451 Phil. 1
CARPIO, J.:
We can now summarize our conclusions as follows:Amari seeks the inhibition of Justice Antonio T. Carpio, ponente of the Decision, on the ground that Justice Carpio, before his appointment to the Court, wrote in his Manila Times column of July 1, 1997, "I have always maintained that the law requires the public bidding of reclamation projects." Justice Carpio, then a private law practitioner, also stated in the same column, "The Amari-PEA reclamation contract is legally flawed because it was not bid out by the PEA." Amari claims that because of these statements Justice Carpio should inhibit himself "on the grounds of bias and prejudgment" and that the instant case should be "re-deliberated" after being assigned to a new ponente.Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987 Constitution. 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." The Court must perform its duty to defend and uphold the Constitution, and therefore declares the Amended JVA null and void ab initio.1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now covered by certificates of title in the name of PEA, 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 Philippine citizens, subject to the ownership limitations in the 1987 Constitution and existing laws.
2. The 592.15 hectares of 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. In their present state, the 592.15 hectares of submerged areas are inalienable and outside the commerce of man.
3. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of 77.34 hectares of the Freedom Islands, such transfer is void for being contrary to Section 3, Article XII of the 1987 Constitution which prohibits private corporations from acquiring any kind of alienable land of the public domain.
4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 hectares of still submerged areas of Manila Bay, such transfer is void for being contrary to Section 2, Article XII 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 Section 3, Article XII of the 1987 Constitution which prohibits private corporations from acquiring any kind of alienable land of the public domain.
The mere fact that, as a former columnist, Justice Carpio has written on the coconut levy will not disqualify him, in the same manner that jurists will not be disqualified just because they may have given their opinions as textbook writers on the question involved in a case.Besides, the subject and title of the column in question was "The CCP reclamation project" and the column referred to the Amari-PEA contract only in passing in one sentence.
x x x. It does not admit of doubt that prior to the declaration of nullity such challenged legislative or executive act must have been in force and had to be complied with. This is so as until after the judiciary, in an appropriate case, declares its invalidity, it is entitled to obedience and respect. Parties may have acted under it and may have changed their positions. What could be more fitting than that in a subsequent litigation regard be had to what has been done while such legislative or executive act was in operation and presumed to be valid in all respects. It is now accepted as a doctrine that prior to its being nullified, its existence as a fact must be reckoned with. This is merely to reflect awareness that precisely because the judiciary is the governmental organ which has the final say on whether or not a legislative or executive measure is valid, a period of time may have elapsed before it can exercise the power of judicial review that may lead to a declaration of nullity. It would be to deprive the law of its quality of fairness and justice then, if there be no recognition of what had transpired prior to such adjudication.Amari now claims that "assuming arguendo that Presidential Decree Nos. 1084 and 1085, and Executive Order Nos. 525 and 654 are inconsistent with the 1987 Constitution, the limitation imposed by the Decision on these decrees and executive orders should only be applied prospectively from the finality of the Decision."
In the language of an American Supreme Court decision: "The actual existence of a statute, prior to such a determination [of unconstitutionality], is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects, — with respect to particular relations, individual and corporate, and particular conduct, private and official." This language has been quoted with approval in a resolution in Araneta v. Hill and the decision in Manila Motor Co., Inc. v. Flores. x x x.
x x x
x x x That before the decision they were not constitutionally infirm was admitted expressly. There is all the more reason then to yield assent to the now prevailing principle that the existence of a statute or executive order prior to its being adjudged void is an operative fact to which legal consequences are attached.
At that time, the prevailing jurisprudence interpreting section 119 of R.A. 141 as amended was that enunciated in Monge and Tupas cited above. The petitioners Benzonan and respondent Pe and the DBP are bound by these decisions for pursuant to Article 8 of the Civil Code "judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines." But while our decisions form part of the law of the land, they are also subject to Article 4 of the Civil Code which provides that "laws shall have no retroactive effect unless the contrary is provided." This is expressed in the familiar legal maxim lex prospicit, non respicit, the law looks forward not backward. The rationale against retroactivity is easy to perceive. The retroactive application of a law usually divests rights that have already become vested or impairs the obligations of contract and hence, is unconstitutional (Francisco v. Certeza, 3 SCRA 565 [1961]).Amari's reliance on De Agbayani and Spouses Benzonan is misplaced. These cases would apply if the prevailing law or doctrine at the time of the signing of the Amended JVA was that a private corporation could acquire alienable lands of the public domain, and the Decision annulled the law or reversed this doctrine. Obviously, this is not the case here.
The same consideration underlies our rulings giving only prospective effect to decisions enunciating new doctrines. Thus, we emphasized in People v. Jabinal, 55 SCRA 607 [1974] "x x x when a doctrine of this Court is overruled and a different view is adopted, the new doctrine should be applied prospectively and should not apply to parties who had relied on the old doctrine and acted on the faith thereof.
There may be special cases where weighty considerations of equity and social justice will warrant a retroactive application of doctrine to temper the harshness of statutory law as it applies to poor farmers or their widows and orphans. In the present petitions, however, we find no such equitable considerations. Not only did the private respondent apply for free agricultural land when he did not need it and he had no intentions of applying it to the noble purposes behind the law, he would now repurchase for only P327,995.00, the property purchased by the petitioners in good faith for P1,650,000.00 in 1979 and which, because of improvements and the appreciating value of land must be worth more than that amount now.
The buyers in good faith from DBP had a right to rely on our rulings in Monge and Tupas when they purchased the property from DBP in 1979 or thirteen (13) years ago. Under the rulings in these two cases, the period to repurchase the disputed lot given to respondent Pe expired on June 18, 1982. He failed to exercise his right. His lost right cannot be revived by relying on the 1988 case of Belisario. The right of petitioners over the subject lot had already become vested as of that time and cannot be impaired by the retroactive application of the Belisario ruling.
As the central implementing agency tasked to undertake reclamation projects nationwide, with authority to sell reclaimed lands, PEA took the place of DENR as the government agency charged with leasing or selling reclaimed lands of the public domain. The reclaimed lands being leased or sold by PEA are not private lands, in the same manner that DENR, when it disposes of other alienable lands, does not dispose of private lands but alienable lands of the public domain. Only when qualified private parties acquire these lands will the lands become private lands. 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 lands.PEA is the central implementing agency tasked to undertake reclamation projects nationwide. PEA took the place of Department of Environment and Natural Resources ("DENR" for brevity) as the government agency charged with leasing or selling all reclaimed lands of the public domain. In the hands of PEA, which took over the leasing and selling functions of DENR, reclaimed foreshore lands are public lands in the same manner that these same lands would have been public lands in the hands of DENR. BCDA is an entirely different government entity. BCDA is authorized by law to sell specific government lands that have long been declared by presidential proclamations as military reservations for use by the different services of the armed forces under the Department of National Defense. BCDA's mandate is specific and limited in area, while PEA's mandate is general and national. BCDA holds government lands that have been granted to end-user government entities — the military services of the armed forces. In contrast, under Executive Order No. 525, PEA holds the reclaimed public lands, not as an end-user entity, but as the government agency "primarily responsible fo integrating, directing, and coordinating all reclamation projects for and on behalf of the National Government."
