ChanRobles Virtual law Library








GO TO FULL LIST OF DECISIONS and RESOLUTIONS


chanrobles.com - PHILIPPINE SUPREME COURT DECISIONS - ON-LINE

cralaw_scdecisions_separator.NHAD



EN BANC


 

Read full text of:
  • Main Resolution
  • Bellosillo, J., please see separate opinion, concurring and dissenting.
  • Puno, J., please see separate opinion.
  • Ynares-Santiago, J., please see dissenting opinion.
  • Sandoval-Gutierrez, J., please see dissenting opinion.
  • FRANCISCO I. CHAVEZ,
                     Petitioner,

    G. R. No.  133250
    May 6, 2003

    -versus-


    PUBLIC   ESTATES  AUTHORITY   AND   AMARI
    COASTAL BAY DEVELOPMENT CORPORATION,

                                  Respondents.
     
     chanroblesvirtualawlibrary

    DISSENTING OPINION


    YNARES-SANTIAGO, J.:chanroblesvirtuallawlibrary
    .


    The moving force behind the main decision is sound.  It proceeds from policies embodied in our Constitution that seek to guard our natural resources from the exploitation of the few and to put our precious land under the stewardship of the common Filipino.  Yet we, perched upon our lofty seat in the heights of Olympus, cannot close our eyes to the far-reaching effects that the decision will have.  Neither can we pretend that practical realities supported by our legal system have to be conceded.  These considerations are so basic that we cannot ignore them.  They represent very fundamental rules of law, upon which decades of Philippine jurisprudence have been built.

    I, for one, refuse to close my eyes or remain silent.cralaw:red

    The sweeping invalidation of the Amended Joint Venture Agreement (JVA) between the Public Estates Authority (PEA) and Amari Coastal Bay Development Corporation (hereinafter, Amari) has left me ill at ease.  The draft resolution and the main decision have taken great pains to explain the majority position with copious research and detailed exposition.  However, scant consideration was given to the fact that P9,876,108,638.00 had already been spent by the private respondent and that the voiding of the Amended JVA would compel all the parties to return what each has received.[1] I submit that there was no need to resort to such a drastic measure.  chan robles virtual law library

    First of all, a historical analysis of the laws affecting reclaimed lands indicates that the same have been treated by law as alienable.cralaw:red

    Article 5 of the Spanish Law of Waters of 1866 reads:

    "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."

    The foregoing clearly mandates that reclaimed property shall belong to the party who undertook the works.  It was on the basis of this provision of law that the Manila Port Area, which was developed from land dredged by the Department of Public Works and Communications during the construction of the Manila South Harbor, became private property of the National Government and registered in its name under the Torrens system.  chan robles virtual law library

    Republic Act No. 1899, and Act to Authorize the Reclamation of Foreshore Lands by Chartered Cities and Municipalities, provided:

    "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."  chan robles virtual law library

    Again on the basis of the above provision, the Pasay City Government entered into a reclamation contract with the Republic Resources Realty Corporation under which a portion of the reclaimed land shall be conveyed to the latter corporation.[2] However, before the reclamation was completed, then President Ferdinand E. Marcos issued Presidential Decree No. 3-A, which provided:

    "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.  chan robles virtual law library

    "All reclamations made in violation of this provision shall be forfeited to the State without need of judicial action.

    "Contracts for reclamation still legally existing or whose validity has been accepted by the National Government shall be taken over by the National Government on the basis of quantum meruit, for proper prosecution of the project involved by administration."

    Thus, the Pasay reclamation project was taken over by the National Government.  Later, the Department of Public Works and Highways (DPWH) entered into a contract with the Construction and Development Corporation of the Philippines (CDCP) for the reclamation of the same area and agreed on a sharing arrangement of the land to be reclaimed.  chan robles virtual law library

    In 1979, PD 1084 was issued, creating the PEA.  EO 525 was issued, Section 3 of which states:

    "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."

    Clearly, all the foregoing statutes evince a legislative intent to characterize reclaimed lands as alienable public lands. In other words, there was never an intention to categorize reclaimed lands as inalienable lands of the public domain; rather they were expressly made private property of the National Government subject to disposition to the person who undertook the reclamation works.

