ChanRobles Virtual law Library

-versus-

PUBLIC   ESTATES   AUTHORITY   AND  AMARI
COASTAL BAYDEVELOPMENT CORPORATION,
                              Respondents.
 
 

TINGA, J.:

With all due respect, I dissent from the majority.cralaw:red

Central to the adjudication of this case is the determination of the status of reclaimed lands. Lands of the State are either lands of the public domain or lands of the private domain. Thus, Section 2, Article XII of the 1987 Constitution, incorporating the Regalian Doctrine, provides that "all lands of the public domain   x  x  x   are owned by the State." Unwritten but implicit in this provision is that the State may own lands of the private domain. In the same vein, the New Civil Code classifies properties of the State as either property of the public dominion[1] or patrimonial property.[2]chanrobles virtuallaw libraryred

If reclaimed land is part of the public domain, it is covered by the proscription in Section 3, Article XII of the 1987 Constitution,[3] which prohibits private corporations from acquiring alienable lands of the public domain. On the other hand, if it is patrimonial property, the constitutional proscription does not apply.chanrobles virtuallaw libraryred

First, the fundamentals. The Constitution ordains that natural resources are not alienable. Then it gives examples of natural resources: "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."[4]chanrobles virtuallaw libraryred

Obviously, the common characteristics of natural resources are that they are still in their original, raw state. Natural resources are material objects of economic value and utility to man produced by nature.[5] In other words, they refer to property and materials in their original and native state, not to those which have been produced through the intervention of man.chanrobles virtuallaw libraryred

Natural resources are capable of conversion or, in the words of the Constitution,[6] "exploration, development and utilization." But the conversion is, again pursuant to the Constitution,[7] "under the full control and supervision of the State." When the conversion activity such as co-production, joint venture or production-sharing agreements is authorized by the Government through a law, the qualified party to the agreement may own the converted product or part of it, when so provided in the agreement. The rationale is that the converted product is not the same as the original natural resource. Thus, the timber concessionaire may own the logs cut from the timber concession; the miner may dispose of the gold produced from the gold ores taken from the mine; the developer may market the energy harnessed from a geothermal field.chanrobles virtuallaw libraryred

Significantly, the reclamation contract is not an outright sale. Reclamation is essentially a construction and infrastructure contract.[8] This is also clear from the BOT Laws.[9]Specifically, the contract subject of this case is a joint venture agreement.chanrobles virtuallaw libraryred

Reclaimed land does not fall under the category of natural resources which under the Constitution are inalienable. This is so because its development from the seabed entails human intervention. It is unlike land per se, which having become such on account of the forces of nature, is considered a natural resource.chanrobles virtuallaw libraryred
That being the case, it is statutory law which determines the status of reclaimed land. In other words, the matter of categorization of reclaimed land is a legislative function.cralaw:red

From the advent of the Spanish Law of Waters of 1886 onwards, it is at least implicit if not express in the laws authorizing reclamation that the resulting reclaimed lands are private property of the Government.chanrobles virtuallaw libraryred

Under the Spanish Law of Waters of 1866, reclaimed land may be categorized even as private individual property. Article 5 thereof provides:

Art. 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.

Following the trail blazed by the Spanish Law of Waters, quite a number of local government units undertook, after liberation, reclamation work under the aegis of special laws.[10]chanrobles virtuallaw libraryred

Other local government units availed of a general reclamation statute, specifically, Republic Act No. 1899, entitled "An Act to Authorize the Reclamation of Foreshore Lands by Chartered Cities and Municipalities," which was enacted in 1957. It provides inter alia:chanrobles virtuallaw libraryred

Sec. 2. Any and all lands reclaimed, as herein provided, shall be the property of the respective municipalities or chartered cities: Provided, however, That the new foreshore along the reclaimed areas shall continue to be the property of the National Government.chanrobles virtuallaw libraryred

Of more recent vintage is Republic Act No. 7160, otherwise known as the Local Government Code of 1991. It empowers local government units to undertake reclamation projects by themselves or through contractors. Section 302 thereof provides that "(t)he contractor shall be entitled to a reasonable return of its investment in accordance with its bid proposal as accepted by the local government unit concerned   x  x  x   In case of land reclamation or construction of industrial estates, the repayment plan may consist of the grant of the portion or percentage of the reclaimed lands or the industrial estate concerned."