To allow vast areas of reclaimed lands of the public domain to be transferred to PEA as private lands will sanction a gross violation of the constitutional ban on private corporations from acquiring any kind of alienable land of the public domain. PEA will simply turn around, as PEA has now done under the Amended JVA, and transfer several hundreds of hectares of these reclaimed and still to be reclaimed lands to a single private corporation in only one transaction. This scheme will effectively nullify the constitutional ban in Section 3, Article XII of the 1987 Constitution which was intended to diffuse equitably the ownership of alienable lands of the public domain among Filipinos, now numbering over 80 million strong.Finally, the Office of the Solicitor General and PEA argue that the cost of reclaiming deeply submerged areas is "enormous" and "it would be difficult for PEA to accomplish such project without the participation of private corporations."[19] The Decision does not bar private corporations from participating in reclamation projects and being paid for their services in reclaiming lands. What the Decision prohibits, following the explicit constitutional mandate, is for private corporations to acquire reclaimed lands of the public domain. There is no prohibition on the directors, officers and stockholders of private corporations, if they are Filipino citizens, from acquiring at public auction reclaimed alienable lands of the public domain. They can acquire not more than 12 hectares per individual, and the land thus acquired becomes private land.
This scheme, if allowed, can even be applied to alienable agricultural lands of the public domain since PEA can "acquire x x x any and all kinds of lands." This will open the floodgates to corporations and even individuals acquiring hundreds, if not thousands, of hectares of alienable lands of the public domain under the guise that in the hands of PEA these lands are private lands. This will result in corporations amassing huge landholdings never before seen in this country — creating the very evil that the constitutional ban was designed to prevent. This will completely reverse the clear direction of constitutional development in this country. The 1935 Constitution allowed private corporations to acquire not more than 1,024 hectares of public lands. The 1973 Constitution prohibited private corporations from acquiring any kind of public land, and the 1987 Constitution has unequivocally reiterated this prohibition.
x x x 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 x x x x The subject matter of the Amended JVA, as stated in its second Whereas clause, consists of three properties, namely: 1. `[T]hree partially reclaimed and substantially eroded islands along Emilio Aguinaldo Boulevard in Paranaque and Las Piñas, Metro Manila, with a combined titled area of 1,578,441 square meters;' 2. `[A]nother area of 2,421,559 square meters contiguous to the three islands;' and 3. `[A]t AMARI's option as approved by PEA, an additional 350 hectares more or less to regularize the configuration of the reclaimed area.' PEA confirms that the Amended JVA involves "the development of the Freedom Islands and further reclamation of about 250 hectares. . .,' plus an option `granted to AMARI to subsequently reclaim another 350 hectares . . .' In short, 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 592.15 hectares are still submerged areas forming part of Manila Bay. Under the Amended JVA, AMARI will reimburse PEA the sum of P1,894,129,200.00 for PEA's `actual cost' in partially reclaiming the Freedom Islands. AMARI will also complete, at its own expense, the reclamation of the Freedom Islands. AMARI will further shoulder all the reclamation costs of all the other areas, totaling 592.15 hectares, still to be reclaimed. 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. Title to AMARI's share in the net usable area, totaling 367.5 hectares, will be issued in the name of AMARI. Section 5.2 (c) of the Amended JVA provides that — `. . . , PEA shall have the duty to execute without delay the necessary deed of transfer or conveyance of the title pertaining to AMARI's land share based on the Land Allocation Plan. PEA, when requested in writing by AMARI, shall then cause the issuance and delivery of the proper certificates of title covering AMARI's Land Share in the name of AMARI,. . . ; provided, that if more than seventy percent (70%) of the titled area at any given time pertains to AMARI, PEA shall deliver to AMARI only seventy percent (70%) of the titles pertaining to AMARI, until such time when a corresponding proportionate area of additional land pertaining to PEA has been titled.' 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. To implement the Amended JVA, PEA delegated to the unincorporated PEA-AMARI joint venture PEA's statutory authority, rights and privileges to reclaim foreshore and submerged areas in Manila Bay. Section 3.2.a of the Amended JVA states that - `PEA hereby contributes to the joint venture its rights and privileges to perform Rawland Reclamation and Horizontal Development as well as own the Reclamation Area, thereby granting the Joint Venture the full and exclusive right, authority and privilege to undertake the Project in accordance with the Master Development Plan.' The Amended JVA is the product of a renegotiation of the original JVA dated April 25, 1995 and its supplemental agreement dated August 9, 1995.[1]But the AJVA, which is basically a specie of an "I do, you give" contract, is severable in the sense that AMARI's share in the project need not be paid in parcels of the reclaimed land but also in cash. The majority cannot set this alternative aside since lawyers for AMARI are also interested in this substitute option if all else fail.[2] Another tame solution, so they say, is for the Public Estates Authority to hold title to the reclaimed lands until transferred to a qualified transferee.[3] This too is possible in the name of equity. To be sure, the prestation in the PEA-AMARI contract is not contrary to law or public policy since the government stands to be benefited by AMARI's part of the bargain while the latter must in turn be compensated for its efforts; in the present context service and compensation, "I do, you give" are certainly not illegal considerations. Since the baseless anxiety about the AJVA lies only in the mode of recompense for AMARI, and the AJVA offers an abundance of means to get it done, even granting that the ponencia has correctly understood the law to prevent permanently the transfer of reclaimed lands to AMARI, no reason could sanely justify voiding the entire contract and eternally deny a party its due for its onerous activities. As we have held in Republic v. Court of Appeals,[4]
x x x it appearing that something compensable was accomplished by them, following the applicable provision of law and hearkening to the dictates of equity, that no one, not even the government shall unjustly enrich oneself/itself at the expense of another, we believe and so hold, that Pasay City and RREC should be paid for the said actual work done and dredge-fill poured in xxxxSecondly, I am not comfortable with the idea of forever withholding reclaimed lands as unmoving assets in our developmental concerns.
This is where I also disagree. Reclaimed lands are lands sui generis, as the majority would rule, and precisely because of this characterization we cannot lump them up in one telling swoop as lands of the public domain without due regard for vested rights as well as joint executive and legislative intent to provide otherwise. For, after all, it is the executive and legislative powers that determine land classification.[14] To illustrate, in Province of Zamboanga del Norte v. City of Zamboanga[15] this Court took note of the diverging "norms" provided by laws, i.e., the Civil Code and the Law of Municipal Corporations, in classifying municipal lands into either public or patrimonial, and held that "applying the norm obtaining under the principles constituting the Law of Municipal Corporations, all those x x x properties in question which are devoted to public service are deemed public; the rest remain patrimonial. Under this norm, to be considered public, it is enough that the property be held and devoted for governmental purposes like local administration, public education, public health, etc." Clearly, the categorization of government lands depends upon legislative intent which the courts must implement.1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now covered by certificates of title in the name of PEA, 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 Philippine citizens, subject to the ownership limitations in the 1987 Constitution and existing laws.
2. The 592.15 hectares of 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. In their present state, the 592.15 hectares of submerged areas are inalienable and outside the commerce of man.
3. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of 77.34 hectares of the Freedom Islands, such transfer is void for being contrary to Section 3, Article XII of the 1987 Constitution which prohibits private corporations from acquiring any kind of alienable land of the public domain.
