G.R. No.

86186 May 8, 1992

RAFAEL GELOS, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and ERNESTO ALZONA, respondents.
Balagtas P. Ilagan for petitioner.
Emil Capulong, Jr., for private respondent.

CRUZ, J .:
The Court is asked to determine the real status of the petitioner, who claims to be a tenant of the
private respondent and entitled to the benefits of tenancy laws. The private respondent objects,
contending that the petitioner is only a hired laborer whose right to occupy the subject land ended
with the termination of their contract of employment.
The subject land is a 25,000 square meter farmland situated in Cabuyao, Laguna, and belonging
originally to private respondent Ernesto Alzona and his parents in equal shares. On July 5, 1970,
they entered into a written contract with petitioner Rafael Gelos employing him as their laborer on
the land at the stipulated daily wage of P5.00.
1
On September 4, 1973, after Alzona had bought his
parents' share and acquired full ownership of the land, he wrote Gelos to inform him of the termination of
his services and to demand that he vacate the property. Gelos refused and continued working on the
land.
On October 1, 1973, Gelos went to the Court of Agrarian Relations and asked for the fixing of the
agricultural lease rental on the property. He later withdrew the case and went to the Ministry of
Agrarian Reform, which granted his petition. For his part, Alzona filed a complaint for illegal detainer
against Gelos in the Municipal Court of Cabuyao, but this action was declared "not proper for trial" by
the Ministry of Agrarian Reform because of the existence of a tenancy relationship between the
parties. Alzona was rebuffed for the same reason when he sought the assistance of the Ministry of
Labor and later when he filed a complaint with the Court of Agrarian Relations for a declaration of
non-tenancy and damages against Gelos. On appeal to the Office of the President, however, the
complaint was declared proper for trial and so de-archived and reinstated.
After hearing, the Regional Trial Court of San Pablo City (which had taken over the Court of Agrarian
Relations under PB 129) rendered a decision dated April 21, 1987, dismissing the complaint.
2
It
found Gelos to be a tenant of the subject property and entitled to remain thereon as such. The plaintiff
was also held liable in attorney's fees and costs.
The decision was subsequently reversed by the Court of Appeals. In its judgment promulgated on
November 25, 1988,
3
it held that Gelos was not a tenant of the land in question and ordered him to
surrender it to Alzona. He was also held liable for the payment of P10,000.00 as attorney's fees and the
costs of the suit.
The basic question the petitioner now raises before the Court is essentially factual and therefore not
proper in a petition for review under Rule 45 of the Rules of Court. Only questions of law may be
raised in this kind of proceeding. The settled rule is that the factual findings of the Court of Appeals
are conclusive on even this Court as long as they are supported by substantial evidence. The
petitioner has not shown that his case comes under any of those rare exceptions on such findings
may be validly reversed by this Court.
It is true that in Talavera v. Court of Appeals,
4
we held that a factual conclusion made by the trial court
that a person is a tenant farmer, if it is supported by the minimum evidence demanded by law, is final and
conclusive and cannot be reversed by the appellate tribunals except for compelling reasons. In the case
at bar, however, we find with the respondent court that there was such a compelling reason. A careful
examination of the record reveals that, indeed, the trial court misappreciated the facts when it ruled that
the petitioner was a tenant of the private respondent.
The circumstance that the findings of the respondent court do not concur with those of the trial court
does not, of course, call for automatic reversal of the appellate court. Precisely, the function of the
appellate court is to review and, if warranted, reverse the findings of the trial court. Disagreement
between the two courts merely calls on us to make a specially careful study of their respective
decisions to determine which of them should be preferred as more conformable to the facts at hand.
The Court has made this careful study and will sustain the decision of the respondent court.
The contract of employment dated July 5, 1970, written in Tagalog and entitled "Kasunduan ng
Upahang Araw," reads pertinently as follows:
1. Ang Unang Panig ay siyang may-ari at nagtatangkilik ng isang lagay na lupa,
sinasaka, na tumatayo sa Nayon ng Baclaran, Cabuyao, Laguna, na siyang gagawa
at sasaka sa lupa, samantalang ang Ikalawang Panig ay magiging upahan at
katulong sa paggawa ng lupa.
2. Ang Unang Panig ay gustong ipagpatuloy ang pagbubungkal at paggawa ng bukid
na binabanggit sa itaas at ang Ikalawang Panig ay may ibig na magpaupa sa
paggawa sa halagang P5.00 sa bawat araw, walong oras na trabaho gaya ng mga
sumusunod: Patubigan ng linang; pagpapahalabas ng mga pilapil; pagpapaaldabis
sa unang araw ng pag-aararo; pagpapalinis ng damo sa ibabaw ng pilapil;
pagpapakamot (unang pagpapasuyod), pagpapahalang at pagpapabalasaw
(ikalawa't ikatlong pagpapasuyod); isang tao sa pagsasabog ng abono una sa
pagpapantay ng linang; bago magtanim; isang tao sa pagaalaga ng dapog; upa sa
isang tao ng magbobomba ng gamot laban sa pagkapit ng mga kulisap (mayroon at
wala); sa nag-we-weeder; upa sa mga tao na maggagamas at magpapatubig ng
palay; magsasapaw ng mga pilapil at iba pa.
3. Ang Unang Panig at ang Ikalawang Panig ay nagkasundo na ang huli ay gagawa
sa bukid ayon sa nabanggit sa itaas bilang katulong at upahan lamang. Ang Unang
Panig bukod sa sila ang gagawa at magsasaka ay maaaring umupa ng iba pang tao
manggagawa sa upahang umiiral sang-ayon sa batas katulad ng pag-aararo,
pagpapahulip, pagpapagamas, pagbobomba, pagweweeder, pagsasabog ng abono,
pagbobomba ng gamot, pagpapatubig at iba pang mga gawain. Maaaring alisin ang
Ikalawang Panig sa pagpapatrabaho sa ano mang oras ng Unang Panig.
4. Ipinatatanto ng Ikalawang Panig na siya ay hindi kasama sa bukid kundi upahan
lamang na binabayaran sa bawa't araw ng kanyang paggawa sa bukid na nabanggit.
It is noted that the agreement provides that "ang Ikalawang Panig (meaning Gelos) ay may ibig na
magpaupa sa paggawa sa halagang P5.00 sa bawa't araw, walong oras na trabaho" (The Second
Party desires to lease his services at the rate of P5.00 per day, eight hours of work) and that
"Ipinatatanto ng Ikalawang Panig na siya ay hindi kasama sa bukid kundi upahan lamang na
binabayaran sa bawa't araw ng kanyang paggawa sa bukid na nabanggit.'' (The Second Party
makes it known that he is not a farm tenant but only a hired laborer who is paid for every day of work
on the said farm.)
These stipulations clearly indicate that the parties did not enter into a tenancy agreement but only a
contract of employment. The agreement is a lease of services, not of the land in dispute. This
intention is quite consistent with the undisputed fact that three days before that agreement was
concluded, the former tenant of the land, Leocadio Punongbayan, had executed an instrument in
which he voluntarily surrendered his tenancy rights to the private respondent.
5
It also clearly
demonstrates that, contrary to the petitioner's contention, Alzona intended to cultivate the land himself
instead of placing it again under tenancy.
The petitioner would now disavow the agreement, but his protestations are less than convincing. His
wife's testimony that he is illiterate is belied by his own testimony to the contrary in another
proceeding.
6
Her claim that they were tricked into signing the agreement does not stand up against the
testimony of Atty. Santos Pampolina, who declared under his oath as a witness (and as an attorney and
officer of the court) that he explained the meaning of the document to Gelos, who even read it himself
before signing it.
7
Atty. Pampolina said the agreement was not notarized because his commission as
notary public was good only for Manila and did not cover Laguna, where the document was executed. 8 At
any rate, the lack of notarization did not adversely affect the veracity and effectiveness of the agreement, which, significantly, Gelos and his
wife do not deny having signed.
Gelos points to the specific tasks mentioned in the agreement and suggests that they are the work of
a tenant and not of a mere hired laborer. Not so. The work specified is not peculiar to tenancy. What
a tenant may do may also be done by a hired laborer working under the direction of the landowner,
as in the case at bar. It is not the nature of the work involved but the intention of the parties that
determines the relationship between them.
As this Court has stressed in a number of cases,
9
"tenancy is not a purely factual relationship
dependent on what the alleged tenant does upon the land. It is also a legal relationship. The intent of the
parties, the understanding when the farmer is installed, and as in this case, their written
agreements, provided these are complied with and are not contrary to law, are even more important."
Gelos presented receipts
10
for fertilizer and pesticides he allegedly bought and applied to the land of the
private respondent, but the latter insists that it was his brother who bought them, being an agriculturist
and in charge of the technical aspect of the farm. Moreover, the receipts do not indicate to which
particular landholding the fertilizers would be applied and, as pointed out by the private respondent, could
refer to the other parcels of land which Gelos was tenanting.
The petitioner's payment of irrigation fees from 1980 to 1985 to the National Irrigation Administration
on the said landholding is explained by the fact that during the pendency of the CAR case, the
Agrarian Reform Office fixed a provisional leasehold rental after a preliminary finding that Gelos was
the tenant of the private respondent. As such, it was he who had to pay the irrigation fees.
Incidentally, Section 12, subpar. (r) of PD 946 provides that the Secretary's determination of the
tenancy relationship is only preliminary and cannot be conclusive on the lower court.
It is noteworthy that, except for the self-serving testimony of the petitioner's wife, the records of this
case are bereft of evidence regarding the sharing of harvest between Gelos and Alzona. No less
importantly, as the Court of Appeals observed, the petitioner has not shown that he paid rentals on
the subject property from 1970 to 1973, before their dispute arose.
A tenant is defined under Section 5(a) of Republic Act No. 1199 as a person who himself and with
the aid available from within his immediate farm household cultivates the land belonging to or
possessed by another, with the latter's consent, for purposes of production, sharing the produce with
the landholder under the share tenancy system, or paying to the landholder a price-certain or
ascertainable in produce or in money or both, under the leasehold tenancy system. (Emphasis
supplied)
For this relationship to exist, it is necessary that: 1) the parties are the landowner and the tenant; 2)
the subject is agricultural land; 3) there is consent; 4) the purpose is agricultural production; 5) there
is personal cultivation; and 6) there is sharing of harvest or payment of rental. In the absence of any
of these requisites, an occupant of a parcel of land, or a cultivator thereof, or planter thereon, cannot
qualify as a de jure tenant.
11

On the other hand, the indications of an employer-employee relationship are: 1) the selection and
engagement of the employee; 2) the payment of wages; 3) the power of dismissal; and 4) the power
to control the employee's
conduct although the latter is the most important element.
12

According to a well-known authority on the subject,
13
tenancy relationship is distinguished from farm
employer-farm worker relationship in that: "In farm employer-farm worker relationship, the lease is one of
labor with the agricultural laborer as the lessor of his services and the farm employer as the lessee
thereof. In tenancy relationship, it is the landowner who is the lessor, and the tenant the lessee of
agricultural land. The agricultural worker works for the farm employer and for his labor be receives a
salary or wage regardless of whether the employer makes a profit. On the other hand, the tenant derives
his income from the agricultural produce or harvest."
The private respondent, instead of receiving payment of rentals or sharing in the produce of the land,
paid the petitioner lump sums for specific kinds of work on the subject lot or gave him vales, or
advance payment of his wages as laborer thereon. The petitioner's wife claims that Alzona made her
husband sign the invoices all at one time because he allegedly needed them to reduce his income
taxes. Even assuming this to be true, we do not think that made the said payments fictitious,
especially so since the petitioner never denied having received them.
The other issue raised by the petitioner, which is decidedly legal, is easily resolved. There being no
tenancy relationship, the contention that the private respondent's complaint has prescribed under
Section 38 of R.A. 3844 must also fail. That section is not applicable. It must be noted that at the
very outset, Alzona rejected the petitioner's claim of agricultural tenancy and immediately instituted
his action for unlawful detainer in accordance with Section 1, Rule 70 of the Rules of Court. As it
happened, the said case was held not proper for trial by the Ministry of Agrarian Reform. He then
resorted to other remedies just so he could recover possession of his land and, finally, in 1979, he
yielded to the jurisdiction of the defunct Court of Agrarian Relations by filing there an action for
declaration of non-tenancy. The action, which was commenced in 1979, was within the ten-year
prescriptive period provided under Article 1144 of the Civil Code for actions based on a written
contract. *
The Court quotes with approval the following acute observations made by Justice Alicia Sempio-Diy:
It might not be amiss to state at this juncture that in deciding this case in favor of
defendant, the lower court might have been greatly influenced by the fact that
defendant is a mere farmer who is almost illiterate while plaintiff is an educated
landlord, such that it had felt that it was its duty to be vigilant for the protection of
defendant's interests. But the duty of the court to protect the weak and the
underprivileged should not be carried out to such an extent as to deny justice to the
landowner whenever truth and justice happen to be on his side. Besides, defendant's
economic position vis a visthe plaintiff does not necessarily make him the
underprivileged party in this case, for as testified by plaintiff which defendant never
denied, the small land in question was the only landholding of plaintiff when he and
his father bought the same, at which time he was just a lowly employee who did not
even have a house of his own and his father, a mere farmer, while defendant was the
agricultural tenant of another piece of land and also owns his own house, a sari
sari store, and a caritela. Plaintiff also surmised that it was only after defendant had
been taken into its wings by the Federation of Free Farmers that he started claiming
to be plaintiff's agricultural tenant, presumably upon the Federation's instigation and
advice. And we cannot discount this possibility indeed, considering that during the
early stages of the proceedings this case, defendant even counter-proposed to
plaintiff that he would surrender the land in question to the latter if plaintiff would
convey to him another piece of land adjacent to the land in question, almost one ha.
in area, that plaintiff had also acquired after buying the land in question, showing that
defendant was not as ignorant as he would want the Court to believe and had the
advice of people knowledgeable on agrarian matters.
This Court has stressed more than once that social justice or any justice for that matter is for
the deserving, whether he be a millionaire in his mansion or a pauper in his hovel. It is true that, in
case of reasonable doubt, we are called upon to tilt the balance in favor of the poor, to whom the
Constitution fittingly extends its sympathy and compassion. But never is it justified to prefer the poor
simply because they are poor, or to reject the rich simply because they are rich, for justice must
always be served, for poor and rich alike, according to the mandate of the law.
WHEREFORE, the challenged decision of the Court of Appeals is AFFIRMED and the petition is
DENIED, with costs against the petitioner. It is so ordered.
Narvasa, C.J., Grio-Aquino, Medialdea and Bellosillo, JJ., concur.

G.R. No. L-27797 August 26, 1974
TRINIDAD GABRIEL, plaintiff-appellee,
vs.
EUSEBIO PANGILINAN, defendant-appellant.
Mariano Manahan, Jr. for plaintiff-appellee.
Virgilio M. Pablo for defendant-appellant.
Armando M. Laki for movant.

ZALDIVAR, J .:p
This appeal from the decision, dated December 26, 1963, of the Court of First Instance of
Pampanga in its Civil Case No. 1823, was certified to this Court by the Court of Appeals for the
reason that the jurisdiction of an inferior court is involved.
During the pendency of this case before this Court, under date of April 29, 1972, Atty. Virgilio M.
Pablo, counsel for the appellant Eusebio Pangilinan, gave notice to this Court that said appellant
died on April 3, 1964, and was survived by his children, who are his legal heirs, namely: Salvador
Pangilinan, Santos Pangilinan, Mariano Pangilinan, Carlos Pangilinan and Pilar Pangilinan de
Avante. For the purposes of this case the appellant Eusebio Pangilinan, therefore, is substituted by
his heirs herein named.
Under date of November 20, 1973, Atty. Amando M. Laki filed a motion with this Court advising that
appellee Trinidad Gabriel died on June 14, 1967, and was survived by her heirs and successors-in-
interest, namely: Corazon O. Gabriel, married to Lamberto Ignacio; Ernesto O. Gabriel; Ester O.
Gabriel, married to Emmanuel Padua; Generoso O. Gabriel, Marciano O. Gabriel and Pablo O.
Gabriel, and prayed that appellee Trinidad Gabriel be substituted by her heirs herein named. By
order of this Court of December 4, 1973 the prayer for substitution was granted.
In its resolution dated April 19, 1967 certifying the case to this Court, the Court of Appeals made the
following findings, which We adopt:
On June 18, 1960 Trinidad Gabriel filed a complaint in the Court of First Instance of
Pampanga against Eusebio Pangilinan alleging that she is the owner of a fishpond
situated in barrio Sta. Ursula, Betis, Pampanga and measuring about 169,507 square
meters; that sometime during the last war she entered into an oral contract of lease
thereof with the defendant on a year to year basis, i.e., from January 1 to December
31, at a rental of P1,200, plus the amount of real estate taxes, payable in advance in
the month of January; that desiring to develop and cultivate the fishpond by herself,
she notified the defendant in a letter dated June 26, 1957 that she was terminating
the contract as of December 31, 1957; that upon request of the defendant, she
extended the lease for another year; that on November 19, 1958 she again wrote the
defendant that he should surrender possession of the fishpond on January 1, 1959,
which demand he however ignored. Plaintiff accordingly prayed that the defendant
be ordered to restore the possession of the fishpond to her and to pay her P1,200,
plus the amount of real estate taxes, a year from 1959, attorney's fees and costs.
The defendant moved for the dismissal of the complaint on the ground that the trial
court had no jurisdiction over the case which properly pertains to the Court of
Agrarian Relations, there being an agricultural leasehold tenancy relationship
between the parties. Upon opposition by the plaintiff, the motion was denied. The
defendant thereafter filed his answer with counterclaim alleging, inter alia, that the
land in question was originally leased to him, also verbally, by the plaintiff's father,
Potenciano Gabriel in 1923 for as long as the defendant wanted subject to the
condition that he would convert the major portion into a fishpond and the part which
was already a fishpond be improved at his expense which would be reimbursed by
Potenciano Gabriel or his heirs at the termination of the lease for whatever cause;
that when the plaintiff became the owner of the property through inheritance, she told
the defendant that she would honor her father's contract with the defendant, and
likewise assured him that he could continue leasing the property, whose original
rental of P400.00 a year had been progressively increased to P1,200.00, for as long
as he wanted since she was not in a position to attend to it personally. As a special
defense, the defendant reiterated the alleged lack of jurisdiction of the trial court to
take cognizance of the case.
On February 12, 1962 the trial court issued an order herein below quoted in full:
The plaintiff sinks to eject the defendant from the fishpond described in the complaint
which is under lease to the said defendant, who, however, refuses to vacate. Instead,
he has impugned the jurisdiction of this Court contending that the action should have
been filed with the Court of Agrarian Relations, which has original and exclusive
jurisdiction, as their relationship is one of leasehold tenancy.
After the motion to dismiss was denied on the basis of the allegations of the
complaint, the parties were ordered to adduce evidence for the purpose of
determining which Court shall take cognizance of the case.
It appears that the fishpond is presently in the possession of the defendant, who
originally leased it from the father of the plaintiff. Upon the death of the said father,
the fishpond was inherited by the plaintiff. It is now covered by T.C.T. No. 1634 and
is registered in her name. It contains an area of 169,507.00 square meters. The
rental is on a yearly basis.
It also appears that the defendant has ceased to work personally with the aid of
helpers the aforecited fishpond since 1956 he became ill and incapacitated. His
daughter, Pilar Pangilinan, took over. She testified that she helps her father in
administering the leased property, conveying his instructions to the workers, Urbano
Maninang, Isidro Bernal and Marciano Maninang. The names of Ire, Juan and
Aguedo Viada have been mentioned as the laborers who were paid for the repair of
the dikes. Bernardo Cayanan, a nephew of the defendant, acts as the watcher. He
has lived separately since he got married. Excepting Pilar Pangilinan. who is residing
near the fishpond, the other children of the defendant are all professions; a lawyer,
an engineer, and a priest all residing in Manila. None of these persons has been
seen working on the fishpond.
The above are the material and pertinent facts upon which we enter this order.
After a study of the facts and in the light of the provisions of the Tenancy Law,
Republic Act No. 1199, particularly Sections 4 and 9, as amended. it seems clear
that his case does not fall within the purview of said Act. The lease contract is
manifestly a civil lease governed by the New Civil Code. Considering the area of the
fishpond, 16 hectares, more or less, the fact that neither the defendant, who is
physically incapacitated, or his daughter is Personally cultivating the fishpond or
through the employment of mechanical farm implements, and the further fact that the
persons named above are not members of the immediate farm household of the
defendant, the conclusion is that no tenancy relationship exists between the plaintiff
and the defendant as defined by Republic Act No. 1199, as amended.
We are, therefore, of the opinion and so hold that this Court is vested with jurisdiction
to try and decide this case. After this order has become final, the plaintiff may
request for the setting of the initial trial.
The defendant does not contest the findings of facts therein made by the trial court.
After the parties adduced their respective evidence on the merits, decision was
rendered wherein the trial court Pursuant to Article 1197 of the Civil Code, fixed the
period of the low up to June 30, 1964, the defendant on said date to surrender
possession of the fishpond to the plaintiff and to pay the rentals due the latter. The
plaintiff, on her part, was required upon surrender of on to her, to pay the defendant
the sum of P1,000.00 as reimbursement of the expenses he incurred in improving
the fishpond, and upon failure by either party to pay the amount due the other, the
same would bear interest at the legal rate until full payment is made.
A reconsideration by the defendant having been denied, he appealed to this Court
and assigned the following errors:
1. The lower court erred in considering the relationship of appellee and appellant as
that of a civil lease, in accordance with the Civil Code of the Philippines and not a
leasehold tenancy under Rep. Act No. 1199 as amended.
2. The lower court erred in not holding that the Court of First Instance is without
jurisdiction, the cue being that of an agrarian relation in nature pursuant to Rep Act.
NO. 1199 as amended.
3. The lower court erred in appreciating the evidence of the appellant particularly the
basis for the expenditure for the development of the fishpond in question.
4. The lower court erred in rendering judgment in favor of the appellant in them easily
amount of one thousand pesos for reimbursement and for seven hundred pesos for
the cost of the floodgate.
Anent the question of jurisdiction, it is an admitted fact that plaintiff leased the fishpond to the
defendant in 1943 without a fixed term, the annual rental payable at the end of the year (Exhibit C,
Deposition of plaintiff, Dec. 13, 1962, pp. 2 and 3). It is likewise undisputed that the work in the
fishpond consisted in letting out the water so algae (lumut) would grow or if algae would not grow,
getting some from the river and putting them in the fishpond, changing the dirty water with fresh
water, repairing leaks in the dikes, and planting of fingerlings and attending to them; that these were
done by defendant, with some help; that he personally attended to the fishpond until 1956 when he
became ill; that thereafter his nephew Bernardo Cayanan, who was living with him, helped in the
work to be done in the fishpond and his daughter Pilar Pangilinan helped in the management,
conveying his instructions to the workers (t.s.n., pp. 4-8, Magat).
Upon the foregoing facts, the defendant insists that the relationship between the parties is an
agricultural leasehold tenancy governed by Republic Act No. 1199, as amended, pursuant to section
35 of Republic Act No. 3844, and the present case is therefore within the original and exclusive
jurisdiction of the Court of Agrarian Relations. Plaintiff, on the other hand, maintains in effect that
since defendant has ceased to work the fishpond personally or with the aid of the members of his
immediate farm household (Section 4, Republic Act No. 1199) the tenancy relationship between the
parties has been extinguished (Section 9, id.) and become of civil lease and therefore the trial court
properly assumed jurisdiction over the case.
It does appear that the controversy on the issue of jurisdiction calls for the interpretation of
cultivating or working the land by the tenant personally or with the aid of the members of his
immediate farm household.
1

Those are the findings and conclusions of facts made by the Court of Appeals which, as a general
rule, bind this Court.
2

1. Let Us now discuss the issues raised in this appeal. First, was the relationship between the
appellee and appellant a leasehold tenancy or a civil law lease?
There are important differences between a leasehold tenancy and a civil law lease. The subject
matter of leasehold tenancy is limited to agricultural land; that of civil law lease may be either rural or
urban property. As to attention and cultivation, the law requires the leasehold tenant to personally
attend to, and cultivate the agricultural land, whereas the civil law lessee need not personally
cultivate or work the thing leased. As to purpose, the landholding in leasehold tenancy is devoted to
agriculture, whereas in civil law lease, the purpose may be for any other lawful pursuits. As to the
law that governs, the civil law lease is governed by the Civil Code, whereas leasehold tenancy is
governed by special laws.
3

In order that leasehold tenancy under the Agricultural Tenancy Act may exist, the following requisites
must concur.
1. That the land worked by the tenant is an agricultural land;
2. That the land is susceptible of cultivation by a single person together with members of his
immediate farm household;
3. That the land must be cultivated by the tenant either personally or with the aid of labor available
from members of his immediate farm household;
4. That the land belongs to another; and
5. That the use of the land by the tenant is for a consideration of a fixed amount in money or in
produce or in both.
4

Were the foregoing requisites present in the instant case?
There is no doubt that the land in question is agricultural land. It is a fishpond and the Agricultural
Tenancy Act, which refers to "agricultural land", specifically mentions fishponds and prescribes the
consideration for the use thereof. Thus Section 46(c) of said Act provides that "the consideration for
the use of sugar lands, fishponds, salt beds and of lands devoted to the raising of livestock shall be
governed by stipulation between the parties". This Court has already ruled that "land in which fish is
produced is classified as agricultural land."
5
The mere fact, however, that a person works an
agricultural land does not necessarily make him a leasehold tenant within the purview of section 4 of
Republic Act No. 1199. He may still be a civil law lessee unless the other requisites as above enumerated
are complied with.
Regarding the second requisite, it is to be noted that the land in question has an area of 169,507
square meters, or roughly 17 hectares of fishpond. The question of whether such a big parcel of land
is susceptible of being worked by the appellant's family or not has not been raised, and We see no
need of tarrying on this point. So, We pass to the third requisite, to wit, whether the tenant himself
personally or with the aid of his immediate family worked the land.
Assuming that appellant had previously entered in 1923 into an agreement of leasehold tenancy with
Potenciano Gabriel, appellee's father, such tenancy agreement was severed in 1956 when he
ceased to work the fishpond personally because he became ill and incapacitated. Not even did the
members of appellant's immediate farm household work the land in question. Only the members of
the family of the tenant and such other persons, whether related to the tenant or not, who are
dependent upon him for support and who usually help him to operate the farm enterprise are
included in the term "immediate farm household"
6
The record shows who helped work the land in
question, and We quote:
It also appears that the defendant has ceased to work personally with the aid of
helpers the aforecited fishpond since 1956 when he became ill and incapacitated.
His daughter, Pilar Pangilinan took over. She testified that she helps her father in
administering the leased property, conveying his instructions to the workers, Urbano
Maninang, Isidro Bernal and Marciano Maninang. The names of Ire, Juan and
Aguedo Viada have been mentioned as the laborers who were paid for the repair of
the dikes. Bernardo Cayanan, a nephew of the defendant, acts as the watcher. He
has lived separately since he got married. Excepting Pilar Pangilinan, who is residing
near the fishpond, the other children of the defendant are all professionals: a lawyer,
an engineer, and a priest all residing in Manila. None of these persons has been
seen working on the fishpond.
7

The law is explicit in requiring the tenant and his immediate family to work the land. Thus Section 5
(a) of Republic Act No. 1199, as amended, defines a "tenant" as a person who, himself and with the
aid available from within his immediate farm household, cultivates the land belonging to, or
possessed by, another, with the latter's consent for purposes of production sharing the produce with
the landholder under the share tenancy system, or paying to the landholder a price certain in
produce or in money or both, under the leasehold tenancy system. Section 8 of the same Act limits
the relation of landholder and tenant to the person who furnishes the land and to the person who
actually works the land himself with the aid of labor available from within his immediate farm
household. Finally, Section 4 of the same Act requires for the existence of leasehold tenancy that
the tenant and his immediate farm household work the land. It provides that leasehold tenancy exists
when a person, who either personally or with the aid of labor available from members of his
immediate farm household, undertakes to cultivate a piece of agricultural land susceptible of
cultivation by a single person together with members of his immediate farm household, belonging to,
or legally possessed by, another in consideration of a fixed amount in money or in produce or in
both.
A person, in order to be considered a tenant, must himself and with the aid available from his
immediate farm household cultivate the land. Persons, therefore, who do not actually work the land
cannot be considered tenants;
8
and he who hires others whom he pays for doing the cultivation of the
land, ceases to hold, and is considered as having abandoned the land as tenant within the meaning of
sections 5 and 8 of Republic Act. No. 1199, and ceases to enjoy the status, rights, and privileges of one.
We are, therefore, constrained to agree with the court a quo that the relationship between the
appellee Trinidad Gabriel and appellant Eusebio Pangilinan was not a leasehold tenancy under
Republic Act No. 1199. Hence, this case was not within the original and exclusive jurisdiction of the
Court of Agrarian Relations.
9

2. Regarding the second assignment of error, We accordingly rule that the Court of First Instance
correctly assumed jurisdiction over the case at bar, this being a case of civil law lease.
3. We deem it unnecessary to discuss the third and fourth assigned errors as these are issues
involving findings of facts which have been settled by the lower court, and unless there is grave
abuse of discretion, which we do not find in the record of the case, We shall not venture to discuss
the merits of the factual findings of the court a quo.
IN VIEW OF THE FOREGOING, the decision of the Court of First Instance of Pampanga in its Civil
Case No. 1823, appealed from, is affirmed, with costs against the appellants.
This decision should apply to the heirs and successors-in-interest of the original parties, as named in
this decision. In consonance with the decision of the lower court, the heirs and successors-in-interest
of appellant Eusebio Pangilinan should deliver the possession of the fishpond in question to the
heirs and successors-in-interest of appellee Trinidad Gabriel; and said heirs and successors-in-
interest of appellant Eusebio Pangilinan should pay the heirs and successors-in-interest of appellee
Trinidad Gabriel the accrued rentals. From January 1, 1960, at the rate of P1,200.00 a year, until the
actual delivery of the possession of the fishpond as herein ordered, with interest at the legal rate
until full payment is made.
IT IS SO ORDERED.
G.R. No. 78742 July 14, 1989
ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC., JUANITO D. GOMEZ,
GERARDO B. ALARCIO, FELIPE A. GUICO, JR., BERNARDO M. ALMONTE, CANUTO RAMIR
B. CABRITO, ISIDRO T. GUICO, FELISA I. LLAMIDO, FAUSTO J. SALVA, REYNALDO G.
ESTRADA, FELISA C. BAUTISTA, ESMENIA J. CABE, TEODORO B. MADRIAGA, AUREA J.
PRESTOSA, EMERENCIANA J. ISLA, FELICISIMA C. ARRESTO, CONSUELO M. MORALES,
BENJAMIN R. SEGISMUNDO, CIRILA A. JOSE & NAPOLEON S. FERRER,petitioners,
vs.
HONORABLE SECRETARY OF AGRARIAN REFORM, respondent.
G.R. No. 79310 July 14, 1989
ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO FERRARIS, DENNIS JEREZA,
HERMINIGILDO GUSTILO, PAULINO D. TOLENTINO and PLANTERS' COMMITTEE, INC.,
Victorias Mill District, Victorias, Negros Occidental, petitioners,
vs.
JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL AGRARIAN REFORM
COUNCIL, respondents.
G.R. No. 79744 July 14, 1989
INOCENTES PABICO, petitioner,
vs.
HON. PHILIP E. JUICO, SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM, HON.
JOKER ARROYO, EXECUTIVE SECRETARY OF THE OFFICE OF THE PRESIDENT, and
Messrs. SALVADOR TALENTO, JAIME ABOGADO, CONRADO AVANCENA and ROBERTO
TAAY, respondents.
G.R. No. 79777 July 14, 1989
NICOLAS S. MANAAY and AGUSTIN HERMANO, JR., petitioners,
vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian Reform, and LAND BANK OF THE
PHILIPPINES,respondents.

CRUZ, J .:
In ancient mythology, Antaeus was a terrible giant who blocked and challenged Hercules for his life
on his way to Mycenae after performing his eleventh labor. The two wrestled mightily and Hercules
flung his adversary to the ground thinking him dead, but Antaeus rose even stronger to resume their
struggle. This happened several times to Hercules' increasing amazement. Finally, as they
continued grappling, it dawned on Hercules that Antaeus was the son of Gaea and could never die
as long as any part of his body was touching his Mother Earth. Thus forewarned, Hercules then held
Antaeus up in the air, beyond the reach of the sustaining soil, and crushed him to death.
Mother Earth. The sustaining soil. The giver of life, without whose invigorating touch even the
powerful Antaeus weakened and died.
The cases before us are not as fanciful as the foregoing tale. But they also tell of the elemental
forces of life and death, of men and women who, like Antaeus need the sustaining strength of the
precious earth to stay alive.
"Land for the Landless" is a slogan that underscores the acute imbalance in the distribution of this
precious resource among our people. But it is more than a slogan. Through the brooding centuries, it
has become a battle-cry dramatizing the increasingly urgent demand of the dispossessed among us
for a plot of earth as their place in the sun.
Recognizing this need, the Constitution in 1935 mandated the policy of social justice to "insure the
well-being and economic security of all the people,"
1
especially the less privileged. In 1973, the new
Constitution affirmed this goal adding specifically that "the State shall regulate the acquisition, ownership,
use, enjoyment and disposition of private property and equitably diffuse property ownership and
profits."
2
Significantly, there was also the specific injunction to "formulate and implement an agrarian
reform program aimed at emancipating the tenant from the bondage of the soil."
3

The Constitution of 1987 was not to be outdone. Besides echoing these sentiments, it also adopted
one whole and separate Article XIII on Social Justice and Human Rights, containing grandiose but
undoubtedly sincere provisions for the uplift of the common people. These include a call in the
following words for the adoption by the State of an agrarian reform program:
SEC. 4. The State shall, by law, undertake an agrarian reform program founded on
the right of farmers and regular farmworkers, who are landless, to own directly or
collectively the lands they till or, in the case of other farmworkers, to receive a just
share of the fruits thereof. To this end, the State shall encourage and undertake the
just distribution of all agricultural lands, subject to such priorities and reasonable
retention limits as the Congress may prescribe, taking into account ecological,
developmental, or equity considerations and subject to the payment of just
compensation. In determining retention limits, the State shall respect the right of
small landowners. The State shall further provide incentives for voluntary land-
sharing.
Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land Reform Code, had already
been enacted by the Congress of the Philippines on August 8, 1963, in line with the above-stated
principles. This was substantially superseded almost a decade later by P.D. No. 27, which was
promulgated on October 21, 1972, along with martial law, to provide for the compulsory acquisition
of private lands for distribution among tenant-farmers and to specify maximum retention limits for
landowners.
The people power revolution of 1986 did not change and indeed even energized the thrust for
agrarian reform. Thus, on July 17, 1987, President Corazon C. Aquino issued E.O. No. 228,
declaring full land ownership in favor of the beneficiaries of P.D. No. 27 and providing for the
valuation of still unvalued lands covered by the decree as well as the manner of their payment. This
was followed on July 22, 1987 by Presidential Proclamation No. 131, instituting a comprehensive
agrarian reform program (CARP), and E.O. No. 229, providing the mechanics for its implementation.
Subsequently, with its formal organization, the revived Congress of the Philippines took over
legislative power from the President and started its own deliberations, including extensive public
hearings, on the improvement of the interests of farmers. The result, after almost a year of spirited
debate, was the enactment of R.A. No. 6657, otherwise known as the Comprehensive Agrarian
Reform Law of 1988, which President Aquino signed on June 10, 1988. This law, while considerably
changing the earlier mentioned enactments, nevertheless gives them suppletory effect insofar as
they are not inconsistent with its provisions.
4

The above-captioned cases have been consolidated because they involve common legal questions,
including serious challenges to the constitutionality of the several measures mentioned above. They
will be the subject of one common discussion and resolution, The different antecedents of each case
will require separate treatment, however, and will first be explained hereunder.
G.R. No. 79777
Squarely raised in this petition is the constitutionality of P.D. No. 27, E.O. Nos. 228 and 229, and
R.A. No. 6657.
The subjects of this petition are a 9-hectare riceland worked by four tenants and owned by petitioner
Nicolas Manaay and his wife and a 5-hectare riceland worked by four tenants and owned by
petitioner Augustin Hermano, Jr. The tenants were declared full owners of these lands by E.O. No.
228 as qualified farmers under P.D. No. 27.
The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on grounds inter alia of
separation of powers, due process, equal protection and the constitutional limitation that no private
property shall be taken for public use without just compensation.
They contend that President Aquino usurped legislative power when she promulgated E.O. No. 228.
The said measure is invalid also for violation of Article XIII, Section 4, of the Constitution, for failure
to provide for retention limits for small landowners. Moreover, it does not conform to Article VI,
Section 25(4) and the other requisites of a valid appropriation.
In connection with the determination of just compensation, the petitioners argue that the same may
be made only by a court of justice and not by the President of the Philippines. They invoke the
recent cases of EPZA v. Dulay
5
and Manotok v. National Food Authority.
6
Moreover, the just
compensation contemplated by the Bill of Rights is payable in money or in cash and not in the form of
bonds or other things of value.
In considering the rentals as advance payment on the land, the executive order also deprives the
petitioners of their property rights as protected by due process. The equal protection clause is also
violated because the order places the burden of solving the agrarian problems on the owners only of
agricultural lands. No similar obligation is imposed on the owners of other properties.
The petitioners also maintain that in declaring the beneficiaries under P.D. No. 27 to be the owners
of the lands occupied by them, E.O. No. 228 ignored judicial prerogatives and so violated due
process. Worse, the measure would not solve the agrarian problem because even the small farmers
are deprived of their lands and the retention rights guaranteed by the Constitution.
In his Comment, the Solicitor General stresses that P.D. No. 27 has already been upheld in the
earlier cases ofChavez v. Zobel,
7
Gonzales v. Estrella,
8
and Association of Rice and Corn Producers of
the Philippines, Inc. v. The National Land Reform Council.
9
The determination of just compensation by
the executive authorities conformably to the formula prescribed under the questioned order is at best
initial or preliminary only. It does not foreclose judicial intervention whenever sought or warranted. At any
rate, the challenge to the order is premature because no valuation of their property has as yet been made
by the Department of Agrarian Reform. The petitioners are also not proper parties because the lands
owned by them do not exceed the maximum retention limit of 7 hectares.
Replying, the petitioners insist they are proper parties because P.D. No. 27 does not provide for
retention limits on tenanted lands and that in any event their petition is a class suit brought in behalf
of landowners with landholdings below 24 hectares. They maintain that the determination of just
compensation by the administrative authorities is a final ascertainment. As for the cases invoked by
the public respondent, the constitutionality of P.D. No. 27 was merely assumed in Chavez, while
what was decided in Gonzales was the validity of the imposition of martial law.
In the amended petition dated November 22, 1588, it is contended that P.D. No. 27, E.O. Nos. 228
and 229 (except Sections 20 and 21) have been impliedly repealed by R.A. No. 6657. Nevertheless,
this statute should itself also be declared unconstitutional because it suffers from substantially the
same infirmities as the earlier measures.
A petition for intervention was filed with leave of court on June 1, 1988 by Vicente Cruz, owner of a
1. 83- hectare land, who complained that the DAR was insisting on the implementation of P.D. No.
27 and E.O. No. 228 despite a compromise agreement he had reached with his tenant on the
payment of rentals. In a subsequent motion dated April 10, 1989, he adopted the allegations in the
basic amended petition that the above- mentioned enactments have been impliedly repealed by R.A.
No. 6657.
G.R. No. 79310
The petitioners herein are landowners and sugar planters in the Victorias Mill District, Victorias,
Negros Occidental. Co-petitioner Planters' Committee, Inc. is an organization composed of 1,400
planter-members. This petition seeks to prohibit the implementation of Proc. No. 131 and E.O. No.
229.
The petitioners claim that the power to provide for a Comprehensive Agrarian Reform Program as
decreed by the Constitution belongs to Congress and not the President. Although they agree that the
President could exercise legislative power until the Congress was convened, she could do so only to
enact emergency measures during the transition period. At that, even assuming that the interim
legislative power of the President was properly exercised, Proc. No. 131 and E.O. No. 229 would still
have to be annulled for violating the constitutional provisions on just compensation, due process,
and equal protection.
They also argue that under Section 2 of Proc. No. 131 which provides:
Agrarian Reform Fund.-There is hereby created a special fund, to be known as the Agrarian Reform
Fund, an initial amount of FIFTY BILLION PESOS (P50,000,000,000.00) to cover the estimated cost
of the Comprehensive Agrarian Reform Program from 1987 to 1992 which shall be sourced from the
receipts of the sale of the assets of the Asset Privatization Trust and Receipts of sale of ill-gotten
wealth received through the Presidential Commission on Good Government and such other sources
as government may deem appropriate. The amounts collected and accruing to this special fund shall
be considered automatically appropriated for the purpose authorized in this Proclamation the amount
appropriated is in futuro, not in esse. The money needed to cover the cost of the contemplated
expropriation has yet to be raised and cannot be appropriated at this time.
Furthermore, they contend that taking must be simultaneous with payment of just compensation as it
is traditionally understood, i.e., with money and in full, but no such payment is contemplated in
Section 5 of the E.O. No. 229. On the contrary, Section 6, thereof provides that the Land Bank of the
Philippines "shall compensate the landowner in an amount to be established by the government,
which shall be based on the owner's declaration of current fair market value as provided in Section 4
hereof, but subject to certain controls to be defined and promulgated by the Presidential Agrarian
Reform Council." This compensation may not be paid fully in money but in any of several modes that
may consist of part cash and part bond, with interest, maturing periodically, or direct payment in
cash or bond as may be mutually agreed upon by the beneficiary and the landowner or as may be
prescribed or approved by the PARC.
The petitioners also argue that in the issuance of the two measures, no effort was made to make a
careful study of the sugar planters' situation. There is no tenancy problem in the sugar areas that
can justify the application of the CARP to them. To the extent that the sugar planters have been
lumped in the same legislation with other farmers, although they are a separate group with problems
exclusively their own, their right to equal protection has been violated.
A motion for intervention was filed on August 27,1987 by the National Federation of Sugarcane
Planters (NASP) which claims a membership of at least 20,000 individual sugar planters all over the
country. On September 10, 1987, another motion for intervention was filed, this time by Manuel
Barcelona, et al., representing coconut and riceland owners. Both motions were granted by the
Court.
NASP alleges that President Aquino had no authority to fund the Agrarian Reform Program and that,
in any event, the appropriation is invalid because of uncertainty in the amount appropriated. Section
2 of Proc. No. 131 and Sections 20 and 21 of E.O. No. 229 provide for an initial appropriation of fifty
billion pesos and thus specifies the minimum rather than the maximum authorized amount. This is
not allowed. Furthermore, the stated initial amount has not been certified to by the National
Treasurer as actually available.
Two additional arguments are made by Barcelona, to wit, the failure to establish by clear and
convincing evidence the necessity for the exercise of the powers of eminent domain, and the
violation of the fundamental right to own property.
The petitioners also decry the penalty for non-registration of the lands, which is the expropriation of
the said land for an amount equal to the government assessor's valuation of the land for tax
purposes. On the other hand, if the landowner declares his own valuation he is unjustly required to
immediately pay the corresponding taxes on the land, in violation of the uniformity rule.
In his consolidated Comment, the Solicitor General first invokes the presumption of constitutionality
in favor of Proc. No. 131 and E.O. No. 229. He also justifies the necessity for the expropriation as
explained in the "whereas" clauses of the Proclamation and submits that, contrary to the petitioner's
contention, a pilot project to determine the feasibility of CARP and a general survey on the people's
opinion thereon are not indispensable prerequisites to its promulgation.
On the alleged violation of the equal protection clause, the sugar planters have failed to show that
they belong to a different class and should be differently treated. The Comment also suggests the
possibility of Congress first distributing public agricultural lands and scheduling the expropriation of
private agricultural lands later. From this viewpoint, the petition for prohibition would be premature.
The public respondent also points out that the constitutional prohibition is against the payment of
public money without the corresponding appropriation. There is no rule that only money already in
existence can be the subject of an appropriation law. Finally, the earmarking of fifty billion pesos as
Agrarian Reform Fund, although denominated as an initial amount, is actually the maximum sum
appropriated. The word "initial" simply means that additional amounts may be appropriated later
when necessary.
On April 11, 1988, Prudencio Serrano, a coconut planter, filed a petition on his own behalf, assailing
the constitutionality of E.O. No. 229. In addition to the arguments already raised, Serrano contends
that the measure is unconstitutional because:
(1) Only public lands should be included in the CARP;
(2) E.O. No. 229 embraces more than one subject which is not expressed in the title;
(3) The power of the President to legislate was terminated on July 2, 1987; and
(4) The appropriation of a P50 billion special fund from the National Treasury did not
originate from the House of Representatives.
G.R. No. 79744
The petitioner alleges that the then Secretary of Department of Agrarian Reform, in violation of due
process and the requirement for just compensation, placed his landholding under the coverage of
Operation Land Transfer. Certificates of Land Transfer were subsequently issued to the private
respondents, who then refused payment of lease rentals to him.
On September 3, 1986, the petitioner protested the erroneous inclusion of his small landholding
under Operation Land transfer and asked for the recall and cancellation of the Certificates of Land
Transfer in the name of the private respondents. He claims that on December 24, 1986, his petition
was denied without hearing. On February 17, 1987, he filed a motion for reconsideration, which had
not been acted upon when E.O. Nos. 228 and 229 were issued. These orders rendered his motion
moot and academic because they directly effected the transfer of his land to the private respondents.
The petitioner now argues that:
(1) E.O. Nos. 228 and 229 were invalidly issued by the President of the Philippines.
(2) The said executive orders are violative of the constitutional provision that no
private property shall be taken without due process or just compensation.
(3) The petitioner is denied the right of maximum retention provided for under the
1987 Constitution.
The petitioner contends that the issuance of E.0. Nos. 228 and 229 shortly before Congress
convened is anomalous and arbitrary, besides violating the doctrine of separation of powers. The
legislative power granted to the President under the Transitory Provisions refers only to emergency
measures that may be promulgated in the proper exercise of the police power.
The petitioner also invokes his rights not to be deprived of his property without due process of law
and to the retention of his small parcels of riceholding as guaranteed under Article XIII, Section 4 of
the Constitution. He likewise argues that, besides denying him just compensation for his land, the
provisions of E.O. No. 228 declaring that:
Lease rentals paid to the landowner by the farmer-beneficiary after October 21, 1972
shall be considered as advance payment for the land.
is an unconstitutional taking of a vested property right. It is also his contention that the inclusion of
even small landowners in the program along with other landowners with lands consisting of seven
hectares or more is undemocratic.
In his Comment, the Solicitor General submits that the petition is premature because the motion for
reconsideration filed with the Minister of Agrarian Reform is still unresolved. As for the validity of the
issuance of E.O. Nos. 228 and 229, he argues that they were enacted pursuant to Section 6, Article
XVIII of the Transitory Provisions of the 1987 Constitution which reads:
The incumbent president shall continue to exercise legislative powers until the first Congress is
convened.
On the issue of just compensation, his position is that when P.D. No. 27 was promulgated on
October 21. 1972, the tenant-farmer of agricultural land was deemed the owner of the land he was
tilling. The leasehold rentals paid after that date should therefore be considered amortization
payments.
In his Reply to the public respondents, the petitioner maintains that the motion he filed was resolved
on December 14, 1987. An appeal to the Office of the President would be useless with the
promulgation of E.O. Nos. 228 and 229, which in effect sanctioned the validity of the public
respondent's acts.
G.R. No. 78742
The petitioners in this case invoke the right of retention granted by P.D. No. 27 to owners of rice and
corn lands not exceeding seven hectares as long as they are cultivating or intend to cultivate the
same. Their respective lands do not exceed the statutory limit but are occupied by tenants who are
actually cultivating such lands.
According to P.D. No. 316, which was promulgated in implementation of P.D. No. 27:
No tenant-farmer in agricultural lands primarily devoted to rice and corn shall be
ejected or removed from his farmholding until such time as the respective rights of
the tenant- farmers and the landowner shall have been determined in accordance
with the rules and regulations implementing P.D. No. 27.
The petitioners claim they cannot eject their tenants and so are unable to enjoy their right of
retention because the Department of Agrarian Reform has so far not issued the implementing rules
required under the above-quoted decree. They therefore ask the Court for a writ of mandamus to
compel the respondent to issue the said rules.
In his Comment, the public respondent argues that P.D. No. 27 has been amended by LOI 474
removing any right of retention from persons who own other agricultural lands of more than 7
hectares in aggregate area or lands used for residential, commercial, industrial or other purposes
from which they derive adequate income for their family. And even assuming that the petitioners do
not fall under its terms, the regulations implementing P.D. No. 27 have already been issued, to wit,
the Memorandum dated July 10, 1975 (Interim Guidelines on Retention by Small Landowners, with
an accompanying Retention Guide Table), Memorandum Circular No. 11 dated April 21, 1978,
(Implementation Guidelines of LOI No. 474), Memorandum Circular No. 18-81 dated December
29,1981 (Clarificatory Guidelines on Coverage of P.D. No. 27 and Retention by Small Landowners),
and DAR Administrative Order No. 1, series of 1985 (Providing for a Cut-off Date for Landowners to
Apply for Retention and/or to Protest the Coverage of their Landholdings under Operation Land
Transfer pursuant to P.D. No. 27). For failure to file the corresponding applications for retention
under these measures, the petitioners are now barred from invoking this right.
The public respondent also stresses that the petitioners have prematurely initiated this case
notwithstanding the pendency of their appeal to the President of the Philippines. Moreover, the
issuance of the implementing rules, assuming this has not yet been done, involves the exercise of
discretion which cannot be controlled through the writ of mandamus. This is especially true if this
function is entrusted, as in this case, to a separate department of the government.
In their Reply, the petitioners insist that the above-cited measures are not applicable to them
because they do not own more than seven hectares of agricultural land. Moreover, assuming
arguendo that the rules were intended to cover them also, the said measures are nevertheless not in
force because they have not been published as required by law and the ruling of this Court
in Tanada v. Tuvera.
10
As for LOI 474, the same is ineffective for the additional reason that a mere letter
of instruction could not have repealed the presidential decree.
I
Although holding neither purse nor sword and so regarded as the weakest of the three departments
of the government, the judiciary is nonetheless vested with the power to annul the acts of either the
legislative or the executive or of both when not conformable to the fundamental law. This is the
reason for what some quarters call the doctrine of judicial supremacy. Even so, this power is not
lightly assumed or readily exercised. The doctrine of separation of powers imposes upon the courts
a proper restraint, born of the nature of their functions and of their respect for the other departments,
in striking down the acts of the legislative and the executive as unconstitutional. The policy, indeed,
is a blend of courtesy and caution. To doubt is to sustain. The theory is that before the act was done
or the law was enacted, earnest studies were made by Congress or the President, or both, to insure
that the Constitution would not be breached.
In addition, the Constitution itself lays down stringent conditions for a declaration of
unconstitutionality, requiring therefor the concurrence of a majority of the members of the Supreme
Court who took part in the deliberations and voted on the issue during their session en banc.
11
And
as established by judge made doctrine, the Court will assume jurisdiction over a constitutional question
only if it is shown that the essential requisites of a judicial inquiry into such a question are first satisfied.
Thus, there must be an actual case or controversy involving a conflict of legal rights susceptible of judicial
determination, the constitutional question must have been opportunely raised by the proper party, and the
resolution of the question is unavoidably necessary to the decision of the case itself.
12

With particular regard to the requirement of proper party as applied in the cases before us, we hold
that the same is satisfied by the petitioners and intervenors because each of them has sustained or
is in danger of sustaining an immediate injury as a result of the acts or measures complained
of.
13
And even if, strictly speaking, they are not covered by the definition, it is still within the wide
discretion of the Court to waive the requirement and so remove the impediment to its addressing and
resolving the serious constitutional questions raised.
In the first Emergency Powers Cases,
14
ordinary citizens and taxpayers were allowed to question the
constitutionality of several executive orders issued by President Quirino although they were invoking only
an indirect and general interest shared in common with the public. The Court dismissed the objection that
they were not proper parties and ruled that "the transcendental importance to the public of these cases
demands that they be settled promptly and definitely, brushing aside, if we must, technicalities of
procedure." We have since then applied this exception in many other cases.
15

The other above-mentioned requisites have also been met in the present petitions.
In must be stressed that despite the inhibitions pressing upon the Court when confronted with
constitutional issues like the ones now before it, it will not hesitate to declare a law or act invalid
when it is convinced that this must be done. In arriving at this conclusion, its only criterion will be the
Constitution as God and its conscience give it the light to probe its meaning and discover its
purpose. Personal motives and political considerations are irrelevancies that cannot influence its
decision. Blandishment is as ineffectual as intimidation.
For all the awesome power of the Congress and the Executive, the Court will not hesitate to "make
the hammer fall, and heavily," to use Justice Laurel's pithy language, where the acts of these
departments, or of any public official, betray the people's will as expressed in the Constitution.
It need only be added, to borrow again the words of Justice Laurel, that
... when the judiciary mediates to allocate constitutional boundaries, it does not
assert any superiority over the other departments; it does not in reality nullify or
invalidate an act of the Legislature, but only asserts the solemn and sacred obligation
assigned to it by the Constitution to determine conflicting claims of authority under
the Constitution and to establish for the parties in an actual controversy the rights
which that instrument secures and guarantees to them. This is in truth all that is
involved in what is termed "judicial supremacy" which properly is the power of judicial
review under the Constitution.
16

The cases before us categorically raise constitutional questions that this Court must categorically
resolve. And so we shall.
II
We proceed first to the examination of the preliminary issues before resolving the more serious
challenges to the constitutionality of the several measures involved in these petitions.
The promulgation of P.D. No. 27 by President Marcos in the exercise of his powers under martial law
has already been sustained in Gonzales v. Estrella and we find no reason to modify or reverse it on
that issue. As for the power of President Aquino to promulgate Proc. No. 131 and E.O. Nos. 228 and
229, the same was authorized under Section 6 of the Transitory Provisions of the 1987 Constitution,
quoted above.
The said measures were issued by President Aquino before July 27, 1987, when the Congress of
the Philippines was formally convened and took over legislative power from her. They are not
"midnight" enactments intended to pre-empt the legislature because E.O. No. 228 was issued on
July 17, 1987, and the other measures, i.e., Proc. No. 131 and E.O. No. 229, were both issued on
July 22, 1987. Neither is it correct to say that these measures ceased to be valid when she lost her
legislative power for, like any statute, they continue to be in force unless modified or repealed by
subsequent law or declared invalid by the courts. A statute does not ipso facto become inoperative
simply because of the dissolution of the legislature that enacted it. By the same token, President
Aquino's loss of legislative power did not have the effect of invalidating all the measures enacted by
her when and as long as she possessed it.
Significantly, the Congress she is alleged to have undercut has not rejected but in fact substantially
affirmed the challenged measures and has specifically provided that they shall be suppletory to R.A.
No. 6657 whenever not inconsistent with its provisions.
17
Indeed, some portions of the said measures,
like the creation of the P50 billion fund in Section 2 of Proc. No. 131, and Sections 20 and 21 of E.O. No.
229, have been incorporated by reference in the CARP Law.
18

That fund, as earlier noted, is itself being questioned on the ground that it does not conform to the
requirements of a valid appropriation as specified in the Constitution. Clearly, however, Proc. No.
131 is not an appropriation measure even if it does provide for the creation of said fund, for that is
not its principal purpose. An appropriation law is one the primary and specific purpose of which is to
authorize the release of public funds from the treasury.
19
The creation of the fund is only incidental to
the main objective of the proclamation, which is agrarian reform.
It should follow that the specific constitutional provisions invoked, to wit, Section 24 and Section
25(4) of Article VI, are not applicable. With particular reference to Section 24, this obviously could
not have been complied with for the simple reason that the House of Representatives, which now
has the exclusive power to initiate appropriation measures, had not yet been convened when the
proclamation was issued. The legislative power was then solely vested in the President of the
Philippines, who embodied, as it were, both houses of Congress.
The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229 should be invalidated
because they do not provide for retention limits as required by Article XIII, Section 4 of the
Constitution is no longer tenable. R.A. No. 6657 does provide for such limits now in Section 6 of the
law, which in fact is one of its most controversial provisions. This section declares:
Retention Limits. Except as otherwise provided in this Act, no person may own or
retain, directly or indirectly, any public or private agricultural land, the size of which
shall vary according to factors governing a viable family-sized farm, such as
commodity produced, terrain, infrastructure, and soil fertility as determined by the
Presidential Agrarian Reform Council (PARC) created hereunder, but in no case
shall retention by the landowner exceed five (5) hectares. Three (3) hectares may be
awarded to each child of the landowner, subject to the following qualifications: (1)
that he is at least fifteen (15) years of age; and (2) that he is actually tilling the land or
directly managing the farm; Provided, That landowners whose lands have been
covered by Presidential Decree No. 27 shall be allowed to keep the area originally
retained by them thereunder, further, That original homestead grantees or direct
compulsory heirs who still own the original homestead at the time of the approval of
this Act shall retain the same areas as long as they continue to cultivate said
homestead.
The argument that E.O. No. 229 violates the constitutional requirement that a bill shall have only one
subject, to be expressed in its title, deserves only short attention. It is settled that the title of the bill
does not have to be a catalogue of its contents and will suffice if the matters embodied in the text are
relevant to each other and may be inferred from the title.
20

The Court wryly observes that during the past dictatorship, every presidential issuance, by whatever
name it was called, had the force and effect of law because it came from President Marcos. Such
are the ways of despots. Hence, it is futile to argue, as the petitioners do in G.R. No. 79744, that LOI
474 could not have repealed P.D. No. 27 because the former was only a letter of instruction. The
important thing is that it was issued by President Marcos, whose word was law during that time.
But for all their peremptoriness, these issuances from the President Marcos still had to comply with
the requirement for publication as this Court held in Tanada v. Tuvera.
21
Hence, unless published in
the Official Gazette in accordance with Article 2 of the Civil Code, they could not have any force and
effect if they were among those enactments successfully challenged in that case. LOI 474 was published,
though, in the Official Gazette dated November 29,1976.)
Finally, there is the contention of the public respondent in G.R. No. 78742 that the writ of mandamus
cannot issue to compel the performance of a discretionary act, especially by a specific department of
the government. That is true as a general proposition but is subject to one important qualification.
Correctly and categorically stated, the rule is that mandamus will lie to compel the discharge of the
discretionary duty itself but not to control the discretion to be exercised. In other words, mandamus
can issue to require action only but not specific action.
Whenever a duty is imposed upon a public official and an unnecessary and
unreasonable delay in the exercise of such duty occurs, if it is a clear duty imposed
by law, the courts will intervene by the extraordinary legal remedy of mandamus to
compel action. If the duty is purely ministerial, the courts will require specific action. If
the duty is purely discretionary, the courts by mandamus will require action only. For
example, if an inferior court, public official, or board should, for an unreasonable
length of time, fail to decide a particular question to the great detriment of all parties
concerned, or a court should refuse to take jurisdiction of a cause when the law
clearly gave it jurisdiction mandamus will issue, in the first case to require a decision,
and in the second to require that jurisdiction be taken of the cause.
22

And while it is true that as a rule the writ will not be proper as long as there is still a plain, speedy
and adequate remedy available from the administrative authorities, resort to the courts may still be
permitted if the issue raised is a question of law.
23

III
There are traditional distinctions between the police power and the power of eminent domain that
logically preclude the application of both powers at the same time on the same subject. In the case
of City of Baguio v. NAWASA,
24
for example, where a law required the transfer of all municipal
waterworks systems to the NAWASA in exchange for its assets of equivalent value, the Court held that
the power being exercised was eminent domain because the property involved was wholesome and
intended for a public use. Property condemned under the police power is noxious or intended for a
noxious purpose, such as a building on the verge of collapse, which should be demolished for the public
safety, or obscene materials, which should be destroyed in the interest of public morals. The confiscation
of such property is not compensable, unlike the taking of property under the power of expropriation, which
requires the payment of just compensation to the owner.
In the case of Pennsylvania Coal Co. v. Mahon,
25
Justice Holmes laid down the limits of the police
power in a famous aphorism: "The general rule at least is that while property may be regulated to a
certain extent, if regulation goes too far it will be recognized as a taking." The regulation that went "too
far" was a law prohibiting mining which might cause the subsidence of structures for human habitation
constructed on the land surface. This was resisted by a coal company which had earlier granted a deed
to the land over its mine but reserved all mining rights thereunder, with the grantee assuming all risks and
waiving any damage claim. The Court held the law could not be sustained without compensating the
grantor. Justice Brandeis filed a lone dissent in which he argued that there was a valid exercise of the
police power. He said:
Every restriction upon the use of property imposed in the exercise of the police
power deprives the owner of some right theretofore enjoyed, and is, in that sense, an
abridgment by the State of rights in property without making compensation. But
restriction imposed to protect the public health, safety or morals from dangers
threatened is not a taking. The restriction here in question is merely the prohibition of
a noxious use. The property so restricted remains in the possession of its owner. The
state does not appropriate it or make any use of it. The state merely prevents the
owner from making a use which interferes with paramount rights of the public.
Whenever the use prohibited ceases to be noxious as it may because of further
changes in local or social conditions the restriction will have to be removed and
the owner will again be free to enjoy his property as heretofore.
Recent trends, however, would indicate not a polarization but a mingling of the police power and the
power of eminent domain, with the latter being used as an implement of the former like the power of
taxation. The employment of the taxing power to achieve a police purpose has long been
accepted.
26
As for the power of expropriation, Prof. John J. Costonis of the University of Illinois College
of Law (referring to the earlier case of Euclid v. Ambler Realty Co., 272 US 365, which sustained a zoning
law under the police power) makes the following significant remarks:
Euclid, moreover, was decided in an era when judges located the Police and eminent
domain powers on different planets. Generally speaking, they viewed eminent
domain as encompassing public acquisition of private property for improvements that
would be available for public use," literally construed. To the police power, on the
other hand, they assigned the less intrusive task of preventing harmful externalities a
point reflected in the Euclid opinion's reliance on an analogy to nuisance law to
bolster its support of zoning. So long as suppression of a privately authored harm
bore a plausible relation to some legitimate "public purpose," the pertinent measure
need have afforded no compensation whatever. With the progressive growth of
government's involvement in land use, the distance between the two powers has
contracted considerably. Today government often employs eminent domain
interchangeably with or as a useful complement to the police power-- a trend
expressly approved in the Supreme Court's 1954 decision in Berman v. Parker,
which broadened the reach of eminent domain's "public use" test to match that of the
police power's standard of "public purpose."
27

The Berman case sustained a redevelopment project and the improvement of blighted areas in the
District of Columbia as a proper exercise of the police power. On the role of eminent domain in the
attainment of this purpose, Justice Douglas declared:
If those who govern the District of Columbia decide that the Nation's Capital should
be beautiful as well as sanitary, there is nothing in the Fifth Amendment that stands
in the way.
Once the object is within the authority of Congress, the right to realize it through the
exercise of eminent domain is clear.
For the power of eminent domain is merely the means to the end.
28

In Penn Central Transportation Co. v. New York City,
29
decided by a 6-3 vote in 1978, the U.S
Supreme Court sustained the respondent's Landmarks Preservation Law under which the owners of the
Grand Central Terminal had not been allowed to construct a multi-story office building over the Terminal,
which had been designated a historic landmark. Preservation of the landmark was held to be a valid
objective of the police power. The problem, however, was that the owners of the Terminal would be
deprived of the right to use the airspace above it although other landowners in the area could do so over
their respective properties. While insisting that there was here no taking, the Court nonetheless
recognized certain compensatory rights accruing to Grand Central Terminal which it said would
"undoubtedly mitigate" the loss caused by the regulation. This "fair compensation," as he called it, was
explained by Prof. Costonis in this wise:
In return for retaining the Terminal site in its pristine landmark status, Penn Central was authorized
to transfer to neighboring properties the authorized but unused rights accruing to the site prior to the
Terminal's designation as a landmark the rights which would have been exhausted by the 59-
story building that the city refused to countenance atop the Terminal. Prevailing bulk restrictions on
neighboring sites were proportionately relaxed, theoretically enabling Penn Central to recoup its
losses at the Terminal site by constructing or selling to others the right to construct larger, hence
more profitable buildings on the transferee sites.
30

The cases before us present no knotty complication insofar as the question of compensable taking is
concerned. To the extent that the measures under challenge merely prescribe retention limits for
landowners, there is an exercise of the police power for the regulation of private property in
accordance with the Constitution. But where, to carry out such regulation, it becomes necessary to
deprive such owners of whatever lands they may own in excess of the maximum area allowed, there
is definitely a taking under the power of eminent domain for which payment of just compensation is
imperative. The taking contemplated is not a mere limitation of the use of the land. What is required
is the surrender of the title to and the physical possession of the said excess and all beneficial rights
accruing to the owner in favor of the farmer-beneficiary. This is definitely an exercise not of the
police power but of the power of eminent domain.
Whether as an exercise of the police power or of the power of eminent domain, the several
measures before us are challenged as violative of the due process and equal protection clauses.
The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the ground that no retention limits are
prescribed has already been discussed and dismissed. It is noted that although they excited many
bitter exchanges during the deliberation of the CARP Law in Congress, the retention limits finally
agreed upon are, curiously enough, not being questioned in these petitions. We therefore do not
discuss them here. The Court will come to the other claimed violations of due process in connection
with our examination of the adequacy of just compensation as required under the power of
expropriation.
The argument of the small farmers that they have been denied equal protection because of the
absence of retention limits has also become academic under Section 6 of R.A. No. 6657.
Significantly, they too have not questioned the area of such limits. There is also the complaint that
they should not be made to share the burden of agrarian reform, an objection also made by the
sugar planters on the ground that they belong to a particular class with particular interests of their
own. However, no evidence has been submitted to the Court that the requisites of a valid
classification have been violated.
Classification has been defined as the grouping of persons or things similar to each other in certain
particulars and different from each other in these same particulars.
31
To be valid, it must conform to
the following requirements: (1) it must be based on substantial distinctions; (2) it must be germane to the
purposes of the law; (3) it must not be limited to existing conditions only; and (4) it must apply equally to
all the members of the class.
32
The Court finds that all these requisites have been met by the measures
here challenged as arbitrary and discriminatory.
Equal protection simply means that all persons or things similarly situated must be treated alike both
as to the rights conferred and the liabilities imposed.
33
The petitioners have not shown that they belong
to a different class and entitled to a different treatment. The argument that not only landowners but also
owners of other properties must be made to share the burden of implementing land reform must be
rejected. There is a substantial distinction between these two classes of owners that is clearly visible
except to those who will not see. There is no need to elaborate on this matter. In any event, the Congress
is allowed a wide leeway in providing for a valid classification. Its decision is accorded recognition and
respect by the courts of justice except only where its discretion is abused to the detriment of the Bill of
Rights.
It is worth remarking at this juncture that a statute may be sustained under the police power only if
there is a concurrence of the lawful subject and the lawful method. Put otherwise, the interests of the
public generally as distinguished from those of a particular class require the interference of the State
and, no less important, the means employed are reasonably necessary for the attainment of the
purpose sought to be achieved and not unduly oppressive upon individuals.
34
As the subject and
purpose of agrarian reform have been laid down by the Constitution itself, we may say that the first
requirement has been satisfied. What remains to be examined is the validity of the method employed to
achieve the constitutional goal.
One of the basic principles of the democratic system is that where the rights of the individual are
concerned, the end does not justify the means. It is not enough that there be a valid objective; it is
also necessary that the means employed to pursue it be in keeping with the Constitution. Mere
expediency will not excuse constitutional shortcuts. There is no question that not even the strongest
moral conviction or the most urgent public need, subject only to a few notable exceptions, will
excuse the bypassing of an individual's rights. It is no exaggeration to say that a, person invoking a
right guaranteed under Article III of the Constitution is a majority of one even as against the rest of
the nation who would deny him that right.
That right covers the person's life, his liberty and his property under Section 1 of Article III of the
Constitution. With regard to his property, the owner enjoys the added protection of Section 9, which
reaffirms the familiar rule that private property shall not be taken for public use without just
compensation.
This brings us now to the power of eminent domain.
IV
Eminent domain is an inherent power of the State that enables it to forcibly acquire
private lands intended for public use upon payment of just compensation to the
owner. Obviously, there is no need to expropriate where the owner is willing to sell
under terms also acceptable to the purchaser, in which case an ordinary deed of sale
may be agreed upon by the parties.
35
It is only where the owner is unwilling to sell, or
cannot accept the price or other conditions offered by the vendee, that the power of
eminent domain will come into play to assert the paramount authority of the State over
the interests of the property owner. Private rights must then yield to the irresistible
demands of the public interest on the time-honored justification, as in the case of the
police power, that the welfare of the people is the supreme law.
But for all its primacy and urgency, the power of expropriation is by no means absolute (as indeed
no power is absolute). The limitation is found in the constitutional injunction that "private property
shall not be taken for public use without just compensation" and in the abundant jurisprudence that
has evolved from the interpretation of this principle. Basically, the requirements for a proper exercise
of the power are: (1) public use and (2) just compensation.
Let us dispose first of the argument raised by the petitioners in G.R. No. 79310 that the State should
first distribute public agricultural lands in the pursuit of agrarian reform instead of immediately
disturbing property rights by forcibly acquiring private agricultural lands. Parenthetically, it is not
correct to say that only public agricultural lands may be covered by the CARP as the Constitution
calls for "the just distribution of all agricultural lands." In any event, the decision to redistribute private
agricultural lands in the manner prescribed by the CARP was made by the legislative and executive
departments in the exercise of their discretion. We are not justified in reviewing that discretion in the
absence of a clear showing that it has been abused.
A becoming courtesy admonishes us to respect the decisions of the political departments when they
decide what is known as the political question. As explained by Chief Justice Concepcion in the case
of Taada v. Cuenco:
36

