CHAVEZ V. PUBLIC ESTATE AUTHORITY

FACTS:

From the time of Marcos until Estrada, portions of Manila Bay were being reclaimed. A law was passed creating the Public Estate Authority which was granted with the power to transfer reclaimed lands. Now in this case, PEA entered into a Joint Venture Agreement with AMARI, a private corporation. Under the Joint Venture Agreement between AMARI and PEA, several hectares of reclaimed lands comprising the Freedom Islands and several portions of submerged areas of Manila Bay were going to be transferred to AMARI .

ISSUE:

Whether or not the stipulations in the Amended JVA for the transfer to AMARI of lands, reclaimed or to be reclaimed, violate the Constitution

RULING: YES!

Under the Public Land Act (CA 141, as amended), reclaimed lands are classified as alienable and disposable lands of the public domain Section 3 of the Constitution: 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 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. 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.