4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 hectares of still submerged areas of Manila Bay, such transfer is void for being contrary to Section 2, Article XII 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 Section 3, Article XII of the 1987 Constitution which prohibits private corporations from acquiring any kind of alienable land of the public domain.[13]
First and foremost, PEA's Charter delimits the contributions of the National Government to the PEA which are to be compensated by the equivalent number of shares of stocks of the PEA in the name of the Republic (Secs. 7 and 15, P. D. 1084). The proposed gratuitous transfer of valuable national government property of the PEA by a Presidential Proclamation would go beyond the amount of the contribution/exposure of the National Government to the capital of the PEA as prescribed by law and do away with the consideration therefor that is the equivalent number of shares of stocks of the PEA to be issued in the name of the National Government. Accordingly, the said proposal would run counter to the provisions of the abovementioned Charter, or amount to an amendment of the said law (underscoring supplied).Consequently, under LOI 1390 (1984), to accelerate the development of the First Neighborhood Unit Project within the Manila-Cavite Coastal Road Project, an excess of the reclaimed land was ceded by PEA to the Marina Properties Corporation. Administrative Order No. 348 (1997) authorized PEA to undertake "pursuant to its charter (PD 1084 and PD 1085) ancillary reclamation works to put in place the drainage canals and outfalls and to negotiate and enter into such agreements including land-swapping, on a value for value basis, as may be necessary for the acquisition of rights-of-way (ROW) for the said major roads/drainage canals in order that these are undertaken at no cost or budgetary outlay on the part of PEA or the National Government (underscoring supplied)."[22] Subsequently, AO No. 397 (1998) of then President Ramos settled claims of CDCP against PEA by conveying portions of the lands previously reclaimed under CDCP's contract with the Republic.
x x x [t]he exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements [are] x x x under such terms and conditions as may be provided by law (underscoring supplied)."The clause "under such terms and conditions as may be provided by law" refers to the standing laws affecting reclaimed lands, such as the PEA charter. The orientation to this portion of Sec. 2 explains why in most executive issuances and statutes relating to reclamation of lands we would read references to joint venture or production-sharing agreements. Hence, in EO 405 (1997) Authorizing the Philippine Ports Authority (PPA) to Reclaim and Develop Submerged Areas Vested in the PPA For Port-Related Purposes, it was noted in the "Whereas" Clauses that land reclamation and development projects are capital intensive infrastructure enterprises requiring huge financial outlays through joint venture agreements. In this light, we ought to resolve the instant reclamation project according to the clear intendment of the executive and legislative branches of government to handle reclaimed lands as patrimonial properties and lands of the private domain of the State.
"Section 1, Article XII of the Constitution classifies lands of the public domain in the Philippines into agricultural, timber and mineral. This is the basic classification adopted since the enactment of the Act of Congress of July 1, 1902, known as the Philippine Bill. At the time of the adoption of the Constitution of the Philippines, the term "Agricultural public lands" had, therefore, acquired a technical meaning in our public land laws. The Supreme Court of the Philippines in the leading case of Mapa vs. Insular Government, 10 Phil. 175, held that the phrase `agricultural public lands' means those public lands acquired from Spain which are neither timber or mineral lands. This definition has been followed by our Supreme Court in many subsequent cases (Montano vs. Ins. Gov't., 12 Phil. 572) by prescribing distinct rules as to their disposition. Lands added to the shore by accretion belong to the State while lands reclaimed belong to the entity or person constructing the work for the reclamation of the land."The advent of the 1973 and the 1987 Constitutions does not appear to have changed the opinion of the DOJ.[1] Secondly, respondent AMARI avers that Congress has consistently enacted laws allowing portions of reclaimed lands to be paid to whoever undertook the work. These laws passed under the 1935 Constitution are, among others, the following:
The same kind of laws was passed by Congress under the 1973 and 1987 Constitutions. Respondent AMARI cites, among others, the following laws:"(i) Rep. Act No. 161 (1947) which authorizes the City of Bacolod to undertake reclamation and own the reclaimed lands;
(ii) Rep. Act No. 287 (1948) which authorizes the Municipality of Catbalogan, Samar to undertake reclamation and own the reclaimed lands;
(iii) Rep. Act No. 1132 (1954) which also authorizes the City of Bacolod to lease out or sell reclaimed lands;
(iv) Rep. Act No. 3857 (1964), as amended by Rep. Act No. 4654 (1966), which authorizes Cebu to reclaim lands and own the reclaimed lands;
(v) Rep. Act No. 4663 (1966) which authorizes the Cagayan De Oro Port Authority to undertake reclamation and own the reclaimed lands;
(vi) Rep. Act No. 4776 (1966) which provides for the authority of Tacloban City to undertake reclamation and to lease, sell or barter such reclaimed land;
(vii) Rep. Act No. 4850 (1966) which authorizes the Laguna Lake Development Authority to undertake reclamation and to own such reclaimed land;
(viii) Rep. Act No. 5412 (1968) which authorizes General Santos City to undertake reclamation and to own such reclaimed land;
(ix) Rep. Act No. 5518 (1969) which authorizes the city of Oroquieta to undertake reclamation and to own such reclaimed land;
(x) Rep. Act No. 5519 (1969) which authorizes the City of Mandaue to undertake reclamation and to own such reclaimed land;
(xi) Rep. Act No. 5798 (1969) which authorizes the City of Dumaguete to undertake reclamation and to own such reclaimed land;
(xii) Rep. Act No. 5956 (1969) [An Act Making the Municipality of Dapa, Province of Surigao Del Norte, a Sub-Port of Entry, and Authorizing the Appropriation of the Necessary Funds for the Operation of a Customs Service Therein] which authorizes the City to undertake reclamation and to own such reclaimed land."
Republic Act No. 6957, enacted in 1990, otherwise known as the Build-Operate-and-Transfer Law (BOT Law), as amended by R.A. No. 7718, is of great significance to the case at bar. The Senate deliberations on the law clearly show that in case of reclamation undertakings, the repayment scheme may consist of the grant of a portion of the reclaimed land. I quote the pertinent deliberations, viz:[2]"(i) Exec. Order No. 1086 (1986) [Tondo Foreshore Area], as amended by Proclamation No. 39 (1992), which provides that reclaimed lands shall be owned by the National Housing Authority;
(ii) Rep. Act No. 6957 (1990) [Build-Operate-Transfer Law] which provides that in case of reclamation, the repayment scheme may consist of a grant of a portion of the reclaimed land;
(iii) Rep. Act No. 7160 (1992) [Bases Conversion Development Authority] which authorizes the BCDA to reclaim lands and to own the reclaimed lands;
(iv) Rep. Act No. 7621 (1992) [Cebu Port Authority] which authorizes the Cebu Port Authority to reclaim lands and to own the reclaimed lands."
<"x x="">The President Pro Tempore. We are still in the period of interpellations.On the basis of his interpellations, Senator Gonzales then introduced the following amendment which was accepted by Senator Ziga and approved by the Senate, viz:[3]
Senator Gonzales. Mr. President.
The President Pro Tempore. Senator Gonzales is recognized.
Senator Gonzales. Mr. President, may I be permitted to ask a few questions from the distinguished Sponsor.
Senator Ziga. Yes, Mr. President.
The President Pro Tempore. Please proceed.
Senator Gonzales. Mr. President, Section 6 provides for the repayment scheme. It provides here that for the financing, construction, operation, and maintenance of any infrastructure project undertaken pursuant to the provisions of this Act, the contractor shall be entitled to a reasonable return of his investment, operating and maintenance costs in accordance with the bid proposal of the contractor as accepted by the concerned contracting infrastructure agency or local government unit and incorporated in the contract terms and conditions. This repayment scheme is to be effected by authorizing the contractor to charge and collect reasonable tolls, fees and rentals for the use of the project facilities, et cetera. May I know, distinguished colleague, whether this repayment scheme is exclusive, in the sense that the repayment here would always consist in authorizing the contractor to charge and collect reasonable tools, fees, or rentals for the use of the project facilities?
