G.R. No.

L-43105 August 31, 1984

REPUBLIC OF THE PHILIPPINES (Director of Lands), petitioner,

vs.
THE HON. COURT OF APPEALS (SECOND DIVISION) AND SANTOS DEL RIO, respondents.

G.R. No. L-43190 August 31, 1984

AURORA BAUTISTA, OLIMPIO LARIOS, FELICIDAD DE LA CRUZ, ELPIDIO LARIOS, LUCITA

BANDA, BENITO SANTAYANA, FRUCTUOSA BANHAO LUCIO VELASCO, GREGORIO
DATOY, FELIMON GUTIERREZ, ET AL., petitioners,
vs.
THE HON. COURT OF APPEALS AND SANTOS DEL RIO, respondents.

Bonifacio, Perez & Concepcion for petitioners.

The Solicitor General for respondent Appellate Court.

Eduardo Cagandahan for respondent Santos del Rio.

CUEVAS, J.:

These two 1 Petitions for Review of the same decision of the defunct Court of Appeals   have been consolidated in this single decision,
2

having arisen from one and the same Land Registration Cage (LRC Case No. N-283, Laguna), and presenting as they do issues which may
be resolved jointly by this Court.

The questioned decision of the Court of Appeals set aside the judgment of the trial court and ordered
the registration of the land in favor of applicant, now private respondent, Santos del Rio. Petitioner
Director of Lands in G.R. No. L-43105 claims that the land sought to be registered is part of the
public domain and therefore not registerable. Petitioners private oppositors in G.R. No. L-43190, on
the other hand, allege that they reclaimed the land by dumping duck egg shells thereon, and that
they have been in possession of the same for more than twenty (20) years.

The lot subject matter of this land registration case, with an area of 17,311 square meters, is situated
near the shore of Laguna de Bay, about twenty (20) meters therefrom (Exh. D),   in Barrio 3

Pinagbayanan, Pila, Laguna. It was purchased by Benedicto del Rio from Angel Pili on April 19,
1909. The Deed of Sale evidencing said purchase is duly recorded with the Registry of Deeds of
Sta. Cruz, Laguna. The land was declared for tax purposes beginning the year 1918, and the realty
taxes thereon had been paid since 1948. When Benedicto del Rio died in 1957, his heirs
extrajudicially partitioned his estate and the subject parcel passed on to his son, Santos del Rio, as
the latter's share in the inheritance.

Santos del Rio, herein applicant-private respondent, filed his application for registration of said
parcel on May 9, 1966. The application was opposed by the Director of Lands and by private
oppositors, petitioners in G.R. No. L-43190.

Sometime before 1966, private oppositors obtained permission from Santos del Rio to construct
duck houses on the land in question. Although there was no definite commitment as to rentals, some
of them had made voluntary payments to private respondent. In violation of the original agreement,
private oppositors constructed residential houses on the land which prompted private respondent to
file an ejectment suit against the former in 1966.   Meanwhile, during the latter part of 1965 and in
4

1966, private oppositors had simultaneously filed their respective sales applications with the Bureau
of Lands, and in 1966, they opposed Santos del Rios application for registration. The Court of First
Instance of Laguna dismissed the application for registration. Applicant appealed and obtained a
favorable judgment from the Court of Appeals. The Director of Lands and the private oppositors filed
their respective Petitions for Review of said decision.

The two consolidated petitions raise substantially the same issues, to wit :

1) whether or not the parcel of land in question is public land; and

2) whether or not applicant private respondent has registerable title to the land.

Property, which includes parcels of land found in Philippine territory, is either of public dominion or of
private ownership.   Public lands, or those of public dominion, have been described as those which,
5

under existing legislation are not the subject of private ownership, and are reserved for public
purposes.   The New Civil Code enumerates properties of public dominion in Articles 420 and 502
6

thereof. Article 420 provides:

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.

Article 502 adds to the above enumeration, the following:

(1) Rivers and their natural beds;

(2) Continuous or intermittent waters of springs and brooks running in their natural
beds and the beds themselves;

(3) Waters rising continuously or intermittently on lands of public dominion;

(4) Lakes and lagoons formed by Nature on public lands and their beds;

xxx xxx xxx

(Emphasis supplied)

The Director of Lands would like Us to believe that since a portion of the land sought to be registered
is covered with water four to five months a year, the same is part of the lake bed of Laguna de Bay,
or is at least, a foreshore land, which brings it within the enumeration in Art. 502 of the New Civil
Code quoted above and therefore it cannot be the subject of registration.

The extent of a lake bed is defined in Art. 74 of the Law of Waters of 1866, as follows:
 The natural bed or basin of lakes, ponds, or pools, is the ground covered by their
waters when at their highest ordinary depth. (Emphasis supplied)

The phrase "highest ordinary depth" in the above definition has been interpreted in the case of
Government of P.I. vs. Colegio de San Jose   to be the highest depth of the waters of Laguna de Bay
7

during the dry season, such depth being the "regular, common, natural, which occurs always or most
of the time during the year." The foregoing interpretation was the focal point in the Court of Appeals
decision sought to be reviewed. We see no reason to disturb the same.

Laguna de Bay is a lake.   While the waters of a lake are also subject to the same gravitational
8

forces that cause the formation of tides   in seas and oceans, this phenomenon is not a regular daily
9

occurrence in the case of lakes. 10 Thus, the alternation of high tides and low tides, which is an ordinary occurrence, could
hardly account for the rise in the water level of the Laguna de Bay as observed four to five months a year during the rainy season. Rather, it
is the rains which bring about the inundation of a portion of the land in question. Since the rise in the water level which causes the
submersion of the land occurs during a shorter period (four to five months a year) than the level of the water at which the is completely dry,
the latter should be considered as the "highest ordinary depth" of Laguna de Bay. Therefore, the land sought to be registered is not part of
the bed or basin of Laguna de Bay. Neither can it be considered as foreshore land. The Brief for the Petitioner Director of Lands cites an
accurate definition of a foreshore land, to wit:

... that part of (the land) which is between high and low water and left dry by the flux
and reflux of the tides... 11

The strip of land that lies between the high and low water mark and that is alternately
wet and dry according to the flow of the tide. 12

As aptly found by the Court a quo, the submersion in water of a portion of the land in question is due to the rains "falling directly on or flowing
into Laguna de Bay from different sources. 13 Since the inundation of a portion of the land is not due to "flux and reflux of tides" it cannot be
considered a foreshore land within the meaning of the authorities cited by petitioner Director of Lands. The land sought to be registered not
being part of the bed or basin of Laguna de Bay, nor a foreshore land as claimed by the Director of Lands, it is not a public land and
therefore capable of registration as private property provided that the applicant proves that he has a registerable title. This brings us to the
second issue, which is whether or not applicant private respondent has registerable title to the land.

The purpose of land registration under the Torrens System is not the acquisition of lands but only the
registration of title which applicant already possesses over the land. 14 Registration under the Torrens Law was
never intended as a means of acquiring ownership. Applicant in this case asserts ownership over the parcel of land he seeks to register and
traces the roots of his title to a public instrument of sale (Exh. G) in favor of his father from whom he inherited said land. In addition to this
muniment of title, he presents tax declarations (Exhs. F, G, H, I) covering the land since 1918 and also tax receipts (Exhs. J, J-1, J-2, J-3, J-
4, K, K-1, K-2, K-3) dating back to 1948. While it is true that by themselves tax receipts and declarations of ownership for taxation purposes
are not incontrovertible evidence of ownership, 15 they become strong evidence of ownership acquired by prescription when accompanied
by proof of actual possession of the property. 16 The then Court of Appeals found applicant by himself and through his father before him, has
been in open, continuous, public, peaceful, exclusive and adverse possession of the disputed land for more than thirty (30) years, counted
from April 19, 1909, when the land was acquired from a third person by purchase. 17 The record does not show any circumstance of note
sufficient enough to overthrow said findings of facts which is binding upon us. Since applicant has possessed the subject parcel in the
concept of owner with just title and in good faith, his possession need only last for ten years in order for ordinary acquisitive prescription to
set in. 18 Applicant has more than satisfied this legal requirement. And even if the land sought to be registered is public land as claimed by
the petitioners still, applicant would be entitled to a judicial confirmation of his imperfect title, since he has also satisfied the requirements of
the Public Land Act (Commonwealth Act No. 141 as amended by Republic Act No. 1942). Sec. 48 of said Act enumerates as among the
persons entitled to judicial confirmation of imperfect title, the following:

(a) ...

(b) Those who, by themselves or through their predecessors-in-interest, have been in

the open, continuous, exclusive, and notorious possession and occupation of
agricultural lands of the public domain, under bona fide c of ownership, for at least
tirty years immediately preceding the filing of the application for confirmation of title ...

The claim of private oppositors, petitioners in G.R. No. L43190, that they have reclaimed the land
from the waters of Laguna de Bay and that they have possessed the same for more than twenty (20)
years does not improve their position. In the first place, private persons cannot, by themselves
reclaim land from water bodies belonging to the public domain without proper permission from
government authorities. 19 And even if such reclamation had been authorized, the reclaimed land does not automatically belong to
the party reclaiming the same as they may still be subject to the terms of the authority earlier granted. 20 Private oppositors-petitioners failed
to show proper authority for the alleged reclamation, therefore, their claimed title to the litigated parcel must fall. In the second place, their
alleged possession can never ripen into ownership. Only possession acquired and enjoyed in the concept of owner can serve as the root of a
title acquired by prescription. 21 As correctly found by the appellate court, the private oppositors-petitioners entered into possession of the
land with the permission of, and as tenants of, the applicant del Rio. The fact that some of them at one time or another did not pay rent
cannot be considered in their favor. Their use of the land and their non-payment of rents thereon were merely tolerated by applicant and
these could not have affected the character of the latter's possession 22 which has already ripened into ownership at the time of the filing of
this application for registration.

The applicant private-respondent having satisfactorily established his registerable title over the
parcel of land described in his application, he is clearly entitled to the registration in his favor of said
land.

IN VIEW OF THE FOREGOING, the judgment appealed from is hereby AFFIRMED and the
registration in favor of applicant private-respondent of the land described in his application is hereby
ordered.

Costs against private petitioners.

SO ORDERED.

Concepcion, Jr., Guerrero, Abad Santos and Escolin, JJ., concur.

Aquino, J., took no part.

Makasiar, J., (Chairman), is on leave.

G.R. No. L-24950             March 25, 1926

VIUDA DE TAN TOCO, plaintiff-appellant,

vs.
THE MUNICIPAL COUNCIL OF ILOILO, defendant-appellee.

Arroyo & Evangelista for appellant.

Provincial Fiscal Borromeo Veloso for appelle.

VILLAMOR, J.:

It appears from the record that the widow of Tan Toco had sued the municipal council of Iloilo for the
amount of P42,966.40, being the purchase price of two strips of land, one on Calle J. M. Basa
consisting of 592 square meters, and the other on Calle Aldiguer consisting of 59 square meters,
which the municipality of Iloilo had appropriated for widening said street. The Court of First Instance
of Iloilo sentenced the said municipality to pay the plaintiff the amount so claimed, plus the interest,
and the said judgment was on appeal affirmed by this court.1

On account of lack of funds the municipality of Iloilo was unable to pay the said judgment, wherefore
plaintiff had a writ of execution issue against the property of the said municipality, by virtue of which
the sheriff attached two auto trucks used for street sprinkling, one police patrol automobile, the
police stations on Mabini street, and in Molo and Mandurriao and the concrete structures, with the
corresponding lots, used as markets by Iloilo, Molo, and Mandurriao.

After notice of the sale of said property had been made, and a few days before the sale, the
provincial fiscal of Iloilo filed a motion which the Court of First Instance praying that the attachment
on the said property be dissolved, that the said attachment be declared null and void as being illegal
and violative of the rights of the defendant municipality.

Plaintiffs counsel objected o the fiscal's motion but the court, by order of August 12, 1925, declared
the attachment levied upon the aforementioned property of the defendant municipality null and void,
thereby dissolving the said attachment.

From this order the plaintiff has appealed by bill of exceptions. The fundamental question raised by
appellant in her four assignments of error is whether or not the property levied upon is exempt from
execution.

The municipal law, section 2165 of the Administrative Code, provides that:

Municipalities are political bodies corporate, and as such are endowed with the faculties of
municipal corporations, to be exercised by and through their respective municipal
government in conformity with law.

It shall be competent for them, in their proper corporate name, to sue and be sued, to
contract and be contracted with, to acquire and hold real and personal property for municipal
purposes, and generally to exercise the powers hereinafter specified or otherwise conferred
upon them by law.

For the purposes of the matter here in question, the Administrative Code does not specify the kind of
property that a municipality may acquire. However, article 343 of the Civil Code divides the property
of provinces and towns (municipalities) into property for public use and patrimonial property.
According to article 344 of the same Code, provincial roads and foot-path, squares, streets,
fountains and public waters, drives and public improvements of general benefit built at the expense
of the said towns or provinces, are property for public use.

All other property possessed by the said towns and provinces is patrimonial and shall be subject to
the provisions of the Civil Code except as provided by special laws.

Commenting upon article 344, Mr. Manresa says that "In accordance with administrative legislation"
(Spanish) we must distinguish, as to the patrimonial property of the towns, "between that a common
benefit and that which is private property of the town. The first differs from property for public use in
that generally its enjoyment is less, as it is limited to neighbors or to a group or class thereof; and,
furthermore, such use, more or less general, is not intrinsic with this kind of property, for by its very
nature it may be enjoyed as though it were private property. The third group, that is, private property,
is used in the name of the town or province by the entities representing it and, like and private
property, giving a source of revenue."

Such distinction, however, is of little practical importance in this jurisdiction in view of the different
principles underlying the functions of a municipality under the American rule. Notwithstanding this,
we believe that the principle governing property of the public domain of the State is applicable to
property for public use of the municipalities as said municipal is similar in character. The principle is
that the property for public use of the State is not within the commerce of man and, consequently, is
inalienable and not subject to prescription. Likewise, property for public of the municipality is not
within the commerce of man so long as it is used by the public and, consequently, said property is
also inalienable.

The American Law is more explicit about this matter as expounded by Mcquilin in Municipal
Corporations, volume 3, paragraph 1160, where he says that:

States statutes often provide the court houses, jails and other buildings owned by
municipalities and the lots on which they stand shall be exempt from attachment and
execution. But independent of express statutory exemption, as a general proposition,
property, real and personal, held by municipal corporations, in trust for the benefit of their
inhabitants, and used for public purposes, is exempt.