The term "political question" connotes what it means in ordinary parlance, namely, a
question of policy. It refers to "those questions which, under the Constitution, are to
be decided by the people in their sovereign capacity; or in regard to which full
discretionary authority has been delegated to the legislative or executive branch of
the government." It is concerned with issues dependent upon the wisdom, not
legality, of a particular measure.
It is true that the concept of the political question has been constricted with the enlargement of
judicial power, which now includes the authority of the courts "to determine whether or not there has
been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government."
37
Even so, this should not be construed as a license for
us to reverse the other departments simply because their views may not coincide with ours.
The legislature and the executive have been seen fit, in their wisdom, to include in the CARP the
redistribution of private landholdings (even as the distribution of public agricultural lands is first
provided for, while also continuing apace under the Public Land Act and other cognate laws). The
Court sees no justification to interpose its authority, which we may assert only if we believe that the
political decision is not unwise, but illegal. We do not find it to be so.
In U.S. v. Chandler-Dunbar Water Power Company,
38
it was held:
Congress having determined, as it did by the Act of March 3,1909 that the entire St.
Mary's river between the American bank and the international line, as well as all of
the upland north of the present ship canal, throughout its entire length, was
"necessary for the purpose of navigation of said waters, and the waters connected
therewith," that determination is conclusive in condemnation proceedings instituted
by the United States under that Act, and there is no room for judicial review of the
judgment of Congress ... .
As earlier observed, the requirement for public use has already been settled for us by the
Constitution itself No less than the 1987 Charter calls for agrarian reform, which is the reason why
private agricultural lands are to be taken from their owners, subject to the prescribed maximum
retention limits. The purposes specified in P.D. No. 27, Proc. No. 131 and R.A. No. 6657 are only an
elaboration of the constitutional injunction that the State adopt the necessary measures "to
encourage and undertake the just distribution of all agricultural lands to enable farmers who are
landless to own directly or collectively the lands they till." That public use, as pronounced by the
fundamental law itself, must be binding on us.
The second requirement, i.e., the payment of just compensation, needs a longer and more
thoughtful examination.
Just compensation is defined as the full and fair equivalent of the property taken from its owner by
the expropriator.
39
It has been repeatedly stressed by this Court that the measure is not the taker's gain
but the owner's loss.
40
The word "just" is used to intensify the meaning of the word "compensation" to
convey the idea that the equivalent to be rendered for the property to be taken shall be real, substantial,
full, ample.
41

It bears repeating that the measures challenged in these petitions contemplate more than a mere
regulation of the use of private lands under the police power. We deal here with an actual taking of
private agricultural lands that has dispossessed the owners of their property and deprived them of all
its beneficial use and enjoyment, to entitle them to the just compensation mandated by the
Constitution.
As held in Republic of the Philippines v. Castellvi,
42
there is compensable taking when the following
conditions concur: (1) the expropriator must enter a private property; (2) the entry must be for more than a
momentary period; (3) the entry must be under warrant or color of legal authority; (4) the property must be
devoted to public use or otherwise informally appropriated or injuriously affected; and (5) the utilization of
the property for public use must be in such a way as to oust the owner and deprive him of beneficial
enjoyment of the property. All these requisites are envisioned in the measures before us.
Where the State itself is the expropriator, it is not necessary for it to make a deposit upon its taking
possession of the condemned property, as "the compensation is a public charge, the good faith of
the public is pledged for its payment, and all the resources of taxation may be employed in raising
the amount."
43
Nevertheless, Section 16(e) of the CARP Law provides that:
Upon receipt by the landowner of the corresponding payment or, in case of rejection
or no response from the landowner, upon the deposit with an accessible bank
designated by the DAR of the compensation in cash or in LBP bonds in accordance
with this Act, the DAR shall take immediate possession of the land and shall request
the proper Register of Deeds to issue a Transfer Certificate of Title (TCT) in the
name of the Republic of the Philippines. The DAR shall thereafter proceed with the
redistribution of the land to the qualified beneficiaries.
Objection is raised, however, to the manner of fixing the just compensation, which it is claimed is
entrusted to the administrative authorities in violation of judicial prerogatives. Specific reference is
made to Section 16(d), which provides that in case of the rejection or disregard by the owner of the
offer of the government to buy his land-
... the DAR shall conduct summary administrative proceedings to determine the
compensation for the land by requiring the landowner, the LBP and other interested
parties to submit evidence as to the just compensation for the land, within fifteen (15)
days from the receipt of the notice. After the expiration of the above period, the
matter is deemed submitted for decision. The DAR shall decide the case within thirty
(30) days after it is submitted for decision.
To be sure, the determination of just compensation is a function addressed to the courts of justice
and may not be usurped by any other branch or official of the government. EPZA v. Dulay
44
resolved
a challenge to several decrees promulgated by President Marcos providing that the just compensation for
property under expropriation should be either the assessment of the property by the government or the
sworn valuation thereof by the owner, whichever was lower. In declaring these decrees unconstitutional,
the Court held through Mr. Justice Hugo E. Gutierrez, Jr.:
The method of ascertaining just compensation under the aforecited decrees
constitutes impermissible encroachment on judicial prerogatives. It tends to render
this Court inutile in a matter which under this Constitution is reserved to it for final
determination.
Thus, although in an expropriation proceeding the court technically would still have
the power to determine the just compensation for the property, following the
applicable decrees, its task would be relegated to simply stating the lower value of
the property as declared either by the owner or the assessor. As a necessary
consequence, it would be useless for the court to appoint commissioners under Rule
67 of the Rules of Court. Moreover, the need to satisfy the due process clause in the
taking of private property is seemingly fulfilled since it cannot be said that a judicial
proceeding was not had before the actual taking. However, the strict application of
the decrees during the proceedings would be nothing short of a mere formality or
charade as the court has only to choose between the valuation of the owner and that
of the assessor, and its choice is always limited to the lower of the two. The court
cannot exercise its discretion or independence in determining what is just or fair.
Even a grade school pupil could substitute for the judge insofar as the determination
of constitutional just compensation is concerned.
x x x
In the present petition, we are once again confronted with the same question of
whether the courts under P.D. No. 1533, which contains the same provision on just
compensation as its predecessor decrees, still have the power and authority to
determine just compensation, independent of what is stated by the decree and to this
effect, to appoint commissioners for such purpose.
This time, we answer in the affirmative.
x x x
It is violative of due process to deny the owner the opportunity to prove that the
valuation in the tax documents is unfair or wrong. And it is repulsive to the basic
concepts of justice and fairness to allow the haphazard work of a minor bureaucrat or
clerk to absolutely prevail over the judgment of a court promulgated only after expert
commissioners have actually viewed the property, after evidence and arguments pro
and con have been presented, and after all factors and considerations essential to a
fair and just determination have been judiciously evaluated.
A reading of the aforecited Section 16(d) will readily show that it does not suffer from the
arbitrariness that rendered the challenged decrees constitutionally objectionable. Although the
proceedings are described as summary, the landowner and other interested parties are nevertheless
allowed an opportunity to submit evidence on the real value of the property. But more importantly,
the determination of the just compensation by the DAR is not by any means final and conclusive
upon the landowner or any other interested party, for Section 16(f) clearly provides:
Any party who disagrees with the decision may bring the matter to the court of proper
jurisdiction for final determination of just compensation.
The determination made by the DAR is only preliminary unless accepted by all parties concerned.
Otherwise, the courts of justice will still have the right to review with finality the said determination in
the exercise of what is admittedly a judicial function.
The second and more serious objection to the provisions on just compensation is not as easily
resolved.
This refers to Section 18 of the CARP Law providing in full as follows:
SEC. 18. Valuation and Mode of Compensation. The LBP shall compensate the
landowner in such amount as may be agreed upon by the landowner and the DAR
and the LBP, in accordance with the criteria provided for in Sections 16 and 17, and
other pertinent provisions hereof, or as may be finally determined by the court, as the
just compensation for the land.
The compensation shall be paid in one of the following modes, at the option of the
landowner:
(1) Cash payment, under the following terms and conditions:
(a) For lands above fifty (50) hectares, insofar as the
excess hectarage is concerned Twenty-five
percent (25%) cash, the balance to be paid in
government financial instruments negotiable at any
time.
(b) For lands above twenty-four (24) hectares and up
to fifty (50) hectares Thirty percent (30%) cash, the
balance to be paid in government financial
instruments negotiable at any time.
(c) For lands twenty-four (24) hectares and below
Thirty-five percent (35%) cash, the balance to be paid
in government financial instruments negotiable at any
time.
(2) Shares of stock in government-owned or controlled corporations, LBP preferred
shares, physical assets or other qualified investments in accordance with guidelines
set by the PARC;
(3) Tax credits which can be used against any tax liability;
(4) LBP bonds, which shall have the following features:
(a) Market interest rates aligned with 91-day treasury
bill rates. Ten percent (10%) of the face value of the
bonds shall mature every year from the date of
issuance until the tenth (10th) year: Provided, That
should the landowner choose to forego the cash
portion, whether in full or in part, he shall be paid
correspondingly in LBP bonds;
(b) Transferability and negotiability. Such LBP bonds
may be used by the landowner, his successors-in-
interest or his assigns, up to the amount of their face
value, for any of the following:
(i) Acquisition of land or other real properties of the
government, including assets under the Asset
Privatization Program and other assets foreclosed by
government financial institutions in the same province
or region where the lands for which the bonds were
paid are situated;
(ii) Acquisition of shares of stock of government-
owned or controlled corporations or shares of stock
owned by the government in private corporations;
(iii) Substitution for surety or bail bonds for the
provisional release of accused persons, or for
performance bonds;
(iv) Security for loans with any government financial
institution, provided the proceeds of the loans shall be
invested in an economic enterprise, preferably in a
small and medium- scale industry, in the same
province or region as the land for which the bonds are
paid;
(v) Payment for various taxes and fees to
government: Provided, That the use of these bonds
for these purposes will be limited to a certain
percentage of the outstanding balance of the financial
instruments; Provided, further, That the PARC shall
determine the percentages mentioned above;
(vi) Payment for tuition fees of the immediate family of
the original bondholder in government universities,
colleges, trade schools, and other institutions;
(vii) Payment for fees of the immediate family of the
original bondholder in government hospitals; and
(viii) Such other uses as the PARC may from time to
time allow.
The contention of the petitioners in G.R. No. 79777 is that the above provision is unconstitutional
insofar as it requires the owners of the expropriated properties to accept just compensation therefor
in less than money, which is the only medium of payment allowed. In support of this contention, they
cite jurisprudence holding that:
The fundamental rule in expropriation matters is that the owner of the property
expropriated is entitled to a just compensation, which should be neither more nor
less, whenever it is possible to make the assessment, than the money equivalent of
said property. Just compensation has always been understood to be the just and
complete equivalent of the loss which the owner of the thing expropriated has to
suffer by reason of the expropriation .
45
(Emphasis supplied.)
In J.M. Tuazon Co. v. Land Tenure Administration,
46
this Court held:
It is well-settled that just compensation means the equivalent for the value of the
property at the time of its taking. Anything beyond that is more, and anything short of
that is less, than just compensation. It means a fair and full equivalent for the loss
sustained, which is the measure of the indemnity, not whatever gain would accrue to
the expropriating entity. The market value of the land taken is the just compensation
to which the owner of condemned property is entitled, the market value being that
sum of money which a person desirous, but not compelled to buy, and an owner,
willing, but not compelled to sell, would agree on as a price to be given and received
for such property. (Emphasis supplied.)
In the United States, where much of our jurisprudence on the subject has been derived, the weight
of authority is also to the effect that just compensation for property expropriated is payable only in
money and not otherwise. Thus
The medium of payment of compensation is ready money or cash. The condemnor
cannot compel the owner to accept anything but money, nor can the owner compel
or require the condemnor to pay him on any other basis than the value of the
property in money at the time and in the manner prescribed by the Constitution and
the statutes. When the power of eminent domain is resorted to, there must be a
standard medium of payment, binding upon both parties, and the law has fixed that
standard as money in cash.
47
(Emphasis supplied.)
Part cash and deferred payments are not and cannot, in the nature of things, be
regarded as a reliable and constant standard of compensation.
48

"Just compensation" for property taken by condemnation means a fair equivalent in
money, which must be paid at least within a reasonable time after the taking, and it is not
within the power of the Legislature to substitute for such payment future obligations,
bonds, or other valuable advantage.
49
(Emphasis supplied.)
It cannot be denied from these cases that the traditional medium for the payment of just
compensation is money and no other. And so, conformably, has just compensation been paid in the
past solely in that medium. However, we do not deal here with the traditional excercise of the power
of eminent domain. This is not an ordinary expropriation where only a specific property of relatively
limited area is sought to be taken by the State from its owner for a specific and perhaps local
purpose.
What we deal with here is a revolutionary kind of expropriation.
The expropriation before us affects all private agricultural lands whenever found and of whatever
kind as long as they are in excess of the maximum retention limits allowed their owners. This kind of
expropriation is intended for the benefit not only of a particular community or of a small segment of
the population but of the entire Filipino nation, from all levels of our society, from the impoverished
farmer to the land-glutted owner. Its purpose does not cover only the whole territory of this country
but goes beyond in time to the foreseeable future, which it hopes to secure and edify with the vision
and the sacrifice of the present generation of Filipinos. Generations yet to come are as involved in
this program as we are today, although hopefully only as beneficiaries of a richer and more fulfilling
life we will guarantee to them tomorrow through our thoughtfulness today. And, finally, let it not be
forgotten that it is no less than the Constitution itself that has ordained this revolution in the farms,
calling for "a just distribution" among the farmers of lands that have heretofore been the prison of
their dreams but can now become the key at least to their deliverance.
Such a program will involve not mere millions of pesos. The cost will be tremendous. Considering
the vast areas of land subject to expropriation under the laws before us, we estimate that hundreds
of billions of pesos will be needed, far more indeed than the amount of P50 billion initially
appropriated, which is already staggering as it is by our present standards. Such amount is in fact
not even fully available at this time.
We assume that the framers of the Constitution were aware of this difficulty when they called for
agrarian reform as a top priority project of the government. It is a part of this assumption that when
they envisioned the expropriation that would be needed, they also intended that the just
compensation would have to be paid not in the orthodox way but a less conventional if more
practical method. There can be no doubt that they were aware of the financial limitations of the
government and had no illusions that there would be enough money to pay in cash and in full for the
lands they wanted to be distributed among the farmers. We may therefore assume that their
intention was to allow such manner of payment as is now provided for by the CARP Law, particularly
the payment of the balance (if the owner cannot be paid fully with money), or indeed of the entire
amount of the just compensation, with other things of value. We may also suppose that what they
had in mind was a similar scheme of payment as that prescribed in P.D. No. 27, which was the law
in force at the time they deliberated on the new Charter and with which they presumably agreed in
principle.
The Court has not found in the records of the Constitutional Commission any categorical agreement
among the members regarding the meaning to be given the concept of just compensation as applied
to the comprehensive agrarian reform program being contemplated. There was the suggestion to
"fine tune" the requirement to suit the demands of the project even as it was also felt that they should
"leave it to Congress" to determine how payment should be made to the landowner and
reimbursement required from the farmer-beneficiaries. Such innovations as "progressive
compensation" and "State-subsidized compensation" were also proposed. In the end, however, no
special definition of the just compensation for the lands to be expropriated was reached by the
Commission.
50

On the other hand, there is nothing in the records either that militates against the assumptions we
are making of the general sentiments and intention of the members on the content and manner of
the payment to be made to the landowner in the light of the magnitude of the expenditure and the
limitations of the expropriator.
With these assumptions, the Court hereby declares that the content and manner of the just
compensation provided for in the afore- quoted Section 18 of the CARP Law is not violative of the
Constitution. We do not mind admitting that a certain degree of pragmatism has influenced our
decision on this issue, but after all this Court is not a cloistered institution removed from the realities
and demands of society or oblivious to the need for its enhancement. The Court is as acutely
anxious as the rest of our people to see the goal of agrarian reform achieved at last after the
frustrations and deprivations of our peasant masses during all these disappointing decades. We are
aware that invalidation of the said section will result in the nullification of the entire program, killing
the farmer's hopes even as they approach realization and resurrecting the spectre of discontent and
dissent in the restless countryside. That is not in our view the intention of the Constitution, and that is
not what we shall decree today.
Accepting the theory that payment of the just compensation is not always required to be made fully
in money, we find further that the proportion of cash payment to the other things of value constituting
the total payment, as determined on the basis of the areas of the lands expropriated, is not unduly
oppressive upon the landowner. It is noted that the smaller the land, the bigger the payment in
money, primarily because the small landowner will be needing it more than the big landowners, who
can afford a bigger balance in bonds and other things of value. No less importantly, the government
financial instruments making up the balance of the payment are "negotiable at any time." The other
modes, which are likewise available to the landowner at his option, are also not unreasonable
because payment is made in shares of stock, LBP bonds, other properties or assets, tax credits, and
other things of value equivalent to the amount of just compensation.
Admittedly, the compensation contemplated in the law will cause the landowners, big and small, not
a little inconvenience. As already remarked, this cannot be avoided. Nevertheless, it is devoutly
hoped that these countrymen of ours, conscious as we know they are of the need for their
forebearance and even sacrifice, will not begrudge us their indispensable share in the attainment of
the ideal of agrarian reform. Otherwise, our pursuit of this elusive goal will be like the quest for the
Holy Grail.
The complaint against the effects of non-registration of the land under E.O. No. 229 does not seem
to be viable any more as it appears that Section 4 of the said Order has been superseded by Section
14 of the CARP Law. This repeats the requisites of registration as embodied in the earlier measure
but does not provide, as the latter did, that in case of failure or refusal to register the land, the
valuation thereof shall be that given by the provincial or city assessor for tax purposes. On the
contrary, the CARP Law says that the just compensation shall be ascertained on the basis of the
factors mentioned in its Section 17 and in the manner provided for in Section 16.
The last major challenge to CARP is that the landowner is divested of his property even before
actual payment to him in full of just compensation, in contravention of a well- accepted principle of
eminent domain.
The recognized rule, indeed, is that title to the property expropriated shall pass from the owner to the
expropriator only upon full payment of the just compensation. Jurisprudence on this settled principle
is consistent both here and in other democratic jurisdictions. Thus:
Title to property which is the subject of condemnation proceedings does not vest the condemnor
until the judgment fixing just compensation is entered and paid, but the condemnor's title relates
back to the date on which the petition under the Eminent Domain Act, or the commissioner's report
under the Local Improvement Act, is filed.
51

... although the right to appropriate and use land taken for a canal is complete at the time of entry,
title to the property taken remains in the owner until payment is actually made.
52
(Emphasis
supplied.)
In Kennedy v. Indianapolis,
53
the US Supreme Court cited several cases holding that title to property
does not pass to the condemnor until just compensation had actually been made. In fact, the decisions
appear to be uniformly to this effect. As early as 1838, in Rubottom v. McLure,
54
it was held that "actual
payment to the owner of the condemned property was a condition precedent to the investment of the title
to the property in the State" albeit "not to the appropriation of it to public use." In Rexford v. Knight,
55
the
Court of Appeals of New York said that the construction upon the statutes was that the fee did not vest in
the State until the payment of the compensation although the authority to enter upon and appropriate the
land was complete prior to the payment. Kennedy further said that "both on principle and authority the
rule is ... that the right to enter on and use the property is complete, as soon as the property is actually
appropriated under the authority of law for a public use, but that the title does not pass from the owner
without his consent, until just compensation has been made to him."
Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes,
56
that:
If the laws which we have exhibited or cited in the preceding discussion are
attentively examined it will be apparent that the method of expropriation adopted in
this jurisdiction is such as to afford absolute reassurance that no piece of land can be
finally and irrevocably taken from an unwilling owner until compensation is paid ...
. (Emphasis supplied.)
It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as October 21, 1972
and declared that he shall "be deemed the owner" of a portion of land consisting of a family-sized
farm except that "no title to the land owned by him was to be actually issued to him unless and until
he had become a full-fledged member of a duly recognized farmers' cooperative." It was understood,
however, that full payment of the just compensation also had to be made first, conformably to the
constitutional requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
All qualified farmer-beneficiaries are now deemed full owners as of October 21, 1972
of the land they acquired by virtue of Presidential Decree No. 27. (Emphasis
supplied.)
it was obviously referring to lands already validly acquired under the said decree, after proof of full-
fledged membership in the farmers' cooperatives and full payment of just compensation. Hence, it
was also perfectly proper for the Order to also provide in its Section 2 that the "lease rentals paid to
the landowner by the farmer- beneficiary after October 21, 1972 (pending transfer of ownership after
full payment of just compensation), shall be considered as advance payment for the land."
The CARP Law, for its part, conditions the transfer of possession and ownership of the land to the
government on receipt by the landowner of the corresponding payment or the deposit by the DAR of
the compensation in cash or LBP bonds with an accessible bank. Until then, title also remains with
the landowner.
57
No outright change of ownership is contemplated either.
Hence, the argument that the assailed measures violate due process by arbitrarily transferring title
before the land is fully paid for must also be rejected.
It is worth stressing at this point that all rights acquired by the tenant-farmer under P.D. No. 27, as
recognized under E.O. No. 228, are retained by him even now under R.A. No. 6657. This should
counter-balance the express provision in Section 6 of the said law that "the landowners whose lands
have been covered by Presidential Decree No. 27 shall be allowed to keep the area originally
retained by them thereunder, further, That original homestead grantees or direct compulsory heirs
who still own the original homestead at the time of the approval of this Act shall retain the same
areas as long as they continue to cultivate said homestead."
In connection with these retained rights, it does not appear in G.R. No. 78742 that the appeal filed by
the petitioners with the Office of the President has already been resolved. Although we have said
that the doctrine of exhaustion of administrative remedies need not preclude immediate resort to
judicial action, there are factual issues that have yet to be examined on the administrative level,
especially the claim that the petitioners are not covered by LOI 474 because they do not own other
agricultural lands than the subjects of their petition.
Obviously, the Court cannot resolve these issues. In any event, assuming that the petitioners have
not yet exercised their retention rights, if any, under P.D. No. 27, the Court holds that they are
entitled to the new retention rights provided for by R.A. No. 6657, which in fact are on the whole
more liberal than those granted by the decree.
V
The CARP Law and the other enactments also involved in these cases have been the subject of
bitter attack from those who point to the shortcomings of these measures and ask that they be
scrapped entirely. To be sure, these enactments are less than perfect; indeed, they should be
continuously re-examined and rehoned, that they may be sharper instruments for the better
protection of the farmer's rights. But we have to start somewhere. In the pursuit of agrarian reform,
we do not tread on familiar ground but grope on terrain fraught with pitfalls and expected difficulties.
This is inevitable. The CARP Law is not a tried and tested project. On the contrary, to use Justice
Holmes's words, "it is an experiment, as all life is an experiment," and so we learn as we venture
forward, and, if necessary, by our own mistakes. We cannot expect perfection although we should
strive for it by all means. Meantime, we struggle as best we can in freeing the farmer from the iron
shackles that have unconscionably, and for so long, fettered his soul to the soil.
By the decision we reach today, all major legal obstacles to the comprehensive agrarian reform
program are removed, to clear the way for the true freedom of the farmer. We may now glimpse the
day he will be released not only from want but also from the exploitation and disdain of the past and
from his own feelings of inadequacy and helplessness. At last his servitude will be ended forever. At
last the farm on which he toils will be his farm. It will be his portion of the Mother Earth that will give
him not only the staff of life but also the joy of living. And where once it bred for him only deep
despair, now can he see in it the fruition of his hopes for a more fulfilling future. Now at last can he
banish from his small plot of earth his insecurities and dark resentments and "rebuild in it the music
and the dream."
WHEREFORE, the Court holds as follows:
1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229 are
SUSTAINED against all the constitutional objections raised in the herein petitions.
2. Title to all expropriated properties shall be transferred to the State only upon full
payment of compensation to their respective owners.
3. All rights previously acquired by the tenant- farmers under P.D. No. 27 are
retained and recognized.
4. Landowners who were unable to exercise their rights of retention under P.D. No.
27 shall enjoy the retention rights granted by R.A. No. 6657 under the conditions
therein prescribed.
5. Subject to the above-mentioned rulings all the petitions are DISMISSED, without
pronouncement as to costs.
SO ORDERED.
G.R. No. 127876 December 17, 1999
ROXAS & CO., INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS, DEPARTMENT OF AGRARIAN REFORM,
SECRETARY OF AGRARIAN REFORM, DAR REGIONAL DIRECTOR FOR REGION IV,
MUNICIPAL AGRARIAN REFORM OFFICER OF NASUGBU, BATANGAS and DEPARTMENT
OF AGRARIAN REFORM ADJUDICATION BOARD,respondents.

PUNO, J .:
This case involves three (3) haciendas in Nasugbu, Batangas owned by petitioner and the validity of
the acquisition of these haciendas by the government under Republic Act No. 6657, the
Comprehensive Agrarian Reform Law of 1988.
Petitioner Roxas & Co. is a domestic corporation and is the registered owner of three haciendas,
namely, Haciendas Palico, Banilad and Caylaway, all located in the Municipality of Nasugbu,
Batangas. Hacienda Palico is 1,024 hectares in area and is registered under Transfer Certificate of
Title (TCT) No. 985. This land is covered by Tax Declaration Nos. 0465, 0466, 0468, 0470, 0234 and
0354. Hacienda Banilad is 1,050 hectares in area, registered under TCT No. 924 and covered by
Tax Declaration Nos. 0236, 0237 and 0390. Hacienda Caylaway is 867.4571 hectares in area and is
registered under TCT Nos. T-44662, T-44663, T-44664 and T-44665.
The events of this case occurred during the incumbency of then President Corazon C. Aquino. In
February 1986, President Aquino issued Proclamation No. 3 promulgating a Provisional Constitution.
As head of the provisional government, the President exercised legislative power "until a legislature
is elected and convened under a new Constitution."
1
In the exercise of this legislative power, the
President signed on July 22, 1987, Proclamation No. 131 instituting a Comprehensive Agrarian Reform
Program and Executive Order No. 229 providing the mechanisms necessary to initially implement the
program.
On July 27, 1987, the Congress of the Philippines formally convened and took over legislative power
from the President.
2
This Congress passed Republic Act No. 6657, the Comprehensive Agrarian Reform
Law (CARL) of 1988. The Act was signed by the President on June 10, 1988 and took effect on June 15,
1988.
Before the law's effectivity, on May 6, 1988, petitioner filed with respondent DAR a voluntary offer to
sell Hacienda Caylaway pursuant to the provisions of E.O. No. 229. Haciendas Palico and Banilad
were later placed under compulsory acquisition by respondent DAR in accordance with the CARL.
Hacienda Palico
On September 29, 1989, respondent DAR, through respondent Municipal Agrarian Reform Officer
(MARO) of Nasugbu, Batangas, sent a notice entitled "Invitation to Parties" to petitioner. The
Invitation was addressed to "Jaime Pimentel, Hda. Administrator, Hda. Palico."
3
Therein, the MARO
invited petitioner to a conference on October 6, 1989 at the DAR office in Nasugbu to discuss the results
of the DAR investigation of Hacienda Palico, which was "scheduled for compulsory acquisition this year
under the Comprehensive Agrarian Reform Program."
4

On October 25, 1989, the MARO completed three (3) Investigation Reports after investigation and
ocular inspection of the Hacienda. In the first Report, the MARO found that 270 hectares under Tax
Declaration Nos. 465, 466, 468 and 470 were "flat to undulating (0-8% slope)" and actually occupied
and cultivated by 34 tillers of sugarcane.
5
In the second Report, the MARO identified as "flat to
undulating" approximately 339 hectares under Tax Declaration No. 0234 which also had several actual
occupants and tillers of sugarcane;
6
while in the third Report, the MARO found approximately 75 hectare
under Tax Declaration No. 0354 as "flat to undulating" with 33 actual occupants and tillers also of
sugarcane.
7

On October 27, 1989, a "Summary Investigation Report" was submitted and signed jointly by the
MARO, representatives of the Barangay Agrarian Reform Committee (BARC) and Land Bank of the
Philippines (LBP), and by the Provincial Agrarian Reform Officer (PARO). The Report recommended
that 333.0800 hectares of Hacienda Palico be subject to compulsory acquisition at a value of
P6,807,622.20.
8
The following day, October 28, 1989, two (2) more Summary Investigation Reports
were submitted by the same officers and representatives. They recommended that 270.0876 hectares
and 75.3800 hectares be placed under compulsory acquisition at a compensation of P8,109,739.00 and
P2,188,195.47, respectively.
9

On December 12, 1989, respondent DAR through then Department Secretary Miriam D. Santiago
sent a "Notice of Acquisition" to petitioner. The Notice was addressed as follows:
Roxas y Cia, Limited
Soriano Bldg., Plaza Cervantes
Manila, Metro Manila.
10

Petitioner was informed that 1,023.999 hectares of its land in Hacienda Palico were subject to
immediate acquisition and distribution by the government under the CARL; that based on the DAR's
valuation criteria, the government was offering compensation of P3.4 million for 333.0800 hectares;
that whether this offer was to be accepted or rejected, petitioner was to inform the Bureau of Land
Acquisition and Distribution (BLAD) of the DAR; that in case of petitioner's rejection or failure to reply
within thirty days, respondent DAR shall conduct summary administrative proceedings with notice to
petitioner to determine just compensation for the land; that if petitioner accepts respondent DAR's
offer, or upon deposit of the compensation with an accessible bank if it rejects the same, the DAR
shall take immediate possession of the land.
11

Almost two years later, on September 26, 1991, the DAR Regional Director sent to the LBP Land
Valuation Manager three (3) separate Memoranda entitled "Request to Open Trust Account." Each
Memoranda requested that a trust account representing the valuation of three portions of Hacienda
Palico be opened in favor of the petitioner in view of the latter's rejection of its offered value.
12

Meanwhile in a letter dated May 4, 1993, petitioner applied with the DAR for conversion of
Haciendas Palico and Banilad from agricultural to non-agricultural lands under the provisions of the
CARL.
13
On July 14, 1993, petitioner sent a letter to the DAR Regional Director reiterating its request for
conversion of the two haciendas.
14

Despite petitioner's application for conversion, respondent DAR proceeded with the acquisition of the
two Haciendas. The LBP trust accounts as compensation for Hacienda Palico were replaced by
respondent DAR with cash and LBP bonds.
15
On October 22, 1993, from the mother title of TCT No.
985 of the Hacienda, respondent DAR registered Certificate of Land Ownership Award (CLOA) No. 6654.
On October 30, 1993, CLOA's were distributed to farmer beneficiaries.
16

Hacienda Banilad
On August 23, 1989, respondent DAR, through respondent MARO of Nasugbu, Batangas, sent a
notice to petitioner addressed as follows:
Mr. Jaime Pimentel
Hacienda Administrator
Hacienda Banilad
Nasugbu, Batangas
17

The MARO informed Pimentel that Hacienda Banilad was subject to compulsory acquisition
under the CARL; that should petitioner wish to avail of the other schemes such as Voluntary
Offer to Sell or Voluntary Land Transfer, respondent DAR was willing to provide assistance
thereto.
18

On September 18, 1989, the MARO sent an "Invitation to Parties" again to Pimentel inviting the latter
to attend a conference on September 21, 1989 at the MARO Office in Nasugbu to discuss the
results of the MARO's investigation over Hacienda Banilad.
19

On September 21, 1989, the same day the conference was held, the MARO submitted two (2)
Reports. In his first Report, he found that approximately 709 hectares of land under Tax Declaration
Nos. 0237 and 0236 were "flat to undulating (0-8% slope)." On this area were discovered 162 actual
occupants and tillers of sugarcane.
20
In the second Report, it was found that approximately 235
hectares under Tax Declaration No. 0390 were "flat to undulating," on which were 92 actual occupants
and tillers of sugarcane.
21

The results of these Reports were discussed at the conference. Present in the conference were
representatives of the prospective farmer beneficiaries, the BARC, the LBP, and Jaime Pimentel on
behalf of the landowner.
22
After the meeting, on the same day, September 21, 1989, a Summary
Investigation Report was submitted jointly by the MARO, representatives of the BARC, LBP, and the
PARO. They recommended that after ocular inspection of the property, 234.6498 hectares under Tax
Declaration No. 0390 be subject to compulsory acquisition and distribution by CLOA.
23
The following day,
September 22, 1989, a second Summary Investigation was submitted by the same officers. They
recommended that 737.2590 hectares under Tax Declaration Nos. 0236 and 0237 be likewise placed
under compulsory acquisition for distribution.
24

On December 12, 1989, respondent DAR, through the Department Secretary, sent to petitioner two
(2) separate "Notices of Acquisition" over Hacienda Banilad. These Notices were sent on the same
day as the Notice of Acquisition over Hacienda Palico. Unlike the Notice over Hacienda Palico,
however, the Notices over Hacienda Banilad were addressed to:
Roxas y Cia. Limited
7th Floor, Cacho-Gonzales Bldg. 101 Aguirre St., Leg.
Makati, Metro Manila.
25

Respondent DAR offered petitioner compensation of P15,108,995.52 for 729.4190 hectares
and P4,428,496.00 for 234.6498 hectares.
26

On September 26, 1991, the DAR Regional Director sent to the LBP Land Valuation Manager a
"Request to Open Trust Account" in petitioner's name as compensation for 234.6493 hectares of
Hacienda Banilad.
27
A second "Request to Open Trust Account" was sent on November 18, 1991 over
723.4130 hectares of said Hacienda.
28

On December 18, 1991, the LBP certified that the amounts of P4,428,496.40 and P21,234,468.78 in
cash and LBP bonds had been earmarked as compensation for petitioner's land in Hacienda
Banilad.
29

On May 4, 1993, petitioner applied for conversion of both Haciendas Palico and Banilad.
Hacienda Caylaway
Hacienda Caylaway was voluntarily offered for sale to the government on May 6, 1988 before the
effectivity of the CARL. The Hacienda has a total area of 867.4571 hectares and is covered by four
(4) titles TCT Nos. T-44662, T-44663, T-44664 and T-44665. On January 12, 1989, respondent
DAR, through the Regional Director for Region IV, sent to petitioner two (2) separate Resolutions
accepting petitioner's voluntary offer to sell Hacienda Caylaway, particularly TCT Nos. T-44664 and
T-44663.
30
The Resolutions were addressed to:
Roxas & Company, Inc.
7th Flr. Cacho-Gonzales Bldg.
Aguirre, Legaspi Village
Makati, M. M
31

On September 4, 1990, the DAR Regional Director issued two separate Memoranda to the LBP
Regional Manager requesting for the valuation of the land under TCT Nos. T-44664 and T-
44663.
32
On the same day, respondent DAR, through the Regional Director, sent to petitioner a "Notice
of Acquisition" over 241.6777 hectares under TCT No. T-44664 and 533.8180 hectares under TCT No. T-
44663.
33
Like the Resolutions of Acceptance, the Notice of Acquisition was addressed to petitioner at its
office in Makati, Metro Manila.
Nevertheless, on August 6, 1992, petitioner, through its President, Eduardo J. Roxas, sent a letter to
the Secretary of respondent DAR withdrawing its VOS of Hacienda Caylaway. The Sangguniang
Bayan of Nasugbu, Batangas allegedly authorized the reclassification of Hacienda Caylaway from
agricultural to non-agricultural. As a result, petitioner informed respondent DAR that it was applying
for conversion of Hacienda Caylaway from agricultural to other
uses.
34

In a letter dated September 28, 1992, respondent DAR Secretary informed petitioner that a
reclassification of the land would not exempt it from agrarian reform. Respondent Secretary also
denied petitioner's withdrawal of the VOS on the ground that withdrawal could only be based on
specific grounds such as unsuitability of the soil for agriculture, or if the slope of the land is over 18
degrees and that the land is undeveloped.
35

Despite the denial of the VOS withdrawal of Hacienda Caylaway, on May 11, 1993, petitioner filed its
application for conversion of both Haciendas Palico and Banilad.
36
On July 14, 1993, petitioner,
through its President, Eduardo Roxas, reiterated its request to withdraw the VOS over Hacienda
Caylaway in light of the following:
1) Certification issued by Conrado I. Gonzales, Officer-in-Charge, Department of
Agriculture, Region 4, 4th Floor, ATI (BA) Bldg., Diliman, Quezon City dated March 1,
1993 stating that the lands subject of referenced titles "are not feasible and
economically sound for further agricultural development.
2) Resolution No. 19 of the Sangguniang Bayan of Nasugbu, Batangas approving the
Zoning Ordinance reclassifying areas covered by the referenced titles to non-
agricultural which was enacted after extensive consultation with government
agencies, including [the Department of Agrarian Reform], and the requisite public
hearings.
3) Resolution No. 106 of the Sangguniang Panlalawigan of Batangas dated March 8,
1993 approving the Zoning Ordinance enacted by the Municipality of Nasugbu.
4) Letter dated December 15, 1992 issued by Reynaldo U. Garcia of the Municipal
Planning & Development, Coordinator and Deputized Zoning Administrator
addressed to Mrs. Alicia P. Logarta advising that the Municipality of Nasugbu,
Batangas has no objection to the conversion of the lands subject of referenced titles
to non-agricultural.
37

On August 24, 1993 petitioner instituted Case No. N-0017-96-46 (BA) with respondent DAR
Adjudication Board (DARAB) praying for the cancellation of the CLOA's issued by respondent DAR
in the name of several persons. Petitioner alleged that the Municipality of Nasugbu, where the
haciendas are located, had been declared a tourist zone, that the land is not suitable for agricultural
production, and that the Sangguniang Bayan of Nasugbu had reclassified the land to non-
agricultural.
In a Resolution dated October 14, 1993, respondent DARAB held that the case involved the
prejudicial question of whether the property was subject to agrarian reform, hence, this question
should be submitted to the Office of the Secretary of Agrarian Reform for determination.
38

On October 29, 1993, petitioner filed with the Court of Appeals CA-G.R. SP No. 32484. It questioned
the expropriation of its properties under the CARL and the denial of due process in the acquisition of
its landholdings.
Meanwhile, the petition for conversion of the three haciendas was denied by the MARO on
November 8, 1993.
Petitioner's petition was dismissed by the Court of Appeals on April 28, 1994.
39
Petitioner moved for
reconsideration but the motion was denied on January 17, 1997 by respondent court.
40

Hence, this recourse. Petitioner assigns the following errors:
A. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT
PETITIONER'S CAUSE OF ACTION IS PREMATURE FOR FAILURE TO EXHAUST
ADMINISTRATIVE REMEDIES IN VIEW OF THE PATENT ILLEGALITY OF THE
RESPONDENTS' ACTS, THE IRREPARABLE DAMAGE CAUSED BY SAID
ILLEGAL ACTS, AND THE ABSENCE OF A PLAIN, SPEEDY AND ADEQUATE
REMEDY IN THE ORDINARY COURSE OF LAW ALL OF WHICH ARE
EXCEPTIONS TO THE SAID DOCTRINE.
B. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT
PETITIONER'S LANDHOLDINGS ARE SUBJECT TO COVERAGE UNDER THE
COMPREHENSIVE AGRARIAN REFORM LAW, IN VIEW OF THE UNDISPUTED
FACT THAT PETITIONER'S LANDHOLDINGS HAVE BEEN CONVERTED TO
NON-AGRICULTURAL USES BY PRESIDENTIAL PROCLAMATION NO. 1520
WHICH DECLARED THE MUNICIPALITY NASUGBU, BATANGAS AS A TOURIST
ZONE, AND THE ZONING ORDINANCE OF THE MUNICIPALITY OF NASUGBU
RE-CLASSIFYING CERTAIN PORTIONS OF PETITIONER'S LANDHOLDINGS AS
NON-AGRICULTURAL, BOTH OF WHICH PLACE SAID LANDHOLDINGS
OUTSIDE THE SCOPE OF AGRARIAN REFORM, OR AT THE VERY LEAST
ENTITLE PETITIONER TO APPLY FOR CONVERSION AS CONCEDED BY
RESPONDENT DAR.
C. RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO
DECLARE THE PROCEEDINGS BEFORE RESPONDENT DAR VOID FOR
FAILURE TO OBSERVE DUE PROCESS, CONSIDERING THAT RESPONDENTS
BLATANTLY DISREGARDED THE PROCEDURE FOR THE ACQUISITION OF
PRIVATE LANDS UNDER R.A. 6657, MORE PARTICULARLY, IN FAILING TO
GIVE DUE NOTICE TO THE PETITIONER AND TO PROPERLY IDENTIFY THE
SPECIFIC AREAS SOUGHT TO BE ACQUIRED.
D. RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO
RECOGNIZE THAT PETITIONER WAS BRAZENLY AND ILLEGALLY DEPRIVED
OF ITS PROPERTY WITHOUT JUST COMPENSATION, CONSIDERING THAT
PETITIONER WAS NOT PAID JUST COMPENSATION BEFORE IT WAS
UNCEREMONIOUSLY STRIPPED OF ITS LANDHOLDINGS THROUGH THE
ISSUANCE OF CLOA'S TO ALLEGED FARMER BENEFICIARIES, IN VIOLATION
OF R.A. 6657.
41

The assigned errors involve three (3) principal issues: (1) whether this Court can take cognizance of
this petition despite petitioner's failure to exhaust administrative remedies; (2) whether the
acquisition proceedings over the three haciendas were valid and in accordance with law; and (3)
assuming the haciendas may be reclassified from agricultural to non-agricultural, whether this court
has the power to rule on this issue.
I. Exhaustion of Administrative Remedies.
In its first assigned error, petitioner claims that respondent Court of Appeals gravely erred in finding
that petitioner failed to exhaust administrative remedies. As a general rule, before a party may be
allowed to invoke the jurisdiction of the courts of justice, he is expected to have exhausted all means
of administrative redress. This is not absolute, however. There are instances when judicial action
may be resorted to immediately. Among these exceptions are: (1) when the question raised is purely
legal; (2) when the administrative body is in estoppel; (3) when the act complained of is patently
illegal; (4) when there is urgent need for judicial intervention; (5) when the respondent acted in
disregard of due process; (6) when the respondent is a department secretary whose acts, as an alter
ego of the President, bear the implied or assumed approval of the latter; (7) when irreparable
damage will be suffered; (8) when there is no other plain, speedy and adequate remedy; (9) when
strong public interest is involved; (10) when the subject of the controversy is private land; and (11)
in quo warranto proceedings.
42

Petitioner rightly sought immediate redress in the courts. There was a violation of its rights and to
require it to exhaust administrative remedies before the DAR itself was not a plain, speedy and
adequate remedy.
Respondent DAR issued Certificates of Land Ownership Award (CLOA's) to farmer beneficiaries
over portions of petitioner's land without just compensation to petitioner. A Certificate of Land
Ownership Award (CLOA) is evidence of ownership of land by a beneficiary under R.A. 6657, the
Comprehensive Agrarian Reform Law of 1988.
43
Before this may be awarded to a farmer beneficiary,
the land must first be acquired by the State from the landowner and ownership transferred to the former.
The transfer of possession and ownership of the land to the government are conditioned upon
the receipt by the landowner of the corresponding payment or deposit by the DAR of the compensation
with an accessible bank. Until then, title remains with the landowner.
44
There was no receipt by petitioner
of any compensation for any of the lands acquired by the government.
The kind of compensation to be paid the landowner is also specific. The law provides that the
deposit must be made only in "cash" or "LBP bonds."
45
Respondent DAR's opening of trust account
deposits in petitioner' s name with the Land Bank of the Philippines does not constitute payment under
the law. Trust account deposits are not cash or LBP bonds. The replacement of the trust account with
cash or LBP bonds did not ipso facto cure the lack of compensation; for essentially, the determination of
this compensation was marred by lack of due process. In fact, in the entire acquisition proceedings,
respondent DAR disregarded the basic requirements of administrative due process. Under these
circumstances, the issuance of the CLOA's to farmer beneficiaries necessitated immediate judicial action
on the part of the petitioner.
II. The Validity of the Acquisition Proceedings Over the Haciendas.
Petitioner's allegation of lack of due process goes into the validity of the acquisition proceedings
themselves. Before we rule on this matter, however, there is need to lay down the procedure in the
acquisition of private lands under the provisions of the law.
A. Modes of Acquisition of Land under R. A. 6657
Republic Act No. 6657, the Comprehensive Agrarian Reform Law of 1988 (CARL), provides for two
(2) modes of acquisition of private land: compulsory and voluntary. The procedure for the
compulsory acquisition of private lands is set forth in Section 16 of R.A. 6657, viz:
Sec. 16. Procedure for Acquisition of Private Lands. For purposes of acquisition of
private lands, the following procedures shall be followed:
a). After having identified the land, the landowners and the
beneficiaries, the DAR shall send its notice to acquire the land to the
owners thereof, by personal delivery or registered mail, and post the
same in a conspicuous place in the municipal building and barangay
hall of the place where the property is located. Said notice shall
contain the offer of the DAR to pay a corresponding value in
accordance with the valuation set forth in Sections 17, 18, and other
pertinent provisions hereof.
b) Within thirty (30) days from the date of receipt of written notice by
personal delivery or registered mail, the landowner, his administrator
or representative shall inform the DAR of his acceptance or rejection
of the offer.
c) If the landowner accepts the offer of the DAR, the LBP shall pay
the landowner the purchase price of the land within thirty (30) days
after he executes and delivers a deed of transfer in favor of the
Government and surrenders the Certificate of Title and other
muniments of title.
d) In case of rejection or failure to reply, the DAR shall conduct
summary administrative proceedings to determine the compensation
for the land requiring the landowner, the LBP and other interested
parties to submit evidence as to the just compensation for the land,
within fifteen (15) days from receipt of the notice. After the expiration
of the above period, the matter is deemed submitted for decision. The
DAR shall decide the case within thirty (30) days after it is submitted
for decision.
e) Upon receipt by the landowner of the corresponding payment, or,
in case of rejection or no response from the landowner, upon the
deposit with an accessible bank designated by the DAR of the
compensation in cash or in LBP bonds in accordance with this Act,
the DAR shall take immediate possession of the land and shall
request the proper Register of Deeds to issue a Transfer Certificate
of Title (TCT) in the name of the Republic of the Philippines. The
DAR shall thereafter proceed with the redistribution of the land to the
qualified beneficiaries.
f) Any party who disagrees with the decision may bring the matter to
the court of proper jurisdiction for final determination of just
compensation.
In the compulsory acquisition of private lands, the landholding, the landowners and the farmer
beneficiaries must first be identified. After identification, the DAR shall send a Notice of Acquisition to
the landowner, by personal delivery or registered mail, and post it in a conspicuous place in the
municipal building and barangay hall of the place where the property is located. Within thirty days
from receipt of the Notice of Acquisition, the landowner, his administrator or representative shall
inform the DAR of his acceptance or rejection of the offer. If the landowner accepts, he executes and
delivers a deed of transfer in favor of the government and surrenders the certificate of title. Within
thirty days from the execution of the deed of transfer, the Land Bank of the Philippines (LBP) pays
the owner the purchase price. If the landowner rejects the DAR's offer or fails to make a reply, the
DAR conducts summary administrative proceedings to determine just compensation for the land.
The landowner, the LBP representative and other interested parties may submit evidence on just
compensation within fifteen days from notice. Within thirty days from submission, the DAR shall
decide the case and inform the owner of its decision and the amount of just compensation. Upon
receipt by the owner of the corresponding payment, or, in case of rejection or lack of response from
the latter, the DAR shall deposit the compensation in cash or in LBP bonds with an accessible bank.
The DAR shall immediately take possession of the land and cause the issuance of a transfer
certificate of title in the name of the Republic of the Philippines. The land shall then be redistributed
to the farmer beneficiaries. Any party may question the decision of the DAR in the regular courts for
final determination of just compensation.
The DAR has made compulsory acquisition the priority mode of the land acquisition to hasten the
implementation of the Comprehensive Agrarian Reform Program (CARP).
46
Under Section 16 of the
CARL, the first step in compulsory acquisition is the identification of the land, the landowners and the
beneficiaries. However, the law is silent on how the identification process must be made. To fill in this
gap, the DAR issued on July 26, 1989 Administrative Order No.12, Series or 1989, which set the
operating procedure in the identification of such lands. The procedure is as follows:
II. OPERATING PROCEDURE
A. The Municipal Agrarian Reform Officer, with the assistance of the pertinent
Barangay Agrarian Reform Committee (BARC), shall:
1. Update the masterlist of all agricultural lands covered under the
CARP in his area of responsibility. The masterlist shall include such
information as required under the attached CARP Masterlist Form
which shall include the name of the landowner, landholding area,
TCT/OCT number, and tax declaration number.
2. Prepare a Compulsory Acquisition Case Folder (CACF) for each
title (OCT/TCT) or landholding covered under Phase I and II of the
CARP except those for which the landowners have already filed
applications to avail of other modes of land acquisition. A case folder
shall contain the following duly accomplished forms:
a) CARP CA Form 1 MARO Investigation Report
b) CARP CA Form 2 Summary Investigation
Report of Findings and Evaluation
c) CARP CA Form 3 Applicant's Information Sheet
d) CARP CA Form 4 Beneficiaries Undertaking
e) CARP CA Form 5 Transmittal Report to the
PARO
The MARO/BARC shall certify that all information contained in the
above-mentioned forms have been examined and verified by him and
that the same are true and correct.
3. Send a Notice of Coverage and a letter of invitation to a
conference/meeting to the landowner covered by the Compulsory
Case Acquisition Folder. Invitations to the said conference/meeting
shall also be sent to the prospective farmer-beneficiaries, the BARC
representative(s), the Land Bank of the Philippines (LBP)
representative, and other interested parties to discuss the inputs to
the valuation of the property. He shall discuss the MARO/BARC
investigation report and solicit the views, objection, agreements or
suggestions of the participants thereon. The landowner shall also be
asked to indicate his retention area. The minutes of the meeting shall
be signed by all participants in the conference and shall form an
integral part of the CACF.
4. Submit all completed case folders to the Provincial Agrarian
Reform Officer (PARO).
B. The PARO shall:
1. Ensure that the individual case folders are forwarded to him by his
MAROs.
2. Immediately upon receipt of a case folder, compute the valuation of
the land in accordance with A.O. No. 6, Series of 1988.
47
The
valuation worksheet and the related CACF valuation forms shall be duly
certified correct by the PARO and all the personnel who participated in
the accomplishment of these forms.
3. In all cases, the PARO may validate the report of the MARO
through ocular inspection and verification of the property. This ocular
inspection and verification shall be mandatory when the computed
value exceeds = 500,000 per estate.
4. Upon determination of the valuation, forward the case folder,
together with the duly accomplished valuation forms and his
recommendations, to the Central Office. The LBP representative and
the MARO concerned shall be furnished a copy each of his report.
C. DAR Central Office, specifically through the Bureau of Land
Acquisition and Distribution (BLAD), shall:
1. Within three days from receipt of the case folder from the PARO,
review, evaluate and determine the final land valuation of the property
covered by the case folder. A summary review and evaluation report
shall be prepared and duly certified by the BLAD Director and the
personnel directly participating in the review and final valuation.
2. Prepare, for the signature of the Secretary or her duly authorized
representative, a Notice of Acquisition (CARP CA Form 8) for the
subject property. Serve the Notice to the landowner personally or
through registered mail within three days from its approval. The
Notice shall include, among others, the area subject of compulsory
acquisition, and the amount of just compensation offered by DAR.
3. Should the landowner accept the DAR's offered value, the BLAD
shall prepare and submit to the Secretary for approval the Order of
Acquisition. However, in case of rejection or non-reply, the DAR
Adjudication Board (DARAB) shall conduct a summary administrative
hearing to determine just compensation, in accordance with the
procedures provided under Administrative Order No. 13, Series of
1989. Immediately upon receipt of the DARAB's decision on just
compensation, the BLAD shall prepare and submit to the Secretary
for approval the required Order of Acquisition.
4. Upon the landowner's receipt of payment, in case of acceptance,
or upon deposit of payment in the designated bank, in case of
rejection or non-response, the Secretary shall immediately direct the
pertinent Register of Deeds to issue the corresponding Transfer
Certificate of Title (TCT) in the name of the Republic of the
Philippines. Once the property is transferred, the DAR, through the
PARO, shall take possession of the land for redistribution to qualified
beneficiaries.
Administrative Order No. 12, Series of 1989 requires that the Municipal Agrarian Reform Officer
(MARO) keep an updated master list of all agricultural lands under the CARP in his area of
responsibility containing all the required information. The MARO prepares a Compulsory Acquisition
Case Folder (CACF) for each title covered by CARP. The MARO then sends the landowner a
"Notice of Coverage" and a "letter of invitation" to a "conference/meeting" over the land covered by
the CACF. He also sends invitations to the prospective farmer-beneficiaries the representatives of
the Barangay Agrarian Reform Committee (BARC), the Land Bank of the Philippines (LBP) and
other interested parties to discuss the inputs to the valuation of the property and solicit views,
suggestions, objections or agreements of the parties. At the meeting, the landowner is asked to
indicate his retention area.
The MARO shall make a report of the case to the Provincial Agrarian Reform Officer (PARO) who
shall complete the valuation of the land. Ocular inspection and verification of the property by the
PARO shall be mandatory when the computed value of the estate exceeds P500,000.00. Upon
determination of the valuation, the PARO shall forward all papers together with his recommendation
to the Central Office of the DAR. The DAR Central Office, specifically, the Bureau of Land
Acquisition and Distribution (BLAD), shall review, evaluate and determine the final land valuation of
the property. The BLAD shall prepare, on the signature of the Secretary or his duly authorized
representative, a Notice of Acquisition for the subject property.
48
From this point, the provisions of
Section 16 of R.A. 6657 then apply.
49

For a valid implementation of the CAR program, two notices are required: (1) the Notice of Coverage
and letter of invitation to a preliminary conference sent to the landowner, the representatives of the
BARC, LBP, farmer beneficiaries and other interested parties pursuant to DAR A.O. No. 12, Series
of 1989; and (2) the Notice of Acquisition sent to the landowner under Section 16 of the CARL.
The importance of the first notice, i.e., the Notice of Coverage and the letter of invitation to the
conference, and its actual conduct cannot be understated. They are steps designed to comply with
the requirements of administrative due process. The implementation of the CARL is an exercise of
the State's police power and the power of eminent domain. To the extent that the CARL prescribes
retention limits to the landowners, there is an exercise of police power for the regulation of private
property in accordance with the Constitution.
50
But where, to carry out such regulation, the owners are
deprived of lands they own in excess of the maximum area allowed, there is also a taking under the
power of eminent domain. The taking contemplated is not a mere limitation of the use of the land. What is
required is the surrender of the title to and physical possession of the said excess and all beneficial rights
accruing to the owner in favor of the farmer beneficiary.
51
The Bill of Rights provides that "[n]o person
shall be deprived of life, liberty or property without due process of law."
52
The CARL was not intended to
take away property without due process of law.
53
The exercise of the power of eminent domain requires
that due process be observed in the taking of private property.
DAR A.O. No. 12, Series of 1989, from whence the Notice of Coverage first sprung, was amended in
1990 by DAR A.O. No. 9, Series of 1990 and in 1993 by DAR A.O. No. 1, Series of 1993. The Notice
of Coverage and letter of invitation to the conference meeting were expanded and amplified in said
amendments.
DAR A.O. No. 9, Series of 1990 entitled "Revised Rules Governing the Acquisition of Agricultural
Lands Subject of Voluntary Offer to Sell and Compulsory Acquisition Pursuant to R.A. 6657,"
requires that:
B. MARO
1. Receives the duly accomplished CARP Form Nos.
1 & 1.1 including supporting documents.
2. Gathers basic ownership documents listed under
1.a or 1.b above and prepares corresponding
VOCF/CACF by landowner/landholding.
3. Notifies/invites the landowner and representatives
of the LBP, DENR, BARC and prospective
beneficiaries of the schedule of ocular inspection of
the property at least one week in advance.
4. MARO/LAND BANK FIELD OFFICE/BARC
a) Identify the land and landowner,
and determine the suitability for
agriculture and productivity of the land
and jointly prepare Field Investigation
Report (CARP Form No. 2), including
the Land Use Map of the property.
b) Interview applicants and assist
them in the preparation of the
Application For Potential CARP
Beneficiary (CARP Form No. 3).
c) Screen prospective farmer-
beneficiaries and for those found
qualified, cause the signing of the
respective Application to Purchase
and Farmer's Undertaking (CARP
Form No. 4).
d) Complete the Field Investigation
Report based on the result of the
ocular inspection/investigation of the
property and documents submitted.
See to it that Field Investigation
Report is duly accomplished and
signed by all concerned.
5. MARO
a) Assists the DENR Survey Party in
the conduct of a boundary/ subdivision
survey delineating areas covered by
OLT, retention, subject of VOS, CA
(by phases, if possible),
infrastructures, etc., whichever is
applicable.
b) Sends Notice of Coverage (CARP
Form No. 5) to landowner concerned
or his duly authorized representative
inviting him for a conference.
c) Sends Invitation Letter (CARP Form
No. 6) for a conference/public hearing
to prospective farmer-beneficiaries,
landowner, representatives of BARC,
LBP, DENR, DA, NGO's, farmers'
organizations and other interested
parties to discuss the following
matters:
Result of Field
Investigation
Inputs to valuation
Issues raised
Comments/recommen
dations by all parties
concerned.
d) Prepares Summary of Minutes of
the conference/public hearing to be
guided by CARP Form No. 7.
e) Forwards the completed
VOCF/CACF to the Provincial
Agrarian Reform Office (PARO) using
CARP Form No. 8 (Transmittal Memo
to PARO).
xxx xxx xxx
DAR A.O. No. 9, Series of 1990 lays down the rules on both Voluntary Offer to Sell (VOS) and
Compulsory Acquisition (CA) transactions involving lands enumerated under Section 7 of the
CARL.
54
In both VOS and CA. transactions, the MARO prepares the Voluntary Offer to Sell Case Folder
(VOCF) and the Compulsory Acquisition Case Folder (CACF), as the case may be, over a particular
landholding. The MARO notifies the landowner as well as representatives of the LBP, BARC and
prospective beneficiaries of the date of the ocular inspection of the property at least one week before the
scheduled date and invites them to attend the same. The MARO, LBP or BARC conducts the ocular
inspection and investigation by identifying the land and landowner, determining the suitability of the land
for agriculture and productivity, interviewing and screening prospective farmer beneficiaries. Based on its
investigation, the MARO, LBP or BARC prepares the Field Investigation Report which shall be signed by
all parties concerned. In addition to the field investigation, a boundary or subdivision survey of the land
may also be conducted by a Survey Party of the Department of Environment and Natural Resources
(DENR) to be assisted by the MARO.
55
This survey shall delineate the areas covered by Operation Land
Transfer (OLT), areas retained by the landowner, areas with infrastructure, and the areas subject to VOS
and CA. After the survey and field investigation, the MARO sends a "Notice of Coverage" to the
landowner or his duly authorized representative inviting him to a conference or public hearing with the
farmer beneficiaries, representatives of the BARC, LBP, DENR, Department of Agriculture (DA), non-
government organizations, farmer's organizations and other interested parties. At the public hearing, the
parties shall discuss the results of the field investigation, issues that may be raised in relation thereto,
inputs to the valuation of the subject landholding, and other comments and recommendations by all
parties concerned. The Minutes of the conference/public hearing shall form part of the VOCF or CACF
which files shall be forwarded by the MARO to the PARO. The PARO reviews, evaluates and validates
the Field Investigation Report and other documents in the VOCF/CACF. He then forwards the records to
the RARO for another review.
DAR A.O. No. 9, Series of 1990 was amended by DAR A.O. No. 1, Series of 1993. DAR A.O. No. 1,
Series of 1993 provided, among others, that:
IV. OPERATING PROCEDURES:
Steps Responsible Activity Forms/
Agency/Unit Document
(requirements)
A. Identification and
Documentation
xxx xxx xxx
5 DARMO Issue Notice of Coverage CARP
to LO by personal delivery Form No. 2
with proof of service, or
registered mail with return
card, informing him that his
property is now under CARP
coverage and for LO to select
his retention area, if he desires
to avail of his right of retention;
and at the same time invites him
to join the field investigation to
be conducted on his property
which should be scheduled at
least two weeks in advance of
said notice.
A copy of said Notice shall CARP
be posted for at least one Form No. 17
week on the bulletin board of
the municipal and barangay
halls where the property is
located. LGU office concerned
notifies DAR about compliance
with posting requirements thru
return indorsement on CARP
Form No. 17.
6 DARMO Send notice to the LBP, CARP
BARC, DENR representatives Form No. 3
and prospective ARBs of the schedule of the field investigation
to be conducted on the subject
property.
7 DARMO With the participation of CARP
BARC the LO, representatives of Form No. 4
LBP the LBP, BARC, DENR Land Use
DENR and prospective ARBs, Map
Local Office conducts the investigation on
subject property to identify
the landholding, determines
its suitability and productivity;
and jointly prepares the Field
Investigation Report (FIR)
and Land Use Map. However,
the field investigation shall
proceed even if the LO, the
representatives of the DENR and
prospective ARBs are not available
provided, they were given due
notice of the time and date of
investigation to be conducted.
Similarly, if the LBP representative
is not available or could not come
on the scheduled date, the field
investigation shall also be conducted,
after which the duly accomplished
Part I of CARP Form No. 4 shall
be forwarded to the LBP
representative for validation. If he agrees
to the ocular inspection report of DAR,
he signs the FIR (Part I) and
accomplishes Part II thereof.
In the event that there is a
difference or variance between
the findings of the DAR and the
LBP as to the propriety of
covering the land under CARP,
whether in whole or in part, on
the issue of suitability to agriculture,
degree of development or slope,
and on issues affecting idle lands,
the conflict shall be resolved by
a composite team of DAR, LBP,
DENR and DA which shall jointly
conduct further investigation
thereon. The team shall submit its
report of findings which shall be
binding to both DAR and LBP,
pursuant to Joint Memorandum
Circular of the DAR, LBP, DENR
and DA dated 27 January 1992.
8 DARMO Screen prospective ARBs
BARC and causes the signing of CARP
the Application of Purchase Form No. 5
and Farmer's Undertaking
(APFU).
9 DARMO Furnishes a copy of the CARP
duly accomplished FIR to Form No. 4
the landowner by personal
delivery with proof of
service or registered mail
will return card and posts
a copy thereof for at least
one week on the bulletin
board of the municipal
and barangay halls where
the property is located.
LGU office concerned CARP
notifies DAR about Form No. 17
compliance with posting
requirement thru return
endorsement on CARP
Form No. 17.
B. Land Survey
10 DARMO Conducts perimeter or Perimeter
And/or segregation survey or
DENR delineating areas covered Segregation
Local Office by OLT, "uncarpable Survey Plan
areas such as 18% slope
and above, unproductive/
unsuitable to agriculture,
retention, infrastructure.
In case of segregation or
subdivision survey, the
plan shall be approved
by DENR-LMS.
C. Review and Completion
of Documents
11. DARMO Forward VOCF/CACF CARP
to DARPO. Form No. 6
xxx xxx xxx.
DAR A.O. No. 1, Series of 1993, modified the identification process and increased the number of
government agencies involved in the identification and delineation of the land subject to
acquisition.
56
This time, the Notice of Coverage is sent to the landowner before the conduct of the field
investigation and the sending must comply with specific requirements. Representatives of the DAR
Municipal Office (DARMO) must send the Notice of Coverage to the landowner by "personal delivery with
proof of service, or by registered mail with return card," informing him that his property is under CARP
coverage and that if he desires to avail of his right of retention, he may choose which area he shall retain.
The Notice of Coverage shall also invite the landowner to attend the field investigation to be scheduled at
least two weeks from notice. The field investigation is for the purpose of identifying the landholding and
determining its suitability for agriculture and its productivity. A copy of the Notice of Coverage shall be
posted for at least one week on the bulletin board of the municipal and barangay halls where the property
is located. The date of the field investigation shall also be sent by the DAR Municipal Office to
representatives of the LBP, BARC, DENR and prospective farmer beneficiaries. The field investigation
shall be conducted on the date set with the participation of the landowner and the various
representatives. If the landowner and other representatives are absent, the field investigation shall
proceed, provided they were duly notified thereof. Should there be a variance between the findings of the
DAR and the LBP as to whether the land be placed under agrarian reform, the land's suitability to
agriculture, the degree or development of the slope, etc., the conflict shall be resolved by a composite
team of the DAR, LBP, DENR and DA which shall jointly conduct further investigation. The team's
findings shall be binding on both DAR and LBP. After the field investigation, the DAR Municipal Office
shall prepare the Field Investigation Report and Land Use Map, a copy of which shall be furnished the
landowner "by personal delivery with proof of service or registered mail with return card." Another copy of
the Report and Map shall likewise be posted for at least one week in the municipal or barangay halls
where the property is located.
Clearly then, the notice requirements under the CARL are not confined to the Notice of Acquisition
set forth in Section 16 of the law. They also include the Notice of Coverage first laid down in DAR
A.O. No. 12, Series of 1989 and subsequently amended in DAR A.O. No. 9, Series of 1990 and DAR
A.O. No. 1, Series of 1993. This Notice of Coverage does not merely notify the landowner that his
property shall be placed under CARP and that he is entitled to exercise his retention right; it also
notifies him, pursuant to DAR A.O. No. 9, Series of 1990, that a public hearing, shall be conducted
where he and representatives of the concerned sectors of society may attend to discuss the results
of the field investigation, the land valuation and other pertinent matters. Under DAR A.O. No. 1,
Series of 1993, the Notice of Coverage also informs the landowner that a field investigation of his
landholding shall be conducted where he and the other representatives may be present.
B. The Compulsory Acquisition of Haciendas Palico and Banilad
In the case at bar, respondent DAR claims that it, through MARO Leopoldo C. Lejano, sent a letter
of invitation entitled "Invitation to Parties" dated September 29, 1989 to petitioner corporation,
through Jaime Pimentel, the administrator of Hacienda Palico.
57
The invitation was received on the
same day it was sent as indicated by a signature and the date received at the bottom left corner of said
invitation. With regard to Hacienda Banilad, respondent DAR claims that Jaime Pimentel, administrator
also of Hacienda Banilad, was notified and sent an invitation to the conference. Pimentel actually
attended the conference on September 21, 1989 and signed the Minutes of the meeting on behalf of
petitioner corporation.
58
The Minutes was also signed by the representatives of the BARC, the LBP and
farmer beneficiaries.
59
No letter of invitation was sent or conference meeting held with respect to
Hacienda Caylaway because it was subject to a Voluntary Offer to Sell to respondent DAR.
60

When respondent DAR, through the Municipal Agrarian Reform Officer (MARO), sent to the various
parties the Notice of Coverage and invitation to the conference, DAR A.O. No. 12, Series of 1989
was already in effect more than a month earlier. The Operating Procedure in DAR Administrative
Order No. 12 does not specify how notices or letters of invitation shall be sent to the landowner, the
representatives of the BARC, the LBP, the farmer beneficiaries and other interested parties. The
procedure in the sending of these notices is important to comply with the requisites of due process
especially when the owner, as in this case, is a juridical entity. Petitioner is a domestic
corporation,
61
and therefore, has a personality separate and distinct from its shareholders, officers and
employees.
The Notice of Acquisition in Section 16 of the CARL is required to be sent to the landowner by
"personal delivery or registered mail." Whether the landowner be a natural or juridical person to
whose address the Notice may be sent by personal delivery or registered mail, the law does not
distinguish. The DAR Administrative Orders also do not distinguish. In the proceedings before the
DAR, the distinction between natural and juridical persons in the sending of notices may be found in
the Revised Rules of Procedure of the DAR Adjudication Board (DARAB). Service of pleadings
before the DARAB is governed by Section 6, Rule V of the DARAB Revised Rules of Procedure.
Notices and pleadings are served on private domestic corporations or partnerships in the following
manner:
Sec. 6. Service upon Private Domestic Corporation or Partnership. If the
defendant is a corporation organized under the laws of the Philippines or a
partnership duly registered, service may be made on the president, manager,
secretary, cashier, agent, or any of its directors or partners.
Similarly, the Revised Rules of Court of the Philippines, in Section 13, Rule 14 provides:
Sec. 13. Service upon private domestic corporation or partnership. If the
defendant is a corporation organized under the laws of the Philippines or a
partnership duly registered, service may be made on the president, manager,
secretary, cashier, agent, or any of its directors.
Summonses, pleadings and notices in cases against a private domestic corporation before the
DARAB and the regular courts are served on the president, manager, secretary, cashier, agent or
any of its directors. These persons are those through whom the private domestic corporation or
partnership is capable of action.
62