The lands reclaimed under the auspices of the aforementioned special laws, Republic Acts No. 1899 and 7160 included, are patrimonial property of the local government units concerned or private property of the developer, as the case may be. Nevertheless, the reclamation law or the local government may reserve certain portions of the reclaimed area for public use such as for plazas, schools or hospitals, in which case, the reclaimed land is characterized as land of the public domain.[11]chanrobles virtuallaw libraryred

Hence, portions of the reclaimed land may be classified as property of public ownership while other portions may be categorized as patrimonial or private property, depending on the text of the reclamation statute.[12]chanrobles virtuallaw libraryred

Clearly, the characterization of reclaimed land as patrimonial or public property emanates from the laws themselves and becomes complete following the accomplishment of the reclamation project.chanrobles virtuallaw libraryred

The challenged Joint Venture Agreement was undertaken under the aegis of Presidential Decree No. 1084,[13] Presidential Decree No. 1085[14] and the so-called Build Operate and Transfer (BOT) laws, Republic Act No. 6957, as amended by Republic Act No. 7718. The latter BOT law[15] enumerates the infrastructure or development projects which may be implemented by the private sector, among which are land reclamation projects. According to the same law,[16] the proponent in land reclamation projects may be repaid by way of "grant of a portion or percentage of the reclaimed land." The payment in the form of reclaimed land in the case of land reclamation projects completes the essence of privatization which is the underlying economic philosophy of the BOT laws. In the beginning, the private sector is tapped to undertake grant infrastructure and development project and in the end it is paid in the form of land which naturally is thenceforth classified as private property.chanrobles virtuallaw libraryred

In sum, whenever land reclamation authorized by law is undertaken by a private individual or entity, the reclaimed lands which the developer secures by way of payment is classified as private property. There is no need for another special law declaring the lands alienable as the reclamation law itself provides the legal basis that renders them alienable, unless of course there is a contrary provision in the law. The laws ordaining that reclaimed lands become lands of the public domain are the exception rather than the rule.chanrobles virtuallaw libraryred

The Public Land Acts (Act No. 2874 and Commonwealth Act No. 141) typify the few laws which provide that reclaimed lands are not alienable. But the categorization applies only to lands reclaimed by the National Government. It does not cover lands reclaimed by private individuals or entities, including local government units, authorized by law. In other words, Commonwealth Act No. 141, being a general law, is not applicable to lands reclaimed pursuant to special laws, such as the reclaimed land subject of this case.cralaw:red

I have no quarrel with the majority's ruling that "submerged areas of the Manila Bay are, under the Constitution, 'waters   x  x  x   owned by the State,' forming part of the public domain and consequently inalienable."[17] I take exception, however, to the holding that the subject JVA is invalid since it covers such submerged areas. I do not think that the parties contemplated the transfer of the submerged lands per se but, rather, the conveyance of the reclaimed lands which shall stand on the submerged lands. If there is any doubt as to the object of the prestation in this case, that interpretation which would render the contract valid is to be favored. Where the instrument is susceptible of two interpretations, one which will make it invalid and illegal, and another which will make it valid and legal, the latter interpretation should be adopted.[18] Thus, the New Civil Code states:chanrobles virtuallaw libraryred

Article 1373. If some stipulation of any contract should admit of several meanings, it shall be understood as bearing that import which is most adequate to render it effectual.chanrobles virtuallaw libraryred

The Constitution[19] specifically mentions joint venture agreements as among the contracts that the State may enter into with the private sector for the development of natural resources. Consequently, there is nothing aberrant for the respondents in this case to secure reconveyance in the form of reclaimed land.chanrobles virtuallaw libraryred

Finally, I submit that this case should be resolved in terms of the long range development of the country. However rich our country may be in natural resources, these riches are not inexhaustible, land being among the most finite. The total area of Philippine agricultural lands is estimated to be 10.4 million hectares; the total area of mountainous lands, about 9.4 million hectares. Such a limited land area could hardly sustain a population, which, as of October 2000, stood at 76.5 million Filipinos (projected to be 81.1 million by the end of 2003) and growing at a rate of 2.36% per annum. Moreover, the Philippine economy is expanding at a rate of 3.5% (2000-2001) to 4.5% (2001-2002). There is no single solution to address these developments but the extension of our coastlines consisting of 36,289 kilometers may be one of them.chanrobles virtuallaw libraryred

It is with this end in mind that the Government pursues policies established or recognized by the Constitution, one of which is land reclamation. No less than the Constitution, under the general welfare clause,[20] empowers and obliges the State to execute such a policy. The State, though, need not go at it alone. Indeed, the Constitution itself acknowledges that the State cannot perform this task by itself. Thus, the fundamental law, under the Article on National Economy and Patrimony,[21] vests the State with the concomitant authority to draw on the resources of the private sector, whose role is aptly described elsewhere as "indispensable,"[22] to aid it in such an awesome endeavor. To deny the motions for reconsideration in this case would be to turn a blind eye to this stark reality and, ultimately, to defeat State policy:chanrobles virtuallaw libraryred

Accordingly, I vote to GRANT respondents' second motions for reconsideration.

