FRANCISCO I. CHAVEZ, petitioner, vs.

PUBLIC ESTATES AUTHORITY and AMARI

COASTAL BAY DEVELOPMENT CORPORATION, respondents.

2002-07-09 | G.R. No. 133250

EN BANC

DECISION

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]

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On November 29, 1996, then Senate President Ernesto Maceda delivered a privilege speech in the Senate and denounced the JVA as
the "grandmother of all scams." As a result, the Senate Committee on Government Corporations and Public Enterprises, and the
Committee on Accountability of Public Officers and Investigations, conducted a joint investigation. The Senate Committees reported the
results of their investigation in Senate Committee Report No. 560 dated September 16, 1997.[7] Among the conclusions of their report
are: (1) the reclaimed lands PEA seeks to transfer to AMARI under the JVA are lands of the public domain which the government has
not classified as alienable lands and therefore PEA cannot alienate these lands; (2) the certificates of title covering the Freedom Islands
are thus void, and (3) the JVA itself is illegal.

On December 5, 1997, then President Fidel V. Ramos issued Presidential Administrative Order No. 365 creating a Legal Task Force to
conduct a study on the legality of the JVA in view of Senate Committee Report No. 560. The members of the Legal Task Force were the
Secretary of Justice,[8] the Chief Presidential Legal Counsel,[9] and the Government Corporate Counsel.[10] The Legal Task Force
upheld the legality of the JVA, contrary to the conclusions reached by the Senate Committees.[11]

On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published reports that there were on-going renegotiations between PEA
and AMARI under an order issued by then President Fidel V. Ramos. According to these reports, PEA Director Nestor Kalaw, PEA
Chairman Arsenio Yulo and retired Navy Officer Sergio Cruz composed the negotiating panel of PEA.

On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition for Prohibition with Application for the Issuance of a Temporary
Restraining Order and Preliminary Injunction docketed as G.R. No. 132994 seeking to nullify the JVA. The Court dismissed the petition
"for unwarranted disregard of judicial hierarchy, without prejudice to the refiling of the case before the proper court."[12]

On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" for brevity) as a taxpayer, filed the instant Petition for Mandamus with Prayer
for the Issuance of a Writ of Preliminary Injunction and Temporary Restraining Order. Petitioner contends the government stands to lose
billions of pesos in the sale by PEA of the reclaimed lands to AMARI. Petitioner prays that PEA publicly disclose the terms of any
renegotiation of the JVA, invoking Section 28, Article II, and Section 7, Article III, of the 1987 Constitution on the right of the people to
information on matters of public concern. Petitioner assails the sale to AMARI of lands of the public domain as a blatant violation of
Section 3, Article XII of the 1987 Constitution prohibiting the sale of alienable lands of the public domain to private corporations. Finally,
petitioner asserts that he seeks to enjoin the loss of billions of pesos in properties of the State that are of public dominion.

After several motions for extension of time,[13] PEA and AMARI filed their Comments on October 19, 1998 and June 25, 1998,
respectively. Meanwhile, on December 28, 1998, petitioner filed an Omnibus Motion: (a) to require PEA to submit the terms of the
renegotiated PEA-AMARI contract; (b) for issuance of a temporary restraining order; and (c) to set the case for hearing on oral
argument. Petitioner filed a Reiterative Motion for Issuance of a TRO dated May 26, 1999, which the Court denied in a Resolution dated
June 22, 1999.

In a Resolution dated March 23, 1999, the Court gave due course to the petition and required the parties to file their respective
memoranda.

On March 30, 1999, PEA and AMARI signed the Amended Joint Venture Agreement ("Amended JVA," for brevity). On May 28, 1999,
the Office of the President under the administration of then President Joseph E. Estrada approved the Amended JVA.

