sight of
the cardinal consideration that "the State as persona
in law is the juridical entity, which is the source of any
asserted right to ownership in land" under basic
Constitutional precepts, and that it is moreover
charged with the conservation of such patrimony. 12
WHEREFORE, the Decision of the Court of Appeals
dated September 30, 1974, dismissing the Petition for
Certiorari and Mandamus filed before it, as well as the
Order of the Court of First Instance of Bataan (Branch
I) dated December 20, 1968, dismissing the Petition
for Review, are hereby set aside and the records of
this case hereby remanded to the latter Court for
further proceedings to enable petitioner to present
evidence in support of its Petition for Review. LLjur
No pronouncement as to costs.
SO ORDERED.

47
Teehankee, Fernandez, Guerrero and De Castro, JJ.,
concur.
Makasiar, J., took no part.
||| (Republic v. Court of Appeals, G.R. No. L-39473,
[April 30, 1979], 178 PHIL 530-538)

EN BANC

Manila-Cavite Coastal Road and Reclamation Project

(MCCRRP).

[G.R. No. 133250. July 9, 2002.]

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 . . .
shall be funded and owned by PEA." Accordingly, PEA
and CDCP executed a Memorandum of Agreement
dated December 29, 1981, which stated:

FRANCISCO I. CHAVEZ, petitioner, vs.

PUBLIC ESTATES AUTHORITY and AMARI
COASTAL BAY DEVELOPMENT
CORPORATION, respondents.
DECISION
CARPIO, J p:
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, . . . 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

"(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.
xxx xxx xxx
(iii) . . . 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

48
of the Municipality of Paraaque 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,
Paraaque 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. 5 On 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, PEA 15 and AMARI 16
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

49
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 and 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 the 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.

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

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 too 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

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

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 titles 19 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.

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

50
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 Taada v.
Tuvera 23 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 Taada, the Executive Department had an
affirmative statutory duty under Article 2 of the Civil
Code 24 and Section 1 of Commonwealth Act No. 638
25 to publish the presidential decrees. There was,
therefore, no need for the petitioners in Taada 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 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.
xxx xxx xxx
In Taada 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
Taada, 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

51
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." (Italics 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 . . . 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 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 (Italics 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

52
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
informations 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 interagency 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." (Italics supplied)

53
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.
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 any proposed
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,
correspondence, 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.
39 This 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.

54
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, . . . .
xxx xxx xxx

Article 341 of the Civil Code of 1889 governed the reclassification 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

(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 GovernorGeneral may by executive order prescribe." (Italics
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 mandate 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, . . .
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. . . .

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." (Italics
supplied)
Section 6 of Act No. 2874 authorized the GovernorGeneral to "classify lands of the public domain
into . . . 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."

xxx xxx xxx

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.
xxx xxx xxx.

Section 56 of Act No. 2874 stated that lands

"disposable under this title 48 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 GovernorGeneral 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

55
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

56
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." (Italics 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." (Italics 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

(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. . . . ."
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.

(a) Alienable or disposable,

Sec. 59. The lands disposable under this title shall be

classified as follows:

(b) Timber and

(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
rivers;

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.

(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. . . . .
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." (Italics 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 nonagricultural 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

In his concurring opinion in the landmark case of

Republic Real Estate Corporation v. Court of Appeals,
55 Justice 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 GovernorGeneral, 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."(Italics
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

57
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 nonagricultural 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. . . . 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: . . . ." (Italics 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:

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, the reclaimed 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.
xxx xxx xxx.

"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, . . .
Sec. 67. The lease or sale shall be made by oral
bidding; and adjudication shall be made to the
highest bidder. . . . ." (Italics 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.

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

58
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." (Italics 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.

59
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."
(Italics 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.

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:

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

(a) To prescribe its by-laws.

xxx xxx xxx
(i) To hold lands of the public domain in excess of the
area permitted to private corporations by statute.

"Sec. 60. . . . ; 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; . . . ." (Italics supplied)

(j) To reclaim lands and to construct work across, or

otherwise, any stream, watercourse, canal, ditch,
flume . . . .
xxx xxx xxx
(o) To perform such acts and exercise such functions
as may be necessary for the attainment of the
purposes and objectives herein specified." (Italics
supplied)

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.

flow of the tide. 62 Foreshore and submerged areas

indisputably belong to the public domain 63 and are
inalienable unless reclaimed, classified as alienable
lands open to disposition, and further declared no
longer needed for public service.