For example, public buildings, school houses, streets, squares, parks, wharves, engines and
engine houses, and the like, are not subject to execution. So city waterworks, and a stock of
liquors carried in a town dispensary, are exempt. The reason for the exemption is obvious.
Municipal corporations are created for public purposes and for the good of the citizens in
their aggregate or public capacity. That they may properly discharge such public functions
corporate property and revenues are essential, and to deny them these means the very
purpose of their creation would be materially impeded, and in some instances practically
destroy it. Respecting this subject the Supreme Court of Louisiana remarked: "On the first
view of this question there is something very repugnant to the moral sense in the idea that a
municipal corporation should contract debts, and that, having no resources but the taxes
which are due to it, these should not be subjected by legal process to the satisfaction of its
creditors. This consideration, deduced from the principles of moral equity has only given way
to the more enlarged contemplation of the great and paramount interests of public order and
the principles of government."

It is generally held that property owned by a municipality, where not used for a public
purpose but for quasi private purposes, is subject to execution on a judgment against the
 municipality, and may be sold. This rule applies to shares of stock owned by a municipal
corporation, and the like. But the mere fact that corporate property held for public uses is
being temporarily used for private purposes does not make it subject execution.

If municipal property exempt from execution is destroyed, the insurance money stands in lieu
thereof and is also exempt.

The members or inhabitants of a municipal corporation proper are not personally liable for
the debts of the municipality, except that in the New England States the individual liability of
the inhabitant is generally maintained.

In Corpus Juris, vol 23, page 355, the following is found:

Where property of a municipal or other public corporation is sough to be subjected to

execution to satisfy judgments recovered against such corporation, the question as to
whether such property is leviable or not is to be determined by the usage and purposes for
which it is held. The rule is that property held for public uses, such as public buildings,
streets, squares parks, promenades, wharves, landing places fire engines, hose and hose
carriages, engine houses, public markets, hospitals, cemeteries, and generally everything
held for governmental purposes, is not subject to levy and sale under execution against such
corporation. The rule also applies to funds in the hands of a public officer. Likewise it has
been held that taxes due to a municipal corporation or country cannot be seized under
execution by a creditor of such corporation. But where a municipal corporation or country
owns in its proprietary, as distinguished from its public or governmental capacity, property
not useful or used for a public purpose but for quasi private purposes, the general rule is that
such property may be seized and sold under execution against the corporation, precisely as
similar property of individuals is seized and sold. But property held for public purposes is not
subject to execution merely because it is temporarily used for private purposes, although if
the public use is wholly abandoned it becomes subject to execution. Whether or not property
held as public property is necessary for the public use is a political, rather than a judicial
question.

In the case of City of New Orleans vs. Louisiana Construction Co., Ltd. (140 U. S., 654; 35 Law. ed.,
556), it was held that a wharf for unloading sugar and molasses, open to the public, was property for
the public use of the City of New Orleans and was not subject to attachment for the payment of the
debts of the said city.

In that case it was proven that the said wharf was a parcel of land adjacent to the Mississippi River
where all shipments of sugar and molasses taken to New Orleans were unloaded.

That city leased the said wharf to the Louisiana Construction Company, Ltd., in order that it might
erect warehouses so that the merchandise upon discharge might not be spoiled by the elements.
The said company was given the privilege of charging certain fees for storing merchandise in the
said warehouses and the public in general had the right to unload sugar and molasses there by
paying the required fees, 10 per cent of which was turned over to the city treasury.

The United States Supreme Court on an appeal held that the wharf was public property, that it never
ceased to be such in order to become private property of the city; wherefore the company could not
levy execution upon the wharf in order to collect the amount of the judgment rendered in favor
thereof.
In the case of Klein vs. City of New Orleans (98 U. S., 149; 25 Law. ed., 430), the Supreme Court of
the United States that a public wharf on the banks of the Mississippi River was public property and
not subject to execution for the payment of a debt of the City of New Orleans where said wharf was
located.

In this case a parcel of land adjacent to the Mississippi River, which formerly was the shore of the
river and which later enlarged itself by accession, was converted into a wharf by the city for public
use, who charged a certain fee for its use.

It was held that the land was public property as necessary as a public street and was not subject to
execution on account of the debts of the city. It was further held that the fees collected where also
exempt from execution because they were a part of the income of the city.

In the case of Tufexis vs. Olaguera and Municipal Council of Guinobatan (32 Phil., 654), the
question raised was whether for the payment of a debt to a third person by the concessionaire of a
public market, the said public market could be attached and sold at public auction. The Supreme
Court held that:

Even though a creditor is unquestionably entitled to recover out of his debtor's property, yet
when among such property there is included the special right granted by the Government of
usufruct in a building intended for a public service, and when this privilege is closely related
to a service of a public character, such right of the creditor to the collection of a debt owed
him by the debtor who enjoys the said special privilege of usufruct in a public market is not
absolute and may be exercised only through the action of court of justice with respect to the
profits or revenue obtained under the special right of usufruct enjoyed by debtor.

The special concession of the right of usufruct in a public market cannot be attached like any
ordinary right, because that would be to permit a person who has contracted with the state or
with the administrative officials thereof to conduct and manage a service of a public
character, to be substituted, without the knowledge and consent of the administrative
authorities, by one who took no part in the contract, thus giving rise to the possibility of the
regular course of a public service being disturbed by the more or less legal action of a
grantee, to the prejudice of the state and the public interests.

The privilege or franchise granted to a private person to enjoy the usufruct of a public market
cannot lawfully be attached and sold, and a creditor of such person can recover his debt only
out of the income or revenue obtained by the debtor from the enjoyment or usufruct of the
said privilege, in the same manner that the rights of such creditors of a railroad company can
be exercised and their credit collected only out of the gross receipts remaining after
deduction has been made therefrom of the operating expenses of the road. (Law of
November 12, 1896, extended to the overseas provinces by the royal order of August 3,
1886.)

For the reasons contained in the authorities above quoted we believe that this court would have
reached the same conclusion if the debtor had been municipality of Guinobatan and the public
market had been levied upon by virtue of the execution.

It is evident that the movable and immovable property of a municipality, necessary for governmental
purpose, may not be attached and sold for the payment of a judgment against the municipality. The
supreme reason for this rule is the character of the public use to which such kind of property is
devoted. The necessity for government service justifies that the property of public of the municipality
be exempt from execution just as it is necessary to exempt certain property of private individuals in
accordance with section 452 of the Code of Civil Procedure.

Even the municipal income, according to the above quoted authorities, is exempt from levy and
execution. In volume 1, page 467, Municipal Corporations by Dillon we find that:

Municipal corporations are instituted by the supreme authority of a state for the public good.
They exercise, by delegation from the legislature, a portion of the sovereign power. The main
object of their creation is to act as administrative agencies for the state, and to provide for
the police and local government of certain designated civil divisions of its territory. To this
end they are invested with certain governmental powers and charged with civil, political, and
municipal duties. To enable them beneficially to exercise these powers and discharge these
duties, they are clothed with the authority to raise revenues, chiefly by taxation, and
subordinately by other modes as by licenses, fines, and penalties. The revenue of the public
corporation is the essential means by which it is enabled to perform its appointed work.
Deprived of its regular and adequate supply of revenue, such a corporation is practically
destroyed and the ends of its erection thwarted. Based upon considerations of this character,
it is the settled doctrine of the law that only the public property but also the taxes and public
revenues of such corporations cannot be seized under execution against them, either in the
treasury or when in transit to it. Judgments rendered for taxes, and the proceeds of such
judgments in the hands of officers of the law, are not subject to execution unless so declared
by statute. The doctrine of the inviolability of the public revenues by the creditor is
maintained, although the corporation is in debt, and has no means of payment but the taxes
which it is authorized to collect.

Another error assigned by counsel for appellant is the holding of the court a quo that the proper
remedy for collecting the judgment in favor of the plaintiff was by way or mandamus.

While this question is not necessarily included in the one which is the subject of this appeal, yet we
believe that the holding of the court, assigned as error by appellant's counsel, is true when, after a
judgment is rendered against a municipality, it has no property subject to execution. This doctrine is
maintained by Dillon (Municipal Corporations, vol. 4, par. 1507, 5th ed.) based upon the decisions of
several States of the Union upholding the same principle and which are cited on page 2679 of the
aforesaid work. In this sense this assignment of error, we believe, is groundless.

By virtue of all the foregoing, the judgment appealed from should be and is hereby affirmed with
costs against the appellant. So ordered.

Avanceña, C. J., Street, Malcolm, Ostrand, Johns, Romualdez and Villa-Real., JJ., concur.
G.R. No. 154953             June 26, 2008

REPUBLIC OF THE PHILIPPINES, petitioner,

vs.
T.A.N. PROPERTIES, INC., respondent.

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review1 assailing the 21 August 2002 Decision2 of the Court of
Appeals in CA-G.R. CV No. 66658. The Court of Appeals affirmed in toto the 16 December 1999
Decision3 of the Regional Trial Court of Tanauan, Batangas, Branch 6 (trial court) in Land
Registration Case No. T-635.

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-04-019741 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 Order10 dated 13 December 1999, the trial court reinstated the Order of General Default.

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.

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.

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-04-019741, 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.

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:

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-in-interest 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:

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

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

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, Batangas certified on Dec. 31, 1925
per LC No. 582."

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.

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;

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.

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.

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 x x x. 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
publication21 of the DENR Secretary’s issuance declaring the land alienable and disposable.

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, FMS-DENR, 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.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, FMS-DENR, 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.

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 x x x 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.

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-in-interest 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.

We agree with petitioner.

Evangelista testified that Kabesang Puroy had been in 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.

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.

The tax declarations presented were only for the 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.

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.

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. x x x x

[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.

In actual practice, the constitutional ban strengthens the constitutional limitation on

individuals from acquiring more than the allowed area of alienable lands of the public
domain. Without the constitutional ban, individuals who already acquired the maximum area
of alienable lands of the public domain could easily set up corporations to acquire more
alienable public lands. An individual could own as many corporations as his means would
allow him. An individual could even hide his ownership of a corporation by putting his
nominees as stockholders of the corporation. The corporation is a convenient vehicle to
circumvent the constitutional limitation on acquisition by individuals of alienable lands of the
public domain.

The constitutional intent, under the 1973 and 1987 Constitutions, is to transfer ownership of
only a limited area of alienable land of the public domain to a qualified individual. This
constitutional intent is safeguarded by the provision prohibiting corporations from acquiring
alienable lands of the public domain, since the vehicle to circumvent the constitutional intent
is removed. The available alienable public lands are gradually decreasing in the face of an
ever-growing population. The most effective way to insure faithful adherence to this
constitutional intent is to grant or sell alienable lands of the public domain only to individuals.
This, it would seem, is the practical benefit arising from the constitutional ban. 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

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 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) "x x
x shall be conclusively presumed to have performed all the conditions essential to a
Government grant and shall be entitled to a certificate of title x x x." 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.

x x x [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. x x
x.40 (Emphasis supplied)

Director of Lands is not applicable to the present case. In Director of Lands, the "land x x x was
already private property at the time it was acquired x x x 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-in-interest 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-in-interest
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.

Admittedly, a corporation can at present still apply for original registration of land under the doctrine
in Director of Lands. Republic Act No. 917642 (RA 9176) further amended the Public Land Act43 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.

Under RA 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 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.

SO ORDERED.

FERNANDA ARBIAS, G.R. No. 173808

Petitioner, Present:

- versus - YNARES-SANTIAGO, J.,

THE REPUBLIC OF THE PHILIPPINES, Chairperson,

Respondent. AUSTRIA-MARTINEZ,

CHICO-NAZARIO,

VELASCO,* and

REYES, JJ.

Promulgated:

September 17, 2008

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari1 filed by Fernanda Arbias seeking to annul and set aside
the Decision2 and Resolution3 of the Court of Appeals dated 2 September 2005 and 19 July 2006,
respectively, in CA-G.R. CV No. 72120. The appellate court, in its assailed Decision, reversed the
Decision4 dated 26 June 2000 of the Regional Trial Court (RTC) of Iloilo City, Branch 34, in Land
Registration Case (LRC) No. N-1025, which granted the application of petitioner Fernanda Arbias
to register the subject property under the provisions of Presidential Decree No. 1529 (Property
Registration Decree); and in its assailed Resolution, denied petitioner’s Motion for
Reconsideration.

The factual antecedents of the case are as follows:

On 12 March 1993, Lourdes T. Jardeleza (Jardeleza) executed a Deed of Absolute Sale5 selling to

petitioner, married to Jimmy Arbias (Jimmy), a parcel of unregistered land situated at Poblacion,
 Estancia, Iloilo, and identified as Cadastral Lot No. 287 of the Estancia Cadastre (subject
property), for the sum of P33,000.00. According to the Deed, the subject property was residential
and consisted of 600 square meters, more or less.

Three years thereafter, on 17 June 1996, petitioner filed with the RTC a verified Application for
Registration of Title6 over the subject property, docketed as LRC Case No. N-1025. She attached
to her application the Tracing Cloth with Blue Print copies, the Deed of Absolute Sale involving
the subject property, the Surveyor’s Certification, the Technical Description of the land, and
Declaration of Real Property in the name of petitioner and her spouse Jimmy. 7

On 3 September 1996, the RTC transmitted the application with all the attached documents and
evidences to the Land Registration Authority (LRA),8 pursuant to the latter’s function as the
central repository of records relative to original registration of lands.9 On 13 April 1998, the LRA
submitted its report to the RTC that petitioner had already complied with all the requirements
precedent to the publication.10

Subsequently, the RTC ordered that its initial hearing of LRC Case No. N-1025 be held on 17
February 1999.11

On 6 January 1999, the respondent Republic of the Philippines, through the Office of the Solicitor
General (OSG), filed its Notice of Appearance and deputized the City Prosecutor of Iloilo City to
appear on its behalf before the RTC in LRC Case No. N-1025. Thereafter, the respondent filed an
Opposition to petitioner’s application for registration of the subject property. 12

The RTC then ordered that its initial hearing of LRC Case No. N-1025 be re-set on 23 July
1999.13 The LRA, thus, issued on 16 March 1999 a Notice of Initial Hearing.14 The Notice of Initial
Hearing was accordingly posted and published.15

At the hearing on 23 July 1999 before the RTC, petitioner took the witness stand where she
identified documentary exhibits and testified as to her purchase of the subject property, as well as
her acts of ownership and possession over the same. The owners of the lots adjoining the subject
property who attended the hearing were Hector Tiples, who opposed the supposed area of the
subject property; and Pablo Garin, who declared that he had no objection thereto. 16

When its turn to present evidence came, respondent, represented by the City Prosecutor,
manifested that it had no evidence to contradict petitioner’s application for registration. It merely
reiterated its objection that the area of the subject property, as stated in the Deed of Sale in favor
of petitioner and the Tax Declarations covering the property, was only 600 square meters, while
the area stated in the Cadastral Survey was 717 square meters.17 The case was then submitted for
decision.