Jaime Pimentel is not the president, manager, secretary, cashier or director of petitioner
corporation. Is he, as administrator of the two Haciendas, considered an agent of the corporation?
The purpose of all rules for service of process on a corporation is to make it reasonably certain that
the corporation will receive prompt and proper notice in an action against it.
63
Service must be made
on a representative so integrated with the corporation as to make it a priori supposable that he will realize
his responsibilities and know what he should do with any legal papers served on him,
64
and bring home
to the corporation notice of the filing of the action.
65
Petitioner's evidence does not show the official duties
of Jaime Pimentel as administrator of petitioner's haciendas. The evidence does not indicate whether
Pimentel's duties is so integrated with the corporation that he would immediately realize his
responsibilities and know what he should do with any legal papers served on him. At the time the notices
were sent and the preliminary conference conducted, petitioner's principal place of business was listed in
respondent DAR's records as "Soriano Bldg., Plaza Cervantes, Manila,"
66
and "7th Flr. Cacho-Gonzales
Bldg., 101 Aguirre St., Makati, Metro Manila."
67
Pimentel did not hold office at the principal place of
business of petitioner. Neither did he exercise his functions in Plaza Cervantes, Manila nor in Cacho-
Gonzales Bldg., Makati, Metro Manila. He performed his official functions and actually resided in the
haciendas in Nasugbu, Batangas, a place over two hundred kilometers away from Metro Manila.
Curiously, respondent DAR had information of the address of petitioner's principal place of business.
The Notices of Acquisition over Haciendas Palico and Banilad were addressed to petitioner at its
offices in Manila and Makati. These Notices were sent barely three to four months after Pimentel
was notified of the preliminary conference.
68
Why respondent DAR chose to notify Pimentel instead of
the officers of the corporation was not explained by the said respondent.
Nevertheless, assuming that Pimentel was an agent of petitioner corporation, and the notices and
letters of invitation were validly served on petitioner through him, there is no showing that Pimentel
himself was duly authorized to attend the conference meeting with the MARO, BARC and LBP
representatives and farmer beneficiaries for purposes of compulsory acquisition of petitioner's
landholdings. Even respondent DAR's evidence does not indicate this authority. On the contrary,
petitioner claims that it had no knowledge of the letter-invitation, hence, could not have given
Pimentel the authority to bind it to whatever matters were discussed or agreed upon by the parties at
the preliminary conference or public hearing. Notably, one year after Pimentel was informed of the
preliminary conference, DAR A.O. No. 9, Series of 1990 was issued and this required that the Notice
of Coverage must be sent "to the landowner concerned or his duly authorized representative."
69

Assuming further that petitioner was duly notified of the CARP coverage of its haciendas, the areas
found actually subject to CARP were not properly identified before they were taken over by
respondent DAR. Respondents insist that the lands were identified because they are all registered
property and the technical description in their respective titles specifies their metes and bounds.
Respondents admit at the same time, however, that not all areas in the haciendas were placed
under the comprehensive agrarian reform program invariably by reason of elevation or character or
use of the land.
70

The acquisition of the landholdings did not cover the entire expanse of the two haciendas, but only
portions thereof. Hacienda Palico has an area of 1,024 hectares and only 688.7576 hectares were
targetted for acquisition. Hacienda Banilad has an area of 1,050 hectares but only 964.0688
hectares were subject to CARP. The haciendas are not entirely agricultural lands. In fact, the various
tax declarations over the haciendas describe the landholdings as "sugarland," and "forest,
sugarland, pasture land, horticulture and woodland."
71

Under Section 16 of the CARL, the sending of the Notice of Acquisition specifically requires that the
land subject to land reform be first identified. The two haciendas in the instant case cover vast tracts
of land. Before Notices of Acquisition were sent to petitioner, however, the exact areas of the
landholdings were not properly segregated and delineated. Upon receipt of this
notice, therefore, petitioner corporation had no idea which portions of its estate were subject to
compulsory acquisition, which portions it could rightfully retain, whether these retained portions were
compact or contiguous, and which portions were excluded from CARP coverage. Even respondent
DAR's evidence does not show that petitioner, through its duly authorized representative, was
notified of any ocular inspection and investigation that was to be conducted by respondent DAR.
Neither is there proof that petitioner was given the opportunity to at least choose and identify its
retention area in those portions to be acquired compulsorily. The right of retention and how this right
is exercised, is guaranteed in Section 6 of the CARL, viz:
Sec. 6. Retention Limits. . . . .
The right to choose the area to be retained, which shall be compact or contiguous,
shall pertain to the landowner; Provided, however, That in case the area selected for
retention by the landowner is tenanted, the tenant shall have the option to choose
whether to remain therein or be a beneficiary in the same or another agricultural land
with similar or comparable features. In case the tenant chooses to remain in the
retained area, he shall be considered a leaseholder and shall lose his right to be a
beneficiary under this Act. In case the tenant chooses to be a beneficiary in another
agricultural land, he loses his right as a leaseholder to the land retained by the
landowner. The tenant must exercise this option within a period of one (1) year from
the time the landowner manifests his choice of the area for retention.
Under the law, a landowner may retain not more than five hectares out of the total area of his
agricultural land subject to CARP. The right to choose the area to be retained, which shall be
compact or contiguous, pertains to the landowner. If the area chosen for retention is tenanted, the
tenant shall have the option to choose whether to remain on the portion or be a beneficiary in the
same or another agricultural land with similar or comparable features.
C. The Voluntary Acquisition of Hacienda Caylaway
Petitioner was also left in the dark with respect to Hacienda Caylaway, which was the subject of a
Voluntary Offer to Sell (VOS). The VOS in the instant case was made on May 6, 1988,
72
before the
effectivity of R.A. 6657 on June 15, 1988. VOS transactions were first governed by DAR Administrative
Order No. 19, series of 1989,
73
and under this order, all VOS filed before June 15, 1988 shall be heard
and processed in accordance with the procedure provided for in Executive Order No. 229, thus:
III. All VOS transactions which are now pending before the DAR and for which no
payment has been made shall be subject to the notice and hearing requirements
provided in Administrative Order No. 12, Series of 1989, dated 26 July 1989, Section
II, Subsection A, paragraph 3.
All VOS filed before 15 June 1988, the date of effectivity of the CARL, shall be heard
and processed in accordance with the procedure provided for in Executive Order No.
229.
xxx xxx xxx.
Sec. 9 of E.O. 229 provides:
Sec. 9. Voluntary Offer to Sell. The government shall purchase all agricultural
lands it deems productive and suitable to farmer cultivation voluntarily offered for
sale to it at a valuation determined in accordance with Section 6. Such transaction
shall be exempt from the payment of capital gains tax and other taxes and fees.
Executive Order 229 does not contain the procedure for the identification of private land as set forth
in DAR A.O. No. 12, Series of 1989. Section 5 of E.O. 229 merely reiterates the procedure
of acquisition in Section 16, R.A. 6657. In other words, the E.O. is silent as to the procedure for the
identification of the land, the notice of coverage and the preliminary conference with the landowner,
representatives of the BARC, the LBP and farmer beneficiaries. Does this mean that these
requirements may be dispensed with regard to VOS filed before June 15, 1988? The answer is no.
First of all, the same E.O. 229, like Section 16 of the CARL, requires that the land, landowner and
beneficiaries of the land subject to agrarian reform be identified before the notice of acquisition
should be issued.
74
Hacienda Caylaway was voluntarily offered for sale in 1989. The Hacienda has a
total area of 867.4571 hectares and is covered by four (4) titles. In two separate Resolutions both dated
January 12, 1989, respondent DAR, through the Regional Director, formally accepted the VOS over the
two of these four
titles.
75
The land covered by two titles has an area of 855.5257 hectares, but only 648.8544 hectares
thereof fell within the coverage of R.A. 6657.
76
Petitioner claims it does not know where these portions
are located.
Respondent DAR, on the other hand, avers that surveys on the land covered by the four titles were
conducted in 1989, and that petitioner, as landowner, was not denied participation therein, The
results of the survey and the land valuation summary report, however, do not indicate whether
notices to attend the same were actually sent to and received by petitioner or its duly authorized
representative.
77
To reiterate, Executive Order No. 229 does not lay down the operating procedure,
much less the notice requirements, before the VOS is accepted by respondent DAR. Notice to the
landowner, however, cannot be dispensed with. It is part of administrative due process and is an essential
requisite to enable the landowner himself to exercise, at the very least, his right of retention guaranteed
under the CARL.
III. The Conversion of the three Haciendas.
It is petitioner's claim that the three haciendas are not subject to agrarian reform because they have
been declared for tourism, not agricultural
purposes.
78
In 1975, then President Marcos issued Proclamation No. 1520 declaring the municipality of
Nasugbu, Batangas a tourist zone. Lands in Nasugbu, including the subject haciendas, were allegedly
reclassified as non-agricultural 13 years before the effectivity of R. A. No. 6657.
79
In 1993, the Regional
Director for Region IV of the Department of Agriculture certified that the haciendas are not feasible and
sound for agricultural development.
80
On March 20, 1992, pursuant to Proclamation No. 1520, the
Sangguniang Bayan of Nasugbu, Batangas adopted Resolution No. 19 reclassifying certain areas of
Nasugbu as non-agricultural.
81
This Resolution approved Municipal Ordinance No. 19, Series of 1992,
the Revised Zoning Ordinance of Nasugbu
82
which zoning ordinance was based on a Land Use Plan for
Planning Areas for New Development allegedly prepared by the University of the
Philippines.
83
Resolution No. 19 of the Sangguniang Bayan was approved by the Sangguniang
Panlalawigan of Batangas on March 8, 1993.
84

Petitioner claims that proclamation No. 1520 was also upheld by respondent DAR in 1991 when it
approved conversion of 1,827 hectares in Nasugbu into a tourist area known as the Batulao Resort
Complex, and 13.52 hectares in Barangay Caylaway as within the potential tourist belt.
85
Petitioner
present evidence before us that these areas are adjacent to the haciendas subject of this petition, hence,
the haciendas should likewise be converted. Petitioner urges this Court to take cognizance of the
conversion proceedings and rule accordingly.
6

We do not agree. Respondent DAR's failure to observe due process in the acquisition of petitioner's
landholdings does not ipso facto give this Court the power to adjudicate over petitioner's application
for conversion of its haciendas from agricultural to non-agricultural. The agency charged with the
mandate of approving or disapproving applications for conversion is the DAR.
At the time petitioner filed its application for conversion, the Rules of Procedure governing the
processing and approval of applications for land use conversion was the DAR A.O. No. 2, Series of
1990. Under this A.O., the application for conversion is filed with the MARO where the property is
located. The MARO reviews the application and its supporting documents and conducts field
investigation and ocular inspection of the property. The findings of the MARO are subject to review
and evaluation by the Provincial Agrarian Reform Officer (PARO). The PARO may conduct further
field investigation and submit a supplemental report together with his recommendation to the
Regional Agrarian Reform Officer (RARO) who shall review the same. For lands less than five
hectares, the RARO shall approve or disapprove applications for conversion. For lands exceeding
five hectares, the RARO shall evaluate the PARO Report and forward the records and his report to
the Undersecretary for Legal Affairs. Applications over areas exceeding fifty hectares are approved
or disapproved by the Secretary of Agrarian Reform.
The DAR's mandate over applications for conversion was first laid down in Section 4 (j) and Section
5 (l) of Executive Order No. 129-A, Series of 1987 and reiterated in the CARL and Memorandum
Circular No. 54, Series of 1993 of the Office of the President. The DAR's jurisdiction over
applications for conversion is provided as follows:
A. The Department of Agrarian Reform (DAR) is mandated to
"approve or disapprove applications for conversion, restructuring or
readjustment of agricultural lands into non-agricultural uses,"
pursuant to Section 4 (j) of Executive Order No. 129-A, Series of
1987.
B. Sec. 5 (l) of E.O. 129-A, Series of 1987, vests in the DAR,
exclusive authority to approve or disapprove applications for
conversion of agricultural lands for residential, commercial, industrial
and other land uses.
C. Sec. 65 of R.A. No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law of 1988, likewise empowers the DAR to
authorize under certain conditions, the conversion of agricultural
lands.
D. Sec. 4 of Memorandum Circular No. 54, Series of 1993 of the
Office of the President, provides that "action on applications for land
use conversion on individual landholdings shall remain as the
responsibility of the DAR, which shall utilize as its primary reference,
documents on the comprehensive land use plans and accompanying
ordinances passed upon and approved by the local government units
concerned, together with the National Land Use Policy, pursuant to
R.A. No. 6657 and E.O. No. 129-A.
87

Applications for conversion were initially governed by DAR A.O. No. 1, Series of 1990 entitled
"Revised Rules and Regulations Governing Conversion of Private Agricultural Lands and Non-
Agricultural Uses," and DAR A.O. No. 2, Series of 1990 entitled "Rules of Procedure Governing the
Processing and Approval of Applications for Land Use Conversion." These A.O.'s and other
implementing guidelines, including Presidential issuances and national policies related to land use
conversion have been consolidated in DAR A.O. No. 07, Series of 1997. Under this recent issuance,
the guiding principle in land use conversion is:
to preserve prime agricultural lands for food production while, at the same time,
recognizing the need of the other sectors of society (housing, industry and
commerce) for land, when coinciding with the objectives of the Comprehensive
Agrarian Reform Law to promote social justice, industrialization and the optimum use
of land as a national resource for public welfare.
88

"Land Use" refers to the manner of utilization of land, including its allocation, development and
management. "Land Use Conversion" refers to the act or process of changing the current use of a
piece of agricultural land into some other use as approved by the DAR.
89
The conversion of
agricultural land to uses other than agricultural requires field investigation and conferences with the
occupants of the land. They involve factual findings and highly technical matters within the special training
and expertise of the DAR. DAR A.O. No. 7, Series of 1997 lays down with specificity how the DAR must
go about its task. This time, the field investigation is not conducted by the MARO but by a special task
force, known as the Center for Land Use Policy Planning and Implementation (CLUPPI-DAR Central
Office). The procedure is that once an application for conversion is filed, the CLUPPI prepares the Notice
of Posting. The MARO only posts the notice and thereafter issues a certificate to the fact of posting. The
CLUPPI conducts the field investigation and dialogues with the applicants and the farmer beneficiaries to
ascertain the information necessary for the processing of the application. The Chairman of the CLUPPI
deliberates on the merits of the investigation report and recommends the appropriate action. This
recommendation is transmitted to the Regional Director, thru the Undersecretary, or Secretary of Agrarian
Reform. Applications involving more than fifty hectares are approved or disapproved by the Secretary.
The procedure does not end with the Secretary, however. The Order provides that the decision of the
Secretary may be appealed to the Office of the President or the Court of Appeals, as the case may
be, viz:
Appeal from the decision of the Undersecretary shall be made to the Secretary, and
from the Secretary to the Office of the President or the Court of Appeals as the case
may be. The mode of appeal/motion for reconsideration, and the appeal fee, from
Undersecretary to the Office of the Secretary shall be the same as that of the
Regional Director to the Office of the Secretary.
90

Indeed, the doctrine of primary jurisdiction does not warrant a court to arrogate unto itself authority to
resolve a controversy the jurisdiction over which is initially lodged with an administrative body of
special competence.
91
Respondent DAR is in a better position to resolve petitioner's application for
conversion, being primarily the agency possessing the necessary expertise on the matter. The power to
determine whether Haciendas Palico, Banilad and Caylaway are non-agricultural, hence, exempt from the
coverage of the CARL lies with the DAR, not with this Court.
Finally, we stress that the failure of respondent DAR to comply with the requisites of due process in
the acquisition proceedings does not give this Court the power to nullify the CLOA's already issued
to the farmer beneficiaries. To assume the power is to short-circuit the administrative process, which
has yet to run its regular course. Respondent DAR must be given the chance to correct its
procedural lapses in the acquisition proceedings. In Hacienda Palico alone, CLOA's were issued to
177 farmer beneficiaries in 1993.
92
Since then until the present, these farmers have been cultivating
their lands.
93
It goes against the basic precepts of justice, fairness and equity to deprive these people,
through no fault of their own, of the land they till. Anyhow, the farmer beneficiaries hold the property in
trust for the rightful owner of the land.
IN VIEW WHEREOF, the petition is granted in part and the acquisition proceedings over the three
haciendas are nullified for respondent DAR's failure to observe due process therein. In accordance
with the guidelines set forth in this decision and the applicable administrative procedure, the case is
hereby remanded to respondent DAR for proper acquisition proceedings and determination of
petitioner's application for conversion.
SO ORDERED.
October 15, 2009
DAR ADMINISTRATIVE ORDER NO. 02-09
SUBJECT : Rules and Procedures Governing the Acquisition and
Distribution of Agricultural Lands Under Republic Act (R.A.)
No. 6657, as Amended byR.A. No. 9700

I. Prefatory Statement
Republic Act (R.A.) No. 9700, which amends R.A. No. 6657, provides
for, among others, the continuing acquisition and distribution of agricultural
lands covered under the Comprehensive Agrarian Reform Program (CARP)
for a period of five (5) years under various phases, and the simultaneous
provision of support services and the delivery of agrarian justice to Agrarian
Reform Beneficiaries (ARBs). It further provides that after June 30, 2009, the
modes of acquisition shall be limited to voluntary offer to sell (VOS) and
compulsory acquisition (CA) and that voluntary land transfer (VLT) shall be
allowed only for landholdings submitted for VLT as of June 30, 2009.
The agrarian reform program is founded on the right of farmers and
regular farmworkers, who are landless, to own directly or collectively the lands
they till or, in the case of other farmworkers, to receive a just share of the
fruits thereof. To this end, the State shall encourage and undertake the just
distribution of all agricultural lands, subject to the priorities and retention limits
set forth under R.A. No. 6657, as amended, taking into account ecological,
developmental, and equity considerations, and subject to the payment of just
compensation. Owners of agricultural land have the obligation to cultivate
directly or through labor administration the lands they own and thereby make
the land productive.
The principles of agrarian reform or stewardship shall be in accordance
with law in the disposition or utilization of other natural resources, including
lands of the public domain, under lease or concession, suitable to agriculture,
subject to prior rights, homestead rights of small settlers and the rights of
indigenous communities to their ancestral lands.
To ensure the completion of land acquisition and distribution within the
prescribed period, the following rules and procedures are hereby
promulgated.
II. Coverage
These rules and regulations shall govern the acquisition and distribution
of all agricultural lands yet to be acquired and/or to be distributed under the
CARP in accordance with R.A. No. 6657, as amended by R.A. No. 9700. TCDcSE
III. Definition of Terms
1. Landless Beneficiary is any farmer/tiller who owns less than three
(3) hectares of agricultural land.
2. Share Tenant refers to a person who himself and with the aid
available from within his immediate farm household, cultivates the land
belonging to or possessed by another with the latter's consent, for purposes
of production, sharing the produce with the landholder under the share
tenancy system, or paying the landholder a price certain or ascertainable in
produce or in money or both, under the leasehold tenancy system. This
arrangement has been abolished by R.A. No. 3844, as amended, which
automatically converted the relations under leasehold.
3. Agricultural lessee refers to a person who, by himself and with the
aid available from within his immediate farm household, cultivates the land,
belonging to or lawfully possessed by another, with the latter's consent for
purposes of agricultural production, for a price certain in money or in
produce or both. It is distinguished from civil lessee as understood in
the Civil Code of the Philippines.
4. Farmworker refers to a natural person who renders service for value
as an employee or laborer in an agricultural enterprise or farm regardless of
whether his/her compensation is paid on a daily, weekly, monthly
or "pakyaw" basis. The term includes an individual whose work has ceased
as a consequence of, or in connection with, a pending agrarian or labor
dispute and who has not obtained a substantially equivalent and regular
farm employment.
5. Regular Farmworker refers to a natural person who is considered
employed on a permanent basis by a landowner engaged in an agricultural
enterprise or farm.
6. Seasonal farmworker refers to a natural person who is employed on
a recurrent, periodic or intermittent basis by an agricultural enterprise or
farm, whether as a permanent or a non-permanent laborer, such
as "dumaan", "sacada", and the like.
7. Other farmworkers refer to farmworkers who do not fall under Items
5 and 6 of this Section.
8. Cooperatives refer to organizations composed primarily of small
agricultural producers, farmers, farmworkers, or other agrarian reform
beneficiaries who voluntarily organize themselves for the purpose of pooling
land, human, technological, financial or other economic resources, and
operate on the principle of one member, one vote. A juridical person may be
a member of a cooperative, with the same rights and duties as a natural
person.
9. Substantially Equivalent and Regular Employment means any
employment or profession from which the applicant farmer derives income
equivalent to the income of a regular farmworker at the time of ARB
identification, screening and selection. IcAaSD
10. Agrarian Dispute refers to any controversy relating to tenurial
arrangements, whether leasehold, tenancy, stewardship, or otherwise, over
lands devoted to agriculture, including disputes concerning farmworkers'
associations, or representation of persons in negotiating, fixing, maintaining,
changing or seeking to arrange terms and conditions of such tenurial
arrangements.
It includes any controversy relating to compensation of lands acquired
under R.A. No. 6657 and other terms and conditions of transfer of
ownership from landowners to farmworkers, tenants and other ARBs,
whether the disputants stand in proximate relation of farm operator and
beneficiary, landowner and tenant, or lessor and lessee.
11. Usufruct refers to a real right conferred on the
beneficiary/usufructuary to enjoy the fruits of the property of another with
the obligation of preserving its form, substance, and productivity.
12. Direct Management in so far as preferred beneficiaries are
concerned, refers to the cultivation of the land through personal supervision
under the system of labor administration. It shall be interpreted along the
lines of farm management as an actual major activity being performed by
the landowner's child from which he/she derives his/her primary source of
income.
13. Newspaper of General Circulation refers to newspaper or publication
of general circulation, which may be national or local to where the property
is located.
14. Award is the conferment of Certificate of Land Ownership Award
(CLOA) title to qualified agrarian reform beneficiaries.
IV. Statement of Policies
A. Notice of Coverage
1. The acquisition and distribution of agricultural lands under
CARP shall be completed by June 30, 2014. However, the process of
acquisition and distribution for landholdings which were issued with
Notices of Coverage (NOCs) on or before June 30, 2014 shall
continue even after June 30, 2014 until the said lands have been
awarded to qualified beneficiaries.
2. The schedule of the acquisition and distribution of lands
covered by CARP shall be as follows:
2.1 All landholdings of landowners owning more than twenty
four (24) hectares which have been issued Notices of Coverage
(NOCs) as of December 10, 2008, shall be subject to immediate
acquisition and distribution under compulsory acquisition and
shall be completed by June 30, 2012. The landholdings of
landowners owning more than fifty (50) hectares shall be
prioritized for coverage within this same period. HcDATC
2.2 All private agricultural lands voluntarily offered before July
1, 2009 by the landowner for agrarian reform shall be subject to
immediate acquisition and distribution under voluntary offer to sell
(VOS) and shall be completed by June 30, 2012.
2.3 Lands under voluntary land transfer (VLT) received by
DAR before July 1, 2009 shall be subject to immediate acquisition
and distribution and shall be completed by June 30, 2012.
2.4 The following types of lands shall likewise be subject of
immediate acquisition and distribution under CARP and shall be
completed by June 30, 2012:
a. Rice and corn lands under Presidential
Decree (P.D.) No. 27;
b. All idle and abandoned lands;
c. All lands foreclosed by government financial
institutions;
d. All lands acquired by the Presidential Commission
on Good Government (PCGG); and
e. All other lands owned by the government.
2.5 All landholdings of landowners owning more than 24
hectares but have not been issued with NOC as of December 10,
2008 shall be subject to land acquisition and distribution (LAD) by
July 1, 2012 and completed by June 30, 2013.
2.6 All landholdings of landowners owning more than 10
hectares up to 24 hectares, in so far as the excess hectarage
above 10 hectares is concerned, shall be covered under land
acquisition and distribution starting July 1, 2012 and be
completed by June 30, 2013.
2.7 All landholdings of landowners owning more than five (5)
hectares up to 10 hectares shall be covered under land
acquisition and distribution starting July 1, 2013 and be
completed by June 30, 2014. Notwithstanding this schedule,
coverage of landholdings more than five (5) hectares up to 10
hectares may commence when the LAD balance of the
concerned province, reckoned as of January 1, 2009, is already
90 percent complete, as certified to by the Provincial Agrarian
Reform Coordinating Committee (PARCCOM) under existing
guidelines of the Presidential Agrarian Reform Council
(PARC). EcTaSC
3. For provinces declared by the Presidential Agrarian Reform
Council (PARC) as priority land reform areas, the acquisition and
distribution of private agricultural lands therein under advanced phases
may be implemented ahead of the above schedules on the condition
that prior phases in these provinces have been completed pursuant to
the PARC implementing rules and regulations on the matter.
4. The Notice of Coverage (NOC) shall be issued to landowners
not later than 90 days prior to the scheduled date of acquisition and
distribution of their landholding except for landowners owning more
than five (5) up to ten (10) hectares, in which case, the NOCs shall be
issued on or after July 1, 2013.
5. In the case of lands for which NOCs have already been issued,
the DAR Provincial Office (DARPO) shall send a memorandum to the
Municipal Agrarian Reform Officer (MARO), copy furnished the LO,
directing him/her to proceed with the process of land acquisition and
distribution of the landholdings under the CARP, either immediately or
on the specific schedule provided under Item IV (A) (2) of this Order.
6. For lands already in the Inventory of CARP Scope (ICS), the
DARPO shall transmit to the DAR Municipal Office (DARMO) on or
before October 30, 2009 the list of LAD balances and the schedule of
coverage of each landholding therein, based on the prioritized phasing
under Section 5 of R.A. No. 9700.
In the case of other landholdings still unacquired and
undistributed but coverable under CARP, the DARMO shall submit the
list of such lands to the DARPO which shall prepare and issue NOCs
and transmit these to the DARMO for service to the landowners (LOs)
based on specific schedules under Item IV (A) (2) of this Order.
7. Landholdings subject of expropriation or acquisition by the
Local Government Units (LGUs) or any portions thereof not actually,
directly and exclusively used for non-agricultural purposes are subject
to CARP coverage if one or more of the following conditions apply:
7.1 There is agricultural activity;
7.2 The land is suitable for agriculture; or
7.3 The land is presently occupied and tilled by farmer/s.
8. Excluded from coverage are lands actually, directly and
exclusively used and found to be necessary for the following purposes:
8.1 Parks;
8.2 Wildlife;
8.3 Forest reserves; AHDaET
8.4 Reforestation;
8.5 Fish sanctuaries and breeding grounds;
8.6 Watersheds;
8.7 Mangroves;
8.8 National defense;
8.9 School sites and campuses including experimental farm
stations operated by public or private schools for educational
purposes;
8.10 Seeds and seedlings research and pilot production
centers;
8.11 Church sites and Islamic centers appurtenant thereto;
8.12 Communal burial grounds and cemeteries;
8.13 Penal colonies and penal farms actually worked by the
inmates;
8.14 Government and private research and quarantine centers;
Also excluded from coverage are:
8.15 All undeveloped lands with eighteen percent (18%) slope
and over;
8.16. All lands actually, directly and exclusively used for
commercial, industrial or residential purposes and classified as
such before June 15, 1988;
8.17. Fish ponds and prawn farms;
8.18. All lands actually, directly and exclusively used for
livestock raising;
8.19. Ancestral lands and domain; and
8.20. Retention areas granted to landowners.
The MARO, together with a representative of the DARPO, shall
conduct an inventory and ocular inspection of all agricultural lands
within their area which are used for the above purposes. A report on
the inventoried and inspected lands shall be submitted by the MARO
and the DARPO representative to the Provincial Agrarian Reform
Officer (PARO) indicating the following:
Name of landowner;
Location of property and area;
OCT/TCT or Tax Declaration Number;
Actual land use; TIaCHA
Existence of agricultural activity;
Land Classification documents available; and
Other information vital to the determination of coverage of
the land or portions thereof under CARP.
9. Any act of the landowner to change or convert his/her
agricultural land to non-agricultural uses shall not affect the coverage
of the landholding. Any diversification or change in the agricultural use
of the landholding, or shift from crop production to non-agricultural
uses and purposes shall be subject to the guidelines on land use
conversion.
10. Land subject to a conversion order but not developed within
the five-year period starting from the issuance of the conversion order
or the specific time frame stipulated therein, or if there is a violation of
other conditions so provided, shall be reverted to agricultural use and
Notice of Coverage thereon shall be issued by the PARO. An ocular
inspection shall be conducted by the PARO on all lands covered by
conversion orders and shall submit a factual finding on land
development or violations of conditions on the conversion orders if
any, to the Regional Director, copy furnished the Center for Land Use
Policy, Planning and Implementation (CLUPPI), for appropriate action
pursuant to the existing implementing rules and regulations (IRR) on
land use conversion. CcAITa
11. As a general rule, the Notice of Coverage (NOC) shall be
addressed to and received by the LO through the following modes of
service:
11.1 Personal Service This is made by handing a copy of the
NOC to the LO in person and having him receive it by affixing his
signature or thumbmark with a witness to the thumbmark who will
set his signature in the receiving copy.
11.2 Substituted Service If personal service of the NOC
cannot be served directly to the LO within a reasonable time,
service may be made by leaving copies of the NOC and having
this duly received at the LO's:
a. residence with some person of suitable age and
discretion residing therein; or
b. office or regular place of business with some
competent person in charge thereof.
11.3 Service by Registered Mail If personal or substituted
service is not practicable, the Notice of Coverage shall be sent by
registered mail to the last known address of the LO. The
registered mail envelope shall be marked"Deliver to Addressee
Only" and "Return to Sender" based on the possibilities that the
LO has moved out, address is erroneous or insufficient, or the LO
refuses to accept or receive the mailed NOC.
11.4 Service by Publication The mode of service by
publication shall apply if the LO is outside the Philippines, or
whereabouts is unknown, or LO refused to receive the NOC. If
any of the three (3) modes of service {Items IV (A) (11.1 to 11.3)
of this Order} fails, the NOC will be published in a newspaper of
general circulation in such places. Service by publication shall be
evidenced by the affidavit of the editor-in-chief, or
circulation/advertising manager attesting to the fact of said
publication and a copy of the said publication. A "Return to
Sender" stamped on the mailing envelope for registered mail will
serve as proof that the NOC was not received by the LO. The
publication need not state the entire contents of the NOC but only
the following essential particulars:
11.4.1 Coverage of the subject landholding under CARP on
the specific land acquisition schedule based on the
prioritized phasing under Section 5 of R.A. No. 9700;
11.4.2 Original Certificate of Title (OCT)/Transfer Certificate
of Title (TCT)/Latest Tax Declaration No/s.;
11.4.3 Complete name/s of the LO/s and last known
address, if available; HTCIcE
11.4.4 Address or location of the subject landholding
(barangay, city/municipality, province); and
11.4.5 A statement that the LO has thirty (30) calendar days
from date of NOC publication to reply to the NOC, and that
failure to do so shall be a waiver of the right to choose his
retention area, the privilege to nominate child/children who
may qualify as preferred beneficiaries and to apply for
exemption/exclusion from CARP coverage.
12. The other modes of service/delivery/receipt of the NOC shall
be as follows:
12.1 Service upon co-owners In case of co-ownership, the
NOC shall be served upon each and every co-owner, unless one
is specifically authorized to receive for the co-owners.
12.2 Service upon minors or incompetents When the LO is a
minor, insane or otherwise incompetent, service shall be made
upon him/her personally and to his/her legal guardian if he/she
has one, or if none, upon his/her guardian ad litem whose
appointment shall be applied for by the Department of Agrarian
Reform (DAR). In the case of a minor, service may also be made
on his/her father and/or mother.
12.3 Service upon entity without juridical personality When
the LOs who are persons associated through an entity without
juridical personality are issued a NOC under the name by which
they are generally or commonly known, service may be effected
upon all the LOs by serving upon any one of them, or upon the
person in charge of the office or place of business maintained in
such name. Such service shall not individually bind any person
whose connection with the entity has, upon due notice, been
severed before the proceeding was brought.
12.4 Service upon domestic private juridical entity When the
LO is a corporation, partnership or association organized under
the laws of the Philippines with a juridical personality, service
may be made on the president, managing partner, general
manager, corporate secretary, treasurer, in-house counsel or
administrator.
13. Within thirty (30) calendar days from receipt of NOC or from its
date of publication, the LO has:
13.1 The right to choose a retention area not exceeding five (5)
hectares pursuant to Section 6 of R.A. No. 6657, as amended;
and
13.2 The privilege to nominate child/ren who may qualify as
preferred beneficiary/ies. SaETCI
The landowner is likewise given the same thirty (30)-day
prescribed period from receipt or date of publication of NOC,
whichever is applicable, within which to protest coverage. Upon
receipt of the protest of coverage by DAR, the LO is given
another thirty (30) days to substantiate his/her protest and/or
application for exemption or exclusion from CARP coverage.
Failure to comply within the aforementioned 30-day reglementary
periods shall be construed as a waiver or abandonment of the
right to protest and/or to file for an application for exemption or
exclusion from CARP coverage.
14. Notwithstanding a protest of coverage or an application for
exemption or exclusion by a landowner, the processing of the claim
folder, including valuation and the issuance of Certification of Deposit
(COD) by the Land Bank of the Philippines (LBP) and the transfer of
title to the Republic of the Philippines, shall continue unless the
Regional Director or the DAR Secretary, as the case may be,
suspends the processing based on preliminary findings on grounds for
exemption or exclusion or the Supreme Court issues a Temporary
Restraining Order (TRO) on the processing of the claim folder.
B. Retention
1. All landholdings five (5) hectares and below shall not be
subject to CARP coverage except for landholdings submitted for
voluntary offer to sell (VOS) before July 1, 2009 wherein the retention
right has been waived. The PAROs shall issue Certification of
Retention to landowners who have already availed of the same and
cover all areas in excess thereof.
2. For VOS lands submitted prior to July 1, 2009 where the
master list of ARBs has been finalized, the retention areas of
landowners covered under said VOS shall be processed under the
existing guidelines of R.A. No. 6657, as amended, before July 1, 2009.
3. Landowners who own lands five (5) hectares or less may file a
request for the issuance of Certification of Retention.
4. Landholdings covered by homestead grants and Free Patents
issued pursuant to Commonwealth Act (C.A.) No. 141 still owned by
the original grantees or their direct compulsory heirs shall be retained
by them as long as they were cultivating the said landholdings at the
time of the approval of R.A. No. 9700 and continue to cultivate the
same.
5. Heirs of deceased landowners who died after June 15, 1988
and whose lands are covered under CARP are only entitled to the five
(5) hectare retention area of the deceased landowner.
6. For landholdings under compulsory acquisition (CA), the
landowner shall choose his retained area within thirty (30) days from
receipt of Notice of Coverage (NOC) or date of publication of
NOC. TEaADS
Failure to exercise the right to choose within the prescribed
period shall constitute a waiver thereof. In which case the DAR,
through the MARO, shall automatically choose for the landowner
his/her retention area.
For landholdings under voluntary offer to sell (VOS), the
landowner shall exercise his right of retention simultaneously at the
time of the offer for sale of the subject landholding.
7. When landowners waive their right of choice, the following
factors shall be considered in choosing their retention area:
6.1 commodity produced;
6.2 terrain;
6.3 infrastructure available; and
6.4 soil fertility.
8. For marriages covered by the New Civil Code, in the absence
of an agreement for the judicial separation of property, spouses whose
agricultural land properties are all conjugal may retain a total of not
more than five (5) hectares of such properties. However, if either or
both of them are landowners in their respective rights (capital and/or
paraphernal), they may each retain not more than five (5) hectares of
their respective landholdings. In no case shall the total retention of
such couple exceed ten (10) hectares.
9. For marriages covered by the Family Code, which took effect
on August 03, 1988, a husband owning capital property and/or a wife
owning paraphernal property may retain not more than five (5)
hectares each, provided they executed a judicial separation of
properties prior to entering into such marriage. In the absence of such
an agreement, all properties (capital, paraphernal and conjugal) shall
be considered to be held in absolute community, i.e., the ownership
relationship is one, and, therefore, only a total of five (5) hectares may
be retained by each couple.
10. The DAR shall notify the LO, through personal service with
proof of receipt or by registered mail with return card, the portion
selected as his/her retention area if the LO fails to exercise such right
within the prescribed period.
11. In case a tenant chooses to remain in the LO's retained area,
he/she shall be a leaseholder in the said land and shall not qualify to
be a beneficiary under CARP. Conversely, if the tenant chooses to be
a beneficiary in another agricultural land, he/she cannot be a
leaseholder in the land retained by the LO. The tenant must exercise
this option within a period of one (1) year from the time the LO
manifests his/her choice of the area for retention.
12. Tenants/lessees in the retained areas who do not wish to
become leaseholders in the retained lands shall be given preference in
other landholdings whether or not these lands belong to the same
landowner, without prejudice to the farmers who are already in place
and subject to the priorities under Section 22 of R.A. No. 6657, as
amended. IcESDA
13. In all cases, the security of tenure of the farmers or
farmworkers on the LO's retained land prior to the approval of R.A. No.
6657, as amended, shall be respected. Further, actual tenant-farmers
in the landholdings shall not be ejected or removed therefrom.
14. Land transactions executed prior to R.A. No. 6657, as
amended, shall be valid only when registered with the Registry of
Deeds within a period of three (3) months after June 15, 1988 in
accordance with Section 6 of R.A. No. 6657, as amended.
Where the transfer/sale of a landholding involves a total of five
(5) hectares and below and such landholding is the retention area of
the transferor or subject of retention by the transferor, and the
transferee will not own an aggregate of more than five (5) hectares as
a result of the sale, the transfer is legal and proper. However, a DAR
clearance is needed for the purpose of monitoring and as requisite for
the registration of the title in the name of the transferee with the
Registry of Deeds (ROD).
In the case of multiple or a series of transfers/sales, only the first
five (5) hectares sold/conveyed and the corresponding titles issued by
the ROD in the name of the transferee shall be considered valid and
be treated as the transferor's retained area, but in no case shall the
transferee exceed the five (5)-hectare landholding ceiling pursuant to
Sections 6, 70 and 73 (a) of R.A. No. 6657, as amended. In so far as
the excess area beyond five (5) hectares sold and conveyed is
concerned, the same shall be covered under CARP, regardless of
whoever is the current title-holder to the land, considering that the
transferor has no right of disposition of these lands since CARP
coverage of these lands is mandated by law as of June 15, 1988. Any
landholding still registered in the name of the landowner after earlier
dispositions up to an aggregate of five (5) hectares are no longer part
of his retention area and therefore shall be covered under CARP.
15. CARP covered agricultural lands which are to be expropriated
or acquired by the local government units (LGUs) and to be used for
actual, direct and exclusive public purposes, such as roads and
bridges, public markets, school sites, resettlement sites, local
government facilities, public parks and barangay plazas or squares,
consistent with the approved local government land use plan, shall not
be subject to the five-hectare retention limit. However, prior to the
expropriation/acquisition by the LGU, the subject land shall first
undergo the land acquisition and distribution process of the CARP,
and the ARBs therein shall be paid just compensation without
prejudice to their qualifying as ARBs in other landholdings under the
CARP.
16. The title of the land awarded under the agrarian reform
program must indicate that it is an Emancipation Patent (EP) or
Certificate of Land Ownership Award (CLOA) and any subsequent
transfer of title must also indicate that it is an EP or a CLOA.
17. Pursuant to Section 4 of R.A. No. 9700, an LGU may, through
its Chief Executive and/or an ordinance, exercise the power of eminent
domain on agricultural lands for public use, purpose, or welfare of the
poor and the landless, upon payment of just compensation to agrarian
reform beneficiaries (ARBs) on these lands, pursuant to the provisions
of the Constitution and pertinent laws. The power of eminent domain
may not be exercised unless a valid and definite offer has been
previously made to the ARBs, and such offer was not accepted. In
cases where the land sought to be acquired has been issued with a
Notice of Coverage or is already subject to voluntary offer to sell (with
letter-offer submitted to DAR) the concerned LGU shall suspend the
exercise of its power of eminent domain until after the LAD process
has been completed and the title to the property has been transferred
to the ARBs. cDACST
Where agricultural lands have been subjected to expropriation,
the ARBs therein shall be paid just compensation. For this purpose,
lands "subjected to expropriation" includes all agricultural lands which
have been reviewed and approved by the DAR to be actually, directly
and exclusively used by the LGU for public purpose with a case for
expropriation already filed by the LGU before a judicial court. ARBs
are those who have been certified by the Barangay Agrarian Reform
Council (BARC) and DAR as beneficiaries of the subject landholdings.
18. The expropriation/conversion of agricultural lands shall be
subject to the existing guidelines of DAR on land conversion. Irrigable
and irrigated lands where (1) there is agricultural activity, (2) land is
suitable for agriculture, or (3) the land is presently occupied and tilled
by farmers shall not be subject of expropriation by the LGUs.
C. Land Acquisition
1. Pursuant to Section 3 of R.A. No. 9700, the landholdings of
LOs owning a total of five (5) hectares or less shall not be subject of
acquisition and distribution under CARP.
2. Landholdings above five (5) hectares which were offered under
voluntary land transfer (VLT) and not approved by the DAR shall be
covered under compulsory acquisition (CA).
All VLT applications submitted to DAR after June 30, 2009 shall
no longer be processed.
3. Landowners (LOs) may voluntarily offer their private
agricultural lands for coverage under R.A. No. 6657, as amended or
under R.A. No. 9700. Upon its acceptance by the DAR, the Letter-
Offer for coverage under Voluntary Offer to Sell (VOS) can no longer
be withdrawn. In any case, the DAR can immediately subject such
landholding to coverage under compulsory acquisition and distribution
under CARP notwithstanding the schedule of prioritized phasing under
R.A. No. 9700.
The acceptance letter for VOS shall stipulate that upon offer
under VOS, the schedule of coverage under R.A. No. 9700 is deemed
waived.
Landowners who received NOCs for their landholdings under
Compulsory Acquisition (CA) may be allowed to shift to Voluntary Offer
to Sell (VOS), provided, that the claim folder (CF) for the subject
landholding has not yet been received by the Claims Processing,
Valuation and Payment Division (CPVPD) of the Land Bank of the
Philippines (LBP) for valuation.
4. Landowners who have voluntarily offered their landholdings for
coverage under CARP and those who have previously waived their
rights to retain are disqualified from becoming ARBs of other
landholding/s being covered or to be covered under CARP. The LO's
voluntary offer or his previous waiver is construed to be his inability
and/or unwillingness to cultivate the land and make it productive. EcIDaA
Likewise, children of the same landowners who were not
nominated as preferred beneficiaries are disqualified from becoming
an ARB in another landholding following the qualification criteria
pursuant to Section 22 of R.A. No. 6657, as amended.
5. For tenanted lands or lands under leasehold, the Agrarian
Reform Beneficiary/ies (ARB/s) shall continue to pay their lease
rentals as tenants/lessees based on their leasehold contracts until
such time that the LBP issues a Certification of Deposit (COD).
6. As a general rule, untitled public alienable and disposable (A &
D) lands are within the jurisdiction of the Department of Environment
and Natural Resources (DENR) pursuant to Commonwealth Act (C.A.)
No. 141 (Public Land Act). However, subject lands are deemed
"private" and for coverage by the DAR, if all the requisites specified in
R.A. No. 6940, as amended by R.A. No. 9176 for the determination
whether or not private rights over a landholding have already been
acquired based on the following:
a. Continuous occupancy and cultivation by oneself or
through one's predecessors-in-interest for at least thirty (30)
years prior to the effectivity of R.A. No. 9176 on December 4,
2002 (i.e., December 1972);
b. The land must have been classified as alienable and
disposable for at least thirty (30) years prior to the effectivity of
R.A. No. 9176;
c. One must have paid the real estate tax thereon; and
d. There are no adverse claims on the land.
In cases where the DAR and DENR have jointly identified
specific untitled properties that may be covered under the LAD
component of CARP, the DENR-Community Environment and
Natural Resources Office (CENRO)/Provincial Environment and
Natural Resources Office (PENRO) or Regional Technical
Director (RTD) Land Management Service (LMS) shall issue
the certification that the subject tract of land is within an area
classified as alienable and disposable.
7. The current list of all lands covered by NOCs and all remaining
unacquired and undistributed landholdings covered under CARP that
are in the process of acquisition and distribution or will be acquired
based on the schedule of priorities under Section 5 of R.A. No. 9700
shall be submitted by the DARPO to the ROD concerned for
segregation of the corresponding original copy of the Certificates of
Title of all these lands from the regular volume or files of the Registry,
and the compilation of the same in a new separate volume (CARP
Volume) until the customary number of titles constituting a regular
volume is reached. This CARP Volume shall be treated as a restricted
volume and any voluntary transaction on any of the titles included in
this restricted file shall be subject to clearance in writing from the
PARO. The maintenance of the CARP Volume shall be undertaken by
the LRA-CARP personnel under the supervision of the ROD. AHaDSI
8. Any title contained in the CARP Volume shall only be returned
to the general/regular file upon proof that the property covered by said
title is exempted, excluded or ascertained to be outside CARP
coverage. Such proof may be in the form of a Court Order or DAR
Order which has become final and executory.
9. The ROD shall issue a Transfer Certificate of Title (for titled
properties) and an Original Certificate of Title (for untitled properties) in
the name of the Republic of the Philippines (RP title) upon receipt of a
copy of the LBP's Certification of Deposit (COD) from the DARPO.
10. Landholdings distributed by the DENR under R.A. No. 6657, as
amended shall no longer be acquired and distributed by the DAR.
11. Landholdings subject of acquisition shall be validated based on
ownership documents and on the projection by the DAR on DENR
land classification maps to determine whether or not the areas are
alienable and disposable.
12. All projections undertaken by the DARPO on land titles,
whether administratively or judicially (survey was based on the
cadastral map of the Department of Environment and Natural
Resources {DENR}) issued, shall be confirmed or validated by the
DENR-Community Environment and Natural Resources Office
(CENRO) or Provincial Environment and Natural Resources Office
(PENRO) as to the land classification status of said lands.
All projections undertaken by the DARPO on lands covered by
judicially issued titles and whose survey was based on the Private
Survey (Psu) Plan of the Land Registration Authority (LRA) shall be
confirmed or validated by the LRA on whether these lands do not
overlap with other titled or decreed property.
13. Titles judicially issued prior to 1921 based on Act No. 2874
need not be validated or confirmed by the DENR-CENRO/PENRO as
to their land classification status as such lands are classified as
alienable and disposable. However, the DARPO shall:
13.1 Undertake the projection as to land classification status;
and
13.2 Obtain a certification from the Land Registration Authority
(LRA) that the property does not overlap with a titled or decreed
property. Such certification shall include, among others, the
Judicial Decree number, date of issuance of Decree, name of
adjudicatee, location and area.
Such properties that partially overlap with other titled or
decreed properties shall be segregated accordingly during the
conduct of survey by the landholdings subject of acquisition. The
acquisition and distribution of such landholdings that either
partially or fully overlap with decreed properties shall continue
regardless in whose name the decree is. TCaEIc
14. As a general rule, the conduct of survey to determine land use,
segregation of coverable and not coverable area, and subdivision
survey shall be undertaken prior to field investigation (FI). The PARO
shall ensure that all field survey activities shall be completed before
the conduct of field investigation (FI).
However, in the event that the finalization of the master list of
ARBs will necessitate resolution of petitions for inclusion and exclusion
of ARBs in the master list, the PARO shall inform the Land Bank of the
Philippines (LBP) regarding the matter, in which case, the conduct of
subdivision survey will come after the field investigation (FI) or upon
the finalization of the master list of ARBs so as not to delay the land
acquisition process.
15. The Land Use Management and Development (LUMD) fund
shall be released and utilized only for CARP covered lands with
Requisition Survey Services (RSS) approved by the DAR's Bureau of
Land Development (BLD), pursuant to existing guidelines on
requisition, approval and monitoring of survey services.
16. A landowner-mortgagor of a foreclosed agricultural land where
the two-year right of redemption period has already expired and is
subsequently to be covered under CARP, cannot qualify as an ARB on
the foreclosed land notwithstanding his/her being in actual possession
and cultivation thereof. The DAR shall be responsible for taking
possession of the land by negotiating or filing of the appropriate case,
if necessary, and to successfully install the qualified ARB/s.
D. Land Valuation and Landowner Compensation
1. The compensation for lands covered under R.A. No. 9700 shall
be: a) the amount determined in accordance with the criteria provided
for in Section 7 of the said law and existing guidelines on land
valuation; or b) the value based on the order of the DAR Adjudication
Board (DARAB) or the regular court, which has become final and
executory.
The basic formula for the valuation of lands covered by
VOS or CA shall be:
LV = (CNI x 0.60) + (CS x 0.30) + (MV x 0.10)
Where: LV = Land Value
CNI = Capitalized Net Income (based on land
use and productivity)
CS = Comparable Sales (based on fair market
value equivalent to 70% of BIR Zonal Value)
MV = Market Value per Tax Declaration (based
on Government assessment)
1.1 If three factors are present ATcEDS
When the CNI, CS and MV are present, the formula
shall be:
LV = (CNI x 0.60) + (CS x 0.30) + (MV x 0.10)
1.2 If two factors are present
1.2.1 When the CS factor is not present and CNI and MV
are applicable, the formula shall be:
LV = (CNI x 0.90) + (MV x 0.10)
1.2.2 When the CNI factor is not present, and CS and MV
are applicable, the formula shall be:
LV = (CS x 0.90) + (MV x 0.10)
1.3 If only one factor is present
When both the CS and CNI are not present and only MV is
applicable, the formula shall be:
LV = MV x 2
In no case shall the value of idle land using the formula (MV x 2)
exceed the lowest value of land within the same estate under
consideration or within the same barangay, municipality or province (in
that order) approved by LBP within one (1) year from receipt of Claim
Folder (CF.)
The specific guidelines governing the valuation of lands under
voluntary offer to sell (VOS) or compulsory acquisition (CA) pursuant
to R.A. No. 6657, as amended by R.A. No. 9700 are provided in
CARP-LAD Annex A of this Order.
2. All previously acquired lands wherein valuation is subject to
challenge by landowners shall be completed and finally resolved
pursuant to Section 17 of R.A. No. 6657, as amended.
In like manner, claims over tenanted rice and corn lands under
P.D. No. 27 and Executive Order (E.O.) No. 228 whether submitted or
not to the Land Bank of the Philippines (LBP) and not yet approved for
payment shall be valued under R.A. No. 6657, as amended.
Landholdings covered by P.D. No. 27 and falling under Phase I
of R.A. No. 9700 shall be valued under R.A. No. 9700.
3. In cases of rejection, landowners may withdraw the original
value of the landholding as determined by the Department of Agrarian
Reform (DAR) and Land Bank of the Philippines (LBP) per
Memorandum of Valuation (MOV) and subsequently deposited in their
names, subject to their submission of the requirements for
payment. ATESCc
When the LO later accepts the original value or as recomputed
by the LBP based on existing valuation guidelines, mere filing of a
manifestation by the LO as regards the acceptance of the original
value or a joint manifestation by the LO and the LBP on the
recomputed value with the DAR Adjudication Board (DARAB) shall
automatically terminate the just compensation case pending thereat.
4. Landowners, other than banks and financial institutions, who
voluntarily offer their lands for sale, shall be entitled to an additional
five percent (5%) cash payment.
5. For landholdings which were conveyed after the effectivity of
R.A. No. 6657, the LBP shall consider the transferor as the payee.
However, payment must be released to the LO-transferee if the
LO-transferor issues a Special Power of Attorney (SPA) or Deed of
Assignment in favor of the former.
6. In the determination of the Annual Gross Production (AGP),
Selling Price (SP) and Cost of Operation (CO) to be used in the land
valuation, the audited financial statement filed with the Bureau of
Internal Revenue (BIR) shall be obtained by the DARMO from the LO
fifteen (15) days prior to the date of field investigation. If the landowner
fails to submit the same, the DAR and LBP may adopt applicable
industry data or, in the absence thereof, conduct an industry study on
the specific crop.
7. Small portions or patches within the covered landholdings
which are determined to be less productive than the bigger portion
during the conduct of joint field investigation shall be valued based on
the current use of the adjacent portions, provided that said small
portions or patches shall not exceed 10% of the productive area.
Likewise, small portions or patches of landholdings above 18
percent slope, undeveloped and of no use to the landowner shall be
valued as idle provided it shall not exceed 10% of the covered
landholding.
E. Farmer Beneficiary Identification, Screening and Selection
1. Farmers/Tillers and farmworkers who meet the following
qualifications shall be eligible as beneficiaries under the
Comprehensive Agrarian Reform Program:
1.1 General Qualifications. All agrarian reform beneficiaries
must be:
1.1.1 Landless as defined by R.A. No. 6657, as amended
and under Item III (1) of this Order;
1.1.2 Filipino citizen;
1.1.3 Permanent resident of the barangay and/or
municipality where the landholding is located as provided
under Section 22 of R.A. No. 6657, as amended.
1.1.4 At least fifteen (15) years of age at the time of
identification, screening and selection of farmer-
beneficiaries; and
1.1.5 Willing, able, and equipped with the aptitude to
cultivate and make the land productive.
1.2 Specific Qualifications for Farmworkers in Commercial
Farms and Plantations. In addition to Item 1.1 above, the
applicant must have been employed as of June 15, 1988 in the
landholding covered under CARP.
All farmworkers who are holding managerial or supervisory positions
as of June 15, 1988 shall not qualify as ARBs. However, farmworkers who
were promoted to managerial or supervisory positions after they were
identified, screened and selected shall remain as qualified ARBs. TIcEDC
2. Qualified beneficiaries shall be prioritized as follows:
2.1 agricultural lessees, share tenants and regular
farmworkers;
2.2 seasonal farmworkers;
2.3 other farmworkers;
2.4 actual tillers or occupants of public lands;
2.5 collectives or cooperatives of the above beneficiaries; and
2.6 others directly working on the land.
3. The following are grounds for disqualification in the
identification of ARBs of the CARP:
3.1 Failure to meet the qualifications as provided for under
Section 22 of R.A. No. 6657, as amended;
3.2 Execution of a waiver of right to become an ARB in
exchange for due compensation and such waiver has not been
questioned in the proper government entity as of the approval of
this Order;
3.3 Non-payment of an aggregate of three (3) annual
amortizations and failure to exercise the right of
redemption/repurchase within two (2) years resulting in the
foreclosure of mortgage by the LBP of a previously awarded land;
3.4 Deliberate non-payment of three (3) annual amortizations
to the landowner (LO) resulting in the repossession by the
landowner (in the case of voluntary land transfer/direct payment
scheme or VLT/DPS) of the awarded land;
3.5 Dismissal from the service for cause upon a judgment that
is final and executory (and there is no case filed questioning said
dismissal) as of the approval of this Order and if there is any such
case, the same has been affirmed with finality by the proper entity
of government;
3.6 Obtaining a substantially equivalent and regular
employment, as defined in Item III (9) of this Order;
3.7 Retirement from the service, whether optional or
mandatory, or voluntary resignation, provided this was not
attended by coercion and/or deception, and there is no case
questioning said retirement or voluntary resignation by the
applicant as of the date of approval of this Order;
3.8 Misuse or diversion of financial support services extended
by government (Section 37 of R.A. No. 6657, as amended);
3.9. Negligence or misuse of the land or any support extended
by government (Section 22 of R.A. No. 6657, as amended);
3.10 Material misrepresentation of the ARB's basic
qualifications as provided for under Section 22 of R.A. No. 6657,
as amended, P.D. No. 27, and other agrarian laws;
3.11 Sale, disposition, or abandonment of the lands awarded by
government under CARP or P.D. No. 27 which is violative of the
agrarian laws;
3.12 Conversion of agricultural lands to non-agricultural use
without prior approval from the DAR;
3.13 Final judgment for forcible entry into the property or for
unlawful detainer; and IDETCA
3.14 Commission of any violation of the agrarian reform laws
and regulations, or related issuances, as determined with finality
after proper proceedings by the appropriate tribunal or agency.
4. Only after the agricultural lessees and share tenants, and
regular farmworkers have each been awarded three (3) hectares
pursuant to Section 8 of R.A. No. 9700, shall other qualified
beneficiaries such as seasonal farmworkers, other farmworkers, actual
tillers/occupants of public lands, collectives or cooperatives of the
above beneficiaries, and others directly working on the land, be
accommodated.
5. The child of an LO shall be given preference in the distribution
of his/her parent's land pursuant to existing rules and regulations on
award to children of LOs provided he/she meets all of the following
criteria:
5.1 Filipino citizen;
5.2 At least fifteen (15) years of age; and
5.3 Actual tiller or directly managing the farm as of the time of
the conduct of field investigation of the landholding under CARP.
However, only untenanted portions of the landholding may
be subject to award to qualified children of the LO and actual
tenant-tillers in the landholding shall not be ejected or removed
therefrom. An LO's child cannot claim that he/she is directly
managing the farm or a specific area of tillage, if the same has
tenants or lessees, considering that the tenants on the land have
the right to directly manage the land or area of tillage with the
obligation to pay the LO lease rental therefor.
6. In the event that the agricultural land for distribution in
commercial farms or plantations is sufficient following the order of
priority under Section 22 of R.A. No. 6657, as amended, the
farmworker-beneficiaries therein on or prior to 15 June 1988, shall
enjoy priority of award of a maximum of three (3) hectares.
On the other hand, farmworkers who were hired after the
effectivity of R.A. No. 6657 shall be accommodated based on their
length of service, reckoned from 15 June 1988, and subject to Item IV
(F) (1.2) of this Order.
7. All potential ARBs of a landholding who have been included in
the preliminary list, including those who have signified their intent or
interest with the DARMO to be included in the preliminary list of
potential ARBs thereof, must submit the essential documents to prove
their qualifications as ARBs as provided under Item V (D.1.d) of this
Order within fifteen (15) days from posting of the said list.
Potential ARBs who fail to comply with the submission of the
required documents to prove their qualifications fifteen (15) days from
the last day of posting of the preliminary list of ARBs shall not be
delisted from the preliminary list of ARBs. The DARMO shall use
available documentary evidence at hand, if any, or exhaust all efforts
to gather the necessary information/evidence as bases in the
evaluation of the potential ARB's qualifications and inclusion in the
said list.
8. For the purpose of screening and selection of qualified ARBs in
commercial farms, plantations and other landholdings that qualify for
collective distribution under Item IV (F) (4) of this Order, all concerned
PAROs shall create a Beneficiary Screening Committee (BSC) whose
members shall be composed of the PARO as the Ex-Officio
Chairperson, the MARO, the DARPO Legal Offer, the Provincial
Agrarian Reform Coordinating Committee (PARCCOM) Chairman or
his representative and the BARC Chairman of the area where the
landholding is located or his representative, pursuant to DAR A.O. No.
7, Series of 2003.
The BSC may invite the landowner/s and/or civil society
organization (CSO) representatives in the area to serve as resource
persons in the ARB selection and screening process, as may be
necessary.
The BSC shall exercise exclusive jurisdiction in the screening
and selection of ARBs in commercial farms, plantations and other
landholdings for collective distribution to ARBs.
9. Qualified beneficiaries in a particular landholding shall include
those determined/identified by the DAR during the actual investigation
and documentation process. The master list of ARBs selected by the
MAROs or the Beneficiaries Screening Committee (BSC) in the case
of commercial farms or plantations, shall be certified under oath by the
BARC and further attested to under oath by the LO in so far as his
tenants, lessees and regular farmworkers in the landholding are
concerned, pursuant to Item IV (E) (10) of this Order. TacADE
10. The right of the LO to attest to the master list of ARBs in so far
as the tenants, lessees and regular farmworkers in his/her
landholdings are concerned, is deemed waived after the lapse of
fifteen (15) days from his/her receipt of the said master list of ARBs, if
he fails to act on it within the said period. Thereafter, the master list of
ARBs shall become final and executory. Landowners who fail, refuse
or delay the issuance of the attestation despite proof of qualification of
the beneficiaries, shall be liable under Sections 24 and 25 of R.A. No.
9700.
In case of partial or full non-attestation or repudiation by the LO
of the ARBs in the master list, the LO shall be required to submit
evidence to sustain his partial or full non-attestation, repudiation of
ARBs, and/or substitution or addition to the master list of ARBs.
The landowner's refusal to attest to all or specific ARB/s in the
master list despite the presentation of proof of their being either
tenants or lessees or regular farmworkers shall not in any way delay
the LAD process. The MARO shall submit a report on this to the
PARO.
11. The DARPO shall, within fifteen (15) days from receipt of the
DARMO's report, conduct a revalidation of the qualifications of the
ARBs' being tenants or lessees or regular farmworkers in cases where
the landowner refuses to attest to:
11.1 Specific ARBs in the master list of ARBs (partial
attestation);
11.2 Specific ARBs in the master list of ARBs (partial
attestation) and identifies other ARBs either by substitution or
addition whom the LO claims are his tenants, lessees or regular
farmworkers; or
11.3 All ARBs in the master list of ARBs (full non-attestation)
and identifies other ARBs either by substitution or addition whom
the LO claims are his tenants, lessees or regular farmworkers.
Should the PARO find that there is possible merit to the
LO's partial or full non-attestation of the master list of ARBs, he
shall order the BARC to conduct compulsory arbitration within
thirty (30) days to pass upon the issue.
The BARC shall submit a report of its findings within five (5) days
after arbitration to the PARO who shall then evaluate and finally
determine the qualifications of the ARBs in the master list. The
PARO's decision shall be final in so far as the master list is concerned.
12. Protests for inclusion/exclusion from the master list of qualified
ARBs may be filed in writing at the DARPO by an interested party not
later than fifteen (15) days from the last day of posting of the master
list, for resolution within thirty (30) days from receipt of the same.
13. The master list of qualified ARBs becomes final after the lapse
of fifteen (15) days from issuance of the PARO's decision on the
protest and receipt of the same by the parties.
14. The authority of the PARO to determine ARBs' qualifications is
specifically limited in the context of partial attestation or full non-
attestation by the LO and to resolve protests and petitions on the
ARBs' qualifications to be included in the master list. After this phase,
the other processes and the authority to decide on the determination of
ARBs' qualifications under specific issuances (e.g.,inclusion/exclusion
of ARBs issued with CLOA from the master list of ARBs under
agrarian law implementation cases) shall remain.
15. In case an appeal/motion for reconsideration is filed on the
PARO's decision/s or order/s for inclusion/exclusion of potential ARBs
in/from the master list, the rules and procedures provided under the
existing agrarian law implementation (ALI) rules shall be followed.
16. The ARBs who qualify under the screening process shall state
under oath before the judge of the city or municipal court that he/she is
willing to work on the land to make it productive and to assume the
obligation of paying the amortization for the compensation of the land
and the land taxes thereon as stipulated in the Application to Purchase
and Farmer's Undertaking (APFU).
ARBs in the master list who fail or refuse to execute and sign the
APFU shall be given thirty (30) days from the date of receipt of the
APFU to sign it. Failure to sign the APFU within the reglementary
period of thirty (30) days shall be considered as a waiver of right to
become an ARB. Due notice shall be given to the concerned parties
stating the consequence of such failure to sign and execute the APFU
within the prescribed period.
F. Land Distribution
1. Equitable distribution of the land shall be observed subject to
the following considerations:
1.1 Landholdings covered by CARP shall be distributed first
to agricultural lessees and share tenants and regular farmworkers
of the same landholding up to a maximum of three (3) hectares
each. Only when the qualified agricultural lessees and tenants
and regular farmworkers by order of priority under Section 22 of
R.A. No. 6657, as amended, shall have received three (3)
hectares each, shall the remaining portion of the subject
landholding, if any, be distributed to seasonal and other
farmworkers, actual tillers or occupants of public lands,
collectives or cooperatives of the beneficiaries and others directly
working on the land, pursuant to R.A. No. 9700.
1.2 Excess areas subsequent to the three-hectare award to
entitled beneficiaries pursuant to R.A. No. 9700, shall be
distributed to other qualified beneficiaries without prejudice to the
consideration of immediate family members of agricultural
lessees/tenants/farmworkers who are actually tilling/cultivating
such lands as ARBs, subject to the procedures on screening and
selection of ARBs. However, the tenants/lessees in such excess
areas shall be given reasonable time to harvest the produce of
his/her crop, subject to the rules on standing crops.
In cases where the land area is not enough to meet the
three-hectare award ceiling for each agricultural lessee and
tenant in a particular landholding, the area to be distributed to
them shall be based on the actual size of tillage by each
tenant/lessee.
Other qualified beneficiaries under Section 22 of R.A. No.
6657, as amended, who are displaced after the distribution of all
available land to tenants/lessees, may still qualify as ARBs in
other lands covered under the CARP.
In cases where the three-hectare award limit is satisfied for
tenants, lessees and regular farmworkers, the remaining lands
shall be distributed to agrarian reform beneficiaries following the
order of priority under Section 22, Items c to f of R.A. No. 6657,
as amended, at an award limit of three (3) hectares each, using
the following as the criteria for prioritization in case the land is not
economically feasible and sound to distribute among all the
remaining ARBs: ISTHED
a. willingness, aptitude and ability to cultivate and
make the land as productive as possible;
b. physical capacity; and
c. length of service.
If there are ARBs who equally meet the foregoing criteria, priority
shall be given to ARBs who have continuously worked on the subject
landholding.
The other farmworkers on the land who cannot be
accommodated shall be put in a wait list of potential ARBs who will be
awarded in other landholdings covered by the CARP.
1.3 For untenanted land, all the farmers/tillers/farmworkers
therein who qualify under the existing guidelines on the
identification, screening and selection of Agrarian Reform
Beneficiaries (ARBs), shall be considered as potential
beneficiaries in the estate, provided that the proportional share of
each will not exceed three (3) hectares, otherwise, additional
farmworkers shall be considered.
1.4 For unoccupied lands, each qualified landless farmer shall
be allowed the award ceiling of three (3) hectares.
2. In general, the land awarded to an ARB should be under an
individual CLOA-title covering one (1) contiguous tract or several
parcels of land cumulated up to a maximum of three (3) hectares.
3. Qualified beneficiaries may opt for collective ownership,
through a co-workers or farmers' cooperative/association or some
other form of collective organization and for the issuance of collective
ownership titles: Provided, That the total area to be awarded shall not
exceed the total number of co-owners or members of the cooperative
or collective organization multiplied by the award limit of three (3)
hectares, except in meritorious cases as may be determined by the
Presidential Agrarian Reform Council (PARC) and that the conditions
for the grant of collective CLOAs under Item IV (F) (4.1 to 4.4) of this
Order are met.
Under collective ownership, a collective CLOA to the property
shall be issued in the name of the co-owners or the farmers'
cooperative/association or collective organization, as the case may be.
If the CLOAs are issued to co-owners or to a farmers'
cooperatives/association, the names of the beneficiaries must be listed
in the CLOA.
4. Collective CLOAs may be issued to farmers'
cooperatives/associations under the following instances:
4.1 The current farm management system of the land covered
by CARP is not appropriate for either individual farming or
division of the landholding into farm parcels;
4.2 The farm labor system is specialized, where the
farmworkers are organized by functions such as spraying,
weeding, packing and other similar activities and not by specific
parcels;
4.3 The potential beneficiaries are currently not farming
individual parcels but collectively working on large contiguous
areas; and
4.4 The farm consists of multiple crops being farmed in an
integrated manner or includes non-crop production areas that are
necessary for the viability of farm operations, such as packing
plants, storage areas, dikes, and other similar facilities that
cannot be subdivided or assigned to individual farmers.
5. If the conditions for the issuance of collective CLOAs no longer
exist, the landholding shall be parcelized/subdivided and the ARBs
subsequently issued individual CLOA-titles.
6. For idle and abandoned lands or undeveloped agricultural
lands to be covered by CARP, collective ownership shall be allowed
only if the beneficiaries opt for it and there is a clear development plan
that would require collective farming or integrated farm operations
exhibiting the conditions described in Item IV (F) (4.1-4.4) of this
Order. Otherwise, such lands awarded to ARBs should be under
individual CLOAs/titles, covering one (1) contiguous tract or several
parcels of land cumulated up to a maximum of three (3) hectares.
7. As a general rule, the DAR shall take immediate possession of
a landholding upon the issuance of Transfer Certificate of Title (TCT)
or Original Certificate of Title (OCT) in the name of the Republic of the
Philippines (RP) by the concerned Registry of Deeds (ROD), and shall
thereafter immediately proceed with the distribution process to the
qualified agrarian reform beneficiaries of the landholding pursuant to
Section 16 of R.A. No. 6657, as amended.
8. The ARBs have the right of usufruct over the land from the time
the DAR takes constructive and actual possession of the same until
the award of a CLOA.
Pending the award of the CLOA and for the purpose of
establishing usufructuary rights, the DAR, upon transfer of the title in
the name of the Republic of the Philippines and it takes actual
possession of the land, shall immediately inform the ARBs that they
have been identified and qualified to receive the land.
9. The existence of labor-related problems between the
landowner and the farmworkers, including questions on ownership of
the subject landholding and payment of just compensation shall in no
case deter or delay the process of land acquisition and distribution.
10. The rights and responsibilities of the ARB shall commence
from their receipt of a duly registered Certificate of Land Ownership
Award (CLOA) and their actual physical possession of the awarded
land.
10.1 All ARBs shall exercise diligence in the use, cultivation
and maintenance of the land including the improvements thereon.
Negligence, misuse, or unauthorized sale of the land or misuse of
any support extended to an ARB shall be a ground for the
forfeiture of one's right as an ARB.
10.2 Lands awarded to ARBs under this Act may not be sold,
transferred or conveyed except through hereditary succession or
to the Government, or to the LBP, or to other qualified
beneficiaries within a period of ten (10) years; Provided, however,
that the children or the spouse of the transferor shall have a right
to repurchase the land from the government or the LBP within a
period of two (2) years from the date of transfer.
10.3 ARBs have the obligation to pay the LBP in thirty (30)
annual amortizations with interest at six percent (6%) per annum
unless the ARB opts to accelerate payment.
10.4 Amortization payments shall commence one (1) year from
the date of the CLOA registration. However, if the actual
occupancy of the ARB takes place after the CLOA registration,
the amortization shall start one (1) year after the constructive and
physical occupation of the land by the ARB.
11. The ARB Cooperative/Association shall assume the
responsibility of paying the local government unit (LGU) the real
property tax (RPT) of collectively awarded land subject to the
provisions of the Cooperative Code of the Philippines.
12. Land improvements and facilities such as roads, bridges,
warehouses, irrigation systems and the like, for common use and
benefit as may be defined by DAR, may be transferred through a
Farmers' Association or Cooperative, or in the absence thereof,
through co-ownership, and equally shared payments covered under
either individual or collective land amortizations, as the case may be.
13. Agricultural lessees and tenants, regular farmworkers and
other qualified beneficiaries such as seasonal farmworkers, other
farmworkers, actual tillers/occupants of public lands, members of
collectives or cooperatives of the above beneficiaries, and others
directly working on the land who are husband and wife may be entitled
to three (3) hectares each provided that they qualify as ARBs in their
own individual rights and that their respective vested rights to the land
have been duly established. A separate CLOA shall be issued to each
spouse in such cases. ATCaDE
14. For legally married spouses, the names of both husband and
wife shall appear in the CLOA and shall be preceded by the word
"spouses". Should the couple qualify as individual ARBs, their names
shall be registered in the title, to wit: Juan married to Maria or Maria
married to Juan to indicate that the first name is the awardee. In the
case of common-law relationship, the names of both parties shall
likewise appear in the CLOA with the conjunctive word "and" between
their names. Should they likewise qualify as individual ARBs, their
names shall be registered without the other. The same provisions shall
apply in cases where the married ARBs or ARBs in a common-law
relationship are covered by a collective/co-ownership CLOA and their
names annotated at the back of the said CLOA.
For purposes of ARB inventory and reporting, spouses or parties
whose names appear in a single CLOA shall be counted as one ARB.
15. It is the ministerial duty of the ROD to:
15.1 Issue the title of the land in the name of the Republic of
the Philippines, after the LBP has certified that the claim
proceeds have been deposited in the name of the landowner
constituting full payment in cash and bonds, with due notice to
the landowner;
15.2 Register the CLOA generated by DAR;
15.3 Cancel previous titles pertaining thereto; and
15.4 Issue title to the LO's retained area.
16. All registered CLOAs shall be released by the Registry of
Deeds (ROD) to LBP as the mortgagee financing institution. The LBP
shall be the responsible repository of the encumbered CLOAs until the
time of their release to the concerned ARBs upon full payment of the
land amortization, and the cancellation of the encumbrance.
G. Installation of Agrarian Reform Beneficiaries on Awarded Lands
1. As owners of awarded lands under CARP, the ARB/s shall take
possession of the land covered by his/her/their titles from the time the
same is awarded to them through a registered CLOA.
In case taking possession of the awarded land by the ARBs
would imperil or endanger their lives, the DAR shall assume
responsibility for the installation of the ARB/s on the subject land with
the assistance of the police or military until they are settled and in
constructive and physical control of the property.
2. As a general rule, there shall only be a one time installation of
ARBs on their specific area of tillage as indicated in their CLOAs,
rendering them in constructive and physical possession of the same.
The DAR shall assist the ARBs in reporting cases of
threat/harassment or ejection attempts by the former landowner or
other parties to the police or military, and the filing of appropriate legal
action against those responsible, if warranted.
3. In case the installation activities would necessitate the
provision of police and/or military forces to assist the DARMO
personnel, the Provincial Agrarian Reform Officer (PARO) shall
coordinate the said activities with the Department of National Defense-
Armed Forces of the Philippines (DND-AFP) and the Department of
Interior and Local Government-Philippine National Police (DILG-PNP),
pursuant to the existing guidelines per Memorandum of Agreement
executed by the DAR, Department of Interior and Local Government
(DILG), and Department of National Defense (DND).
4. In the event that the former landowner harasses or threatens
the ARB/s installed by the DAR, the affected ARB/s shall immediately
report the matter to the concerned PNP and the DAR. The ARBs
should be assisted by the DAR Regional/Provincial Legal Division,
Public Attorney's Office (PAO) and the Office of the City/Provincial
Prosecutors.
5. If upon the effectivity of this Order, the former landowner
deliberately acts to delay, stall or obstruct the installation of the ARBs,
a criminal case shall be filed against him/her for violation of Sec. 73 (d)
of R.A. No. 6657, as amended. Moreover, the DAR shall ask that the
landowner be held liable by the Court for actual, compensatory and
moral damages suffered by the ARB/s.
G.R. No. 78517 February 27, 1989
GABINO ALITA, JESUS JULIAN, JR., JESUS JULIAN, SR., PEDRO RICALDE, VICENTE
RICALDE and ROLANDO SALAMAR, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, ENRIQUE M. REYES, PAZ M. REYES and FE M.
REYES,respondents.
Bureau of Agrarian Legal Assistance for petitioners.
Leonardo N. Zulueta for Enrique Reyes, et al. Adolfo S. Azcuna for private respondents.