Due to the approval of the Amended JVA by the Office of the President, petitioner now prays that on "constitutional and statutory
grounds the renegotiated contract be declared null and void."[14]

The Issues

The issues raised by petitioner, PEA[15] and AMARI[16] are as follows:

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

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

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

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

V. WHETHER THE CONSTITUTIONAL RIGHT TO INFORMATION INCLUDES OFFICIAL INFORMATION ON ON-GOING

NEGOTIATIONS BEFORE A FINAL AGREEMENT;

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 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 titles[19] under Title II of Commonwealth Act. 141 ("CA No. 141" for brevity). In the instant case, AMARI
seeks to acquire from PEA, a public corporation, reclaimed lands and submerged areas for non-agricultural purposes by purchase
under PD No. 1084 (charter of PEA) and Title III of CA No. 141. Certain undertakings by AMARI under the Amended JVA constitute the
consideration for the purchase. 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

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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. Tuvera[23] where the Court granted the petition for mandamus even if the petitioners
there did not initially demand from the Office of the President the publication of the presidential decrees. PEA points out that in Tañada,
the Executive Department had an affirmative statutory duty under Article 2 of the Civil Code[24] and Section 1 of Commonwealth Act No.
638[25] to publish the presidential decrees. There was, therefore, no need for the petitioners in 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]2 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

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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?
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 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.

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]

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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,

| Page 7 of 46
 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 -

| Page 8 of 46
 (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
| Page 9 of 46
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

| Page 10 of 46
 (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
| Page 11 of 46
 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

| Page 12 of 46
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 -

| Page 13 of 46
 "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:

| Page 14 of 46
 (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
| Page 15 of 46
"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

| Page 16 of 46
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,
| Page 17 of 46
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

| Page 18 of 46
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)

| Page 19 of 46
 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 Force[68] constituted under Presidential Administrative Order No. 365 admitted in its Report and
Recommendation to then President Fidel V. Ramos, "[R]eclaimed lands are classified as alienable and disposable lands of the public
domain."[69] The Legal Task Force concluded that -

"D. Conclusion

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

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

Under Section 2, Article XII of the 1987 Constitution, the foreshore and submerged areas of Manila Bay are part of the "lands of
the public domain, waters 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]

| Page 20 of 46
 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)

| Page 21 of 46
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

| Page 22 of 46
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.

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;

| Page 23 of 46
 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 6[81] and 7[82] of CA No. 141. Once DENR decides that the
reclaimed lands should be so classified, it then recommends to the President the issuance of a proclamation classifying the lands as
alienable or disposable lands of the public domain open to disposition. We note that then DENR Secretary Fulgencio S. Factoran, Jr.
countersigned Special Patent No. 3517 in compliance with the Revised Administrative Code and Sections 6 and 7 of CA No. 141.

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

Clearly, the mere physical act of reclamation by PEA of foreshore or submerged areas does not make the reclaimed lands alienable or
disposable lands of the public domain, much less patrimonial lands of PEA. Likewise, the mere transfer by the National Government of
lands of the public domain to PEA does not make the lands alienable or disposable lands of the public domain, much less patrimonial
lands of PEA.

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

| Page 24 of 46
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

| Page 25 of 46
 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

| Page 26 of 46
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

| Page 27 of 46
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

| Page 28 of 46
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

| Page 29 of 46
 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.

| Page 30 of 46
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:

| Page 31 of 46
 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

| Page 32 of 46
 "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.

| Page 33 of 46
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.

| Page 34 of 46
 2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural resources of the public domain until
classified as alienable or disposable lands open to disposition and declared no longer needed for public service. The
government can make such classification and declaration only after PEA has reclaimed these submerged areas. Only then can
these lands qualify as agricultural lands of the public domain, which are the only natural resources the government can alienate.
In their present state, the 592.15 hectares of submerged areas are inalienable and outside the commerce of man.

3. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of 77.34 hectares[110] of the Freedom
Islands, such transfer is void for being contrary to Section 3, Article XII of the 1987 Constitution which prohibits private
corporations from acquiring any kind of alienable land of the public domain.

4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 hectares[111] of still submerged areas of
Manila Bay, such transfer is void for being contrary to Section 2, Article XII of the 1987 Constitution which prohibits the
alienation of natural resources other than agricultural lands of the public domain. PEA may reclaim these submerged areas.
Thereafter, the government can classify the reclaimed lands as alienable or disposable, and further declare them no longer
needed for public service. Still, the transfer of such reclaimed alienable lands of the public domain to AMARI will be void in view
of Section 3, Article XII of the 1987 Constitution which prohibits private corporations from acquiring any kind of alienable land of
the public domain.

Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987 Constitution. Under Article 1409[112] of the Civil
Code, contracts whose "object or purpose is contrary to law," or whose "object is outside the commerce of men," are "inexistent and
void from the beginning." The Court must perform its duty to defend and uphold the Constitution, and therefore declares the Amended
JVA null and void ab initio.