Senator Ziga. Exclusive to the ...?
Senator Gonzales. Exclusive in the sense that no other repayment scheme may be pursued or adopted?
Senator Ziga. Yes, Mr. President.
Senator Gonzales. If it be so, Mr. President, I notice that, among others, the project that can be the subject of the build-operate-and-transfer scheme are land reclamations.
Senator Ziga. That is correct, Mr. President.
Senator Gonzales. Now, in land reclamation, does the distinguished Gentleman expect that the one or the builder or contractor who effects or undertakes the reclamation project will be merely repaid or will be required to recoup his investments, plus profits, and otherwise, by imposing tolls. That is not the usual arrangement as far as land reclamation is concerned.
Senator Ziga. Yes, Mr. President. "Tolls" here are concentrated more on horizontal constructions, such as roads and bridges.
Senator Gonzales. Yes, Mr. President, but undoubtedly, the priority projects here would be land reclamation. In land reclamation, the usual arrangement is that there should be a certain percentage of the reclaimed area that would be under the ownership of the Government. On the other hand, a certain percentage of the land area reclaimed would go to the contractor or the reclaiming entity.
Senator Ziga. Yes, Mr. President.
Senator Gonzales. If as the Gentleman now say that Section 6, which is the repayment scheme, is exclusive, then that would not be allowable and we cannot effect land reclamation.
Senator Ziga. Yes, Mr. President. I believe that there is a little bit of difference that probably this concept, that the Gentleman put into light here by the reclamation project, could be met under the build-and-transfer scheme only.
Senator Gonzales. Yes, Mr. President, the build-and-transfer scheme, but there is no question that they are already covered, either by the build-operate-and-transfer scheme and build-and-transfer scheme. The question is repayment. How will the contractor be able to recoup his investments, plus reasonable returns of whatever amount that he had invested for the purpose?
I think, the distinguished Gentleman is agreeable that the imposition of tolls, fees, and rentals would not be appropriate.
Senator Ziga. In reclamation.
Senator Gonzales. Yes, Mr. President.
Senator Ziga. Yes, Mr. President. I believe that there is a space for improvement on these reclamation projects.
Senator Gonzales. So, we can provide for another scheme of repayment outside of the repayment scheme as provided for in Section 6 of the bill now.
Senator Ziga. Yes, Mr. President.
Senator Gonzales. Now, would a foreign entity, probably, wholly owned by foreigners, be authorized to engage in land reclamation?
Senator Ziga. In the earlier interpellation, we have stated that the issue of the sharing of 60:40 is one of the acceptable points of amendment. I believe that, in this bill, we are still covered by that ratio. As of now, this bill intends that it can only allow contractor or developers, whether they be private corporations, but with the requirements of the Constitution as to foreign participation.
Senator Gonzales. Yes, Mr. President. Because, in Section 2, paragraph a provides:
... any private individual, partnership, corporation or firm desiring to undertake the construction and operation of any of the infrastructure facilities mentioned in Section 3 of this Act. The private individual contractor/developer must be a Filipino citizen. For a corporation, partnership or firm, 75 percent of the capital must be owned by the citizens of the Philippines in accordance with Letter of Instructions No. 630.
My problem here is in land reclamation, Mr. President. Normally, the arrangement here is that a certain percentage goes to the Government, and a certain percentage of the reclaimed land would go to the developer or the contractor. Now, would the distinguished Gentleman require a 75:25 percent ratio as far as the ownership of stocks are concerned, while the Constitution allows a 60:40 ratio as far as ownership of the land is concerned?
Senator Ziga: Mr. President, we have stated that the requirements of the Constitution would be adhered to.
Senator Gonzales. I see. So it would be sufficient that an entity, a corporation, or a partnership that undertakes a land reclamation project be owned on the basis of the 60:40 ratio between Filipino citizens and foreigners.
Senator Ziga. Yes, that is correct, Mr. President.
Senator Gonzales. All of these would require undoubtedly amendments in this bill. Would the distinguished Gentleman be willing to, at least, consider these amendments at the opportune time?
Senator Ziga. Yes, Mr. President.
Senator Gonzales. Thank you, Mr. President."
Section 6 of R.A. No. 6957 (BOT Law), as amended, thus provides:"GONZALES AMENDMENT
Senator Gonzales. Mr. President, between lines 8 and 9, I am proposing a new paragraph which would read as follows:IN CASE OF LAND RECLAMATION OR THE BUILDING OF INDUSTRIAL ESTATES, THE REPAYMENT SCHEME MAY CONSIST OF THE GRANT OF A PORTION OR PERCENTAGE OF THE RECLAIMED LAND OR INDUSTRIAL ESTATE BUILT SUBJECT TO CONSTITUTIONAL REQUIREMENT WITH RESPECT TO THE OWNERSHIP OF LANDS.'Because, Mr. President, the repayment scheme includes all of these — payment of tolls, fees, rentals, and charges. But in case of land reclamation, that is not the ordinary arrangement. Usually, the compensation there takes the form of a portion or a percentage of the reclaimed land. And I would apply it all, as far as the building of industrial estates is concerned. Of course, we have to respect the constitutional provision that only Filipino citizens or corporations-at least, 60 percent of the capital of which is owned by citizens of the Philippines-may acquire or own lands.
The President. What is the pleasure of the Sponsor?
Senator Ziga. Accepted, Mr. President.
Mr. President. Is there any objection? Any comment? (Silence) Hearing none, the same is approved.
Senator Gonzales. Thank you, Mr. President."
"Section 6. Repayment Scheme. — For the financing, construction, operation and maintenance of any infrastructure project undertaken through the Build-Operate-and-Transfer arrangement or any of its variations pursuant to the provisions of this Act, the project proponent shall be repaid by authorizing it to charge and collect reasonable tolls, fees, and rentals for the use of the project facility not exceeding those incorporated in the contract and, where applicable, the proponent may likewise be repaid in the form of a share in the revenue of the project or other non-monetary payments, such as, but not limited to, the grant of a portion or percentage of the reclaimed land, subject to the constitutional requirements with respect to the ownership of land..."The Rules and Regulations implementing R.A. No. 6957 (BOT Law), as amended, likewise provide:
"Sec. 12.13 Repayment SchemeBut this is not all. Respondent AMARI points to P.D. No. 1085, the charter of the respondent PEA, which conveyed to it the reclaimed lands within the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP) including the lands subject of the case at bar and which authorized respondent PEA to dispose of said lands. Pursuant to existing laws, rules, and regulations, it appears that respondent PEA has the discretion to pay the entity reclaiming the lands a portion or percentage of said lands. P.D. No. 1085 pertinently provides:
x x x
"Where applicable, the proponent may likewise be repaid in the form of a share in the revenue of the project or other non-monetary payments, such as, but not limited to the grant of commercial development rights or the grant of a portion or percentage of the reclaimed land, subject to the constitutional requirement that only Filipino citizens or in the case of corporations only those with at least 60% Filipino equity will be allowed to own land."