PARAS, J .:
Before us is a petition seeking the reversal of the decision rendered by the respondent Court of
Appeals**on March 3, 1987 affirming the judgment of the court a quo dated April 29, 1986, the
dispositive portion of the trial court's decision reading as follows;
WHEREFORE, the decision rendered by this Court on November 5, 1982 is hereby
reconsidered and a new judgment is hereby rendered:
1. Declaring that Presidential Decree No. 27 is inapplicable to lands obtained thru the
homestead law,
2. Declaring that the four registered co-owners will cultivate and operate the
farmholding themselves as owners thereof; and
3. Ejecting from the land the so-called tenants, namely; Gabino Alita, Jesus Julian,
Sr., Jesus Julian, Jr., Pedro Ricalde, Vicente Ricalde and Rolando Salamar, as the
owners would want to cultivate the farmholding themselves.
No pronouncement as to costs.
SO ORDERED. (p. 31, Rollo)
The facts are undisputed. The subject matter of the case consists of two (2) parcels of land, acquired
by private respondents' predecessors-in-interest through homestead patent under the provisions of
Commonwealth Act No. 141. Said lands are situated at Guilinan, Tungawan, Zamboanga del Sur.
Private respondents herein are desirous of personally cultivating these lands, but petitioners refuse
to vacate, relying on the provisions of P.D. 27 and P.D. 316 and appurtenant regulations issued by
the then Ministry of Agrarian Reform (DAR for short), now Department of Agrarian Reform (MAR for
short).
On June 18, 1981, private respondents (then plaintiffs), instituted a complaint against Hon. Conrado
Estrella as then Minister of Agrarian Reform, P.D. Macarambon as Regional Director of MAR Region
IX, and herein petitioners (then defendants) for the declaration of P.D. 27 and all other Decrees,
Letters of Instructions and General Orders issued in connection therewith as inapplicable to
homestead lands.
Defendants filed their answer with special and affirmative defenses of July 8, 1981.
Subsequently, on July 19, 1982, plaintiffs filed an urgent motion to enjoin the defendants from
declaring the lands in litigation under Operation Land Transfer and from being issued land transfer
certificates to which the defendants filed their opposition dated August 4, 1982.
On November 5, 1982, the then Court of Agrarian Relations 16th Regional District, Branch IV,
Pagadian City (now Regional Trial Court, 9th Judicial Region, Branch XVIII) rendered its decision
dismissing the said complaint and the motion to enjoin the defendants was denied.
On January 4, 1983, plaintiffs moved to reconsider the Order of dismissal, to which defendants filed
their opposition on January 10, 1983.
Thus, on April 29, 1986, the Regional Trial Court issued the aforequoted decision prompting
defendants to move for a reconsideration but the same was denied in its Order dated June 6, 1986.
On appeal to the respondent Court of Appeals, the same was sustained in its judgment rendered on
March 3, 1987, thus:
WHEREFORE, finding no reversible error thereof, the decision appealed from is
hereby AFFIRMED.
SO ORDERED. (p. 34, Rollo)
Hence, the present petition for review on certiorari.
The pivotal issue is whether or not lands obtained through homestead patent are covered by the
Agrarian Reform under P.D. 27.
The question certainly calls for a negative answer.
We agree with the petitioners in saying that P.D. 27 decreeing the emancipation of tenants from the
bondage of the soil and transferring to them ownership of the land they till is a sweeping social
legislation, a remedial measure promulgated pursuant to the social justice precepts of the
Constitution. However, such contention cannot be invoked to defeat the very purpose of the
enactment of the Public Land Act or Commonwealth Act No. 141. Thus,
The Homestead Act has been enacted for the welfare and protection of the poor. The
law gives a needy citizen a piece of land where he may build a modest house for
himself and family and plant what is necessary for subsistence and for the
satisfaction of life's other needs. The right of the citizens to their homes and to the
things necessary for their subsistence is as vital as the right to life itself. They have a
right to live with a certain degree of comfort as become human beings, and the State
which looks after the welfare of the people's happiness is under a duty to safeguard
the satisfaction of this vital right. (Patricio v. Bayog, 112 SCRA 45)
In this regard, the Philippine Constitution likewise respects the superiority of the homesteaders'
rights over the rights of the tenants guaranteed by the Agrarian Reform statute. In point is Section 6
of Article XIII of the 1987 Philippine Constitution which provides:
Section 6. The State shall apply the principles of agrarian reform or stewardship,
whenever applicable in accordance with law, in the disposition or utilization of other
natural resources, including lands of public domain under lease or concession
suitable to agriculture, subject to prior rights, homestead rights of small settlers, and
the rights of indigenous communities to their ancestral lands.
Additionally, it is worthy of note that the newly promulgated Comprehensive Agrarian Reform Law of
1988 or Republic Act No. 6657 likewise contains a proviso supporting the inapplicability of P.D. 27 to
lands covered by homestead patents like those of the property in question, reading,
Section 6. Retention Limits. ...
... Provided further, That original homestead grantees or their direct compulsory heirs
who still own the original homestead at the time of the approval of this Act shall retain
the same areas as long as they continue to cultivate said homestead.'
WHEREFORE, premises considered, the decision of the respondent Court of Appeals sustaining the
decision of the Regional Trial Court is hereby AFFIRMED.
SO ORDERED.
G.R. No. 103302 August 12, 1993
NATALIA REALTY, INC., AND ESTATE DEVELOPERS AND INVESTORS CORP., petitioners,
vs.
DEPARTMENT OF AGRARIAN REFORM, SEC. BENJAMIN T. LEONG and DIR. WILFREDO
LEANO, DAR REGION IV, respondents.
Lino M. Patajo for petitioners.
The Solicitor General for respondents.

BELLOSILLO, J .:
Are lands already classified for residential, commercial or industrial use, as approved by the Housing
and Land Use Regulatory Board and its precursor agencies
1
prior to 15 June 1988,
2
covered by R.A.
6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988? This is the pivotal issue in
this petition for certiorari assailing the Notice of Coverage
3
of the Department of Agrarian Reform over
parcels of land already reserved as townsite areas before the enactment of the law.
Petitioner Natalia Realty, Inc. (NATALIA, for brevity) is the owner of three (3) contiguous parcels of
land located in Banaba, Antipolo, Rizal, with areas of 120.9793 hectares, 1.3205 hectares and
2.7080 hectares, or a total of 125.0078 hectares, and embraced in Transfer Certificate of Title No.
31527 of the Register of Deeds of the Province of Rizal.
On 18 April 1979, Presidential Proclamation No. 1637 set aside 20,312 hectares of land located in
the Municipalities of Antipolo, San Mateo and Montalban as townsite areas to absorb the population
overspill in the metropolis which were designated as the Lungsod Silangan Townsite. The NATALIA
properties are situated within the areas proclaimed as townsite reservation.
Since private landowners were allowed to develop their properties into low-cost housing subdivisions
within the reservation, petitioner Estate Developers and Investors Corporation (EDIC, for brevity), as
developer of NATALIA properties, applied for and was granted preliminary approval and locational
clearances by the Human Settlements Regulatory Commission. The necessary permit for Phase I of
the subdivision project, which consisted of 13.2371 hectares, was issued sometime in 1982;
4
for
Phase II, with an area of 80,000 hectares, on 13 October 1983;
5
and for Phase III, which consisted of the
remaining 31.7707 hectares, on 25 April 1986.
6
Petitioner were likewise issued development
permits
7
after complying with the requirements. Thus the NATALIA properties later became the Antipolo
Hills Subdivision.
On 15 June 1988, R.A. 6657, otherwise known as the "Comprehensive Agrarian Reform Law of
1988" (CARL, for brevity), went into effect. Conformably therewith, respondent Department of
Agrarian Reform (DAR, for brevity), through its Municipal Agrarian Reform Officer, issued on 22
November 1990 a Notice of Coverage on the undeveloped portions of the Antipolo Hills Subdivision
which consisted of roughly 90.3307 hectares. NATALIA immediately registered its objection to the
notice of Coverage.
EDIC also protested to respondent Director Wilfredo Leano of the DAR Region IV Office and twice
wrote him requesting the cancellation of the Notice of Coverage.
On 17 January 1991, members of the Samahan ng Magsasaka sa Bundok Antipolo, Inc. (SAMBA,
for the brevity), filed a complaint against NATALIA and EDIC before the DAR Regional Adjudicator to
restrain petitioners from developing areas under cultivation by SAMBA members.
8
The Regional
Adjudicator temporarily restrained petitioners from proceeding with the development of the subdivision.
Petitioners then moved to dismiss the complaint; it was denied. Instead, the Regional Adjudicator issued
on 5 March 1991 a Writ of Preliminary Injunction.
Petitioners NATALIA and EDIC elevated their cause to the DAR Adjudication Board (DARAB);
however, on 16 December 1991 the DARAB merely remanded the case to the Regional Adjudicator
for further proceedings.
9

In the interim, NATALIA wrote respondent Secretary of Agrarian Reform reiterating its request to set
aside the Notice of Coverage. Neither respondent Secretary nor respondent Director took action on
the protest-letters, thus compelling petitioners to institute this proceeding more than a year
thereafter.
NATALIA and EDIC both impute grave abuse of discretion to respondent DAR for including
undedeveloped portions of the Antipolo Hills Subdivision within the coverage of the CARL. They
argue that NATALIA properties already ceased to be agricultural lands when they were included in
the areas reserved by presidential fiat for the townsite reservation.
Public respondents through the Office of the Solicitor General dispute this contention. They maintain
that the permits granted petitioners were not valid and binding because they did not comply with the
implementing Standards, Rules and Regulations of P.D. 957, otherwise known as "The Subdivision
and Condominium Buyers Protective Decree," in that no application for conversion of the NATALIA
lands from agricultural residential was ever filed with the DAR. In other words, there was no valid
conversion. Moreover, public respondents allege that the instant petition was prematurely filed
because the case instituted by SAMBA against petitioners before the DAR Regional Adjudicator has
not yet terminated. Respondents conclude, as a consequence, that petitioners failed to fully exhaust
administrative remedies available to them before coming to court.
The petition is impressed with merit. A cursory reading of the Preliminary Approval and Locational
Clearances as well as the Development Permits granted petitioners for Phases I, II and III of the
Antipolo Hills Subdivision reveals that contrary to the claim of public respondents, petitioners
NATALIA and EDIC did in fact comply with all the requirements of law.
Petitioners first secured favorable recommendations from the Lungsod Silangan Development
Corporation, the agency tasked to oversee the implementation of the development of the townsite
reservation, before applying for the necessary permits from the Human Settlements Regulatory
Commission.
10
And, in all permits granted to petitioners, the Commission
stated invariably therein that the applications were in "conformance"
11
or "conformity"
12
or
"conforming"
13
with the implementing Standards, Rules and Regulations of P.D. 957. Hence, the
argument of public respondents that not all of the requirements were complied with cannot be sustained.
As a matter of fact, there was even no need for petitioners to secure a clearance or prior approval
from DAR. The NATALIA properties were within the areas set aside for the Lungsod Silangan
Reservation. Since Presidential Proclamation No. 1637 created the townsite reservation for the
purpose of providing additional housing to the burgeoning population of Metro Manila, it in effect
converted for residential use what were erstwhile agricultural lands provided all requisites were met.
And, in the case at bar, there was compliance with all relevant rules and requirements. Even in their
applications for the development of the Antipolo Hills Subdivision, the predecessor agency of
HLURB noted that petitioners NATALIA and EDIC complied with all the requirements prescribed by
P.D. 957.
The implementing Standards, Rules and Regulations of P.D. 957 applied to all subdivisions and
condominiums in general. On the other hand, Presidential Proclamation No. 1637 referred only to
the Lungsod Silangan Reservation, which makes it a special law. It is a basic tenet in statutory
construction that between a general law and a special law, the latter prevails.
14

Interestingly, the Office of the Solicitor General does not contest the conversion of portions of the
Antipolo Hills Subdivision which have already been developed.
15
Of course, this is contrary to its
earlier position that there was no valid conversion. The applications for the developed and undeveloped
portions of subject subdivision were similarly situated. Consequently, both did not need prior DAR
approval.
We now determine whether such lands are covered by the CARL. Section 4 of R.A. 6657 provides
that the CARL shall "cover, regardless of tenurial arrangement and commodity produced, all public
and private agricultural lands." As to what constitutes "agricultural land," it is referred to as "land
devoted to agricultural activity as defined in this Act and not classified as mineral, forest, residential,
commercial or industrial land."
16
The deliberations of the Constitutional Commission confirm this
limitation. "Agricultural lands" are only those lands which are "arable and suitable agricultural lands" and
"do not include commercial, industrial and residential lands."
17

Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills Subdivision
cannot in any language be considered as "agricultural lands." These lots were intended for
residential use. They ceased to be agricultural lands upon approval of their inclusion in the Lungsod
Silangan Reservation. Even today, the areas in question continued to be developed as a low-cost
housing subdivision, albeit at a snail's pace. This can readily be gleaned from the fact that SAMBA
members even instituted an action to restrain petitioners from continuing with such development.
The enormity of the resources needed for developing a subdivision may have delayed its completion
but this does not detract from the fact that these lands are still residential lands and outside the
ambit of the CARL.
Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These include
lands previously converted to non-agricultural uses prior to the effectivity of CARL by government
agencies other than respondent DAR. In its Revised Rules and Regulations Governing Conversion
of Private Agricultural Lands to Non-Agricultural Uses,
18
DAR itself defined "agricultural land" thus
. . . Agricultural lands refers to those devoted to agricultural activity as defined in R.A.
6657 and not classified as mineral or forest by the Department of Environment and
Natural Resources (DENR) and its predecessor agencies, and not classified in town
plans and zoning ordinances as approved by the Housing and Land Use Regulatory
Board (HLURB) and its preceding competent authorities prior to 15 June 1988 for
residential, commercial or industrial use.
Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is bound by such
conversion. It was therefore error to include the undeveloped portions of the Antipolo Hills
Subdivision within the coverage of CARL.
Be that as it may, the Secretary of Justice, responding to a query by the Secretary of Agrarian
Reform, noted in an Opinion
19
that lands covered by Presidential Proclamation No. 1637, inter alia, of
which the NATALIA lands are part, having been reserved for townsite purposes "to be developed as
human settlements by the proper land and housing agency," are "not deemed 'agricultural lands' within
the meaning and intent of Section 3 (c) of R.A. No. 6657. " Not being deemed "agricultural lands," they
are outside the coverage of CARL.
Anent the argument that there was failure to exhaust administrative remedies in the instant petition,
suffice it to say that the issues raised in the case filed by SAMBA members differ from those of
petitioners. The former involve possession; the latter, the propriety of including under the operation
of CARL lands already converted for residential use prior to its effectivity.
Besides, petitioners were not supposed to wait until public respondents acted on their letter-protests,
this after sitting it out for almost a year. Given the official indifference, which under the
circumstances could have continued forever, petitioners had to act to assert and protect their
interests.
20

In fine, we rule for petitioners and hold that public respondents gravely abused their discretion in
issuing the assailed Notice of Coverage of 22 November 1990 by of lands over which they no longer
have jurisdiction.
WHEREFORE, the petition for Certiorari is GRANTED. The Notice of Coverage of 22 November
1990 by virtue of which undeveloped portions of the Antipolo Hills Subdivision were placed under
CARL coverage is hereby SET ASIDE.
SO ORDERED.
EN BANC
[G.R. No. 86889 : December 4, 1990.]
192 SCRA 51
LUZ FARMS, Petitioner, vs. THE HONORABLE SECRETARY OF THE DEPARTMENT OF
AGRARIAN REFORM, Respondent.

D E C I S I O N

PARAS, J.:

This is a petition for prohibition with prayer for restraining order and/or preliminary and
permanent injunction against the Honorable Secretary of the Department of Agrarian
Reform for acting without jurisdiction in enforcing the assailed provisions of R.A. No. 6657,
otherwise known as the Comprehensive Agrarian Reform Law of 1988 and in promulgating
the Guidelines and Procedure Implementing Production and Profit Sharing under R.A. No.
6657, insofar as the same apply to herein petitioner, and further from performing an act in
violation of the constitutional rights of the petitioner.
As gathered from the records, the factual background of this case, is as follows:
On June 10, 1988, the President of the Philippines approved R.A. No. 6657, which includes
the raising of livestock, poultry and swine in its coverage (Rollo, p. 80).
On January 2, 1989, the Secretary of Agrarian Reform promulgated the Guidelines and
Procedures Implementing Production and Profit Sharing as embodied in Sections 13 and 32
of R.A. No. 6657 (Rollo, p. 80).
On January 9, 1989, the Secretary of Agrarian Reform promulgated its Rules and
Regulations implementing Section 11 of R.A. No. 6657 (Commercial Farms). (Rollo, p. 81).
Luz Farms, petitioner in this case, is a corporation engaged in the livestock and poultry
business and together with others in the same business allegedly stands to be adversely
affected by the enforcement of Section 3(b), Section 11, Section 13, Section 16(d) and 17
and Section 32 of R.A. No. 6657 otherwise known as Comprehensive Agrarian Reform Law
and of the Guidelines and Procedures Implementing Production and Profit Sharing under
R.A. No. 6657 promulgated on January 2, 1989 and the Rules and Regulations
Implementing Section 11 thereof as promulgated by the DAR on January 9, 1989 (Rollo, pp.
2-36).: rd
Hence, this petition praying that aforesaid laws, guidelines and rules be declared
unconstitutional. Meanwhile, it is also prayed that a writ of preliminary injunction or
restraining order be issued enjoining public respondents from enforcing the same, insofar as
they are made to apply to Luz Farms and other livestock and poultry raisers.
This Court in its Resolution dated July 4, 1939 resolved to deny, among others, Luz Farms'
prayer for the issuance of a preliminary injunction in its Manifestation dated May 26, and
31, 1989. (Rollo, p. 98).
Later, however, this Court in its Resolution dated August 24, 1989 resolved to grant said
Motion for Reconsideration regarding the injunctive relief, after the filing and approval by
this Court of an injunction bond in the amount of P100,000.00. This Court also gave due
course to the petition and required the parties to file their respective memoranda (Rollo, p.
119).
The petitioner filed its Memorandum on September 6, 1989 (Rollo, pp. 131-168).
On December 22, 1989, the Solicitor General adopted his Comment to the petition as his
Memorandum (Rollo, pp. 186-187).
Luz Farms questions the following provisions of R.A. 6657, insofar as they are made to
apply to it:
(a) Section 3(b) which includes the "raising of livestock (and poultry)" in the
definition of "Agricultural, Agricultural Enterprise or Agricultural Activity."
(b) Section 11 which defines "commercial farms" as "private agricultural lands
devoted to commercial, livestock, poultry and swine raising . . ."
(c) Section 13 which calls upon petitioner to execute a production-sharing plan.
(d) Section 16(d) and 17 which vest on the Department of Agrarian Reform the
authority to summarily determine the just compensation to be paid for lands covered
by the Comprehensive Agrarian Reform Law.
(e) Section 32 which spells out the production-sharing plan mentioned in Section 13

". . . (W)hereby three percent (3%) of the gross sales from the production of such
lands are distributed within sixty (60) days of the end of the fiscal year as
compensation to regular and other farmworkers in such lands over and above the
compensation they currently receive: Provided, That these individuals or entities
realize gross sales in excess of five million pesos per annum unless the DAR, upon
proper application, determine a lower ceiling.
In the event that the individual or entity realizes a profit, an additional ten (10%) of
the net profit after tax shall be distributed to said regular and other farmworkers
within ninety (90) days of the end of the fiscal year . . ."
The main issue in this petition is the constitutionality of Sections 3(b), 11, 13 and 32 of R.A.
No. 6657 (the Comprehensive Agrarian Reform Law of 1988), insofar as the said law
includes the raising of livestock, poultry and swine in its coverage as well as the
Implementing Rules and Guidelines promulgated in accordance therewith.:-cralaw
The constitutional provision under consideration reads as follows:
ARTICLE XIII
x x x
AGRARIAN AND NATURAL RESOURCES REFORM
Section 4. The State shall, by law, undertake an agrarian reform program founded
on the right of farmers and regular farmworkers, who are landless, to own directly or
collectively the lands they till or, in the case of other farmworkers, to receive a just
share of the fruits thereof. To this end, the State shall encourage and undertake the
just distribution of all agricultural lands, subject to such priorities and reasonable
retention limits as the Congress may prescribe, taking into account ecological,
developmental, or equity considerations, and subject to the payment of just
compensation. In determining retention limits, the State shall respect the rights of
small landowners. The State shall further provide incentives for voluntary land-
sharing.
x x x"
Luz Farms contended that it does not seek the nullification of R.A. 6657 in its
entirety. In fact, it acknowledges the correctness of the decision of this Court in the
case of the Association of Small Landowners in the Philippines, Inc. vs. Secretary of
Agrarian Reform (G.R. 78742, 14 July 1989) affirming the constitutionality of the
Comprehensive Agrarian Reform Law. It, however, argued that Congress in enacting
the said law has transcended the mandate of the Constitution, in including land
devoted to the raising of livestock, poultry and swine in its coverage (Rollo, p. 131).
Livestock or poultry raising is not similar to crop or tree farming. Land is not the
primary resource in this undertaking and represents no more than five percent (5%)
of the total investment of commercial livestock and poultry raisers. Indeed, there are
many owners of residential lands all over the country who use available space in
their residence for commercial livestock and raising purposes, under "contract-
growing arrangements," whereby processing corporations and other commercial
livestock and poultry raisers (Rollo, p. 10). Lands support the buildings and other
amenities attendant to the raising of animals and birds. The use of land is incidental
to but not the principal factor or consideration in productivity in this industry.
Including backyard raisers, about 80% of those in commercial livestock and poultry
production occupy five hectares or less. The remaining 20% are mostly corporate
farms (Rollo, p. 11).
On the other hand, the public respondent argued that livestock and poultry raising is
embraced in the term "agriculture" and the inclusion of such enterprise under Section 3(b)
of R.A. 6657 is proper. He cited that Webster's International Dictionary, Second Edition
(1954), defines the following words:
"Agriculture the art or science of cultivating the ground and raising and harvesting
crops, often, including also, feeding, breeding and management of livestock, tillage,
husbandry, farming.
It includes farming, horticulture, forestry, dairying, sugarmaking . . .
Livestock domestic animals used or raised on a farm, especially for profit.
Farm a plot or tract of land devoted to the raising of domestic or other animals." (Rollo,
pp. 82-83).
The petition is impressed with merit.
The question raised is one of constitutional construction. The primary task in constitutional
construction is to ascertain and thereafter assure the realization of the purpose of the
framers in the adoption of the Constitution (J.M. Tuazon & Co. vs. Land Tenure
Administration, 31 SCRA 413 [1970]).: rd
Ascertainment of the meaning of the provision of Constitution begins with the language of
the document itself. The words used in the Constitution are to be given their ordinary
meaning except where technical terms are employed in which case the significance thus
attached to them prevails (J.M. Tuazon & Co. vs. Land Tenure Administration, 31 SCRA 413
[1970]).
It is generally held that, in construing constitutional provisions which are ambiguous or of
doubtful meaning, the courts may consider the debates in the constitutional convention as
throwing light on the intent of the framers of the Constitution. It is true that the intent of
the convention is not controlling by itself, but as its proceeding was preliminary to the
adoption by the people of the Constitution the understanding of the convention as to what
was meant by the terms of the constitutional provision which was the subject of the
deliberation, goes a long way toward explaining the understanding of the people when they
ratified it (Aquino, Jr. v. Enrile, 59 SCRA 183 [1974]).
The transcripts of the deliberations of the Constitutional Commission of 1986 on the
meaning of the word "agricultural," clearly show that it was never the intention of the
framers of the Constitution to include livestock and poultry industry in the coverage of the
constitutionally-mandated agrarian reform program of the Government.
The Committee adopted the definition of "agricultural land" as defined under Section 166 of
R.A. 3844, as laud devoted to any growth, including but not limited to crop lands, saltbeds,
fishponds, idle and abandoned land (Record, CONCOM, August 7, 1986, Vol. III, p. 11).
The intention of the Committee is to limit the application of the word "agriculture."
Commissioner Jamir proposed to insert the word "ARABLE" to distinguish this kind of
agricultural land from such lands as commercial and industrial lands and residential
properties because all of them fall under the general classification of the word "agricultural".
This proposal, however, was not considered because the Committee contemplated that
agricultural lands are limited to arable and suitable agricultural lands and therefore, do not
include commercial, industrial and residential lands (Record, CONCOM, August 7, 1986, Vol.
III, p. 30).
In the interpellation, then Commissioner Regalado (now a Supreme Court Justice), posed
several questions, among others, quoted as follows:
x x x
"Line 19 refers to genuine reform program founded on the primary right of farmers
and farmworkers. I wonder if it means that leasehold tenancy is thereby proscribed
under this provision because it speaks of the primary right of farmers and
farmworkers to own directly or collectively the lands they till. As also mentioned by
Commissioner Tadeo, farmworkers include those who work in piggeries and poultry
projects.
I was wondering whether I am wrong in my appreciation that if somebody puts up a
piggery or a poultry project and for that purpose hires farmworkers therein, these
farmworkers will automatically have the right to own eventually, directly or
ultimately or collectively, the land on which the piggeries and poultry projects were
constructed. (Record, CONCOM, August 2, 1986, p. 618).
x x x
The questions were answered and explained in the statement of then Commissioner
Tadeo, quoted as follows:
x x x
"Sa pangalawang katanungan ng Ginoo ay medyo hindi kami nagkaunawaan.
Ipinaaalam ko kay Commissioner Regalado na hindi namin inilagay ang agricultural
worker sa kadahilanang kasama rito ang piggery, poultry at livestock workers. Ang
inilagay namin dito ay farm worker kaya hindi kasama ang piggery, poultry at
livestock workers (Record, CONCOM, August 2, 1986, Vol. II, p. 621).
It is evident from the foregoing discussion that Section II of R.A. 6657 which includes
"private agricultural lands devoted to commercial livestock, poultry and swine raising" in the
definition of "commercial farms" is invalid, to the extent that the aforecited agro-industrial
activities are made to be covered by the agrarian reform program of the State. There is
simply no reason to include livestock and poultry lands in the coverage of agrarian reform.
(Rollo, p. 21).
Hence, there is merit in Luz Farms' argument that the requirement in Sections 13 and 32 of
R.A. 6657 directing "corporate farms" which include livestock and poultry raisers to execute
and implement "production-sharing plans" (pending final redistribution of their landholdings)
whereby they are called upon to distribute from three percent (3%) of their gross sales and
ten percent (10%) of their net profits to their workers as additional compensation is
unreasonable for being confiscatory, and therefore violative of due process (Rollo, p. 21).:-cralaw
It has been established that this Court will assume jurisdiction over a constitutional question
only if it is shown that the essential requisites of a judicial inquiry into such a question are
first satisfied. Thus, there must be an actual case or controversy involving a conflict of legal
rights susceptible of judicial determination, the constitutional question must have been
opportunely raised by the proper party, and the resolution of the question is unavoidably
necessary to the decision of the case itself (Association of Small Landowners of the
Philippines, Inc. v. Secretary of Agrarian Reform, G.R. 78742; Acuna v. Arroyo, G.R. 79310;
Pabico v. Juico, G.R. 79744; Manaay v. Juico, G.R. 79777, 14 July 1989, 175 SCRA 343).
However, despite the inhibitions pressing upon the Court when confronted with
constitutional issues, it will not hesitate to declare a law or act invalid when it is convinced
that this must be done. In arriving at this conclusion, its only criterion will be the
Constitution and God as its conscience gives it in the light to probe its meaning and discover
its purpose. Personal motives and political considerations are irrelevancies that cannot
influence its decisions. Blandishment is as ineffectual as intimidation, for all the awesome
power of the Congress and Executive, the Court will not hesitate "to make the hammer fall
heavily," where the acts of these departments, or of any official, betray the people's will as
expressed in the Constitution (Association of Small Landowners of the Philippines, Inc. v.
Secretary of Agrarian Reform, G.R. 78742; Acuna v. Arroyo, G.R. 79310; Pabico v. Juico,
G.R. 79744; Manaay v. Juico, G.R. 79777, 14 July 1989).
Thus, where the legislature or the executive acts beyond the scope of its constitutional
powers, it becomes the duty of the judiciary to declare what the other branches of the
government had assumed to do, as void. This is the essence of judicial power conferred by
the Constitution "(I)n one Supreme Court and in such lower courts as may be established by
law" (Art. VIII, Section 1 of the 1935 Constitution; Article X, Section I of the 1973
Constitution and which was adopted as part of the Freedom Constitution, and Article VIII,
Section 1 of the 1987 Constitution) and which power this Court has exercised in many
instances (Demetria v. Alba, 148 SCRA 208 [1987]).
PREMISES CONSIDERED, the instant petition is hereby GRANTED. Sections 3(b), 11, 13 and
32 of R.A. No. 6657 insofar as the inclusion of the raising of livestock, poultry and swine in
its coverage as well as the Implementing Rules and Guidelines promulgated in accordance
therewith, are hereby DECLARED null and void for being unconstitutional and the writ of
preliminary injunction issued is hereby MADE permanent.
SO ORDERED.
G.R. No. 162070 October 19, 2005
DEPARTMENT OF AGRARIAN REFORM, represented by SECRETARY JOSE MARI B. PONCE
(OIC),Petitioner
vs.
DELIA T. SUTTON, ELLA T. SUTTON-SOLIMAN and HARRY T. SUTTON, Respondents.
D E C I S I O N
PUNO, J .:
This is a petition for review filed by the Department of Agrarian Reform (DAR) of the Decision and
Resolution of the Court of Appeals, dated September 19, 2003 and February 4, 2004, respectively,
which declared DAR Administrative Order (A.O.) No. 9, series of 1993, null and void for being
violative of the Constitution.
The case at bar involves a land in Aroroy, Masbate, inherited by respondents which has been
devoted exclusively to cow and calf breeding. On October 26, 1987, pursuant to the then existing
agrarian reform program of the government, respondents made a voluntary offer to sell (VOS)
1
their
landholdings to petitioner DAR to avail of certain incentives under the law.
On June 10, 1988, a new agrarian law, Republic Act (R.A.) No. 6657, also known as the
Comprehensive Agrarian Reform Law (CARL) of 1988, took effect. It included in its coverage farms
used for raising livestock, poultry and swine.
On December 4, 1990, in an en banc decision in the case of Luz Farms v. Secretary of DAR,
2
this
Court ruled that lands devoted to livestock and poultry-raising are not included in the definition of
agricultural land. Hence, we declared as unconstitutional certain provisions of the CARL insofar as
they included livestock farms in the coverage of agrarian reform.
In view of the Luz Farms ruling, respondents filed with petitioner DAR a formal request to withdraw
their VOS as their landholding was devoted exclusively to cattle-raising and thus exempted from the
coverage of the CARL.
3

On December 21, 1992, the Municipal Agrarian Reform Officer of Aroroy, Masbate, inspected
respondents land and found that it was devoted solely to cattle-raising and breeding. He
recommended to the DAR Secretary that it be exempted from the coverage of the CARL.
On April 27, 1993, respondents reiterated to petitioner DAR the withdrawal of their VOS and
requested the return of the supporting papers they submitted in connection therewith.
4
Petitioner
ignored their request.
On December 27, 1993, DAR issued A.O. No. 9, series of 1993,
5
which provided that only portions
of private agricultural lands used for the raising of livestock, poultry and swine as of June 15, 1988
shall be excluded from the coverage of the CARL. In determining the area of land to be excluded,
the A.O. fixed the following retention limits, viz: 1:1 animal-land ratio (i.e., 1 hectare of land per 1
head of animal shall be retained by the landowner), and a ratio of 1.7815 hectares for livestock
infrastructure for every 21 heads of cattle shall likewise be excluded from the operations of the
CARL.
On February 4, 1994, respondents wrote the DAR Secretary and advised him to consider as final
and irrevocable the withdrawal of their VOS as, under the Luz Farms doctrine, their entire
landholding is exempted from the CARL.
6

On September 14, 1995, then DAR Secretary Ernesto D. Garilao issued an Order
7
partially granting
the application of respondents for exemption from the coverage of CARL. Applying the retention
limits outlined in the DAR A.O. No. 9, petitioner exempted 1,209 hectares of respondents land for
grazing purposes, and a maximum of 102.5635 hectares for infrastructure. Petitioner ordered the
rest of respondents landholding to be segregated and placed under Compulsory Acquisition.
Respondents moved for reconsideration. They contend that their entire landholding should be
exempted as it is devoted exclusively to cattle-raising. Their motion was denied.
8
They filed a notice
of appeal
9
with the Office of the President assailing: (1) the reasonableness and validity of DAR A.O.
No. 9, s. 1993, which provided for a ratio between land and livestock in determining the land area
qualified for exclusion from the CARL, and (2) the constitutionality of DAR A.O. No. 9, s. 1993, in
view of the Luz Farms case which declared cattle-raising lands excluded from the coverage of
agrarian reform.
On October 9, 2001, the Office of the President affirmed the impugned Order of petitioner DAR.
10
It
ruled that DAR A.O. No. 9, s. 1993, does not run counter to the Luz Farms case as the A.O.
provided the guidelines to determine whether a certain parcel of land is being used for cattle-raising.
However, the issue on the constitutionality of the assailed A.O. was left for the determination
of the courts as the sole arbiters of such issue.
On appeal, the Court of Appeals ruled in favor of the respondents. It declared DAR A.O. No. 9, s.
1993, void for being contrary to the intent of the 1987 Constitutional Commission to exclude livestock
farms from the land reform program of the government. The dispositive portion reads:
WHEREFORE, premises considered, DAR Administrative Order No. 09, Series of 1993 is
hereby DECLARED null and void. The assailed order of the Office of the President dated 09
October 2001 in so far as it affirmed the Department of Agrarian Reforms ruling that petitioners
landholding is covered by the agrarian reform program of the government is REVERSED and SET
ASIDE.
SO ORDERED.
11

Hence, this petition.
The main issue in the case at bar is the constitutionality of DAR A.O. No. 9, series of 1993, which
prescribes a maximum retention limit for owners of lands devoted to livestock raising.
Invoking its rule-making power under Section 49 of the CARL, petitioner submits that it issued DAR
A.O. No. 9 to limit the area of livestock farm that may be retained by a landowner pursuant to its
mandate to place all public and private agricultural lands under the coverage of agrarian reform.
Petitioner also contends that the A.O. seeks to remedy reports that some unscrupulous landowners
have converted their agricultural farms to livestock farms in order to evade their coverage in the
agrarian reform program.
Petitioners arguments fail to impress.
Administrative agencies are endowed with powers legislative in nature, i.e., the power to make rules
and regulations. They have been granted by Congress with the authority to issue rules to regulate
the implementation of a law entrusted to them. Delegated rule-making has become a practical
necessity in modern governance due to the increasing complexity and variety of public functions.
However, while administrative rules and regulations have the force and effect of law, they are not
immune from judicial review.
12
They may be properly challenged before the courts to ensure that
they do not violate the Constitution and no grave abuse of administrative discretion is committed by
the administrative body concerned.
The fundamental rule in administrative law is that, to be valid, administrative rules and
regulations must be issued by authority of a law and must not contravene the provisions of the
Constitution.
13
The rule-making power of an administrative agency may not be used to abridge the
authority given to it by Congress or by the Constitution. Nor can it be used to enlarge the power of
the administrative agency beyond the scope intended. Constitutional and statutory
provisions control with respect to what rules and regulations may be promulgated by
administrative agencies and the scope of their regulations.
14

In the case at bar, we find that the impugned A.O. is invalid as it contravenes the Constitution. The
A.O. sought to regulate livestock farms by including them in the coverage of agrarian reform and
prescribing a maximum retention limit for their ownership. However, the deliberations of the 1987
Constitutional Commission show a clear intent to exclude, inter alia, all lands exclusively
devoted to livestock, swine and poultry- raising. The Court clarified in the Luz Farms case that
livestock, swine and poultry-raising are industrial activities and do not fall within the definition of
"agriculture" or "agricultural activity." The raising of livestock, swine and poultry is different from crop
or tree farming. It is an industrial, not an agricultural, activity. A great portion of the investment in this
enterprise is in the form of industrial fixed assets, such as: animal housing structures and facilities,
drainage, waterers and blowers, feedmill with grinders, mixers, conveyors, exhausts and generators,
extensive warehousing facilities for feeds and other supplies, anti-pollution equipment like bio-gas
and digester plants augmented by lagoons and concrete ponds, deepwells, elevated water tanks,
pumphouses, sprayers, and other technological appurtenances.
15

Clearly, petitioner DAR has no power to regulate livestock farms which have been exempted by
the Constitution from the coverage of agrarian reform. It has exceeded its power in issuing the
assailed A.O.
The subsequent case of Natalia Realty, Inc. v. DAR
16
reiterated our ruling in the Luz Farms case.
In Natalia Realty, the Court held that industrial, commercial and residential lands are not covered by
the CARL.
17
We stressed anew that while Section 4 of R.A. No. 6657 provides that the CARL
shall cover all public and private agricultural lands, the term "agricultural land" does not
include lands classified as mineral, forest, residential, commercial or industrial. Thus,
in Natalia Realty, even portions of the Antipolo Hills Subdivision, which are arable yet still
undeveloped, could not be considered as agricultural lands subject to agrarian reform as these lots
were already classified as residential lands.
A similar logical deduction should be followed in the case at bar. Lands devoted to raising of
livestock, poultry and swine have been classified as industrial, not agricultural, lands and thus
exempt from agrarian reform. Petitioner DAR argues that, in issuing the impugned A.O., it was
seeking to address the reports it has received that some unscrupulous landowners have been
converting their agricultural lands to livestock farms to avoid their coverage by the agrarian reform.
Again, we find neither merit nor logic in this contention. The undesirable scenario which petitioner
seeks to prevent with the issuance of the A.O. clearly does not apply in this
case.Respondents family acquired their landholdings as early as 1948. They have long been in the
business of breeding cattle in Masbate which is popularly known as the cattle-breeding capital of the
Philippines.
18
Petitioner DAR does not dispute this fact. Indeed, there is no evidence on record that
respondents have just recently engaged in or converted to the business of breeding cattle after the
enactment of the CARL that may lead one to suspect that respondents intended to evade its
coverage. It must be stressed that what the CARL prohibits is theconversion of agricultural
lands for non-agricultural purposes after the effectivity of the CARL. There has been no change
of business interest in the case of respondents.
Moreover, it is a fundamental rule of statutory construction that the reenactment of a statute by
Congress without substantial change is an implied legislative approval and adoption of the previous
law. On the other hand, by making a new law, Congress seeks to supersede an earlier one.
19
In the
case at bar, after the passage of the 1988 CARL, Congress enacted R.A. No. 7881
20
which
amended certain provisions of the CARL. Specifically, the new law changed the definition of the
terms "agricultural activity" and "commercial farming" by dropping from its coverage lands
that are devoted to commercial livestock, poultry and swine-raising.
21
With this significant
modification, Congress clearly sought to align the provisions of our agrarian laws with the
intent of the 1987 Constitutional Commission to exclude livestock farms from the coverage of
agrarian reform.
In sum, it is doctrinal that rules of administrative bodies must be in harmony with the provisions of
the Constitution. They cannot amend or extend the Constitution. To be valid, they must conform to
and be consistent with the Constitution. In case of conflict between an administrative order and the
provisions of the Constitution, the latter prevails.
22
The assailed A.O. of petitioner DAR was properly
stricken down as unconstitutional as it enlarges the coverage of agrarian reform beyond the scope
intended by the 1987 Constitution.
IN VIEW WHEREOF, the petition is DISMISSED. The assailed Decision and Resolution of the Court
of Appeals, dated September 19, 2003 and February 4, 2004, respectively, are AFFIRMED. No
pronouncement as to costs.
SO ORDERED.
G.R. No. 182332 February 23, 2011
MILESTONE FARMS, INC., Petitioner,
vs.
OFFICE OF THE PRESIDENT, Respondent.
D E C I S I O N
NACHURA, J .:
Before this Court is a Petition for Review on Certiorari
1
under Rule 45 of the Rules of Civil
Procedure, seeking the reversal of the Court of Appeals (CA) Amended Decision
2
dated October 4,
2006 and its Resolution
3
dated March 27, 2008.
The Facts
Petitioner Milestone Farms, Inc. (petitioner) was incorporated with the Securities and Exchange
Commission on January 8, 1960.
4
Among its pertinent secondary purposes are: (1) to engage in the
raising of cattle, pigs, and other livestock; to acquire lands by purchase or lease, which may be
needed for this purpose; and to sell and otherwise dispose of said cattle, pigs, and other livestock
and their produce when advisable and beneficial to the corporation; (2) to breed, raise, and sell
poultry; to purchase or acquire and sell, or otherwise dispose of the supplies, stocks, equipment,
accessories, appurtenances, products, and by-products of said business; and (3) to import cattle,
pigs, and other livestock, and animal food necessary for the raising of said cattle, pigs, and other
livestock as may be authorized by law.
5

On June 10, 1988, a new agrarian reform law, Republic Act (R.A.) No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law (CARL), took effect, which included the raising of livestock,
poultry, and swine in its coverage. However, on December 4, 1990, this Court, sitting en banc, ruled
in Luz Farms v. Secretary of the Department of Agrarian Reform
6
that agricultural lands devoted to
livestock, poultry, and/or swine raising are excluded from the Comprehensive Agrarian Reform
Program (CARP).
Thus, in May 1993, petitioner applied for the exemption/exclusion of its 316.0422-hectare property,
covered by Transfer Certificate of Title Nos. (T-410434) M-15750, (T-486101) M-7307, (T-486102)
M-7308, (T-274129) M-15751, (T-486103) M-7309, (T-486104) M-7310, (T-332694) M-15755, (T-
486105) M-7311, (T-486106) M-7312, M-8791, (T-486107) M-7313, (T-486108) M-7314, M-8796,
(T-486109) M-7315, (T-486110) M-9508, and M-6013, and located in Pinugay, Baras, Rizal, from the
coverage of the CARL, pursuant to the aforementioned ruling of this Court in Luz Farms.
Meanwhile, on December 27, 1993, the Department of Agrarian Reform (DAR) issued Administrative
Order No. 9, Series of 1993 (DAR A.O. No. 9), setting forth rules and regulations to govern the
exclusion of agricultural lands used for livestock, poultry, and swine raising from CARP coverage.
Thus, on January 10, 1994, petitioner re-documented its application pursuant to DAR A.O. No. 9.
7

Acting on the said application, the DARs Land Use Conversion and Exemption Committee (LUCEC)
of Region IV conducted an ocular inspection on petitioners property and arrived at the following
findings:
[T]he actual land utilization for livestock, swine and poultry is 258.8422 hectares; the area which
served as infrastructure is 42.0000 hectares; ten (10) hectares are planted to corn and the remaining
five (5) hectares are devoted to fish culture; that the livestock population are 371 heads of cow, 20
heads of horses, 5,678 heads of swine and 788 heads of cocks; that the area being applied for
exclusion is far below the required or ideal area which is 563 hectares for the total livestock
population; that the approximate area not directly used for livestock purposes with an area of 15
hectares, more or less, is likewise far below the allowable 10% variance; and, though not directly
used for livestock purposes, the ten (10) hectares planted to sweet corn and the five (5) hectares
devoted to fishpond could be considered supportive to livestock production.
The LUCEC, thus, recommended the exemption of petitioners 316.0422-hectare property from the
coverage of CARP. Adopting the LUCECs findings and recommendation, DAR Regional Director
Percival Dalugdug (Director Dalugdug) issued an Order dated June 27, 1994, exempting petitioners
316.0422-hectare property from CARP.
8

The Southern Pinugay Farmers Multi-Purpose Cooperative, Inc. (Pinugay Farmers), represented by
Timiano Balajadia, Sr. (Balajadia), moved for the reconsideration of the said Order, but the same
was denied by Director Dalugdug in his Order dated November 24, 1994.
9
Subsequently, the
Pinugay Farmers filed a letter-appeal with the DAR Secretary.
Correlatively, on June 4, 1994, petitioner filed a complaint for Forcible Entry against Balajadia and
company before the Municipal Circuit Trial Court (MCTC) of Teresa-Baras, Rizal, docketed as Civil
Case No. 781-T.
10
The MCTC ruled in favor of petitioner, but the decision was later reversed by the
Regional Trial Court, Branch 80, of Tanay, Rizal. Ultimately, the case reached the CA, which, in its
Decision
11
dated October 8, 1999, reinstated the MCTCs ruling, ordering Balajadia and all
defendants therein to vacate portions of the property covered by TCT Nos. M-6013, M-8796, and M-
8791. In its Resolution
12
dated July 31, 2000, the CA held that the defendants therein failed to timely
file a motion for reconsideration, given the fact that their counsel of record received its October 8,
1999 Decision; hence, the same became final and executory.
In the meantime, R.A. No. 6657 was amended by R.A. No. 7881,
13
which was approved on February
20, 1995. Private agricultural lands devoted to livestock, poultry, and swine raising were excluded
from the coverage of the CARL. On October 22, 1996, the fact-finding team formed by the DAR
Undersecretary for Field Operations and Support Services conducted an actual headcount of the
livestock population on the property. The headcount showed that there were 448 heads of cattle and
more than 5,000 heads of swine.
The DAR Secretarys Ruling
On January 21, 1997, then DAR Secretary Ernesto D. Garilao (Secretary Garilao) issued an Order
exempting from CARP only 240.9776 hectares of the 316.0422 hectares previously exempted by
Director Dalugdug, and declaring 75.0646 hectares of the property to be covered by CARP.
14

Secretary Garilao opined that, for private agricultural lands to be excluded from CARP, they must
already be devoted to livestock, poultry, and swine raising as of June 15, 1988, when the CARL took
effect. He found that the Certificates of Ownership of Large Cattle submitted by petitioner showed
that only 86 heads of cattle were registered in the name of petitioners president, Misael Vera, Jr.,
prior to June 15, 1988; 133 were subsequently bought in 1990, while 204 were registered from 1992
to 1995. Secretary Garilao gave more weight to the certificates rather than to the headcount
because "the same explicitly provide for the number of cattle owned by petitioner as of June 15,
1988."
Applying the animal-land ratio (1 hectare for grazing for every head of cattle/carabao/horse) and the
infrastructure-animal ratio (1.7815 hectares for 21 heads of cattle/carabao/horse, and 0.5126
hectare for 21 heads of hogs) under DAR A.O. No. 9, Secretary Garilao exempted 240.9776
hectares of the property, as follows:
1. 86 hectares for the 86 heads of cattle existing as of 15 June 1988;
2. 8 hectares for infrastructure following the ratio of 1.7815 hectares for every 21 heads of
cattle;
3. 8 hectares for the 8 horses;
4. 0.3809 square meters of infrastructure for the 8 horses; [and]
5. 138.5967 hectares for the 5,678 heads of swine.
15

Petitioner filed a Motion for Reconsideration,
16
submitting therewith copies of Certificates of Transfer
of Large Cattle and additional Certificates of Ownership of Large Cattle issued to petitioner prior to
June 15, 1988, as additional proof that it had met the required animal-land ratio. Petitioner also
submitted a copy of a Disbursement Voucher dated December 17, 1986, showing the purchase of
100 heads of cattle by the Bureau of Animal Industry from petitioner, as further proof that it had been
actively operating a livestock farm even before June 15, 1988. However, in his Order dated April 15,
1997, Secretary Garilao denied petitioners Motion for Reconsideration.
17

Aggrieved, petitioner filed its Memorandum on Appeal
18
before the Office of the President (OP).
The OPs Ruling
On February 4, 2000, the OP rendered a decision
19
reinstating Director Dalugdugs Order dated
June 27, 1994 and declared the entire 316.0422-hectare property exempt from the coverage of
CARP.
However, on separate motions for reconsideration of the aforesaid decision filed by farmer-groups
Samahang Anak-Pawis ng Lagundi (SAPLAG) and Pinugay Farmers, and the Bureau of Agrarian
Legal Assistance of DAR, the OP issued a resolution
20
dated September 16, 2002, setting aside its
previous decision. The dispositive portion of the OP resolution reads:
WHEREFORE, the Decision subject of the instant separate motions for reconsideration is hereby
SET ASIDE and a new one entered REINSTATING the Order dated 21 January 1997 of then DAR
Secretary Ernesto D. Garilao, as reiterated in another Order of 15 April 1997, without prejudice to
the outcome of the continuing review and verification proceedings that DAR, thru the appropriate
Municipal Agrarian Reform Officer, may undertake pursuant to Rule III (D) of DAR Administrative
Order No. 09, series of 1993.
SO ORDERED.
21

The OP held that, when it comes to proof of ownership, the reference is the Certificate of Ownership
of Large Cattle. Certificates of cattle ownership, which are readily available being issued by the
appropriate government office ought to match the number of heads of cattle counted as existing
during the actual headcount. The presence of large cattle on the land, without sufficient proof of
ownership thereof, only proves such presence.
Taking note of Secretary Garilaos observations, the OP also held that, before an ocular
investigation is conducted on the property, the landowners are notified in advance; hence, mere
reliance on the physical headcount is dangerous because there is a possibility that the landowners
would increase the number of their cattle for headcount purposes only. The OP observed that there
was a big variance between the actual headcount of 448 heads of cattle and only 86 certificates of
ownership of large cattle.
Consequently, petitioner sought recourse from the CA.
22

The Proceedings Before the CA and Its Rulings
On April 29, 2005, the CA found that, based on the documentary evidence presented, the property
subject of the application for exclusion had more than satisfied the animal-land and infrastructure-
animal ratios under DAR A.O. No. 9. The CA also found that petitioner applied for exclusion long
before the effectivity of DAR A.O. No. 9, thus, negating the claim that petitioner merely converted the
property for livestock, poultry, and swine raising in order to exclude it from CARP coverage.
Petitioner was held to have actually engaged in the said business on the property even before June
15, 1988. The CA disposed of the case in this wise:
WHEREFORE, the instant petition is hereby GRANTED. The assailed Resolution of the Office of the
President dated September 16, 2002 is hereby SET ASIDE, and its Decision dated February 4, 2000
declaring the entire 316.0422 hectares exempt from the coverage of the Comprehensive Agrarian
Reform Program is hereby REINSTATED without prejudice to the outcome of the continuing review
and verification proceedings which the Department of Agrarian Reform, through the proper Municipal
Agrarian Reform Officer, may undertake pursuant to Policy Statement (D) of DAR Administrative
Order No. 9, Series of 1993.
SO ORDERED.
23

Meanwhile, six months earlier, or on November 4, 2004, without the knowledge of the CA as the
parties did not inform the appellate court then DAR Secretary Rene C. Villa (Secretary Villa) issued
DAR Conversion Order No. CON-0410-0016
24
(Conversion Order), granting petitioners application
to convert portions of the 316.0422-hectare property from agricultural to residential and golf courses
use. The portions converted with a total area of 153.3049 hectares were covered by TCT Nos.
M-15755 (T-332694), M-15751 (T-274129), and M-15750 (T-410434). With this Conversion Order,
the area of the property subject of the controversy was effectively reduced to 162.7373 hectares.
On the CAs decision of April 29, 2005, Motions for Reconsideration were filed by farmer-groups,
namely: the farmers represented by Miguel Espinas
25
(Espinas group), the Pinugay Farmers,
26
and
the SAPLAG.
27
The farmer-groups all claimed that the CA should have accorded respect to the
factual findings of the OP. Moreover, the farmer-groups unanimously intimated that petitioner
already converted and developed a portion of the property into a leisure-residential-commercial
estate known as the Palo Alto Leisure and Sports Complex (Palo Alto).
Subsequently, in a Supplement to the Motion for Reconsideration on Newly Secured Evidence
pursuant to DAR Administrative Order No. 9, Series of 1993
28
(Supplement) dated June 15, 2005,
the Espinas group submitted the following as evidence:
1) Conversion Order
29
dated November 4, 2004, issued by Secretary Villa, converting
portions of the property from agricultural to residential and golf courses use, with a total area
of 153.3049 hectares; thus, the Espinas group prayed that the remaining 162.7373 hectares
(subject property) be covered by the CARP;
2) Letter
30
dated June 7, 2005 of both incoming Municipal Agrarian Reform Officer (MARO)
Bismark M. Elma (MARO Elma) and outgoing MARO Cesar C. Celi (MARO Celi) of Baras,
Rizal, addressed to Provincial Agrarian Reform Officer (PARO) II of Rizal, Felixberto Q.
Kagahastian, (MARO Report), informing the latter, among others, that Palo Alto was already
under development and the lots therein were being offered for sale; that there were actual
tillers on the subject property; that there were agricultural improvements thereon, including
an irrigation system and road projects funded by the Government; that there was no existing
livestock farm on the subject property; and that the same was not in the possession and/or
control of petitioner; and
3) Certification
31
dated June 8, 2005, issued by both MARO Elma and MARO Celi,
manifesting that the subject property was in the possession and cultivation of actual
occupants and tillers, and that, upon inspection, petitioner maintained no livestock farm
thereon.
Four months later, the Espinas group and the DAR filed their respective Manifestations.
32
In its
Manifestation dated November 29, 2005, the DAR confirmed that the subject property was no longer
devoted to cattle raising. Hence, in its Resolution
33
dated December 21, 2005, the CA directed
petitioner to file its comment on the Supplement and the aforementioned Manifestations. Employing
the services of a new counsel, petitioner filed a Motion to Admit Rejoinder,
34
and prayed that the
MARO Report be disregarded and expunged from the records for lack of factual and legal basis.
With the CA now made aware of these developments, particularly Secretary Villas Conversion
Order of November 4, 2004, the appellate court had to acknowledge that the property subject of the
controversy would now be limited to the remaining 162.7373 hectares. In the same token, the
Espinas group prayed that this remaining area be covered by the CARP.
35

On October 4, 2006, the CA amended its earlier Decision. It held that its April 29, 2005 Decision was
theoretically not final because DAR A.O. No. 9 required the MARO to make a continuing review and
verification of the subject property. While the CA was cognizant of our ruling in Department of
Agrarian Reform v. Sutton,
36
wherein we declared DAR A.O. No. 9 as unconstitutional, it still
resolved to lift the exemption of the subject property from the CARP, not on the basis of DAR A.O.
No. 9, but on the strength of evidence such as the MARO Report and Certification, and the
Katunayan
37
issued by the Punong Barangay, Alfredo Ruba (Chairman Ruba), of Pinugay, Baras,
Rizal, showing that the subject property was no longer operated as a livestock farm. Moreover, the
CA held that the lease agreements,
38
which petitioner submitted to prove that it was compelled to
lease a ranch as temporary shelter for its cattle, only reinforced the DARs finding that there was
indeed no existing livestock farm on the subject property. While petitioner claimed that it was merely
forced to do so to prevent further slaughtering of its cattle allegedly committed by the occupants, the
CA found the claim unsubstantiated. Furthermore, the CA opined that petitioner should have
asserted its rights when the irrigation and road projects were introduced by the Government within
its property. Finally, the CA accorded the findings of MARO Elma and MARO Celi the presumption of
regularity in the performance of official functions in the absence of evidence proving misconduct
and/or dishonesty when they inspected the subject property and rendered their report. Thus, the CA
disposed:
WHEREFORE, this Courts Decision dated April 29, 2005 is hereby amended in that the exemption
of the subject landholding from the coverage of the Comprehensive Agrarian Reform Program is
hereby lifted, and the 162.7373 hectare-agricultural portion thereof is hereby declared covered by
the Comprehensive Agrarian Reform Program.
SO ORDERED.
39

Unperturbed, petitioner filed a Motion for Reconsideration.
40
On January 8, 2007, MARO Elma, in
compliance with the Memorandum of DAR Regional Director Dominador B. Andres, tendered
another Report
41
reiterating that, upon inspection of the subject property, together with petitioners
counsel-turned witness, Atty. Grace Eloisa J. Que (Atty. Que), PARO Danilo M. Obarse, Chairman
Ruba, and several occupants thereof, he, among others, found no livestock farm within the subject
property. About 43 heads of cattle were shown, but MARO Elma observed that the same were inside
an area adjacent to Palo Alto. Subsequently, upon Atty. Ques request for reinvestigation,
designated personnel of the DAR Provincial and Regional Offices (Investigating Team) conducted
another ocular inspection on the subject property on February 20, 2007. The Investigating Team, in
its Report
42
dated February 21, 2007, found that, per testimony of petitioners caretaker, Rogelio
Ludivices (Roger),
43
petitioner has 43 heads of cattle taken care of by the following individuals: i)
Josefino Custodio (Josefino) 18 heads; ii) Andy Amahit 15 heads; and iii) Bert Pangan 2
heads; that these individuals pastured the herd of cattle outside the subject property, while Roger
took care of 8 heads of cattle inside the Palo Alto area; that 21 heads of cattle owned by petitioner
were seen in the area adjacent to Palo Alto; that Josefino confirmed to the Investigating Team that
he takes care of 18 heads of cattle owned by petitioner; that the said Investigating Team saw 9
heads of cattle in the Palo Alto area, 2 of which bore "MFI" marks; and that the 9 heads of cattle
appear to have matched the Certificates of Ownership of Large Cattle submitted by petitioner.
Because of the contentious factual issues and the conflicting averments of the parties, the CA set
the case for hearing and reception of evidence on April 24, 2007.
44
Thereafter, as narrated by the
CA, the following events transpired:
On May 17, 2007, [petitioner] presented the Judicial Affidavits of its witnesses, namely, [petitioners]
counsel, [Atty. Que], and the alleged caretaker of [petitioners] farm, [Roger], who were both cross-
examined by counsel for farmers-movants and SAPLAG. [Petitioner] and SAPLAG then marked their
documentary exhibits.
On May 24, 2007, [petitioners] security guard and third witness, Rodolfo G. Febrada, submitted his
Judicial Affidavit and was cross-examined by counsel for fa[r]mers-movants and SAPLAG. Farmers-
movants also marked their documentary exhibits.
Thereafter, the parties submitted their respective Formal Offers of Evidence. Farmers-movants and
SAPLAG filed their objections to [petitioners] Formal Offer of Evidence. Later, [petitioner] and
farmers-movants filed their respective Memoranda.
In December 2007, this Court issued a Resolution on the parties offer of evidence and considered
[petitioners] Motion for Reconsideration submitted for resolution.
45

Finally, petitioners motion for reconsideration was denied by the CA in its Resolution
46
dated March
27, 2008. The CA discarded petitioners reliance on Sutton. It ratiocinated that the MARO Reports
and the DARs Manifestation could not be disregarded simply because DAR A.O. No. 9 was
declared unconstitutional. The Sutton ruling was premised on the fact that the Sutton property
continued to operate as a livestock farm. The CA also reasoned that, in Sutton, this Court did not
remove from the DAR the power to implement the CARP, pursuant to the latters authority to
oversee the implementation of agrarian reform laws under Section 50
47
of the CARL. Moreover, the
CA found:
Petitioner-appellant claimed that they had 43 heads of cattle which are being cared for and pastured
by 4 individuals. To prove its ownership of the said cattle, petitioner-appellant offered in evidence 43
Certificates of Ownership of Large Cattle. Significantly, however, the said Certificates were all dated
and issued on November 24, 2006, nearly 2 months after this Court rendered its Amended Decision
lifting the exemption of the 162-hectare portion of the subject landholding. The acquisition of such
cattle after the lifting of the exemption clearly reveals that petitioner-appellant was no longer
operating a livestock farm, and suggests an effort to create a semblance of livestock-raising for the
purpose of its Motion for Reconsideration.
48

On petitioners assertion that between MARO Elmas Report dated January 8, 2007 and the
Investigating Teams Report, the latter should be given credence, the CA held that there were no
material inconsistencies between the two reports because both showed that the 43 heads of cattle
were found outside the subject property.
Hence, this Petition assigning the following errors:
I.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT HELD THAT
LANDS DEVOTED TO LIVESTOCK FARMING WITHIN THE MEANING OF LUZ FARMS
AND SUTTON, AND WHICH ARE THEREBY EXEMPT FROM CARL COVERAGE, ARE
NEVERTHELESS SUBJECT TO DARS CONTINUING VERIFICATION AS TO USE, AND,
ON THE BASIS OF SUCH VERIFICATION, MAY BE ORDERED REVERTED TO
AGRICULTURAL CLASSIFICATION AND COMPULSORY ACQUISITION[;]
II.
GRANTING THAT THE EXEMPT LANDS AFORESAID MAY BE SO REVERTED TO
AGRICULTURAL CLASSIFICATION, STILL THE PROCEEDINGS FOR SUCH PURPOSE
BELONGS TO THE EXCLUSIVE ORIGINAL JURISDICTION OF THE DAR, BEFORE
WHICH THE CONTENDING PARTIES MAY VENTILATE FACTUAL ISSUES, AND AVAIL
THEMSELVES OF USUAL REVIEW PROCESSES, AND NOT TO THE COURT OF
APPEALS EXERCISING APPELLATE JURISDICTION OVER ISSUES COMPLETELY
UNRELATED TO REVERSION [; AND]
III.
IN ANY CASE, THE COURT OF APPEALS GRAVELY ERRED AND COMMITTED GRAVE
ABUSE OF DISCRETION WHEN IT HELD THAT THE PROPERTY IN DISPUTE IS NO
LONGER BEING USED FOR LIVESTOCK FARMING.
49

Petitioner asseverates that lands devoted to livestock farming as of June 15, 1988 are classified as
industrial lands, hence, outside the ambit of the CARP; that Luz Farms, Sutton, and R.A. No. 7881
clearly excluded such lands on constitutional grounds; that petitioners lands were actually devoted
to livestock even before the enactment of the CARL; that livestock farms are exempt from the CARL,
not by reason of any act of the DAR, but because of their nature as industrial lands; that petitioners
property was admittedly devoted to livestock farming as of June 1988 and the only issue before was
whether or not petitioners pieces of evidence comply with the ratios provided under DAR A.O. No. 9;
and that DAR A.O. No. 9 having been declared as unconstitutional, DAR had no more legal basis to
conduct a continuing review and verification proceedings over livestock farms. Petitioner argues that,
in cases where reversion of properties to agricultural use is proper, only the DAR has the exclusive
original jurisdiction to hear and decide the same; hence, the CA, in this case, committed serious
errors when it ordered the reversion of the property and when it considered pieces of evidence not
existing as of June 15, 1988, despite its lack of jurisdiction; that the CA should have remanded the
case to the DAR due to conflicting factual claims; that the CA cannot ventilate allegations of fact that
were introduced for the first time on appeal as a supplement to a motion for reconsideration of its
first decision, use the same to deviate from the issues pending review, and, on the basis thereof,
declare exempt lands reverted to agricultural use and compulsorily covered by the CARP; that the
"newly discovered [pieces of] evidence" were not introduced in the proceedings before the DAR,
hence, it was erroneous for the CA to consider them; and that piecemeal presentation of evidence is
not in accord with orderly justice. Finally, petitioner submits that, in any case, the CA gravely erred
and committed grave abuse of discretion when it held that the subject property was no longer used
for livestock farming as shown by the Report of the Investigating Team. Petitioner relies on the 1997
LUCEC and DAR findings that the subject property was devoted to livestock farming, and on the
1999 CA Decision which held that the occupants of the property were squatters, bereft of any
authority to stay and possess the property.
50

On one hand, the farmer-groups, represented by the Espinas group, contend that they have been
planting rice and fruit-bearing trees on the subject property, and helped the National Irrigation
Administration in setting up an irrigation system therein in 1997, with a produce of 1,500 to 1,600
sacks of palay each year; that petitioner came to court with unclean hands because, while it sought
the exemption and exclusion of the entire property, unknown to the CA, petitioner surreptitiously filed
for conversion of the property now known as Palo Alto, which was actually granted by the DAR
Secretary; that petitioners bad faith is more apparent since, despite the conversion of the 153.3049-
hectare portion of the property, it still seeks to exempt the entire property in this case; and that the
fact that petitioner applied for conversion is an admission that indeed the property is agricultural. The
farmer-groups also contend that petitioners reliance on Luz Farms and Sutton is unavailing because
in these cases there was actually no cessation of the business of raising cattle; that what is being
exempted is the activity of raising cattle and not the property itself; that exemptions due to cattle
raising are not permanent; that the declaration of DAR A.O. No. 9 as unconstitutional does not at all
diminish the mandated duty of the DAR, as the lead agency of the Government, to implement the
CARL; that the DAR, vested with the power to identify lands subject to CARP, logically also has the
power to identify lands which are excluded and/or exempted therefrom; that to disregard DARs
authority on the matter would open the floodgates to abuse and fraud by unscrupulous landowners;
that the factual finding of the CA that the subject property is no longer a livestock farm may not be
disturbed on appeal, as enunciated by this Court; that DAR conducted a review and monitoring of
the subject property by virtue of its powers under the CARL; and that the CA has sufficient discretion
to admit evidence in order that it could arrive at a fair, just, and equitable ruling in this case.
51

On the other hand, respondent OP, through the Office of the Solicitor General (OSG), claims that the
CA correctly held that the subject property is not exempt from the coverage of the CARP, as
substantial pieces of evidence show that the said property is not exclusively devoted to livestock,
swine, and/or poultry raising; that the issues presented by petitioner are factual in nature and not
proper in this case; that under Rule 43 of the 1997 Rules of Civil Procedure, questions of fact may
be raised by the parties and resolved by the CA; that due to the divergence in the factual findings of
the DAR and the OP, the CA was duty bound to review and ascertain which of the said findings are
duly supported by substantial evidence; that the subject property was subject to continuing review
and verification proceedings due to the then prevailing DAR A.O. No. 9; that there is no question that
the power to determine if a property is subject to CARP coverage lies with the DAR Secretary; that
pursuant to such power, the MARO rendered the assailed reports and certification, and the DAR
itself manifested before the CA that the subject property is no longer devoted to livestock farming;
and that, while it is true that this Courts ruling in Luz Farms declared that agricultural lands devoted
to livestock, poultry, and/or swine raising are excluded from the CARP, the said ruling is not without
any qualification.
52

In its Reply
53
to the farmer-groups and to the OSGs comment, petitioner counters that the farmer-
groups have no legal basis to their claims as they admitted that they entered the subject property
without the consent of petitioner; that the rice plots actually found in the subject property, which were
subsequently taken over by squatters, were, in fact, planted by petitioner in compliance with the
directive of then President Ferdinand Marcos for the employer to provide rice to its employees; that
when a land is declared exempt from the CARP on the ground that it is not agricultural as of the time
the CARL took effect, the use and disposition of that land is entirely and forever beyond DARs
jurisdiction; and that, inasmuch as the subject property was not agricultural from the very beginning,
DAR has no power to regulate the same. Petitioner also asserts that the CA cannot
uncharacteristically assume the role of trier of facts and resolve factual questions not previously
adjudicated by the lower tribunals; that MARO Elma rendered the assailed MARO reports with bias
against petitioner, and the same were contradicted by the Investigating Teams Report, which
confirmed that the subject property is still devoted to livestock farming; and that there has been no
change in petitioners business interest as an entity engaged in livestock farming since its inception
in 1960, though there was admittedly a decline in the scale of its operations due to the illegal acts of
the squatter-occupants.
Our Ruling
The Petition is bereft of merit.
Let it be stressed that when the CA provided in its first Decision that continuing review and
verification may be conducted by the DAR pursuant to DAR A.O. No. 9, the latter was not yet
declared unconstitutional by this Court. The first CA Decision was promulgated on April 29, 2005,
while this Court struck down as unconstitutional DAR A.O. No. 9, by way of Sutton, on October 19,
2005. Likewise, let it be emphasized that the Espinas group filed the Supplement and submitted the
assailed MARO reports and certification on June 15, 2005, which proved to be adverse to
petitioners case. Thus, it could not be said that the CA erred or gravely abused its discretion in
respecting the mandate of DAR A.O. No. 9, which was then subsisting and in full force and effect.
While it is true that an issue which was neither alleged in the complaint nor raised during the trial
cannot be raised for the first time on appeal as it would be offensive to the basic rules of fair play,
justice, and due process,
54
the same is not without exception,
55
such as this case. The CA, under
Section 3,
56
Rule 43 of the Rules of Civil Procedure, can, in the interest of justice, entertain and
resolve factual issues. After all, technical and procedural rules are intended to help secure, and not
suppress, substantial justice. A deviation from a rigid enforcement of the rules may thus be allowed
to attain the prime objective of dispensing justice, for dispensation of justice is the core reason for
the existence of courts.
57
Moreover, petitioner cannot validly claim that it was deprived of due
process because the CA afforded it all the opportunity to be heard.
58
The CA even directed
petitioner to file its comment on the Supplement, and to prove and establish its claim that the subject
property was excluded from the coverage of the CARP. Petitioner actively participated in the
proceedings before the CA by submitting pleadings and pieces of documentary evidence, such as
the Investigating Teams Report and judicial affidavits. The CA also went further by setting the case
for hearing. In all these proceedings, all the parties rights to due process were amply protected and
recognized.
With the procedural issue disposed of, we find that petitioners arguments fail to persuade. Its
invocation of Sutton is unavailing. In Sutton, we held:
In the case at bar, we find that the impugned A.O. is invalid as it contravenes the Constitution. The
A.O. sought to regulate livestock farms by including them in the coverage of agrarian reform and
prescribing a maximum retention limit for their ownership. However, the deliberations of the 1987
Constitutional Commission show a clear intent to exclude, inter alia, all lands exclusively devoted
to livestock, swine and poultry-raising. The Court clarified in the Luz Farms case that livestock,
swine and poultry-raising are industrial activities and do not fall within the definition of "agriculture" or
"agricultural activity." The raising of livestock, swine and poultry is different from crop or tree farming.
It is an industrial, not an agricultural, activity. A great portion of the investment in this enterprise is in
the form of industrial fixed assets, such as: animal housing structures and facilities, drainage,
waterers and blowers, feedmill with grinders, mixers, conveyors, exhausts and generators, extensive
warehousing facilities for feeds and other supplies, anti-pollution equipment like bio-gas and digester
plants augmented by lagoons and concrete ponds, deepwells, elevated water tanks, pumphouses,
sprayers, and other technological appurtenances.
Clearly, petitioner DAR has no power to regulate livestock farms which have been exempted by the
Constitution from the coverage of agrarian reform. It has exceeded its power in issuing the assailed
A.O.
59

Indeed, as pointed out by the CA, the instant case does not rest on facts parallel to those of Sutton
because, in Sutton, the subject property remained a livestock farm. We even highlighted therein the
fact that "there has been no change of business interest in the case of respondents."
60
Similarly, in
Department of Agrarian Reform v. Uy,
61
we excluded a parcel of land from CARP coverage due to the
factual findings of the MARO, which were confirmed by the DAR, that the property was entirely
devoted to livestock farming. However, in A.Z. Arnaiz Realty, Inc., represented by Carmen Z. Arnaiz
v. Office of the President; Department of Agrarian Reform; Regional Director, DAR Region V,
Legaspi City; Provincial Agrarian Reform Officer, DAR Provincial Office, Masbate, Masbate; and
Municipal Agrarian Reform Officer, DAR Municipal Office, Masbate, Masbate,
62
we denied a similar
petition for exemption and/or exclusion, by according respect to the CAs factual findings and its
reliance on the findings of the DAR and the OP that
the subject parcels of land were not directly, actually, and exclusively used for pasture.
63

Petitioners admission that, since 2001, it leased another ranch for its own livestock is fatal to its
cause.
64
While petitioner advances a defense that it leased this ranch because the occupants of the
subject property harmed its cattle, like the CA, we find it surprising that not even a single police
and/or barangay report was filed by petitioner to amplify its indignation over these alleged illegal
acts. Moreover, we accord respect to the CAs keen observation that the assailed MARO reports and
the Investigating Teams Report do not actually contradict one another, finding that the 43 cows,
while owned by petitioner, were actually pastured outside the subject property.
Finally, it is established that issues of Exclusion and/or Exemption are characterized as Agrarian
Law Implementation (ALI) cases which are well within the DAR Secretarys competence and
jurisdiction.
65
Section 3, Rule II of the 2003 Department of Agrarian Reform Adjudication Board Rules
of Procedure provides:
Section 3. Agrarian Law Implementation Cases.
The Adjudicator or the Board shall have no jurisdiction over matters involving the administrative
implementation of RA No. 6657, otherwise known as the Comprehensive Agrarian Reform Law
(CARL) of 1988 and other agrarian laws as enunciated by pertinent rules and administrative orders,
which shall be under the exclusive prerogative of and cognizable by the Office of the Secretary of
the DAR in accordance with his issuances, to wit:
x x x x
3.8 Exclusion from CARP coverage of agricultural land used for livestock, swine, and poultry raising.
Thus, we cannot, without going against the law, arbitrarily strip the DAR Secretary of his legal
mandate to exercise jurisdiction and authority over all ALI cases. To succumb to petitioners
contention that "when a land is declared exempt from the CARP on the ground that it is not
agricultural as of the time the CARL took effect, the use and disposition of that land is entirely and
forever beyond DARs jurisdiction" is dangerous, suggestive of self-regulation. Precisely, it is the
DAR Secretary who is vested with such jurisdiction and authority to exempt and/or exclude a
property from CARP coverage based on the factual circumstances of each case and in accordance
with law and applicable jurisprudence. In addition, albeit parenthetically, Secretary Villa had already
granted the conversion into residential and golf courses use of nearly one-half of the entire area
originally claimed as exempt from CARP coverage because it was allegedly devoted to livestock
production.lawphil1
In sum, we find no reversible error in the assailed Amended Decision and Resolution of the CA
which would warrant the modification, much less the reversal, thereof.
WHEREFORE, the Petition is DENIED and the Court of Appeals Amended Decision dated October
4, 2006 and Resolution dated March 27, 2008 are AFFIRMED. No costs.
SO ORDERED.
REPUBLIC ACT NO. 7781
REPUBLIC ACT NO. 7781 - AN ACT ESTABLISHING A BARANGAY
NATIONAL HIGH SCHOOL IN THE CITY OF SILAY, PROVINCE OF
NEGROS OCCIDENTAL, TO BE KNOWN AS THE BARANGAY GUINBALA-
ON NATIONAL HIGH SCHOOL, AND APPROPRIATING FUNDS
THEREFORE

Section 1. There shall be established a barangay national high school in the
City of Silay, Province of Negros Occidental, to be known as the Barangay
Guinbala-on National High School.