On 26 June 2000, the RTC ruled on petitioner’s application for registration in this wise:

As to the issue that muniments of title and/or tax declarations and tax receipts/payments do not
constitute competent and sufficient evidence of ownership, the same cannot hold through (sic)
anymore it appearing from the records that the muniments of titles as presented by the herein
applicant are coupled with open, adverse and continuous possession in the concept of an owner,
hence, it can be given greater weight in support of the claim for ownership. The [herein petitioner]
is a private individual who is qualified under the law being a purchaser in good faith and for
value. The adverse, open, continuous and exclusive possession of the land in the concept of owner
of the [petitioner] started as early as in 1992 when their predecessors in interest from Lourdes
Jardeleza then to the herein [petitioner] without any disturbance of their possession as well as
 claim of ownership. Hence, uninterrupted possession and claim of ownership has ripen (sic) into
an incontrovertible proof in favor of the [petitioner].

Premises considered, the Application of Petitioner Fernanda Arbias to bring Lot 287 under the
operation of the Property Registration Decree is GRANTED.

Let therefore a DECREE be issued in favor of the [petitioner] Fernanda Arbias, of legal age,
married to Jimmy Arbias and a resident of Golingan St. Poblacion, Estancia, Iloilo and after the
Decree shall have been issued, the corresponding Certificate of Title over the said parcel of land
(Lot 287) shall likewise be issued in favor of the petitioner Fernanda Arbias after the parties shall
have paid all legal fees due thereon.18

Respondent, through the OSG, filed with the RTC a Notice of Appeal19 of the above Decision. In
its Brief20 before the Court of Appeals, respondent questioned the granting by the RTC of the
application, notwithstanding the alleged non-approval of the survey plan by the Director of the
Land Management Bureau (LMB); the defective publication of the notice of initial hearing; and
the failure of petitioner to prove the continuous, open, exclusive and notorious possession by their
predecessor-in-interest.

On 2 September 2005, the Court of Appeals rendered the assailed Decision in which it decreed,
thus:

WHEREFORE, the Decision of the trial court dated June 26, 2000 is hereby REVERSED and
SET ASIDE. Accordingly, the application for original registration of title is hereby DISMISSED. 21

The appellate court declared that the Certification of the blueprint of the subject lot’s survey plan
issued by the Regional Technical Director of the Lands Management Services (LMS) of the
Department of Environment and Natural Resources (DENR) was equivalent to the approval by
the Director of the LMB, inasmuch as the functions of the latter agency was already delegated to
the former. The blueprint copy of said plan was also certified 22 as a duly authentic, true and
correct copy of the original plan, thus, admissible for the purpose for which it was offered.

The Court of Appeals likewise brushed aside the allegation that the Notice of Initial Hearing
posted and published was defective for having indicated therein a much bigger area than that
described in the tax declaration for the subject property. The appellate court ruled that the
property is defined by its boundaries and not its calculated area, and measurements contained in
tax declarations are merely based on approximation, rather than computation. At any rate, the
Court of Appeals reasoned further that the discrepancy in its land area did not cast doubt on the
identity of the subject property.

It was on the issue of possession, however, that the Court of Appeals digressed from the ruling of
the RTC. The appellate court found that other than petitioner’s own general statements and tax
declarations, no other evidence was presented to prove her possession of the subject property for
the period required by law. Likewise, petitioner failed to establish the classification of the subject
property as an alienable and disposable land of the public domain.

Petitioner sought reconsideration23 of the afore-mentioned Decision, but the Court of Appeals
denied the same in a Resolution24 dated 19 July 2006.

Petitioner now comes to us via the instant Petition, raising the following issues:
 I.

WHETHER OR NOT THE PUBLIC RESPONDENT COURT OF APPEALS ERRED IN NOT

HOLDING THAT THE OFFICE OF THE SOLICITOR GENERAL IS ESTOPPED FROM
ASSAILING THE DECISION OF THE COURT A QUO AS IT DID NOT OBJECT TO
PETITIONER’S EVIDENCE AND PRESENT PROOF TO REFUTE THE SAME.

II.

WHETHER OR NOT THE PUBLIC RESPONDENT COURT OF APPEALS ERRED IN

DEPARTING FROM THE WELL SETTLED RULE THAT THE CONCLUSIONS OF THE
COURT A QUO, WHICH IS IN BEST POSITION TO OBSERVE THE DEMEANOR,
CONDUCT AND ATTITUDE OF THE WITNESS AT THE TRIAL, ARE GIVEN MORE
WEIGHT AND MUCH MORE THAT THE OFFICE OF THE SOLICITOR GENERAL DID
NOT PRESENT EVIDENCE FOR THE REPUBLIC IN THE COURT BELOW.

III.

WHETHER OR NOT THE PUBLIC RESPONDENT COURT OF APPEALS ERRED IN NOT

HOLDING THAT THE LOT IN QUESTION CEASES (sic) TO BE PUBLIC LAND IN VIEW
OF PETITIONER’S AND THAT OF HER PREDECESSOR’S-IN-INTEREST POSSESSION EN
CONCEPTO DE DUENO FOR MORE THAN THIRTY (30) YEARS.

IV.

WHETHER OR NOT THE PUBLIC RESPONDENT COURT OF APPEALS ERRED IN

DISMISSING OUTRIGHT PETITIONER’S APPLICATION FOR TITLING WITHOUT
REMANDING THE INSTANT CASE FIRST TO THE COURT A QUO FOR FURTHER
PROCEEDINGS PURSUANT TO THE RULINGS OF THIS HONORABLE COURT IN THE
CASES OF VICENTE ABAOAG VS. DIRECTOR OF LANDS, 045 Phil. 518 AND REPUBLIC
OF THE PHILIPPINES VS. HON. SOFRONIO G. SAYO ET. AL., G.R. NO. 60413, OCTOBER
31, 1990.

Petitioner ascribes error on the part of the Court of Appeals for failing to conclude that she and
her predecessor-in-interest possessed the subject property in the concept of an owner for more
than 30 years and that the said property had already been classified as an alienable and disposable
land of the public domain. Petitioner contends that her documentary and testimonial evidence
were sufficient to substantiate the said allegations, as correctly and conclusively pronounced by
the RTC. Petitioner likewise points out that no third party appeared before the RTC to oppose
her application and possession other than respondent. Respondent, then represented by the City
Prosecutor, did not even adduce any evidence before the RTC to rebut petitioner’s claims; thus,
respondent, presently represented by the OSG, is now estopped from assailing the RTC Decision.
Petitioner finally maintains that assuming her possession was indeed not proven under the
circumstances, the Court of Appeals should have remanded the case to the trial court for further
proceedings, instead of dismissing it outright.

This Court finds the petition plainly without merit.

Under the Regalian doctrine, all lands of the public domain belong to the State, and the State is
the source of any asserted right to ownership of land and charged with the conservation of such
patrimony. This same doctrine also states that all lands not otherwise appearing to be clearly
within private ownership are presumed to belong to the
State.25 http://www.supremecourt.gov.ph/jurisprudence/1998/sep1998/94524.htm - _edn21 Hence,
the burden of proof in overcoming the presumption of State ownership of lands of the public
domain is on the person applying for registration. The applicant must show that the land subject
of the application is alienable or disposable.26

Section 14, paragraph 1 of Presidential Decree No. 152927 states the requirements necessary for a
judicial confirmation of imperfect title to be issued. In accordance with said provision, persons
who by themselves or through their predecessors-in-interest have been in open, continuous,
exclusive and notorious possession and occupation of alienable and disposable lands of the public
domain under a bona fide claim of ownership since 12 June 1945 or earlier, may file in the proper
trial court an application for registration of title to land, whether personally or through their duly
authorized representatives.

Hence, the applicant for registration under said statutory provision must specifically prove: 1)
possession of the subject land under a bona fide claim of ownership from 12 June 1945 or earlier;
and 2) the classification of the land as an alienable and disposable land of the public domain.

In the case at bar, petitioner miserably failed to discharge the burden of proof imposed on her by
the law.

First, the documentary evidence that petitioner presented before the RTC did not in any way
prove the length and character of her possession and those of her predecessor-in-interest relative
to the subject property.

The Deed of Sale28 merely stated that the vendor of the subject property, Jardeleza, was the true
and lawful owner of the subject property, and that she sold the same to petitioner on 12 March
1993. The Deed did not state the duration of time during which the vendor (or her predecessors-
in-interest) possessed the subject property in the concept of an owner.

Petitioner’s presentation of tax declarations of the subject property for the years 1983, 1989, 1991
and 1994, as well as tax receipts of payment of the realty tax due thereon, are of little evidentiary
weight. Well-settled is the rule that tax declarations and receipts are not conclusive evidence of
ownership or of the right to possess land when not supported by any other evidence.  The fact that
the disputed property may have been declared for taxation purposes in the names of the
applicants for registration or of their predecessors-in-interest does not necessarily prove
ownership. They are merely indicia of a claim of ownership.29

The Survey Plan30 and Technical Description31 of the subject property submitted by petitioner
merely plot the location, area and boundaries thereof. Although they help in establishing the
identity of the property sought to be registered, they are completely ineffectual in proving that
petitioner and her predecessors-in-interest actually possessed the subject property in the concept
of an owner for the necessary period.

The following testimonial evidence adduced by petitioner likewise fails to persuade us:

Direct Examination of Fernanda Arbias:

Atty. Rey Padilla:

Q: You said you bought this property from the Spouses Jardeleza. Can you tell us how long did
they possess the subject property?
 A: 30 years.

Q: And you said you bought this property sometime in the year 1993. After 1993, do you know if
anybody filed claim or ownership of the subject property?

A: No, Sir.

Q: Can you tell us if anybody disturbed your possession in the subject property?

A: No, Sir.

Q: Are you possessing the subject property in concept of the owner open and continuous?

A: Yes, Sir.

Q: What are the improvements you introduced in the subject property?

A: I have the intention to put up my house.32

Cross Examination of Fernanda Arbias:

Prosecutor Nelson Geduspan:

Q: How long have you been in open, continuous, exclusive possession of this property?

A: Almost six (6) years.

Q: And before that it is Lourdes Jardeleza who is in open, continuous and in actual possession of
the property?

A: Yes, Sir.

Q: Of your own knowledge, aside from this predecessor Lourdes Jardeleza, has anybody had any
claim of the property?

A: No, Sir.33

Quite obviously, the above-quoted statements made by petitioner during her testimony, by
themselves, are nothing more than self-serving, bereft of any independent and objective
substantiation. As correctly found by the Court of Appeals, petitioner cannot thereby rely on her
assertions to prove her claim of possession in the concept of an owner for the period required by
law. Petitioner herself admitted that she only possessed the property for six years. The bare claim
of petitioner that the land applied for had been in the possession of her predecessor-in-interest,
Jardeleza, for 30 years, does not constitute the "well-nigh inconvertible" and "conclusive"
evidence required in land registration.34

Second, neither does the evidence on record establish to our satisfaction that the subject property
has been classified as alienable and disposable. To prove this requirement, petitioner merely
points to an annotation in the lower left portion of the blueprint of the subject property, which
recites:
 ALL CORNERS ARE OLD POINTS.

ALIENABLE AND DISPOSABLE PROJ. 44 BLK-1 PER LC MAP. 1020 APPROVED BY THE
DIRECTOR OF FORESTRY ON JULY 26, 1933. COORDINATES OF BLLM#1 N=1266998.39,
E=516077.19 LAT 11o 27’ 27.4" N, LONG 123o 08’ 9.9" E.35 (Emphasis supplied.)

Petitioner’s reliance on the above inscription is misguided. In Menguito v. Republic, 36 we held that
an applicant cannot rely on the notation in the blueprint made by a surveyor-geodetic engineer
indicating that the property involved is alienable and disposable land. We emphasized therein that
–

For the original registration of title, the applicant must overcome the presumption that the land
sought to be registered forms part of the public domain. Unless public land is shown to have been
reclassified or alienated to a private person by the State, it remains part of the inalienable public
domain. Indeed, "occupation thereof in the concept of owner, no matter how long, cannot ripen
into ownership and be registered as a title." To overcome such presumption, incontrovertible
evidence must be shown by the applicant. Absent such evidence, the land sought to be registered
remains inalienable.

In the present case, petitioners cite a surveyor-geodetic engineer’s notation x x x indicating that
the survey was inside alienable and disposable land. Such notation does not constitute a positive
government act validly changing the classification of the land in question. Verily, a mere surveyor
has no authority to reclassify lands of the public domain. By relying solely on the said surveyor’s
assertion, petitioners have not sufficiently proven that the land in question has been declared
alienable.37

In the absence of incontrovertible evidence to prove that the subject property is already classified
as alienable and disposable, we must consider the same as still inalienable public domain.

The fact that no third person appeared before the RTC to oppose the petitioner’s application for
registration is also irrelevant. The burden of proof imposed by law on petitioner does not shift.
Indeed, a person who seeks the registration of title to a piece of land on the basis of possession by
himself and his predecessors-in-interest must prove his claim by clear and convincing
evidence, i.e., he must prove his title and should not rely on the absence or weakness of the
evidence of the oppositors.38 Furthermore, the court has the bounden duty, even in the absence of
any opposition, to require the petitioner to show, by a preponderance of evidence and by positive
and absolute proof, so far as possible, that he is the owner in fee simple of the lands which he is
attempting to register.39

Petitioner cannot also invoke estoppel on the part of the OSG as to bar the latter from challenging
the decision of the RTC. In land registration cases, the Solicitor General is not merely the
principal, but the only legal counsel of the government.40 The City Prosecutor appeared as counsel
for the respondent before the RTC only after being deputized by the OSG. Being the
representative of the Republic of the Philippines, the OSG, thus, falls within the purview of the
doctrine which provides that estoppel does not operate against the state or its agents.41 Although
exceptions from this rule are allowed, as when there is a need to uphold a policy adopted to
protect the public or to protect the citizens from dishonorable, capricious and ignoble acts by the
government,42 the same are not present in the instant case. In fact, public policy demands that the
respondent, through the OSG, must deter dubious applications for registration of real property
and protect within all legal means the inalienable public domain which rightfully belongs only to
the State.