"WHEREAS, the National Government acting through the Department of Public Highways is presently undertaking pursuant to the provisions of Section 3(m) of Republic Act No. 5137, as amended by Presidential Decree No. 3-A, the reclamation of a portion of the foreshore and offshore areas of the Manila Bay from the Cultural Center of the Philippines passing through Pasay City, Parañaque, Las Piñas, Zapote, Bacoor up to Cavite City;Former President Corazon C. Aquino also implemented P.D. No. 1085 by issuing Special Patent No. 3517 ceding absolute rights over the said properties to respondent PEA, which rights include the determination whether to use parts of the reclaimed lands as compensation to the contractor, viz:
WHEREAS, in the implementation of the above-cited laws bidding was held for the reclamation works and the corresponding contract awarded to the Construction and Development Corporation of the Philippines;
WHEREAS, it is in the public interest to convert the land reclaimed into a modern city and develop it into a governmental, commercial, residential and recreational complex and this is better accomplished through a distinct entity organized for the purpose;
NOW, THEREFORE, I FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby decree and order the following:
The land reclaimed in the foreshore and offshore area of Manila Bay pursuant to the contract for the reclamation and construction of the Manila-Cavite Coastal Road Project between the Republic of the Philippines and the Construction and Development Corporation of the Philippines dated November 20, 1973 and/or any other contract or reclamation covering the same area is hereby transferred, conveyed and assigned to the ownership and administration of the Public Estates Authority established pursuant to P.D. No. 1084; Provided, however, That the rights and interest of the Construction and Development Corporation of the Philippines pursuant to the aforesaid contract shall be recognized and respected.
Henceforth, the Public Estates Authority shall exercise the rights and assume the obligations of the Republic of the Philippines (Department of Public Highways) arising from, or incident to, the aforesaid contract between the Republic of the Philippines and the Construction and Development Corporation of the Philippines.
In consideration of the foregoing transfer and assignment, the Public Estates Authority shall issue in favor of the Republic of the Philippines the corresponding shares of stock in said entity with an issued value of said shares of stock shall be deemed fully paid and non-assessable.
The Secretary of Public Highways and the General Manager of the Public Estates Authority shall execute such contracts or agreements, including appropriate agreements with the Construction and Development Corporation of the Philippines, as may be necessary to implement the above.
Special land patent/patents shall be issued by the Secretary of Natural Resources in favor of the Public Estates Authority without prejudice to the subsequent transfer to the contractor or his assignees of such portion or portions of the land reclaimed or to be reclaimed as provided for in the above-mentioned contract. On the basis of such patents, the Land Registration Commission shall issue the corresponding certificates of title."
"TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETINGS:Respondent AMARI further claims that the administration of former President Fidel V. Ramos upheld the legality of the original JVA. On the other hand, it alleges that the amended JVA was the subject of prior exhaustive study and approval by the Office of the General Corporate Counsel, and the Government Corporate Monitoring and Coordinating Committee composed of the Executive Secretary of Finance, Secretary of Budget and Management, Secretary of Trade and Industry, the NEDA Director-General, the head of the Presidential Management Staff, the Governor of the Bangko Sentral ng Pilipinas and the Office of the President.[4] The amended JVA was executed on March 30, 1999 and approved on May 28, 1999 under the administration of former President Joseph E. Estrada.[5]
WHEREAS, under Presidential Decree No. 1085 dated February 4, 1977 the ownership and administration of certain reclaimed lands have been transferred, conveyed and assigned to the Public Estates Authority, a government entity created by virtue of Presidential Decree No. 1084 dated February 4, 1977, subject to the terms and conditions imposed in said Presidential Decree No. 1085;
WHEREAS, pursuant to said decree the parcels of land so reclaimed under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP) of the Public Estates Authority consist of a total area of 1,915,894 square meters surveyed under Plans RL-13-000002 to RL-13-000005 situated in the Municipality of Parañaque;
NOW, THEREFORE, KNOW YE, that by authority of the Constitution of the Philippines and in conformity with the provisions thereof and of Presidential Decree No. 1085, supplemented by Commonwealth Act No. 141, as amended, there are hereby granted and conveyed unto the Public Estates Authority the aforesaid tracts of land containing a total area of one million nine hundred fifteen thousand eight hundred ninety-four (1,9 15,894) square meters; the technical descriptions of which are hereto attached and made an integral part hereof;
TO HAVE AND TO HOLD the said tracts of land, with appurtenances thereunto of right belonging unto the Public Estates Authority, subject to private `rights, if any there be, and to the condition that the said land shall be used only for the purposes authorized under Presidential Decree No. 1085;
IN TESTIMONY WHEREOF, and by authority vested in me by law, I, CORAZON C. AQUINO, President of the Philippines, hereby caused these letters to be made patent and the seal of the Republic of the Philippines to be hereunto affixed."
"The principle of prospectivity of statutes, original or amendatory, has been applied in many cases. These include: Buyco v. PNB, 961, (sic) 2 SCRA 682 (June 30, 1961), holding that Republic Act No. 1576 which divested the Philippine National Bank of authority to accept back pay certificates in payment of loans, does not apply to an offer of payment made before effectivity of the act; Lagardo v. Masaganda, et al., 5 SCRA 522 (June 30, 1962), ruling that RA 2613, as amended by RA 3090 on June, 1961, granting to inferior courts jurisdiction over guardianship cases, could not be given retroactive effect, in the absence of a saving clause; Larga v. Ranada, Jr., 64 SCRA 18, to the effect that Sections 9 and 10 of Executive Order No. 90, amending Section 4 of PD 1752, could have no retroactive application; People v. Que Po Lay, 94 SCRA 640, holding that a person cannot be convicted of violating Circular No. 20 of the Central Bank, when the alleged violation occurred before publication of the Circular in the Official Gazette; Baltazar v. CA, 104 SCRA 619, denying retroactive application to P.D. No. 27 decreeing the emancipation of tenants from the bondage of the soil, and P.D. No. 316 prohibiting ejectment of tenants from rice and corn farm holdings, pending the promulgation of rules and regulations implementing P.D. No. 27; Nilo v. Court of Appeals, 128 SCRA 519, adjudging that RA 6389 which removed `personal cultivation' as a ground for the ejectment of a tenant cannot be given retroactive effect in the absence of a statutory statement for retroactivity; Tac-An v. CA, 129 SCRA 319, ruling that the repeal of the old Administrative Code by RA 4252 could not be accorded retroactive effect; Ballardo v. Borromeo, 161 SCRA 500, holding that RA 6389 should have only prospective application; (see also Bonifacio v. Dizon, 177 SCRA 294 and Balatbat v. CA, 205 SCRA 419).
The prospectivity principle has also been made to apply to administrative rulings and circulars, to wit: ABS-CBN Broadcasting Corporation v. CTA, October 12, 1981, 108 SCRA 142, holding that a circular or ruling of the Commissioner of Internal Revenue may not be given retroactive effect adversely to a taxpayer; Sanchez v. COMELEC, 193 SCRA 317, ruling that Resolution No. 90-0590 of the Commission on Elections, which directed the holding of recall proceedings, had no retroactive application; Romualdez v. CSC, 197 SCRA 168, where it was ruled that CSC Memorandum Circular No. 29, s. 1989 cannot be given retrospective effect so as to entitle to permanent appointment an employee whose temporary appointment had expired before the Circular was issued.
The principle of prospectivity has also been applied to judicial decisions which, `although in themselves not laws, are nevertheless evidence of what the laws mean, (this being) the reason why under Article 8 of the New Civil Code, Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system.'
