Chavez v. NHA, G.R. No.

164527, August 15, 2007

Facts:

On March 1, 1988, then President Corazon C. Aquino issued Memorandum Order No. (MO) 1612
approving and directing the implementation of the Comprehensive and Integrated Metropolitan Manila
Waste Management Plan (the Plan). Pursuant to MO 161-A, NHA prepared the feasibility studies of the
Smokey Mountain low-cost housing project and formulated the Smokey Mountain Development and
Reclamation Project (SMDRP).

On July 9, 1990, the Build-Operate-and-Transfer (BOT) Law or RA 6957 was enacted which
authorized and empowered all government infrastructure agencies, including government-owned and
controlled corporations and local government units x x x to enter into contract with any duly pre-
qualified private contractor for the financing, construction, operation and maintenance of any financially
viable infrastructure facilities through the build-operate-transfer or build and transfer scheme and that
the repayment scheme in the case of land reclamation may consist of the grant of a portion or
percentage of the reclaimed land or industrial estate built, subject to the constitutional requirements
with respect to the ownership of lands.

In MO 415, Pres. Aquino approved the implementation of SMDRP, assigned the PEA to assist in
the evaluation of proposals regarding the technical feasibility of reclamation, created an executive
committee to oversee the implementation chaired by the NCR-CORD with NHA heads.

When Pres. Ramon assumed the office, he issued proclamation 29 on Sept. 9, 1992 which
authorizes the NHA to convert the Smokey Mountain into a habitable area, including the reclamation if
the area across Road Radial 10 which is adjacent to the Smokey Mountain. On Oct. 7, 1992, he
authorized NHA to enter into a JVA with RBI.

On March 19, 1993, the NHA and R-II Builders Inc (RBI) entered into a Joint Venture Agreement
(JVA) for the development of the Smokey Mountain Dumpsite and reclamation area to be converted into
a low cost medium rise housing complex and industrial /commercial site. The Project will involve 79
hectares of reclaimed land (it was initially 40 hectares but the JVA was amended). The JVA also provides
that as part of the consideration for the Project, NHA will convey a portion of the reclaimed lands to RBI.

The reclamation of the areas was made; and subsequently, Special Patents were issued conveying the
reclaimed land to NHA.

On August 5, 2004, former Solicitor General Francisco Chavez filed this petition for Prohibition and
Mandamus seeking to declare null and void the JVA and the Smokey Mountain Development and
Reclamation Project, and all other agreements in relation thereto, for being unconstitutional and invalid.
Among his contentions, Chavez claims that the power to reclaim lands of public domains is vested
exclusively with Public Estates Authority (PEA) per EO 525.

Issue:

WON NHA and RBI have been granted the power and authority to reclaim lands of public domain as this
power is vested exclusively in PEA
Ruling:

Yes, NHA and RBI have been granted the power and authority to reclaim lands of public domain. PEA
was designated under EO 525 as the agency “primarily responsible for integration, directing, and
coordination all reclamation projects for and on behalf of the National Government”. Its charter does
not mention that it has exclusive power and authority to reclaim lands of public domain. EO 525 further
states that reclamation projects may also be undertaken by a national government agency or entity
authorized by its charter to reclaim land and that that there are three requisites for a legal and valid
reclamation project which are as follows:

a. Approval by the president;

b. Favorable recommendation of PEA; and,
c. Undertaken by any of the following:
a. PEA
b. Any person or entity pursuant to a contract it executed with PEA
c. The national government agency or entity authorized under its charter to reclaim
lands and subject to consultation with PEA

Applying the mentioned requirements, the SC held that the Project has met all three requirements of
law:

a. There was approval by the President of the Philippines – Presidents Aquino and Ramos issued
proclamations approving and implementing reclamation of lands
b. There was implied grant of a favorable endorsement of the reclamation phase from PEA – This is
shown in the fact that PEA was a member of the EXECOM which was in charge of overseeing the
implementation of the Project
c. The reclamation undertaken by the NHA, a national government agency authorized to reclaim
lands under its charter and other laws – while the charter of NHA does not explicitly mention
reclamation in any of its listed powers, such power is implied since it is vital or incidental to
achieving the objective of an urban land reform and housing program.