Sec. 2. The Secretary of the Department of Education, Culture and Sports
shall issue such rules and regulations as may be necessary to carry out the
purpose of this Act.

Sec. 3. The amount necessary to carry out the provisions of this Act shall be
funded out of the appropriations authorized by Republic Act No. 7663 for the
Department of Education, Culture and Sports intended for the operational
expenses of newly legislated high schools. Thereafter, the amount needed
for its operation and maintenance shall be included in the annual General
Appropriations Act.

Sec. 4. This Act shall take effect upon its approval.
G.R. No. 100091 October 22, 1992
CENTRAL MINDANAO UNIVERSITY REPRESENTED ITS PRESIDENT DR. LEONARDO A. CHUA, petitioner,
vs.
THE DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD, THE COURT OF APPEALS and ALVIN
OBRIQUE, REPRESENTING BUKIDNON FREE FARMERS AGRICULTURAL LABORERS ORGANIZATION
(BUFFALO), respondents.

CAMPOS, JR., J .:
This is a Petition for Review on Certiorari under Rule 65 of the Rules of Court to nullify the proceedings and decision
of the Department of Agrarian Reform Adjudication Board (DARAB for brevity) dated September 4, 1989 and to set
aside the decision the decision * of the Court of Appeals dated August 20, 1990, affirming the decision of the DARAB
which ordered the segregation of 400 hectares of suitable, compact and contiguous portions of the Central Mindanao
University (CMU for brevity) land and their inclusion in the Comprehensive Agrarian Reform Program (CARP for
brevity) for distribution to qualified beneficiaries, on the ground of lack of jurisdiction.
This case originated in a complaint filed by complainants calling themselves as the Bukidnon Free Farmers and
Agricultural Laborers Organization (BUFFALO for brevity) under the leadership of Alvin Obrique and Luis Hermoso
against the CMU, before the Department of Agrarian Reform for Declaration of Status as Tenants, under the CARP.
From the records, the following facts are evident. The petitioner, the CMU, is an agricultural educational institution
owned and run by the state located in the town of Musuan, Bukidnon province. It started as a farm school at Marilang,
Bukidnon in early 1910, in response to the public demand for an agricultural school in Mindanao. It expanded into the
Bukidnon National Agricultural High School and was transferred to its new site in Managok near Malaybalay, the
provincial capital of Bukidnon.
In the early 1960's, it was converted into a college with campus at Musuan, until it became what is now known as the
CMU, but still primarily an agricultural university. From its beginning, the school was the answer to the crying need for
training people in order to develop the agricultural potential of the island of Mindanao. Those who planned and
established the school had a vision as to the future development of that part of the Philippines. On January 16, 1958
the President of the Republic of the Philippines, the late Carlos P. Garcia, "upon the recommendation of the
Secretary of Agriculture and Natural Resources, and pursuant to the provisions of Section 53, of Commonwealth Act
No. 141, as amended", issued Proclamation No. 476, withdrawing from sale or settlement and reserving for the
Mindanao Agricultural College, a site which would be the future campus of what is now the CMU. A total land area
comprising 3,080 hectares was surveyed and registered and titled in the name of the petitioner under OCT Nos. 160,
161 and 162.
1

In the course of the cadastral hearing of the school's petition for registration of the aforementioned grant of
agricultural land, several tribes belonging to cultural communities, opposed the petition claiming ownership of certain
ancestral lands forming part of the tribal reservations. Some of the claims were granted so that what was titled to the
present petitioner school was reduced from 3,401 hectares to 3,080 hectares.
In the early 1960's, the student population of the school was less than 3,000. By 1988, the student population had
expanded to some 13,000 students, so that the school community has an academic population (student, faculty and
non-academic staff) of almost 15,000. To cope with the increase in its enrollment, it has expanded and improved its
educational facilities partly from government appropriation and partly by self-help measures.
True to the concept of a land grant college, the school embarked on self-help measures to carry out its educational
objectives, train its students, and maintain various activities which the government appropriation could not adequately
support or sustain. In 1984, the CMU approved Resolution No. 160, adopting a livelihood program called "Kilusang
Sariling Sikap Program" under which the land resources of the University were leased to its faculty and employees.
This arrangement was covered by a written contract. Under this program the faculty and staff combine themselves to
groups of five members each, and the CMU provided technical know-how, practical training and all kinds of
assistance, to enable each group to cultivate 4 to 5 hectares of land for the lowland rice project. Each group pays the
CMU a service fee and also a land use participant's fee. The contract prohibits participants and their hired workers to
establish houses or live in the project area and to use the cultivated land as a collateral for any kind of loan. It was
expressly stipulated that no landlord-tenant relationship existed between the CMU and the faculty and/or employees.
This particular program was conceived as a multi-disciplinary applied research extension and productivity program to
utilize available land, train people in modern agricultural technology and at the same time give the faculty and staff
opportunities within the confines of the CMU reservation to earn additional income to augment their salaries. The
location of the CMU at Musuan, Bukidnon, which is quite a distance from the nearest town, was the proper setting for
the adoption of such a program. Among the participants in this program were Alvin Obrique, Felix Guinanao, Joven
Caballero, Nestor Pulao, Danilo Vasquez, Aronio Pelayo and other complainants. Obrique was a Physics Instructor at
the CMU while the others were employees in the lowland rice project. The other complainants who were not
members of the faculty or non-academic staff CMU, were hired workers or laborers of the participants in this program.
When petitioner Dr. Leonardo Chua became President of the CMU in July 1986, he discontinued the agri-business
project for the production of rice, corn and sugar cane known as Agri-Business Management and Training Project,
due to losses incurred while carrying on the said project. Some CMU personnel, among whom were the
complainants, were laid-off when this project was discontinued. As Assistant Director of this agri-business project,
Obrique was found guilty of mishandling the CMU funds and was separated from service by virtue of Executive Order
No. 17, the re-organization law of the CMU.
Sometime in 1986, under Dr. Chua as President, the CMU launched a self-help project called CMU-Income
Enhancement Program (CMU-IEP) to develop unutilized land resources, mobilize and promote the spirit of self-
reliance, provide socio-economic and technical training in actual field project implementation and augment the
income of the faculty and the staff.
Under the terms of a 3-party Memorandum of Agreement
2
among the CMU, the CMU-Integrated Development
Foundation (CMU-IDF) and groups or "seldas" of 5 CMU employees, the CMU would provide the use of 4
to 5 hectares of land to a selda for one (1) calendar year. The CMU-IDF would provide researchers and
specialists to assist in the preparation of project proposals and to monitor and analyze project
implementation. The selda in turn would pay to the CMU P100 as service fee and P1,000 per hectare as
participant's land rental fee. In addition, 400 kilograms of the produce per year would be turned over or
donated to the CMU-IDF. The participants agreed not to allow their hired laborers or member of their
family to establish any house or live within vicinity of the project area and not to use the allocated lot as
collateral for a loan. It was expressly provided that no tenant-landlord relationship would exist as a result
of the Agreement.
Initially, participation in the CMU-IEP was extended only to workers and staff members who were still employed with
the CMU and was not made available to former workers or employees. In the middle of 1987, to cushion the impact of
the discontinuance of the rice, corn and sugar cane project on the lives of its former workers, the CMU allowed them
to participate in the CMU-IEP as special participants.
Under the terms of a contract called Addendum To Existing Memorandum of Agreement Concerning Participation To
the CMU-Income Enhancement Program,
3
a former employee would be grouped with an existing selda of his
choice and provided one (1) hectare for a lowland rice project for one (1) calendar year. He would pay the
land rental participant's fee of P1,000.00 per hectare but on a charge-to-crop basis. He would also be
subject to the same prohibitions as those imposed on the CMU employees. It was also expressly
provided that no tenant-landlord relationship would exist as a result of the Agreement.
The one-year contracts expired on June 30, 1988. Some contracts were renewed. Those whose contracts were not
renewed were served with notices to vacate.
The non-renewal of the contracts, the discontinuance of the rice, corn and sugar cane project, the loss of jobs due to
termination or separation from the service and the alleged harassment by school authorities, all contributed to, and
precipitated the filing of the complaint.
On the basis of the above facts, the DARAB found that the private respondents were not tenants and cannot
therefore be beneficiaries under the CARP. At the same time, the DARAB ordered the segregation of 400 hectares of
suitable, compact and contiguous portions of the CMU land and their inclusion in the CARP for distribution to qualified
beneficiaries.
The petitioner CMU, in seeking a review of the decisions of the respondents DARAB and the Court of Appeals, raised
the following issues:
1.) Whether or not the DARAB has jurisdiction to hear and decide Case No. 005 for Declaration of Status of Tenants
and coverage of land under the CARP.
2.) Whether or not respondent Court of Appeals committed serious errors and grave abuse of discretion amounting to
lack of jurisdiction in dismissing the Petition for Review on Certiorari and affirming the decision of DARAB.
In their complaint, docketed as DAR Case No. 5, filed with the DARAB, complainants Obrique, et al. claimed that they
are tenants of the CMU and/or landless peasants claiming/occupying a part or portion of the CMU situated at
Sinalayan, Valencia, Bukidnon and Musuan, Bukidnon, consisting of about 1,200 hectares. We agree with the
DARAB's finding that Obrique, et. al. are not tenants. Under the terms of the written agreement signed by Obrique, et.
al., pursuant to the livelihood program called "Kilusang Sariling Sikap Program", it was expressly stipulated that no
landlord-tenant relationship existed between the CMU and the faculty and staff (participants in the project). The CMU
did not receive any share from the harvest/fruits of the land tilled by the participants. What the CMU collected was a
nominal service fee and land use participant's fee in consideration of all the kinds of assistance given to the
participants by the CMU. Again, the agreement signed by the participants under the CMU-IEP clearly stipulated that
no landlord-tenant relationship existed, and that the participants are not share croppers nor lessees, and the CMU did
not share in the produce of the participants' labor.
In the same paragraph of their complaint, complainants claim that they are landless peasants. This allegation
requires proof and should not be accepted as factually true. Obrique is not a landless peasant. The facts showed he
was Physics Instructor at CMU holding a very responsible position was separated from the service on account of
certain irregularities he committed while Assistant Director of the Agri-Business Project of cultivating lowland rice.
Others may, at the moment, own no land in Bukidnon but they may not necessarily be so destitute in their places of
origin. No proof whatsoever appears in the record to show that they are landless peasants.
The evidence on record establish without doubt that the complainants were originally authorized or given permission
to occupy certain areas of the CMU property for a definite purpose to carry out certain university projects as part of
the CMU's program of activities pursuant to its avowed purpose of giving training and instruction in agricultural and
other related technologies, using the land and other resources of the institution as a laboratory for these projects.
Their entry into the land of the CMU was with the permission and written consent of the owner, the CMU, for a limited
period and for a specific purpose. After the expiration of their privilege to occupy and cultivate the land of the CMU,
their continued stay was unauthorized and their settlement on the CMU's land was without legal authority. A person
entering upon lands of another, not claiming in good faith the right to do so by virtue of any title of his own, or by
virtue of some agreement with the owner or with one whom he believes holds title to the land, is a
squatter.
4
Squatters cannot enter the land of another surreptitiously or by stealth, and under the umbrella
of the CARP, claim rights to said property as landless peasants. Under Section 73 of R.A. 6657, persons
guilty of committing prohibited acts of forcible entry or illegal detainer do not qualify as beneficiaries and
may not avail themselves of the rights and benefits of agrarian reform. Any such person who knowingly
and wilfully violates the above provision of the Act shall be punished with imprisonment or fine at the
discretion of the Court.
In view of the above, the private respondents, not being tenants nor proven to be landless peasants, cannot qualify
as beneficiaries under the CARP.
The questioned decision of the Adjudication Board, affirmed in toto by the Court of Appeals, segregating 400
hectares from the CMU land is primarily based on the alleged fact that the land subject hereof is "not directly, actually
and exclusively used for school sites, because the same was leased to Philippine Packing Corporation (now Del
Monte Philippines)".
In support of this view, the Board held that the "respondent University failed to show that it is using actually, really,
truly and in fact, the questioned area to the exclusion of others, nor did it show that the same is directly used without
any intervening agency or person",
5
and "there is no definite and concrete showing that the use of said lands
are essentially indispensable for educational purposes".
6
The reliance by the respondents Board and
Appellate Tribunal on the technical or literal definition from Moreno's Philippine Law Dictionary and
Black's Law Dictionary, may give the ordinary reader a classroom meaning of the phrase "is actually
directly and exclusively", but in so doing they missed the true meaning of Section 10, R.A. 6657, as to
what lands are exempted or excluded from the coverage of the CARP.
The pertinent provisions of R.A. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988, are as
follows:
Sec. 4. SCOPE. The Comprehensive Agrarian Reform Law of 1988 shall cover, regardless of
tenurial arrangement and commodity produced, all public and private agricultural lands as provided
in Proclamation No. 131 and Executive Order No. 229 including other lands of the public domain
suitable for agriculture.
More specifically, the following lands are covered by the Comprehensive Agrarian Reform
Program:
(a) All alienable and disposable lands of the public domain devoted to or suitable for agriculture. No
reclassification of forest of mineral lands to agricultural lands shall be undertaken after the approval
of this Act until Congress, taking into account ecological, developmental and equity considerations,
shall have determined by law, the specific limits of the public domain;
(b) All lands of the public domain in excess of the specific limits ad determined by Congress in the
preceding paragraph;
(c) All other lands owned by the Government devoted to or suitable for agriculture; and
(d) All private lands devoted to or suitable for agriculture regardless of the agricultural products
raised or that can be raised thereon.
Sec. 10 EXEMPTIONS AND EXCLUSIONS. Lands actually, directly and exclusively used and
found to be necessary for parks, wildlife, forest reserves, reforestration, fish sanctuaries and
breeding grounds, watersheds and mangroves, national defense, school sites and campuses
including experimental farm stations operated by public or private schools for educational
purposes, seeds and seedlings research and pilot production centers, church sites and convents
appurtenant thereto, mosque sites and Islamic centers appurtenant thereto, communal burial
grounds and cemeteries, penal colonies and penal farms actually worked by the inmates,
government and private research and quarantine centers and all lands with eighteen percent (18%)
slope and over, except those already developed shall be exempt from the coverage of this
Act. (Emphasis supplied).
The construction given by the DARAB to Section 10 restricts the land area of the CMU to its present needs or to a
land area presently, actively exploited and utilized by the university in carrying out its present educational program
with its present student population and academic facility overlooking the very significant factor of growth of the
university in the years to come. By the nature of the CMU, which is a school established to promote agriculture and
industry, the need for a vast tract of agricultural land and for future programs of expansion is obvious. At the outset,
the CMU was conceived in the same manner as land grant colleges in America, a type of educational institution
which blazed the trail for the development of vast tracts of unexplored and undeveloped agricultural lands in the Mid-
West. What we now know as Michigan State University, Penn State University and Illinois State University, started as
small land grant colleges, with meager funding to support their ever increasing educational programs. They were
given extensive tracts of agricultural and forest lands to be developed to support their numerous expanding activities
in the fields of agricultural technology and scientific research. Funds for the support of the educational programs of
land grant colleges came from government appropriation, tuition and other student fees, private endowments and
gifts, and earnings from miscellaneous sources.
7
It was in this same spirit that President Garcia issued
Proclamation No. 476, withdrawing from sale or settlement and reserving for the Mindanao Agricultural
College (forerunner of the CMU) a land reservation of 3,080 hectares as its future campus. It was set up
in Bukidnon, in the hinterlands of Mindanao, in order that it can have enough resources and wide open
spaces to grow as an agricultural educational institution, to develop and train future farmers of Mindanao
and help attract settlers to that part of the country.
In line with its avowed purpose as an agricultural and technical school, the University adopted a land utilization
program to develop and exploit its 3080-hectare land reservation as follows: 8
No. of Hectares Percentage
a. Livestock and Pasture 1,016.40 33
b. Upland Crops 616 20
c. Campus and Residential sites 462 15
d. Irrigated rice 400.40 13
e. Watershed and forest reservation 308 10
f. Fruit and Trees Crops 154 5
g. Agricultural
Experimental stations 123.20 4
3,080.00 100%
The first land use plan of the CARP was prepared in 1975 and since then it has undergone several revisions in line
with changing economic conditions, national economic policies and financial limitations and availability of resources.
The CMU, through Resolution No. 160 S. 1984, pursuant to its development plan, adopted a multi-disciplinary applied
research extension and productivity program called the "Kilusang Sariling Sikap Project" (CMU-KSSP). The
objectives
9
of this program were:
1. Provide researches who shall assist in (a) preparation of proposal; (b) monitor project
implementation; and (c) collect and analyze all data and information relevant to the processes and
results of project implementation;
2. Provide the use of land within the University reservation for the purpose of establishing a lowland
rice project for the party of the Second Part for a period of one calendar year subject to
discretionary renewal by the Party of the First Part;
3. Provide practical training to the Party of the Second Part on the management and operation of
their lowland project upon request of Party of the Second Part; and
4. Provide technical assistance in the form of relevant livelihood project specialists who shall
extend expertise on scientific methods of crop production upon request by Party of the Second
Part.
In return for the technical assistance extended by the CMU, the participants in a project pay a nominal amount as
service fee. The self-reliance program was adjunct to the CMU's lowland rice project.
The portion of the CMU land leased to the Philippine Packing Corporation (now Del Monte Phils., Inc.) was leased
long before the CARP was passed. The agreement with the Philippine Packing Corporation was not a lease but a
Management and Development Agreement, a joint undertaking where use by the Philippine Packing Corporation of
the land was part of the CMU research program, with the direct participation of faculty and students. Said contracts
with the Philippine Packing Corporation and others of a similar nature (like MM-Agraplex) were made prior to the
enactment of R.A. 6657 and were directly connected to the purpose and objectives of the CMU as an educational
institution. As soon as the objectives of the agreement for the joint use of the CMU land were achieved as of June
1988, the CMU adopted a blue print for the exclusive use and utilization of said areas to carry out its own research
and agricultural experiments.
As to the determination of when and what lands are found to be necessary for use by the CMU, the school is in the
best position to resolve and answer the question and pass upon the problem of its needs in relation to its avowed
objectives for which the land was given to it by the State. Neither the DARAB nor the Court of Appeals has the right to
substitute its judgment or discretion on this matter, unless the evidentiary facts are so manifest as to show that the
CMU has no real for the land.
It is our opinion that the 400 hectares ordered segregated by the DARAB and affirmed by the Court of Appeals in its
Decision dated August 20, 1990, is not covered by the CARP because:
(1) It is not alienable and disposable land of the public domain;
(2) The CMU land reservation is not in excess of specific limits as determined by Congress;
(3) It is private land registered and titled in the name of its lawful owner, the CMU;
(4) It is exempt from coverage under Section 10 of R.A. 6657 because the lands are actually,
directly and exclusively used and found to be necessary for school site and campus, including
experimental farm stations for educational purposes, and for establishing seed and seedling
research and pilot production centers. (Emphasis supplied).
Under Section 4 and Section 10 of R.A. 6657, it is crystal clear that the jurisdiction of the DARAB is limited only to
matters involving the implementation of the CARP. More specifically, it is restricted to agrarian cases and
controversies involving lands falling within the coverage of the aforementioned program. It does not include those
which are actually, directly and exclusively used and found to be necessary for, among such purposes, school sites
and campuses for setting up experimental farm stations, research and pilot production centers, etc.
Consequently, the DARAB has no power to try, hear and adjudicate the case pending before it involving a portion of
the CMU's titled school site, as the portion of the CMU land reservation ordered segregated is actually, directly and
exclusively used and found by the school to be necessary for its purposes. The CMU has constantly raised the issue
of the DARAB's lack of jurisdiction and has questioned the respondent's authority to hear, try and adjudicate the case
at bar. Despite the law and the evidence on record tending to establish that the fact that the DARAB had no
jurisdiction, it made the adjudication now subject of review.
Whether the DARAB has the authority to order the segregation of a portion of a private property titled in the name of
its lawful owner, even if the claimant is not entitled as a beneficiary, is an issue we feel we must resolve. The quasi-
judicial powers of DARAB are provided in Executive Order No. 129-A, quoted hereunder in so far as pertinent to the
issue at bar:
Sec. 13. AGRARIAN REFORM ADJUDICATION BOARD There is hereby created an
Agrarian Reform Adjudication Board under the office of the Secretary. . . . The Board shall assume
the powers and functions with respect to adjudication of agrarian reform cases under Executive
Order 229 and this Executive Order . . .
Sec. 17. QUASI JUDICIAL POWERS OF THE DAR. The DAR is hereby vested with quasi-
judicial powers to determine and adjudicate agrarian reform matters and shall have exclusive
original jurisdiction over all matters including implementation of Agrarian Reform.
Section 50 of R.A. 6658 confers on the DAR quasi-judicial powers as follows:
The DAR is hereby vested with primary jurisdiction to determine and adjudicate agrarian reform
matters and shall have original jurisdiction over all matters involving the implementation of agrarian
reform. . . .
Section 17 of Executive Order No. 129-A is merely a repetition of Section 50, R.A. 6657. There is no doubt
that the DARAB has jurisdiction to try and decide any agrarian dispute in the implementation of the CARP.
An agrarian dispute is defined by the same law as any controversy relating to tenurial rights whether
leasehold, tenancy stewardship or otherwise over lands devoted to
agriculture.
10

In the case at bar, the DARAB found that the complainants are not share tenants or lease holders of the CMU, yet it
ordered the "segregation of a suitable compact and contiguous area of Four Hundred hectares, more or less", from
the CMU land reservation, and directed the DAR Regional Director to implement its order of segregation. Having
found that the complainants in this agrarian dispute for Declaration of Tenancy Status are not entitled to claim as
beneficiaries of the CARP because they are not share tenants or leaseholders, its order for the segregation of 400
hectares of the CMU land was without legal authority. w do not believe that the quasi-judicial function of the DARAB
carries with it greater authority than ordinary courts to make an award beyond what was demanded by the
complainants/petitioners, even in an agrarian dispute. Where the quasi-judicial body finds that the
complainants/petitioners are not entitled to the rights they are demanding, it is an erroneous interpretation of authority
for that quasi-judicial body to order private property to be awarded to future beneficiaries. The order segregation 400
hectares of the CMU land was issued on a finding that the complainants are not entitled as beneficiaries, and on an
erroneous assumption that the CMU land which is excluded or exempted under the law is subject to the coverage of
the CARP. Going beyond what was asked by the complainants who were not entitled to the relief prayed the
complainants who were not entitled to the relief prayed for, constitutes a grave abuse of discretion because it implies
such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction.
The education of the youth and agrarian reform are admittedly among the highest priorities in the government socio-
economic programs. In this case, neither need give way to the other. Certainly, there must still be vast tracts of
agricultural land in Mindanao outside the CMU land reservation which can be made available to landless peasants,
assuming the claimants here, or some of them, can qualify as CARP beneficiaries. To our mind, the taking of the
CMU land which had been segregated for educational purposes for distribution to yet uncertain beneficiaries is a
gross misinterpretation of the authority and jurisdiction granted by law to the DARAB.
The decision in this case is of far-reaching significance as far as it concerns state colleges and universities whose
resources and research facilities may be gradually eroded by misconstruing the exemptions from the CARP. These
state colleges and universities are the main vehicles for our scientific and technological advancement in the field of
agriculture, so vital to the existence, growth and development of this country.
It is the opinion of this Court, in the light of the foregoing analysis and for the reasons indicated, that the evidence is
sufficient to sustain a finding of grave abuse of discretion by respondents Court of Appeals and DAR Adjudication
Board. We hereby declare the decision of the DARAB dated September 4, 1989 and the decision of the Court of
Appeals dated August 20, 1990, affirming the decision of the quasi-judicial body, as null and void and hereby order
that they be set aside, with costs against the private respondents.
SO ORDERED
G.R. No. 158228 March 23, 2004
DEPARTMENT OF AGRARIAN REFORM, as represented by its Secretary, ROBERTO M.
PAGDANGANAN,petitioner,
vs.
DEPARTMENT OF EDUCATION, CULTURE AND SPORTS (DECS), respondent.
D E C I S I O N
YNARES-SANTIAGO, J .:
This petition for review on certiorari seeks to set aside the decision
1
of the Court of Appeals dated
October 29, 2002 in CA-G.R. SP No. 64378, which reversed the August 30, 2000 decision of the
Secretary of Agrarian Reform, as well as the Resolution dated May 7, 2003, which denied
petitioners motion for reconsideration.
In controversy are Lot No. 2509 and Lot No. 817-D consisting of an aggregate area of 189.2462
hectares located at Hacienda Fe, Escalante, Negros Occidental and Brgy. Gen. Luna, Sagay,
Negros Occidental, respectively. On October 21, 1921, these lands were donated by the late
Esteban Jalandoni to respondent DECS (formerly Bureau of Education).
2
Consequently, titles thereto
were transferred in the name of respondent DECS under Transfer Certificate of Title No. 167175.
3

On July 15, 1985, respondent DECS leased the lands to Anglo Agricultural Corporation for 10
agricultural crop years, commencing from crop year 1984-1985 to crop year 1993-1994. The
contract of lease was subsequently renewed for another 10 agricultural crop years, commencing
from crop year 1995-1996 to crop year 2004-2005.
4

On June 10, 1993, Eugenio Alpar and several others, claiming to be permanent and regular farm
workers of the subject lands, filed a petition for Compulsory Agrarian Reform Program (CARP)
coverage with the Municipal Agrarian Reform Office (MARO) of Escalante.
5

After investigation, MARO Jacinto R. Piosa, sent a "Notice of Coverage" to respondent DECS,
stating that the subject lands are now covered by CARP and inviting its representatives for a
conference with the farmer beneficiaries.
6
Then, MARO Piosa submitted his report to OIC-PARO
Stephen M. Leonidas, who recommended to the DAR Regional Director the approval of the
coverage of the landholdings.
On August 7, 1998, DAR Regional Director Dominador B. Andres approved the recommendation,
the dispositive portion of which reads:
WHEREFORE, all the foregoing premises considered, the petition is granted. Order is hereby
issued:
1. Placing under CARP coverage Lot 2509 with an area of 111.4791 hectares situated at
Had. Fe, Escalante, Negros Occidental and Lot 817-D with an area of 77.7671 hectares
situated at Brgy. Gen. Luna, Sagay, Negros Occidental;
2. Affirming the notice of coverage sent by the DAR Provincial Office, Negros Occidental
dated November 23, 1994;
3. Directing the Provincial Agrarian Reform Office of Negros Occidental and the Municipal
Agrarian Reform Officers of Sagay and Escalante to facilitate the acquisition of the subject
landholdings and the distribution of the same qualified beneficiaries.
SO ORDERED.
7

Respondent DECS appealed the case to the Secretary of Agrarian Reform which affirmed the Order
of the Regional Director.
8

Aggrieved, respondent DECS filed a petition for certiorari with the Court of Appeals, which set aside
the decision of the Secretary of Agrarian Reform.
9

Hence, the instant petition for review.
The pivotal issue to be resolved in this case is whether or not the subject properties are exempt from
the coverage of Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform
Law of 1998 (CARL).
The general policy under CARL is to cover as much lands suitable for agriculture as
possible.
10
Section 4 of R.A. No. 6657 sets out the coverage of CARP. It states that the program
shall:
" cover, regardless of tenurial arrangement and commodity produced, all public and private
agricultural lands as provided in Proclamation No. 131 and Executive Order No. 229, including other
lands of the public domain suitable for agriculture."
More specifically, the following lands are covered by the Comprehensive Agrarian Reform Program:
(a) All alienable and disposable lands of the public domain devoted to or suitable for
agriculture. No reclassification of forest or mineral lands to agricultural lands shall be
undertaken after the approval of this Act until Congress, taking into account, ecological,
developmental and equity considerations, shall have determined by law, the specific limits of
the public domain;
(b) All lands of the public domain in excess of the specific limits as determined by Congress
in the preceding paragraph;
(c) All other lands owned by the Government devoted to or suitable for agriculture; and
(d) All private lands devoted to or suitable for agriculture regardless of the agricultural
products raised or that can be raised thereon.
Section 3(c) thereof defines "agricultural land," as "land devoted to agricultural activity as defined in
this Act and not classified as mineral, forest, residential, commercial or industrial land." The term
"agriculture" or "agricultural activity" is also defined by the same law as follows:
Agriculture, Agricultural Enterprises or Agricultural Activity means the cultivation of the soil, planting
of crops, growing of fruit trees, raising of livestock, poultry or fish, including the harvesting of such
farm products, and other farm activities, and practices performed by a farmer in conjunction with
such farming operations done by persons whether natural or juridical.
11

The records of the case show that the subject properties were formerly private agricultural lands
owned by the late Esteban Jalandoni, and were donated to respondent DECS. From that time until
they were leased to Anglo Agricultural Corporation, the lands continued to be agricultural primarily
planted to sugarcane, albeit part of the public domain being owned by an agency of the
government.
12
Moreover, there is no legislative or presidential act, before and after the enactment of
R.A. No. 6657, classifying the said lands as mineral, forest, residential, commercial or industrial land.
Indubitably, the subject lands fall under the classification of lands of the public domain devoted to or
suitable for agriculture.
Respondent DECS sought exemption from CARP coverage on the ground that all the income
derived from its contract of lease with Anglo Agricultural Corporation were actually, directly and
exclusively used for educational purposes, such as for the repairs and renovations of schools in the
nearby locality.
Petitioner DAR, on the other hand, argued that the lands subject hereof are not exempt from the
CARP coverage because the same are not actually, directly and exclusively used as school sites or
campuses, as they are in fact leased to Anglo Agricultural Corporation. Further, to be exempt from
the coverage, it is the land per se, not the income derived therefrom, that must be actually, directly
and exclusively used for educational purposes.
We agree with the petitioner.
Section 10 of R.A. No. 6657 enumerates the types of lands which are exempted from the coverage
of CARP as well as the purposes of their exemption, viz:
x x x x x x x x x
c) Lands actually, directly and exclusively used and found to be necessary for national
defense, school sites and campuses, including experimental farm stations operated by public or
private schools for educational purposes, , shall be exempt from the coverage of this Act.
13

x x x x x x x x x
Clearly, a reading of the paragraph shows that, in order to be exempt from the coverage: 1) the land
must be "actually, directly, and exclusively used and found to be necessary;" and 2) the purpose is
"for school sites and campuses, including experimental farm stations operated by public or private
schools for educational purposes."
The importance of the phrase "actually, directly, and exclusively used and found to be necessary"
cannot be understated, as what respondent DECS would want us to do by not taking the words in
their literal and technical definitions. The words of the law are clear and unambiguous. Thus, the
"plain meaning rule" or verba legis in statutory construction is applicable in this case. Where the
words of a statute are clear, plain and free from ambiguity, it must be given its literal meaning and
applied without attempted interpretation.
14

We are not unaware of our ruling in the case of Central Mindanao University v. Department of
Agrarian Reform Adjudication Board,
15
wherein we declared the land subject thereof exempt from
CARP coverage. However, respondent DECS reliance thereon is misplaced because the factual
circumstances are different in the case at bar.
Firstly, in the CMU case, the land involved was not alienable and disposable land of the public
domain because it was reserved by the late President Carlos P. Garcia under Proclamation No. 476
for the use of Mindanao Agricultural College (now CMU).
16
In this case, however, the lands fall under
the category of alienable and disposable lands of the public domain suitable for agriculture.
Secondly, in the CMU case, the land was actually, directly and exclusively used and found to be
necessary for school sites and campuses. Although a portion of it was being used by the Philippine
Packing Corporation (now Del Monte Phils., Inc.) under a "Management and Development
Agreement", the undertaking was that the land shall be used by the Philippine Packing Corporation
as part of the CMU research program, with direct participation of faculty and students. Moreover, the
land was part of the land utilization program developed by the CMU for its "Kilusang Sariling Sikap
Project" (CMU-KSSP), a multi-disciplinary applied research extension and productivity
program.
17
Hence, the retention of the land was found to be necessary for the present and future
educational needs of the CMU. On the other hand, the lands in this case were
not actually and exclusively utilized as school sites and campuses, as they were leased to Anglo
Agricultural Corporation, not for educational purposes but for the furtherance of its business. Also, as
conceded by respondent DECS, it was the income from the contract of lease and not the subject
lands that was directly used for the repairs and renovations of the schools in the locality.
Anent the issue of whether the farmers are qualified beneficiaries of CARP, we disagree with the
Court of Appeals finding that they were not.
At the outset, it should be pointed out that the identification of actual and potential beneficiaries
under CARP is vested in the Secretary of Agrarian Reform pursuant to Section 15, R.A. No. 6657,
which states:
SECTION 15. Registration of Beneficiaries. The DAR in coordination with the Barangay Agrarian
Reform Committee (BARC) as organized in this Act, shall register all agricultural lessees, tenants
and farmworkers who are qualified to be beneficiaries of the CARP. These potential beneficiaries
with the assistance of the BARC and the DAR shall provide the following data:
(a) names and members of their immediate farm household;
(b) owners or administrators of the lands they work on and the length of tenurial relationship;
(c) location and area of the land they work;
(d) crops planted; and
(e) their share in the harvest or amount of rental paid or wages received.
A copy of the registry or list of all potential CARP beneficiaries in the barangay shall be posted in the
barangay hall, school or other public buildings in the barangay where it shall be open to inspection
by the public at all reasonable hours.
In the case at bar, the BARC certified that herein farmers were potential CARP beneficiaries of the
subject properties.
18
Further, on November 23, 1994, the Secretary of Agrarian Reform through the
Municipal Agrarian Reform Office (MARO) issued a Notice of Coverage placing the subject
properties under CARP. Since the identification and selection of CARP beneficiaries are matters
involving strictly the administrative implementation of the CARP,
19
it behooves the courts to exercise
great caution in substituting its own determination of the issue, unless there is grave abuse of
discretion committed by the administrative agency. In this case, there was none.
The Comprehensive Agrarian Reform Program (CARP) is the bastion of social justice of poor
landless farmers, the mechanism designed to redistribute to the underprivileged the natural right to
toil the earth, and to liberate them from oppressive tenancy. To those who seek its benefit, it is the
means towards a viable livelihood and, ultimately, a decent life. The objective of the State is no less
certain: "landless farmers and farmworkers will receive the highest consideration to promote social
justice and to move the nation toward sound rural development and industrialization."
20

WHEREFORE, in view of the foregoing, the petition is GRANTED. The decision of the Court of
Appeals dated October 29, 2002, in CA-G.R. SP No. 64378 is REVERSED and SET ASIDE. The
decision dated August 30, 2000 of the Secretary of Agrarian Reform placing the subject lands under
CARP coverage, is REINSTATED.
SO ORDERED.
G.R. No. 158228 March 23, 2004
DEPARTMENT OF AGRARIAN REFORM, as represented by its Secretary, ROBERTO M.
PAGDANGANAN,petitioner,
vs.
DEPARTMENT OF EDUCATION, CULTURE AND SPORTS (DECS), respondent.
D E C I S I O N
YNARES-SANTIAGO, J .:
This petition for review on certiorari seeks to set aside the decision
1
of the Court of Appeals dated
October 29, 2002 in CA-G.R. SP No. 64378, which reversed the August 30, 2000 decision of the
Secretary of Agrarian Reform, as well as the Resolution dated May 7, 2003, which denied
petitioners motion for reconsideration.
In controversy are Lot No. 2509 and Lot No. 817-D consisting of an aggregate area of 189.2462
hectares located at Hacienda Fe, Escalante, Negros Occidental and Brgy. Gen. Luna, Sagay,
Negros Occidental, respectively. On October 21, 1921, these lands were donated by the late
Esteban Jalandoni to respondent DECS (formerly Bureau of Education).
2
Consequently, titles thereto
were transferred in the name of respondent DECS under Transfer Certificate of Title No. 167175.
3

On July 15, 1985, respondent DECS leased the lands to Anglo Agricultural Corporation for 10
agricultural crop years, commencing from crop year 1984-1985 to crop year 1993-1994. The
contract of lease was subsequently renewed for another 10 agricultural crop years, commencing
from crop year 1995-1996 to crop year 2004-2005.
4

On June 10, 1993, Eugenio Alpar and several others, claiming to be permanent and regular farm
workers of the subject lands, filed a petition for Compulsory Agrarian Reform Program (CARP)
coverage with the Municipal Agrarian Reform Office (MARO) of Escalante.
5

After investigation, MARO Jacinto R. Piosa, sent a "Notice of Coverage" to respondent DECS,
stating that the subject lands are now covered by CARP and inviting its representatives for a
conference with the farmer beneficiaries.
6
Then, MARO Piosa submitted his report to OIC-PARO
Stephen M. Leonidas, who recommended to the DAR Regional Director the approval of the
coverage of the landholdings.
On August 7, 1998, DAR Regional Director Dominador B. Andres approved the recommendation,
the dispositive portion of which reads:
WHEREFORE, all the foregoing premises considered, the petition is granted. Order is hereby
issued:
1. Placing under CARP coverage Lot 2509 with an area of 111.4791 hectares situated at
Had. Fe, Escalante, Negros Occidental and Lot 817-D with an area of 77.7671 hectares
situated at Brgy. Gen. Luna, Sagay, Negros Occidental;
2. Affirming the notice of coverage sent by the DAR Provincial Office, Negros Occidental
dated November 23, 1994;
3. Directing the Provincial Agrarian Reform Office of Negros Occidental and the Municipal
Agrarian Reform Officers of Sagay and Escalante to facilitate the acquisition of the subject
landholdings and the distribution of the same qualified beneficiaries.
SO ORDERED.
7

Respondent DECS appealed the case to the Secretary of Agrarian Reform which affirmed the Order
of the Regional Director.
8

Aggrieved, respondent DECS filed a petition for certiorari with the Court of Appeals, which set aside
the decision of the Secretary of Agrarian Reform.
9

Hence, the instant petition for review.
The pivotal issue to be resolved in this case is whether or not the subject properties are exempt from
the coverage of Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform
Law of 1998 (CARL).
The general policy under CARL is to cover as much lands suitable for agriculture as
possible.
10
Section 4 of R.A. No. 6657 sets out the coverage of CARP. It states that the program
shall:
" cover, regardless of tenurial arrangement and commodity produced, all public and private
agricultural lands as provided in Proclamation No. 131 and Executive Order No. 229, including other
lands of the public domain suitable for agriculture."
More specifically, the following lands are covered by the Comprehensive Agrarian Reform Program:
(a) All alienable and disposable lands of the public domain devoted to or suitable for
agriculture. No reclassification of forest or mineral lands to agricultural lands shall be
undertaken after the approval of this Act until Congress, taking into account, ecological,
developmental and equity considerations, shall have determined by law, the specific limits of
the public domain;
(b) All lands of the public domain in excess of the specific limits as determined by Congress
in the preceding paragraph;
(c) All other lands owned by the Government devoted to or suitable for agriculture; and
(d) All private lands devoted to or suitable for agriculture regardless of the agricultural
products raised or that can be raised thereon.
Section 3(c) thereof defines "agricultural land," as "land devoted to agricultural activity as defined in
this Act and not classified as mineral, forest, residential, commercial or industrial land." The term
"agriculture" or "agricultural activity" is also defined by the same law as follows:
Agriculture, Agricultural Enterprises or Agricultural Activity means the cultivation of the soil, planting
of crops, growing of fruit trees, raising of livestock, poultry or fish, including the harvesting of such
farm products, and other farm activities, and practices performed by a farmer in conjunction with
such farming operations done by persons whether natural or juridical.
11

The records of the case show that the subject properties were formerly private agricultural lands
owned by the late Esteban Jalandoni, and were donated to respondent DECS. From that time until
they were leased to Anglo Agricultural Corporation, the lands continued to be agricultural primarily
planted to sugarcane, albeit part of the public domain being owned by an agency of the
government.
12
Moreover, there is no legislative or presidential act, before and after the enactment of
R.A. No. 6657, classifying the said lands as mineral, forest, residential, commercial or industrial land.
Indubitably, the subject lands fall under the classification of lands of the public domain devoted to or
suitable for agriculture.
Respondent DECS sought exemption from CARP coverage on the ground that all the income
derived from its contract of lease with Anglo Agricultural Corporation were actually, directly and
exclusively used for educational purposes, such as for the repairs and renovations of schools in the
nearby locality.
Petitioner DAR, on the other hand, argued that the lands subject hereof are not exempt from the
CARP coverage because the same are not actually, directly and exclusively used as school sites or
campuses, as they are in fact leased to Anglo Agricultural Corporation. Further, to be exempt from
the coverage, it is the land per se, not the income derived therefrom, that must be actually, directly
and exclusively used for educational purposes.
We agree with the petitioner.
Section 10 of R.A. No. 6657 enumerates the types of lands which are exempted from the coverage
of CARP as well as the purposes of their exemption, viz:
x x x x x x x x x
c) Lands actually, directly and exclusively used and found to be necessary for national
defense, school sites and campuses, including experimental farm stations operated by public or
private schools for educational purposes, , shall be exempt from the coverage of this Act.
13

x x x x x x x x x
Clearly, a reading of the paragraph shows that, in order to be exempt from the coverage: 1) the land
must be "actually, directly, and exclusively used and found to be necessary;" and 2) the purpose is
"for school sites and campuses, including experimental farm stations operated by public or private
schools for educational purposes."
The importance of the phrase "actually, directly, and exclusively used and found to be necessary"
cannot be understated, as what respondent DECS would want us to do by not taking the words in
their literal and technical definitions. The words of the law are clear and unambiguous. Thus, the
"plain meaning rule" or verba legis in statutory construction is applicable in this case. Where the
words of a statute are clear, plain and free from ambiguity, it must be given its literal meaning and
applied without attempted interpretation.
14

We are not unaware of our ruling in the case of Central Mindanao University v. Department of
Agrarian Reform Adjudication Board,
15
wherein we declared the land subject thereof exempt from
CARP coverage. However, respondent DECS reliance thereon is misplaced because the factual
circumstances are different in the case at bar.
Firstly, in the CMU case, the land involved was not alienable and disposable land of the public
domain because it was reserved by the late President Carlos P. Garcia under Proclamation No. 476
for the use of Mindanao Agricultural College (now CMU).
16
In this case, however, the lands fall under
the category of alienable and disposable lands of the public domain suitable for agriculture.
Secondly, in the CMU case, the land was actually, directly and exclusively used and found to be
necessary for school sites and campuses. Although a portion of it was being used by the Philippine
Packing Corporation (now Del Monte Phils., Inc.) under a "Management and Development
Agreement", the undertaking was that the land shall be used by the Philippine Packing Corporation
as part of the CMU research program, with direct participation of faculty and students. Moreover, the
land was part of the land utilization program developed by the CMU for its "Kilusang Sariling Sikap
Project" (CMU-KSSP), a multi-disciplinary applied research extension and productivity
program.
17
Hence, the retention of the land was found to be necessary for the present and future
educational needs of the CMU. On the other hand, the lands in this case were
not actually and exclusively utilized as school sites and campuses, as they were leased to Anglo
Agricultural Corporation, not for educational purposes but for the furtherance of its business. Also, as
conceded by respondent DECS, it was the income from the contract of lease and not the subject
lands that was directly used for the repairs and renovations of the schools in the locality.
Anent the issue of whether the farmers are qualified beneficiaries of CARP, we disagree with the
Court of Appeals finding that they were not.
At the outset, it should be pointed out that the identification of actual and potential beneficiaries
under CARP is vested in the Secretary of Agrarian Reform pursuant to Section 15, R.A. No. 6657,
which states:
SECTION 15. Registration of Beneficiaries. The DAR in coordination with the Barangay Agrarian
Reform Committee (BARC) as organized in this Act, shall register all agricultural lessees, tenants
and farmworkers who are qualified to be beneficiaries of the CARP. These potential beneficiaries
with the assistance of the BARC and the DAR shall provide the following data:
(a) names and members of their immediate farm household;
(b) owners or administrators of the lands they work on and the length of tenurial relationship;
(c) location and area of the land they work;
(d) crops planted; and
(e) their share in the harvest or amount of rental paid or wages received.
A copy of the registry or list of all potential CARP beneficiaries in the barangay shall be posted in the
barangay hall, school or other public buildings in the barangay where it shall be open to inspection
by the public at all reasonable hours.
In the case at bar, the BARC certified that herein farmers were potential CARP beneficiaries of the
subject properties.
18
Further, on November 23, 1994, the Secretary of Agrarian Reform through the
Municipal Agrarian Reform Office (MARO) issued a Notice of Coverage placing the subject
properties under CARP. Since the identification and selection of CARP beneficiaries are matters
involving strictly the administrative implementation of the CARP,
19
it behooves the courts to exercise
great caution in substituting its own determination of the issue, unless there is grave abuse of
discretion committed by the administrative agency. In this case, there was none.
The Comprehensive Agrarian Reform Program (CARP) is the bastion of social justice of poor
landless farmers, the mechanism designed to redistribute to the underprivileged the natural right to
toil the earth, and to liberate them from oppressive tenancy. To those who seek its benefit, it is the
means towards a viable livelihood and, ultimately, a decent life. The objective of the State is no less
certain: "landless farmers and farmworkers will receive the highest consideration to promote social
justice and to move the nation toward sound rural development and industrialization."
20

WHEREFORE, in view of the foregoing, the petition is GRANTED. The decision of the Court of
Appeals dated October 29, 2002, in CA-G.R. SP No. 64378 is REVERSED and SET ASIDE. The
decision dated August 30, 2000 of the Secretary of Agrarian Reform placing the subject lands under
CARP coverage, is REINSTATED.
SO ORDERED.
G.R. No. 103125 May 17, 1993
PROVINCE OF CAMARINES SUR, represented by GOV. LUIS R. VILLAFUERTE and HON.
BENJAMIN V. PANGA as Presiding Judge of RTC Branch 33 at Pili, Camarines
Sur, petitioners,
vs.
THE COURT OF APPEALS (THIRD DIVISION), ERNESTO SAN JOAQUIN and EFREN SAN
JOAQUIN,respondents.
The Provincial Attorney for petitioners.
Reynaldo L. Herrera for Ernesto San Joaquin.

QUIASON, J .:
In this appeal by certiorari from the decision of the Court of Appeals in AC-G.R. SP No. 20551
entitled "Ernesto N. San Joaquin, et al., v. Hon. Benjamin V. Panga, et al.," this Court is asked to
decide whether the expropriation of agricultural lands by local government units is subject, to the
prior approval of the Secretary of the Agrarian Reform, as the implementator of the agrarian reform
program.
On December 22, 1988, the Sangguniang Panlalawigan of the Province of Camarines Sur passed
Resolution No. 129, Series of 1988, authorizing the Provincial Governor to purchase or expropriate
property contiguous to the provincial capitol site, in order to establish a pilot farm for non-food and
non-traditional agricultural crops and a housing project for provincial government employees.
The "WHEREAS" clause o:f the Resolution states:
WHEREAS, the province of Camarines Sur has adopted a five-year Comprehensive
Development plan, some of the vital components of which includes the establishment
of model and pilot farm for non-food and non-traditional agricultural crops, soil testing
and tissue culture laboratory centers, 15 small scale technology soap making, small
scale products of plaster of paris, marine biological and sea farming research
center,and other progressive feasibility concepts objective of which is to provide the
necessary scientific and technology know-how to farmers and fishermen in
Camarines Sur and to establish a housing project for provincial government
employees;
WHEREAS, the province would need additional land to be acquired either by
purchase or expropriation to implement the above program component;
WHEREAS, there are contiguous/adjacent properties to be (sic) present Provincial
Capitol Site ideally suitable to establish the same pilot development center;
WHEREFORE . . . .
Pursuant to the Resolution, the Province of Camarines Sur, through its Governor, Hon. Luis
R.Villafuerte, filed two separate cases for expropriation against Ernesto N. San Joaquin and Efren N.
San Joaquin, docketed as Special Civil Action Nos. P-17-89 and P-19-89 of the Regional Trial Court,
Pili, Camarines Sur, presided by the Hon. Benjamin V. Panga.
Forthwith, the Province of Camarines Sur filed a motion for the issuance of writ of possession. The
San Joaquins failed to appear at the hearing of the motion.
The San Joaquins moved to dismiss the complaints on the ground of inadequacy of the price offered
for their property. In an order dated December 6, 1989, the trial court denied the motion to dismiss
and authorized the Province of Camarines Sur to take possession of the property upon the deposit
with the Clerk of Court of the amount of P5,714.00, the amount provisionally fixed by the trial court to
answer for damages that private respondents may suffer in the event that the expropriation cases do
not prosper. The trial court issued a writ of possession in an order dated January18, 1990.
The San Joaquins filed a motion for relief from the order, authorizing the Province of Camarines Sur
to take possession of their property and a motion to admit an amended motion to dismiss. Both
motions were denied in the order dated February 1990.
In their petition before the Court of Appeals, the San Joaquins asked: (a) that Resolution No. 129,
Series of 1988 of the Sangguniang Panlalawigan be declared null and void; (b) that the complaints
for expropriation be dismissed; and (c) that the order dated December 6, 1989 (i) denying the motion
to dismiss and (ii) allowing the Province of Camarines Sur to take possession of the property subject
of the expropriation and the order dated February 26, 1990, denying the motion to admit the
amended motion to dismiss, be set aside. They also asked that an order be issued to restrain the
trial court from enforcing the writ of possession, and thereafter to issue a writ of injunction.
In its answer to the petition, the Province of Camarines Sur claimed that it has the authority to initiate
the expropriation proceedings under Sections 4 and 7 of Local Government Code (B.P. Blg. 337)
and that the expropriations are for a public purpose.
Asked by the Court of Appeals to give his Comment to the petition, the Solicitor General stated that
under Section 9 of the Local Government Code (B.P. Blg. 337), there was no need for the approval
by the Office of the President of the exercise by the Sangguniang Panlalawigan of the right of
eminent domain. However, the Solicitor General expressed the view that the Province of Camarines
Sur must first secure the approval of the Department of Agrarian Reform of the plan to expropriate
the lands of petitioners for use as a housing project.
The Court of Appeals set aside the order of the trial court, allowing the Province of Camarines Sur to
take possession of private respondents' lands and the order denying the admission of the amended
motion to dismiss. It also ordered the trial court to suspend the expropriation proceedings until after
the Province of Camarines Sur shall have submitted the requisite approval of the Department of
Agrarian Reform to convert the classification of the property of the private respondents from
agricultural to non-agricultural land.
Hence this petition.
It must be noted that in the Court of Appeals, the San Joaquins asked for: (i) the dismissal of the
complaints for expropriation on the ground of the inadequacy of the compensation offered for the
property and (ii) the nullification of Resolution No. 129, Series of 1988 of the Sangguniang
Panlalawigan of the Province of Camarines Sur.
The Court of Appeals did not rule on the validity of the questioned resolution; neither did it dismiss
the complaints. However, when the Court of Appeals ordered the suspension of the proceedings
until the Province of Camarines Sur shall have obtained the authority of the Department of Agrarian
Reform to change the classification of the lands sought to be expropriated from agricultural to non-
agricultural use, it assumed that the resolution is valid and that the expropriation is for a public
purpose or public use.
Modernly, there has been a shift from the literal to a broader interpretation of "public purpose" or
"public use" for which the power of eminent domain may be exercised. The old concept was that the
condemned property must actually be used by the general public (e.g. roads, bridges, public plazas,
etc.) before the taking thereof could satisfy the constitutional requirement of "public use". Under the
new concept, "public use" means public advantage, convenience or benefit, which tends to
contribute to the general welfare and the prosperity of the whole community, like a resort complex for
tourists or housing project (Heirs of Juancho Ardano v. Reyes, 125 SCRA 220 [1983]; Sumulong v.
Guerrero, 154 SC.RA 461 [1987]).
The expropriation of the property authorized by the questioned resolution is for a public purpose.
The establishment of a pilot development center would inure to the direct benefit and advantage of
the people of the Province of Camarines Sur. Once operational, the center would make available to
the community invaluable information and technology on agriculture, fishery and the cottage
industry. Ultimately, the livelihood of the farmers, fishermen and craftsmen would be enhanced. The
housing project also satisfies the public purpose requirement of the Constitution. As held
in Sumulong v. Guerrero, 154 SCRA 461, "Housing is a basic human need. Shortage in housing is a
matter of state concern since it directly and significantly affects public health, safety, the environment
and in sum the general welfare."
It is the submission of the Province of Camarines Sur that its exercise of the power of eminent
domain cannot be restricted by the provisions of the Comprehensive Agrarian Reform Law (R.A. No.
6657), particularly Section 65 thereof, which requires the approval of the Department of Agrarian
Reform before a parcel of land can be reclassified from an agricultural to a non-agricultural land.
The Court of Appeals, following the recommendation of the Solicitor General, held that the Province
of Camarines Sur must comply with the provision of Section 65 of the Comprehensive Agrarian
Reform Law and must first secure the approval of the Department of Agrarian Reform of the plan to
expropriate the lands of the San Joaquins.
In Heirs of Juancho Ardana v. Reyes, 125 SCRA 220, petitioners raised the issue of whether the
Philippine Tourism Authority can expropriate lands covered by the "Operation Land Transfer" for use
of a tourist resort complex. There was a finding that of the 282 hectares sought to be expropriated,
only an area of 8,970 square meters or less than one hectare was affected by the land reform
program and covered by emancipation patents issued by the Ministry of Agrarian Reform. While the
Court said that there was "no need under the facts of this petition to rule on whether the public
purpose is superior or inferior to another purpose or engage in a balancing of competing public
interest," it upheld the expropriation after noting that petitioners had failed to overcome the showing
that the taking of 8,970 square meters formed part of the resort complex. A fair and reasonable
reading of the decision is that this Court viewed the power of expropriation as superior to the power
to distribute lands under the land reform program.
The Solicitor General denigrated the power to expropriate by the Province of Camarines Sur by
stressing the fact that local government units exercise such power only by delegation. (Comment,
pp. 14-15; Rollo, pp. 128-129)
It is true that local government units have no inherent power of eminent domain and can exercise it
only when expressly authorized by the legislature (City of Cincinnati v. Vester, 28l US 439, 74 L.ed.
950, 50 SCt. 360). It is also true that in delegating the power to expropriate, the legislature may
retain certain control or impose certain restraints on the exercise thereof by the local governments
(Joslin Mfg. Co. v. Providence, 262 US 668 67 L. ed. 1167, 43 S Ct. 684). While such delegated
power may be a limited authority, it is complete within its limits. Moreover, the limitations on the
exercise of the delegated power must be clearly expressed, either in the law conferring the power or
in other legislations.
Resolution No. 129, Series of 1988, was promulgated pursuant to Section 9 of B.P. Blg. 337, the
Local Government Code, which provides:
A local government unit may, through its head and acting pursuant to a resolution of
its sanggunian exercise the right of eminent domain and institute condemnation
proceedings for public use or purpose.
Section 9 of B.P. Blg. 337 does not intimate in the least that local government, units must first secure
the approval of the Department of Land Reform for the conversion of lands from agricultural to non-
agricultural use, before they can institute the necessary expropriation proceedings. Likewise, there is
no provision in the Comprehensive Agrarian Reform Law which expressly subjects the expropriation
of agricultural lands by local government units to the control of the Department of Agrarian Reform.
The closest provision of law that the Court of Appeals could cite to justify the intervention of the
Department of Agrarian Reform in expropriation matters is Section 65 of the Comprehensive
Agrarian Reform Law, which reads:
Sec. 65. Conversion of Lands. After the lapse of five (5) years from its award,
when the land ceases to be economically feasible and sound for, agricultural
purposes, or the locality has become urbanized and the land will have a greater
economic value for residential, commercial or industrial purposes, the DAR, upon
application of the beneficiary or the landowner, with due notice to the affected
parties, and subject to existing laws, may authorize the reclassification or conversion
of the land and its disposition: Provided, That the beneficiary shall have fully paid his
obligation.
The opening, adverbial phrase of the provision sends signals that it applies to lands previously
placed under the agrarian reform program as it speaks of "the lapse of five (5) years from its award."
The rules on conversion of agricultural lands found in Section 4 (k) and 5 (1) of Executive Order No.
129-A, Series of 1987, cannot be the source of the authority of the Department of Agrarian Reform
to determine the suitability of a parcel of agricultural land for the purpose to which it would be
devoted by the expropriating authority. While those rules vest on the Department of Agrarian Reform
the exclusive authority to approve or disapprove conversions of agricultural lands for residential,
commercial or industrial uses, such authority is limited to the applications for reclassification
submitted by the land owners or tenant beneficiaries.
Statutes conferring the power of eminent domain to political subdivisions cannot be broadened or
constricted by implication (Schulman v. People, 10 N.Y. 2d. 249, 176 N.E. 2d. 817, 219 NYS 2d.
241).
To sustain the Court of Appeals would mean that the local government units can no longer
expropriate agricultural lands needed for the construction of roads, bridges, schools, hospitals, etc,
without first applying for conversion of the use of the lands with the Department of Agrarian Reform,
because all of these projects would naturally involve a change in the land use. In effect, it would then
be the Department of Agrarian Reform to scrutinize whether the expropriation is for a public purpose
or public use.
Ordinarily, it is the legislative branch of the local government unit that shall determine whether the
use of the property sought to be expropriated shall be public, the same being an expression of
legislative policy. The courts defer to such legislative determination and will intervene only when a
particular undertaking has no real or substantial relation to the public use (United States Ex Rel
Tennessee Valley Authority v. Welch, 327 US 546, 90 L. ed. 843, 66 S Ct 715; State ex rel Twin City
Bldg. and Invest. Co. v. Houghton, 144 Minn. 1, 174 NW 885, 8 ALR 585).
There is also an ancient rule that restrictive statutes, no matter how broad their terms are, do not
embrace the sovereign unless the sovereign is specially mentioned as subject thereto (Alliance of
Government Workers v. Minister of Labor and Employment, 124 SCRA 1 [1983]). The Republic of
the Philippines, as sovereign, or its political subdivisions, as holders of delegated sovereign powers,
cannot be bound by provisions of law couched in general term.
The fears of private respondents that they will be paid on the basis of the valuation declared in the
tax declarations of their property, are unfounded. This Court has declared as unconstitutional the
Presidential Decrees fixing the just compensation in expropriation cases to be the value given to the
condemned property either by the owners or the assessor, whichever was lower ([Export Processing
Zone Authority v. Dulay, 149 SCRA 305 [1987]). As held in Municipality of Talisay v. Ramirez, 183
SCRA 528 [1990], the rules for determining just compensation are those laid down in Rule 67 of the
Rules of Court, which allow private respondents to submit evidence on what they consider shall be
the just compensation for their property.
WHEREFORE, the petition is GRANTED and the questioned decision of the Court of Appeals is set
aside insofar as it (a) nullifies the trial court's order allowing the Province of Camarines Sur to take
possession of private respondents' property; (b) orders the trial court to suspend the expropriation
proceedings; and (c) requires the Province of Camarines Sur to obtain the approval of the
Department of Agrarian Reform to convert or reclassify private respondents' property from
agricultural to non-agricultural use.
The decision of the Court of Appeals is AFFIRMED insofar as it sets aside the order of the trial court,
denying the amended motion to dismiss of the private respondents.
SO ORDERED.
G.R. No. 149548 December 4, 2009
ROXAS & COMPANY, INC., Petitioner,
vs.
DAMBA-NFSW and the DEPARTMENT OF AGRARIAN REFORM,
*
Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 167505 December 4, 2009
DAMAYAN NG MGA MANGGAGAWANG BUKID SA ASYENDA ROXAS-NATIONAL
FEDERATION OF SUGAR WORKERS (DAMBA-NFSW) Petitioner,
vs.
SECRETARY OF THE DEPT. OF AGRARIAN REFORM, ROXAS & Co., INC. AND/OR ATTY.
MARIANO AMPIL,Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 167540 December 4, 2009
KATIPUNAN NG MGA MAGBUBUKID SA HACIENDA ROXAS, INC. (KAMAHARI), rep. by its
President CARLITO CAISIP, and DAMAYAN NG MANGGAGAWANG BUKID SA ASYENDA
ROXAS-NATIONAL FEDERATION OF SUGAR WORKERS (DAMBA-NFSW), represnted by
LAURO MARTIN, Petitioners,
vs.
SECRETARY OF THE DEPT. OF AGRARIAN REFORM, ROXAS & Co., INC., Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 167543 December 4, 2009
DEPARTMENT OF LAND REFORM, FORMERLY DEPARTMENT OF AGRARIAN REFORM
(DAR), Petitioner,
vs.
ROXAS & CO, INC., Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 167845 December 4, 2009
ROXAS & CO., INC., Petitioner,
vs.
DAMBA-NFSW, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 169163 December 4, 2009
DAMBA-NFSW REPRESENTED BY LAURO V. MARTIN, Petitioner,
vs.
ROXAS & CO., INC., Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 179650 December 4, 2009
DAMBA-NFSW, Petitioner,
vs.
ROXAS & CO., INC., Respondent.
D E C I S I O N
CARPIO MORALES, J .
The main subject of the seven consolidated petitions is the application of petitioner Roxas & Co., Inc.
(Roxas & Co.) for conversion from agricultural to non-agricultural use of its three haciendas located
in Nasugbu, Batangas containing a total area of almost 3,000 hectares. The facts are not new, the
Court having earlier resolved intimately-related issues dealing with these haciendas. Thus, in the
1999 case of Roxas & Co., Inc. v. Court of Appeals,
1
the Court presented the facts as follows:
. . . Roxas & Co. is a domestic corporation and is the registered owner of three haciendas,
namely, Haciendas Palico, Banilad and Caylaway, all located in the Municipality of Nasugbu,
Batangas. Hacienda Palico is 1,024 hectares in area and is registered under Transfer Certificate of
Title (TCT) No. 985. This land is covered by Tax Declaration Nos. 0465, 0466, 0468, 0470, 0234 and
0354. Hacienda Banilad is 1,050 hectares in area, registered under TCT No. 924 and covered by
Tax Declaration Nos. 0236, 0237 and 0390. Hacienda Caylaway is 867.4571 hectares in area and is
registered under TCT Nos. T-44662, T-44663, T-44664 and T-44665.
x x x x
On July 27, 1987, the Congress of the Philippines formally convened and took over legislative power
from the President. This Congress passed Republic Act No. 6657, the Comprehensive Agrarian
Reform Law (CARL) of 1988. The Act was signed by the President on June 10, 1988 and took effect
on June 15, 1988.
Before the laws effectivity, on May 6, 1988, [Roxas & Co.] filed with respondent DAR a voluntary
offer to sell [VOS] Hacienda Caylaway pursuant to the provisions of E.O. No. 229. Haciendas Palico
and Banilad were later placed under compulsory acquisition by DAR in accordance with the
CARL.
x x x x
Nevertheless, on August 6, 1992, [Roxas & Co.], through its President, Eduardo J. Roxas, sent a
letter to the Secretary of DAR withdrawing its VOS of Hacienda Caylaway. The Sangguniang
Bayan of Nasugbu, Batangas allegedly authorized the reclassification of Hacienda Caylaway
from agricultural to non-agricultural. As a result, petitioner informed respondent DAR that it
was applying for conversion of Hacienda Caylaway from agricultural to other uses.
x x x x
2
(emphasis and underscoring supplied)
The petitions in G.R. Nos. 167540 and 167543 nub on the interpretation of Presidential Proclamation
(PP) 1520 which was issued on November 28, 1975 by then President Ferdinand Marcos. The PP
reads:
DECLARING THE MUNICIPALITIES OF MARAGONDON AND TERNATE IN CAVITE PROVINCE
AND THE MUNICIPALITY OF NASUGBU IN BATANGAS AS A TOURIST ZONE, AND FOR
OTHER PURPOSES
WHEREAS, certain areas in the sector comprising the Municipalities of Maragondon and
Ternate in Cavite Province and Nasugbu in Batangas have potential tourism value after being
developed into resort complexes for the foreign and domestic market; and
WHEREAS, it is necessary to conduct the necessary studies and to segregate specific geographic
areas for concentrated efforts of both the government and private sectors in developing their tourism
potential;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the
powers vested in me by the Constitution, do hereby declare the area comprising the Municipalities of
Maragondon and Ternate in Cavite Province and Nasugbu in Batangas Province as a tourist zone
under the administration and control of the Philippine Tourism Authority (PTA) pursuant to
Section 5 (D) of P.D. 564.
The PTA shall identify well-defined geographic areas within the zone with potential tourism
value, wherein optimum use of natural assets and attractions, as well as existing facilities and
concentration of efforts and limited resources of both government and private sector may be affected
and realized in order to generate foreign exchange as well as other tourist receipts.
Any duly established military reservation existing within the zone shall be excluded from this
proclamation.
All proclamation, decrees or executive orders inconsistent herewith are hereby revoked or modified
accordingly. (emphasis and underscoring supplied).
The incidents which spawned the filing of the petitions in G.R. Nos. 149548, 167505, 167845,
169163 and 179650 are stated in the dissenting opinion of Justice Minita Chico-Nazario, the original
draft of which was made the basis of the Courts deliberations.
Essentially, Roxas & Co. filed its application for conversion of its three haciendas from argricultural
to non-agricultural on the assumption that the issuance of PP 1520 which declared Nasugbu,
Batangas as a tourism zone, reclassified them to non-agricultural uses. Its pending application
notwithstanding, the Department of Agrarian Reform (DAR) issued Certificates of Land Ownership
Award (CLOAs) to the farmer-beneficiaries in the three haciendas including CLOA No. 6654 which
was issued on October 15, 1993 covering 513.983 hectares, the subject of G.R. No. 167505.
The application for conversion of Roxas & Co. was the subject of the above-stated Roxas & Co., Inc.
v. Court of Appeals which the Court remanded to the DAR for the observance of proper acquisition
proceedings. As reflected in the above-quoted statement of facts in said case, during the pendency
before the DAR of its application for conversion following its remand to the DAR or on May 16, 2000,
Roxas & Co. filed with the DAR an application for exemption from the coverage of the
Comprehensive Agrarian Reform Program (CARP) of 1988 on the basis of PP 1520 and of DAR
Administrative Order (AO) No. 6, Series of 1994
3
which states that all lands already classified as
commercial, industrial, or residential before the effectivity of CARP no longer need conversion
clearance from the DAR.
It bears mentioning at this juncture that on April 18, 1982, the Sangguniang Bayan of Nasugbu
enacted Municipal Zoning Ordinance No. 4 (Nasugbu MZO No. 4) which was approved on May 4,
1983 by the Human Settlements Regulation Commission, now the Housing and Land Use
Regulatory Board (HLURB).
The records show that Sangguniang Bayan and Association of Barangay Captains of Nasugbu filed
before this Court petitions for intervention which were, however, denied by Resolution of June 5,
2006 for lack of standing.
4