____________________________

Endnotes:
 

[1] Art 420. The following things are property of public dominion:chanroblesvirtuallawlibrarychanrobles virtuallaw libraryred
  (1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constricted 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 for the development of the national wealth.chanrobles virtuallaw libraryred
[2] Art. 421. All other property of the State, which is not of the character stated in the preceding article, is patrimonial property.chanrobles virtuallaw libraryred
[3] Sec. 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands, and national parks. Agricultural lands of the public domain may be further classified by law according to the uses to which they may be devoted. Alienable lands of the public domain shall be limited to agricultural lands. Private corporations or associations may not hold such alienable lands of the public domain except by lease, for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and not to exceed one thousand hectares in area. Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more than twelve hectares thereof by purchase, homestead or grant.chanrobles virtuallaw libraryred
x  x  x              x  x  x              x  x  x   (Emphasis supplied.)chanrobles virtuallaw libraryred
[4] Sec. 2, Art: XII, 1987 Constitution.chanrobles virtuallaw libraryred
[5] Peña, Philippine Law on Natural Resources, 1982 ed, p. 2.chanrobles virtuallaw libraryred
[6] Section 2, Art. XII, 1987 Constitution.chanrobles virtuallaw libraryred
[7] Ibid.chanrobles virtuallaw libraryred
[8] Malayan Integrated Industries Corp. v. Court of Appeals, G.R. No. 104169, September 4, 1992, 213 SCRA 640; Gov. Garcia v. Hon. Burgos, 353 Phil. 740.
[9] R.A. No. 6957 as amended by R.A. No. 7718.chanrobles virtuallaw libraryred
[10] Bacolod City pursuant to R.A. No. 161; Municipality of Catbalogan, Samar, R.A. No. 287; Cebu City pursuant to R.A. No. 3857, as amended by R.A. No. 4654; Tacloban City pursuant to R.A. No. 4776; General Santos City pursuant to R.A. No. 5412; Oroquieta City pursuant to R.A. No. 5518; and Mandaue City pursuant to R.A. No. 5519.chanrobles virtuallaw libraryred
[11] See Act No. 2360; Manila Lodge No. 761 vs. Court of Appeals, G.R. No. L-41001, Sept. 30, 1976, 73 SCRA 162.chanrobles virtuallaw libraryred
[12] E.g., R.A. No. 1899; Resolution dated 3 February 1965 and 24 June 1966 in L-21870 and L-22669, referred to as the Ponce cases.chanrobles virtuallaw libraryred
[13] Creating the Public Estates Authority, Defining its Powers and Functions, Providing Funds therefor and for other purposes.chanrobles virtuallaw libraryred
[14] Conveying the Land Reclaimed in the Foreshore and Offshore of the Manila Bay (The Manila-Cavite Coastal Road Project) as Property of the Public Estates Authority as well as Rights and Interest with Assumption of Obligations in the Reclamation Contract Covering Areas of the Manila Bay between the Republic of the Philippines and the Construction and Development Corporation of the Philippines.chanrobles virtuallaw libraryred
[15] Sec. 2.chanrobles virtuallaw libraryred
[16] Sec. 8.chanrobles virtuallaw libraryred
[17] Decision, p. 52.chanrobles virtuallaw libraryred
[18] Luna v. Linatoc, 74 Phil. 15.chanrobles virtuallaw libraryred
[19] Sec. 2, Art. XII, 1987 Constitution.chanrobles virtuallaw libraryred
[20] Sec. 5, Art. II, 1987 Constitution. Sec. 9 of the same Article likewise provides, 'The State shall promote a just and dynamic social order that will ensure the prosperity and independence of the
[21] Sec. 2, Art. XII, 1987 Constitution.chanrobles virtuallaw libraryred
[22] Sec. 20, Art II, 1987 Constitution.chanrobles virtuallaw libraryred