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

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

60
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. . . . .
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.

alienable lands of the public domain is still CA No.

141.

landholdings by corporations or private persons had

spawned social unrest."

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:

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.

"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.

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." (Italics supplied)

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."
(Italics supplied)

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

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

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 evergrowing 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
Paraaque and Las Pias, 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 . . . ," plus an
option "granted to AMARI to subsequently reclaim
another 350 hectares . . . ." 66
In short, the Amended JVA covers a reclamation area
of 750 hectares. Only 157.84 hectares of the 750hectare 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
". . . , 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, . . . ;
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." (Italics 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."

61
"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. . . . .
xxx xxx xxx
Section 3. . . . 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, .
. . ." (Italics 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;
xxx xxx xxx.'" (Italics supplied)

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:

Likewise, the Legal Task Force 68 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 . . .
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 quasipublic 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
422 74 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]." (Italics
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 Paraaque 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 erosion 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

62
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 . . . 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." (Italics
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 land 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. (Italics supplied)

xxx xxx xxx."

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 . . . 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

63
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, . . . ;
[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 and on behalf of the National Government."
The same section also states that "[A]ll reclamation
projects shall be approved by the President upon the
recommendation of the PEA, and shall be undertaken
by the PEA or through a proper contract executed by
it with any person or entity; . . . ." 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 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.
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 domains 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:

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.

64
Absent two official acts a classification that these
lands are alienable or disposable and open to
disposition and a declaration that these lands are not
needed for public service, lands reclaimed by PEA
remain inalienable lands of the public domain. Only
such an official classification and formal declaration
can convert reclaimed lands into alienable or
disposable lands of the public domain, open to
disposition under the Constitution, Title I and Title III
83 of CA No. 141 and other applicable laws. 84

"Sec. 4. Powers and Functions. The Department shall:

(1) . . .
xxx xxx xxx
(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;
xxx xxx xxx
(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
(Italics supplied)
As manager, conservator and overseer of the natural

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 81 and 7
82 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.

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: . . . ." 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: . . . ."
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." (Italics 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

certificate of title." (Italics supplied)

"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 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.

On the other hand, Section 3 of EO No. 525, issued on

February 14, 1979, provides that

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 contacts or 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

"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 . . . owned, managed, controlled and/or
operated by the government." 87 (Italics 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 its patrimonial 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

65
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" (Italics 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.
89-296 91 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, . . . ." 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 buildoperate-and-transfer arrangement or any of its
variations pursuant to the provisions of this Act, the
project proponent . . . 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: . . . ." (Italics
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

66
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. . . .
xxx xxx xxx
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 hectares 96 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:

67
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
titles issued 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." (Italics 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 entitles 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.
xxx xxx xxx."
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

68
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 . . . 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 . . . 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." (Italics
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) . . .
(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." (Italics 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 own power of eminent domain become

69
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 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." (Italics 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
on 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 conditional ban
on alienation of lands of the public domain to private
corporations, do so at their own risks.

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 hectares
110 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.

We can now summarize our conclusions as follows;

4. Since the Amended JVA also seeks to transfer to

AMARI ownership of 290.156 hectares 111 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.

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.

Clearly the Amended JVA violates glaringly Sections 2

and 3, Article XII of the 1987 Constitution. under
Article 1409 112 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. EcICDT

70
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 the 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.
HSIaAT
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Puno, Vitug, Kapunan,
Mendoza, Panganiban, Quisumbing, Ynares-Santiago,
Sandoval-Gutierrez, Austria-Martinez and Corona, JJ.,
concur.
||| (Chavez v. Public Estates Authority, G.R. No.
133250, [July 9, 2002], 433 PHIL 506-592)

