Constitutional Law Case Digest:

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

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.

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.

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.

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 Legal Task Force upheld the legality of the JVA, contrary to the conclusions reached by the Senate Committees.

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.
  • Petitioner asserts that he seeks to enjoin the loss of billions of pesos in properties of the State that are of public dominion.

Issues:

• • Whether the petition merits dismissal for failing to observe the principle governing the hierarchy of courts;
  • Whether the petition merits dismissal for non-exhaustion of administrative remedies;
  • Whether petitioner has locus standito bring this suit;
  • 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

Ruling:

1^st

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

2^nd

The original JVA sought to dispose to AMARI public lands held by PEA, a government corporation. Under Section 79 of the Government Auditing Code,²⁶ the disposition of government lands to private parties requires public bidding. PEA was under a positive legal duty to disclose to the public the terms and conditions for the sale of its lands. The law obligated PEA to make this public disclosure even without demand from petitioner or from anyone. PEA failed to make this public disclosure because the original JVA, like the Amended JVA, was the result of a negotiated contract, not of a public bidding. Considering that PEA had an affirmative statutory duty to make the public disclosure, and was even in breach of this legal duty, petitioner had the right to seek direct judicial intervention.

Moreover, and this alone is determinative of this issue, the principle of exhaustion of administrative remedies does not apply when the issue involved is a purely legal or constitutional question.²⁷ The principal issue in the instant case is the capacity of AMARI to acquire lands held by PEA in view of the constitutional ban prohibiting the alienation of lands of the public domain to private corporations. We rule that the principle of exhaustion of administrative remedies does not apply in the instant case.

3^rd

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.

The thrust here 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.

• • 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 here 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.

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.

4^th

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.

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.   
 
The 1987 Constitution recognizes the Regalian doctrine.  It 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.  
 
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 area are still submerged areas forming part of Manila Bay.  Further,  it  is  provided  that  AMARI  will  reimburse  the  actual  costs  in reclaiming the areas of land and it will shoulder the other reclamation costs to be incurred.  
 
The foreshore and submerged areas of Manila Bay are part of the lands of the  public  domain,  waters  and  other  natural  resources  and  consequently owned by the State.  As such, foreshore and submerged areas shall not be alienable  unless  they  are  classified  as  agricultural  lands  of  the  public domain.  The mere reclamation of these areas by the PEA doesn’t convert these  inalienable  natural  resources  of  the  State  into  alienable  and disposable lands of the public domain.  There must be a law or presidential
proclamation  officially  classifying  these  reclaimed  lands  as  alienable  and disposable  if  the  law  has  reserved  them  for  some  public  or  quasi-public use.

Principle:

Regalian Doctrine

“all lands of the public domain as well as all natural resources enumerated therein, whether on public or private land, belong to the State”

Exhaustion of Administrative remedies

“a person challenging an agency decision must first pursue the agency’s available remedies before seeking judicial review. It was created by courts in order to promote an efficient justice system and autonomous administrative state”

Locus Standi

“requires a personal stake in the outcome of a controversy for significant reasons. It assures adverseness and sharpens the presentation of issues for the illumination of the Court in resolving difficult constitutional questions”

Hierarchy of Courts

“As a matter of policy, direct resort to the Supreme Court will no longer be entertained unless the redress cannot be obtained in the appropriate lower courts, and exceptional and compelling circumstances, such as in the case of involving national interest and those of serious implications, justify the availment of the extraordinary remedy of the writ of certiorari, calling for the exercise of its primary jurisdiction”