Finally, this Court cannot subscribe to the submission of the petitioner that the Court of Appeals
erred in dismissing the petitioner’s appeal outright instead of remanding the same to the RTC for
further proceedings. The cases cited by petitioner, namely Abaoag v. Director of Lands43 and
Republic v. Sayo,44 are not on all fours with the instant case.

In Abaoag, we remanded the case notwithstanding the failure of the applicants to prove their
entitlement to the registration of their property because the public land laws45 prevailing at that
time granted a presumption of ownership in favor of the actual occupants of the particular
property and against the State; while in Sayo, the case was ordered remanded for further
proceedings since it was proven that an invalid compromise agreement was entered into between
parties and non-parties to the land registration case, without the participation of the Solicitor
General, and that some of the parties therein failed to adduce evidence to prove their land
ownership.

None of the above circumstances appear to be present in the case presently before us. Simply,
petitioner failed to prove that she had an imperfect title to the subject property, which could be
confirmed by registration. She had every opportunity before the RTC to present all the evidence
in support of her application for registration, and neither the Court of Appeals nor this Court has
the duty, absent any compelling reason, to grant her a second chance by remanding the case to the
RTC for further reception of evidence.

WHEREFORE, premises considered, the Petition is DENIED. The Decision of the Court of
Appeals dated 2 September 2005 in CA-G.R. CV No. 72120 is hereby AFFIRMED. Costs against
the petitioner.

SO ORDERED.
G.R. No. 133250           July 9, 2002

FRANCISCO I. CHAVEZ, petitioner,
vs.
PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT
CORPORATION, respondents.

CARPIO, J.:

This is an original Petition for Mandamus with prayer for a writ of preliminary injunction and a
temporary restraining order. The petition seeks to compel the Public Estates Authority ("PEA" for
brevity) to disclose all facts on PEA's then on-going renegotiations with Amari Coastal Bay and
Development Corporation ("AMARI" for brevity) to reclaim portions of Manila Bay. The petition
further seeks to enjoin PEA from signing a new agreement with AMARI involving such reclamation.

The Facts

On November 20, 1973, the government, through the Commissioner of Public Highways, signed a
contract with the Construction and Development Corporation of the Philippines ("CDCP" for brevity)
to reclaim certain foreshore and offshore areas of Manila Bay. The contract also included the
construction of Phases I and II of the Manila-Cavite Coastal Road. CDCP obligated itself to carry out
all the works in consideration of fifty percent of the total reclaimed land.

On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree No. 1084
creating PEA. PD No. 1084 tasked PEA "to reclaim land, including foreshore and submerged areas,"
and "to develop, improve, acquire, x x x lease and sell any and all kinds of lands." 1 On the same
date, then President Marcos issued Presidential Decree No. 1085 transferring to PEA the "lands
reclaimed in the foreshore and offshore of the Manila Bay" 2 under the Manila-Cavite Coastal Road
and Reclamation Project (MCCRRP).

On December 29, 1981, then President Marcos issued a memorandum directing PEA to amend its
contract with CDCP, so that "[A]ll future works in MCCRRP x x x shall be funded and owned by
PEA." Accordingly, PEA and CDCP executed a Memorandum of Agreement dated December 29,
1981, which stated:

"(i) CDCP shall undertake all reclamation, construction, and such other works in the
MCCRRP as may be agreed upon by the parties, to be paid according to progress of works
on a unit price/lump sum basis for items of work to be agreed upon, subject to price
escalation, retention and other terms and conditions provided for in Presidential Decree No.
1594. All the financing required for such works shall be provided by PEA.

xxx

(iii) x x x CDCP shall give up all its development rights and hereby agrees to cede and
transfer in favor of PEA, all of the rights, title, interest and participation of CDCP in and to all
the areas of land reclaimed by CDCP in the MCCRRP as of December 30, 1981 which have
not yet been sold, transferred or otherwise disposed of by CDCP as of said date, which
areas consist of approximately Ninety-Nine Thousand Four Hundred Seventy Three (99,473)
square meters in the Financial Center Area covered by land pledge No. 5 and approximately
Three Million Three Hundred Eighty Two Thousand Eight Hundred Eighty Eight (3,382,888)
 square meters of reclaimed areas at varying elevations above Mean Low Water Level
located outside the Financial Center Area and the First Neighborhood Unit." 3

On January 19, 1988, then President Corazon C. Aquino issued Special Patent No. 3517, granting
and transferring to PEA "the parcels of land so reclaimed under the Manila-Cavite Coastal Road and
Reclamation Project (MCCRRP) containing a total area of one million nine hundred fifteen thousand
eight hundred ninety four (1,915,894) square meters." Subsequently, on April 9, 1988, the Register
of Deeds of the Municipality of Parañaque issued Transfer Certificates of Title Nos. 7309, 7311, and
7312, in the name of PEA, covering the three reclaimed islands known as the "Freedom Islands"
located at the southern portion of the Manila-Cavite Coastal Road, Parañaque City. The Freedom
Islands have a total land area of One Million Five Hundred Seventy Eight Thousand Four Hundred
and Forty One (1,578,441) square meters or 157.841 hectares.

On April 25, 1995, PEA entered into a Joint Venture Agreement ("JVA" for brevity) with AMARI, a
private corporation, to develop the Freedom Islands. The JVA also required the reclamation of an
additional 250 hectares of submerged areas surrounding these islands to complete the configuration
in the Master Development Plan of the Southern Reclamation Project-MCCRRP. PEA and AMARI
entered into the JVA through negotiation without public bidding. 4 On April 28, 1995, the Board of
Directors of PEA, in its Resolution No. 1245, confirmed the JVA.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, PEA15 and AMARI16 are as follows:

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

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

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

ADMINISTRATIVE REMEDIES;

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

V. WHETHER THE CONSTITUTIONAL RIGHT TO INFORMATION INCLUDES OFFICIAL

INFORMATION ON ON-GOING NEGOTIATIONS BEFORE A FINAL AGREEMENT;

VI. WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE AGREEMENT

FOR THE TRANSFER TO AMARI OF CERTAIN LANDS, RECLAIMED AND STILL TO BE
RECLAIMED, VIOLATE THE 1987 CONSTITUTION; AND

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

The Court's Ruling

 First issue: whether the principal reliefs prayed for in the petition are moot and academic
because of subsequent events.

The petition prays that PEA publicly disclose the "terms and conditions of the on-going negotiations
for a new agreement." The petition also prays that the Court enjoin PEA from "privately entering into,
perfecting and/or executing any new agreement with AMARI."

PEA and AMARI claim the petition is now moot and academic because AMARI furnished petitioner
on June 21, 1999 a copy of the signed Amended JVA containing the terms and conditions agreed
upon in the renegotiations. Thus, PEA has satisfied petitioner's prayer for a public disclosure of the
renegotiations. Likewise, petitioner's prayer to enjoin the signing of the Amended JVA is now moot
because PEA and AMARI have already signed the Amended JVA on March 30, 1999. Moreover, the
Office of the President has approved the Amended JVA on May 28, 1999.

Petitioner counters that PEA and AMARI cannot avoid the constitutional issue by simply fast-tracking
the signing and approval of the Amended JVA before the Court could act on the issue. Presidential
approval does not resolve the constitutional issue or remove it from the ambit of judicial review.

We rule that the signing of the Amended JVA by PEA and AMARI and its approval by the President
cannot operate to moot the petition and divest the Court of its jurisdiction. PEA and AMARI have still
to implement the Amended JVA. The prayer to enjoin the signing of the Amended JVA on
constitutional grounds necessarily includes preventing its implementation if in the meantime PEA
and AMARI have signed one in violation of the Constitution. Petitioner's principal basis in assailing
the renegotiation of the JVA is its violation of Section 3, Article XII of the Constitution, which prohibits
the government from alienating lands of the public domain to private corporations. If the Amended
JVA indeed violates the Constitution, it is the duty of the Court to enjoin its implementation, and if
already implemented, to annul the effects of such unconstitutional contract.

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

Also, the instant petition is a case of first impression. All previous decisions of the Court involving
Section 3, Article XII of the 1987 Constitution, or its counterpart provision in the 1973
Constitution,18 covered agricultural lands sold to private corporations which acquired the lands from
private parties. The transferors of the private corporations claimed or could claim the right to judicial
confirmation of their imperfect titles19 under Title II of Commonwealth Act. 141 ("CA No. 141" for
brevity). In the instant case, AMARI seeks to acquire from PEA, a public corporation, reclaimed
lands and submerged areas for non-agricultural purposes by purchase under PD No. 1084
(charter of PEA) and Title III of CA No. 141. Certain undertakings by AMARI under the Amended
JVA constitute the consideration for the purchase. Neither AMARI nor PEA can claim judicial
confirmation of their titles because the lands covered by the Amended JVA are newly reclaimed or
still to be reclaimed. Judicial confirmation of imperfect title requires open, continuous, exclusive and
notorious occupation of agricultural lands of the public domain for at least thirty years since June 12,
1945 or earlier. Besides, the deadline for filing applications for judicial confirmation of imperfect title
expired on December 31, 1987. 20

Lastly, there is a need to resolve immediately the constitutional issue raised in this petition because
of the possible transfer at any time by PEA to AMARI of title and ownership to portions of the
reclaimed lands. Under the Amended JVA, PEA is obligated to transfer to AMARI the latter's seventy
percent proportionate share in the reclaimed areas as the reclamation progresses. The Amended
JVA even allows AMARI to mortgage at any time the entire reclaimed area to raise financing for the
reclamation project.21

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

PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief directly from the
Court. The principle of hierarchy of courts applies generally to cases involving factual questions. As
it is not a trier of facts, the Court cannot entertain cases involving factual issues. The instant case,
however, raises constitutional issues of transcendental importance to the public. 22 The Court can
resolve this case without determining any factual issue related to the case. Also, the instant case is a
petition for mandamus which falls under the original jurisdiction of the Court under Section 5, Article
VIII of the Constitution. We resolve to exercise primary jurisdiction over the instant case.

Third issue: whether the petition merits dismissal for non-exhaustion of administrative
remedies.

PEA faults petitioner for seeking judicial intervention in compelling PEA to disclose publicly certain
information without first asking PEA the needed information. PEA claims petitioner's direct resort to
the Court violates the principle of exhaustion of administrative remedies. It also violates the rule that
mandamus may issue only if there is no other plain, speedy and adequate remedy in the ordinary
course of law.

PEA distinguishes the instant case from Tañada v. Tuvera23 where the Court granted the petition for
mandamus even if the petitioners there did not initially demand from the Office of the President the
publication of the presidential decrees. PEA points out that in Tañada, the Executive Department
had an affirmative statutory duty under Article 2 of the Civil Code24 and Section 1 of
Commonwealth Act No. 63825 to publish the presidential decrees. There was, therefore, no need for
the petitioners in Tañada to make an initial demand from the Office of the President. In the instant
case, PEA claims it has no affirmative statutory duty to disclose publicly information about its
renegotiation of the JVA. Thus, PEA asserts that the Court must apply the principle of exhaustion of
administrative remedies to the instant case in view of the failure of petitioner here to demand initially
from PEA the needed information.

The original JVA sought to dispose to AMARI public lands held by PEA, a government corporation.
Under Section 79 of the Government Auditing Code, 26 the disposition of government lands to private
parties requires public bidding. PEA was under a positive legal duty to disclose to the public the
terms and conditions for the sale of its lands. The law obligated PEA to make this public
disclosure even without demand from petitioner or from anyone. PEA failed to make this public
disclosure because the original JVA, like the Amended JVA, was the result of a negotiated
contract, not of a public bidding. Considering that PEA had an affirmative statutory duty to make the
public disclosure, and was even in breach of this legal duty, petitioner had the right to seek direct
judicial intervention.
Moreover, and this alone is determinative of this issue, the principle of exhaustion of administrative
remedies does not apply when the issue involved is a purely legal or constitutional question. 27 The
principal issue in the instant case is the capacity of AMARI to acquire lands held by PEA in view of
the constitutional ban prohibiting the alienation of lands of the public domain to private corporations.
We rule that the principle of exhaustion of administrative remedies does not apply in the instant
case.

Fourth issue: whether petitioner has locus standi to bring this suit

PEA argues that petitioner has no standing to institute mandamus proceedings to enforce his

constitutional right to information without a showing that PEA refused to perform an affirmative duty
imposed on PEA by the Constitution. PEA also claims that petitioner has not shown that he will
suffer any concrete injury because of the signing or implementation of the Amended JVA. Thus,
there is no actual controversy requiring the exercise of the power of judicial review.

The petitioner has standing to bring this taxpayer's suit because the petition seeks to compel PEA to
comply with its constitutional duties. There are two constitutional issues involved here. First is the
right of citizens to information on matters of public concern. Second is the application of a
constitutional provision intended to insure the equitable distribution of alienable lands of the public
domain among Filipino citizens. The thrust of the first issue is to compel PEA to disclose publicly
information on the sale of government lands worth billions of pesos, information which the
Constitution and statutory law mandate PEA to disclose. The thrust of the second issue is to prevent
PEA from alienating hundreds of hectares of alienable lands of the public domain in violation of the
Constitution, compelling PEA to comply with a constitutional duty to the nation.

Moreover, the petition raises matters of transcendental importance to the public. In Chavez v.
PCGG,28 the Court upheld the right of a citizen to bring a taxpayer's suit on matters of transcendental
importance to the public, thus -

"Besides, petitioner emphasizes, the matter of recovering the ill-gotten wealth of the
Marcoses is an issue of 'transcendental importance to the public.' He asserts that ordinary
taxpayers have a right to initiate and prosecute actions questioning the validity of acts or
orders of government agencies or instrumentalities, if the issues raised are of 'paramount
public interest,' and if they 'immediately affect the social, economic and moral well being of
the people.'

