Whether the stipulations in the amended joint venture agreement for the transfer to AMARI of certain lands, reclaimed and still to be reclaimed violate the 1987 Constitution;

Article 339 of the Civil Code of 1889 defined property of public dominion as follows:"Art. 339. Property of public dominion is 1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, riverbanks, shores, roadsteads, and that of a similar character; 2. That belonging exclusively to the State which, without being of general public use, is employed in some public service, or in the development of the national wealth, such as walls, fortresses, and other works for the defense of the territory, and mines, until granted to private individuals.

Property devoted to public use referred to property open for use by the public. In contrast, property devoted to public service referred to property used for some specific public service and open only to those authorized to use the property. Property of public dominion referred not only to property devoted to public use, but also to property not so used but employed to develop the national wealth. This class of property constituted property of public dominion although employed for some economic or commercial activity to increase the national wealth.

"Art. 341. Property of public dominion, when no longer devoted to public use or to the defense of the territory, shall become a part of the private property of the State." This provision, however, was not self-executing. The legislature, or the executive department pursuant to law, must declare the property no longer needed for public use or territorial defense before the government could lease or alienate the property to private parties.

Act No. 2874 of the Philippine Legislature Sec. 55. Any tract of land of the public domain which, being neither timber nor mineral land, shall be classified as suitable for residential purposes or for commercial, industrial, or other productive purposes other than agricultural purposes, and shall be open to disposition or concession, shall be disposed of under the provisions of this chapter, and not otherwise.

The rationale behind this State policy is obvious. Government reclaimed, foreshore and marshy public lands for non-agricultural purposes retain their inherent potential as areas for public service. This is the reason the government prohibited the sale, and only allowed the lease, of these lands to private parties. The State always reserved these lands for some future public service.

However, government reclaimed and marshy lands, although subject to classification as disposable public agricultural lands, could only be leased and not sold to private parties because of Act No. 2874.

The 1987 Constitution continues the State policy in the 1973 Constitution banning private corporations from acquiring any kind of alienable land of the public domain. Like the 1973 Constitution, the 1987 Constitution allows private corporations to hold alienable lands of the public domain only through lease. As in the 1935 and 1973 Constitutions, the general law governing the lease to private corporations of reclaimed, foreshore and marshy alienable lands of the public domain is still CA No. 141.

Without the constitutional ban, individuals who already acquired the maximum area of alienable lands of the public domain could easily set up corporations to acquire more alienable public lands. An individual could own as many corporations as his means would allow him. An individual could even hide his ownership of a corporation by putting his nominees as stockholders of the corporation. The corporation is a convenient vehicle to circumvent the constitutional limitation on acquisition by individuals of alienable lands of the public domain.

PD No. 1085, coupled with President Aquino's actual issuance of a special patent covering the Freedom Islands, is equivalent to an official proclamation classifying the Freedom Islands as alienable or disposable lands of the public domain. Being neither timber, mineral, nor national park lands, the reclaimed Freedom Islands necessarily fall under the classification of agricultural lands of the public domain. Under the 1987 Constitution, agricultural lands of the public domain are the only natural resources that the State may alienate to qualified private parties. All other natural resources, such as the seas or bays, are "waters . . . owned by the State" forming part of the public domain, and are inalienable pursuant to Section 2, Article XII of the 1987 Constitution.

In short, DENR is vested with the power to authorize the reclamation of areas under water, while PEA is vested with the power to undertake the physical reclamation of areas under water whether directly or through private contractors. DENR is also empowered to classify lands of the public domain into alienable or disposable lands subject to the approval of the President. On the other hand, PEA is tasked to develop, sell or lease the reclaimed alienable lands of the public domain.

Clearly, the mere physical act of reclamation by PEA of foreshore or submerged areas does not make the reclaimed lands alienable or disposable lands of the public domain, much less patrimonial lands of PEA. Likewise, the mere transfer by the National Government of lands of the public domain to PEA does not make the lands alienable or disposable lands of the public domain, much less patrimonial lands of PEA.

There is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell its reclaimed lands. PD No. 1085 merely transferred "ownership and administration" of lands reclaimed from Manila Bay to PEA, while EO No. 525 declared that lands reclaimed by PEA "shall belong to or be owned by PEA." PEA's charter, however, expressly tasks PEA "to develop, improve, acquire, administer, deal in, subdivide, dispose, lease and sell any and all kinds of lands . . . owned, managed, controlled and/or operated by the government." 87 (Emphasis supplied) There is, therefore, legislative authority granted to PEA to sell its lands, whether patrimonial or alienable lands of the public domain. PEA may sell to private parties its patrimonial properties in accordance with the PEA charter free from constitutional limitations. The constitutional ban on private corporations from acquiring alienable lands of the public domain does not apply to the sale of PEA's patrimonial lands.