After the seven present petitions were consolidated and referred to the Court en banc,
5
oral
arguments were conducted on July 7, 2009.
The core issues are:
1. Whether PP 1520 reclassified in 1975 all lands in the Maragondon-Ternate-Nasugbu
tourism zone to non-agricultural use to exempt Roxas & Co.s three haciendas in Nasugbu
from CARP coverage;
2. Whether Nasugbu MSO No. 4, Series of 1982 exempted certain lots in Hacienda Palico
from CARP coverage; and
3. Whether the partial and complete cancellations by the DAR of CLOA No. 6654 subject of
G.R. No. 167505 is valid.
The Court shall discuss the issues in seriatim.
I. PP 1520 DID NOT AUTOMATICALLY CONVERT THE AGRICULTURAL LANDS IN THE THREE
MUNICIPALITIES INCLUDING NASUGBU TO NON-AGRICULTURAL LANDS.
Roxas & Co. contends that PP 1520 declared the three municipalities as each constituting a tourism
zone, reclassified all lands therein to tourism and, therefore, converted their use to non-agricultural
purposes.
To determine the chief intent of PP 1520, reference to the "whereas clauses" is in order. By and
large, a reference to the congressional deliberation records would provide guidance in dissecting the
intent of legislation. But since PP 1520 emanated from the legislative powers of then President
Marcos during martial rule, reference to thewhereas clauses cannot be dispensed with.
6

The perambulatory clauses of PP 1520 identified only "certain areas in the sector comprising the
[three Municipalities that] have potential tourism value" and mandated the conduct of "necessary
studies" and the segregation of "specific geographic areas" to achieve its purpose. Which is why the
PP directed the Philippine Tourism Authority (PTA) to identify what those potential tourism areas are.
If all the lands in those tourism zones were to be wholly converted to non-agricultural use, there
would have been no need for the PP to direct the PTA to identify what those "specific geographic
areas" are.
The Court had in fact passed upon a similar matter before. Thus in DAR v. Franco,
7
it pronounced:
Thus, the DAR Regional Office VII, in coordination with the Philippine Tourism Authority, has to
determine precisely which areas are for tourism development and excluded from the Operation
Land Transfer and the Comprehensive Agrarian Reform Program. And suffice it to state here that
the Court has repeatedly ruled that lands already classified as non-agricultural before the enactment
of RA 6657 on 15 June 1988 do not need any conversion clearance.
8
(emphasis and underscoring
supplied).
While the above pronouncement in Franco is an obiter, it should not be ignored in the resolution of
the present petitions since it reflects a more rational and just interpretation of PP 1520. There is no
prohibition in embracing the rationale of an obiter dictum in settling controversies, or in considering
related proclamations establishing tourism zones.
In the above-cited case of Roxas & Co. v. CA,
9
the Court made it clear that the "power to determine
whether Haciendas Palico, Banilad and Caylaway are non-agricultural, hence, exempt from the
coverage of the [Comprehensive Agrarian Reform Law] lies with the [Department of Agrarian
Reform], not with this Court."
10
The DAR, an administrative body of special competence, denied, by
Order of October 22, 2001, the application for CARP exemption of Roxas & Co., it finding that PP
1520 did not automatically reclassify all the lands in the affected municipalities from their original
uses. It appears that the PTA had not yet, at that time, identified the "specific geographic areas" for
tourism development and had no pending tourism development projects in the areas. Further, report
from the Center for Land Use Policy Planning and Implementation (CLUPPI) indicated that the areas
were planted with sugar cane and other crops.
11

Relatedly, the DAR, by Memorandum Circular No. 7, Series of 2004,
12
came up with clarificatory
guidelines and therein decreed that
A. x x x x.
B. Proclamations declaring general areas such as whole provinces, municipalities, barangays,
islands or peninsulas as tourist zones that merely:
(1) recognize certain still unidentified areas within the covered provinces, municipalities,
barangays, islands, or peninsulas to be with potential tourism value and charge the
Philippine Tourism Authority with the task to identify/delineate specific geographic areas
within the zone with potential tourism value and to coordinate said areas development; or
(2) recognize the potential value of identified spots located within the general area declared
as tourist zone (i.e. x x x x) and direct the Philippine Tourism Authority to coordinate said
areas development;
could not be regarded as effecting an automatic reclassification of the entirety of the land area
declared as tourist zone. This is so because "reclassification of lands" denotes their allocation into
some specific use and "providing for the manner of their utilization and disposition (Sec. 20, Local
Government Code) or the "act of specifying how agricultural lands shall be utilized for non-
agricultural uses such as residential, industrial, or commercial, as embodied in the land use plan."
(Joint HLURB, DAR, DA, DILG Memo. Circular Prescribing Guidelines for MC 54, S. 1995, Sec.2)
A proclamation that merely recognizes the potential tourism value of certain areas within the general
area declared as tourist zone clearly does not allocate, reserve, or intend the entirety of the land
area of the zone for non-agricultural purposes. Neither does said proclamation direct that otherwise
CARPable lands within the zone shall already be used for purposes other than agricultural.
Moreover, to view these kinds of proclamation as a reclassification for non-agricultural purposes of
entire provinces, municipalities, barangays, islands, or peninsulas would be unreasonable as it
amounts to an automatic and sweeping exemption from CARP in the name of tourism development.
The same would also undermine the land use reclassification powers vested in local government
units in conjunction with pertinent agencies of government.
C. There being no reclassification, it is clear that said proclamations/issuances, assuming [these]
took effect before June 15, 1988, could not supply a basis for exemption of the entirety of the lands
embraced therein from CARP coverage x x x x.
D. x x x x. (underscoring in the original; emphasis and italics supplied)
The DARs reading into these general proclamations of tourism zones deserves utmost
consideration, more especially in the present petitions which involve vast tracts of agricultural land.
To reiterate, PP 1520 merely recognized the "potential tourism value" of certain areas within the
general area declared as tourism zones. It did not reclassify the areas to non-agricultural use.
Apart from PP 1520, there are similarly worded proclamations declaring the whole of Ilocos Norte
and Bataan Provinces, Camiguin, Puerto Prinsesa, Siquijor, Panglao Island, parts of Cebu City and
Municipalities of Argao and Dalaguete in Cebu Province as tourism zones.
13

Indubitably, these proclamations, particularly those pertaining to the Provinces of Ilocos Norte and
Bataan, did not intend to reclassify all agricultural lands into non-agricultural lands in one fell swoop.
The Court takes notice of how the agrarian reform program wasand still isimplemented in these
provinces since there are lands that do not have any tourism potential and are more appropriate for
agricultural utilization.
Relatedly, a reference to the Special Economic Zone Act of 1995
14
provides a parallel orientation on
the issue. Under said Act, several towns and cities encompassing the whole Philippines were readily
identified as economic zones.
15
To uphold Roxas & Co.s reading of PP 1520 would see a total
reclassification of practically all the agricultural lands in the country to non-agricultural use.
Propitiously, the legislature had the foresight to include a bailout provision in Section 31 of said Act
for land conversion.
16
The same cannot be said of PP 1520, despite the existence of Presidential
Decree (PD) No. 27 or the Tenant Emancipation Decree,
17
which is the precursor of the CARP.
Interestingly, then President Marcos also issued on September 26, 1972 PD No. 2 which declared
the entire Philippines as land reform area.
18
Such declaration did not intend to reclassify all lands in
the entire country to agricultural lands. President Marcos, about a month later or on October 21,
1972, issued PD 27 which decreed that all private agricultural lands primarily devoted to rice and
corn were deemed awarded to their tenant-farmers.
Given these martial law-era decrees and considering the socio-political backdrop at the time PP
1520 was issued in 1975, it is inconceivable that PP 1520, as well as other similarly worded
proclamations which are completely silent on the aspect of reclassification of the lands in those
tourism zones, would nullify the gains already then achieved by PD 27.
Even so, Roxas & Co. turns to Natalia Realty v. DAR and NHA v. Allarde to support its position.
These cases are not even closely similar to the petitions in G.R. Nos. 167540 and 167543. The only
time that these cases may find application to said petitions is when the PTA actually identifies "well-
defined geographic areas within the zone with potential tourism value."
In remotely tying these two immediately-cited cases that involve specific and defined townsite
reservations for the housing program of the National Housing Authority to the present petitions,
Roxas & Co. cites Letter of Instructions No. 352 issued on December 22, 1975 which states that the
survey and technical description of the tourism zones shall be considered an integral part of PP
1520. There were, however, at the time no surveys and technical delineations yet of the intended
tourism areas.
On hindsight, Natalia and Allarde find application in the petitions in G.R. Nos. 179650 & 167505,
which petitions are anchored on the extenuating effects of Nasugbu MZO No. 4, but not in the
petitions in G.R. Nos. 167540 & 167543 bearing on PP 1520, as will later be discussed.
Of significance also in the present petitions is the issuance on August 3, 2007 of Executive Order
No. 647
19
by President Arroyo which proclaimed the areas in the Nasugbu Tourism Development
Plan as Special Tourism Zone. Pursuant to said Executive Order, the PTA completed its validation of
21 out of 42 barangays as tourism priority areas, hence, it is only after such completion that these
identified lands may be subjected to reclassification proceedings.
It bears emphasis that a mere reclassification of an agricultural land does not automatically allow a
landowner to change its use since there is still that process of conversion before one is permitted to
use it for other purposes.
20

The recent passage of the Tourism Act of 2009
21
also impacts on the present petitions since Section
32 thereof states that:
Sec. 32. x x x x. - Any other area specifically defined as a tourism area, zone or spot under any
special or general law, decree or presidential issuance shall, as far as practicable, be
organized into a TEZ under the provisions of this Act. x x x x. (italics and emphasis supplied)
Furthermore, it is only under this same Act that it is explicitly declared that lands identified as part of
a tourism zone shall qualify for exemption from CARP coverage.
22

The dissenting opinion ignores the supervening issuances mentioned above during the pendency of
the present petitions because they came after the effectivity of the CARP on June 15, 1988. It labors
on the supposition that PP 1520 had already reclassified the lands encompassing the tourism zones;
and that those subsequent issuances, even if applied in the present cases, cannot be applied
retroactively.
Relevantly, while it may be argued that a remand to the DAR would be proper in light of the recent
formulation of a tourism development plan, which was validated by the PTA, that would put the
cases within the ambit of PP 1520, the Court sees otherwise. Roxas & Co. can only look to the
provisions of the Tourism Act, and not to PP 1520, for possible exemption.
II. ROXAS & CO.S APPLICATION IN DAR Administrative Case No. A-9999-142-97 FOR CARP
EXEMPTION IN HACIENDA PALICO SUBJECT OF G.R. NO. 179650 CANNOT BE GRANTED IN
VIEW OF DISCREPANCIES IN THE LOCATION AND IDENTITY OF THE SUBJECT PARCELS
OF LAND.
Since PP 1520 did not automatically convert Haciendas Caylaway, Banilad and Palico into non-
agricultural estates, can Roxas & Co. invoke in the alternative Nasugbu MZO No. 4, which
reclassified in 1982 the haciendas to non-agricultural use to exclude six parcels of land in Hacienda
Palico from CARP coverage?
By Roxas & Co.s contention, the affected six parcels of land which are the subject of DAR
Administrative Case No. A-9999-142-97 and nine parcels of land which are the subject of DAR
Administrative Case No. A-9999-008-98 involved in G.R. No. 167505, all in Hacienda Palico, have
been reclassified to non-agricultural uses via Nasugbu MZO No. 4 which was approved by the
forerunner of HLURB.
Roxas & Co.s contention fails.
To be sure, the Court had on several occasions decreed that a local government unit has the power
to classify and convert land from agricultural to non-agricultural prior to the effectivity of the
CARL.
23
In Agrarian Reform Beneficiaries Association v. Nicolas,
24
it reiterated that
. . . the facts obtaining in this case are similar to those in Natalia Realty. Both subject lands form part
of an area designated for non-agricultural purposes. Both were classified as non-agricultural lands
prior to June 15, 1988, the date of effectivity of CARL.
x x x x
In the case under review, the subject parcels of lands were reclassified within an urban zone as per
approved Official Comprehensive Zoning Map of the City of Davao. The reclassification was
embodied in City Ordinance No. 363, Series of 1982. As such, the subject parcels of land are
considered "non-agricultural" and may be utilized for residential, commercial, and industrial
purposes. The reclassification was later approved by the HLURB.
25
(emphasis, italics and
underscoring supplied)
The DAR Secretary
26
denied the application for exemption of Roxas & Co., however, in this wise:
Initially, CLUPPI-2 based [its] evaluation on the lot nos. as appearing in CLOA No. 6654. However,
for purposes of clarity and to ensure that the area applied for exemption is indeed part of TCT No. T-
60034, CLUPPI-2 sought to clarify with [Roxas & Co.] the origin of TCT No. T-60034. In a letter
dated May 28, 1998, [Roxas & Co.] explains that portions of TCT No. T-985, the mother title, was
subdivided into 125 lots pursuant to PD 27. A total of 947.8417 was retained by the landowners and
was subsequently registered under TCT No. 49946. [[Roxas & Co.] further explains that TCT No.
49946 was further subdivided into several lots (Lot 125-A to Lot 125-P) with Lot No. 125-N
registered under TCT No. 60034. [A] review of the titles, however, shows that the origin of T-
49946 is T-783 and not T-985. On the other hand, the origin of T-60034 is listed as 59946, and
not T-49946. The discrepancies were attributed by [Roxas & Co.] to typographical errors
which were "acknowledged and initialled" [sic] by the ROD. Per verification, the
discrepancies . . . cannot be ascertained.
27
(emphasis and underscoring supplied)
In denying Roxas & Co.s motion for reconsideration, the DAR Secretary held:
The landholdings covered by the aforesaid titles do not correspond to the Certification dated
February 11, 1998 of the [HLURB] , the Certification dated September 12, 1996 issued by the
Municipal Planning and Development Coordinator, and the Certifications dated July 31, 1997
and May 27, 1997 issued by the National Irrigation Authority. The certifications were issued for
Lot Nos. 21, 24, 28, 31, 32 and 34. Thus, it was not even possible to issue exemption clearance over
the lots covered by TCT Nos. 60019 to 60023.
Furthermore, we also note the discrepancies between the certifications issued by the HLURB and
the Municipal Planning Development Coordinator as to the area of the specific lots.
28
(emphasis and
underscoring supplied)
In affirming the DAR Secretarys denial of Roxas & Co.s application for exemption, the Court of
Appeals, in CA-G.R. SP No. 63146 subject of G.R. No. 179650, observed:
In the instant case, a perusal of the documents before us shows that there is no indication that the
said TCTs refer to the same properties applied for exemption by [Roxas & Co.] It is true that the
certifications refer, among others, to DAR Lot Nos. 21, 24, 28, 31, 32 and 34But these
certifications contain nothing to show that these lots are the same as Lots 125-A, 125-B, 125-C, 125-
D and 125-E covered by TCT Nos. 60019, 60020, 60021, 60022 and 60023, respetively. While
[Roxas & Co.] claims that DAR Lot Nos. 21, 24 and 31 correspond to the aforementioned TCTs
submitted to the DAR no evidence was presented to substantiate such allegation.
Moreover, [Roxas & Co.] failed to submit TCT 634 which it claims covers DAR Lot Nos. 28, 32 and
24.(TSN, April 24, 2001, pp. 43-44)
x x x x
[Roxas & Co.] also claims that subject properties are located at Barangay Cogunan and Lumbangan
and that these properties are part of the zone classified as Industrial under Municipal Ordinance No.
4, Series of 1982 of the Municipality of Nasugbu, Batangas. .a scrutiny of the said Ordinance
shows that only Barangays Talangan and Lumbangan of the said municipality were classified
as Industrial ZonesBarangay Cogunan was not included. x x x x. In fact, the TCTs submitted
by [Roxas & Co.] show that the properties covered by said titles are all located at Barrio
Lumbangan.
29
(emphasis and underscoring supplied)
Its foregoing findings notwithstanding, the appellate court still allowed Roxas & Co. to adduce
additional evidence to support its application for exemption under Nasugbu MZO No. 4.
Meanwhile, Roxas & Co. appealed the appellate courts decision in CA-G.R. No. SP No. 63146
affirming the DAR Secretarys denial of its application for CARP exemption in Hacienda Palico (now
the subject of G.R. No. 149548).
When Roxas & Co. sought the re-opening of the proceedings in DAR Administrative Case No. A-
9999-142-97 (subject of G.R. No. 179650), and offered additional evidence in support of its
application for CARP exemption, the DAR Secretary, this time, granted its application for the six lots
including Lot No. 36 since the additional documents offered by Roxas & Co. mentioned the said lot.
In granting the application, the DAR Secretary
30
examined anew the evidence submitted by Roxas &
Co. which consisted mainly of certifications from various local and national government
agencies.
31
Petitioner in G.R. Nos. 167505, 167540, 169163 and 179650, Damayan Ng Mga
Manggagawang Bukid Sa Asyenda Roxas-National Federation of Sugar Workers (DAMBA-NFSW),
the organization of the farmer-beneficiaries, moved to have the grant of the application reconsidered
but the same was denied by the DAR by Order of December 12, 2003, hence, it filed a petition
for certiorari before the Court of Appeals, docketed as CA-G.R. SP No. 82225, on grounds of forum-
shopping and grave abuse of discretion. The appellate court, by Decision of October 31, 2006, ruled
that DAMBA-NFSW availed of the wrong mode of appeal. At all events, it dismissed its petition as it
upheld the DAR Secretarys ruling that Roxas & Co. did not commit forum-shopping, hence, the
petition of DAMBA-NGSW in G.R. No. 179650.
While ordinarily findings of facts of quasi-judicial agencies are generally accorded great weight and
even finality by the Court if supported by substantial evidence in recognition of their expertise on the
specific matters under their consideration,
32
this legal precept cannot be made to apply in G.R. No.
179650.
Even as the existence and validity of Nasugbu MZO No. 4 had already been established, there
remains in dispute the issue of whether the parcels of land involved in DAR Administrative Case No.
A-9999-142-97 subject of G.R. No. 179650 are actually within the said zoning ordinance.
The Court finds that the DAR Secretary indeed committed grave abuse of discretion when he
ignored the glaring inconsistencies in the certifications submitted early on by Roxas & Co. in support
of its application vis--vis the certifications it later submitted when the DAR Secretary reopened DAR
Administrative Case No. A-9999-142-97.
Notably, then DAR Secretary Horacio Morales, on one hand, observed that the "landholdings
covered by the aforesaid titles do not correspond to the Certification dated February 11, 1998 of the
[HLURB], the Certification dated September 12, 1996 issued by the Municipal Planning and
Development Coordinator, and the Certifications dated July 31, 1997 and May 27, 1997 issued by
the National Irrigation Authority." On the other hand, then Secretary Hernani Braganza relied on a
different set of certifications which were issued later or on September 19, 1996.
In this regard, the Court finds in order the observation of DAMBA-NFSW that Roxas & Co. should
have submitted the comprehensive land use plan and pointed therein the exact locations of the
properties to prove that indeed they are within the area of coverage of Nasugbu MZO No. 4.
The petitions in G.R. Nos. 179650 & 149548 must be distinguished from Junio v. Garilao
33
wherein
the certifications submitted in support of the application for exemption of the therein subject lot were
mainly considered on the presumption of regularity in their issuance, there being no doubt on the
location and identity of the subject lot.
34
In G.R. No. 179650, there exist uncertainties on the location
and identities of the properties being applied for exemption.
G.R. No. 179650 & G.R. No. 149548 must accordingly be denied for lack of merit.
III. ROXAS & CO.S APPLICATION FOR CARP EXEMPTION IN DAR Administrative Case No. A-
9999-008-98FOR THE NINE PARCELS OF LAND IN HACIENDA PALICO SUBJECT OF G.R. NO.
167505 SHOULD BEGRANTED.
The Court, however, takes a different stance with respect to Roxas & Co.s application for CARP
exemption in DAR Administrative Case No. A-9999-008-98 over nine parcels of land identified as Lot
Nos. 20, 13, 37, 19-B, 45, 47, 49, 48-1 and 48-2 which are portions of TCT No. 985 covering
45.9771 hectares in Hacienda Palico, subject of G.R. No. 167505.
In its application, Roxas & Co. submitted the following documents:
1. Letter-application dated 29 September 1997 signed by Elino SJ. Napigkit, for and on
behalf of Roxas & Company, Inc., seeking exemption from CARP coverage of subject
landholdings;
2. Secretarys Certificate dated September 2002 executed by Mariano M. Ampil III,
Corporate Secretary of Roxas & Company, Inc., indicating a Board Resolution authorizing
him to represent the corporation in its application for exemption with the DAR. The same
Board Resolution revoked the authorization previously granted to the Sierra Management &
Resources Corporation;
3. Photocopy of TCT No. 985 and its corresponding Tax Declaration No. 0401;
4. Location and vicinity maps of subject landholdings;
5. Certification dated 10 July 1997 issued by Reynaldo Garcia, Municipal Planning and
Development Coordinator (MPDC) and Zoning Administrator of Nasugbu, Batangas,
stating that the subject parcels of land are within the Urban Core Zone as specified in
Zone A. VII of Municipal Zoning Ordinance No. 4, Series of 1982, approved by the Human
Settlements Regulatory Commission (HSRC), now the Housing and Land Use Regulatory
Board (HLURB), under Resolution No. 123, Series of 1983, dated 4 May 1983;
6. Two (2) Certifications both dated 31 August 1998, issued by Alfredo Tan II, Director,
HLURB, Region IV, stating that the subject parcels of land appear to be within the
Residential cluster Area as specified in Zone VII of Municipal Zoning Ordinance No. 4,
Series of 1982, approved under HSRC Resolution No. 123, Series of 1983, dated 4 May
1983;
35

x x x x (emphasis and underscoring supplied)
By Order of November 6, 2002, the DAR Secretary granted the application for exemption but issued
the following conditions:
1. The farmer-occupants within subject parcels of land shall be maintained in their peaceful
possession and cultivation of their respective areas of tillage until a final determination has
been made on the amount of disturbance compensation due and entitlement of such farmer-
occupants thereto by the PARAD of Batangas;
2. No development shall be undertaken within the subject parcels of land until the
appropriate disturbance compensation has been paid to the farmer-occupants who are
determined by the PARAD to be entitled thereto. Proof of payment of disturbance
compensation shall be submitted to this Office within ten (10) days from such payment; and
3. The cancellation of the CLOA issued to the farmer-beneficiaries shall be subject of a
separate proceeding before the PARAD of Batangas.
36

DAMBA-NSFW moved for reconsideration but the DAR Secretary denied the same and explained
further why CLOA holders need not be informed of the pending application for exemption in this
wise:
As regards the first ground raised by [DAMBA-NSFW], it should be remembered that an application
for CARP-exemption pursuant to DOJ Opinion No. 44, series of 1990, as implemented by DAR
Administrative Order No. 6, series of 1994, is non-adversarial or non-litigious in nature. Hence,
applicant is correct in saying that nowhere in the rules is it required that occupants of a landholding
should be notified of an initiated or pending exemption application.
x x x x
With regard [to] the allegation that oppositors-movants are already CLOA holders of subject
propert[ies] and deserve to be notified, as owners, of the initiated questioned exemption application,
is of no moment. The Supreme Court in the case of Roxas [&] Co., Inc. v. Court of Appeals, 321
SCRA 106, held:
"We stress that the failure of respondent DAR to comply with the requisites of due process in the
acquisition proceedings does not give this Court the power to nullify the CLOAs already issued to
the farmer beneficiaries. x x x x. Anyhow, the farmer[-]beneficiaries hold the property in trust for the
rightful owner of the land."
Since subject landholding has been validly determined to be CARP-exempt, therefore, the previous
issuance of the CLOA of oppositors-movants is erroneous. Hence, similar to the situation of the
above-quoted Supreme Court Decision, oppositors-movants only hold the property in trust for the
rightful owners of the land and are not the owners of subject landholding who should be notified of
the exemption application of applicant Roxas & Company, Incorporated.
Finally, this Office finds no substantial basis to reverse the assailed Orders since there is substantial
compliance by the applicant with the requirements for the issuance of exemption clearance under
DAR AO 6 (1994).
37

On DAMBA-NSFWs petition for certiorari, the Court of Appeals, noting that the petition was
belatedly filed, sustained, by Decision of December 20, 1994 and Resolution of May 7, 2007,
38
the
DAR Secretarys finding that Roxas & Co. had substantially complied with the prerequisites of DAR
AO 6, Series of 1994. Hence, DAMBA-NFSWs petition in G.R. No. 167505.
The Court finds no reversible error in the Court of Appeals assailed issuances, the orders of the
DAR Secretary which it sustained being amply supported by evidence.
IV. THE CLOAs ISSUED BY THE DAR in ADMINISTRATIVE CASE NO. A-9999-008-98 SUBJECT
OF G.R. No. 179650 TO THE FARMER-BENEFICIARIES INVOLVING THE NINE PARCELS OF
LAND IN HACIENDA PALICO MUST BE CANCELLED.
Turning now to the validity of the issuance of CLOAs in Hacienda Palico vis--vis the present
dispositions: It bears recalling that in DAR Administrative Case Nos. A-9999-008-98 and A-9999-
142-97 (G.R. No. 179650), the Court ruled for Roxas & Co.s grant of exemption in DAR
Administrative Case No. A-9999-008-98 but denied the grant of exemption in DAR Administrative
Case No. A-9999-142-97 for reasons already discussed. It follows that the CLOAs issued to the
farmer-beneficiaries in DAR Administrative Case No. A-9999-008-98 must be cancelled.
But first, the Court digresses. The assertion of DAMBA-NSFW that the petitions for partial and
complete cancellations of the CLOAs subject of DARAB Case Nos. R-401-003-2001 to R-401-005-
2001 and No. 401-239-2001 violated the earlier order in Roxas v. Court of Appeals does not lie.
Nowhere did the Court therein pronounce that the CLOAs issued "cannot and should not be
cancelled," what was involved therein being the legality of the acquisition proceedings. The Court
merely reiterated that it is the DAR which has primary jurisdiction to rule on the validity of CLOAs.
Thus it held:
. . . [t]he failure of respondent DAR to comply with the requisites of due process in the acquisition
proceedings does not give this Court the power to nullify the [CLOAs] already issued to the farmer-
beneficiaries. To assume the power is to short-circuit the administrative process, which has yet to
run its regular course. Respondent DAR must be given the chance to correct its procedural lapses in
the acquisition proceedings. x x x x. Anyhow, the farmer beneficiaries hold the property in trust for
the rightful owner of the land.
39

On the procedural question raised by Roxas & Co. on the appellate courts relaxation of the rules by
giving due course to DAMBA-NFSWs appeal in CA G.R. SP No. 72198, the subject of G.R. No.
167845:
Indeed, the perfection of an appeal within the statutory period is jurisdictional and failure to do so
renders the assailed decision final and executory.
40
A relaxation of the rules may, however, for
meritorious reasons, be allowed in the interest of justice.
41
The Court finds that in giving due course
to DAMBA-NSFWs appeal, the appellate court committed no reversible error. Consider its
ratiocination:
x x x x. To deny [DAMBA-NSFW]s appeal with the PARAD will not only affect their right over the
parcel of land subject of this petition with an area of 103.1436 hectares, but also that of the whole
area covered by CLOA No. 6654 since the PARAD rendered a Joint Resolution of the Motion for
Reconsideration filed by the [DAMBA-NSFW] with regard to [Roxas & Co.]s application for partial
and total cancellation of the CLOA in DARAB Cases No. R-401-003-2001 to R-401-005-2001 and
No. 401-239-2001. There is a pressing need for an extensive discussion of the issues as raised by
both parties as the matter of canceling CLOA No. 6654 is of utmost importance, involving as it does
the probable displacement of hundreds of farmer-beneficiaries and their families. x x x x
(underscoring supplied)
Unlike courts of justice, the DARAB, as a quasi-judicial body, is not bound to strictly observe rules of
procedure and evidence. To strictly enforce rules on appeals in this case would render to naught the
Courts dispositions on the other issues in these consolidated petitions.
In the main, there is no logical recourse except to cancel the CLOAs issued for the nine parcels of
land identified as Lot Nos. 20, 13, 37, 19-B, 45, 47, 49, 48-1 and 48-2 which are portions of TCT No.
985 covering 45.9771 hectares in Hacienda Palico (or those covered by DAR Administrative Case
No. A-9999-008-98). As for the rest of the CLOAs, they should be respected since Roxas & Co., as
shown in the discussion in G.R. Nos. 167540, 167543 and 167505, failed to prove that the other lots
in Hacienda Palico and the other two haciendas, aside from the above-mentioned nine lots, are
CARP-exempt.
Conformably, Republic Act No. 3844 (R.A. No. 3844), as amended,
42
mandates that disturbance
compensation be given to tenants of parcels of land upon finding that "(t)he landholding is declared
by the department head upon recommendation of the National Planning Commission to be suited for
residential, commercial, industrial or some other urban purposes."
43
In addition, DAR AO No. 6,
Series of 1994 directs the payment of disturbance compensation before the application for
exemption may be completely granted.
Roxas & Co. is thus mandated to first satisfy the disturbance compensation of affected farmer-
beneficiaries in the areas covered by the nine parcels of lands in DAR AO No. A-9999-008-98 before
the CLOAs covering them can be cancelled. And it is enjoined to strictly follow the instructions of
R.A. No. 3844.
Finally then, and in view of the Courts dispositions in G.R. Nos. 179650 and 167505, the May 27,
2001 Decision of the Provincial Agrarian Reform Adjudicator (PARAD)
44
in DARAB Case No. 401-
239-2001 ordering the total cancellation of CLOA No. 6654, subject of G.R. No. 169163, is SET
ASIDE except with respect to the CLOAs issued for Lot Nos. 20, 13, 37, 19-B, 45, 47, 49, 48-1 and
48-2 which are portions of TCT No. 985 covering 45.9771 hectares in Hacienda Palico (or those
covered by DAR Administrative Case No. A-9999-008-98). It goes without saying that the motion for
reconsideration of DAMBA-NFSW is granted to thus vacate the Courts October 19, 2005 Resolution
dismissing DAMBA-NFSWs petition for review of the appellate courts Decision in CA-G.R. SP No.
75952;
45

WHEREFORE,
1) In G.R. No. 167540, the Court REVERSES and SETS ASIDE the November 24, 2003
Decision
46
and March 18, 2005 Resolution of the Court of Appeals in CA-G.R. SP No. 72131
which declared that Presidential Proclamation No. 1520 reclassified the lands in the
municipalities of Nasugbu in Batangas and Maragondon and Ternate in Cavite to non-
agricultural use;
2) The Court accordingly GRANTS the Motion for Reconsideration of the Department of
Agrarian Reform inG.R. No. 167543 and REVERSES and SETS ASIDE its Resolution of
June 20, 2005;
3) In G.R. No. 149548, the Court DENIES the petition for review of Roxas & Co. for lack of
merit;
4) In G.R. No. 179650, the Court GRANTS the petition for review of DAMBA-NSFW
and REVERSES andSETS ASIDE the October 31, 2006 Decision and August 16, 2007
Resolution of the Court of Appeals in CA-G.R. SP No. 82225;
5) In G.R. No. 167505, the Court DENIES the petition for review of DAMBA-NSFW
and AFFIRMS the December 20, 2004 Decision and March 7, 2005 Resolution of the Court
of Appeals in CA-G.R. SP No. 82226;
6) In G.R. No. 167845, the Court DENIES Roxas & Co.s petition for review for lack of merit
and AFFIRMSthe September 10, 2004 Decision and April 14, 2005 Resolution of the Court
of Appeals;
7) In G.R. No. 169163, the Court SETS ASIDE the Decisions of the Provincial Agrarian
Reform Adjudicator in DARAB Case No. 401-239-2001 ordering the cancellation of CLOA
No. 6654 and DARAB Cases Nos. R-401-003-2001 to No. R-401-005-2001 granting the
partial cancellation of CLOA No. 6654. The CLOAs issued for Lots No. 21 No. 24, No. 26,
No. 31, No. 32 and No. 34 or those covered by DAR Administrative Case No. A-9999-142-
97) remain; and
8) Roxas & Co. is ORDERED to pay the disturbance compensation of affected farmer-
beneficiaries in the areas covered by the nine parcels of lands in DAR Administrative Case
No. A-9999-008-98 before the CLOAs therein can be cancelled, and is ENJOINED to strictly
follow the mandate of R.A. No. 3844.
No pronouncement as to costs.
SO ORDERED.
EXECUTIVE ORDER NO. 228 July 17, 1987
DECLARING FULL LAND OWNERSHIP TO QUALIFIED FARMER BENEFICIARIES COVERED
BY PRESIDENTIAL DECREE NO. 27: DETERMINING THE VALUE OF REMAINING UNVALUED
RICE AND CORN LANDS SUBJECT TO P.D. NO. 27; AND PROVIDING FOR THE MANNER OF
PAYMENT BY THE FARMER BENEFICIARY AND MODE OF COMPENSATION TO THE
LANDOWNER
WHEREAS, Presidential Decree No. 27; for purposes of determining the cost of the land to be
transferred to the tenant-farmer; provided that valuation shall be determined by crop productivity;
WHEREAS, there is a need to complete Operation Land Transfer and accelerate the payment to the
landowners of lands transferred to tenant-farmers; and
WHEREAS, there is also a need to maintain the financial validity of the Land Bank of the Philippines,
the financing arm of the agrarian reform program of the government;
NOW THEREFORE, I, CORAZON C. AQUINO, President of the Philippines, by virtue of the powers
vested in me by the Constitution, here order that:
Sec. 1. All qualified farmer beneficiaries are now deemed full owners as of October 21, 1972 of the
land they acquired by virtue of Presidential Decree No. 27 (hereinafter referred to as P.D. No. 27).
Sec. 2. Henceforth, the valuation of rice and corn lands covered by P.D. No. 27 shall be based on
the average gross production determined by the Barangay Committee on Land Production in
accordance with Department Memorandum Circular No. 26, Series of 1973, and related issuances
and regulations of the Department of Agrarian Reform. The average gross production per hectare
shall be multiplied by two and a half (2.5), the product of which shall be multiplied by Thirty Five
Pesos (P35.00), the government support price for one cavan of 50 kilos of palay on October 21,
1972, or Thirty One Pesos (P31.00), the government support price for one cavan of 50 kilos of corn
on October 21, 1972, and the amount arrived at shall be the value of the rice and corn land, as the
case may be, for the purpose of determining its cost to the farmer and compensation to the
landowner.
Lease rentals paid to the landowner by the farmer beneficiary after October 21, 1972, shall be
considered as advance payment for the land. In the event of dispute with the land owner regarding
the amount of lease rental paid by the farmer beneficiary, the Department of Agrarian Reform and
the Barangay Committee on Land Production concerned shall resolve the dispute within thirty (30)
days from its submission pursuant to Department of Agrarian Reform Memorandum Circular No. 26,
Series of 1973, and other pertinent issuances. In the event a party questions in court the resolution
of the dispute, the landowner's compensation claim shall still be processed for payment and the
proceeds shall be held in trust by the Trust Department of the Land Bank in accordance with the
provisions of Section 5 hereof, pending the resolution of the dispute before the court.
Sec. 3. Compensation shall be paid to the landowners in any of the following modes, at the option of
the landowners:
(a) Bond payment over ten (10) years, with ten percent (10%) of the value of the land
payable immediately in cash, and the balance in the form of LBP bonds bearing market rates
of interest that are aligned with 90-day treasury bills rates, net of applicable final withholding
tax. One-tenth of the face value of the bonds shall mature every year from the date of
issuance until the tenth year.
The LDP bonds issued hereunder shall be eligible for the purchase of government assets to
be privatized.
(b) Direct payment in cash or in kind by the farmer-beneficiaries with the terms to be mutually
agreed upon by the beneficiaries and landowners and subject to the approval of the
Department of Agrarian Reform; and
(c) Other modes of payment as may be prescribed or approved by the Presidential Agrarian
Reform Council.
Sec. 4. All outstanding Land Bank bonds that are retained by the original landowners-payee or by
their heirs, are deemed matured up to on-twenty fifth (1/25) of their yearly face value from their date
of issue to the date of this Executive Order and may be claimed by the original landowner-payee by
surrendering the bonds to the Land Bank. The original landowner-payee may claim payment for the
remaining unmatured period of the surrendered bonds under any of the modes of compensation
provided in Section 3, subsections (a) (b) or (c) hereof.
In order to meet the financial requirements mentioned in this Section, the Central Bank shall remit to
the Land Bank such sums as may b necessary from the Sinking Fund established by the Land Bank
from the retirement of its bonds and other long-term obligations and which Sinking Fund is
administered by the Central Bank: Provided, however, That there is no change in maturity of other
outstanding Land Bank bonds acquired and held by transferees from original bondholders.
The landowner is exempt from capital gains tax on the compensation paid to him under this
Executive Order.
Sec. 5. In the event that the landowner does not accept payment of the compensation due him, his
compensation shall be held in trust for him by the Trust Department of the Land Bank. The cash
portion of the compensation and such portions that mature yearly shall be invested by the Trust
Department only in government securities fully guaranteed by the Republic of the Philippines. All the
net earnings of the investment shall be for the benefit of the landowner, his heirs or successors in
interest.
The rights of the landowners may be exercised by his heirs upon his death.
Sec. 6. The total costs of the land including interest at the rate of six percent (6%) per annum with a
two percent (2%) interest rebate for amortizations paid on time, shall be paid by the farmer-
beneficiary or his heirs to the Land Bank over a period up to twenty (20) years in twenty (20) equal
annual amortizations. Lands already valued and financed by the Land Bank are likewise extended a
20-year period of payment of twenty (20) equal annual amortizations. However, the farmer-
beneficiary if he so elects, may pay in full before the twentieth year or may request the Land Bank to
structure a repayment period of less than twenty (20) years if the amount to be financed and the
corresponding annual obligations are well within the farmer's capacity to meet. Ownership of lands
acquired by the farmer-beneficiary may be transferred after full payment of amortizations.
Sec. 7. As of the date of this Executive Order, a lien by way of mortgage shall exist in favor of the
Land Bank on all lands it has financed and acquired by the farmer-beneficiary by virtue of P.D. No.
27 for all amortizations, both principal and interest, due from the farmer-beneficiary or a valid
transferee until the amortizations are paid in full.
Sec. 8. Henceforth, failure on the part of the farmer-beneficiary to pay three (3) annual amortizations
shall be sufficient cause for the Land Bank to foreclose on the mortgage.
Sec. 9. Thirty (30) days after final notice for payment to the defaulting tenant-farmer, a copy of which
notice shall be furnished to the Department of Agrarian Reform, the Land Bank may foreclose on the
mortgage by registering a certification under oath of its intent to foreclose with the Registry of Deeds
of the city or province where the land is located attaching thereto: a copy of the final notice for
payment; proof of service to the tenant-farmer and the Department of Agrarian Reform of the final
notice for payment; and a certification that at least three (3) annual amortizations on the land or the
sum thereof remain unpaid. The mortgage is deemed foreclosed upon registration of said
documents with the Registry of Deeds.
In the event the defaulting tenant-farmer could not be served the final notice for payment, the Land
Bank shall post the notice for payment in the town hall, public market and barangay hall or any other
suitable place frequented by the public of the barangay where the defaulting tenant-farmer resides.
A certification by the Land Bank to this effect will substitute for the proof of service of the final notice
of payment for purposes of foreclosure.
The Register of Deeds of all cities and provinces are directed to have a separate registry book to
enter all the requirements of foreclosure as provided herein.
Sec. 10. The tenant-farmer, or any of his compulsory heirs may lift the foreclosure within a period of
two (2) years from its registration by paying the Land Bank all unpaid amortizations on the land with
interest thereon of six percent (6%) per annum. In case of failure to lift the foreclosure within the said
period, ownership of the land shall be deemed transferred to the Land Bank.
Sec. 11. The Land Bank, not later than three (3) months after its acquisition of the land, shall sell the
foreclosed land to any interested landless farmer duly certified to as a bona fide landless farmer by
the Department of Agrarian Reform of the barangay or the two closest barangays where the land is
situated. The cost of the land is the unpaid amortizations due on the lands as of the date of the sale
with interest thereon of six percent (6%) per annum. In the event that there is more than one
interested buyer, the actual buyer shall be determined by lottery in the presence of all the buyers or
their representatives and a representative of the Department of Agrarian Reform. The Deed of
Conveyance executed by the Land Bank in favor of the farmer transferee shall be registered with the
Register of Deeds of the city or province where the land is located. Ownership shall transfer to the
farmer transferee only upon registration with the Registry of Deeds. The lien of the Land Bank by
way of mortgage on the remaining unpaid amortizations shall subsists on the title of the transferee.
Sec. 12. The Land Bank, at least one (1) month prior to the sale, shall furnish the Department of
Agrarian Reform with a notice of sale and shall post a similar notice in the town hall, public market
and barangay hall or any other suitable place frequented by the public of the barangay where the
property is located. The notice shall state the description of the property subject of the sale, the
price, the date and place of sale.
Sec. 13. The National Land Titles and Deeds Registration Administration is hereby authorized to
issue such rules and regulations as may be necessary relative to the registration with the Register of
Deeds of all transactions/activities required herein taking into consideration the need to protect the
integrity of the Torrens System, the interests of the parties and innocent third parties.
All transactions/activities and their corresponding documents that are registered with the Register of
Deeds pursuant to the requirements of P.D. No. 27 and this Executive Order shall be free from all
documentary stamps and registration fees.
Sec. 14. The Department of Agrarian Reform and the Land Bank are authorized to issue the
additional implementing guidelines of this Executive Order which shall not be later than sixty (60)
days from the date hereof.
Sec. 15. To ensure the successful implementation of the Agrarian Reform Program, an Agrarian
Reform Operating Fund (Agrarian Fund) shall be set up by the National Government in the Land
Bank. The amount of this Agrarian Fund, to be determined by the Government Corporation
Monitoring and Coordinating Committee hereinafter referred to as GCMCC), will source the funding
requirements for Land Bank to carry out the full implementation of this program which will include the
net operating losses directly and indirectly attributable to this program and the credit facilities to
farmers and farmers' organizations. Within thirty (30) days from the effectivity of this Executive
Order, the Land Bank shall submit to the GCMCC its funding requirements for 1987. Thereafter,
within sixty (60) days after the end of each calendar year, the Land Bank shall submit to the GCMCC
an accounting of all drawings the Land Bank had made against the Fund. At the same time, it will
also submit its prospective funding requirements for the current year for review and validation of the
GCMCC. The amount approved by the GCMCC shall be deemed appropriate and the amount
programmed for release in coordination with the Department of Finance, Budget and Management
and the National Economic and Development Authority. Within thirty (30) days from GCMCC's
approval, such funds shall be remitted to the Land Bank for credit to the Agrarian Fund.
Sec. 16. If any part of this Executive Order is declared invalid or unconstitutional, it shall not affect
any other part thereof.
Sec. 17. All laws, presidential decrees, orders, letters of instructions, rules and regulations, and
other issuances or parts thereof inconsistent with this Executive Order are hereby repealed or
modified accordingly.
Sec. 18. This Executive Order shall take effect upon its signing and publication as provided by law.
DONE in the City of Manila, this 17th day of July, in the year of Our Lord, nineteen hundred and
eighty-seven.
G.R. No. 175644 October 2, 2009
LAND BANK OF THE PHILIPPINES, Petitioner,
vs.
JOSE MARIE M. RUFINO, NILO M. RESURRECCION, ARNEL M. ATANACIO and SUZETTE G.
MATEO,Respondents,
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 175702
DEPARTMENT OF AGRARIAN REFORM, represented by OIC-SECRETARY NASSER C.
PANGANDAMAN,Petitioner,
vs.
JOSE MARIE M. RUFINO, NILO M. RESURRECCION, ARNEL M. ATANACIO and SUZETTE G.
MATEO,Respondents.
D E C I S I O N
CARPIO MORALES, J .:
Challenged in these consolidated Petitions for Review is the December 15, 2005 Decision of the
Court of Appeals
1
in CA-G.R. CV No. 69640 affirming with modification that of Branch 52 of the
Regional Trial Court (RTC) of Sorsogon in Civil Case No. 98-6438 setting the valuation of
respondents 138.4018-hectare land taken under the Comprehensive Agrarian Reform Program
(CARP) at P29,926,000, exclusive of the value of secondary crops thereon.
Respondents Jose Marie M. Rufino (Rufino), Nilo M. Resurreccion (Resureccion), Arnel M. Atanacio
(Atanacio), and Suzette G. Mateo (Suzette) are the registered owners in equal share of a parcel of
agricultural land situated in Barangay San Benon, Irosin, Sorsogon, with an area of 239.7113
hectares covered by Transfer Certificate of Title (TCT) No. T-22934.
2

By respondents claim, in 1989, they voluntarily offered the aforesaid property to the government for
CARP coverage at P120,000 per hectare. Acting thereon, petitioner Department of Agrarian Reform
(DAR) issued a Notice of Land Valuation and Acquisition dated October 21, 1996 declaring that out
of the total area indicated in the title, 138.4018 hectares was subject to immediate acquisition at a
valuation of P8,736,270.40 based on the assessment of petitioner Land Bank of the Philippines
(LBP).
Respondents having found the valuation unacceptable, the matter was referred by the provincial
agrarian reform officer of Sorsogon to the DAR Adjudication Board (DARAB) for the conduct of
summary administrative proceedings to determine just compensation.
3

By Decision of November 21, 1997,
4
the DARAB sustained LBPs valuation upon respondents
failure to present any evidence to warrant an increase thereof.
Meanwhile, upon the DARs application, accompanied with LBPs certification of deposit of payment,
the Register of Deeds of Sorsogon partially cancelled TCT No. T-22934 corresponding to the
138.4018-hectare covered area (hereafter the property) and issued TCT No. T-47571 in the name of
the Republic of the Philippines (the Republic). The Republic thereupon subdivided the property into
85 lots for distribution to qualified farmer-beneficiaries under Republic Act No. 6657 (RA 6657) or the
Comprehensive Agrarian Reform Law of 1988.
5

On February 23, 1998, respondents lodged with Branch 52 of the Sorsogon RTC (acting as a
Special Agrarian Court) a complaint for determination of just compensation against Ernesto Garilao,
in his capacity as then DAR Secretary, and LBP. Respondents contended that LBPs valuation was
not the full and fair equivalent of the property at the time of its taking, the same having been offered
in 1989 at P120,000 per hectare.
6

LBP countered that the property was acquired by the DAR for CARP coverage in 1993 by
compulsory acquisition and not by respondents voluntary offer to sell; and that it determined the
valuation thereof in accordance with RA 6657 and pertinent DAR regulations.
7

The DAR Secretary argued that LBPs valuation was properly based on DAR issuances.
8

The trial court appointed the parties respective nominated commissioners to appraise the property.
Commissioner Jesus S. Empleo, LBPs nominee, appraised the property based on, among other
things, the applicable DAR issuances, average gross production, and prevailing selling prices of the
crops planted thereon which included coconut, abaca, coffee, and rice. He arrived at a valuation
of P13,449,579.08.
9

Commissioner Amando Chua of Cuervo Appraisers, Inc., respondents nominee, used the market
data approach which relies primarily on sales and listings of comparable lots in the neighborhood.
Excluding the secondary crops planted thereon, he valued the property at P29,925,725.
10

At the witness stand, Eugenio Mateo, Sr. (Mateo), attorney-in-fact of respondents Rufino,
Resurreccion, and Atanacio, declared that Commissioner Chua erroneously considered the
secondary crops as merely enhancing the demand for the property without them significantly
increasing its value; and that the coffee intercropping on the property which yielded an estimated
profit of P3,000,000, spread over a 12-year period, should be considered in the determination of just
compensation.
11

By Decision of July 4, 2000,
12
the trial court found the market data approach to be more realistic and
consistent with law and jurisprudence on the full and fair equivalent of the property. Applying the
average rate of P216,226 per hectare, it arrived at a valuation of the 138.4018-hectare property
at P29,926,000, to which it addedP8,000,000 representing 50% of the value of trees, plants, and
other improvements thereon, bringing the total toP37,926,000. It disposed thus:
WHEREFORE, premises considered, judgment is hereby rendered to wit:
a) Fixing the Just Compensation of the entire 138.4018 hectares for acquisition covered by
TCT No. T-22934 in the total amount of THIRTY SEVEN MILLION NINE HUNDRED
TWENTY-SIX THOUSAND (Php37,926,000.00) Pesos Philippine Currency, less the amount
previously deposited in trust with the Land Bank which was already received by the plaintiffs.
b) The Land Bank of the Philippines is hereby ordered to pay the landowners-plaintiffs the
afore-cited amount less the amount previously paid to them in the manner provided by law.
c) Without pronouncement as to costs.
LBP filed a Motion for Reconsideration, while the DAR filed a Notice of Appeal. By Order dated
August 21, 2000, the trial court denied the motion of LBP,
13
prompting it to also file a Notice of
Appeal.
14

By consolidated Decision of December 15, 2005,
15
the Court of Appeals sustained the trial courts
valuation ofP29,926,000 as just compensation.
The appellate court found that, among other things, it would be specious to rely on the DARs
computation in ostensible compliance with its own issuances; that Commissioner Empleo failed to
consider available sales data of comparable properties in the locality; and that the value of
secondary crops should be excluded as the same is inconclusive in view of conflicting evidence.
Petitioners and respondents filed their respective Motions for Reconsideration which were denied by
the appellate court by Resolution of November 28, 2006.
16
Hence, petitioners LBP and DAR
separately sought recourse to this Court through the present Petitions for Review, which were
consolidated in the interest of uniformity of rulings on related cases.
In G.R. No. 175644, LBP maintains that its valuation of the property at P13,449,579.08 was based
on the factors mentioned in RA 6657 and formula prescribed by the DAR; that its determination
should be given weight as it has the expertise to do the same; and that the taking of private property
for agrarian reform is not a traditional exercise of the power of eminent domain as it also involves the
exercise of police power, hence, part of the loss is not compensable.
17

In G.R. No. 175702, the DAR avers that the valuation sustained by the appellate court was
determined in contravention of the criteria set by RA 6657 and relevant jurisprudence.
18

Respondents, for their part, posit in their consolidated Comment
19
that factual findings of the trial
court, when affirmed by the appellate court, are conclusive; and that the just compensation due them
should be equivalent to the market value of the property.
In determining the just compensation due owners of lands taken for CARP coverage, the RTC,
acting as a Special Agrarian Court, should take into account the factors enumerated in Section 17 of
RA 6657, as amended, to wit:
Sec. 17. Determination of Just Compensation. In determining just compensation, the cost of
acquisition of the land, the current value of like properties, its nature, actual use and income, the
sworn valuation by the owner, the tax declarations, and the assessment made by government
assessors shall be considered. The social and economic benefits contributed by the farmers and the
farmworkers and by the Government to the property as well as the non-payment of taxes or loans
secured from any government financing institution on the said land shall be considered as additional
factors to determine its valuation. (Emphasis supplied)
The DAR, being the government agency primarily charged with the implementation of the CARP,
issued Administrative Order No. 6, Series of 1992 (DAR AO 6-92), as amended by DAR
Administrative Order No. 11, Series of 1994 (DAR AO 11-94), translating the factors mentioned in
Section 17 of RA 6657 into a basic formula, presented as follows:
LV = (CNI x 0.6) + ( CS x 0.3) + (MV x 0.1)
Where: LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
The above formula shall be used if all the three factors are present, relevant, and applicable.
A.1. When the CS factor is not present and CNI and MV are applicable, the formula shall be:
LV = (CNI x 0.9) + (MV x 0.1)
A.2. When the CNI factor is not present, and CS and MV are applicable, the formula shall be:
LV = (CS x 0.9) + (MV x 0.1)
A.3. When both the CS and CNI are not present and only MV is applicable, the formula shall
be:
LV = MV x 2
The threshold issue then is whether the appellate court correctly upheld the valuation by the trial
court of the property on the basis of the market data approach, in disregard of the formula prescribed
by DAR AO 6-92, as amended.
The petitions are partly meritorious.
While the determination of just compensation is essentially a judicial function which is vested in the
RTC acting as a Special Agrarian Court, the Court, in LBP v. Banal,
20
LBP v. Celada,
21
and LBP v.
Lim,
22
nonetheless disregarded the RTCs determination thereof when, as in the present case, the
judge did not fully consider the factors specifically identified by law and implementing rules.
In LBP v. Banal,
23
the Court ruled that the factors laid down in Section 17 of RA 6657 and the
formula stated in DAR AO 6-92, as amended, must be adhered to by the RTC in fixing the valuation
of lands subjected to agrarian reform:
In determining just compensation, the RTC is required to consider several factors enumerated in
Section 17 of R.A. 6657, as amended, thus:
x x x x
These factors have been translated into a basic formula in [DAO 6-92], as amended by [DAO 11-94],
issued pursuant to the DAR's rule-making power to carry out the object and purposes of R.A. 6657,
as amended.
x x x x
While the determination of just compensation involves the exercise of judicial discretion,
however, such discretion must be discharged within the bounds of the law. Here, the RTC wantonly
disregarded R.A. 6657, as amended, and its implementing rules and regulations. ([DAO 6-92], as
amended by [DAO 11-94]).
x x x x
WHEREFORE, . . . The trial judge is directed to observe strictly the procedures specified above in
determining the proper valuation of the subject property. (Underscoring supplied)
And in LBP v. Celada,
24
the Court was emphatic that the RTC is not at liberty to disregard the DAR
valuation formula which filled in the details of Section 17 of RA 6657, it being elementary that rules
and regulations issued by administrative bodies to interpret the law they are entrusted to enforce
have the force of law.
In fixing the just compensation in the present case, the trial court, adopting the market data
approach on which Commissioner Chua relied,
25
merely put premium on the location of the property
and the crops planted thereon which are not among the factors enumerated in Section 17 of RA
6657. And the trial court did not apply the formula provided in DAR AO 6-92, as amended. This is a
clear departure from the settled doctrine regarding the mandatory nature of Section 17 of RA 6657
and the DAR issuances implementing it.
Not only did Commissioner Chua not consider Section 17 of RA 6657 and DAR AO 6-92, as
amended, in his appraisal of the property. His conclusion that the market data approach conformed
with statutory and regulatory requirements is bereft of basis.1avvphi1
Resolving in the negative the issue of whether the RTC can resort to any other means of
determining just compensation, aside from Section 17 of RA 6657 and DAR AO 6-92, as amended,
this Court, in LBP v. Lim,
26
held that Section 17 of RA 6657 and DAR AO 6-92, as amended, are
mandatory and not mere guides that the RTC may disregard.
Petitioners maintain that the correct valuation of the property is P13,449,579.08 as computed by
Commissioner Empleo.
The pertinent provisions of Item II of DAR AO 6-92, as amended by DAR AO 11-94, read:
A. There shall be one basic formula for the valuation of lands covered by [Voluntary Offer to Sell] or
[Compulsory Acquisition] regardless of the date of offer or coverage of the claim:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
Where: LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
The above formula shall be used if all the three factors are present, relevant and applicable.
A.1. When the CS factor is not present and CNI and MV are applicable, the formula shall be:
LV = (CNI x 0.9) + (MV x 0.1)
x x x x
A.5 For purposes of this Administrative Order, the date of receipt of claimfolder by LBP from
DAR shall mean the date when the claimfolder is determined by the LBP to be complete with
all the required documents and valuation inputs duly verified and validated, and is ready for
final computation/processing.
A.6 The basic formula in the grossing-up of valuation inputs such as . . . Market Value per
Tax Declaration (MV) shall be:
Grossed-up
Valuation input
x =
Valuation Input
Regional Consumer
Price Index (RCPI)
Adjustment Factor
The RCPI Adjustment Factor shall refer to the ratio of RCPI for the month issued by the
National Statistics Office as of the date when the claimfolder (CF) was received by LBP from
DAR for processing or, in its absence, the most recent available RCPI for the month issued
prior to the date of receipt of CF from DAR and the RCPI for the month as of the
date/effectivity/registration of the valuation input. Expressed in equation form:
RCPI
Adjustment
Factor
=
RCPI for the Month as of the
Date of Receipt of Claimfolder
by LBP from DAR or the Most
recent RCPI for the Month
Issued Prior to the Date of
Receipt of CF

RCPI for the Month Issued as of
the Date/Effectivity/Registration
of the Valuation Input
B. Capitalized Net Income (CNI) This shall refer to the difference between the gross sales (AGP x
SP) and total cost of operations (CO) capitalized at 12%.
Expressed in equation form:
CNI =
(AGP x SP) - CO

.12
Where: CNI = Capitalized Net Income
AGP = Latest available 12-month's gross production immediately preceding the
date of offer in case of VOS or date of notice of coverage in case of CA.
SP = The average of the latest available 12-month's selling prices prior to the
date of receipt of the claimfolder by LBP for processing, such prices to be
secured from the Department of Agriculture (DA) and other appropriate
regulatory bodies or, in their absence, from the Bureau of Agricultural
Statistics. If possible, SP data shall be gathered from the barangay or
municipality where the property is located. In the absence thereof, SP
may be secured within the province or region.
CO = Cost of Operations
Whenever the cost of operations could not be obtained or verified, an
assumed net income rate (NIR) of 20% shall be used. Landholdings
planted to coconut which are productive at the time of offer/coverage
shall continue to use the 70% NIR. DAR and LBP shall continue to
conduct joint industry studies to establish the applicable NIR for each
crop covered under CARP.
.12 = Capitalization Rate
x x x x
D. In the computation of Market Value per Tax Declaration (MV), the most recent Tax Declaration
(TD) and Schedule of Unit Market Value (SMV) issued prior to receipt of claimfolder by LBP shall be
considered. The Unit Market Value (UMV) shall be grossed up from the date of its effectivity up to
the date of receipt of claimfolder by LBP from DAR for processing, in accordance with item II.A.A.6.
(Emphasis and italics supplied)
In thus computing Capitalized Net Income (CNI), the Average Gross Production (AGP) of the latest
available 12 months immediately preceding the date of offer in case of voluntary offer to sell or date
of notice of coverage in case of compulsory acquisition, and the average Selling Price (SP) of the
latest available 12 months prior to the date of receipt of the claimfolder by LBP for processing,
should be used.
While these dates-bases of computation are not clearly indicated in the records (as the mode of
acquisition is in fact disputed), the date of offer (assuming the acquisition was by voluntary offer to
sell) would have to be sometime in 1989, the alleged time of voluntary offer to sell; whereas the date
of notice of coverage (assuming the acquisition was compulsory) would be sometime prior to
October 21, 1996, which is the date of the Notice of Land Valuation and Acquisition, because under
DAR Administrative Order No. 9, series of 1990,
27
as amended by DAR Administrative Order No. 1,
series of 1993, the notice of coverage precedes the Notice of Land Valuation and Acquisition.
And the claimfolder would have been received by LBP in or before 1997, the year the property was
distributed to agrarian reform beneficiaries,
28
because land distribution is the last step in the
procedure prescribed by the above-said DAR administrative orders. Hence, the data for the AGP
should pertain to a period in 1989 (in case of voluntary offer to sell) or prior to October, 1996 (in case
of compulsory acquisition), while the data for the SP should pertain to 1997 or earlier.
Commissioner Empleo, however, instead used available data within the 12-month period prior to his
ocular inspection in October 1998 for the AGP,
29
and the average selling price for the period January
1998 to December 1998 for the SP,
30
contrary to DAR AO 6-92, as amended.
Furthermore, the Regional Consumer Price Index (RCPI) Adjustment Factor, which is used in
computing the market value of the property, is the ratio of the RCPI for the month when the
claimfolder was received by LBP, to the RCPI for the month of the registration of the most recent
Tax Declaration and Schedule of Unit Market Value
31
issued prior to receipt of claimfolder by LBP.
Consistent with the previous discussion, the applicable RCPIs should therefore be dated 1997 or
earlier.1avvphi 1
Again, Commissioner Empleo instead used RCPI data for January 1999 in computing the RCPI
Adjustment Factor,
32
contrary to DAR AO 6-92, as amended.
Parenthetically, Commissioner Empleo testified
33
that his computations were based on DAR
Administrative Order No. 5, series of 1998.
34
This Administrative Order took effect only on May 11,
1998, however, hence, the applicable valuation rules in this case remain to be those prescribed by
DAR AO 6-92, as amended by DAR AO 11-94.
But even if the 1998 valuation rules were applied, the data for the AGP would still pertain to a period
prior to October 1996, the revised reference date being the date of the field investigation which
precedes the Notice of Land Valuation and Acquisition; while the data for the SP and the RCPIs
would still pertain to 1997 or earlier, there being no substantial revisions in their reference dates.
Finally, as reflected earlier, Commissioner Empleo did not consider in his computation the secondary
crops planted on the property (coffee, pili, cashew, etc.), contrary to DAR AO 6-92, as amended,
which provides that the "[t]otal income shall be computed from the combination of crops actually
produced on the covered land whether seasonal or permanent."
35

In fine, the valuation asserted by petitioners does not lie.
While the Court is minded to write finis to this protracted litigation by itself computing the just
compensation due respondents, the evidence on record is not sufficient for the purpose. The Court
is thus constrained to remand the case for determination of the valuation of the property by the trial
court, which is mandated to consider the factors provided under Section 17 of RA 6657, as
amended, and as translated into the formula prescribed in DAR AO 6-92, as amended by DAR AO
11-94.
The trial court may, motu proprio or at the instance of any of the parties, again appoint one or more
commissioners to ascertain facts relevant to the dispute and file a written report thereof. The amount
determined by the trial court would then be the basis of interest income on the cash and bond
deposits due respondents from the time of the taking of the property up to the time of actual payment
of just compensation.
36

WHEREFORE, the challenged Decision of the Court of Appeals is REVERSED and SET ASIDE.
Civil Case No. 98-6438 is REMANDED to Branch 52 of the Sorsogon RTC which is directed to
determine with dispatch the just compensation due respondents strictly in accordance with the
procedures specified above.
SO ORDERED.
G.R. No. 143276 July 20, 2004
LANDBANK OF THE PHILIPPINES, petitioner,
vs.
SPOUSES VICENTE BANAL and LEONIDAS ARENAS-BANAL, respondents.