Moreover, the mere fact that he is a citizen satisfies the requirement of personal interest,
when the proceeding involves the assertion of a public right, such as in this case. He invokes
several decisions of this Court which have set aside the procedural matter of locus standi,
when the subject of the case involved public interest.

xxx

In Tañada v. Tuvera, the Court asserted that when the issue concerns a public right and the
object of mandamus is to obtain the enforcement of a public duty, the people are regarded
as the real parties in interest; and because it is sufficient that petitioner is a citizen and as
such is interested in the execution of the laws, he need not show that he has any legal or
special interest in the result of the action. In the aforesaid case, the petitioners sought to
enforce their right to be informed on matters of public concern, a right then recognized in
Section 6, Article IV of the 1973 Constitution, in connection with the rule that laws in order to
be valid and enforceable must be published in the Official Gazette or otherwise effectively
promulgated. In ruling for the petitioners' legal standing, the Court declared that the right they
 sought to be enforced 'is a public right recognized by no less than the fundamental law of the
land.'

Legaspi v. Civil Service Commission, while reiterating Tañada, further declared that 'when a
mandamus proceeding involves the assertion of a public right, the requirement of personal
interest is satisfied by the mere fact that petitioner is a citizen and, therefore, part of the
general 'public' which possesses the right.'

Further, in Albano v. Reyes, we said that while expenditure of public funds may not have
been involved under the questioned contract for the development, management and
operation of the Manila International Container Terminal, 'public interest [was] definitely
involved considering the important role [of the subject contract] . . . in the economic
development of the country and the magnitude of the financial consideration involved.' We
concluded that, as a consequence, the disclosure provision in the Constitution would
constitute sufficient authority for upholding the petitioner's standing.

Similarly, the instant petition is anchored on the right of the people to information and access
to official records, documents and papers — a right guaranteed under Section 7, Article III of
the 1987 Constitution. Petitioner, a former solicitor general, is a Filipino citizen. Because of
the satisfaction of the two basic requisites laid down by decisional law to sustain petitioner's
legal standing, i.e. (1) the enforcement of a public right (2) espoused by a Filipino citizen, we
rule that the petition at bar should be allowed."

We rule that since the instant petition, brought by a citizen, involves the enforcement of constitutional
rights - to information and to the equitable diffusion of natural resources - matters of transcendental
public importance, the petitioner has the requisite locus standi.

Fifth issue: whether the constitutional right to information includes official information on on-
going negotiations before a final agreement.

Section 7, Article III of the Constitution explains the people's right to information on matters of public
concern in this manner:

"Sec. 7. The right of the people to information on matters of public concern shall be
recognized. Access to official records, and to documents, and papers pertaining to
official acts, transactions, or decisions, as well as to government research data used as
basis for policy development, shall be afforded the citizen, subject to such limitations as may
be provided by law." (Emphasis supplied)

The State policy of full transparency in all transactions involving public interest reinforces the
people's right to information on matters of public concern. This State policy is expressed in Section
28, Article II of the Constitution, thus:

"Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and
implements a policy of full public disclosure of all its transactions involving public
interest." (Emphasis supplied)

These twin provisions of the Constitution seek to promote transparency in policy-making and in the
operations of the government, as well as provide the people sufficient information to exercise
effectively other constitutional rights. These twin provisions are essential to the exercise of freedom
of expression. If the government does not disclose its official acts, transactions and decisions to
citizens, whatever citizens say, even if expressed without any restraint, will be speculative and
amount to nothing. These twin provisions are also essential to hold public officials "at all times x x x
accountable to the people,"29 for unless citizens have the proper information, they cannot hold public
officials accountable for anything. Armed with the right information, citizens can participate in public
discussions leading to the formulation of government policies and their effective implementation. An
informed citizenry is essential to the existence and proper functioning of any democracy. As
explained by the Court in Valmonte v. Belmonte, Jr.30 –

"An essential element of these freedoms is to keep open a continuing dialogue or process of
communication between the government and the people. It is in the interest of the State that
the channels for free political discussion be maintained to the end that the government may
perceive and be responsive to the people's will. Yet, this open dialogue can be effective only
to the extent that the citizenry is informed and thus able to formulate its will intelligently. Only
when the participants in the discussion are aware of the issues and have access to
information relating thereto can such bear fruit."

PEA asserts, citing Chavez v. PCGG,31 that in cases of on-going negotiations the right to information
is limited to "definite propositions of the government." PEA maintains the right does not include
access to "intra-agency or inter-agency recommendations or communications during the stage when
common assertions are still in the process of being formulated or are in the 'exploratory stage'."

Also, AMARI contends that petitioner cannot invoke the right at the pre-decisional stage or before
the closing of the transaction. To support its contention, AMARI cites the following discussion in the
1986 Constitutional Commission:

"Mr. Suarez. And when we say 'transactions' which should be distinguished from contracts,
agreements, or treaties or whatever, does the Gentleman refer to the steps leading to the
consummation of the contract, or does he refer to the contract itself?

Mr. Ople: The 'transactions' used here, I suppose is generic and therefore, it can cover
both steps leading to a contract and already a consummated contract, Mr. Presiding
Officer.

Mr. Suarez: This contemplates inclusion of negotiations leading to the consummation

of the transaction.

Mr. Ople: Yes, subject only to reasonable safeguards on the national interest.

Mr. Suarez: Thank you."32 (Emphasis supplied)

AMARI argues there must first be a consummated contract before petitioner can invoke the right.
Requiring government officials to reveal their deliberations at the pre-decisional stage will degrade
the quality of decision-making in government agencies. Government officials will hesitate to express
their real sentiments during deliberations if there is immediate public dissemination of their
discussions, putting them under all kinds of pressure before they decide.

We must first distinguish between information the law on public bidding requires PEA to disclose
publicly, and information the constitutional right to information requires PEA to release to the public.
Before the consummation of the contract, PEA must, on its own and without demand from anyone,
disclose to the public matters relating to the disposition of its property. These include the size,
location, technical description and nature of the property being disposed of, the terms and conditions
of the disposition, the parties qualified to bid, the minimum price and similar information. PEA must
prepare all these data and disclose them to the public at the start of the disposition process, long
before the consummation of the contract, because the Government Auditing Code requires public
bidding. If PEA fails to make this disclosure, any citizen can demand from PEA this information at
any time during the bidding process.

Information, however, on on-going evaluation or review of bids or proposals being undertaken by

the bidding or review committee is not immediately accessible under the right to information. While
the evaluation or review is still on-going, there are no "official acts, transactions, or decisions" on the
bids or proposals. However, once the committee makes its official recommendation, there arises
a "definite proposition" on the part of the government. From this moment, the public's right to
information attaches, and any citizen can access all the non-proprietary information leading to such
definite proposition. In Chavez v. PCGG,33 the Court ruled as follows:

"Considering the intent of the framers of the Constitution, we believe that it is incumbent
upon the PCGG and its officers, as well as other government representatives, to disclose
sufficient public information on any proposed settlement they have decided to take up with
the ostensible owners and holders of ill-gotten wealth. Such information, though, must
pertain to definite propositions of the government, not necessarily to intra-agency or
inter-agency recommendations or communications during the stage when common
assertions are still in the process of being formulated or are in the "exploratory" stage. There
is need, of course, to observe the same restrictions on disclosure of information in general,
as discussed earlier – such as on matters involving national security, diplomatic or foreign
relations, intelligence and other classified information." (Emphasis supplied)

Contrary to AMARI's contention, the commissioners of the 1986 Constitutional Commission

understood that the right to information "contemplates inclusion of negotiations leading to the
consummation of the transaction." Certainly, a consummated contract is not a requirement for the
exercise of the right to information. Otherwise, the people can never exercise the right if no contract
is consummated, and if one is consummated, it may be too late for the public to expose its defects. 1âwphi1.nêt

Requiring a consummated contract will keep the public in the dark until the contract, which may be
grossly disadvantageous to the government or even illegal, becomes a fait accompli. This negates
the State policy of full transparency on matters of public concern, a situation which the framers of the
Constitution could not have intended. Such a requirement will prevent the citizenry from participating
in the public discussion of 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,
correspondences, or discussions during closed-door Cabinet meetings which, like internal
deliberations of the Supreme Court and other collegiate courts, or executive sessions of either house
of Congress,38 are recognized as confidential. This kind of information cannot be pried open by a co-
equal branch of government. A frank exchange of exploratory ideas and assessments, free from the
glare of publicity and pressure by interested parties, is essential to protect the independence of
decision-making of those tasked to exercise Presidential, Legislative and Judicial power. 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.

Article 341 of the Civil Code of 1889 governed the re-classification of property of public dominion into
private property, to wit:
 "Art. 341. Property of public dominion, when no longer devoted to public use or to the
defense of the territory, shall become a part of the private property of the State."

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

Act No. 1654 of the Philippine Commission

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

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

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

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

xxx

(e) The leases above provided for shall be disposed of to the highest and best
bidder therefore, subject to such regulations and safeguards as the Governor-General may
by executive order prescribe." (Emphasis supplied)

Act No. 1654 mandated that the government should retain title to all lands reclaimed by the
government. The Act also vested in the government control and disposition of foreshore lands.
Private parties could lease lands reclaimed by the government only if these lands were no longer
needed for public purpose. Act No. 1654 mandated public bidding in the lease of government
reclaimed lands. Act No. 1654 made government reclaimed lands sui generis in that unlike other
public lands which the government could sell to private parties, these reclaimed lands were available
only for lease to private parties.

Act No. 1654, however, did not repeal Section 5 of the Spanish Law of Waters of 1866. Act No. 1654
did not prohibit private parties from reclaiming parts of the sea under Section 5 of the Spanish Law
of Waters. Lands reclaimed from the sea by private parties with government permission remained
private lands.

Act No. 2874 of the Philippine Legislature

On November 29, 1919, the Philippine Legislature enacted Act No. 2874, the Public Land Act. 46 The
salient provisions of Act No. 2874, on reclaimed lands, were as follows:
 "Sec. 6. The Governor-General, upon the recommendation of the Secretary of
Agriculture and Natural Resources, shall from time to time classify the lands of the
public domain into –

(a) Alienable or disposable,

(b) Timber, and

(c) Mineral lands, x x x.

Sec. 7. For the purposes of the government and disposition of alienable or disposable public
lands, the Governor-General, upon recommendation by the Secretary of Agriculture
and Natural Resources, shall from time to time declare what lands are open to
disposition or concession under this Act."

Sec. 8. Only those lands shall be declared open to disposition or concession which
have been officially delimited or classified x x x.

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.

x x x.

Sec. 58. The lands comprised in classes (a), (b), and (c) of section fifty-six shall be
disposed of to private parties by lease only and not otherwise, as soon as the
Governor-General, upon recommendation by the Secretary of Agriculture and Natural
Resources, shall declare that the same are not necessary for the public service and
are open to disposition under this chapter. The lands included in class (d) may be
disposed of by sale or lease under the provisions of this Act." (Emphasis supplied)

Section 6 of Act No. 2874 authorized the Governor-General to "classify lands of the public domain
into x x x alienable or disposable"47 lands. Section 7 of the Act empowered the Governor-General to
"declare what lands are open to disposition or concession." Section 8 of the Act limited alienable or
disposable lands only to those lands which have been "officially delimited and classified."
Section 56 of Act No. 2874 stated that lands "disposable under this 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 Governor-General to classify further such disposable lands of the public domain
into government reclaimed, foreshore or marshy lands of the public domain, as well as other non-
agricultural lands.

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

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

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

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

Dispositions under the 1935 Constitution

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

"Section 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals,
coal, petroleum, and other mineral oils, all forces of potential energy and other natural
resources of the Philippines belong to the State, and their disposition, exploitation,
development, or utilization shall be limited to citizens of the Philippines or to corporations or
associations at least sixty per centum of the capital of which is owned by such citizens,
subject to any existing right, grant, lease, or concession at the time of the inauguration of the
Government established under this Constitution. Natural resources, with the exception of
public agricultural land, shall not be alienated, and no license, concession, or lease for
the exploitation, development, or utilization of any of the natural resources shall be granted
for a period exceeding twenty-five years, renewable for another twenty-five years, except as
to water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, in which cases beneficial use may be the measure and limit of
the grant." (Emphasis supplied)
The 1935 Constitution barred the alienation of all natural resources except public agricultural lands,
which were the only natural resources the State could alienate. Thus, foreshore lands, considered
part of the State's natural resources, became inalienable by constitutional fiat, available only for
lease for 25 years, renewable for another 25 years. The government could alienate foreshore lands
only after these lands were reclaimed and classified as alienable agricultural lands of the public
domain. Government reclaimed and marshy lands of the public domain, being neither timber nor
mineral lands, fell under the classification of public agricultural lands. 50 However, government
reclaimed and marshy lands, although subject to classification as disposable public agricultural
lands, could only be leased and not sold to private parties because of Act No. 2874.

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

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

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

Commonwealth Act No. 141 of the Philippine National Assembly

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

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

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

(a) Alienable or disposable,

(b) Timber, and

 (c) Mineral lands,

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

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

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

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

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

"Sec. 58. Any tract of land of the public domain which, being neither timber nor
mineral land, is intended to be used for residential purposes or for commercial,
industrial, or other productive purposes other than agricultural, and is open to
disposition or concession, shall be disposed of under the provisions of this chapter
and not otherwise.

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

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

(b) Foreshore;

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

(d) Lands not included in any of the foregoing classes.

Sec. 60. Any tract of land comprised under this title may be leased or sold, as the case may
be, to any person, corporation, or association authorized to purchase or lease public lands
for agricultural purposes. x x x.

Sec. 61. The lands comprised in classes (a), (b), and (c) of section fifty-nine shall be
disposed of to private parties by lease only and not otherwise, as soon as the
President, upon recommendation by the Secretary of Agriculture, shall declare that the
same are not necessary for the public service and are open to disposition under this
 chapter. The lands included in class (d) may be disposed of by sale or lease under the
provisions of this Act." (Emphasis supplied)

Section 61 of CA No. 141 readopted, after the effectivity of the 1935 Constitution, Section 58 of Act
No. 2874 prohibiting the sale of government reclaimed, foreshore and marshy disposable lands of
the public domain. All these lands are intended for residential, commercial, industrial or other non-
agricultural purposes. As before, Section 61 allowed only the lease of such lands to private parties.
The government could sell to private parties only lands falling under Section 59 (d) of CA No. 141, or
those lands for non-agricultural purposes not classified as government reclaimed, foreshore and
marshy disposable lands of the public domain. Foreshore lands, however, became inalienable under
the 1935 Constitution which only allowed the lease of these lands to qualified private parties.