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.

Davide, Jr., C.J., Bellosillo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez,
Austria-Martinez, and Corona, JJ., concur.

| Page 35 of 46
Footnotes

[1] Section 4 of PD No. 1084.

[2] PEA's Memorandum dated August 4, 1999, p. 3.

[3] PEA's Memorandum, supra note 2 at 7. PEA's Memorandum quoted extensively, in its Statement of Facts and the Case, the
Statement of Facts in Senate Committee Report No. 560 dated September 16, 1997.

[4] In Opinion No. 330 dated December 23, 1994, the Government Corporate Counsel, citing COA Audit Circular No. 89-296, advised
PEA that PEA could negotiate the sale of the 157.84-hectare Freedom Islands in view of the failure of the public bidding held on
December 10, 1991 where there was not a single bidder. See also Senate Committee Report No. 560, p. 12.

[5] PEA's Memorandum, supra note 2 at 9.

[6] Ibid.

[7] The existence of this report is a matter of judicial notice pursuant to Section 1, Rule 129 of the Rules of Court which provides, "A
court shall take judicial notice, without the introduction of evidence, of x x x the official acts of the legislature x x x."

[8] Teofisto Guingona, Jr.

[9] Renato Cayetano.

[10] Virgilio C. Abejo.

[11] Report and Recommendation of the Legal Task Force, Annex "C", AMARI's Memorandum dated June 19, 1999.

| Page 36 of 46
[12] AMARI's Comment dated June 24, 1998, p. 3; Rollo, p. 68.

[13] AMARI filed three motions for extension of time to file comment (Rollo, pp. 32, 38, 48), while PEA filed nine motions for extension of
time (Rollo, pp. 127, 139).

[14] Petitioner's Memorandum dated July 6, 1999, p. 42.

[15] Represented by the Office of the Solicitor General, with Solicitor General Ricardo P. Galvez, Assistant Solicitor General Azucena R.
Balanon-Corpuz, and Associate Solicitor Raymund I. Rigodon signing PEA's Memorandum.

[16] Represented by Azcuna Yorac Arroyo & Chua Law Offices, and Romulo Mabanta Sayoc & De los Angeles Law Offices.

[17] Salonga v. Paño, 134 SCRA 438 (1985); Gonzales v. Marcos, 65 SCRA 624 (1975 ); Aquino v. Enrile, 59 SCRA 183 (1974 ); Dela
Camara v. Enage, 41 SCRA 1 (1971 ).

[18] Section 11, Article XIV.

[19] Manila Electric Co. v. Judge F. Castro-Bartolome, 114 SCRA 799 (1982); Republic v. CA and Iglesia, and Republic v. Cendana and
Iglesia ni Cristo, 119 SCRA 449 (1982); Republic v. Villanueva and Iglesia ni Cristo, 114 SCRA 875 (1982); Director of Lands v. Lood,
124 SCRA 460 (1983); Republic v. Iglesia ni Cristo, 128 SCRA 44 (1984); Director of Lands v. Hermanos y Hermanas de Sta. Cruz de
Mayo, Inc., 141 SCRA 21 (1986); Director of Lands v. IAC and Acme Plywood & Veneer Co., 146 SCRA 509 (1986); Republic v. IAC
and Roman Catholic Bishop of Lucena, 168 SCRA 165 (1988); Natividad v. CA, 202 SCRA 493 (1991); Villaflor v. CA and Nasipit
Lumber Co., 280 SCRA 297 (1997). In Ayog v. Cusi, 118 SCRA 492 (1982), the Court did not apply the constitutional ban in the 1973
Constitution because the applicant corporation, Biñan Development Co., Inc., had fully complied with all its obligations and even paid
the full purchase price before the effectivity of the 1973 Constitution, although the sales patent was issued after the 1973 Constitution
took effect.

[20] PD No. 1073.

[21] Annex "B", AMARI's Memorandum dated June 19, 1999, Section 5.2 (c) and (e) of the Amended JVA, pp. 16-17.

[22] Chavez v. PCGG, 299 SCRA 744 (1998).

[23] 136 SCRA 27 (1985).

| Page 37 of 46
[24] Article 2 of the Civil Code (prior to its amendment by EO No. 200) provided as follows: "Laws shall take effect after fifteen days
following the completion of their publication in the Official Gazette, unless it is provided otherwise, x x x."