So did this Court hold, for example, in People v. Jabinal, 55 SCRA 607, 611:
`It will be noted that when appellant was appointed Secret Agent by the Provincial Government in 1962, and Confidential Agent by the Provincial Commander in 1964, the prevailing doctrine on the matter was that laid down by Us in People v. Macarandang (1959) and People v. Lucero (1958). Our decision in People v. Mapa, reversing the aforesaid doctrine, came only in 1967. The sole question in this appeal is: should appellant be acquitted on the basis of our rulings in Macarandang and Lucero, or should his conviction stand in view of the complete reversal of the Macarandang and Lucero in Mapa?
Decisions of this Court, although in themselves not laws, are nevertheless evidence of what the laws mean, and this is the reason why under Article 8 of the New Civil Code, `Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system.' The interpretation upon a law was originally passed, since this Court's construction merely established the contemporaneous legislative intent that the law thus construed intends to effectuate. The settled rule supported by numerous authorities is a restatement of the legal maxim `legis interpretatio legis vim obtinet' - the interpretation placed upon the written law by a competent court has the force of law. The doctrine laid down in Lucero and Macarandang was part of the jurisprudence, hence, of the law of the land, at the time appellant was found in possession of the firearm in question and when he was arraigned by the trial court. It is true that the doctrine was overruled in the Mapa case in 1967, but when a doctrine of this Court is overruled and a different view is adopted, the new doctrine should be applied prospectively, and should not apply to parties who had relied on the old doctrine and acted on the faith thereof. This is specially true in the construction and application of criminal laws, where it is necessary that the punishability of an act be reasonably foreseen for the guidance of society.'
So, too, did the Court rule in Spouses Gauvain and Bernardita Benzonan v. Court of Appeals, et al. (G.R. No. 97973) and Development Bank of the Philippines v. Court of Appeals, et al. (G.R. No. 97998), January 27, 1992, 205 SCRA 515, 527-528:
`We sustain the petitioner's position. It is undisputed that the subject lot was mortgaged to DBP as the highest bidder at a foreclosure sale on June 18, 1977, and then sold to the petitioners on September 29, 1979.
At that time, the prevailing jurisprudence interpreting section 119 of R.A. 141 as amended was that enunciated in Monge and Tupas cited above. The petitioners Benzonan and respondent Pe and the DBP are bound by these decisions for pursuant to Article 8 of the Civil Code `judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines.' But while our decisions form part of the law of the land, they are also subject to Article 4 of the Civil Code which provides that `laws shall have no retroactive effect unless the contrary is provided.' This is expressed in the familiar legal maxim lex prospicit, non respicit, the law looks forward not backward. The rationale against retroactivity is easy to perceive. The retroactive application of a law usually divests rights that have already become vested or impairs the obligations of contract and hence, is unconstitutional (Francisco v. Certeza, 3 SCRA 565 [1061 (sic)]).
The same consideration underlies our rulings giving only prospective effect to decisions enunciating new doctrines. Thus, we emphasized in People v. Jabinal, 55 SCRA 607 [1974] when a doctrine of this Court is overruled and a different view is adopted, the new doctrine should be applied prospectively and should not apply to parties who had relied on the old doctrine and acted on the faith thereof.'
A compelling rationalization of the prospectivity principle of judicial decisions is well set forth in the oft-cited case of Chicot County Drainage Dist v. Baxter States Bank, 308 US 371, 374 [1940]. The Chicot doctrine advocates the imperative necessity to take account of the actual existence of a statute prior to its nullification, as an operative fact negating acceptance of "a principle of absolute retroactive invalidity."
Thus, in this Court's decision in Tañada v. Tuvera, promulgated on April 24, 1985 — which declared `that presidential issuances of general application, which have not been published, shall have no force and effect,' and as regards which declaration some members of the Court appeared `quite apprehensive about the possible unsettling effect (the) decision might have on acts done in reliance on the validity of those presidential decrees' — the Court said:
The answer is all too familiar. In similar situations in the past this Court had taken the pragmatic and realistic course set forth in Chicot County Drainage District vs. Baxter States Bank (308 U.S. 371, 374) to wit:
`The courts below have proceeded on the theory that the Act of Congress, having been found to be unconstitutional, was not a law; that it was inoperative, conferring no rights and imposing no duties, and hence affording no basis for the challenged decree. Norton v. Shellby County, 118 US 425, 442; Chicago, I. & L. Ry. Co. v. Hackett, 228 U.S. 559, 566.
It is quite clear, however, that such broad statements as to the effect of a determination of unconstitutionality must be taken with qualifications. The actual existence of a statute, prior to such a determination, is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects - with respect to particular conduct, private and official. Questions of rights claimed to have become vested, of status, or prior determinations deemed to have finality and acted upon accordingly, of public policy in the light of the nature both of the statute and of its previous application, demand examination. These questions are among the most difficult of those which have engaged the attention of courts, state and federal, and it is manifest from numerous decisions that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be justified.'
Much earlier, in De Agbayani v. PNB, 38 SCRA 429 —concerning the effects of the invalidation of "Republic Act No. 342, the moratorium legislation, which continued Executive Order No. 32, issued by the then President Osmeña, suspending the enforcement of payment of all debts and other monetary obligations payable by war sufferers," and which had been "explicitly held in Rutter v. Esteban (93 Phil. 68 [1953]) (to be) in 1953 unreasonable, and oppressive, and should not be prolonged a minute longer" — the Court made substantially the same observations, to wit:
`The decision now on appeal reflects the orthodox view that an unconstitutional act, for that matter an executive order or a municipal ordinance likewise suffering from the infirmity, cannot be the source of any legal rights or duties. Nor can it justify any official act taken under it. Its repugnancy to the fundamental law once judicially declared results in its being to all intents and purposes a mere scrap of paper. It is understandable why it should be so, the Constitution being supreme and paramount. Any legislative or executive act contrary to its terms cannot survive.
Such a view has support in logic and possesses the merit of simplicity. It may not however be sufficiently realistic. It does not admit of doubt that prior to the declaration of nullity such challenged legislative or executive act must have been in force and had to be complied with. This is so as until after the judiciary, in an appropriate case, declares its invalidity, it is entitled to obedience and respect. Parties may have acted under it and may have changed their positions. What could be more fitting than that in a subsequent litigation regard be had to what has been done while such legislative or executive act was in operation and presumed to be valid in all respects. It is now accepted as a doctrine that prior to its being nullified, its existence as a fact must be reckoned with. This is merely to reflect awareness that precisely because the judiciary is the governmental organ which has the final say on whether or not a legislative or executive measure is valid, a period of time may have elapsed before it can exercise the power of judicial review that may lead to a declaration of nullity. It would be to deprive the law of its quality of fairness and justice then, if there be no recognition of what had transpired prior to such adjudication.
In the language of an American Supreme Court decision: The actual existence of a statute, prior to such a determination [of unconstitutionality], is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects, — with respect to particular relations, individual and corporate, and particular conduct, private and official (Chicot County Drainage Dist. v. Baxter States Bank, 308 US 371, 374 [1940]). This language has been quoted with approval in a resolution in Araneta v. Hill (93 Phil. 1002 [1953]) and the decision in Manila Motor Co., Inc. v. Flores (99 Phil. 738 [1956]). An even more recent instance is the opinion of Justice Zaldivar speaking for the Court in Fernandez v. Cuerva and Co. (L-21114, Nov. 28, 1967, 21 SCRA 1095).'
