Chavez vs.

PEA and Amari

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

Facts:

Former President Ferdinand E. Marcos issued PD 1084 creating the Public Estates
Authority (PEA) which was tasked “to reclaim land, including foreshore and submerged areas,"
and "to develop, improve, acquire, x x x lease and sell any and all kinds of lands. On the same
day, he issued PD No. 1085 transferring to PEA the “lands reclaimed in the foreshore and offshore
of Manila Bay" under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP).

During the Presidency of Fidel V. Ramoz, PEA entered into a Joint Venture Agreement
(JVA) with Amari Coastal Bay Development Corporation (Amari), a private corporation, to develop
the Freedom Islands, which were part of the areas to be developed under the MCCRRP, and to
reclaim the additional 250 hectares of submerged areas surrounding these islands. PEA and
Amari sought to transfer these reclaimed lands to Amari.

Petitioner Frank I. Chavez, as a taxpayer, sought to declare the JVA as null and void on
constitutional and statutory grounds.

Issue:

Whether or not the transfer of certain lands, which were part of areas of development
under the MCRRP, reclaimed and still to be reclaimed, to Amari, unconstitutional and illegal

Ruling:

Yes, the transfer of certain lands, which were part of areas of development under the
MCRRP, reclaimed and still to be reclaimed, to Amari, unconstitutional and illegal.

The reclaimed lands comprising the Freedom Islands, 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 Filipino citizens, subject
to the constitutional and statutory limitations on ownership.

The 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. At present, these submerged areas are inalienable and outside the commerce of
man.

Since what was sought under the JVA was the transfer to AMARI, a private corporation,
of ownership of certain areas of the the Freedom Islands, such transfer was void for being
contrary to Article XII, Section 3 of the Constitution which, prohibits private corporations from
acquiring any kind of alienable land of the public domain.

Since the JVA also sought to transfer to AMARI the ownership of certain areas of still
submerged lands of Manila Bay, such transfer was void for being contrary to Article XII, Section
2 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 Article XII, Section 3 of the 1987 Constitution
which prohibits private corporations from acquiring any kind of alienable land of the public
domain.

Clearly, the JVA violates glaringly Article XII, Sections 2 and 3 of the Constitution.
Furthermore, under Article 1409 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."

Hence, the subject stipulation under the JVA was unconstitutional and illegal.