    Inasmuch as reclaimed lands are not public lands, the provisions of the Constitution prohibiting the acquisition by private corporations of lands of the public domain do not apply.  In the same vein, the Court, in Director of Lands v. Intermediate Appellate Court, et al.,[3] held that public lands which have become private may be acquired by private corporations.  This dictum is clearly enunciated by Chief Justice Claudio Teehankee in his concurring opinion, viz:

    Such ipso jure conversion into private property of public lands publicly held under a bona fide claim of acquisition or ownership is the public policy of the Act and is so expressly stated therein.  By virtue of such conversion into private property, qualified corporations may lawfully acquire them and there is no “alteration or defeating” of the 1973 Constitution’s prohibition against corporations holding or acquiring title to lands of the public domain, as claimed in the dissenting opinion, for the simple reason that no public lands are involved.[4]  chan robles virtual law library

    Indeed, the Government has the authority to reclaim lands, converting them into its own patrimonial property.  It can contract out the reclamation works and convey a portion of the reclaimed land by way of compensation.  chan robles virtual law library

    Secondly, the reason behind the total nullification of the Amended JVA must be reexamined.  I believe there is some confusion with regard to its infirmities.  We must remember that the Amended JVA is a contract and, as such, is governed by the Civil Code provisions on Contracts, the essential requisites of which are laid out in the following provision:

    Art.  1318.  There is no contract unless the following requisites concur:

    (1)     Consent of the contracting parties;

    (2)     Object certain which is the subject matter of the contract;

    (3)     Cause of the obligation which is established.[5]  chan robles virtual law library

    The main decision states that the Amended JVA is void because its “object” is contrary law, morals, good customs, public order or public policy, and that the “object” is also outside the commerce of man, citing as authority Article 1409 of the Civil Code.  However, it has been opined, and persuasively so, that the object of a contract is either the thing, right or service which is the subject matter of the obligation arising from the contract.[6] In other words, the object of the contract is not necessarily a physical thing that by its very nature cannot be the subject of a contract.  The object of a contract can, as it appears so in this case, contemplate a service.  I submit, therefore, that the object herein is not the reclaimed land, no matter how much emotion these piles of wet soil have stirred up.  The proper object is the service that was to be rendered by Amari, which is the act of reclamation.  Surely, reclamation, in and of itself, is neither contrary to law, morals, good customs, public order nor to public policy.  The act of reclamation is most certainly not outside the commerce of man.  It is a vital service utilized by the Republic to increase the national wealth and, therefore, cannot be cited as an improper object that could serve to invalidate a contract.

    Furthermore, in Section 1.1 (g) of the Amended JVA, the term “Joint Venture Proceeds” is defined as follows:

    “Joint Venture Proceeds” shall refer to all proceeds, whether land or money or their equivalent arising from the project or from the sale, lease or any other form or disposition or from the allocation of the Net Usable Area of the Reclamation Area.

    It is actually upon this provision of the Amended JVA that its validity hinges.  If it is the contemplated transfer of lands of the public domain to private corporation which renders the Amended JVA constitutionally infirm, then resort to the alternative prestation referred to in this provision will cure the contract.  The Civil Code provision on alternative obligations reads as follows:  chan robles virtual law library

    "Art.  1199.  A person alternatively bound by different prestations shall completely perform one of them.

    "The creditor cannot be compelled to receive part of one and part of the other undertaking."

    In an alternative obligation, there is more than one object, and the fulfillment of one is sufficient, determined by the choice of the debtor who generally has the right of election.[7] From the point of view of Amari, once it fulfills its obligations under the Amended JVA, then it would be entitled to its stipulated share of the Joint Venture Profits.  In this instance, Amari would stand as creditor, with PEA as the debtor who has to choose between two payment forms:  70% of the Joint venture Profits, in the form of cash or a corresponding portion of the land reclaimed.[8] Since it has been ruled that the transfer of any of the reclaimed lands to Amari would be unconstitutional,[9] one of the prestations of this alternative obligation has been rendered unlawful.  In such case, the following Civil Code provision becomes pertinent:

    "Art. 1202.  The debtor shall lose the right of choice when among the prestations whereby he is alternatively bound, only one is practicable."