Again, treating of the effect that should be given to its decision in Olaguer v. Military Commission No. 34, — declaring invalid criminal proceedings conducted during the martial law regime against civilians, which had resulted in the conviction and incarceration of numerous persons — this Court, in Tan vs. Barrios, 190 SCRA 686, at p. 700, ruled as follows:
It would seem, then, that the weight of authority is decidedly in favor of the proposition that the Court's decision of September 21, 1987 in Que v. People, 154 SCRA 160 (1987) — i.e., that a check issued merely to guarantee the performance of an obligation is nevertheless covered by B.P. Blg. 22 — should not be given retrospective effect to the prejudice of the petitioner and other persons similarly situated, who relied on the official opinion of the Minister of Justice that such a check did not fall within the scope of B.P. Blg. 22."`In the interest of justice and consistency, we hold that Olaguer should, in principle, be applied prospectively only to future cases and cases still ongoing or not yet final when that decision was promulgated. Hence, there should be no retroactive nullification of final judgments, whether of conviction or acquittal, rendered by military courts against civilians before the promulgation of the Olaguer decision. Such final sentences should not be disturbed by the State. Only in particular cases where the convicted person or the State shows that there was serious denial of constitutional rights of the accused, should the nullity of the sentence be declared and a retrial be ordered based on the violation of he constitutional rights of the accused, and not on the Olaguer doctrine. If a retrial is no longer possible, the accused should be released since the judgment against him is null on account of the violation of his constitutional rights and denial of due process.
The trial of thousands of civilians for common crimes before the military tribunals and commissions during the ten-year period of martial rule (1971-1981) which were created under general orders issued by President Marcos in the exercise of his legislative powers is an operative fact that may not just be ignored. The belated declaration in 1987 of the unconstitutionality and invalidity of those proceedings did not erase the reality of their consequences which occurred long before our decision in Olaguer was promulgated and which now prevent us from carrying Olaguer to the limit of its logic. Thus did this Court rule in Municipality of Malabang v. Benito, 27 SCRA 533, where the question arose as to whether the nullity of creation of a municipality by executive order wiped out all the acts of the local government abolished.'
"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, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant." (Emphasis supplied.)With due respect, the plea for prospectivity is based on the ground that our Decision is novel not because it bars private corporations like respondent AMARI from acquiring alienable lands of the public domain except by lease but because for the first time we held, among others, that joint venture agreements cannot allow entities undertaking reclamation of lands to be paid with portions of the reclaimed lands. This is the first case where we are interpreting that portion of section 2, Article XII of the Constitution which states that "x x x the exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production sharing agreements with Filipino citizens or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years and under such terms and conditions as may be provided by law." Indisputably, this part of section 2, Article XII of the 1987 Constitution is new as it is neither in the 1973 or 1935 Constitutions. Undoubtedly too, our Decision goes against the grain of understanding of the said provision on the part of the Executive and Legislative Departments of our government. The disquieting effects of our Decision interpreting said provision in a different light cannot be gainsaid.
"There are, moreover, special circumstances that disqualify Amari from invoking equity principles. Amari cannot claim good faith because even before Amari signed the Amended JVA on March 30, 1999, petitioner had already filed the instant case on April 27, 1998 questioning precisely the qualification of Amari to acquire the Freedom Islands. Even before the filing of this petition, two Senate Committees had already approved on September 16, 1997 Senate Committee Report No. 560. This Report concluded, after a well-publicized investigation into PEA's sale of the Freedom Islands to Amari, that the Freedom Islands are inalienable lands of the public domain. Thus, Amari signed the Amended JVA knowing and assuming all the attendant risks, including the annulment of the Amended JVA.Again, with due respect, I beg to disagree. The alleged facts and factors cited by the majority do not provide sufficient basis to condemn respondent AMARI of bad faith. First, the petition at bar was filed before the amended JVA was consummated. As alleged by the petitioner, he filed the petition to:[12]
Amari has also not paid to PEA the full reimbursement cost incurred by PEA in reclaiming the Freedom Islands. Amari states that it has paid PEA only P300,000,000.00 out of the P1,894,129,200.00 total reimbursement cost agreed upon in the Amended JVA. Moreover, Amari does not claim to have even initiated the reclamation of the 592. 15 hectares of submerged areas covered in the Amended JVA, or to have started to construct any permanent infrastructure on the Freedom Islands. In short, Amari does not claim to have introduced any physical improvement or development on the reclamation project that is the subject of the Amended JVA. And yet Amari claims that it had already spent a "whopping P9,876,108,638.00 as its total development cost as of June 30, 2002. Amari does not explain how it spent the rest of the P9,876,108,638.00 total project cost after paying PEA P300,000,000.00. Certainly, Amari cannot claim to be an innocent purchaser in good faith and for value."
"x x xPetitioner invoked section 7, Article III of the Constitution which recognizes the right of people to information on matters of public concern and section 28, Article II of the Constitution which provides that the State adopts and implements a policy of full public disclosure of all its transactions involving public interest. In fine, the amended JVA was yet inexistent at the time the petition at bar was filed and could not provide a basis for a finding of bad faith on the part of respondent AMARI. Secondly, Senate Committee Report No. 560 also pertains to the original JVA. Precisely because of the report, former President Ramos issued Presidential Order No. 365 which established a presidential legal task force to study the legality of the original JVA. The legal task force did not reach the same conclusions as the Senate. In any event, the original JVA was renegotiated and was approved by former President Estrada on May 28, 1999 following intensive review by the Office of the General Corporate Counsel and the Government Corporate Monitoring and Coordinating Committee which, as aforestated, is composed of the Executive Secretary, the Secretary of Finance, the Secretary of Budget and Management, the Secretary of Trade and Industry, the NEDA Director General, the Head of the Presidential Management Staff and the Governor of the Bangko Sentral ng Pilipinas and the Office of the President. To be sure, the value of Senate Report No. 560 is not as proof of good or bad faith of any party but as a study in aid of legislation. As a legislative body, the Senate does not determine adjudicative facts. Thirdly, the allegation that respondent AMARI has not complied with its obligation to PEA is a matter that cannot be resolved in the case at bar. If at all it can be raised, it is PEA that should raise it in a proper action for breach of contract or specific performance. This Court is not a `trier of facts and it cannot resolve these allegations that respondent AMARI violated its contract with PEA. The majority cannot condemn respondent AMARI of acting in bad faith on the basis of patently inadmissible evidence without running afoul of the rudimentary requirements of due process. At the very least, the majority should hear respondent AMARI on the issue of its alleged bad faith before condemning it to certain bankruptcy.5.1 Compel respondent to make public all documents, facts and data related to or in connection with the ongoing RENEGOTIATIONS between respondents PEA and AMARI, and
5.2 Enjoin respondents from privately entering into perfecting and/or executing any new agreement with AMARI."
"x x xNeedless to state, the government will be unjustly enriched if it will not be made to compensate the respondent AMARI for the expenses it incurred in reclaiming the lands subject of the case at bar.
Although Pasay City and RREC did not succeed in their undertaking to reclaim any area within the subject reclamation project, it appearing that something compensable was accomplished by them, following the applicable provision of law and hearkening to the dictates of equity, that no one, not even the government shall unjustly enrich oneself/itself at the expense of another, we believe, and so hold, that Pasay City and RREC should be paid for the said actual work done and dredge-fill' poured in..."