71

EN BANC
[G.R. No. 164527. August 15, 2007.]
FRANCISCO I. CHAVEZ, petitioner, vs.
NATIONAL HOUSING, AUTHORITY, R-II
BUILDERS, INC., R-II HOLDINGS, INC.,
HARBOUR CENTRE PORT TERMINAL,
INC., and MR. REGHIS ROMERO II,
respondents.
DECISION
VELASCO, JR., J p:
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; TIEHDC
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 . . .; 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. The Smokey
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. DTaAHS
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 . . . to enter into contract with any duly prequalified 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:
xxx xxx xxx
(d) Port infrastructure like piers, wharves, quays,
storage handling, ferry service and related facilities;

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

xxx xxx xxx

(k) Land reclamation, dredging and other related
development facilities;
(l) Industrial estates, regional industrial centers and
export processing zones including steel mills, ironmaking and petrochemical complexes and related
infrastructure and utilities; AcICHD
xxx xxx xxx
(p) Environmental and solid waste managementrelated 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

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. caITAC
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

72
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 prequalification 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. TcSICH
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;

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.

73
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 Smokey Mountain while
development is being undertaken. These temporary
housing units shall be turned over to the [NHA] for
disposition.

The Scope of Work of RBI under Article II of the JVA is

as follows:

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.

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.
TaCDcE

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.

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.)

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.

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.

c) The construction activities will only commence

after the acquisition of the ECC, and

The profit sharing shall be based on the approved prefeasibility report submitted to the EXECOM, viz:
CHDTIS

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

d) Final details of the contract, including construction,

duration and delivery timetables, shall be based on
the approved feasibility report and detailed
engineering.

On March 19, 1993, the NHA and RBI entered into a

Joint Venture Agreement 17 (JVA) for the development
of the Smokey Mountain 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

Other obligations of RBI are as follows:

xxx xxx xxx

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.

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].

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

74
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:

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. AHaETS
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.

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.

4.11 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. SIcTAC

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].

4.07 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.

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.

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

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.

For the NHA:

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.

4.10 The [NHA] shall assist the [RBI] in the complete

electrification of the PROJECT. . . .

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.

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.

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].

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.

Phase I shall involve the following:

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

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

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: aIAEcD

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 PROJECT shall consist of Phase I and Phase II.

a. the construction of 2,992 units of temporary

housing for the affected residents while clearing and
development of Smokey Mountain [are] being
undertaken

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

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

75
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 (sleeping quarter) 3.6 m. floor
units/building. height, painted and improved
architectural faade, 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
(PhP6,693,387,364).
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

76
agreement on the clarifications and amendments
required to be made on the ARJVA. AcHaTE
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.
xxx xxx xxx
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. cSCADE
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

77
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 79hectare enabling component under the ARJVA". 41
The EXECOM passed Resolution Nos. 99-16-01 and 9916-02 42 which approved the modification of the
Supplemental Agreement, to wit: DTCSHA
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 PhP2,953,984,941.40 to PhP2,969,134,053.13.
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 commercialindustrial 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 PhP480 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 PhP480
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:

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; caSEAH
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.

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 1993
b. Amended and Restated Joint Venture Agreement
(ARJVA) dated 21 February 1994
c. Amendment and Restated Joint Venture Agreement
dated 11 August 1994
d. Supplemental Agreement dated 24 March 1998
e. Amended Supplemental Agreement (ASA) dated 19
November 2001.
xxx xxx xxx
5. SETTLEMENT OF CLAIMS
5.1 Subject to the validation of the DEVELOPER's
claims, the NHA hereby agrees to initially compensate

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,

78
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 PhP132,621,548 in 2002 and a net loss
of PhP15,540,063 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. CDaTAI
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 beneficiaryfamilies 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:

ACQUIRE LANDS OF THE PUBLIC DOMAIN.

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.

III

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.

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.

4. THERE WAS NEVER ANY PUBLIC BIDDING

AWARDING OWNERSHIP OF THE SUBJECT LAND TO
RESPONDENT R-II BUILDERS.

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.
cTSDAH

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 EXPRESSLY
PROHIBITED BY THE PHILIPPINE CONSTITUTION TO

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

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.

79
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 . . .
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. AHcaDC

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

80
NHA case, the NHA and RBI executed a JVA after RBI
was declared the winning bidder on August 31, 1992
as the JVA partner of the NHA in the SMDRP after
compliance with the requisite public bidding.