Section 58 of CA No. 141 expressly states that disposable lands of the public domain intended for
residential, commercial, industrial or other productive purposes other than agricultural "shall be
disposed of under the provisions of this chapter and not otherwise." Under Section 10 of CA
No. 141, the term "disposition" includes lease of the land. Any disposition of government reclaimed,
foreshore and marshy disposable lands for non-agricultural purposes must comply with Chapter IX,
Title III of CA No. 141,54 unless a subsequent law amended or repealed these provisions.

In his concurring opinion in the landmark case of Republic Real Estate Corporation v. Court of
Appeals,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 Governor-General, upon recommendation of the Secretary of Agriculture and
Natural Resources, had first to determine that the land reclaimed was not necessary for the
public service. This requisite must have been met before the land could be disposed of. But
even then, the foreshore and lands under water were not to be alienated and sold to
private parties. The disposition of the reclaimed land was only by lease. The land
remained property of the State." (Emphasis supplied)

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

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

After the effectivity of the 1935 Constitution, government reclaimed and marshy disposable lands of
the public domain continued to be only leased and not sold to private parties. 56 These lands
remained sui generis, as the only alienable or disposable lands of the public domain the
government could not sell to private parties.
Since then and until now, the only way the government can sell to private parties government
reclaimed and marshy disposable lands of the public domain is for the legislature to pass a law
authorizing such sale. CA No. 141 does not authorize the President to reclassify government
reclaimed and marshy lands into other non-agricultural lands under Section 59 (d). Lands classified
under Section 59 (d) are the only alienable or disposable lands for non-agricultural purposes that the
government could sell to private parties.

Moreover, Section 60 of CA No. 141 expressly requires congressional authority before lands under

Section 59 that the government previously transferred to government units or entities could be sold
to private parties. Section 60 of CA No. 141 declares that –

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

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

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

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

"Sec. 63. Whenever it is decided that lands covered by this chapter are not needed for public
purposes, the Director of Lands shall ask the Secretary of Agriculture and Commerce (now
the Secretary of Natural Resources) for authority to dispose of the same. Upon receipt of
such authority, the Director of Lands shall give notice by public advertisement in the same
manner as in the case of leases or sales of agricultural public land, x x x.

Sec. 67. The lease or sale shall be made by oral bidding; and adjudication shall be
made to the highest bidder. x x x." (Emphasis supplied)

Thus, CA No. 141 mandates the Government to put to public auction all leases or sales of alienable
or disposable lands of the public domain. 58

Like Act No. 1654 and Act No. 2874 before it, CA No. 141 did not repeal Section 5 of the Spanish
Law of Waters of 1866. Private parties could still reclaim portions of the sea with government
permission. However, 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.

x x x.

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

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

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

Dispositions under the 1973 Constitution

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

"Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral
oils, all forces of potential energy, fisheries, wildlife, and other natural resources of the
Philippines belong to the State. With the exception of agricultural, industrial or
commercial, residential, and resettlement lands of the public domain, natural
resources shall not be alienated, and no license, concession, or lease for the exploration,
development, exploitation, or utilization of any of the natural resources shall be granted for a
period exceeding twenty-five years, renewable for not more than twenty-five years, except as
to water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, in which cases, beneficial use may be the measure and the
limit of the grant." (Emphasis supplied)
The 1973 Constitution prohibited the alienation of all natural resources with the exception of
"agricultural, industrial or commercial, residential, and resettlement lands of the public domain." In
contrast, the 1935 Constitution barred the alienation of all natural resources except "public
agricultural lands." However, the term "public agricultural lands" in the 1935 Constitution
encompassed industrial, commercial, residential and resettlement lands of the public domain. 60 If the
land of public domain were neither timber nor mineral land, it would fall under the classification of
agricultural land of the public domain. Both the 1935 and 1973 Constitutions, therefore,
prohibited the alienation of all natural resources except agricultural lands of the public
domain.

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

"Sec. 11. The Batasang Pambansa, taking into account conservation, ecological, and
development requirements of the natural resources, shall determine by law the size of land
of the public domain which may be developed, held or acquired by, or leased to, any
qualified individual, corporation, or association, and the conditions therefor. No private
corporation or association may hold alienable lands of the public domain except by
lease not to exceed one thousand hectares in area nor may any citizen hold such lands by
lease in excess of five hundred hectares or acquire by purchase, homestead or grant, in
excess of twenty-four hectares. No private corporation or association may hold by lease,
concession, license or permit, timber or forest lands and other timber or forest resources in
excess of one hundred thousand hectares. However, such area may be increased by the
Batasang Pambansa upon recommendation of the National Economic and Development
Authority." (Emphasis supplied)

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

PD No. 1084 Creating the Public Estates Authority

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

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

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

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

(c) To provide for, operate or administer such service as may be necessary for the efficient,
economical and beneficial utilization of the above properties.
 Sec. 5. Powers and functions of the Authority. The Authority shall, in carrying out the
purposes for which it is created, have the following powers and functions:

(a)To prescribe its by-laws.

xxx

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

(j) To reclaim lands and to construct work across, or otherwise, any stream, watercourse,
canal, ditch, flume x x x.

xxx

(o) To perform such acts and exercise such functions as may be necessary for the
attainment of the purposes and objectives herein specified." (Emphasis supplied)

PD No. 1084 authorizes PEA to reclaim both foreshore and submerged areas of the public domain.
Foreshore areas are those covered and uncovered by the ebb and flow of the tide. 61 Submerged
areas are those permanently under water regardless of the ebb and flow of the tide. 62 Foreshore and
submerged areas indisputably belong to the public domain 63 and are inalienable unless reclaimed,
classified as alienable lands open to disposition, and further declared no longer needed for public
service.

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

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

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

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

Dispositions under the 1987 Constitution

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

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

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

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

The 1987 Constitution continues the State policy in the 1973 Constitution banning private
corporations from acquiring any kind of alienable land of the public domain. Like the 1973
Constitution, the 1987 Constitution allows private corporations to hold alienable lands of the public
domain only through lease. As in the 1935 and 1973 Constitutions, the general law governing the
lease to private corporations of reclaimed, foreshore and marshy alienable lands of the public
domain is still CA No. 141.

The Rationale behind the Constitutional Ban

The rationale behind the constitutional ban on corporations from acquiring, except through lease,
alienable lands of the public domain is not well understood. During the deliberations of the 1986
Constitutional Commission, the commissioners probed the rationale behind this ban, thus:

"FR. BERNAS: Mr. Vice-President, my questions have reference to page 3, line 5 which
says:

`No private corporation or association may hold alienable lands of the public domain except
by lease, not to exceed one thousand hectares in area.'

If we recall, this provision did not exist under the 1935 Constitution, but this was introduced
in the 1973 Constitution. In effect, it prohibits private corporations from acquiring alienable
public lands. But it has not been very clear in jurisprudence what the reason for this is.
In some of the cases decided in 1982 and 1983, it was indicated that the purpose of this
is to prevent large landholdings. Is that the intent of this provision?

MR. VILLEGAS: I think that is the spirit of the provision.

 FR. BERNAS: In existing decisions involving the Iglesia ni Cristo, there were instances
where the Iglesia ni Cristo was not allowed to acquire a mere 313-square meter land where
a chapel stood because the Supreme Court said it would be in violation of this." (Emphasis
supplied)

In Ayog v. Cusi,64 the Court explained the rationale behind this constitutional ban in this way:

"Indeed, one purpose of the constitutional prohibition against purchases of public agricultural
lands by private corporations is to equitably diffuse land ownership or to encourage 'owner-
cultivatorship and the economic family-size farm' and to prevent a recurrence of cases like
the instant case. Huge landholdings by corporations or private persons had spawned social
unrest."

However, if the constitutional intent is to prevent huge landholdings, the Constitution could have
simply limited the size of alienable lands of the public domain that corporations could acquire. The
Constitution could have followed the limitations on individuals, who could acquire not more than 24
hectares of alienable lands of the public domain under the 1973 Constitution, and not more than 12
hectares under the 1987 Constitution.

If the constitutional intent is to encourage economic family-size farms, placing the land in the name
of a corporation would be more effective in preventing the break-up of farmlands. If the farmland is
registered in the name of a corporation, upon the death of the owner, his heirs would inherit shares
in the corporation instead of subdivided parcels of the farmland. This would prevent the continuing
break-up of farmlands into smaller and smaller plots from one generation to the next.

In actual practice, the constitutional ban strengthens the constitutional limitation on individuals from
acquiring more than the allowed area of alienable lands of the public domain. Without the
constitutional ban, individuals who already acquired the maximum area of alienable lands of the
public domain could easily set up corporations to acquire more alienable public lands. An individual
could own as many corporations as his means would allow him. An individual could even hide his
ownership of a corporation by putting his nominees as stockholders of the corporation. The
corporation is a convenient vehicle to circumvent the constitutional limitation on acquisition by
individuals of alienable lands of the public domain.

The constitutional intent, under the 1973 and 1987 Constitutions, is to transfer ownership of only a
limited area of alienable land of the public domain to a qualified individual. This constitutional intent
is safeguarded by the provision prohibiting corporations from acquiring alienable lands of the public
domain, since the vehicle to circumvent the constitutional intent is removed. The available alienable
public lands are gradually decreasing in the face of an ever-growing population. The most effective
way to insure faithful adherence to this constitutional intent is to grant or sell alienable lands of the
public domain only to individuals. This, it would seem, is the practical benefit arising from the
constitutional ban.

The Amended Joint Venture Agreement

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

1. "[T]hree partially reclaimed and substantially eroded islands along Emilio Aguinaldo
Boulevard in Paranaque and Las Pinas, Metro Manila, with a combined titled area of
1,578,441 square meters;"
 2. "[A]nother area of 2,421,559 square meters contiguous to the three islands;" and

3. "[A]t AMARI's option as approved by PEA, an additional 350 hectares more or less to
regularize the configuration of the reclaimed area." 65

PEA confirms that the Amended JVA involves "the development of the Freedom Islands and further
reclamation of about 250 hectares x x x," plus an option "granted to AMARI to subsequently reclaim
another 350 hectares x x x."66

In short, the Amended JVA covers a reclamation area of 750 hectares. Only 157.84 hectares of the
750-hectare reclamation project have been reclaimed, and the rest of the 592.15 hectares are
still submerged areas forming part of Manila Bay.

Under the Amended JVA, AMARI will reimburse PEA the sum of P1,894,129,200.00 for PEA's
"actual cost" in partially reclaiming the Freedom Islands. AMARI will also complete, at its own
expense, the reclamation of the Freedom Islands. AMARI will further shoulder all the reclamation
costs of all the other areas, totaling 592.15 hectares, still to be reclaimed. AMARI and PEA will
share, in the proportion of 70 percent and 30 percent, respectively, the total net usable area which is
defined in the Amended JVA as the total reclaimed area less 30 percent earmarked for common
areas. Title to AMARI's share in the net usable area, totaling 367.5 hectares, will be issued in the
name of AMARI. Section 5.2 (c) of the Amended JVA provides that –

"x x x, PEA shall have the duty to execute without delay the necessary deed of transfer or
conveyance of the title pertaining to AMARI's Land share based on the Land Allocation
Plan. PEA, when requested in writing by AMARI, shall then cause the issuance and
delivery of the proper certificates of title covering AMARI's Land Share in the name of
AMARI, x x x; provided, that if more than seventy percent (70%) of the titled area at any
given time pertains to AMARI, PEA shall deliver to AMARI only seventy percent (70%) of the
titles pertaining to AMARI, until such time when a corresponding proportionate area of
additional land pertaining to PEA has been titled." (Emphasis supplied)

Indisputably, under the Amended JVA AMARI will acquire and own a maximum of 367.5
hectares of reclaimed land which will be titled in its name.

To implement the Amended JVA, PEA delegated to the unincorporated PEA-AMARI joint venture
PEA's statutory authority, rights and privileges to reclaim foreshore and submerged areas in Manila
Bay. Section 3.2.a of the Amended JVA states that –

"PEA hereby contributes to the joint venture its rights and privileges to perform Rawland
Reclamation and Horizontal Development as well as own the Reclamation Area, thereby
granting the Joint Venture the full and exclusive right, authority and privilege to undertake the
Project in accordance with the Master Development Plan."

The Amended JVA is the product of a renegotiation of the original JVA dated April 25, 1995 and its
supplemental agreement dated August 9, 1995.

The Threshold Issue

The threshold issue is whether AMARI, a private corporation, can acquire and own under the
Amended JVA 367.5 hectares of reclaimed foreshore and submerged areas in Manila Bay in view of
Sections 2 and 3, Article XII of the 1987 Constitution which state that:
 "Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and
fauna, and other natural resources are owned by the State. With the exception of
agricultural lands, all other natural resources shall not be alienated. x x x.

xxx

Section 3. x x x Alienable lands of the public domain shall be limited to agricultural

lands. Private corporations or associations may not hold such alienable lands of the
public domain except by lease, x x x."(Emphasis supplied)

Classification of Reclaimed Foreshore and Submerged Areas

PEA readily concedes that lands reclaimed from foreshore or submerged areas of Manila Bay are
alienable or disposable lands of the public domain. In its Memorandum, 67 PEA admits that –

"Under the Public Land Act (CA 141, as amended), reclaimed lands are classified as
alienable and disposable lands of the public domain:

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

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

x x x.'" (Emphasis supplied)

Likewise, the Legal Task Force68 constituted under Presidential Administrative Order No. 365
admitted in its Report and Recommendation to then President Fidel V. Ramos, "[R]eclaimed lands
are classified as alienable and disposable lands of the public domain."69 The Legal Task Force
concluded that –

"D. Conclusion

Reclaimed lands are lands of the public domain. However, by statutory authority, the rights of
ownership and disposition over reclaimed lands have been transferred to PEA, by virtue of
which PEA, as owner, may validly convey the same to any qualified person without violating
the Constitution or any statute.