[25] Section 1 of CA No. 638 provides as follows: "There shall be published in the Official Gazette all important legislative acts and
resolutions of the Congress of the Philippines; all executive and administrative orders and proclamations, except such as have no
general applicability; x x x."

[26] Section 79 of the Government Auditing Codes provides as follows: "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."

[27] Paat v. Court of Appeals, 266 SCRA 167 (1997); Quisumbing v. Judge Gumban, 193 SCRA 520 (1991); Valmonte v. Belmonte, Jr.,
170 SCRA 256 (1989).

[28] See note 22.

[29] Section 1, Article XI of the 1987 Constitution states as follows: "Public office is a public trust. Public officers and employees must at
all times be accountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency, act with patriotism and
justice, and lead modest lives."

[30] 170 SCRA 256 (1989).

[31] See note 22.

[32] Record of the Constitutional Commission, Vol. V, pp. 24-25, (1986).

[33] Supra, Note 22.

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[34] Ibid.

[35] Legaspi v. Civil Service Commission, 150 SCRA 530 (1987).

[36] Almonte v. Vasquez, 244 SCRA 286 (1995).

[37] See Note 22.

[38] Chavez v. PCGG, see note 22; Aquino-Sarmiento v. Morato, 203 SCRA 515 (1991).

[39] Almonte v. Vasquez, see note 36.

[40] People's Movement for Press Freedom, et al. v. Hon. Raul Manglapus, G.R. No. 84642, En Banc Resolution dated April 13, 1988;
Chavez v. PCGG, see note 22.

[41] Section 270 of the National Internal Revenue Code punishes any officer or employee of the Bureau of Internal Revenue who
divulges to any person, except as allowed by law, information regarding the business, income, or estate of any taxpayer, the secrets,
operation, style of work, or apparatus of any manufacturer or producer, or confidential information regarding the business of any
taxpayer, knowledge of which was acquired by him in the discharge of his official duties. Section 14 of R.A. No. 8800 (Safeguard
Measures Act) prohibits the release to the public of confidential information submitted in evidence to the Tariff Commission. Section 3 (n)
of R.A. No. 8504 (Philippine AIDS Prevention and Control Act) classifies as confidential the medical records of HIV patients. Section 6 (j)
of R.A. No. 8043 (Inter-Country Adoption Act) classifies as confidential the records of the adopted child, adopting parents, and natural
parents. Section 94 (f) of R.A. No. 7942 (Philippine Mining Act) requires the Department of Environment and Natural Resources to
maintain the confidentiality of confidential information supplied by contractors who are parties to mineral agreements or financial and
technical assistance agreements.

[42] The Recopilacion de Leyes de las Indias declared that: "We, having acquired full sovereignty over the Indies, and all lands,
territories, and possessions not heretofore ceded away by our royal predecessors, or by us, or in our name, still pertaining to the royal
crown and patrimony, it is our will that all lands which are held without proper and true deeds of grant be restored to us according as
they belong to us, in order that after reserving before all what to us or to our viceroys, audiencias, and governors may seem necessary
for public squares, ways, pastures, and commons in those places which are peopled, taking into consideration not only their present
condition, but also their future and their probable increase, and after distributing to the natives what may be necessary for tillage and
pasturage, confirming them in what they now have and giving them more if necessary, all the rest of said lands may remain free and
unencumbered for us to dispose of as we may wish." See concurring opinion of Justice Reynato S. Puno in Republic Real Estate
Corporation v. Court of Appeals, 299 SCRA 199 (1998).

[43] Cariño v. Insular Government, 41 Phil. 935 (1909). The exception mentioned in Cariño, referring to lands in the possession of an
occupant and of his predecessors-in-interest, since time immemorial, is actually a species of a grant by the State. The United States
Supreme Court, speaking through Justice Oliver Wendell Holmes, Jr., declared in Cariño: "Prescription is mentioned again in the royal
cedula of October 15, 1754, cited in 3 Philippine, 546; 'Where such possessors shall not be able to produce title deeds, it shall be

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sufficient if they shall show that ancient possession, as a valid title by prescription.' It may be that this means possession from before
1700; but, at all events, the principle is admitted. As prescription, even against the Crown lands, was recognized by the laws of Spain,
we see no sufficient reason for hesitating to admit that it was recognized in the Philippines in regard to lands over which Spain had only
a paper sovereignty." See also Republic v. Lee, 197 SCRA 13 (1991).