    If all the prestations, except one, are impossible or unlawful, it follows that the debtor can choose and perform only one.  The obligation ceases to be alternative, and is converted into a simple obligation to perform the only feasible or practicable prestation.[10] Even if PEA had insisted on paying Amari with tracts of reclaimed land, it could not have done so, since it had no right to choose undertakings that are impossible or illegal.[11]
       
    We must also remember that, in an alternative obligation, the fact that one of the prestations is found to be unlawful does not result in the total nullity of the Amended JVA.  The Civil Code provides:  chan robles virtual law library

    "Art. 1420. In case of a divisible contract, if the illegal terms can be separated from the legal ones, the latter may be enforced."

    As a general rule, Article 1420 is applied if there are several stipulations in the contract, some of which are valid and some void.  If the stipulations can be separated from each other, then those which are void will not have any effect, but those which are valid will be enforced.  In case of doubt, the contract must be considered as divisible or separable.[12] The contract itself provides for severability in case any of its provisions are deemed invalid.[13] Curiously, the main decision makes no mention of the alternative form of payment provided for in Section 1.1 (g) of the Amended JVA.  A reading of the main decision would lead one to conclude that the transfer of reclaimed land is the only form of payment contemplated by the parties.[14] In truth, the questionable provisions of the Amended JVA can be excised without going against the intent of the parties or the nature of the contract.  Removing all references to the transfer of reclaimed land to Amari or its transferees will leave us with a simple contract for reclamation services, to be paid for in cash.

    It should also be noted that declaring the Amended JVA to be completely null and void would result in the unjust enrichment of the state. The Civil Code provision on human relations states:

    Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.[15]

    Again, in Republic v. Court of Appeals,[16] it was the finding of this Court that the reclamation efforts of the Pasay City government and the RREC resulted in “something compensable.”  Mr. Justice Reynato Puno explained it best in his concurring opinion:  chan robles virtual law library

    Given all the facts, Pasay City and RREC cannot be left uncompensated.  The National Government should not be unjustly enriched at the expense of Pasay City and RREC.  Pasay City and RREC deserve to be compensated quantum meruit and on equitable consideration for their work.[17]

    Following the applicable provision of law and hearkening to the dictates of equity, that no one, not even the government, shall unjustly enrich himself at the expense of another,[18] I believe that Amari and its successors in interest are entitled to equitable compensation for their proven efforts, at least in the form of cash, as provided for under the Amended JVA.

    At this juncture, I wish to express my concern over the draft resolution’s pronouncement that the Court’s Decision can be made to apply retroactively because “(t)he Decision, whether made retroactive or not, does not change the law since the Decision merely reiterates the law that prevailed since the effectivity of the 1973 Constitution.”  This statement would hold true for the constitutions, statutes and other laws involved in the case that existed before the Decision was rendered. However, the issues involved are so novel that even the esteemed ponente concedes that this case is one of first impression.cralaw:red

    For example, Section 3 of E.O. 525 declares that:

    "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."

    Can we really blame respondents for concluding that any kind of land reclaimed by PEA becomes the latter’s patrimonial property?  It is spelled out as such.  It was only the filing of the present petition which brought to light the possibility that this provision may have already been modified, even partially repealed by Section 4, Subsections 4, 14 and 15 of the Revised Administrative Code of 1987.[19]  chan robles virtual law library

    Another doctrine which was set aside by the Court’s Decision is the general rule that alienable land of the public domain automatically becomes private land upon the grant of a patent or the issuance of a certificate of title.[20] Curiously, this legal principle was held to be inapplicable to government entities,[21] despite several analogous cases which may have reasonably led the respondents to a different conclusion.[22]

    Most significantly, the ruling laid down by the Decision that:  “In the hands of the government agency tasked and authorized to dispose of alienable or disposable lands of the public domain, these lands are still public, not private land,”[23] is not based on any previous jurisprudence, nor is it spelled out in any law.  It is the result of a process of induction and interpretation of several laws which have not been set side by side in such a manner before.[24] This pronouncement has never been made before, and yet now it is law.  So when the Decision claimed that it, “ does not change the law,” and that it, “merely reiterates the law that prevailed since the effectivity of the 1973 Constitution,” we believe such a statement to be inaccurate, to say the least.cralaw:red

    Since new doctrines, which constitute new law, are espoused in the Decision, these should be subject to the general rule under the Civil Code regarding prospective application:  chan robles virtual law library

    Art. 4.  Laws shall have no retroactive effect, unless the contrary is provided.