The constitutional provision prohibiting private corporations from holding public land, except
by lease (Sec. 3, Art. XVII,70 1987 Constitution), does not apply to reclaimed lands whose
ownership has passed on to PEA by statutory grant."

Under Section 2, Article XII of the 1987 Constitution, the foreshore and submerged areas of Manila
Bay are part of the "lands of the public domain, waters x x x and other natural resources" and
consequently "owned by the State." As such, foreshore and submerged areas "shall not be
alienated," unless they are classified as "agricultural lands" of the public domain. The mere
reclamation of these areas by PEA does not convert these inalienable natural resources of the State
into alienable or disposable lands of the public domain. There must be a law or presidential
proclamation officially classifying these reclaimed lands as alienable or disposable and open to
disposition or concession. Moreover, these reclaimed lands cannot be classified as alienable or
disposable if the law has reserved them for some public or quasi-public use. 71
Section 8 of CA No. 141 provides that "only those lands shall be declared open to disposition or
concession which have been officially delimited and classified."72 The President has the authority
to classify inalienable lands of the public domain into alienable or disposable lands of the public
domain, pursuant to Section 6 of CA No. 141. In Laurel vs. Garcia,73 the Executive Department
attempted to sell the Roppongi property in Tokyo, Japan, which was acquired by the Philippine
Government for use as the Chancery of the Philippine Embassy. Although the Chancery had
transferred to another location thirteen years earlier, the Court still ruled that, under Article 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]." (Emphasis supplied)

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

PD No. 1085, coupled with President Aquino's actual issuance of a special patent covering the
Freedom Islands, is equivalent to an official proclamation classifying the Freedom Islands as
alienable or disposable lands of the public domain. PD No. 1085 and President Aquino's issuance of
a land patent also constitute a declaration that the Freedom Islands are no longer needed for public
service. The Freedom Islands are thus alienable or disposable lands of the public domain,
open to disposition or concession to qualified parties.

At the time then President Aquino issued Special Patent No. 3517, PEA had already reclaimed the
Freedom Islands although subsequently there were partial erosions on some areas. The government
had also completed the necessary surveys on these islands. Thus, the Freedom Islands were no
longer part of Manila Bay but part of the land mass. Section 3, Article XII of the 1987 Constitution
classifies lands of the public domain into "agricultural, forest or timber, mineral lands, and national
parks." Being neither timber, mineral, nor national park lands, the reclaimed Freedom Islands
necessarily fall under the classification of agricultural lands of the public domain. Under the 1987
Constitution, agricultural lands of the public domain are the only natural resources that the State may
alienate to qualified private parties. All other natural resources, such as the seas or bays, are
"waters x x x owned by the State" forming part of the public domain, and are inalienable pursuant to
Section 2, Article XII of the 1987 Constitution.

AMARI claims that the Freedom Islands are private lands because CDCP, then a private
corporation, reclaimed the islands under a contract dated November 20, 1973 with the
Commissioner of Public Highways. AMARI, citing Article 5 of the Spanish Law of Waters of 1866,
argues that "if the ownership of reclaimed lands may be given to the party constructing the works,
then it cannot be said that reclaimed lands are lands of the public domain which the State may not
alienate."75 Article 5 of the Spanish Law of Waters reads as follows:
 "Article 5. Lands reclaimed from the sea in consequence of works constructed by the State,
or by the provinces, pueblos or private persons, with proper permission, shall become the
property of the party constructing such works, unless otherwise provided by the terms of
the grant of authority." (Emphasis supplied)

Under Article 5 of the Spanish Law of Waters of 1866, private parties could reclaim from the sea only
with "proper permission" from the State. Private parties could own the reclaimed land only if not
"otherwise provided by the terms of the grant of authority." This clearly meant that no one could
reclaim from the sea without permission from the State because the sea is property of public
dominion. It also meant that the State could grant or withhold ownership of the reclaimed land
because any reclaimed land, like the sea from which it emerged, belonged to the State. Thus, a
private person reclaiming from the sea without permission from the State could not acquire
ownership of the reclaimed land which would remain property of public dominion like the sea it
replaced.76 Article 5 of the Spanish Law of Waters of 1866 adopted the time-honored principle of land
ownership that "all lands that were not acquired from the government, either by purchase or by
grant, belong to the public domain."77

Article 5 of the Spanish Law of Waters must be read together with laws subsequently enacted on the
disposition of public lands. In particular, CA No. 141 requires that lands of the public domain must
first be classified as alienable or disposable before the government can alienate them. These lands
must not be reserved for public or quasi-public purposes. 78 Moreover, the contract between CDCP
and the government was executed after the effectivity of the 1973 Constitution which barred private
corporations from acquiring any kind of alienable land of the public domain. This contract could not
have converted the Freedom Islands into private lands of a private corporation.

Presidential Decree No. 3-A, issued on January 11, 1973, revoked all laws authorizing the
reclamation of areas under water and revested solely in the National Government the power to
reclaim lands. Section 1 of PD No. 3-A declared that –

"The provisions of any law to the contrary notwithstanding, the reclamation of areas
under water, whether foreshore or inland, shall be limited to the National Government or
any person authorized by it under a proper contract. (Emphasis supplied)

x x x."

PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866 because reclamation of areas
under water could now be undertaken only by the National Government or by a person contracted by
the National Government. Private parties may reclaim from the sea only under a contract with the
National Government, and no longer by grant or permission as provided in Section 5 of the Spanish
Law of Waters of 1866.

Executive Order No. 525, issued on February 14, 1979, designated PEA as the National
Government's implementing arm to undertake "all reclamation projects of the government," which
"shall be undertaken by the PEA or through a proper contract executed by it with any person
or entity." Under such contract, a private party receives compensation for reclamation services
rendered to PEA. Payment to the contractor may be in cash, or in kind consisting of portions of the
reclaimed land, subject to the constitutional ban on private corporations from acquiring alienable
lands of the public domain. The reclaimed land can be used as payment in kind only if the reclaimed
land is first classified as alienable or disposable land open to disposition, and then declared no
longer needed for public service.
The Amended JVA covers not only the Freedom Islands, but also an additional 592.15 hectares
which are still submerged and forming part of Manila Bay. There is no legislative or Presidential
act classifying these submerged areas as alienable or disposable lands of the public domain
open to disposition. These submerged areas are not covered by any patent or certificate of title.
There can be no dispute that these submerged areas form part of the public domain, and in their
present state are inalienable and outside the commerce of man. Until reclaimed from the sea,
these submerged areas are, under the Constitution, "waters x x x owned by the State," forming part
of the public domain and consequently inalienable. Only when actually reclaimed from the sea can
these submerged areas be classified as public agricultural lands, which under the Constitution are
the only natural resources that the State may alienate. Once reclaimed and transformed into public
agricultural lands, the government may then officially classify these lands as alienable or disposable
lands open to disposition. Thereafter, the government may declare these lands no longer needed for
public service. Only then can these reclaimed lands be considered alienable or disposable lands of
the public domain and within the commerce of man.

The classification of PEA's reclaimed foreshore and submerged lands into alienable or disposable
lands open to disposition is necessary because PEA is tasked under its charter to undertake public
services that require the use of lands of the public domain. Under Section 5 of PD No. 1084, the
functions of PEA include the following: "[T]o own or operate railroads, tramways and other kinds of
land transportation, x x x; [T]o construct, maintain and operate such systems of sanitary sewers as
may be necessary; [T]o construct, maintain and operate such storm drains as may be necessary."
PEA is empowered to issue "rules and regulations as may be necessary for the proper use by
private parties of any or all of the highways, roads, utilities, buildings and/or any of its
properties and to impose or collect fees or tolls for their use." Thus, part of the reclaimed foreshore
and submerged lands held by the PEA would actually be needed for public use or service since
many of the functions imposed on PEA by its charter constitute essential public services.

Moreover, Section 1 of Executive Order No. 525 provides that PEA "shall be primarily responsible for
integrating, directing, and coordinating all reclamation projects for and on behalf of the National
Government." The same section also states that "[A]ll reclamation projects shall be approved by the
President upon recommendation of the PEA, and shall be undertaken by the PEA or through a
proper contract executed by it with any person or entity; x x x." Thus, under EO No. 525, in relation
to PD No. 3-A and PD No.1084, PEA became the primary implementing agency of the National
Government to reclaim foreshore and submerged lands of the public domain. EO No. 525
recognized PEA as the government entity "to undertake the reclamation of lands and ensure their
maximum utilization in promoting public welfare and interests."79 Since large portions of these
reclaimed lands would obviously be needed for public service, there must be a formal declaration
segregating reclaimed lands no longer needed for public service from those still needed for public
service.1âwphi1.nêt

Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA "shall belong to or be owned
by the PEA," could not automatically operate to classify inalienable lands into alienable or disposable
lands of the public domain. Otherwise, reclaimed foreshore and submerged lands of the public
domain would automatically become alienable once reclaimed by PEA, whether or not classified as
alienable or disposable.

The Revised Administrative Code of 1987, a later law than either PD No. 1084 or EO No. 525, vests
in the Department of Environment and Natural Resources ("DENR" for brevity) the following powers
and functions:

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

 (1) x x x

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

(14) Promulgate rules, regulations and guidelines on the issuance of licenses,

permits, concessions, lease agreements and such other privileges concerning the
development, exploration and utilization of the country's marine, freshwater, and
brackish water and over all aquatic resources of the country and shall continue to
oversee, supervise and police our natural resources; cancel or cause to cancel such
privileges upon failure, non-compliance or violations of any regulation, order, and for all other
causes which are in furtherance of the conservation of natural resources and supportive of
the national interest;

(15) Exercise exclusive jurisdiction on the management and disposition of all lands of

the public domain and serve as the sole agency responsible for classification, sub-
classification, surveying and titling of lands in consultation with appropriate
agencies."80 (Emphasis supplied)

As manager, conservator and overseer of the natural resources of the State, DENR exercises
"supervision and control over alienable and disposable public lands." DENR also exercises
"exclusive jurisdiction on the management and disposition of all lands of the public domain." Thus,
DENR decides whether areas under water, like foreshore or submerged areas of Manila Bay, should
be reclaimed or not. This means that PEA needs authorization from DENR before PEA can
undertake reclamation projects in Manila Bay, or in any part of the country.

DENR also exercises exclusive jurisdiction over the disposition of all lands of the public domain.
Hence, DENR decides whether reclaimed lands of PEA should be classified as alienable under
Sections 681 and 782 of CA No. 141. Once DENR decides that the reclaimed lands should be so
classified, it then recommends to the President the issuance of a proclamation classifying the lands
as alienable or disposable lands of the public domain open to disposition. We note that then DENR
Secretary Fulgencio S. Factoran, Jr. countersigned Special Patent No. 3517 in compliance with the
Revised Administrative Code and Sections 6 and 7 of CA No. 141.

In short, DENR is vested with the power to authorize the reclamation of areas under water, while
PEA is vested with the power to undertake the physical reclamation of areas under water, whether
directly or through private contractors. DENR is also empowered to classify lands of the public
domain into alienable or disposable lands subject to the approval of the President. On the other
hand, PEA is tasked to develop, sell or lease the reclaimed alienable lands of the public domain.

Clearly, the mere physical act of reclamation by PEA of foreshore or submerged areas does not
make the reclaimed lands alienable or disposable lands of the public domain, much less patrimonial
lands of PEA. Likewise, the mere transfer by the National Government of lands of the public domain
to PEA does not make the lands alienable or disposable lands of the public domain, much less
patrimonial lands of PEA.
Absent two official acts – a classification that these lands are alienable or disposable and open to
disposition and a declaration that these lands are not needed for public service, lands reclaimed by
PEA remain inalienable lands of the public domain. Only such an official classification and formal
declaration can convert reclaimed lands into alienable or disposable lands of the public domain,
open to disposition under the Constitution, Title I and Title III 83 of CA No. 141 and other applicable
laws.84

PEA's Authority to Sell Reclaimed Lands

PEA, like the Legal Task Force, argues that as alienable or disposable lands of the public domain,
the reclaimed lands shall be disposed of in accordance with CA No. 141, the Public Land Act. PEA,
citing Section 60 of CA No. 141, admits that reclaimed lands transferred to a branch or subdivision of
the government "shall not be alienated, encumbered, or otherwise disposed of in a manner affecting
its title, except when authorized by Congress: x x x."85 (Emphasis by PEA)

In Laurel vs. Garcia,86 the Court cited Section 48 of the Revised Administrative Code of 1987, which
states that –

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

Thus, the Court concluded that a law is needed to convey any real property belonging to the
Government. The Court declared that -

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

PEA contends that PD No. 1085 and EO No. 525 constitute the legislative authority allowing PEA to
sell its reclaimed lands. PD No. 1085, issued on February 4, 1977, provides that –

"The land reclaimed in the foreshore and offshore area of Manila Bay pursuant to the
contract for the reclamation and construction of the Manila-Cavite Coastal Road Project
between the Republic of the Philippines and the Construction and Development Corporation
of the Philippines dated November 20, 1973 and/or any other contract or reclamation
covering the same area is hereby transferred, conveyed and assigned to the ownership
and administration of the Public Estates Authority established pursuant to PD No. 1084;
Provided, however, That the rights and interests of the Construction and Development
Corporation of the Philippines pursuant to the aforesaid contract shall be recognized and
respected.

Henceforth, the Public Estates Authority shall exercise the rights and assume the obligations
of the Republic of the Philippines (Department of Public Highways) arising from, or incident
to, the aforesaid contract between the Republic of the Philippines and the Construction and
Development Corporation of the Philippines.

In consideration of the foregoing transfer and assignment, the Public Estates Authority shall
issue in favor of the Republic of the Philippines the corresponding shares of stock in said
entity with an issued value of said shares of stock (which) shall be deemed fully paid and
non-assessable.
 The Secretary of Public Highways and the General Manager of the Public Estates Authority
shall execute such contracts or agreements, including appropriate agreements with the
Construction and Development Corporation of the Philippines, as may be necessary to
implement the above.