D E C I S I O N


SANDOVAL-GUTIERREZ, J .:
Spouses Vicente and Leonidas Banal, respondents, are the registered owners of 19.3422 hectares
of agricultural land situated in San Felipe, Basud, Camarines Norte covered by Transfer Certificate
of Title No. T-6296. A portion of the land consisting of 6.2330 hectares (5.4730 of which is planted to
coconut and 0.7600 planted to palay) was compulsorily acquired by the Department of Agrarian
Reform (DAR) pursuant to Republic Act (R.A.) No. 6657,
1
as amended, otherwise known as the
Comprehensive Agrarian Reform Law of 1988.
In accordance with the formula prescribed in DAR Administrative Order No. 6, Series of 1992,
2
as
amended by DAR Administrative Order No. 11, Series of 1994,
3
the Land Bank of the
Philippines
4
(Landbank), petitioner, made the following valuation of the property:
Acquired
property
Area in hectares Value
Coconut land 5.4730 P148,675.19
Riceland 0.7600 25,243.36

P173,918.55
Respondents rejected the above valuation. Thus, pursuant to Section 16(d) of R.A. 6657, as
amended, a summary administrative proceeding was conducted before the Provincial Agrarian
Reform Adjudicator (PARAD) to determine the valuation of the land. Eventually, the PARAD
rendered its Decision affirming the Landbank's valuation.
Dissatisfied with the Decision of the PARAD, respondents filed with the Regional Trial Court (RTC),
Branch 40, Daet, Camarines Norte, designated as a Special Agrarian Court, a petition for
determination of just compensation, docketed as Civil Case No. 6806. Impleaded as respondents
were the DAR and the Landbank. Petitioners therein prayed for a compensation of P100,000.00 per
hectare for both coconut land and riceland, or an aggregate amount of P623,000.00.
During the pre-trial on September 23, 1998, the parties submitted to the RTC the following
admissions of facts: (1) the subject property is governed by the provisions of R.A. 6657, as
amended; (2) it was distributed to the farmers-beneficiaries; and (3) the Landbank deposited the
provisional compensation based on the valuation made by the DAR.
5

On the same day after the pre-trial, the court issued an Order dispensing with the hearing and
directing the parties to submit their respective memoranda.
6

In its Decision dated February 5, 1999, the trial court computed the just compensation for the
coconut land atP657,137.00 and for the riceland at P46,000.00, or a total of P703,137.00, which is
beyond respondents' valuation of P623,000.00. The court further awarded compounded interest
at P79,732.00 in cash. The dispositive portion of the Decision reads:
"WHEREFORE, judgment is hereby rendered as follows:
1. Ordering respondent Landbank to pay the petitioners, the spouses Dr. Vicente Banal and
Leonidas Arenas-Banal, for the 5.4730 hectares of coconut land the sum of SIX HUNDRED
FIFTY-SEVEN THOUSAND ONE HUNDRED THIRTY-SEVEN PESOS (P657,137.00) in
cash and in bonds in the proportion provided by law;
2. Ordering respondent Landbank to pay the petitioners for the .7600 hectares of riceland the
sum of FORTY-SIX THOUSAND PESOS (P46,000.00) in cash and in bonds in the
proportion provided by law; and
3. Ordering respondent Landbank to pay the petitioners the sum of SEVENTY-NINE
THOUSAND SEVEN HUNDRED THIRTY-TWO PESOS (P79,732.00) as the compounded
interest in cash.
IT IS SO ORDERED."
7

In determining the valuation of the land, the trial court based the same on the facts established in
another case pending before it (Civil Case No. 6679, "Luz Rodriguez vs. DAR, et al."), using the
following formula:
For the coconut land
1. Average Gross Production (AGP) x .70 x 9.70 (price per kilo of coconut) = Net
Income (NI)
2. NI / 6% = Price Per Hectare (PPH) (applying the capitalization formula
under Republic Act No. 3844
8
)
For the riceland
1. 2.5 x AGP x Government Support Price (GSP) = Land Value (LV) or PPH (using
the formula underExecutive Order No. 228
9
)
2. AGP x 6% compounded annually for 26 years x GSP = Interest (pursuant to DAR
AO No. 13, Series of 1994)
Forthwith, the Landbank filed with the Court of Appeals a petition for review, docketed as CA-G.R.
SP No. 52163.
On March 20, 2000, the Appellate Court rendered a Decision
10
affirming in toto the judgment of the
trial court. The Landbank's motion for reconsideration was likewise denied.
11

Hence, this petition for review on certiorari.
The fundamental issue for our resolution is whether the Court of Appeals erred in sustaining the trial
court's valuation of the land. As earlier mentioned, there was no trial on the merits.
To begin with, under Section 1 of Executive Order No. 405 (1990), the Landbank is charged
"primarily" with "the determination of the land valuation and compensation for all private lands
suitable for agriculture under the Voluntary Offer to Sell or Compulsory Acquisition arrangement"
For its part, the DAR relies on the determination of the land valuation and compensation by the
Landbank.
12

Based on the Landbank's valuation of the land, the DAR makes an offer to the landowner.
13
If the
landowner accepts the offer, the Landbank shall pay him the purchase price of the land after he
executes and delivers a deed of transfer and surrenders the certificate of title in favor of the
government.
14
In case the landowner rejects the offer or fails to reply thereto, the DAR
adjudicator
15
conducts summary administrative proceedings to determine the compensation for the
land by requiring the landowner, the Landbank and other interested parties to submit evidence as to
the just compensation for the land.
16
These functions by the DAR are in accordance with its quasi-
judicial powers under Section 50 of R.A. 6657, as amended, which provides:
"SEC. 50. Quasi-Judicial Powers of the DAR. The DAR is hereby vested with primary
jurisdiction to determine and adjudicate agrarian reform matters and shall have exclusive
original jurisdiction over all matters involving the implementation of agrarian reform, except
those falling under the exclusive jurisdiction of the Department of Agriculture (DA) and the
Department of Environment and Natural Resources (DENR).
x x x."
A party who disagrees with the decision of the DAR adjudicator may bring the matter to the RTC
designated as a Special Agrarian Court
17
"for final determination of just compensation."
18

In the proceedings before the RTC, it is mandated to apply the Rules of Court
19
and, on its own
initiative or at the instance of any of the parties, "appoint one or more commissioners to examine,
investigate and ascertain facts relevant to the dispute, including the valuation of properties, and to
file a written report thereof x x x."
20
In determining just compensation, the RTC is required to consider
several factors enumerated in Section 17 of R.A. 6657, as amended, thus:
"Sec. 17. Determination of Just Compensation. In determining just compensation, the cost
of acquisition of the land, the current value of like properties, its nature, actual use and
income, the sworn valuation by the owner, the tax declarations, and the assessment made
by government assessors shall be considered. The social and economic benefits contributed
by the farmers and the farmworkers and by the Government to the property, as well as the
non-payment of taxes or loans secured from any government financing institution on the said
land, shall be considered as additional factors to determine its valuation."
These factors have been translated into a basic formula in DAR Administrative Order No. 6, Series
of 1992, as amended by DAR Administrative Order No. 11, Series of 1994, issued pursuant to the
DAR's rule-making power to carry out the object and purposes of R.A. 6657, as amended.
21

The formula stated in DAR Administrative Order No. 6, as amended, is as follows:
"LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
The above formula shall be used if all the three factors are present, relevant and applicable.
A.1 When the CS factor is not present and CNI and MV are applicable, the formula shall be:
LV = (CNI x 0.9) + (MV x 0.1)
A.2 When the CNI factor is not present, and CS and MV are applicable, the formula shall be:
LV = (CS x 0.9) + (MV x 0.1)
A.3 When both the CS and CNI are not present and only MV is applicable, the formula shall
be:
LV = MV x 2"
Here, the RTC failed to observe the basic rules of procedure and the fundamental requirements in
determining just compensation for the property. Firstly, it dispensed with the hearing and merely
ordered the parties to submit their respective memoranda. Such action is grossly erroneous since
the determination of just compensation involves the examination of the following factors specified in
Section 17 of R.A. 6657, as amended:
1. the cost of the acquisition of the land;
2. the current value of like properties;
3. its nature, actual use and income;
4. the sworn valuation by the owner; the tax declarations;
5. the assessment made by government assessors;
6. the social and economic benefits contributed by the farmers and the farmworkers and by
the government to the property; and
7. the non-payment of taxes or loans secured from any government financing institution on
the said land, if any.
Obviously, these factors involve factual matters which can be established only during a hearing
wherein the contending parties present their respective evidence. In fact, to underscore the intricate
nature of determining the valuation of the land, Section 58 of the same law even authorizes the
Special Agrarian Courts to appoint commissioners for such purpose.
Secondly, the RTC, in concluding that the valuation of respondents' property is P703,137.00, merely
took judicial notice of the average production figures in the Rodriguez case pending before it and
applied the same to this case without conducting a hearing and worse, without the knowledge or
consent of the parties, thus:
"x x x. In the case x x x of the coconut portion of the land 5.4730 hectares, defendants
determined the average gross production per year at 506.95 kilos only, but in the very
recent case of Luz Rodriguez vs. DAR, et al., filed and decided by this court in Civil
Case No. 6679 also for just compensation for coconut lands and Riceland situated at Basud,
Camarines Norte wherein also the lands in the above-entitled case are situated, the value
fixed therein was 1,061.52 kilos per annum per hectare for coconut land and the price
per kilo is P8.82, but in the instant case the price per kilo is P9.70. In the present case,
we consider 506.95 kilos average gross production per year per hectare to be very low
considering that farm practice for coconut lands is harvest every forty-five days. We cannot
also comprehended why in the Rodriguez case and in this case there is a great variance in
average production per year when in the two cases the lands are both coconut lands and in
the same place of Basud, Camarines Norte. We believe that it is more fair to adapt the
1,061.52 kilos per hectare per year as average gross production. In the Rodriguez case,
the defendants fixed the average gross production of palay at 3,000 kilos or 60 cavans per
year. The court is also constrained to apply this yearly palay production in the
Rodriguez case to the case at bar.
x x x x x x x x x
"As shown in the Memorandum of Landbank in this case, the area of the coconut land taken
under CARP is 5.4730 hectares. But as already noted, the average gross production a
year of 506.96 kilos per hectare fixed by Landbank is too low as compared to the
Rodriguez case which was 1,061 kilos when the coconut land in both cases are in the
same town of Basud, Camarines Norte, compelling this court then to adapt 1,061 kilos
as the average gross production a year of the coconut land in this case. We have to
apply also the price of P9.70 per kilo as this is the value that Landbank fixed for this case.
"The net income of the coconut land is equal to 70% of the gross income. So, the net income
of the coconut land is 1,061 x .70 x 9.70 equals P7,204.19 per hectare. Applying the
capitalization formula of R.A. 3844 to the net income of P7,204.19 divided by 6%, the legal
rate of interest, equals P120,069.00 per hectare. Therefore, the just compensation for the
5.4730 hectares is P657,137.00.
"The Riceland taken under Presidential Decree No. 27 as of October 21, 1972 has an area
of .7600 hectare. If in the Rodriguez case the Landbank fixed the average gross production
of 3000 kilos or 60 cavans of palay per year, then the .7600 hectare in this case would be 46
cavans. The value of the riceland therefore in this case is 46 cavans x 2.5 x P400.00
equals P46,000.00.
22

"PARC Resolution 94-24-1 of 25 October 1994, implemented by DAR AO 13, granted
interest on the compensation at 6% compounded annually. The compounded interest on the
46 cavans for 26 years is 199.33 cavans. At P400.00 per cavan, the value of the
compounded interest is P79,732.00."
23
(emphasis added)
Well-settled is the rule that courts are not authorized to take judicial notice of the contents of the
records of other cases even when said cases have been tried or are pending in the same court or
before the same judge.
24
They may only do so "in the absence of objection" and "with the knowledge
of the opposing party,"
25
which are not obtaining here.
Furthermore, as earlier stated, the Rules of Court shall apply to all proceedings before the Special
Agrarian Courts. In this regard, Section 3, Rule 129 of the Revised Rules on Evidence is explicit on
the necessity of a hearing before a court takes judicial notice of a certain matter, thus:
"SEC. 3. Judicial notice, when hearing necessary. During the trial, the court, on its own
initiative, or on request of a party, may announce its intention to take judicial notice of
any matter and allow the parties to be heard thereon.
"After the trial, and before judgment or on appeal, the proper court, on its own initiative or on
request of a party, may take judicial notice of any matter and allow the parties to be heard
thereon if such matter is decisive of a material issue in the case." (emphasis added)
The RTC failed to observe the above provisions.
Lastly, the RTC erred in applying the formula prescribed under Executive Order (EO) No. 228
26
and
R.A. No. 3844,
27
as amended, in determining the valuation of the property; and in granting
compounded interest pursuant to DAR Administrative Order No. 13, Series of 1994.
28
It must be
stressed that EO No. 228 covers private agricultural lands primarily devoted to rice and corn,
while R.A. 3844 governs agricultural leasehold relation between "the person who furnishes the
landholding, either as owner, civil law lessee, usufructuary, or legal possessor, and the person who
personally cultivates the same."
29
Here, the land is planted to coconut and rice and does not involve
agricultural leasehold relation. What the trial court should have applied is the formula in DAR
Administrative Order No. 6, as amended by DAR Administrative Order No. 11 discussed earlier.
As regards the award of compounded interest, suffice it to state that DAR Administrative Order No.
13, Series of 1994 does not apply to the subject land but to those lands taken under Presidential
Decree No. 27
30
and Executive Order No. 228 whose owners have not been compensated. In this
case, the property is covered by R.A. 6657, as amended, and respondents have been paid the
provisional compensation thereof, as stipulated during the pre-trial.
While the determination of just compensation involves the exercise of judicial discretion, however,
such discretion must be discharged within the bounds of the law. Here, the RTC wantonly
disregarded R.A. 6657, as amended, and its implementing rules and regulations. (DAR
Administrative Order No. 6, as amended by DAR Administrative Order No.11).
In sum, we find that the Court of Appeals and the RTC erred in determining the valuation of the
subject land. Thus, we deem it proper to remand this case to the RTC for trial on the merits wherein
the parties may present their respective evidence. In determining the valuation of the subject
property, the trial court shall consider the factors provided under Section 17 of R.A. 6657, as
amended, mentioned earlier. The formula prescribed by the DAR in Administrative Order No. 6,
Series of 1992, as amended by DAR Administrative Order No. 11, Series of 1994, shall be used in
the valuation of the land. Furthermore, upon its own initiative, or at the instance of any of the parties,
the trial court may appoint one or more commissioners to examine, investigate and ascertain facts
relevant to the dispute.
WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals dated
March 20, 2000 in CA-G.R. SP No. 52163 is REVERSED. Civil Case No. 6806 is REMANDED to the
RTC, Branch 40, Daet, Camarines Norte, for trial on the merits with dispatch. The trial judge is
directed to observe strictly the procedures specified above in determining the proper valuation of the
subject property.
SO ORDERED.
G.R. No. 164876 January 23, 2006
LAND BANK OF THE PHILIPPINES, Petitioner,
vs.
LEONILA P. CELADA, Respondent.
D E C I S I O N
YNARES-SANTIAGO, J .:
Respondent Leonila P. Celada owns 22.3167 hectares of agricultural land situated in Calatrava,
Carmen, Bohol registered under TCT No. 16436,
1
of which 14.1939 hectares was identified in 1998
by the Department of Agrarian Reform (DAR) as suitable for compulsory acquisition under the
Comprehensive Agrarian Reform Program (CARP). The matter was then indorsed to petitioner Land
Bank of the Philippines (LBP) for field investigation and land valuation.
In due course, LBP valued respondents land at P2.1105517 per square meter for an aggregate
value of P299,569.61.
2
The DAR offered the same amount to respondent as just compensation, but
it was rejected. Nonetheless, on August 27, 1999, LBP deposited the said sum in cash and bonds in
the name of respondent.
3

Pursuant to Section 16(d) of Republic Act (RA) No. 6657 or the Comprehensive Agrarian Reform
Law of 1988, the matter was referred to the DAR Adjudication Board (DARAB), Region VII-Cebu
City, for summary administrative hearing on determination of just compensation. The case was
docketed as DARAB Case No. VII-4767-B-990.
While the DARAB case was pending, respondent filed, on February 10, 2000, a petition
4
for judicial
determination of just compensation against LBP, the DAR and the Municipal Agrarian Reform Officer
(MARO) of Carmen, Bohol, before the Regional Trial Court of Tagbilaran City. The same was
docketed as Civil Case No. 6462 and raffled to Branch 3, the designated Special Agrarian Court
(SAC). Respondent alleged that the current market value of her land is at least P150,000.00 per
hectare based on the following factors:
14.1. The land in question has been mortgaged to the defunct Rural Bank of San Miguel
(Bohol), Inc., for P1,220,000.00 on July 23, 1998 since it was appraised at P15.00 per
square meter;
14.2. Agricultural lands in said barangay are priced ranging from P140,000.00 to
P150,000.00 per hectare and current land transactions reveal said price range;
14.3. The land in question is titled or registered property, cultivated and fully developed with
rice
5
and corn occupying the greater portion thereof;
14.4. The topography of the land, its soil condition, climate and productivity of surrounding
lots justify the just compensation requested or asked for;
14.5. Even the class and base unit market value for agricultural lands in Bohol is about thirty
(30) times higher than the price offered per hectare by DAR/LBP.
6

On April 27, 2000, LBP filed its Answer
7
raising non-exhaustion of administrative remedies as well as
forum-shopping as affirmative defense. According to petitioner, respondent must first await the
outcome of the DARAB case before taking any judicial recourse; that its valuation was arrived at by
applying the formula prescribed by law whereas respondents was based only on the "current value
of like properties".
The DAR and the MARO likewise filed an Answer
8
averring that the determination of just
compensation rests exclusively with the LBP. Thus, they are not liable to respondent and are merely
nominal parties in the case.
Meanwhile, the DARAB Provincial Adjudicator (PARAD) issued an Order
9
dated April 12, 2000
affirming the valuation made by LBP. Respondent failed to appear in the DARAB case despite due
notice.
On June 4, 2001, the SAC issued an order resolving petitioners affirmative defense in this wise:
WHEREFORE, the Affirmative Defense of x x x Land Bank is hereby denied. Besides, in the mind of
the court, the recourse to the DARAB is x x x of no moment since it is only conciliatory to the parties.
Upon agreement of the parties, the pre-trial is reset to June 11, 2001 at 9:00 in the morning.
SO ORDERED.
10

Thereafter, a pre-trial conference was conducted
11
and trial on the merits ensued. On March 1, 2003,
the SAC rendered judgment as follows:
WHEREFORE, in view of all the foregoing, the Court hereby fixes the compensation of the land of
petitioner at P2.50 per square meter or a total of P354,847.50 for the portion of 14.1939 hectares
subject of compulsory acquisition under the CARP which it believes just, fair and equitable under the
present circumstances and which shall earn legal interest of twelve percent (12%) per annum from
the time of its taking by the DAR. Furthermore, respondent Land Bank is hereby ordered to
indemnify petitioner the amount of P10,000.00 for attorneys fee and incidental expenses of
P5,000.00 and costs.
SO ORDERED.
12

LBP elevated the matter to the Court of Appeals which, however, dismissed the appeal outright on
the following grounds:
1. The petition is not accompanied with an affidavit of service, although there is an
explanation that respondent, respondents counsel and Judge Venancio J. Amila were
furnished with copies of the petition by registered mail x x x.
2. Petitioners counsel indicated his IBP and PTR but not his Roll of Attorneys Number x x x.
3. Copies of (a) PARAD Decision x x x adverted to in the petition which fixed the land
valuation for just compensation at P299,569.11 and (b) petitioners Petition for Judicial
Determination of Just Compensationfiled with the Regional Trial Court of Tagbilaran City,
Branch 3, were not attached as annexes, x x x.
13

Upon denial of its motion for reconsideration,
14
LBP filed the instant petition under Rule 45 of the
Rules of Court, alleging that:
A
THE COURT OF APPEALS ERRED IN X X X RIGIDLY OR STRICTLY APPLYING
PROCEDURAL LAW AT THE EXPENSE OF SUBSTANTIAL JUSTICE AND THE RIGHT
TO APPEAL.
B
THE SAC A QUO ERRED IN ASSUMING JURISDICTION OVER THE PETITION FOR
DETERMINATION OF JUST COMPENSATION WHILE ADMINISTRATIVE PROCEEDINGS
IS ON-GOING BEFORE THE DARAB, REGION VII, CEBU CITY.
C
THE SAC A QUO ERRED IN FIXING THE JUST COMPENSATION OF THE LAND BASED
NOT ON ITS ACTUAL LAND USE BUT ON THE VALUATION OF NEIGHBORING LANDS.
D
THE SAC A QUO ERRED IN AWARDING ATTORNEYS FEES AND INCIDENTAL
EXPENSES X X X.
15

On the first assigned error, petitioner asserts that the Court of Appeals should have liberally
construed the rules of procedure and not dismissed its appeal on technical grounds.
We agree with petitioner.
The Court of Appeals dismissed petitioners appeal on three technical grounds, namely: (a) lack of
affidavit of service; (b) failure of counsel to indicate his Roll of Attorneys number; and (c) failure to
attach material portions of the records. However, the lack of affidavit of service is not deemed fatal
where the petition filed below is accompanied by the original registry receipts showing that the
petition and its annexes were served upon the parties.
16
On the other hand, the failure of counsel to
indicate his Roll of Attorneys number would not affect respondents substantive rights, such that
petitioners counsel could have been directed to comply with the latter requirement rather than
dismiss the petition on purely technical grounds. As for petitioners failure to attach material portions
of the records, we held in Donato v. Court of Appeals
17
that:
[T]he failure of the petitioner to x x x append to his petition copies of the pleadings and other material
portions of the records as would support the petition, does not justify the outright dismissal of the
petition. It must be emphasized that the RIRCA (Revised Internal Rules of the Court of Appeals)
gives the appellate court a certain leeway to require parties to submit additional documents as may
be necessary in the interest of substantial justice. Under Section 3, paragraph d of Rule 3 of the
RIRCA, the CA may require the parties to complete the annexes as the court deems necessary, and
if the petition is given due course, the CA may require the elevation of a complete record of the case
as provided for under Section 3(d)(5) of Rule 6 of the RIRCA x x x.
18

An examination of the records and pleadings filed before the Court of Appeals reveals that there was
substantial compliance with procedural requirements. Moreover, we have held time and again that
cases should, as much as possible, be determined on the merits after the parties have been given
full opportunity to ventilate their causes and defenses, rather than on technicality or some procedural
imperfection.
19
After all, technical rules of procedure are not ends in themselves but are primarily
devised to help in the proper and expedient dispensation of justice. In appropriate cases, therefore,
the rules may be construed liberally in order to meet and advance the cause of substantial justice.
20

While a remand of the case to the appellate court would seem to be in order, we deem it proper to
resolve the case on the merits if only to write finis to the present controversy.
We do not agree with petitioners submission that the SAC erred in assuming jurisdiction over
respondents petition for determination of just compensation despite the pendency of the
administrative proceedings before the DARAB. In Land Bank of the Philippines v. Court of
Appeals,
21
the landowner filed an action for determination of just compensation without waiting for
the completion of the DARABs re-evaluation of the land. The Court nonetheless held therein that the
SAC acquired jurisdiction over the action for the following reason:
It is clear from Sec. 57 that the RTC, sitting as a Special Agrarian Court, has original and exclusive
jurisdiction over all petitions for the determination of just compensation to landowners. This original
and exclusive jurisdiction of the RTC would be undermined if the DAR would vest in administrative
officials original jurisdiction in compensation cases and make the RTC an appellate court for the
review of administrative decision. Thus, although the new rules speak of directly appealing the
decision of adjudicators to the RTCs sitting as Special Agrarian Courts, it is clear from Sec. 57 that
the original and exclusive jurisdiction to determine such cases is in the RTCs. Any effort to transfer
such jurisdiction to the adjudicators and to convert the original jurisdiction of the RTCs into appellate
jurisdiction would be contrary to Sec. 57 and therefore would be void. Thus, direct resort to the SAC
by private respondent is valid.
22

It would be well to emphasize that the taking of property under RA No. 6657 is an exercise of the
power of eminent domain by the State.
23
The valuation of property or determination of just
compensation in eminent domain proceedings is essentially a judicial function which is vested with
the courts and not with administrative agencies.
24
Consequently, the SAC properly took cognizance
of respondents petition for determination of just compensation.
In the same vein, there is no merit to petitioners contention that respondent failed to exhaust
administrative remedies when she directly filed the petition for determination of just compensation
with the SAC even before the DARAB case could be resolved. The issue is now moot considering
that the valuation made by petitioner had long been affirmed by the DARAB in its order dated April
12, 2000. As held in Land Bank of the Philippines v. Wycoco,
25
the doctrine of exhaustion of
administrative remedies is inapplicable when the issue is rendered moot and academic, as in the
instant case.
With regard to the third assigned error, however, we agree with petitioner that the SAC erred in
setting aside petitioners valuation of respondents land on the sole basis of the higher valuation
given for neighboring properties. In this regard, the SAC held:
It appears from the evidence of petitioner that the neighboring lands of similar classification were
paid higher than what was quoted to her land by respondent Land Bank as the value per square
meter to her land was only quoted at P2.1105517 while the others which were of the same
classification were paid by respondent Bank at P2.42 more or less, per square meter referring to the
land of Consuelito Borja (Exh. D) and Cesar Borja (Exh. F). Furthermore, the land of petitioner was
allegedly mortgaged for a loan of P1,200,000.00 before the Rural Bank of San Miguel, Bohol and
that it was purchased by her from a certain Felipe Dungog for P450,000.00 although no documents
therefor were shown to support her claim. Nevertheless, the Court finds a patent disparity in the
price quotations by respondent Land Bank for the land of petitioner and that of the other landowners
brought under CARP which could be caused by deficient or erroneous references due to the
petitioners indifference and stubborn attitude in not cooperating with respondent bank in submitting
the data needed for the evaluation of the property. x x x At any rate, the price quotation by
respondent Land Bank on the land of the petitioner is low more so that it was done some four years
ago, particularly, on June 22, 1998 (Exh. 1) and the same has become irrelevant in the course of
time due to the devaluation of the peso brought about by our staggering economy.
26

As can be gleaned from above ruling, the SAC based its valuation solely on the observation that
there was a "patent disparity" between the price given to respondent and the other landowners. We
note that it did not apply the DAR valuation formula since according to the SAC, it is Section 17 of
RA No. 6657 that "should be the principal basis of computation as it is the law governing the
matter".
27
The SAC further held that said Section 17 "cannot be superseded by any administrative
order of a government agency",
28
thereby implying that the valuation formula under DAR
Administrative Order No. 5, Series of 1998 (DAR AO No. 5, s. of 1998),
29
is invalid and of no effect.
While SAC is required to consider the acquisition cost of the land, the current value of like
properties, its nature, actual use and income, the sworn valuation by the owner, the tax declaration
and the assessments made by the government assessors
30
to determine just compensation, it is
equally true that these factors have been translated into a basic formula by the DAR pursuant to its
rule-making power under Section 49 of RA No. 6657.
31
As the government agency principally tasked
to implement the agrarian reform program, it is the DARs duty to issue rules and regulations to carry
out the object of the law. DAR AO No. 5, s. of 1998 precisely "filled in the details" of Section 17, RA
No. 6657 by providing a basic formula by which the factors mentioned therein may be taken into
account. The SAC was at no liberty to disregard the formula which was devised to implement the
said provision.
It is elementary that rules and regulations issued by administrative bodies to interpret the law which
they are entrusted to enforce, have the force of law, and are entitled to great
respect.
32
Administrative issuances partake of the nature of a statute
33
and have in their favor a
presumption of legality.
34
As such, courts cannot ignore administrative issuances especially when, as
in this case, its validity was not put in issue. Unless an administrative order is declared invalid, courts
have no option but to apply the same.
Thus, Section 17 of RA No. 6657 states:
SEC. 17. Determination of Just Compensation. In determining just compensation, the cost of
acquisition of the land, the current value of like properties, its nature, actual use and income, the
sworn valuation by the owner, the tax declarations, and the assessment made by government
assessors, shall be considered. The social and economic benefits contributed by the farmers and
the farmworkers and by the Government to the property as well as the nonpayment of taxes or loans
secured from any government financing institution on the said land shall be considered as additional
factors to determine its valuation.
As stated earlier, the above provision is implemented through DAR AO No. 5, s. of 1998, which
provides that:
A. There shall be one basic formula for the valuation of lands covered by VOS or CA:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
Where: LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
The above formula shall be used if all three factors are present, relevant, and applicable.
A1. When the CS factor is not present and CNI and MV are applicable, the formula shall be:
LV = (CNI x 0.9) + (MV x 0.1)
A2. When the CNI factor is not present, and CS and MV are applicable, the formula shall be:
LV = (CS x 0.9) + (MV x 0.1)
A3. When both the CS and CNI are not present and only MV is applicable, the formula shall be:
LV = MV x 2
In no case shall the value of idle land using the formula MV x 2 exceed the lowest value of land
within the same estate under consideration or within the same barangay or municipality (in that
order) approved by LBP within one (1) year from receipt of claimfolder.
Accordingly, petitioner applied the formula under A1 above since the comparable sales factor ("CS
factor") was not present. As observed by the SAC itself, respondent refused to cooperate with the
local valuation office of petitioner and did not provide the necessary data to arrive at a proper "CS
factor". DAR AO No. 5, s. of 1998 defines "CS factor" as follows:
C. CS shall refer to any one or the average of all the applicable sub-factors, namely ST, AC and
MVM:
Where: ST = Peso Value of Sales Transactions as defined under Item C.2
AC = Acquisition Cost as defined under Item C.3
MVM = Market Value Based on Mortgage as defined under Item C.4
x x x x
C.2. The criteria in the selection of the comparable sales transaction (ST) shall be as follows:
a. When the required number of STs is not available at the barangay level, additional STs may be
secured from the municipality where the land being offered/covered is situated to complete the
required three comparable STs. In case there are more STs available than what is required at the
municipal level, the most recent transactions shall be considered. The same rule shall apply at the
provincial level when no STs are available at the municipal level. In all cases, the combination of
STs sourced from the barangay, municipality and province shall not exceed three transactions.
b. The land subject of acquisition as well as those subject of comparable sales transactions should
be similar in topography, land use, i.e., planted to the same crop. Furthermore, in case of permanent
crops, the subject properties should be more or less comparable in terms of their stages of
productivity and plant density.
c. The comparable sales transactions should have been executed within the period January 1, 1985
to June 15, 1988, and registered within the period January 1, 1985, to September 13, 1988.
x x x x
C.3. Acquisition Cost (AC) AC shall be deemed relevant when the property subject of acquisition
was acquired through purchase or exchange with another property within the period January 1, 1985
to June 15, 1988 and registered within the period January 1, 1985 to September 13, 1988, and the
condition of said property is still substantially similar from the date of purchase or exchange to the
date of FI.
x x x x
C.4. Market Value Based on Mortgage (MVM) For MVM to be relevant or applicable, the property
subject of acquisition should have been mortgaged as of June 15, 1988 and the condition of the
property is still substantially similar up to the date of FI. MVM shall refer to the latest available
appraised value of the property.
In the case at bar, while respondent attempted to prove during the hearings before the SAC,
comparable sales transactions, the acquisition cost of the property as well as its mortgage value,
she failed to submit adequate documentary evidence to support the same. Consequently, there was
nothing from which the "CS factor" could be determined.
In contrast, petitioner arrived at its valuation by using available factors culled from the Department of
Agriculture and Philippine Coconut Authority,
35
and by computing the same in accordance with the
formula provided, thus
COMPUTATION (Applicable Formula) : LV = 0.90 CNI + 0.10 MV
Comparable Land Transactions (P x x x x ____ ) = P x-x-x
Capitalized Net Income: Cassava 16,666.67 x 0.90 = 15,000.00
Corn/Coco 26,571.70 = 23,914.53
Market Value Cassava 8,963.78 x 0.10 = 896.38
per Tax Declaration: Corn/Coco 10,053.93 = 1,005.39
Computed Value per Hectare: Cassava 15,896.38; Corn/Coco 24,919.92
x x x
Value per hectare used: Cassava 15,896.38 x 6.0000 has. = 95,378.28
Corn/Coco 24,919.92 x 8.1939 has. = 204,191.33
Payment due to LO : P299, 569.61
The above computation was explained by Antero M. Gablines, Chief of the Claims, Processing,
Valuation and Payment Division of the Agrarian Operations Center of the Land Bank, to wit:
ATTY. CABANGBANG: (On direct):
x x x x
q. What are the items needed for the Land Bank to compute?
a. In accordance with Administrative Order No. 5, series of 1998, the value of the land should be
computed using the capitalized net income plus the market value. We need the gross production of
the land and its output and the net income of the property.
q. You said "gross production". How would you fix the gross production of the property?
a. In that Administrative Order No. 5, if the owner of the land is cooperative, he is required to submit
the net income. Without submitting all his sworn statements, we will get the data from the DA
(Agriculture) or from the coconut authorities.
x x x x
q. In this recommended amount which you approved, how did you arrive at this figure?
a. We used the data from the Philippine (Coconut) Authority and the Agriculture and the data stated
that Cassava production was only 10,000 kilos per hectare; corn, 2,000 kilos; and coconuts, 15.38
kilos per hectare. The data stated that in the first cropping of 1986, the price of cassava was P1.00
per kilo; corn was sold at P7.75 per kilo; and the Philippine Coconut Authority stated that during that
time, the selling price of coconuts was P8.23 per kilo.
q. After these Production data and selling price, there is here a "cost of operation", what is this?
a. It is the expenses of the land owner or farmer. From day one of the cultivation until production.
Without the land owners submission of the sworn statement of the income, production and the cost,
x x x Administrative Order No. 5 states that x x x we will use 20% as the net income, meaning 80%
of the production in peso. This is the cost of valuation.
q. 80 % for what crops?
a. All crops except for coconuts where the cost of expenses is only 20%.
q. Summing all these data, what is the value per hectare of the cassava?
a. The cassava is P15,896.38.
q. How about the corn x x x intercropped with coconuts?
a. P24,919.92.
36

Under the circumstances, we find the explanation and computation of petitioner to be sufficient and
in accordance with applicable laws. Petitioners valuation must thus be upheld.
Finally, there is no basis for the SACs award of 12% interest per annum in favor of respondent.
Although in some expropriation cases, the Court allowed the imposition of said interest, the same
was in the nature of damages for delay in payment which in effect makes the obligation on the part
of the government one of forbearance.
37
In this case, there is no delay that would justify the payment
of interest since the just compensation due to respondent has been promptly and validly deposited in
her name in cash and LBP bonds. Neither is there factual or legal justification for the award of
attorneys fees and costs of litigation in favor of respondent.
WHEREFORE, the instant petition is GRANTED. The Decision of the Regional Trial Court,
Tagbilaran City, Branch 3 in Civil Case No. 6462 dated March 1, 2003 is REVERSED and SET
ASIDE. A new judgment is entered fixing the just compensation for respondents land at P2.1105517
per square meter or a total of P299,569.61.
SO ORDERED.
G.R. Nos. 180772 and 180776 May 6, 2010
LAND BANK OF THE PHILIPPINES [LBP], petitioner,
vs.
DOMINGO AND MAMERTO SORIANO, Respondents.
D E C I S I O N
PEREZ, J .:
For consideration is a Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by
the Land Bank of the Philippines (LBP) seeking the annulment of the Decision
1
dated 9 October
2007 and the Resolution
2
dated 12 December 2007 issued by the Court of Appeals in CA-G.R. SP
Nos. 89005 and 89288.
The controversy is hinged on the determination of just compensation for land covered by the
Comprehensive Agrarian Reform Program (CARP).
First, the antecedents.
Domingo and Mamerto Soriano (respondents) are the registered owners of several parcels of rice
land situated in Oas, Albay. Out of the 18.9163 hectares of land
3
owned by the respondents,
18.2820 hectares were placed under the Operations Land Transfer and the CARP pursuant to
Presidential Decree No. 27
4
and Republic Act No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law.
5

The LBP
6
pegged the value of 18.0491 hectares of land at P482,363.95
7
(P133,751.65 as land value
plusP348,612.30 incremental interest), while the remaining 0.2329 hectare was computed
at P8,238.94.
8
Not satisfied with the valuation, respondents, on 23 November 2000, instituted a
Complaint
9
for judicial determination of just compensation with the Regional Trial Court of Legazpi
City,
10
sitting as a Special Agrarian Court (SAC). Respondents alleged that they are entitled to an
amount of not less than P4,500,000.00 as just compensation.
11

On 21 February 2005, the SAC rendered a judgment, ordering LBP to pay the
respondents P894,584.94. The dispositive portion reads:
ACCORDINGLY, the just compensation of the 18.0491 hectares of irrigated riceland is P133,751.79,
plus increment of 6% per annum computed annually beginning October 21, 1972, until the value is
fully paid, and of the 0.2329 hectare of rain fed riceland is P8,238.94 plus 12% interest per annum,
beginning August 17, 1998, until the value is fully paid or a total of P894,584.94 as of this date. Land
Bank is ordered to pay the landowners Domingo Soriano and Mamerto Soriano said amount/land
value in accordance with law.
12

The SAC applied the formula prescribed under Executive Order No. 228 in determining the valuation
of the property, i.e., Land value = Average Gross Production x 2.5 x Government Support Price. It
likewise granted compounded interest pursuant to Department of Agrarian Reform (DAR)
Administrative Order No. 13, series of 1994, as amended by DAR Administrative Order No. 2, series
of 2004.
Both parties disagreed with the trial courts valuation, prompting them to file their respective appeals
with the Court of Appeals. The appellate court, however, affirmed the judgment of the trial court. It
also upheld the award of compounded interest, thus:
In the case at bar, the subject lands were taken under PD 27 and were covered by Operation Land
Transfer, making the aforecited Administrative Order applicable. Hence, the Petitioners SORIANOs
are entitled to the 6% compounded interest per annum from the date of taking on 21 October 1972
until full payment of the just compensation.
13

LBP moved for reconsideration but it was denied by the Court of Appeals on 12 December 2007.
LBP filed the instant petition seeking to nullify the appellate courts decision and resolution,
particularly the amount awarded to respondents as just compensation.
Basic is the tenet that since respondents were deprived of their land, they are entitled to just
compensation. Under Executive Order No. 228, the formula used to compute the land value is:
Land value = Average Gross Production (AGP) x 2.5
x Government Support Price (GSP)
With the passage of Republic Act (R.A.) No. 6657 or the CARL in 1988, new guidelines were set for
the determination of just compensation. In particular, Section 17 provides, thus:
Determination of Just Compensation. In determining just compensation, the cost of acquisition of
the land, the current value of like properties, its nature, actual use and income, the sworn valuation
by the owner, the tax declarations, and the assessment made by government assessors shall be
considered. The social and economic benefits contributed by the farmers and the farmworkers and
by the Government to the property as well as the non-payment of taxes or loans secured from any
government financing institution on the said land shall be considered as additional factors to
determine its valuation.
Consequently, two divergent formulae arose which prompted the Court to come up with a categorical
pronouncement that, if just compensation is not settled prior to the passage of Republic Act No.
6657, it should be computed in accordance with the said law, although the property was acquired
under Presidential Decree No. 27. The fixing of just compensation should therefore be based on the
parameters set out in Republic Act No. 6657, with Presidential Decree No. 27 and Executive Order
No. 228 having only suppletory effect.
14

In the instant case, while the subject lands were acquired under Presidential Decree No. 27, the
complaint for just compensation was only lodged before the court on 23 November 2000 or long
after the passage of Republic Act No. 6657 in 1988. Therefore, Section 17 of Republic Act No. 6657
should be the principal basis of the computation for just compensation. As a matter of fact, the
factors enumerated therein had already been translated into a basic formula by the DAR pursuant to
its rule-making power under Section 49 of Republic Act No. 6657. The formula outlined in DAR
Administrative Order No. 5, series of 1998 should be applied in computing just compensation, thus:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
Where: LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
15

As much as this Court would like to determine the proper valuation based on the formula cited
above, the records of this case are bereft of adequate data. To write finis to this case, we uphold the
amount derived from the old formula. However, since the application of the new formula is a matter
of law and thus, should be made applicable, the parties are not precluded from asking for any
additional amount as may be warranted by the new formula.
On to the more pertinent issue. LBP assails the imposition of 6% interest rate on the 18.0491
hectares of lot valued at P133,751.65. It avers that the incremental interest due to the respondents
should be computed from the date of taking on 21 October 1972, not up to full payment of just
compensation but up to the time LBP approved the payment of their just compensation claim and a
corresponding deposit of the compensation proceeds was made by the bank. LBP relies on the
provisions of DAR Administrative Order No. 13, series of 1994, as amended, which substantially
provides that "the grant of 6% yearly interest compounded annually shall be reckoned from 21
October 1972 up to the time of actual payment but not later than December 2006." LBP stresses that
under said Administrative Order, time of actual payment is defined as the date when LBP approves
the payment of the land transfer claim and deposits the compensation proceeds in the name of the
landowner in cash and in bonds. In sum, LBP posits that the appellate court departed from the
express provision of DAR Administrative Order No. 13, as amended, by imposing an interest to be
reckoned from the time of taking up to the actual payment of just compensation.
16

Respondents counter that the award of interest until full payment of just compensation was correctly
adhered to by the lower courts in line with the Courts ruling in Land Bank of the Philippines v.
Imperial,
17
which found it inequitable to determine just compensation based solely on the formula
provided by DAR Administrative Order No. 13, as amended. According to respondents, the award of
interest until full payment of just compensation is to ensure prompt payment. Moreover, respondents
claim that the date LBP approves the payment of the land transfer claim and deposits the proceeds
in the name of the landowner is not tantamount to actual payment because on said date, the release
of the amount is conditioned on certain requirements.
18

This issue has already been raised before the Court of Appeals by LBP, first, in its petition for review
and, second, in its motion for reconsideration. The Court of Appeals, however, neglected to give a
definitive ruling on the issue of computation of interest and merely echoed the trial courts ruling that
respondents are entitled to the 6% compounded interest per annum from the date of taking on 21
October 1972 until full payment of just compensation.1avvphi 1
At any rate, we cannot subscribe to the arguments of LBP.
Section 4, Article XIII of the 1987 Constitution, mandates that the redistribution of agricultural lands
shall be subject to the payment of just compensation. The deliberations of the 1986 Constitutional
Commission on this subject reveal that just compensation should not do violence to the Bill of
Rights, but should also not make an insurmountable obstacle to a successful agrarian reform
program. Hence, the landowner's right to just compensation should be balanced with agrarian
reform.
19

Administrative Order No. 13, as amended, was issued to compensate those who were effectively
deprived of their lands by expropriation. LBP relies on said Administrative Order to justify its own
computation of interest. A literal reading of this Administrative Order seems to favor LBPs
interpretation with respect to the period covered by the interest rate. We quote the relevant portion of
the Administrative Order:
The grant of six percent (6%) yearly interest compounded annually shall be reckoned as follows:
3.1 Tenanted as of 21 October 1972 and covered under OLT
- From 21 October 1972 up to the time of actual payment but not later than December 2006
3.2 Tenanted after 21 October 1972 and covered under OLT
-From the date when the land was actually tenanted (by virtue of Regional Order of Placement
issued prior to August 18, 1987) up to the time of actual payment but not later than December 2006
Time of actual payment is the date when the Land Bank of the Philippines (LBP) approves
payment of the land transfer claim and deposits the compensation proceeds in the name of the
landowner (LO) in cash and in bonds. The release of payment can be claimed by the landowner
upon compliance with the documentary requirements for release of payment.
20

However, as embodied in its Prefatory Statement, the intent of the Administrative Order was
precisely to address a situation "where a number of landholdings remain unpaid in view of the non-
acceptance by the landowners of the compensation due to low valuation. Had the landowner been
paid from the time of taking his land and the money deposited in a bank, the money would have
earned the same interest rate compounded annually as authorized under banking laws, rules and
regulations."
21
The concept of just compensation embraces not only the correct determination of the
amount to be paid to the owners of the land, but also payment within a reasonable time from its
taking. Without prompt payment, compensation cannot be considered "just" inasmuch as the
property owner is made to suffer the consequences of being immediately deprived of his land while
being made to wait for a decade or more before actually receiving the amount necessary to cope
with his loss.
22
To condition the payment upon LBPs approval and its release upon compliance with
some documentary requirements would render nugatory the very essence of "prompt payment."
Therefore, to expedite the payment of just compensation, it is logical to conclude that the 6% interest
rate be imposed from the time of taking up to the time of full payment of just compensation.
Certainly, the trend of recent rulings bolsters this interpretation. In Forform Development Corporation
v. Philippine National Railways,
23
the Philippine National Railways was directed to file the
appropriate expropriation action over the land in question, so that just compensation due to its owner
may be determined in accordance with the Rules of Court, with interest at the legal rate of 6% per
annum from the time of taking until full payment is made. The Court in Manila International Airport
Authority v. Rodriguez
24
ordered just compensation for the portion of respondents lot actually
occupied by the runway, with interest thereon at the legal rate of 6% per annum from the time of
taking until full payment is made.ten.li hpwal
LBP also proffers that just compensation pertaining to the 0.2329 hectare valued at P8,238.94 with
no pronouncement as to interest per the Department of Agrarian Reform Adjudication Board
(DARAB) decision has already attained finality, hence, it cannot be modified.
25

Anent the DARAB decision relating to the 0.2329 hectare, suffice it to say that the determination of
just compensation is a judicial function.
26
The DAR's land valuation is only preliminary and is not, by
any means, final and conclusive upon the landowner or any other interested party. In the exercise of
their functions, the courts still have the final say on what the amount of just compensation will
be.
27
Hence, we sustain the computation reached by the trial court.
WHEREFORE, the petition is DENIED. The Decision dated 9 October 2007 and the Resolution
dated 12 December 2007 of the Court of Appeals in CA-G.R. SP Nos. 89005 and 89288 are hereby
AFFIRMED without prejudice to the right of the parties for additional claims that may arise in the
application of DAR Administrative Order No. 5, series of 1998 in relation to R.A. No. 6657.
SO ORDERED.
G.R. No. 164195 April 5, 2011
APO FRUITS CORPORATION and HIJO PLANTATION, INC., Petitioners,
vs.
LAND BANK OF THE PHILIPPINES, Respondent.
R E S O L U T I O N
BRION, J .:
We resolve Land Bank of the Philippines (LBPs) 2nd Motion for Reconsideration of December
14, 2010 that addresses our Resolutions of October 12, 2010 and November 23, 2010. This motion
prays as well for the holding of oral arguments. We likewise resolve the Office of the Solicitor
Generals (OSG) Motion for Leave to Intervene and to Admit Motion for Reconsideration-in-
Intervention dated February 15, 2011 in behalf of the Republic of the Philippines (Republic).
The Motion for Reconsideration
The LBP submits the following arguments in support of its 2nd motion for reconsideration:
a) the test of "transcendental importance" does not apply to the present case;
b) the standard of "transcendental importance" cannot justify the negation of the doctrine of
immutability of a final judgment and the abrogation of a vested right in favor of the
Government that respondent LBP represents;
c) the Honorable Court ignored the deliberations of the 1986 Constitutional Commission
showing that just compensation for expropriated agricultural property must be viewed in the
context of social justice; and
d) granting arguendo that the interest payment has factual and legal bases, only six (6%)
percent interest per annum may be validly imposed.
We have more than amply addressed argument (d) above in our October 12, 2010 Resolution, and
we see no point in further discussing it. Without in any way detracting from the overriding effect of
our main and primary ruling that the present 2nd motion for reconsideration is a prohibited motion
that the Court can no longer entertain, and if only to emphatically signal an unequivocal finis to this
case, we examine for the last and final time the LBPs other arguments.
In the course of the Courts deliberations, Mr. Justice Roberto A. Abad questioned the application of
Section 3, Rule 15 of the Internal Rules of the Supreme Court to the present 2nd motion for
reconsideration. He posited that instead of voting immediately on the present 2nd motion for
reconsideration, the Court should instead first consider the validity of our October 12, 2010
Resolution; he claimed that this Resolution is null and void because the Court violated the above-
cited provision of the Internal Rules when it did not first vote on whether the Resolutions underlying
motion (itself a 3rd motion for reconsideration) should be entertained before voting on the motions
merits. We shall lay to rest Mr. Justice Abads observation before dwelling on the merits of the
present 2nd motion for reconsideration.
Our Ruling
We find no merit in the LBPs second motion for reconsideration, and reject as well the Mr.
Justice Abads observation on how to approach the consideration of the present motion.
Mr. Justice Abads Observations/Objections;
The Rules on 2nd Motions for Reconsideration.
Mr. Justice Abads observation apparently stemmed from the peculiar history of the present case.
a. A recap of the history of the case.
This case was originally handled by the Third Division of this Court. In its original Decision of
February 6, 2007, the Division affirmed the RTCs decision setting the just compensation to be paid
and fixing the interest due on the balance of the compensation due at 12% per annum. In its
Resolution of December 19, 2007, the Third Division resolved the parties motions for
reconsideration by deleting the 12% interest due on the balance of the awarded just compensation.
The parties subsequent motions to reconsider this Resolution were denied on April 30, 2008; on
May 16, 2008, entry of judgment followed. Despite the entry of judgment, the present petitioners filed
a second motion for reconsideration that prayed as well that the case be referred to the Court en
banc. Finding merit in these motions, the Third Division referred the case to the En Banc for its
disposition. On December 4, 2009, the Court en banc denied the petitioners second motion for
reconsideration. Maintaining their belief in their demand to be granted 12% interest, the petitioners
persisted in filing another motion for reconsideration. In the interim, the Court promulgated its
Internal Rules that regulated, among others, 2nd motions for reconsideration. On October 12, 2010,
the Court en banc granted by a vote of 8 for and 4 against the petitioners motion and awarded
the 12% interests the petitioners prayed for, thus affirming the interests the RTC originally awarded.
The Court subsequently denied the respondents motion for reconsideration, giving rise to the
present 2nd motion for reconsideration. It was at this point that the OSG moved for leave to
intervene.
b. The governing rules on
2nd motions for reconsideration
The basic rule governing 2nd motions for reconsideration is Section 2, Rule 52 (which applies to
original actions in the Supreme Court pursuant to Section 2, Rule 56) of the Rules of Court. This
Rule expressly provides:
Sec. 2. Second Motion for Reconsideration. No second motion for reconsideration of a judgment or
final resolution by the same party shall be entertained.
The absolute terms of this Rule is tempered by Section 3, Rule 15 of the Internal Rules of the
Supreme Court that provides:
Sec. 3. Second Motion for Reconsideration. The Court shall not entertain a second motion for
reconsideration and any exception to this rule can only be granted in the higher interest of justice by
the Court en banc upon a vote of at least two-thirds of its actual membership. There is
reconsideration "in the higher interest of justice" when the assailed decision is not only legally
erroneous, but is likewise patently unjust and potentially capable of causing unwarranted and
irremediable injury or damage to the parties. A second motion for reconsideration can only be
entertained before the ruling sought to be reconsidered becomes final by operation of law or by the
Courts declaration. [Emphases supplied.]
Separately from these rules is Article VIII, Section 4 (2) of the 1987 Constitution which governs the
decision-making by the Court en banc of any matter before it, including a motion for the
reconsideration of a previous decision. This provision states:
Section 4.
x x x x
(2) All cases involving the constitutionality of a treaty, international or executive agreement, or law,
which shall be heard by the Supreme Court en banc, and all other cases which under the Rules of
Court are required to be heard en banc, including those involving the constitutionality, application, or
operation of presidential decrees, proclamations, orders, instructions, ordinances, and other
regulations, shall be decided with the concurrence of a majority of the Members who actually took
part in the deliberations on the issues in the case and voted thereon.
Thus, while the Constitution grants the Supreme Court the power to promulgate rules concerning the
practice and procedure in all courts
1
(and allows the Court to regulate the consideration of 2nd
motions for reconsideration, including the vote that the Court shall require), these procedural rules
must be consistent with the standards set by the Constitution itself. Among these constitutional
standards is the above quoted Section 4 which applies to "all other cases which under the Rules of
Court are required to be heard en banc," and does not make any distinction as to the type of cases
or rulings it applies to, i.e, whether these cases are originally filed with the Supreme Court, or cases
on appeal, or rulings on the merits of motions before the Court. Thus, rulings on the merits by the
Court en banc on 2nd motions for reconsideration, if allowed by the Court to be entertained under its
Internal Rules, must be decided with the concurrence of a majority of the Members who actually took
part in the deliberations.
When the Court ruled on October 12, 2010 on the petitioners motion for reconsideration by a vote of
12 Members (8 for the grant of the motion and 4 against), the Court ruled on the merits of the
petitioners motion. This ruling complied in all respects with the Constitution requirement for the
votes that should support a ruling of the Court.
Admittedly, the Court did not make any express prior ruling accepting or disallowing the petitioners
motion as required by Section 3, Rule 15 of the Internal Rules. The Court, however, did not thereby
contravene its own rule on 2nd motions for reconsideration; since 12 Members of the Court opted to
entertain the motion by voting for and against it, the Court simply did not register an express vote,
but instead demonstrated its compliance with the rule through the participation by no less than 12 of
its 15 Members.1avvphi 1 Viewed in this light, the Court cannot even be claimed to have suspended the
effectiveness of its rule on 2nd motions for reconsideration; it simply complied with this rule in a form
other than by express and separate voting.
Based on these considerations, arrived at after a lengthy deliberation, the Court thus rejected Mr.
Justice Abads observations, and proceeded to vote on the question of whether to entertain the
respondents present 2nd motion for reconsideration. The vote was 9 to 2, with 9 Members voting
not to entertain the LBPs 2nd motion for reconsideration. By this vote, the ruling sought to be
reconsidered for the second time was unequivocally upheld; its finality already declared by the
Court in its Resolution of November 23, 2010 was reiterated. To quote the dispositive portion of
the reiterated November 23, 2010 Resolution:
On these considerations, we hereby DENY the Motion for Reconsideration with FINALITY. No
further pleadings shall be entertained. Let entry of judgment be made in due course.
Thus, this Court mandated a clear, unequivocal, final and emphatic finis to the present case.
Landowners right to just compensation:
a matter of public interest
In assailing our October 12, 2010 resolution, the LBP emphasizes the need to respect the doctrine of
immutability of final judgments. The LBP maintains that we should not have granted the petitioners
motion for reconsideration in our October 12, 2010 Resolution because the ruling deleting the 12%
interest had already attained finality when an Entry of Judgment was issued. The LBP argues, too,
that the present case does not involve a matter of transcendental importance, as it does not involve
life or liberty. The LBP further contends that the Court mistakenly used the concept of transcendental
importance to recall a final ruling; this standard should only apply to questions on the legal standing
of parties.
In his dissenting opinion, Mr. Justice Roberto Abad agrees with the LBPs assertion, positing that
this case does not fall under any of the exceptions to the immutability doctrine since it only involves
money and does not involve a matter of overriding public interest.
We reject the basic premise of the LBP's and Mr. Justice Abads arguments for being flawed. The
present case goes beyond the private interests involved; it involves a matter of public interest the
proper application of a basic constitutionally-guaranteed right, namely, the right of a landowner to
receive just compensation when the government exercises the power of eminent domain in its
agrarian reform program.
Section 9, Article III of the 1987 Constitution expresses the constitutional rule on eminent domain
"Private property shall not be taken for public use without just compensation." While confirming the
States inherent power and right to take private property for public use, this provision at the same
time lays down the limitation in the exercise of this power. When it takes property pursuant to its
inherent right and power, the State has the corresponding obligation to pay the owner just
compensation for the property taken. For compensation to be considered "just," it must not only be
the full and fair equivalent of the property taken;
2
it must also be paid to the landowner without
delay.
3

To fully and properly appreciate the significance of this case, we have to consider it in its proper
context. Contrary to the LBPs and Mr. Justice Abads assertions, the outcome of this case is not
confined to the fate of the two petitioners alone. This case involves the governments agrarian reform
program whose success largely depends on the willingness of the participants, both the farmers-
beneficiaries and the landowners, to cooperate with the government. Inevitably, if the government
falters or is seen to be faltering through lack of good faith in implementing the needed reforms,
including any hesitation in paying the landowners just compensation, this reform program and its
objectives would suffer major setbacks. That the governments agrarian reform program and its
success are matters of public interest, to our mind, cannot be disputed as the program seeks to
remedy long existing and widespread social justice and economic problems.
In a last ditch attempt to muddle the issues, the LBP focuses on our use of the phrase
"transcendental importance," and asserts that we erred in applying this doctrine, applicable only to
legal standing questions, to negate the doctrine of immutability of judgment. This is a very myopic
reading of our ruling as the context clearly shows that the phrase "transcendental importance" was
used only to emphasize the overriding public interestinvolved in this case. Thus, we said:
That the issues posed by this case are of transcendental importance is not hard to discern from
these discussions. A constitutional limitation, guaranteed under no less than the all-important Bill of
Rights, is at stake in this case: how can compensation in an eminent domain case be "just" when the
payment for the compensation for property already taken has been unreasonably delayed? To claim,
as the assailed Resolution does, that only private interest is involved in this case is to forget that an
expropriation involves the government as a necessary actor. It forgets, too, that under eminent
domain, the constitutional limits or standards apply to government who carries the burden of
showing that these standards have been met. Thus, to simply dismiss the case as a private interest
matter is an extremely shortsighted view that this Court should not leave uncorrected.
x x x x
More than the stability of our jurisprudence, the matter before us is of transcendental importance to
the nation because of the subject matter involved agrarian reform, a societal objective of that the
government has unceasingly sought to achieve in the past half century.
4

From this perspective, our Resolution of October 12, 2010 only had to demonstrate, as it did, that
the higher interests of justice are duly served. All these, amply discussed in the Resolution of
October 12, 2010, are briefly summarized and reiterated below.
LBP at fault for twelve-
year delay in payment
In his dissenting opinion, Mr. Justice Abad insists that the LBPs initial valuation of the petitioners
properties was fully in accord with Section 17 of the CARL. He posits that when the RTC gave a
significantly higher value to these lands, the LBP acted well within its rights when it appealed the
valuation. Thus, to him, it was wrong for this Court to characterize the LBPs appeal as malicious or
in bad faith.
A simple look at the attendant facts disproves the accuracy of this claim.
First, Mr. Justice Abads allegation that the LBP correctly valued the petitioners properties is not at
all accurate. Significantly, Mr. Justice Abad does not cite any evidence on record to support his claim
that "the Land Bank valued the lands using the compensation formula that Section 17 of Republic
Act 6657 and the DARs implementing rules provide."
5

More to the point, this Court has already determined, in a final and executed judgment, that the
RTCs valuation of the petitioners properties is the correct one. To recall, the LBP initially fixed the
value of Apo Fruits Corporations (AFC) properties at P165,484.47 per hectare or P16.00 per
square meter (sqm), while it valued Hijo Plantation Inc.s (HPI) properties at P201,929.97 per
hectare, or approximately P20.00/sqm. In contrast, the Regional Trial Court fixed the valuation of the
petitioners properties at P103.33/sqm., or more than five times the initial valuation fixed by the
LBP.
After reviewing the records, this Court affirmed the RTCs valuation in its February 6, 2007 decision,
noting that it was based on the following evidence: (a) the Commissioners reports, (b) the Cuervo
appraisers report, (c) the schedule of market values of the City of Tagum per its 1993 and 1994
Revision of Assessment and Property Classification, (d) the value of the permanent improvements
found on the expropriated properties, and (e) the comparative sales of adjacent lands from early
1995 to early 1997. The Court observed that the RTC valuation also took into consideration the
lands nature as irrigated land, its location along the highway, market value, assessors value, and
the volume and value of its produce. This valuation is fully in accordance with Section 17 of RA
6657, which states:
Section 17. Determination of Just Compensation. - In determining just compensation, the cost of
acquisition of the land, the current value of like properties, its nature, actual use and income,
the sworn valuation by the owner, the tax declarations, and the assessment made by
government assessors, shall be considered. The social and economic benefits contributed by the
farmers and the farm workers and by government to the property as well as the non-payment of
taxes or loans secured from any government financing institution on the said land shall be
considered as additional factors to determine its valuation.
On its face, the staggering difference between the LBPs initial valuation of the petitioners
properties (totalingP251,379,104.02) and the RTCs valuation (totaling P1,383,179,000.00) a
difference of P1,131,799,895.98 amounting to 81% of the total price betrays the lack of good
faith on the part of the government in dealing with the landowners. The sheer enormity of the
difference between the two amounts cannot but lead us to conclude that the LBPs error was
grievous and amounted to nothing less than gross negligence in the exercise of its duty in this
case, to properly ascertain the just compensation due to the petitioners.
Mr. Justice Abad further argues that interest on just compensation is due only where there is delay in
payment. In the present case, the petitioners allegedly did not suffer any delay in payment since the
LBP made partial payments prior to the taking of their lands.
This argument completely overlooks the definition of just compensation already established in
jurisprudence. Apart from the requirement that compensation for expropriated land must be fair and
reasonable, compensation, to be "just," must also be made without delay.
6
In simpler terms, for
the governments payment to be considered just compensation, the landowner must receive it in full
without delay.
In the present case, it is undisputed that the government took the petitioners lands on December 9,
1996; the petitioners only received full payment of the just compensation due on May 9, 2008. This
circumstance, by itself, already confirms the unconscionable delay in the payment of just
compensation.
Admittedly, a grain of truth exists in Justice Abads observation that the petitioners received partial
payments from the LBP before the titles to their landholdings were transferred to the
government. The full and exact truth, however, is that the partial payments at the time of the taking
only amounted to a trifling five percent (5%) of the actual value of the expropriated properties, as
determined with finality by this Court. Even taking into consideration the subsequent partial
payments made totaling P411,769,168.32 (inclusive of the amounts deposited prior to the taking),
these payments only constituted a mere one-third (1/3) of the actual value of the petitioners
properties.
It should be considered as highlighted in our October 12, 2010 Resolution that the properties the
government took were fully operating and earning plantations at the time of the taking. Thus, the
landowners lost not only their properties, but the fruits of these properties. These were all lost in
1996, leaving the landowners without any replacement income from their properties, except for the
possible interest for the trifling payment made at the time of the taking that, together with the
subsequent payment, only amounted to a third of the total amount due. Thus, for twelve long years,
the amount of P971,409,831.68 was withheld from the landowners.
An added dimension to this delayed payment is the impact of the delay. One impact as pointed out
above is the loss of income the landowners suffered. Another impact that the LBP now glosses
over is the income that the LBP earned from the sizeable sum it withheld for twelve long years. From
this perspective, the unaccounted-for LBP income is unjust enrichment in its favor and an
inequitable loss to the landowners. This situation was what the Court essentially addressed when it
awarded the petitioners 12% interest.
Mr. Justice Abad goes on to argue that the delay should not be attributed to the LBP as it could not
have foreseen that it would take twelve years for the case to be resolved. Justice Abads stance
could have been correct were it not for the fact that the delay in this case is ultimately attributable to
the government. Two significant factors justify the attribution of the delay to the government.
The first is the DARs gross undervaluation of the petitioners properties the government move that
started the cycle of court actions.
The second factor to consider is government inaction. Records show that after the petitioners
received the LBPs initial valuation of their lands, they filed petitions with the DARAB, the responsible
agency of the DAR, for the proper determination of just compensation. Instead of dismissing these
petitions outright for lack of jurisdiction, the DARAB sat on these cases for three years. It was only
after the petitioners resorted to judicial intervention, filing their petitions for the determination of just
compensation with the RTC, that the petitioners case advanced.
The RTC interpreted the DARABs inaction as reluctance of the government to pay the petitioners
just compensation, a view this Court affirmed in its October 12, 2010 Resolution.
Expropriation for agrarian reform
requires the payment of just compensation
The LBP claims that the just compensation in this case should be determined within the context of
the article on social justice found in the 1987 Constitution. In the LBPs opinion, when we awarded
the petitioners 12% interest by way of potential income, we removed from the taking of agricultural
properties for agrarian reform its main public purpose of righting the wrong inflicted on landless
farmers.
By this argument, the LBP effectively attempts to make a distinction between the just compensation
given to landowners whose properties are taken for the governments agrarian reform program and
properties taken for other public purposes. This perceived distinction, however, is misplaced and is
more apparent than real.
The constitutional basis for our agrarian reform program is Section 4, Article XIII of the 1987
Constitution, which mandates:
Section 4. The State shall, by law, undertake an agrarian reform program founded on the right of
farmers and regular farm workers, who are landless, to own directly or collectively the lands they till
or, in the case of other farm workers, to receive a just share of the fruits thereof. To this end, the
State shall encourage and undertake the just distribution of all agricultural lands, subject to such
priorities and reasonable retention limits as the Congress may prescribe, taking into account
ecological, developmental, or equity considerations, and subject to the payment of just
compensation.
This provision expressly provides that the taking of land for use in the governments agrarian reform
program isconditioned on the payment of just compensation. Nothing in the wording of this
provision even remotely suggests that the just compensation required from the taking of land for the
agrarian reform program should be treated any differently from the just compensation required in any
other case of expropriation. As explained by Commissioner Roberto R. Concepcion during the
deliberations of the 1986 Constitutional Commission:
[T]he term "just compensation" is used in several parts of the Constitution, and, therefore, it must
have a uniform meaning. It cannot have in one part a meaning different from that which appears in
the other portion. If, after all, the party whose property is taken will receive the real value of the
property on just compensation, that is good enough.
7

In fact, while a proposal was made during the deliberations of the 1986 Constitutional Commission to
give a lower market price per square meter for larger tracts of land, the Commission never intended
to give agricultural landowners less than just compensation in the expropriation of property for
agrarian reform purposes.
8

To our mind, nothing is inherently contradictory in the public purpose of land reform and the right of
landowners to receive just compensation for the expropriation by the State of their properties. That
the petitioners are corporations that used to own large tracts of land should not be taken against
them. As Mr. Justice Isagani Cruz eloquently put it:
[S]ocial justice - or any justice for that matter - is for the deserving, whether he be a millionaire in his
mansion or a pauper in his hovel. It is true that, in case of reasonable doubt, we are called upon to
tilt the balance in favor of the poor, to whom the Constitution fittingly extends its sympathy and
compassion. But never is it justified to prefer the poor simply because they are poor, or to reject the
rich simply because they are rich, for justice must always be served, for poor and rich alike,
according to the mandate of the law.
9

Interest payments borne by government,
not by farmers-beneficiaries
Nor do we find any merit in the LBPs assertion that the large amount of just compensation that we
awarded the petitioners, together with the amount of interest due, would necessarily result in making
the farmers- beneficiaries endure another form of bondage the payment of an exorbitant amount
for the rest of their lives.
As the petitioners correctly pointed out, the governments liability for the payment of interest to the
landowner for any delay attributable to it in paying just compensation for the expropriated property is
entirely separate and distinct from the farmers-beneficiaries obligations to pay regular amortizations
for the properties transferred to them.
Republic Act No. 6657 (The Comprehensive Agrarian Reform Law, or CARL) provides for the
specific source of funding to be used by the government in implementing the agrarian reform
program; this funding does not come directly from the payments made by the farmers-
beneficiaries.
10
1avvphi 1
More to the point, under the CARL, the amount the farmers-beneficiaries must pay the LBP for their
land is, for the most part, subsidized by the State and is not equivalent to the actual cost of the land
that the Department of Agrarian Reform paid to the original landowners. Section 26, Chapter VII of
the CARL provides:
SEC. 26. Payment by Beneficiaries. - Lands awarded pursuant to this Act shall be paid for by the
beneficiaries to the LBP in thirty (30) annual amortizations at six percent (6%) interest per annum.
The payments for the first three (3) years after the award may be at reduced amounts as established
by the PARC: Provided, That the first five (5) annual payments may not be more than five
percent (5%) of the value of the annual gross productions paid as established by the DAR.
Should the scheduled annual payments after the fifth year exceed ten percent (10) of the annual
gross production and the failure to produce accordingly is not due to the beneficiary's fault, the LBP
may reduce the interest rate or reduce the principal obligation to make the payment affordable.
Interpreting this provision of the law, DAR Administrative Order No. 6, Series of 1993 provides:
A. As a general rule, land awarded pursuant to E.O. 229 and R.A. 6657 shall be repaid by
the Agrarian Reform Beneficiary (ARB) to LANDBANK in thirty (30) annual amortizations at
six (6%) percent interest per annum. The annual amortization shall start one year from date
of Certificate of Landownership Award (CLOA) registration.
B. The payments by the ARBs for the first three (3) years shall be two and a half percent
(2.5%) of AGP [Annual Gross Production] and five percent (5.0%) of AGP for the fourth and
fifth years. To further make the payments affordable, the ARBs shall pay ten percent (10%)
of AGP or the regular amortization, whichever is lower, from the sixth (6th) to the thirtieth
(30th) year.
Clearly, the payments made by the farmers-beneficiaries to the LBP are primarily based on
a fixed percentage of their annual gross production, or the value of the annual yield/produce of
the land awarded to them.
11
The cost of the land will only be considered as the basis for the
payments made by the farmers-beneficiaries when this amount is lower than the amount based on
the annual gross production. Thus, there is no basis for the LBP to claim that our ruling has violated
the letter and spirit of the social justice provision of the 1987 Constitution. On the contrary, our ruling
is made in accordance with the intent of the 1987 Constitution.
Motion for Oral Arguments
We deny as well the LBPs motion to set the case for oral arguments. The submissions of the
parties, as well as the records of the case, have already provided this Court with enough arguments
and particulars to rule on the issues involved. Oral arguments at this point would be superfluous and
would serve no useful purpose.
The OSGs Intervention
The interest of the Republic, for whom the OSG speaks, has been amply protected through the
direct action of petitioner LBP the government instrumentality created by law to provide timely and
adequate financial support in all phases involved in the execution of needed agrarian reform. The
OSG had every opportunity to intervene through the long years that this case had been pending but
it chose to show its hand only at this very late stage when its presence can only serve to delay the
final disposition of this case. The arguments the OSG presents, furthermore, are issues that this
Court has considered in the course of resolving this case. Thus, every reason exists to deny the
intervention prayed for.
WHEREFORE, premises considered, the respondents second motion for reconsideration and the
motion to set the case for oral arguments are hereby DENIED WITH ABSOLUTE FINALITY. The
motion for intervention filed by the Office of the Solicitor General is, likewise, denied. We reiterate,
under pain of contempt if our directive is disregarded or disobeyed, that no further pleadings shall be
entertained. Let judgment be entered in due course.
SO ORDERED.
G.R. No. 127198 May 16, 2005
LAND BANK OF THE PHILIPPINES, petitioner,
vs.
HON. ELI G. C. NATIVIDAD, Presiding Judge of the Regional Trial Court, Branch 48, San
Fernando, Pampanga, and JOSE R. CAGUIAT represented by Attorneys-in-fact JOSE T.
BARTOLOME and VICTORIO MANGALINDAN, respondents.
D E C I S I O N
TINGA, J .:
This is a Petition for Review
1
dated December 6, 1996 assailing the Decision
2
of the Regional Trial
Court
3
dated July 5, 1996 which ordered the Department of Agrarian Reform (DAR) and petitioner
Land Bank of the Philippines (Land Bank) to pay private respondents the amount of P30.00 per
square meter as just compensation for the States acquisition of private respondents properties
under the land reform program.
The facts follow.
On May 14, 1993, private respondents filed a petition before the trial court for the determination of
just compensation for their agricultural lands situated in Arayat, Pampanga, which were acquired by
the government pursuant to Presidential Decree No. 27 (PD 27). The petition named as respondents
the DAR and Land Bank. With leave of court, the petition was amended to implead as co-
respondents the registered tenants of the land.
After trial, the court rendered the assailed Decision the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of petitioners and against respondents,
ordering respondents, particularly, respondents Department of Agrarian Reform and the
Land Bank of the Philippines, to pay these lands owned by petitioners and which are the
subject of acquisition by the State under its land reform program, the amount of THIRTY
PESOS (P30.00) per square meter, as the just compensation due for payment for same
lands of petitioners located at San Vicente (or Camba), Arayat, Pampanga.
Respondent Department of Agrarian Reform is also ordered to pay petitioners the amount of
FIFTY THOUSAND PESOS (P50,000.00) as Attorneys Fee, and to pay the cost of suit.
SO ORDERED.
4