"Be that as it may, we deem it necessary to clarify our Decision's application to and effect on LBP's pending cases filed as ordinary appeals before the Court of Appeals. It must first be stressed that the instant case poses a novel issue; our Decision herein will be a landmark ruling on the proper way to appeal decisions of Special Agrarian Courts. Before this case reached us, LBP had no authoritative guideline on how to appeal decisions of Special Agrarian Courts considering the seemingly conflicting provisions of Sections 60 and 61 of RA 6657.
More importantly, the Court of Appeals has rendered conflicting decisions on this precise issue. On the strength of Land Bank of the Philippines vs. Hon. Feliciano Buenaventura, penned by Associate Justice Salvador Valdez, Jr. of the Court of Appeals, certain decisions of the appellate court held that an ordinary appeal is the proper mode. On the other hand, a decision of the same court, penned by Associate Justice Romeo Brawner and subject of the instant review, held that the proper mode of appeal is a petition for review. In another case, the Court of Appeals also entertained an appeal by the DAR filed as a petition for review.
On account of the absence of jurisprudence interpreting Sections 60 and 61 of RA 6657 regarding the proper way to appeal decisions of Special Agrarian Courts as well as the conflicting decisions of (the) Court of Appeals thereon, LBP cannot be blamed for availing of the wrong mode. Based on its own interpretation and reliance on the Buenaventura ruling, LBP acted on the mistaken belief that an ordinary appeal is the appropriate manner to question decisions of Special Agrarian Courts.
Hence, in the light of the aforementioned circumstances, we find it proper to emphasize the prospective application of our Decision dated September 10, 2002. A prospective application of our Decision is not only grounded on equity and fair play but also based on the constitutional tenet that rules of procedure shall not impair substantive rights.
In accordance with our constitutional power to review rules of procedure of special courts, our Decision in the instant case actually lays down a rule of procedure, specifically, a rule on the proper mode of appeal from decisions of Special Agrarian Courts. Under Section 5 (5), Article VIII of the 1987 Philippine Constitution, rules of procedure shall not diminish, increase or modify substantive rights. In determining whether a rule of procedure affects substantive rights, the test is laid down in Fabian vs. Desierto, which provides that:
Our Decision under reconsideration has a far reaching effect on persons and entities similarly situated as the respondent AMARI. Since time immemorial, we have allowed private corporations to reclaim lands in partnership with government. On the basis of age-old laws and opinions of the executive, they entered into contracts with government similar to the contracts in the case at bar and they invested huge sums of money to help develop our economy. Local banks and even international lending institutions have lent their financial facilities to support these reclamation projects which government could not undertake by itself in view of its scant resources. For them to lose their invaluable property rights when they relied in good faith on these unbroken stream of laws of congress passed pursuant to our 1935, 1973 and 1987 Constitutions and executive interpretations is a disquieting prospect. We cannot invite investors and then decapitate them without due process of law.`[I]n determining whether a rule prescribed by the Supreme Court, for the practice and procedure of the lower courts, abridges, enlarges, or modifies any substantive right, the test is whether the rule really regulates procedure, that is, the judicial process for enforcing rights and duties recognized by substantive law and for justly administering remedy and redress for a disregard or infraction of them. If the rule takes away a vested right, it is not procedural. If the rule creates a right such as the right to appeal, it may be classified as a substantive matter, but if it operates as a means of implementing an existing right then the rule deals merely with procedure.'
We hold that our Decision, declaring a petition for review as the proper mode of appeal from judgments of Special Agrarian Courts, is a rule of procedure which affects substantive rights. If our ruling is given retroactive application, it will prejudice LBP's right to appeal because pending appeals in the Court of Appeals will be dismissed outright on mere technicality thereby sacrificing the substantial merits thereof. It would be unjust to apply a new doctrine to a pending case involving a party who already invoked a contrary view and who acted in good faith thereon prior to the issuance of said doctrine."
x x x Water is a natural resource, the development, exploitation or utilization of which is reserved for citizens of the Philippines, or corporations or associations at least 60% of the capital of which is owned by such citizens (Opinion No. 243, Secretary Of Justice, s. 1989).[2] CP-Senate, TSP, 8 February 1990, 12th Congress, Regular Session, S.B. No. 1285 pp. 9-12.
x x x The appropriation of waters is the acquisition of rights over the use of waters or the taking or divesting of waters from natural source in the manner and for any purpose allowed by law (Art. 9, id.).
It may be observed, however, that while the Water Code imposes a nationality requirement for the grant of water permits, the same refers to the privilege "to appropriate and use water." We have consistently interpreted this to mean the extraction of water directly from its natural source. However, once removed therefrom, they cease to be part of the natural resources of the country and are subject of ordinary commerce and they can be acquired by foreigners (Sec. of Justice Opn. No. 55, s. 1939; No. 173, s. 1984; No. 243, s. 1989).
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.
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.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.
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.
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.
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]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.
Art. 1318. There is no contract unless the following requisites concur: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.(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]
"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:
Art. 1199. A person alternatively bound by different prestations shall completely perform one of them.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:
The creditor cannot be compelled to receive part of one and part of the other undertaking.
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]
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.
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:
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.
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]
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.
[15] Emphasis supplied.xxx xxx xxx
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.
xxx xxx xxx
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)
"Lands of the Public domain are classified into agricultural, forest or timbre, 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.I dissent from the foregoing conclusions which are based on general laws mainly of ancient vintage. Reclaimed lands, especially those under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP), are governed by PD 1084[9] and PD 1085[10] enacted in 1976 and 1977, respectively, or more than half a century after the enactment of the Public Lands Acts of 1919 and 1936.
"Taking into account the requirements of conservation, ecology, and development, and subject to the requirements of agrarian reform, the Congress shall determine, by law, the size of lands of the public domain which may be acquired, developed, held, or leased and the conditions therefor."
PD 1084-Pursuant to the above provisions, PEA is mandated inter alia to reclaim land, including foreshore and submerged areas, or to acquire reclaimed land. Likewise, PEA has the power to sell any and all kinds of lands and other forms of real property owned and managed by the government. Significantly, PEA is authorized to transfer to the contractor or its assignees portion or portions of the land reclaimed or to be reclaimed.
"Section 4. Purposes. — The Authority is hereby created for the following purposes:a. To reclaim land, including foreshore and submerged areas, by dredging, filling or other means, or to acquire reclaimed land;PD 1085—
b. To develop, improve, acquire, administer, deal in, subdivide, dispose, lease and sell any and all kinds of lands, buildings, estates and other forms of real property, owned, managed, controlled and/or operated by the government;
c. To provide for, operate or administer such services as may be necessary for the efficient, economical and beneficial utilization of the above properties. (Emphasis ours)
"The land reclaimed in the foreshore and offshore area of Manila Bay pursuant to the contract for the reclamation and construction of the Manila-Cavite Coastal Road Project between the Republic of the Philippines and the Construction and Development Corporation of the Philippines dated November 20, 1973 and/or any other contract or reclamation covering the same area is hereby transferred, conveyed and assigned to the ownership and administration of the Public Estates Authority established pursuant to P.D. No. 1084; Provided, however, that the rights and interest of the Construction and Development Corporation of the Philippines pursuant to the aforesaid contract shall be recognized and respected.x x x x x x x x x
"Special land patent/patents shall be issued by the Secretary of Natural Resources in favor of the Public Estates Authority without prejudice to the subsequent transfer to the contractor or his assignees of such portion or portions of the land reclaimed or to be reclaimed as provided for in the above-mentioned contract. On the basis of such patents, the Land Registration Commission shall issue the corresponding certificates of title." (Emphasis Ours)