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

(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; ETCcSa
(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

81
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 granted the power and authority to reclaim
lands of the public domain as this 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; . . . ." 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. HCaIDS
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 ". . . 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.
aSEHDA

Philippine Ports Authority, the Department of

Environment and Natural Resources and the
Development Bank of the Philippines. (Emphasis
supplied.)

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.

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. aSTECA

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

82
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

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.

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:

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.

b) To undertake housing, development, resettlement

or other activities as would enhance the provision of
housing to every Filipino;

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,

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:
xxx xxx xxx

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. ScHADI

83
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:

formulate and enforce general and specific policies for

its development which shall ensure reasonable degree
of compliance with environmental standards. aESHDA

c. Sec. 6 of PD 757 delineates the functions and

powers of the NHA which embrace the authority to
reclaim land, 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. . . . (Emphasis supplied.)

b) To prescribe guidelines and standards for the

reservation, conservation and utilization of public
lands covering the Tondo Foreshore land and its
resettlement sites;

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:

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 socioeconomic 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 lagoon and/or any other
additional/alternative resettlement site and to

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.

(a) Develop and implement the comprehensive and

integrated housing program provided for in Section
hereof; HaTSDA
xxx xxx xxx
(c) Prescribe guidelines and standards for the
reservation, conservation and utilization of public
lands identified for housing and resettlement;
xxx xxx xxx
(e) Develop and undertake housing development
and/or resettlement projects through joint ventures or
other arrangements with public and private entities;
xxx xxx xxx
(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;
xxx xxx xxx
(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". caSDCA
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.
xxx xxx xxx
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 Smokey
Mountain 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,

84
must necessarily command respect and much weight
and credit. cHSIAC
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.

this Executive Order are hereby repealed or amended

accordingly. (Emphasis supplied.)

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.

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).

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

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. ScHAIT
Second Issue: Whether respondents NHA and RBI
were given the power and authority by DENR to
reclaim foreshore and submerged lands
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

85
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: aDSTIC
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 . . .
. 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: TAacHE
Section 14. Power to Reserve Lands of the Public and
Private Domain of the Government. (1) The
President shall have the power to reserve 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

86
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
reclaimed foreshore and submerged lands considered
as inalienable and outside 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

87
and void from the beginning:

reclaimed across R-10."

and stressed:

(1) Those whose cause, object or purpose is contrary

to law, morals, good customs, public order or public
policy;

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.

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.) ECHSDc

xxx xxx xxx

(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. IaEHSD
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:

(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.

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:

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.

(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

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

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 . . . 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. TCaSAH
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

88
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. aIcDCA
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, 2003 Resolution. 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] ". . . 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
reclaimed lands when there was no declaration that
said lands are no longer 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: aTcHIC
These parcels of land of public domain are hereby
placed under the administration and disposition of the

89
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

90
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 Mountain
beneficiaries. 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. CSAcTa
Fifth Issue: Whether there is a law authorizing sale of
reclaimed 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:

xxx xxx xxx
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:

(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 RBI was 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:
DTSaIc
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.
xxx xxx xxx
Section 67. The lease or sale shall be made through
oral bidding; and adjudication shall be made to the

91
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: aDSIHc
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: CTcSAE

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."
. . . 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

92
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 enduser 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 10hectare 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 disclose all 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: ECTIcS
ARTICLE II

xxx xxx xxx

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 . . . 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. EScAID
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

93
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.

94
Ninth Issue: Whether the operative fact doctrine
applies to the instant 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. ADCIca
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. . . . 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 allinclusive 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 abovementioned 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. DAHCaI
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. TAIESD

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, quasijudicial 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

95
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.

96
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. ECTIcS
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.
Puno, C.J., Quisumbing, Ynares-Santiago, SandovalGutierrez, Austria-Martinez, Corona, Carpio-Morales,
Azcuna, Tinga, Chico-Nazario, Garcia and Nachura, JJ.,
concur.
Carpio, J., took no part. I reviewed the original
contract but . . . (ILLEGIBLE PORTION).
Reyes, J., took no part. Did not participate in
deliberations.
||| (Chavez v. National Housing Authority, G.R. No.
164527, [August 15, 2007], 557 PHIL 29-120)