[44] Article 1 of the Spanish Law of Waters of 1866.

[45] Ignacio v. Director of Lands, 108 Phil. 335 (1960); Joven v. Director of Lands, 93 Phil. 134 (1953); Laurel v. Garcia, 187 SCRA 797
(1990). See concurring opinion of Justice Reynato S. Puno in Republic Real Estate Corporation v. Court of Appeals, 299 SCRA 199
(1998).

[46] Act No. 926, enacted on October 7, 1903, was also titled the Public Land Act. This Act, however, did not cover reclaimed lands.
Nevertheless, Section 23 of this Act provided as follows: "x x x In no case may lands leased under the provisions of this chapter be
taken so as to gain control of adjacent land, water, stream, shore line, way, roadstead, or other valuable right which in the opinion of the
Chief of the Bureau of Public Lands would be prejudicial to the interests of the public."

[47] Section 10 of Act No. 2874 provided as follows: "The words "alienation," "disposition," or "concession" as used in this Act, shall
mean any of the methods authorized by this Act for the acquisition, lease, use, or benefit of the lands of the public domain other than
timber or mineral lands."

[48] Title II of Act No. 2874 governed alienable lands of the public domain for agricultural purposes, while Title III of the same Act
governed alienable lands of the public domain for non-agricultural purposes.

[49] Section 57 of Act No. 2874 provided as follows: "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 the legislature; x x x."

[50] Krivenko v. Register of Deeds, 79 Phil. 461 (1947).5

[51] Section 2 of CA No. 141 states as follows: "The provisions of this Act shall apply to the lands of the public domain; but timber and
mineral lands shall be governed by special laws and nothing in this Act provided shall be understood or construed to change or modify
the administration and disposition of the lands commonly called "friar lands" and those which, being privately owned, have reverted to or
become the property of the Commonwealth of the Philippines, which administration and disposition shall be governed by the laws at
present in force or which may hereafter be enacted."

[52] Like Act No. 2874, Section 10 of CA No. 141 defined the terms "alienation" and "disposition" as follows: "The words "alienation,"
"disposition," or "concession" as used in this Act, shall mean any of the methods authorized by this Act for the acquisition, lease, use, or
benefit of the lands of the public domain other than timber or mineral lands."

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[53] R.A. No. 6657 has suspended the authority of the President to reclassify forest or mineral lands into agricultural lands. Section 4 (a)
of RA No. 6657 (Comprehensive Agrarian Reform Law of 1988) states, "No reclassification of forest or mineral lands to agricultural
lands shall be undertaken after the approval of this Act until Congress, taking into account ecological, developmental and equity
considerations, shall have delimited by law, the specific limits of the public domain."

[54] Covering Sections 58 to 68 of CA No. 141.

[55] 299 SCRA 199 (1998).

[56] Section 1, Article XIII of the 1935 Constitution limited the disposition and utilization of public agricultural lands to Philippine citizens
or to corporations at least sixty percent owned by Philippine citizens. This was, however, subject to the original Ordinance appended to
the 1935 Constitution stating, among others, that until the withdrawal of United States sovereignty in the Philippines, "Citizens and
corporations of the United States shall enjoy in the Commonwealth of the Philippines all the civil rights of the citizens and corporations,
respectively, thereof."

[57] Section 44 of PD No. 1529 (previously Section 39 of Act No. 496) provides that "liens, claims or rights arising or existing under the
laws and the Constitution of the Philippines which are not by law required to appear of record in the Registry of Deeds in order to be
valid against subsequent purchasers or encumbrancers of record" constitute statutory liens affecting the title.

