G.R. No. 103882 & G.R. No. 105276. November 25, 1998.
Republic of the Philippines, Petitioner, vs. The Honorable Court of Appeals and Republic Real Estate Corporation, Respondents; Pasay City and Republic Real Estate Corporation, Petitioners, vs. Court of Appeals and Republic of the Philippines, Respondents.

FACTS

The consolidated cases originated from a 1958 reclamation project by Pasay City and Republic Real Estate Corporation (RREC) based on city ordinances and a Reclamation Agreement. The Republic filed a complaint in 1961 seeking nullification of the ordinances and agreement, arguing the reclaimed area was part of a national park reserved under Proclamation No. 41, that the ordinances violated R.A. 1899 by covering submerged areas beyond foreshore lands, and that the agreement was executed without national authority or public bidding. The trial court dismissed the complaint, a decision affirmed by the Court of Appeals. The Supreme Court initially denied the Republic’s petition but later granted a motion for reconsideration.

ISSUE

The core legal issue is whether Pasay City had the authority under R.A. 1899 to reclaim the disputed submerged areas of Manila Bay and validly contract with RREC, or whether the area was inalienable public land reserved for a national park, placing it beyond commerce and local government authority.

RULING

The Supreme Court ruled in favor of the Republic, declaring the reclamation contract and related ordinances null and void. The legal logic is anchored on the fundamental doctrine that foreshore and submerged lands are part of the public domain, intended for public use and not subject to private appropriation unless declared alienable by the State. R.A. 1899 authorized cities to reclaim foreshore lands only, which are defined as areas alternately covered and left dry by the tide. The Court held that the law did not grant local governments the power to reclaim submerged areas beyond this zone. The disputed area, being submerged, was therefore outside Pasay City’s authority to reclaim or dispose of. Furthermore, the Court found that the area was indeed part of the area reserved for a national park under Proclamation No. 41, classifying it as inalienable public land. Consequently, the contract between Pasay City and RREC, which involved the disposition of such land, was void ab initio for dealing with property outside the commerce of man. The Court emphasized the State’s paramount ownership and control over public lands, which cannot be diminished by local ordinances or private contracts.