    Moreover, lex prospicit, non respicit - - - the law looks forward not backward.  If decisions that repeal the rulings in older ones are given only prospective application,[25] why should not doctrines that resolve questions of first impression be treated in like manner?  Therefore, it is my considered view that, if the amended JVA should be nullified, the ruling must be given prospective effect and all vested rights under contracts executed during the validity thereof must be respected.

    The foregoing are basic principles in civil law which have been brushed aside in the wake of this Court’s haste to stamp out what it deems unjust.  Zeal in the pursuit of justice is admirable, to say the least, especially amid the cynicism and pessimism that has prevailed among our people in recent times.  However, in our pursuit of righteousness, we must not lose sight of our duty to dispense justice with an even hand, always mindful that where we tread, the rights of others may be trampled upon underfoot.cralaw:red

    Therefore, I vote to GRANT the Motion for Reconsideration and to DENY the petition for lack of merit.
     
     
     


    ____________________________

    Endnotes:
     

    [1] IV TOLENTINO 632, (1990 ed.), citing Perez Gonzalez & Alguer; I-II Enneccerus, Kipp & Wolff 364-366; 3 Von Tuhr 311; 3 Fabres 231.
    [2] See Republic v. Court of Appeals, 359 Phil. 530 (1998).  chan robles virtual law library
    [3] G.R. No. 73002, 29 December 1986, 146 SCRA 509.
    [4] Id., at pp. 526-527.  chan robles virtual law library
    [5] Emphasis supplied.  chan robles virtual law library
    [6] IV Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines (Quezon City, 1991), p. 520.
    [7] Id., p. 203.  chan robles virtual law library
    [8] Amended Joint Venture Agreement, Sections 1.1 (g) and 5.1, Private Respondent’s Annex B.
    [9] Chavez v. Public Estates Authority, G.R. No. 133250, 9 July 2002.  chan robles virtual law library
    [10] Supra note 2, at 209.  chan robles virtual law library
    [11] Legarda v. Miailhe, 88 Phil. 637 (1951).
    [12] Supra note 2, at 642, citing 4 Llerna 93.  chan robles virtual law library
    [13] Amended Joint Venture Agreement, Section 7.4, Private Respondent’s Annex B.
    [14] Chavez v. Public Estates Authority, supra.  chan robles virtual law library
    The decision states:chanroblesvirtuallawlibrary  chan robles virtual law library
    xxx       xxx       xxx  chan robles virtual law library
    AMARI and PEA will share, in the proportion 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.  chan robles virtual law library
    xxx       xxx       xxx  chan robles virtual law library
    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. (Emphasis in the original)
    [15] Emphasis supplied.  chan robles virtual law library
    [16] 359 Phil. 530 (1998).  chan robles virtual law library
    [17] Republic v. Court of Appeals, 359 Phil. 530 (1998), (concurring opinion of Puno, J.), citing Civil Code, art. 19.
    [18] Republic v. Court of Appeals, supra.
    [19] Chavez v. Public Estates Authority, supra.  chan robles virtual law library
    [20] Sumail v. Judge of the Court of First Insatnce of Cotabato, 96 Phil. 946 (1955).
    [21] Chavez v. Public Estates Authority, supra.  chan robles virtual law library
    [22] Heirs of Gregorio Tengco v. Heirs of Jose Aliwalas, G.R. No. 77541, 29 November 1988, 168 SCRA 198; Manalo v. Intermediate Appellate Court, G.R. No. 64753, 26 April 1989, 172 SCRA 795.
    [23] Chavez v. Public Estates Authority, supra.  chan robles virtual law library
    [24] These laws are C.A. 141, P.D. 1084, P.D. 1085, P.D. 3-A, E.O. 525, the 1973 Constitution and the 1987 Constitution, among others.
    [25] People v. Jabinal, 154 Phil. 565 (1974); Benzonan v. Court of Appeals, G.R. No. 97973, 27 January 1992, 205 SCRA 515.



     Back to Top   -   Back to Main Index   -   Back to Table of Contents -2003 SC Decisions   -   Back to Home











































    chanrobles.com




    ChanRobles Legal Resources:

    ChanRobles On-Line Bar Review

    ChanRobles Internet Bar Review : www.chanroblesbar.com

    ChanRobles MCLE On-line

    ChanRobles Lawnet Inc. - ChanRobles MCLE On-line : www.chanroblesmcleonline.com