[58] RA No. 730, which took effect on June 18, 1952, authorized the private sale of home lots to actual occupants of public lands not
needed for public service. Section 1 of RA No. 730 provided as follows: "Notwithstanding the provisions of Sections 61 and 67 of
Commonwealth Act No. 141, as amended by RA No. 293, any Filipino citizen of legal age who is not the owner of a home lot in the
municipality or city in which he resides and who had in good faith established his residence on a parcel of land of the Republic of the
Philippines which is not needed for public service, shall be given preference to purchase at a private sale of which reasonable notice
shall be given to him, not more than one thousand square meters at a price to be fixed by the Director of Lands with the approval of the
Secretary of Agriculture and Natural Resources. x x x." In addition, on June 16, 1948, Congress enacted R.A. No. 293 allowing the
private sale of marshy alienable or disposable lands of the public domain to lessees who have improved and utilized the same as farms,
fishponds or other similar purposes for at least five years from the date of the lease contract with the government. R.A. No. 293,
however, did not apply to marshy lands under Section 56 (c), Title III of CA No. 141 which refers to marshy lands leased for residential,
commercial, industrial or other non-agricultural purposes.

[59] See note 49.

[60] See note 60.

[61] Republic Real Estate Corporation v. Court of Appeals, see note 56.

[62] Ibid.

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[63] Insular Government v. Aldecoa, 19 Phil. 505 (1911); Government v. Cabangis, 53 Phil. 112 (1929).

[64] 118 SCRA 492 (1982).

[65] Annex "B", AMARI's Memorandum, see note 2 at 1 & 2.

[66] PEA's Memorandum, see note 6.

[67] Ibid., p. 44.

[68] See notes 9, 10 & 11.

[69] Annex "C", p. 3, AMARI's Memorandum, see note 12 at 3.

[70] This should read Article XII.

[71] Section 8 of CA No. 141.

[72] Emphasis supplied.

[73] 187 SCRA 797 (1990).

[74] Article 422 of the Civil Code states as follows: "Property of public dominion, when no longer needed for public use or public service,
shall form part of the patrimonial property of the State."

[75] AMARI's Comment dated June 24, 1998, p. 20; Rollo, p. 85.

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[76] Dizon v. Rodriguez, 13 SCRA 705 (1965); Republic v. Lat Vda. de Castillo, 163 SCRA 286 (1988).

[77] Cariño v. Insular Government, 41 Phil. 935 (1909).

[78] Proclamation No. 41, issued by President Ramon Magsaysay on July 5, 1954, reserved for "National Park purposes" 464.66
hectares of the public domain in Manila Bay "situated in the cities of Manila and Pasay and the municipality of Paranaque, Province of
Rizal, Island of Luzon," which area, as described in detail in the Proclamation, is "[B]ounded on the North, by Manila Bay; on the East,
by Dewey Boulevard; and on the south and west, by Manila Bay." See concurring opinion of Justice Reynato S. Puno in Republic Real
Estate Corporation v. Court of Appeals, 299 SCRA 1999 (1998). Under Sections 2 and 3, Article XII of the 1987 Constitution, "national
parks" are inalienable natural resources of the State.

[79] Fifth Whereas clause of EO No. 525.

[80] Section 4, Chapter I, Title XIV, Book IV.

[81] Section 6 of CA No 141 provides as follows: "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, x x x."

[82] Section 7 of CA No. 141 provides as follows: "For purposes of the administration and disposition of alienable or disposable public
lands, the President, upon recommendation by the Secretary of Agriculture and Commerce, shall from time to time declare what lands
are open to disposition or concession under this Act."

[83] On "Lands for Residential, Commercial, or Industrial and other Similar Purposes."

[84] RA No. 293, enacted on June 16, 1948, authorized the sale of marshy lands under certain conditions. Section 1 of RA No. 293
provided as follows: "The provisions of section sixty-one of Commonwealth Act Numbered One hundred and forty-one to the contrary
notwithstanding, marshy lands and lands under water bordering on shores or banks or navigable lakes or rivers which are covered by
subsisting leases or leases which may hereafter be duly granted under the provisions of the said Act and are already improved and
have been utilized for farming, fishpond, or similar purposes for at least five years from the date of the contract of lease, may be sold to
the lessees thereof under the provisions of Chapter Five of the said Act as soon as the President, upon recommendation of the
Secretary of Agriculture and Natural Resources, shall declare that the same are not necessary for the public service."

[85] PEA's Memorandum, see note 2 at 45.

[86] See note 73.

| Page 43 of 46
[87] Section 4 (b) of PD No. 1084

[88] R.A. No. 730 allows the private sale of home lots to actual occupants of public lands. See note 63.

[89] Issued on February 26, 1981.