Moreover, under Section 79 of PD No. 1445, otherwise known as the Government Auditing Code, the government is required to sell valuable government property through public bidding. Section 79 of PD No. 1445 mandates that:... "In the event that the public auction fails, the property may be sold at a private sale at such price as may be fixed by the same committee or body concerned and approved by the Commission."

However, the original JVA dated April 25, 1995 covered not only the Freedom Islands and the additional 250 hectares still to be reclaimed, it also granted an option to AMARI to reclaim another 350 hectares. The original JVA, a negotiated contract, enlarged the reclamation area to 750 hectares. The failure of public bidding on December 10, 1991, involving only 407.84 hectares, is not a valid justification for a negotiated sale of 750 hectares, almost double the area publicly auctioned.

Jurisprudence holding that upon the grant of the patent or issuance of the certificate of title the alienable land of the public domain automatically becomes private land cannot apply to government units and entities like PEA. The grant of legislative authority to sell public lands in accordance with Section 60 of CA No. 141 does not automatically convert alienable lands of the public domain into private or patrimonial lands. The alienable lands of the public domain must be transferred to qualified private parties, or to government entities not tasked to dispose of public lands, before these lands can become private or patrimonial lands. Otherwise, the constitutional ban will become illusory if Congress can declare lands of the public domain as private or patrimonial lands in the hands of a government agency tasked to dispose of public lands.

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. This scheme can even be applied to alienable agricultural lands of the public domain since PEA can "acquire . . . any and all kinds of lands."

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.

Chavez vs. PEA- AmariDoctrine:In the hands of the government agency tasked and authorized to dispose of alienable or disposable lands of public domain, these lands are still public, not private lands.Facts:On November 20, 1973, the government through the Commissioner of Public Highways signed a contract with the Construction and Development Corporation of the Philippines (CDCP) to reclaim certain foreshore and offshore areas of Manila bay. The contract also included the construction of Phases I and II of the Manila-Cavite Costal Road. CDCP obligated itself to carry out all the works in consideration of 50% of the total reclaimed land. On February 4, 1977, then President Marcos issued PD No. 1084 creating Public Estates Authority and tasked PEA to reclaim land, including foreshore and submerged areas and to develop, improve, acquire, lease, sell any and all kinds of lands. On the same day, Pres. Marcos issued P.D 1085 transferring to PEA the lands reclaimed in the foreshore and offshore of the manila bay under the Manila-Cavite Coastal Road Reclamation project. On January 19, 1988, then Pres. Aquino issued Special Potent No. 3517, grating the transferring to PEA the parcels of land so reclaimed under the MCCRRP. On April 19, 1988, ROD issued TCT Nos. 7309, 7311, and 7312 in the name of PEA, covering the 3 reclaimed islands known as the Freedom islands located at the southern portion of the Manila-Cavite Coastal Road, Paranaque City. On April 25, 1995, PEA entered into a joint venture agreement with AMARI a private corporation to develop the Freedom Islands. These two entered into a joint venture in the absence of public bidding. On November 29, 1996, a privilege speech was given by Senator Ernesto Maceda denouncing the JVA as the grandmother of all scam. On December 5, 19978, then Pres. Ramos issued AO No. 365 creating a legal Task Force to conduct the legality of the JVA. On April 27, 1998, Chavez filed a petition for mandamus with prayer for the issuance of a writ of preliminary injunction and TRO. He contends that the sale to AMARI of lands of the public domain is a blatant violation of Section 3, Article Xii of the 1987 Constitution prohibiting the sale of alienable lands of the public domain to private corporations. On March 30, 1999, PEA and AMARI signed the Amended Joint Venture Agreement. On May 28, 1999, the Office of the President under the administration of Pres. Estrada approves the amended JVA.

ISSUE: WON the stipulations in the amended JVA for the transfer to AMARI certain lands, reclaimed ans till to be reclaimed, violate the 1987 Constitution.

HELD:The ownership of lands reclaimed from foreshore and submerged areas is rooted in the Regalian doctrine, which holds that the State owns all lands and waters of the public domain. The 1987 constitution recognizes the Regalian doctrine. It declares that all natural resources are owned by the State and except for alienable agricultural land of the public domain, natural resources cannot be alienated. The amended JVA covers a reclamation area of 750 Hectares. Only 157.84 hectares of the 750 hectares have been reclaimed and the rest of the areas are still submerged areas forming part of Manila Bay. Further, it is provided that AMARAI will reimburse the actual cost in reclaiming the areas of land and it will shoulder the other reclamation costs to be incurred.The foreshore and submerged areas of Manila Bay are part of the lands of the public domain, waters and other natural resources and consequently owned by the State. As such, foreshore and submerged areas shall not be alienable unless they are classified as agricultural lands of the public domain. The mere reclamation of these areas by the PEA doesnt cover these inalienable natural resources of the State into alienable and disposable lands of public domain. There must be a law or presidential proclamation officially classifying these reclaimed lands as alienable and disposable, if the law has reserved them for some public or quasi-public use.