Special land patent/patents shall be issued by the Secretary of Natural Resources in

favor of the Public Estates Authority without prejudice to the subsequent transfer to
the contractor or his assignees of such portion or portions of the land reclaimed or to
be reclaimed as provided for in the above-mentioned contract. On the basis of such
patents, the Land Registration Commission shall issue the corresponding certificate
of title." (Emphasis supplied)

On the other hand, Section 3 of EO No. 525, issued on February 14, 1979, provides that -

"Sec. 3. All lands reclaimed by PEA shall belong to or be owned by the PEA which shall
be responsible for its administration, development, utilization or disposition in accordance
with the provisions of Presidential Decree No. 1084. Any and all income that the PEA may
derive from the sale, lease or use of reclaimed lands shall be used in accordance with the
provisions of Presidential Decree No. 1084."

There is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell its reclaimed
lands. PD No. 1085 merely transferred "ownership and administration" of lands reclaimed from
Manila Bay to PEA, while EO No. 525 declared that lands reclaimed by PEA "shall belong to or be
owned by PEA." EO No. 525 expressly states that PEA should dispose of its reclaimed lands "in
accordance with the provisions of Presidential Decree No. 1084," the charter of PEA.

PEA's charter, however, expressly tasks PEA "to develop, improve, acquire, administer, deal in,
subdivide, dispose, lease and sell any and all kinds of lands x x x owned, managed, controlled
and/or operated by the government."87 (Emphasis supplied) There is, therefore, legislative
authority granted to PEA to sell its lands, whether patrimonial or alienable lands of the public
domain. PEA may sell to private parties 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 authority benefits only
individuals. Private corporations remain barred from acquiring any kind of alienable land of the public
domain, including government reclaimed lands.

The provision in PD No. 1085 stating that portions of the reclaimed lands could be transferred by
PEA to the "contractor or his assignees" (Emphasis supplied) would not apply to private corporations
but only to individuals because of the constitutional ban. Otherwise, the provisions of PD No. 1085
would violate both the 1973 and 1987 Constitutions.

The requirement of public auction in the sale of reclaimed lands

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

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

"Section 79. When government property has become unserviceable for any cause, or is no

longer needed, it shall, upon application of the officer accountable therefor, be inspected by
the head of the agency or his duly authorized representative in the presence of the auditor
concerned and, if found to be valueless or unsaleable, it may be destroyed in their
presence. If found to be valuable, it may be sold at public auction to the highest
bidder under the supervision of the proper committee on award or similar body in the
presence of the auditor concerned or other authorized representative of the
Commission, after advertising by printed notice in the Official Gazette, or for not less
than three consecutive days in any newspaper of general circulation, or where the
value of the property does not warrant the expense of publication, by notices posted for a
like period in at least three public places in the locality where the property is to be sold. In
the event that the public auction fails, the property may be sold at a private sale at
such price as may be fixed by the same committee or body concerned and approved
by the Commission."

It is only when the public auction fails that a negotiated sale is allowed, in which case the
Commission on Audit must approve the selling price.90 The Commission on Audit implements
Section 79 of the Government Auditing Code through Circular No. 89-296 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, x x x." Even Republic Act No. 6957 ("BOT Law," for brevity), cited by PEA and AMARI as
legislative authority to sell reclaimed lands to private parties, recognizes the constitutional ban.
Section 6 of RA No. 6957 states –

"Sec. 6. Repayment Scheme. - For the financing, construction, operation and maintenance
of any infrastructure projects undertaken through the build-operate-and-transfer arrangement
or any of its variations pursuant to the provisions of this Act, the project proponent x x x may
likewise be repaid in the form of a share in the revenue of the project or other non-monetary
payments, such as, but not limited to, the grant of a portion or percentage of the reclaimed
land, subject to the constitutional requirements with respect to the ownership of the
land: x x x." (Emphasis supplied)

A private corporation, even one that undertakes the physical reclamation of a government BOT
project, cannot acquire reclaimed alienable lands of the public domain in view of the constitutional
ban.

Section 302 of the Local Government Code, also mentioned by PEA and AMARI, authorizes local
governments in land reclamation projects to pay the contractor or developer in kind consisting of a
percentage of the reclaimed land, to wit:

"Section 302. Financing, Construction, Maintenance, Operation, and Management of

Infrastructure Projects by the Private Sector. x x x

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:

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."
(Emphasis supplied)

Thus, the provisions of CA No. 141 apply to the Freedom Islands on matters not covered by PD No.
1084. Section 60 of CA No. 141 prohibits, "except when authorized by Congress," the sale of
alienable lands of the public domain that are transferred to government units or entities. Section 60
of CA No. 141 constitutes, under Section 44 of PD No. 1529, a "statutory lien affecting title" of the
registered land even if not annotated on the certificate of title. 104 Alienable lands of the public domain
held by government entities under Section 60 of CA No. 141 remain public lands because they
cannot be alienated or encumbered unless Congress passes a law authorizing their disposition.
Congress, however, cannot authorize the sale to private corporations of reclaimed alienable lands of
the public domain because of the constitutional ban. Only individuals can benefit from such law.

The grant of legislative authority to sell public lands in accordance with Section 60 of CA No. 141
does not automatically convert alienable lands of the public domain into private or patrimonial lands.
The alienable lands of the public domain must be transferred to qualified private parties, or to
government entities not tasked to dispose of public lands, before these lands can become private or
patrimonial lands. Otherwise, the constitutional ban will become illusory if Congress can declare
lands of the public domain as private or patrimonial lands in the hands of a government agency
tasked to dispose of public lands. This will allow private corporations to acquire directly from
government agencies limitless areas of lands which, prior to such law, are concededly public lands.

Under EO No. 525, PEA became the central implementing agency of the National Government to
reclaim foreshore and submerged areas of the public domain. Thus, EO No. 525 declares that –

"EXECUTIVE ORDER NO. 525

Designating the Public Estates Authority as the Agency Primarily Responsible for all
Reclamation Projects

Whereas, there are several reclamation projects which are ongoing or being proposed to be
undertaken in various parts of the country which need to be evaluated for consistency with
national programs;

Whereas, there is a need to give further institutional support to the Government's declared
policy to provide for a coordinated, economical and efficient reclamation of lands;

Whereas, Presidential Decree No. 3-A requires that all reclamation of areas shall be limited
to the National Government or any person authorized by it under proper contract;

Whereas, a central authority is needed to act on behalf of the National Government

which shall ensure a coordinated and integrated approach in the reclamation of lands;

Whereas, Presidential Decree No. 1084 creates the Public Estates Authority as a
government corporation to undertake reclamation of lands and ensure their maximum
utilization in promoting public welfare and interests; and

Whereas, Presidential Decree No. 1416 provides the President with continuing authority to
reorganize the national government including the transfer, abolition, or merger of functions
and offices.

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of

the powers vested in me by the Constitution and pursuant to Presidential Decree No. 1416,
do hereby order and direct the following:

Section 1. The Public Estates Authority (PEA) shall be primarily responsible for
integrating, directing, and coordinating all reclamation projects for and on behalf of
the National Government. All reclamation projects shall be approved by the President upon
recommendation of the PEA, and shall be undertaken by the PEA or through a proper
contract executed by it with any person or entity; Provided, that, reclamation projects of any
national government agency or entity authorized under its charter shall be undertaken in
consultation with the PEA upon approval of the President.

x x x ."

As the central implementing agency tasked to undertake reclamation projects nationwide, with
authority to sell reclaimed lands, PEA took the place of DENR as the government agency charged
with leasing or selling reclaimed lands of the public domain. The reclaimed lands being leased or
sold by PEA are not private lands, in the same manner that DENR, when it disposes of other
alienable lands, does not dispose of private lands but alienable lands of the public domain. Only
when qualified private parties acquire these lands will the lands become private lands. In the hands
of the government agency tasked and authorized to dispose of alienable of disposable lands
of the public domain, these lands are still public, not private lands.

Furthermore, PEA's charter expressly states that PEA "shall hold lands of the public domain" as
well as "any and all kinds of lands." PEA can hold both lands of the public domain and private lands.
Thus, the mere fact that alienable lands of the public domain like the Freedom Islands are
transferred to PEA and issued land patents or certificates of title in PEA's name does not
automatically make such lands private.

To allow vast areas of reclaimed lands of the public domain to be transferred to PEA as private lands
will sanction a gross violation of the constitutional ban on private corporations from acquiring any
kind of alienable land of the public domain. PEA will simply turn around, as PEA has now done
under the Amended JVA, and transfer several hundreds of hectares of these reclaimed and still to
be reclaimed lands to a single private corporation in only one transaction. This scheme will
effectively nullify the constitutional ban in Section 3, Article XII of the 1987 Constitution which was
intended to diffuse equitably the ownership of alienable lands of the public domain among Filipinos,
now numbering over 80 million strong.

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

The contention of PEA and AMARI that public lands, once registered under Act No. 496 or PD No.
1529, automatically become private lands is contrary to existing laws. Several laws authorize lands
of the public domain to be registered under the Torrens System or Act No. 496, now PD No. 1529,
without losing their character as public lands. Section 122 of Act No. 496, and Section 103 of PD No.
1529, respectively, provide as follows:

Act No. 496

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

PD No. 1529

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

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

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

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

(1) x x x

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

Thus, private property purchased by the National Government for expansion of a public wharf may
be titled in the name of a government corporation regulating port operations in the country. Private
property purchased by the National Government for expansion of an airport may also be titled in the
name of the government agency tasked to administer the airport. Private property donated to a
municipality for use as a town plaza or public school site may likewise be titled in the name of the
municipality.106 All these properties become properties of the public domain, and if already registered
under Act No. 496 or PD No. 1529, remain registered land. There is no requirement or provision in
any existing law for the de-registration of land from the Torrens System.

Private lands taken by the Government for public use under its power of eminent domain become
unquestionably part of the public domain. Nevertheless, Section 85 of PD No. 1529 authorizes the
Register of Deeds to issue in the name of the National Government new certificates of title covering
such expropriated lands. Section 85 of PD No. 1529 states –

"Sec. 85. Land taken by eminent domain. Whenever any registered land, or interest therein,
is expropriated or taken by eminent domain, the National Government, province, city or
municipality, or any other agency or instrumentality exercising such right shall file for
registration in the proper Registry a certified copy of the judgment which shall state definitely
by an adequate description, the particular property or interest expropriated, the number of
the certificate of title, and the nature of the public use. A memorandum of the right or interest
taken shall be made on each certificate of title by the Register of Deeds, and where the fee
simple is taken, a new certificate shall be issued in favor of the National Government,
province, city, municipality, or any other agency or instrumentality exercising such right for
the land so taken. The legal expenses incident to the memorandum of registration or
issuance of a new certificate of title shall be for the account of the authority taking the land or
interest therein." (Emphasis supplied)

Consequently, lands registered under Act No. 496 or PD No. 1529 are not exclusively private or
patrimonial lands. Lands of the public domain may also be registered pursuant to existing laws.
AMARI makes a parting shot that the Amended JVA is not a sale to AMARI of the Freedom Islands
or of the lands to be reclaimed from submerged areas of Manila Bay. In the words of AMARI, the
Amended JVA "is not a sale but a joint venture with a stipulation for reimbursement of the original
cost incurred by PEA for the earlier reclamation and construction works performed by the CDCP
under its 1973 contract with the Republic." Whether the Amended JVA is a sale or a joint venture,
the fact remains that the Amended JVA requires PEA to "cause the issuance and delivery of the
certificates of title conveying AMARI's Land Share in the name of AMARI." 107

This stipulation still contravenes Section 3, Article XII of the 1987 Constitution which provides that
private corporations "shall not hold such alienable lands of the public domain except by lease." The
transfer of title and ownership to AMARI clearly means that AMARI will "hold" the reclaimed lands
other than by lease. The transfer of title and ownership is a "disposition" of the reclaimed lands, a
transaction considered a sale or alienation under CA No. 141, 108 the Government Auditing
Code,109 and Section 3, Article XII of the 1987 Constitution.

The Regalian doctrine is deeply implanted in our legal system. Foreshore and submerged areas
form part of the public domain and are inalienable. Lands reclaimed from foreshore and submerged
areas also form part of the public domain and are also inalienable, unless converted pursuant to law
into alienable or disposable lands of the public domain. Historically, lands reclaimed by the
government are sui generis, not available for sale to private parties unlike other alienable public
lands. Reclaimed lands retain their inherent potential as areas for public use or public service.
Alienable lands of the public domain, increasingly becoming scarce natural resources, are to be
distributed equitably among our ever-growing population. To insure such equitable distribution, the
1973 and 1987 Constitutions have barred private corporations from acquiring any kind of alienable
land of the public domain. Those who attempt to dispose of inalienable natural resources of the
State, or seek to circumvent the constitutional ban on alienation of lands of the public domain to
private corporations, do so at their own risk.

We can now summarize our conclusions as follows:

1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now covered by
certificates of title in the name of PEA, are alienable lands of the public domain. PEA may
lease these lands to private corporations but may not sell or transfer ownership of these
lands to private corporations. PEA may only sell these lands to Philippine citizens, subject to
the ownership limitations in the 1987 Constitution and existing laws.

2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural
resources of the public domain until classified as alienable or disposable lands open to
disposition and declared no longer needed for public service. The government can make
such classification and declaration only after PEA has reclaimed these submerged areas.
Only then can these lands qualify as agricultural lands of the public domain, which are the
only natural resources the government can alienate. In their present state, the 592.15
hectares of submerged areas are inalienable and outside the commerce of man.

3. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of
77.34 hectares110 of the Freedom Islands, such transfer is void for being contrary to Section
3, Article XII of the 1987 Constitution which prohibits private corporations from acquiring any
kind of alienable land of the public domain.

4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156
hectares111 of still submerged areas of Manila Bay, such transfer is void for being contrary to
Section 2, Article XII of the 1987 Constitution which prohibits the alienation of natural
 resources other than agricultural lands of the public domain. PEA may reclaim these
submerged areas. Thereafter, the government can classify the reclaimed lands as alienable
or disposable, and further declare them no longer needed for public service. Still, the transfer
of such reclaimed alienable lands of the public domain to AMARI will be void in view of
Section 3, Article XII of the 1987 Constitution which prohibits private corporations from
acquiring any kind of alienable land of the public domain.

Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987 Constitution.
Under Article 1409112 of the Civil Code, contracts whose "object or purpose is contrary to law," or
whose "object is outside the commerce of men," are "inexistent and void from the beginning." The
Court must perform its duty to defend and uphold the Constitution, and therefore declares the
Amended JVA null and void ab initio.

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

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

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

SO ORDERED.