[90] While PEA claims there was a failure of public bidding on December 10, 1991, there is no showing that the Commission on Audit
approved the price or consideration stipulated in the negotiated Amended JVA as required by Section 79 of the Government Auditing
Code. Senate Committee Report No. 560 did not discuss this issue.

[91] Paragraph 2 (a) of COA Circular No. 89-296, on "Sale Thru Negotiation," states that disposal through negotiated sale may be
resorted to if "[T]here was a failure of public auction."

[92] Senate Committee Report No. 560, Statement of Facts, p. 7, citing PEA Board Resolution No. 835, as appearing in the Minutes of
the PEA Board of Directors Meeting held on May 30, 1991, per Certification of Jaime T. De Veyra, Corporate Secretary, dated June 11,
1991.

[93] Opinion No. 330, citing COA Audit Circular No. 89-296. See note 5.

[94] PEA's Memorandum, see note 2.

[95] Senate Committee Report No. 560, pp. 7-8, citing the Minutes of Meeting of the PEA Board of Directors held on December 19,
1991.

[96] Section 3, Article XII of the 1987 Constitution provides as follows: "x x x Citizens of the Philippines may x x x acquire not more than
twelve hectares thereof by purchase, homestead or grant." However, Section 6 of R.A. No. 6657 (Comprehensive Agrarian Reform Law)
limits the ownership of "public or private agricultural land" to a maximum of five hectares per person.

[97] 96 Phil. 946 (1955).

[98] 48 SCRA 372 (1977).

| Page 44 of 46
[99] 168 SCRA 198 (1988).

[100] 172 SCRA 795 (1989).

[101] 73 SCRA 146 (1976).

[102] Avila v. Tapucar, 201 SCRA 148 (1991).

[103] Republic v. Ayala Cia, et al., 14 SCRA 259 (1965); Dizon v. Rodriguez, 13 SCRA 705 (1965).

[104] Section 44 of PD No. 1529 states as follows: "Every registered owner receiving a certificate of title in pursuance of a decree of
registration, and every subsequent purchaser of registered land taking a certificate of title for value and in good faith, shall hold the
same free from all encumbrances except those noted on said certificate and any of the following encumbrances which may be
subsisting, namely: First. Liens, claims or rights arising or existing under the laws and Constitution of the Philippines which are not by
law required to appear of record in the Registry of Deeds in order to be valid against subsequent purchasers or encumbrancers of
record. x x x." Under Section 103 of PD No. 1529, Section 44 applies to certificates of title issued pursuant to a land patent granted by
the government.

[105] Section 2, Article XIII of the 1935 Constitution.

[106] Harty v. Municipality of Victoria, 13 Phil. 152 (1909).

[107] Annex "B", AMARI's Memorandum, see note 21 at 16, Section 5.2 (c) of the Amended JVA.

[108] Section 10 of CA No. 141 provides as follows: "Sec. 10. The words "alienation," "disposition," or "concession" as used in this Act,
shall mean any of the methods authorized by this Act for the acquisition, lease, use, or benefit of the lands of the public domain other
than timber or mineral lands."

[109] Section 79 of the Government Auditing Code, which requires public auction in the sale of government assets, includes all kinds of
disposal or divestment of government assets. Thus, COA Audit Circular No. 86-264 dated October 16, 1986 speaks of "guidelines
(which) shall govern the general procedures on the divestment or disposal of assets of government-owned and/or controlled
corporations and their subsidiaries." Likewise, COA Audit Circular No. 89-296 dated January 27, speaks of "guidelines (which) shall be
observed and adhered to in the divestment or disposal of property and other assets of all government entities/instrumentalities" and that
"divestment shall refer to the manner or scheme of taking away, depriving, withdrawing of an authority, power or title." These COA

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Circulars implement Section 79 of the Government Auditing Code.

[110] The share of AMARI in the Freedom Islands is 77.34 hectares, which is 70 percent of the net usable area of 110.49 hectares. The
net usable area is the total land area of the Freedom Islands less 30 percent allocated for common areas.

[111] The share of AMARI in the submerged areas for reclamation is 290.129 hectares, which is 70 percent of the net usable area of
414.47 hectares.

[112] Article 1409 of the Civil Code provides as follows: "The following contracts are inexistent and void from the beginning: (1) Those
whose cause, object or purpose is contrary to law; x x x; (4) Those whose object is outside the commerce of men; x x x."

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