DAR and Land Bank filed separate motions for reconsideration which were denied by the trial court
in its Order
5
dated July 30, 1996 for being pro forma as the same did not contain a notice of
hearing. Thus, the prescriptive period for filing an appeal was not tolled. Land Bank consequently
failed to file a timely appeal and the assailedDecision became final and executory.
Land Bank then filed a Petition for Relief from Order Dated 30 July 1996,
6
citing excusable
negligence as its ground for relief. Attached to the petition for relief were two affidavits of merit
claiming that the failure to include in the motion for reconsideration a notice of hearing was due to
accident and/or mistake.
7
The affidavit of Land Banks counsel of record notably states that "he
simply scanned and signed the Motion for Reconsideration for Agrarian Case No. 2005, Regional
Trial Court of Pampanga, Branch 48, not knowing, or unmindful that it had no notice of hearing"
8
due
to his heavy workload.
The trial court, in its Order
9
of November 18, 1996, denied the petition for relief because Land Bank
lost a remedy in law due to its own negligence.
In the instant petition for review, Land Bank argues that the failure of its counsel to include a notice
of hearing due to pressure of work constitutes excusable negligence and does not make the motion
for reconsideration pro formaconsidering its allegedly meritorious defenses. Hence, the denial of its
petition for relief from judgment was erroneous.
According to Land Bank, private respondents should have sought the reconsideration of the DARs
valuation of their properties. Private respondents thus failed to exhaust administrative remedies
when they filed a petition for the determination of just compensation directly with the trial court. Land
Bank also insists that the trial court erred in declaring that PD 27 and Executive Order No. 228 (EO
228) are mere guidelines in the determination of just compensation, and in relying on private
respondents evidence of the valuation of the properties at the time of possession in 1993 and not on
Land Banks evidence of the value thereof as of the time of acquisition in 1972.
Private respondents filed a Comment
10
dated February 22, 1997, averring that Land Banks failure to
include a notice of hearing in its motion for reconsideration due merely to counsels heavy workload,
which resulted in the motion being declared pro forma, does not constitute excusable negligence,
especially in light of the admission of Land Banks counsel that he has been a lawyer since 1973 and
has "mastered the intricate art and technique of pleading."
Land Bank filed a Reply
11
dated March 12, 1997 insisting that equity considerations demand that it
be heard on substantive issues raised in its motion for reconsideration.
The Court gave due course to the petition and required the parties to submit their respective
memoranda.
12
Both parties complied.
13

The petition is unmeritorious.
At issue is whether counsels failure to include a notice of hearing constitutes excusable negligence
entitling Land Bank to a relief from judgment.
Section 1, Rule 38 of the 1997 Rules of Civil Procedure provides:
Sec. 1. Petition for relief from judgment, order, or other proceedings.When a judgment or
final order is entered, or any other proceeding is thereafter taken against a party in any court
through fraud, accident, mistake, or excusable negligence, he may file a petition in such
court and in the same case praying that the judgment, order or proceeding be set aside.
As can clearly be gleaned from the foregoing provision, the remedy of relief from judgment can only
be resorted to on grounds of fraud, accident, mistake or excusable negligence. Negligence to be
excusable must be one which ordinary diligence and prudence could not have guarded against.
14

Measured against this standard, the reason profferred by Land Banks counsel, i.e., that his heavy
workload prevented him from ensuring that the motion for reconsideration included a notice of
hearing, was by no means excusable.
Indeed, counsels admission that "he simply scanned and signed the Motion for Reconsideration for
Agrarian Case No. 2005, Regional Trial Court of Pampanga, Branch 48, not knowing, or unmindful
that it had no notice of hearing" speaks volumes of his arrant negligence, and cannot in any manner
be deemed to constitute excusable negligence.
The failure to attach a notice of hearing would have been less odious if committed by a greenhorn
but not by a lawyer who claims to have "mastered the intricate art and technique of pleading."
15

Indeed, a motion that does not contain the requisite notice of hearing is nothing but a mere scrap of
paper. The clerk of court does not even have the duty to accept it, much less to bring it to the
attention of the presiding judge.
16
The trial court therefore correctly considered the motion for
reconsideration pro forma. Thus, it cannot be faulted for denying Land Banks motion for
reconsideration and petition for relief from judgment.
It should be emphasized at this point that procedural rules are designed to facilitate the adjudication
of cases. Courts and litigants alike are enjoined to abide strictly by the rules. While in certain
instances, we allow a relaxation in the application of the rules, we never intend to forge a weapon for
erring litigants to violate the rules with impunity. The liberal interpretation and application of rules
apply only in proper cases of demonstrable merit and under justifiable causes and circumstances.
While it is true that litigation is not a game of technicalities, it is equally true that every case must be
prosecuted in accordance with the prescribed procedure to ensure an orderly and speedy
administration of justice. Party litigants and their counsel are well advised to abide by, rather than
flaunt, procedural rules for these rules illumine the path of the law and rationalize the pursuit of
justice.
17

Aside from ruling on this procedural issue, the Court shall also resolve the other issues presented by
Land Bank, specifically as regards private respondents alleged failure to exhaust administrative
remedies and the question of just compensation.
Land Bank avers that private respondents should have sought the reconsideration of the DARs
valuation instead of filing a petition to fix just compensation with the trial court.
The records reveal that Land Banks contention is not entirely true. In fact, private respondents did
write a letter
18
to the DAR Secretary objecting to the land valuation summary submitted by the
Municipal Agrarian Reform Office and requesting a conference for the purpose of fixing just
compensation. The letter, however, was left unanswered prompting private respondents to file a
petition directly with the trial court.
At any rate, in Philippine Veterans Bank v. Court of Appeals,
19
we declared that there is nothing
contradictory between the DARs primary jurisdiction to determine and adjudicate agrarian reform
matters and exclusive original jurisdiction over all matters involving the implementation of agrarian
reform, which includes the determination of questions of just compensation, and the original and
exclusive jurisdiction of regional trial courts over all petitions for the determination of just
compensation. The first refers to administrative proceedings, while the second refers to judicial
proceedings.
In accordance with settled principles of administrative law, primary jurisdiction is vested in the DAR
to determine in a preliminary manner the just compensation for the lands taken under the agrarian
reform program, but such determination is subject to challenge before the courts. The resolution of
just compensation cases for the taking of lands under agrarian reform is, after all, essentially a
judicial function.
20

Thus, the trial did not err in taking cognizance of the case as the determination of just compensation
is a function addressed to the courts of justice.
Land Banks contention that the property was acquired for purposes of agrarian reform on October
21, 1972, the time of the effectivity of PD 27, ergo just compensation should be based on the value
of the property as of that time and not at the time of possession in 1993, is likewise erroneous.
In Office of the President, Malacaang, Manila v. Court of Appeals,
21
we ruled that the seizure of the
landholding did not take place on the date of effectivity of PD 27 but would take effect on the
payment of just compensation.
Under the factual circumstances of this case, the agrarian reform process is still incomplete as the
just compensation to be paid private respondents has yet to be settled. Considering the passage of
Republic Act No. 6657 (RA 6657)
22
before the completion of this process, the just compensation
should be determined and the process concluded under the said law. Indeed, RA 6657 is the
applicable law, with PD 27 and EO 228 having only suppletory effect, conformably with our ruling
in Paris v. Alfeche.
23

Section 17 of RA 6657 which is particularly relevant, providing as it does the guideposts for the
determination of just compensation, reads as follows:
Sec. 17. Determination of Just Compensation.In determining just compensation, the cost
of acquisition of the land, the current value of like properties, its nature, actual use and
income, the sworn valuation by the owner, the tax declarations, and the assessment made
by government assessors shall be considered. The social and economic benefits contributed
by the farmers and the farm-workers and by the Government to the property as well as the
non-payment of taxes or loans secured from any government financing institution on the said
land shall be considered as additional factors to determine its valuation.
It would certainly be inequitable to determine just compensation based on the guideline provided by
PD 27 and EO 228 considering the DARs failure to determine the just compensation for a
considerable length of time. That just compensation should be determined in accordance with RA
6657, and not PD 27 or EO 228, is especially imperative considering that just compensation should
be the full and fair equivalent of the property taken from its owner by the expropriator, the equivalent
being real, substantial, full and ample.
24

In this case, the trial court arrived at the just compensation due private respondents for their
property, taking into account its nature as irrigated land, location along the highway, market value,
assessors value and the volume and value of its produce. This Court is convinced that the trial court
correctly determined the amount of just compensation due private respondents in accordance with,
and guided by, RA 6657 and existing jurisprudence.
WHEREFORE, the petition is DENIED. Costs against petitioner.
SO ORDERED.
G.R. No. 170220 November 20, 2006
JOSEFINA S. LUBRICA, in her capacity as Assignee of FEDERICO C. SUNTAY, NENITA
SUNTAY TAEDO and EMILIO A.M. SUNTAY III, Petitioners,
vs.
LAND BANK OF THE PHILIPPINES, Respondent.
D E C I S I O N
YNARES-SANTIAGO, J .:
This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails the October 27,
2005 Amended Decision
1
of the Court of Appeals in CA-G.R. SP No. 77530, which vacated its May
26, 2004 Decision affirming (a) the Order of the Regional Trial Court of San Jose, Occidental
Mindoro, Branch 46, acting as Special Agrarian Court, in Agrarian Case Nos. R-1339 and R-1340,
dated March 31, 2003 directing respondent Land Bank of the Philippines (LBP) to deposit the
provisional compensation as determined by the Provincial Agrarian Reform Adjudicator (PARAD);
(b) the May 26, 2003 Resolution denying LBPs motion for reconsideration; and (c) the May 27, 2003
Order requiring Teresita V. Tengco, LBPs Land Compensation Department Manager, to comply with
the March 31, 2003 Order.
The facts of the case are as follows:
Petitioner Josefina S. Lubrica is the assignee
2
of Federico C. Suntay over certain parcels of
agricultural land located at Sta. Lucia, Sablayan, Occidental Mindoro, with an area of 3,682.0285
hectares covered by Transfer Certificate of Title (TCT) No. T-31 (T-1326)
3
of the Registry of Deeds
of Occidental Mindoro. In 1972, a portion of the said property with an area of 311.7682 hectares,
was placed under the land reform program pursuant to Presidential Decree No. 27 (1972)
4
and
Executive Order No. 228 (1987).
5
The land was thereafter subdivided and distributed to farmer
beneficiaries. The Department of Agrarian Reform (DAR) and the LBP fixed the value of the land at
P5,056,833.54 which amount was deposited in cash and bonds in favor of Lubrica.
On the other hand, petitioners Nenita Suntay-Taedo and Emilio A.M. Suntay III inherited from
Federico Suntay a parcel of agricultural land located at Balansay, Mamburao, Occidental Mindoro
covered by TCT No. T-128
6
of the Register of Deeds of Occidental Mindoro, consisting of two lots,
namely, Lot 1 with an area of 45.0760 hectares and Lot 2 containing an area of 165.1571 hectares
or a total of 210.2331 hectares. Lot 2 was placed under the coverage of P.D. No. 27 but only
128.7161 hectares was considered by LBP and valued the same at P1,512,575.05.
Petitioners rejected the valuation of their properties, hence the Office of the Provincial Agrarian
Reform Adjudicator (PARAD) conducted summary administrative proceedings for determination of
just compensation. On January 29, 2003, the PARAD fixed the preliminary just compensation at
P51,800,286.43 for the 311.7682 hectares (TCT No. T-31) and P21,608,215.28 for the 128.7161
hectares (TCT No. T-128).
7

Not satisfied with the valuation, LBP filed on February 17, 2003, two separate petitions
8
for judicial
determination of just compensation before the Regional Trial Court of San Jose, Occidental Mindoro,
acting as a Special Agrarian Court, docketed as Agrarian Case No. R-1339 for TCT No. T-31 and
Agrarian Case No. R-1340 for TCT No. T-128, and raffled to Branch 46 thereof.
Petitioners filed separate Motions to Deposit the Preliminary Valuation Under Section 16(e) of
Republic Act (R.A.) No. 6657 (1988)
9
and Ad Cautelam Answer praying among others that LBP
deposit the preliminary compensation determined by the PARAD.
On March 31, 2003, the trial court issued an Order
10
granting petitioners motion, the dispositive
portion of which reads:
WHEREFORE, Ms. Teresita V. Tengco, of the Land Compensation Department I (LCD I), Land
Bank of the Philippines, is hereby ordered pursuant to Section 16 (e) of RA 6657 in relation to
Section 2, Administrative Order No. 8, Series of 1991, to deposit the provisional compensation as
determined by the PARAD in cash and bonds, as follows:
1. In Agrarian Case No. R-1339, the amount of P 51,800,286.43, minus the amount received
by the Landowner;
2. In Agrarian Case No. R-1340, the amount of P 21,608,215.28, less the amount of P
1,512,575.16, the amount already deposited.
Such deposit must be made with the Land Bank of the Philippines, Manila within five (5) days from
receipt of a copy of this order and to notify this court of her compliance within such period.
Let this order be served by the Sheriff of this Court at the expense of the movants.
SO ORDERED.
11

LBPs motion for reconsideration was denied in a Resolution
12
dated May 26, 2003. The following
day, May 27, 2003, the trial court issued an Order
13
directing Ms. Teresita V. Tengco, LBPs Land
Compensation Department Manager, to deposit the amounts.
Thus, on June 17, 2003, LBP filed with the Court of Appeals a Petition for Certiorari and Prohibition
under Rule 65 of the Rules of Court with application for the issuance of a Temporary Restraining
Order and Writ of Preliminary Injunction docketed as CA-G.R. SP No. 77530.
14

On June 27, 2003, the appellate court issued a 60-day temporary restraining order
15
and on October
6, 2003, a writ of preliminary injunction.
16

On May 26, 2004, the Court of Appeals rendered a Decision
17
in favor of the petitioners, the
dispositive portion of which reads:
WHEREFORE, premises considered, there being no grave abuse of discretion, the instant Petition
for Certiorari and Prohibition is DENIED. Accordingly, the Order dated March 31, 2003, Resolution
dated May 26, 2003, and Order dated May 27, 2003 are hereby AFFIRMED. The preliminary
injunction We previously issued is hereby LIFTED and DISSOLVED.
SO ORDERED.
18

The Court of Appeals held that the trial court correctly ordered LBP to deposit the amounts
provisionally determined by the PARAD as there is no law which prohibits LBP to make a deposit
pending the fixing of the final amount of just compensation. It also noted that there is no reason for
LBP to further delay the deposit considering that the DAR already took possession of the properties
and distributed the same to farmer-beneficiaries as early as 1972.
LBP moved for reconsideration which was granted. On October 27, 2005, the appellate court
rendered the assailed Amended Decision,
19
the dispositive portion of which reads:
Wherefore, in view of the prescription of a different formula in the case of Gabatin which We hold as
cogent and compelling justification necessitating Us to effect the reversal of Our judgment herein
sought to be reconsidered, the instant Motion for Reconsideration is GRANTED, and Our May 26,
2004 Decision is hereby VACATED and ABANDONED with the end in view of giving way to and
acting in harmony and in congruence with the tenor of the ruling in the case of Gabatin. Accordingly,
the assailed rulings of the Special Agrarian Court is (sic) commanded to compute and fix the just
compensation for the expropriated agricultural lands strictly in accordance with the mode of
computation prescribed (sic) Our May 26, 2004 judgment in the case of Gabatin.
SO ORDERED.
20

In the Amended Decision, the Court of Appeals held that the immediate deposit of the preliminary
value of the expropriated properties is improper because it was erroneously computed.
Citing Gabatin v. Land Bank of the Philippines,
21
it held that the formula to compute the just
compensation should be: Land Value = 2.5 x Average Gross Production x Government Support
Price. Specifically, it held that the value of the government support price for the corresponding
agricultural produce (rice and corn) should be computed at the time of the legal taking of the subject
agricultural land, that is, on October 21, 1972 when landowners were effectively deprived of
ownership over their properties by virtue of P.D. No. 27. According to the Court of Appeals, the
PARAD incorrectly used the amounts of P500 and P300 which are the prevailing government
support price for palay and corn, respectively, at the time of payment, instead of P35 and P31, the
prevailing government support price at the time of the taking in 1972.
Hence, this petition raising the following issues:
A. THE COURT A QUO HAS DECIDED THE CASE IN A WAY NOT IN ACCORD WITH THE
LATEST DECISION OF THE SUPREME COURT IN THE CASE OF LAND BANK OF THE
PHILIPPINES VS. HON. ELI G.C. NATIVIDAD, ET AL., G.R. NO. 127198, PROM. MAY 16,
2005; and
22

B. THE COURT A QUO HAS, WITH GRAVE GRAVE ABUSE OF DISCRETION, SO FAR
DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS, DECIDING ISSUES THAT HAVE NOT BEEN RAISED, AS TO CALL FOR
AN EXERCISE OF THE POWER OF SUPERVISION.
23

Petitioners insist that the determination of just compensation should be based on the value of the
expropriated properties at the time of payment. Respondent LBP, on the other hand, claims that the
value of the realties should be computed as of October 21, 1972 when P.D. No. 27 took effect.
The petition is impressed with merit.
In the case of Land Bank of the Philippines v. Natividad,
24
the Court ruled thus:
Land Banks contention that the property was acquired for purposes of agrarian reform on October
21, 1972, the time of the effectivity of PD 27, ergo just compensation should be based on the value
of the property as of that time and not at the time of possession in 1993, is likewise erroneous. In
Office of the President, Malacaang, Manila v. Court of Appeals, we ruled that the seizure of the
landholding did not take place on the date of effectivity of PD 27 but would take effect on the
payment of just compensation.
The Natividad case reiterated the Courts ruling in Office of the President v. Court of Appeals
25
that
the expropriation of the landholding did not take place on the effectivity of P.D. No. 27 on October
21, 1972 but seizure would take effect on the payment of just compensation judicially determined.
Likewise, in the recent case of Heirs of Francisco R. Tantoco, Sr. v. Court of Appeals,
26
we held that
expropriation of landholdings covered by R.A. No. 6657 take place, not on the effectivity of the Act
on June 15, 1988, but on the payment of just compensation.
In the instant case, petitioners were deprived of their properties in 1972 but have yet to receive the
just compensation therefor.1wphi1 The parcels of land were already subdivided and distributed to the
farmer-beneficiaries thereby immediately depriving petitioners of their use. Under the circumstances,
it would be highly inequitable on the part of the petitioners to compute the just compensation using
the values at the time of the taking in 1972, and not at the time of the payment, considering that the
government and the farmer-beneficiaries have already benefited from the land although ownership
thereof have not yet been transferred in their names. Petitioners were deprived of their properties
without payment of just compensation which, under the law, is a prerequisite before the property can
be taken away from its owners.
27
The transfer of possession and ownership of the land to the
government are conditioned upon the receipt by the landowner of the corresponding payment or
deposit by the DAR of the compensation with an accessible bank. Until then, title remains with the
landowner.
28

Our ruling in Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian
Reform
29
is instructive, thus:
It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as October 21, 1972
and declared that he shall "be deemed the owner" of a portion of land consisting of a family-sized
farm except that "no title to the land owned by him was to be actually issued to him unless and until
he had become a full-fledged member of a duly recognized farmers cooperative." It was understood,
however, that full payment of the just compensation also had to be made first, conformably to the
constitutional requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
All qualified farmer-beneficiaries are now deemed full owners as of October 21, 1972 of the land
they acquired by virtue of Presidential Decree No. 27 (Emphasis supplied.)
it was obviously referring to lands already validly acquired under the said decree, after proof of full-
fledged membership in the farmers cooperatives and full payment of just compensation. x x x
The CARP Law, for its part, conditions the transfer of possession and ownership of the land to the
government on receipt by the landowner of the corresponding payment or the deposit by the DAR of
the compensation in cash or LBP bonds with an accessible bank. Until then, title also remains with
the landowner. No outright change of ownership is contemplated either.
We also note that the expropriation proceedings in the instant case was initiated under P.D. No. 27
but the agrarian reform process is still incomplete considering that the just compensation to be paid
to petitioners has yet to be settled. Considering the passage of R.A. No. 6657 before the completion
of this process, the just compensation should be determined and the process concluded under the
said law. Indeed, R.A. No. 6657 is the applicable law, with P.D. No. 27 and E.O. No. 228 having only
suppletory effect.
30

In Land Bank of the Philippines v. Court of Appeals,
31
we held that:
RA 6657 includes PD 27 lands among the properties which the DAR shall acquire and distribute to
the landless.1wphi1And to facilitate the acquisition and distribution thereof, Secs. 16, 17 and 18 of the Act
should be adhered to.
Section 18 of R.A. No. 6657 mandates that the LBP shall compensate the landowner in such amount
as may be agreed upon by the landowner and the DAR and the LBP or as may be finally determined
by the court as the just compensation for the land. In determining just compensation, the cost of the
acquisition of the land, the current value of like properties, its nature, actual use and income, the
sworn valuation by the owner, the tax declarations, and the assessment made by government
assessors shall be considered. The social and economic benefits contributed by the farmers and the
farmworkers and by the government to the property as well as the nonpayment of taxes or loans
secured from any government financing institution on the said land shall be considered as additional
factors to determine its valuation.
32

Corollarily, we held in Land Bank of the Philippines v. Celada
33
that the above provision was
converted into a formula by the DAR through Administrative Order No. 05, S. 1998, to wit:
Land Value (LV) = (Capitalized Net Income x 0.6) + (Comparable Sales x 0.3) + (Market Value per
Tax Declaration x 0.1)
Petitioners were deprived of their properties way back in 1972, yet to date, they have not yet
received just compensation. Thus, it would certainly be inequitable to determine just compensation
based on the guideline provided by P.D. No. 227 and E.O. No. 228 considering the failure to
determine just compensation for a considerable length of time. That just compensation should be
determined in accordance with R.A. No. 6657 and not P.D. No. 227 or E.O. No. 228, is important
considering that just compensation should be the full and fair equivalent of the property taken from
its owner by the expropriator, the equivalent being real, substantial, full and ample.
34

WHEREFORE, premises considered, the petition is GRANTED. The assailed Amended Decision
dated October 27, 2005 of the Court of Appeals in CA-G.R. SP No. 77530 is REVERSED and SET
ASIDE. The Decision dated May 26, 2004 of the Court of Appeals affirming (a) the March 31, 2003
Order of the Special Agrarian Court ordering the respondent Land Bank of the Philippines to deposit
the just compensation provisionally determined by the PARAD; (b) the May 26, 2003 Resolution
denying respondents Motion for Reconsideration; and (c) the May 27, 2003 Order directing Teresita
V. Tengco, respondents Land Compensation Department Manager to comply with the March 31,
2003 Order, is REINSTATED. The Regional Trial Court of San Jose, Occidental Mindoro, Branch 46,
acting as Special Agrarian Court is ORDERED to proceed with dispatch in the trial of Agrarian Case
Nos. R-1339 and R-1340, and to compute the final valuation of the subject properties based on the
aforementioned formula.
SO ORDERED.
G.R. No. 118712 October 6, 1995
LAND BANK OF THE PHILIPPINES, petitioner,
vs.
COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL
MANAGEMENT & DEVELOPMENT CORP., respondents.
G.R. No. 118745 October 6, 1995
DEPARTMENT OF AGRARIAN REFORM, represented by the Secretary of Agrarian
Reform, petitioner,
vs.
COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL
MANAGEMENT & DEVELOPMENT CORP., ET AL., respondents.

FRANCISCO, R., J .:
It has been declared that the duty of the court to protect the weak and the underprivileged should not
be carried out to such an extent as deny justice to the landowner whenever truth and justice happen
to be on his side.
1
As eloquently stated by Justice Isagani Cruz:
. . . social justice or any justice for that matter is for the deserving, whether he
be a millionaire in his mansion or a pauper in his hovel. It is true that, in case of
reasonable doubt, we are called upon to tilt the balance in favor of the poor, to whom
the Constitution fittingly extends its sympathy and compassion. But never is it
justified to prefer the poor simply because they are poor, or to reject the rich simply
because they are rich, for justice must always be served, for poor and rich alike,
according to the mandate of the law.
2

In this agrarian dispute, it is once more imperative that the aforestated principles be applied in its
resolution.
Separate petitions for review were filed by petitioners Department of Agrarian Reform (DAR) (G.R.
No. 118745) and Land Bank of the Philippines (G.R. No. 118712) following the adverse ruling by the
Court of Appeals in CA-G.R. SP No. 33465. However, upon motion filed by private respondents, the
petitions were ordered consolidated.
3

Petitioners assail the decision of the Court of Appeals promulgated on October 20, 1994, which
granted private respondents' Petition for Certiorari and Mandamus and ruled as follows:
WHEREFORE, premises considered, the Petition for Certiorari and Mandamus is
hereby GRANTED:
a) DAR Administrative Order No. 9, Series of 1990 is
declared null and void insofar as it provides for the opening of trust
accounts in lieu of deposits in cash or bonds;
b) Respondent Landbank is ordered to immediately deposit not
merely "earmark", "reserve" or "deposit in trust" with an accessible
bank designated by respondent DAR in the names of the following
petitioners the following amounts in cash and in government financial
instruments within the parameters of Sec. 18 (1) of RA 6657:
P 1,455,207.31 Pedro L. Yap
P 135,482.12 Heirs of Emiliano Santiago
P 15,914,127.77 AMADCOR;
c) The DAR-designated bank is ordered to allow the petitioners to
withdraw the above-deposited amounts without prejudice to the final
determination of just compensation by the proper authorities; and
d) Respondent DAR is ordered to
1) immediately conduct summary administrative proceedings to
determine the just compensation for the lands of the petitioners giving
the petitioners 15 days from notice within which to submit evidence
and to 2) decide the cases within 30 days after they are submitted for
decision.
4

Likewise, petitioners seek the reversal of the Resolution dated January 18, 1995,
5
denying
their motion for reconsideration.
Private respondents are landowners whose landholdings were acquired by the DAR and subjected
to transfer schemes to qualified beneficiaries under the Comprehensive Agrarian Reform Law
(CARL, Republic Act No. 6657).
Aggrieved by the alleged lapses of the DAR and the Landbank with respect to the valuation
and payment of compensation for their land pursuant to the provisions of RA 6657, private
respondents filed with this Court a Petition for Certiorari and Mandamus with prayer for
preliminary mandatory injunction. Private respondents questioned the validity of DAR
Administrative Order No. 6, Series of 1992
6
and DAR Administrative Order No. 9, Series of
1990,
7
and sought to compel the DAR to expedite the pending summary administrative
proceedings to finally determine the just compensation of their properties, and the Landbank to
deposit in cash and bonds the amounts respectively "earmarked", "reserved" and "deposited in
trust accounts" for private respondents, and to allow them to withdraw the same.
Through a Resolution of the Second Division dated February 9, 1994, this Court referred the petition
to respondent Court of Appeals for proper determination and disposition.
As found by respondent court , the following are undisputed:
Petitioner Pedro Yap alleges that "(o)n 4 September 1992 the transfer certificates of
title (TCTs) of petitioner Yap were totally cancelled by the Registrar of Deeds of
Leyte and were transferred in the names of farmer beneficiaries collectively, based
on the request of the DAR together with a certification of the Landbank that the sum
of P735,337.77 and P719,869.54 have been earmarked for Landowner Pedro L. Yap
for the parcels of lands covered by TCT Nos. 6282 and 6283, respectively, and
issued in lieu thereof TC-563 and TC-562, respectively, in the names of listed
beneficiaries (ANNEXES "C" & "D") without notice to petitioner Yap and without
complying with the requirement of Section 16 (e) of RA 6657 to deposit the
compensation in cash and Landbank bonds in an accessible bank. (Rollo, p. 6).
The above allegations are not disputed by any of the respondents.
Petitioner Heirs of Emiliano Santiago allege that the heirs of Emiliano F. Santiago are
the owners of a parcel of land located at Laur, NUEVA ECIJA with an area of
18.5615 hectares covered by TCT No. NT-60359 of the registry of Deeds of Nueva
Ecija, registered in the name of the late Emiliano F. Santiago; that in November and
December 1990, without notice to the petitioners, the Landbank required and the
beneficiaries executed Actual tillers Deed of Undertaking (ANNEX "B") to pay rentals
to the LandBank for the use of their farmlots equivalent to at least 25% of the net
harvest; that on 24 October 1991 the DAR Regional Director issued an order
directing the Landbank to pay the landowner directly or through the establishment of
a trust fund in the amount of P135,482.12, that on 24 February 1992, the Landbank
reserved in trust P135,482.12 in the name of Emiliano F. Santiago. (ANNEX
"E"; Rollo,
p. 7); that the beneficiaries stopped paying rentals to the landowners after they
signed the Actual Tiller's Deed of Undertaking committing themselves to pay rentals
to the LandBank (Rollo, p. 133).
The above allegations are not disputed by the respondents except that respondent
Landbank claims 1) that it was respondent DAR, not Landbank which required the
execution of Actual Tillers Deed of Undertaking (ATDU, for brevity); and 2) that
respondent Landbank, although armed with the ATDU, did not collect any amount as
rental from the substituting beneficiaries (Rollo, p. 99).
Petitioner Agricultural Management and Development Corporation (AMADCOR, for
brevity) alleges with respect to its properties located in San Francisco, Quezon
that the properties of AMADCOR in San Francisco, Quezon consist of a parcel of
land covered by TCT No. 34314 with an area of 209.9215 hectares and another
parcel covered by TCT No. 10832 with an area of 163.6189 hectares; that a
summary administrative proceeding to determine compensation of the property
covered by TCT No. 34314 was conducted by the DARAB in Quezon City without
notice to the landowner; that a decision was rendered on 24 November 1992
(ANNEX "F") fixing the compensation for the parcel of land covered by TCT No.
34314 with an area of 209.9215 hectares at P2,768,326.34 and ordering the
Landbank to pay or establish a trust account for said amount in the name of
AMADCOR; and that the trust account in the amount of P2,768,326.34 fixed in the
decision was established by adding P1,986,489.73 to the first trust account
established on 19 December 1991 (ANNEX "G"). With respect to petitioner
AMADCOR's property in Tabaco, Albay, it is alleged that the property of AMADCOR
in Tabaco, Albay is covered by TCT No. T-2466 of the Register of Deeds of Albay
with an area of 1,629.4578 hectares'; that emancipation patents were issued
covering an area of 701.8999 hectares which were registered on 15 February 1988
but no action was taken thereafter by the DAR to fix the compensation for said land;
that on 21 April 1993, a trust account in the name of AMADCOR was established in
the amount of P12,247,217.83', three notices of acquisition having been previously
rejected by AMADCOR. (Rollo, pp. 8-9)
The above allegations are not disputed by the respondents except that respondent
Landbank claims that petitioner failed to participate in the DARAB proceedings (land
valuation case) despite due notice to it (Rollo, p. 100).
8

Private respondents argued that Administrative Order No. 9, Series of 1990 was issued without
jurisdiction and with grave abuse of discretion because it permits the opening of trust accounts by
the Landbank, in lieu of depositing in cash or bonds in an accessible bank designated by the DAR,
the compensation for the land before it is taken and the titles are cancelled as provided under
Section 16(e) of RA 6657.
9
Private respondents also assail the fact that the DAR and the Landbank
merely "earmarked", "deposited in trust" or "reserved" the compensation in their names as landowners
despite the clear mandate that before taking possession of the property, the compensation must be
deposited in cash or in bonds.
10

Petitioner DAR, however, maintained that Administrative Order No. 9 is a valid exercise of its rule-
making power pursuant to Section 49 of RA 6657.
11
Moreover, the DAR maintained that the issuance
of the "Certificate of Deposit" by the Landbank was a substantial compliance with Section 16(e) of RA
6657 and the ruling in the case of Association of Small Landowners in the Philippines, Inc., et
al. vs. Hon. Secretary of Agrarian Reform, G.R. No. 78742, July 14, 1989 (175 SCRA 343).
12

For its part, petitioner Landbank declared that the issuance of the Certificates of Deposits was in
consonance with Circular Nos. 29, 29-A and 54 of the Land Registration Authority where the words
"reserved/deposited" were also used.
13

On October 20, 1994, the respondent court rendered the assailed decision in favor of private
respondents.
14
Petitioners filed a motion for reconsideration but respondent court denied the same.
15

Hence, the instant petitions.
On March 20, 1995, private respondents filed a motion to dismiss the petition in G.R. No. 118745
alleging that the appeal has no merit and is merely intended to delay the finality of the appealed
decision.
16
The Court, however, denied the motion and instead required the respondents to file their
comments.
17

Petitioners submit that respondent court erred in (1) declaring as null and void DAR Administrative
Order No. 9, Series of 1990, insofar as it provides for the opening of trust accounts in lieu of deposit
in cash or in bonds, and (2) in holding that private respondents are entitled as a matter of right to the
immediate and provisional release of the amounts deposited in trust pending the final resolution of
the cases it has filed for just compensation.
Anent the first assignment of error, petitioners maintain that the word "deposit" as used in Section
16(e) of RA 6657 referred merely to the act of depositing and in no way excluded the opening of a
trust account as a form of deposit. Thus, in opting for the opening of a trust account as the
acceptable form of deposit through Administrative Circular No. 9, petitioner DAR did not commit any
grave abuse of discretion since it merely exercised its power to promulgate rules and regulations in
implementing the declared policies of RA 6657.
The contention is untenable. Section 16(e) of RA 6657 provides as follows:
Sec. 16. Procedure for Acquisition of Private Lands
xxx xxx xxx
(e) Upon receipt by the landowner of the corresponding payment or, in case of
rejection or no response from the landowner, upon the deposit with an accessible
bank designated by the DAR of the compensation in cash or in LBP bonds in
accordance with this Act, the DAR shall take immediate possession of the land and
shall request the proper Register of Deeds to issue a Transfer Certificate of Title
(TCT) in the name of the Republic of the Philippines. . . . (emphasis supplied)
It is very explicit therefrom that the deposit must be made only in "cash" or in "LBP bonds". Nowhere
does it appear nor can it be inferred that the deposit can be made in any other form. If it were the
intention to include a "trust account" among the valid modes of deposit, that should have been made
express, or at least, qualifying words ought to have appeared from which it can be fairly deduced
that a "trust account" is allowed. In sum, there is no ambiguity in Section 16(e) of RA 6657 to warrant
an expanded construction of the term "deposit".
The conclusive effect of administrative construction is not absolute. Action of an administrative
agency may be disturbed or set aside by the judicial department if there is an error of law, a grave
abuse of power or lack of jurisdiction or grave abuse of discretion clearly conflicting with either the
letter or the spirit of a legislative enactment.
18
In this regard, it must be stressed that the function of
promulgating rules and regulations may be legitimately exercised only for the purpose of carrying the
provisions of the law into effect. The power of administrative agencies is thus confined to implementing
the law or putting it into effect. Corollary to this is that administrative regulations cannot extend
the law and amend a legislative enactment,
19
for settled is the rule that administrative regulations must be
in harmony with the provisions of the law. And in case there is a discrepancy between the basic law and
an implementing rule or regulation, it is the former that prevails.
20

In the present suit, the DAR clearly overstepped the limits of its power to enact rules and regulations
when it issued Administrative Circular No. 9. There is no basis in allowing the opening of a trust
account in behalf of the landowner as compensation for his property because, as heretofore
discussed, Section 16(e) of RA 6657 is very specific that the deposit must be made only in "cash" or
in "LBP bonds". In the same vein, petitioners cannot invoke LRA Circular Nos. 29, 29-A and 54
because these implementing regulations cannot outweigh the clear provision of the law. Respondent
court therefore did not commit any error in striking down Administrative Circular No. 9 for being null
and void.
Proceeding to the crucial issue of whether or not private respondents are entitled to withdraw the
amounts deposited in trust in their behalf pending the final resolution of the cases involving the final
valuation of their properties, petitioners assert the negative.
The contention is premised on the alleged distinction between the deposit of compensation under
Section 16(e) of RA 6657 and payment of final compensation as provided under Section 18
21
of the
same law. According to petitioners, the right of the landowner to withdraw the amount deposited in his
behalf pertains only to the final valuation as agreed upon by the landowner, the DAR and the LBP or that
adjudged by the court. It has no reference to amount deposited in the trust account pursuant to Section
16(e) in case of rejection by the landowner because the latter amount is only provisional and intended
merely to secure possession of the property pending final valuation. To further bolster the contention
petitioners cite the following pronouncements in the case of "Association of Small Landowners in the Phil.
Inc. vs. Secretary of Agrarian Reform".
22

The last major challenge to CARP is that the landowner is divested of his property
even before actual payment to him in full of just compensation, in contravention of a
well-accepted principle of eminent domain.
xxx xxx xxx
The CARP Law, for its part conditions the transfer of possession and ownership of
the land to the government on receipt by the landowner of the corresponding
payment or the deposit by the DAR of the compensation in cash or LBP bonds with
an accessible bank. Until then, title also remains with the landowner. No outright
change of ownership is contemplated either.
xxx xxx xxx
Hence the argument that the assailed measures violate due process by arbitrarily
transferring title before the land is fully paid for must also be rejected.
Notably, however, the aforecited case was used by respondent court in discarding petitioners'
assertion as it found that:
. . . despite the "revolutionary" character of the expropriation envisioned under RA
6657 which led the Supreme Court, in the case of Association of Small Landowners
in the Phil. Inc. vs. Secretary of Agrarian Reform (175 SCRA 343), to conclude that
"payments of the just compensation is not always required to be made fully in
money" even as the Supreme Court admits in the same case "that the traditional
medium for the payment of just compensation is money and no other" the
Supreme Court in said case did not abandon the "recognized rule . . . that title to the
property expropriated shall pass from the owner to the expropriator only upon full
payment of the just compensation."
23
(Emphasis supplied)
We agree with the observations of respondent court. The ruling in the "Association" case merely
recognized the extraordinary nature of the expropriation to be undertaken under RA 6657 thereby
allowing a deviation from the traditional mode of payment of compensation and recognized payment
other than in cash. It did not, however, dispense with the settled rule that there must be full payment
of just compensation before the title to the expropriated property is transferred.
The attempt to make a distinction between the deposit of compensation under Section 16(e) of RA
6657 and determination of just compensation under Section 18 is unacceptable. To withhold the
right of the landowners to appropriate the amounts already deposited in their behalf as
compensation for their properties simply because they rejected the DAR's valuation, and
notwithstanding that they have already been deprived of the possession and use of such properties,
is an oppressive exercise of eminent domain. The irresistible expropriation of private respondents'
properties was painful enough for them. But petitioner DAR rubbed it in all the more by withholding
that which rightfully belongs to private respondents in exchange for the taking, under an authority
(the "Association" case) that is, however, misplaced. This is misery twice bestowed on private
respondents, which the Court must rectify.
Hence, we find it unnecessary to distinguish between provisional compensation under Section 16(e)
and final compensation under Section 18 for purposes of exercising the landowners' right to
appropriate the same. The immediate effect in both situations is the same, the landowner is deprived
of the use and possession of his property for which he should be fairly and immediately
compensated. Fittingly, we reiterate the cardinal rule that:
. . . within the context of the State's inherent power of eminent domain, just
compensation means not only the correct determination of the amount to be paid to
the owner of the land but also the payment of the land within a reasonable time from
its taking. Without prompt payment, compensation cannot be considered "just" for the
property owner is made to suffer the consequence of being immediately deprived of
his land while being made to wait for a decade or more before actually receiving the
amount necessary to cope with his loss.
24
(Emphasis supplied)
The promulgation of the "Association" decision endeavored to remove all legal obstacles in the
implementation of the Comprehensive Agrarian Reform Program and clear the way for the true
freedom of the farmer.
25
But despite this, cases involving its implementation continue to multiply and
clog the courts' dockets. Nevertheless, we are still optimistic that the goal of totally emancipating the
farmers from their bondage will be attained in due time. It must be stressed, however, that in the pursuit
of this objective, vigilance over the rights of the landowners is equally important because social justice
cannot be invoked to trample on the rights of property owners, who under our Constitution and laws are
also entitled to protection.
26

WHEREFORE, the foregoing premises considered, the petition is hereby DENIED for lack of merit
and the appealed decision is AFFIRMED in toto.
SO ORDERED.
G.R. No. 171101 July 5, 2011
HACIENDA LUISITA, INCORPORATED, Petitioner,
LUISITA INDUSTRIAL PARK CORPORATION and RIZAL COMMERCIAL BANKING
CORPORATION, Petitioners-in-Intervention,
vs.
PRESIDENTIAL AGRARIAN REFORM COUNCIL; SECRETARY NASSER PANGANDAMAN OF
THE DEPARTMENT OF AGRARIAN REFORM; ALYANSA NG MGA MANGGAGAWANG BUKID
NG HACIENDA LUISITA, RENE GALANG, NOEL MALLARI, and JULIO SUNIGA
1
and his
SUPERVISORY GROUP OF THE HACIENDA LUISITA, INC. and WINDSOR
ANDAYA, Respondents.
D E C I S I O N
VELASCO, JR., J .:
"Land for the landless," a shibboleth the landed gentry doubtless has received with much misgiving,
if not resistance, even if only the number of agrarian suits filed serves to be the norm. Through the
years, this battle cry and root of discord continues to reflect the seemingly ceaseless discourse on,
and great disparity in, the distribution of land among the people, "dramatizing the increasingly urgent
demand of the dispossessed x x x for a plot of earth as their place in the sun."
2
As administrations
and political alignments change, policies advanced, and agrarian reform laws enacted, the latest
being what is considered a comprehensive piece, the face of land reform varies and is masked in
myriads of ways. The stated goal, however, remains the same: clear the way for the true freedom of
the farmer.
3

Land reform, or the broader term "agrarian reform," has been a government policy even before the
Commonwealth era. In fact, at the onset of the American regime, initial steps toward land reform
were already taken to address social unrest.
4
Then, under the 1935 Constitution, specific provisions
on social justice and expropriation of landed estates for distribution to tenants as a solution to land
ownership and tenancy issues were incorporated.
In 1955, the Land Reform Act (Republic Act No. [RA] 1400) was passed, setting in motion the
expropriation of all tenanted estates.
5

On August 8, 1963, the Agricultural Land Reform Code (RA 3844) was enacted,
6
abolishing share
tenancy and converting all instances of share tenancy into leasehold tenancy.
7
RA 3844 created the
Land Bank of the Philippines (LBP) to provide support in all phases of agrarian reform.
As its major thrust, RA 3844 aimed to create a system of owner-cultivatorship in rice and corn,
supposedly to be accomplished by expropriating lands in excess of 75 hectares for their eventual
resale to tenants. The law, however, had this restricting feature: its operations were confined mainly
to areas in Central Luzon, and its implementation at any level of intensity limited to the pilot project in
Nueva Ecija.
8

Subsequently, Congress passed the Code of Agrarian Reform (RA 6389) declaring the entire
country a land reform area, and providing for the automatic conversion of tenancy to leasehold
tenancy in all areas. From 75 hectares, the retention limit was cut down to seven hectares.
9

Barely a month after declaring martial law in September 1972, then President Ferdinand Marcos
issued Presidential Decree No. 27 (PD 27) for the "emancipation of the tiller from the bondage of the
soil."
10
Based on this issuance, tenant-farmers, depending on the size of the landholding worked on,
can either purchase the land they tilled or shift from share to fixed-rent leasehold tenancy.
11
While
touted as "revolutionary," the scope of the agrarian reform program PD 27 enunciated covered only
tenanted, privately-owned rice and corn lands.
12

Then came the revolutionary government of then President Corazon C. Aquino and the drafting and
eventual ratification of the 1987 Constitution. Its provisions foreshadowed the establishment of a
legal framework for the formulation of an expansive approach to land reform, affecting all agricultural
lands and covering both tenant-farmers and regular farmworkers.
13

So it was that Proclamation No. 131, Series of 1987, was issued instituting a comprehensive
agrarian reform program (CARP) to cover all agricultural lands, regardless of tenurial arrangement
and commodity produced, as provided in the Constitution.
On July 22, 1987, Executive Order No. 229 (EO 229) was issued providing, as its title
14
indicates, the
mechanisms for CARP implementation. It created the Presidential Agrarian Reform Council (PARC)
as the highest policy-making body that formulates all policies, rules, and regulations necessary for
the implementation of CARP.
On June 15, 1988, RA 6657 or the Comprehensive Agrarian Reform Law of 1988, also known as
CARL or the CARP Law, took effect, ushering in a new process of land classification, acquisition,
and distribution. As to be expected, RA 6657 met stiff opposition, its validity or some of its provisions
challenged at every possible turn.Association of Small Landowners in the Philippines, Inc. v.
Secretary of Agrarian Reform
15
stated the observation that the assault was inevitable, the CARP
being an untried and untested project, "an experiment [even], as all life is an experiment," the Court
said, borrowing from Justice Holmes.
The Case
In this Petition for Certiorari and Prohibition under Rule 65 with prayer for preliminary injunctive
relief, petitioner Hacienda Luisita, Inc. (HLI) assails and seeks to set aside PARC Resolution No.
2005-32-01
16
and Resolution No. 2006-34-01
17
issued on December 22, 2005 and May 3, 2006,
respectively, as well as the implementing Notice of Coverage dated January 2, 2006 (Notice of
Coverage).
18

The Facts
At the core of the case is Hacienda Luisita de Tarlac (Hacienda Luisita), once a 6,443-hectare mixed
agricultural-industrial-residential expanse straddling several municipalities of Tarlac and owned by
Compaia General de Tabacos de Filipinas (Tabacalera). In 1957, the Spanish owners of
Tabacalera offered to sell Hacienda Luisita as well as their controlling interest in the sugar mill within
the hacienda, the Central Azucarera de Tarlac (CAT), as an indivisible transaction. The Tarlac
Development Corporation (Tadeco), then owned and/or controlled by the Jose Cojuangco, Sr.
Group, was willing to buy. As agreed upon, Tadeco undertook to pay the purchase price for
Hacienda Luisita in pesos, while that for the controlling interest in CAT, in US dollars.
19

To facilitate the adverted sale-and-purchase package, the Philippine government, through the then
Central Bank of the Philippines, assisted the buyer to obtain a dollar loan from a US bank.
20
Also, the
Government Service Insurance System (GSIS) Board of Trustees extended on November 27, 1957
a PhP 5.911 million loan in favor of Tadeco to pay the peso price component of the sale. One of the
conditions contained in the approving GSIS Resolution No. 3203, as later amended by Resolution
No. 356, Series of 1958, reads as follows:
That the lots comprising the Hacienda Luisita shall be subdivided by the applicant-corporation and
sold at cost to the tenants, should there be any, and whenever conditions should exist warranting
such action under the provisions of the Land Tenure Act;
21

As of March 31, 1958, Tadeco had fully paid the purchase price for the acquisition of Hacienda
Luisita and Tabacaleras interest in CAT.
22

The details of the events that happened next involving the hacienda and the political color some of
the parties embossed are of minimal significance to this narration and need no belaboring. Suffice it
to state that on May 7, 1980, the martial law administration filed a suit before the Manila Regional
Trial Court (RTC) against Tadeco, et al., for them to surrender Hacienda Luisita to the then Ministry
of Agrarian Reform (MAR, now the Department of Agrarian Reform [DAR]) so that the land can be
distributed to farmers at cost. Responding, Tadeco or its owners alleged that Hacienda Luisita does
not have tenants, besides which sugar landsof which the hacienda consistedare not covered by
existing agrarian reform legislations. As perceived then, the government commenced the case
against Tadeco as a political message to the family of the late Benigno Aquino, Jr.
23

Eventually, the Manila RTC rendered judgment ordering Tadeco to surrender Hacienda Luisita to the
MAR. Therefrom, Tadeco appealed to the Court of Appeals (CA).
On March 17, 1988, the Office of the Solicitor General (OSG) moved to withdraw the governments
case against Tadeco, et al. By Resolution of May 18, 1988, the CA dismissed the case the Marcos
government initially instituted and won against Tadeco, et al. The dismissal action was, however,
made subject to the obtention by Tadeco of the PARCs approval of a stock distribution plan (SDP)
that must initially be implemented after such approval shall have been secured.
24
The appellate court
wrote:
The defendants-appellants x x x filed a motion on April 13, 1988 joining the x x x governmental
agencies concerned in moving for the dismissal of the case subject, however, to the following
conditions embodied in the letter dated April 8, 1988 (Annex 2) of the Secretary of the [DAR] quoted,
as follows:
1. Should TADECO fail to obtain approval of the stock distribution plan for failure to comply
with all the requirements for corporate landowners set forth in the guidelines issued by the
[PARC]: or
2. If such stock distribution plan is approved by PARC, but TADECO fails to initially
implement it.
x x x x
WHEREFORE, the present case on appeal is hereby dismissed without prejudice, and should be
revived if any of the conditions as above set forth is not duly complied with by the TADECO.
25

Markedly, Section 10 of EO 229
26
allows corporate landowners, as an alternative to the actual land
transfer scheme of CARP, to give qualified beneficiaries the right to purchase shares of stocks of the
corporation under a stock ownership arrangement and/or land-to-share ratio.
Like EO 229, RA 6657, under the latters Sec. 31, also provides two (2) alternative modalities, i.e.,
land or stock transfer, pursuant to either of which the corporate landowner can comply with CARP,
but subject to well-defined conditions and timeline requirements. Sec. 31 of RA 6657 provides:
SEC. 31. Corporate Landowners.Corporate landowners may voluntarily transfer ownership over
their agricultural landholdings to the Republic of the Philippines pursuant to Section 20 hereof or to
qualified beneficiaries x x x.
Upon certification by the DAR, corporations owning agricultural lands may give their qualified
beneficiaries the right to purchase such proportion of the capital stock of the corporation that
the agricultural land, actually devoted to agricultural activities, bears in relation to the
companys total assets, under such terms and conditions as may be agreed upon by them. In no
case shall the compensation received by the workers at the time the shares of stocks are distributed
be reduced. x x x
Corporations or associations which voluntarily divest a proportion of their capital stock, equity or
participation in favor of their workers or other qualified beneficiaries under this section shall be
deemed to have complied with the provisions of this Act: Provided, That the following conditions are
complied with:
(a) In order to safeguard the right of beneficiaries who own shares of stocks to dividends and
other financial benefits, the books of the corporation or association shall be subject to
periodic audit by certified public accountants chosen by the beneficiaries;
(b) Irrespective of the value of their equity in the corporation or association, the beneficiaries
shall be assured of at least one (1) representative in the board of directors, or in a
management or executive committee, if one exists, of the corporation or association;
(c) Any shares acquired by such workers and beneficiaries shall have the same rights and
features as all other shares; and
(d) Any transfer of shares of stocks by the original beneficiaries shall be void ab initio unless
said transaction is in favor of a qualified and registered beneficiary within the same
corporation.
If within two (2) years from the approval of this Act, the [voluntary] land or stock transfer envisioned
above is not made or realized or the plan for such stock distribution approved by the PARC within
the same period, the agricultural land of the corporate owners or corporation shall be subject to the
compulsory coverage of this Act. (Emphasis added.)
Vis--vis the stock distribution aspect of the aforequoted Sec. 31, DAR issued Administrative Order
No. 10, Series of 1988 (DAO 10),
27
entitled Guidelines and Procedures for Corporate Landowners
Desiring to Avail Themselves of the Stock Distribution Plan under Section 31 of RA 6657.
From the start, the stock distribution scheme appeared to be Tadecos preferred option, for, on
August 23, 1988,
28
it organized a spin-off corporation, HLI, as vehicle to facilitate stock acquisition by
the farmworkers. For this purpose, Tadeco assigned and conveyed to HLI the agricultural land
portion (4,915.75 hectares) and other farm-related properties of Hacienda Luisita in exchange for
HLI shares of stock.
29

Pedro Cojuangco, Josephine C. Reyes, Teresita C. Lopa, Jose Cojuangco, Jr., and Paz C. Teopaco
were the incorporators of HLI.
30

To accommodate the assets transfer from Tadeco to HLI, the latter, with the Securities and
Exchange Commissions (SECs) approval, increased its capital stock on May 10, 1989 from PhP
1,500,000 divided into 1,500,000 shares with a par value of PhP 1/share to PhP 400,000,000 divided
into 400,000,000 shares also with par value of PhP 1/share, 150,000,000 of which were to be issued
only to qualified and registered beneficiaries of the CARP, and the remaining 250,000,000 to any
stockholder of the corporation.
31

As appearing in its proposed SDP, the properties and assets of Tadeco contributed to the capital
stock of HLI, as appraised and approved by the SEC, have an aggregate value of PhP 590,554,220,
or after deducting the total liabilities of the farm amounting to PhP 235,422,758, a net value of PhP
355,531,462. This translated to 355,531,462 shares with a par value of PhP 1/share.
32

On May 9, 1989, some 93% of the then farmworker-beneficiaries (FWBs) complement of Hacienda
Luisita signified in a referendum their acceptance of the proposed HLIs Stock Distribution Option
Plan. On May 11, 1989, the Stock Distribution Option Agreement (SDOA), styled as a Memorandum
of Agreement (MOA),
33
was entered into by Tadeco, HLI, and the 5,848 qualified FWBs
34
and
attested to by then DAR Secretary Philip Juico. The SDOA embodied the basis and mechanics of
the SDP, which would eventually be submitted to the PARC for approval. In the SDOA, the parties
agreed to the following:
1. The percentage of the value of the agricultural land of Hacienda Luisita (P196,630,000.00)
in relation to the total assets (P590,554,220.00) transferred and conveyed to the SECOND
PARTY [HLI] is 33.296% that, under the law, is the proportion of the outstanding capital
stock of the SECOND PARTY, which is P355,531,462.00 or 355,531,462 shares with a par
value of P1.00 per share, that has to be distributed to the THIRD PARTY [FWBs] under the
stock distribution plan, the said 33.296% thereof being P118,391,976.85 or 118,391,976.85
shares.
2. The qualified beneficiaries of the stock distribution plan shall be the farmworkers who
appear in the annual payroll, inclusive of the permanent and seasonal employees, who are
regularly or periodically employed by the SECOND PARTY.
3. At the end of each fiscal year, for a period of 30 years, the SECOND PARTY shall
arrange with the FIRST PARTY [Tadeco] the acquisition and distribution to the THIRD
PARTY on the basis of number of days worked and at no cost to them of one-thirtieth (1/30)
of 118,391,976.85 shares of the capital stock of the SECOND PARTY that are presently
owned and held by the FIRST PARTY, until such time as the entire block of 118,391,976.85
shares shall have been completely acquired and distributed to the THIRD PARTY.
4.The SECOND PARTY shall guarantee to the qualified beneficiaries of the [SDP] that every
year they will receive on top of their regular compensation, an amount that approximates the
equivalent of three (3%) of the total gross sales from the production of the agricultural land,
whether it be in the form of cash dividends or incentive bonuses or both.
5. Even if only a part or fraction of the shares earmarked for distribution will have been
acquired from the FIRST PARTY and distributed to the THIRD PARTY, FIRST PARTY shall
execute at the beginning of each fiscal year an irrevocable proxy, valid and effective for one
(1) year, in favor of the farmworkers appearing as shareholders of the SECOND PARTY at
the start of said year which will empower the THIRD PARTY or their representative to vote in
stockholders and board of directors meetings of the SECOND PARTY convened during the
year the entire 33.296% of the outstanding capital stock of the SECOND PARTY earmarked
for distribution and thus be able to gain such number of seats in the board of directors of the
SECOND PARTY that the whole 33.296% of the shares subject to distribution will be entitled
to.
6. In addition, the SECOND PARTY shall within a reasonable time subdivide and allocate for
free and without charge among the qualified family-beneficiaries residing in the place where
the agricultural land is situated, residential or homelots of not more than 240 sq.m. each, with
each family-beneficiary being assured of receiving and owning a homelot in the barangay
where it actually resides on the date of the execution of this Agreement.
7. This Agreement is entered into by the parties in the spirit of the (C.A.R.P.) of the
government and with the supervision of the [DAR], with the end in view of improving the lot of
the qualified beneficiaries of the [SDP] and obtaining for them greater benefits. (Emphasis
added.)
As may be gleaned from the SDOA, included as part of the distribution plan are: (a) production-
sharing equivalent to three percent (3%) of gross sales from the production of the agricultural land
payable to the FWBs in cash dividends or incentive bonus; and (b) distribution of free homelots of
not more than 240 square meters each to family-beneficiaries. The production-sharing, as the SDP
indicated, is payable "irrespective of whether [HLI] makes money or not," implying that the benefits
do not partake the nature of dividends, as the term is ordinarily understood under corporation law.
While a little bit hard to follow, given that, during the period material, the assigned value of the
agricultural land in the hacienda was PhP 196.63 million, while the total assets of HLI was PhP
590.55 million with net assets of PhP 355.53 million, Tadeco/HLI would admit that the ratio of the
land-to-shares of stock corresponds to 33.3% of the outstanding capital stock of the HLI equivalent
to 118,391,976.85 shares of stock with a par value of PhP 1/share.
Subsequently, HLI submitted to DAR its SDP, designated as "Proposal for Stock Distribution under
C.A.R.P.,"
35
which was substantially based on the SDOA.
Notably, in a follow-up referendum the DAR conducted on October 14, 1989, 5,117 FWBs, out of
5,315 who participated, opted to receive shares in HLI.
36
One hundred thirty-two (132) chose actual
land distribution.
37

After a review of the SDP, then DAR Secretary Miriam Defensor-Santiago (Sec. Defensor-Santiago)
addressed a letter dated November 6, 1989
38
to Pedro S. Cojuangco (Cojuangco), then Tadeco
president, proposing that the SDP be revised, along the following lines:
1. That over the implementation period of the [SDP], [Tadeco]/HLI shall ensure that there will
be no dilution in the shares of stocks of individual [FWBs];
2. That a safeguard shall be provided by [Tadeco]/HLI against the dilution of the percentage
shareholdings of the [FWBs], i.e., that the 33% shareholdings of the [FWBs] will be
maintained at any given time;
3. That the mechanics for distributing the stocks be explicitly stated in the [MOA] signed
between the [Tadeco], HLI and its [FWBs] prior to the implementation of the stock plan;
4. That the stock distribution plan provide for clear and definite terms for determining the
actual number of seats to be allocated for the [FWBs] in the HLI Board;
5. That HLI provide guidelines and a timetable for the distribution of homelots to qualified
[FWBs]; and
6. That the 3% cash dividends mentioned in the [SDP] be expressly provided for [in] the
MOA.
In a letter-reply of November 14, 1989 to Sec. Defensor-Santiago, Tadeco/HLI explained that the
proposed revisions of the SDP are already embodied in both the SDP and MOA.
39
Following that
exchange, the PARC, under then Sec. Defensor-Santiago, by Resolution No. 89-12-2
40
dated
November 21, 1989, approved the SDP of Tadeco/HLI.
41

At the time of the SDP approval, HLI had a pool of farmworkers, numbering 6,296, more or less,
composed of permanent, seasonal and casual master list/payroll and non-master list members.
From 1989 to 2005, HLI claimed to have extended the following benefits to the FWBs:
(a) 3 billion pesos (P3,000,000,000) worth of salaries, wages and fringe benefits
(b) 59 million shares of stock distributed for free to the FWBs;
(c) 150 million pesos (P150,000,000) representing 3% of the gross produce;
(d) 37.5 million pesos (P37,500,000) representing 3% from the sale of 500 hectares of
converted agricultural land of Hacienda Luisita;
(e) 240-square meter homelots distributed for free;
(f) 2.4 million pesos (P2,400,000) representing 3% from the sale of 80 hectares at 80 million
pesos (P80,000,000) for the SCTEX;
(g) Social service benefits, such as but not limited to free hospitalization/medical/maternity
services, old age/death benefits and no interest bearing salary/educational loans and rice
sugar accounts.
42

Two separate groups subsequently contested this claim of HLI.
On August 15, 1995, HLI applied for the conversion of 500 hectares of land of the hacienda from
agricultural to industrial use,
43
pursuant to Sec. 65 of RA 6657, providing:
SEC. 65. Conversion of Lands.After the lapse of five (5) years from its award, when the land
ceases to be economically feasible and sound for agricultural purposes, or the locality has become
urbanized and the land will have a greater economic value for residential, commercial or industrial
purposes, the DAR, upon application of the beneficiary or the landowner, with due notice to the
affected parties, and subject to existing laws, may authorize the reclassification, or conversion of the
land and its disposition: Provided, That the beneficiary shall have fully paid its obligation.
The application, according to HLI, had the backing of 5,000 or so FWBs, including respondent Rene
Galang, and Jose Julio Suniga, as evidenced by the Manifesto of Support they signed and which
was submitted to the DAR.
44
After the usual processing, the DAR, thru then Sec. Ernesto Garilao,
approved the application on August 14, 1996, per DAR Conversion Order No. 030601074-764-(95),
Series of 1996,
45
subject to payment of three percent (3%) of the gross selling price to the FWBs and
to HLIs continued compliance with its undertakings under the SDP, among other conditions.
On December 13, 1996, HLI, in exchange for subscription of 12,000,000 shares of stocks of
Centennary Holdings, Inc. (Centennary), ceded 300 hectares of the converted area to the
latter.
46
Consequently, HLIs Transfer Certificate of Title (TCT) No. 287910
47
was canceled and TCT
No. 292091
48
was issued in the name of Centennary. HLI transferred the remaining 200 hectares
covered by TCT No. 287909 to Luisita Realty Corporation (LRC)
49
in two separate transactions in
1997 and 1998, both uniformly involving 100 hectares for PhP 250 million each.
50

Centennary, a corporation with an authorized capital stock of PhP 12,100,000 divided into
12,100,000 shares and wholly-owned by HLI, had the following incorporators: Pedro Cojuangco,
Josephine C. Reyes, Teresita C. Lopa, Ernesto G. Teopaco, and Bernardo R. Lahoz.
Subsequently, Centennary sold
51
the entire 300 hectares to Luisita Industrial Park Corporation
(LIPCO) for PhP 750 million. The latter acquired it for the purpose of developing an industrial
complex.
52
As a result, Centennarys TCT No. 292091 was canceled to be replaced by TCT No.
310986
53
in the name of LIPCO.
From the area covered by TCT No. 310986 was carved out two (2) parcels, for which two (2)
separate titles were issued in the name of LIPCO, specifically: (a) TCT No. 365800
54
and (b) TCT
No. 365801,
55
covering 180 and four hectares, respectively. TCT No. 310986 was, accordingly,
partially canceled.
Later on, in a Deed of Absolute Assignment dated November 25, 2004, LIPCO transferred the
parcels covered by its TCT Nos. 365800 and 365801 to the Rizal Commercial Banking Corporation
(RCBC) by way of dacion en pagoin payment of LIPCOs PhP 431,695,732.10 loan obligations.
LIPCOs titles were canceled and new ones, TCT Nos. 391051 and 391052, were issued to RCBC.
Apart from the 500 hectares alluded to, another 80.51 hectares were later detached from the area
coverage of Hacienda Luisita which had been acquired by the government as part of the Subic-
Clark-Tarlac Expressway (SCTEX) complex. In absolute terms, 4,335.75 hectares remained of the
original 4,915 hectares Tadeco ceded to HLI.
56

Such, in short, was the state of things when two separate petitions, both undated, reached the DAR
in the latter part of 2003. In the first, denominated as Petition/Protest,
57
respondents Jose Julio
Suniga and Windsor Andaya, identifying themselves as head of the Supervisory Group of HLI
(Supervisory Group), and 60 other supervisors sought to revoke the SDOA, alleging that HLI had
failed to give them their dividends and the one percent (1%) share in gross sales, as well as the
thirty-three percent (33%) share in the proceeds of the sale of the converted 500 hectares of land.
They further claimed that their lives have not improved contrary to the promise and rationale for the
adoption of the SDOA. They also cited violations by HLI of the SDOAs terms.
58
They prayed for a
renegotiation of the SDOA, or, in the alternative, its revocation.
Revocation and nullification of the SDOA and the distribution of the lands in the hacienda were the
call in the second petition, styled as Petisyon (Petition).
59
The Petisyon was ostensibly filed on
December 4, 2003 by Alyansa ng mga Manggagawang Bukid ng Hacienda Luisita (AMBALA), where
the handwritten name of respondents Rene Galang as "Pangulo AMBALA" and Noel Mallari as "Sec-
Gen. AMBALA"
60
appeared. As alleged, the petition was filed on behalf of AMBALAs members
purportedly composing about 80% of the 5,339 FWBs of Hacienda Luisita.
HLI would eventually answer
61
the petition/protest of the Supervisory Group. On the other hand,
HLIs answer
62
to the AMBALA petition was contained in its letter dated January 21, 2005 also filed
with DAR.
Meanwhile, the DAR constituted a Special Task Force to attend to issues relating to the SDP of HLI.
Among other duties, the Special Task Force was mandated to review the terms and conditions of the
SDOA and PARC Resolution No. 89-12-2 relative to HLIs SDP; evaluate HLIs compliance reports;
evaluate the merits of the petitions for the revocation of the SDP; conduct ocular inspections or field
investigations; and recommend appropriate remedial measures for approval of the Secretary.
63

After investigation and evaluation, the Special Task Force submitted its "Terminal Report: Hacienda
Luisita, Incorporated (HLI) Stock Distribution Plan (SDP) Conflict"
64
dated September 22, 2005
(Terminal Report), finding that HLI has not complied with its obligations under RA 6657 despite the
implementation of the SDP.
65
The Terminal Report and the Special Task Forces recommendations
were adopted by then DAR Sec. Nasser Pangandaman (Sec. Pangandaman).
66

Subsequently, Sec. Pangandaman recommended to the PARC Executive Committee (Excom) (a)
the recall/revocation of PARC Resolution No. 89-12-2 dated November 21, 1989 approving HLIs
SDP; and (b) the acquisition of Hacienda Luisita through the compulsory acquisition scheme.
Following review, the PARC Validation Committee favorably endorsed the DAR Secretarys
recommendation afore-stated.
67

On December 22, 2005, the PARC issued the assailed Resolution No. 2005-32-01, disposing as
follows:
NOW, THEREFORE, on motion duly seconded, RESOLVED, as it is HEREBY RESOLVED, to
approve and confirm the recommendation of the PARC Executive Committee adopting in toto the
report of the PARC ExCom Validation Committee affirming the recommendation of the DAR to
recall/revoke the SDO plan of Tarlac Development Corporation/Hacienda Luisita Incorporated.
RESOLVED, further, that the lands subject of the recalled/revoked TDC/HLI SDO plan be forthwith
placed under the compulsory coverage or mandated land acquisition scheme of the [CARP].
APPROVED.
68

A copy of Resolution No. 2005-32-01 was served on HLI the following day, December 23, without
any copy of the documents adverted to in the resolution attached. A letter-request dated December
28, 2005
69
for certified copies of said documents was sent to, but was not acted upon by, the PARC
secretariat.
Therefrom, HLI, on January 2, 2006, sought reconsideration.
70
On the same day, the DAR Tarlac
provincial office issued the Notice of Coverage
71
which HLI received on January 4, 2006.
Its motion notwithstanding, HLI has filed the instant recourse in light of what it considers as the
DARs hasty placing of Hacienda Luisita under CARP even before PARC could rule or even read the
motion for reconsideration.
72
As HLI later rued, it "can not know from the above-quoted resolution the
facts and the law upon which it is based."
73

PARC would eventually deny HLIs motion for reconsideration via Resolution No. 2006-34-01 dated
May 3, 2006.
By Resolution of June 14, 2006,
74
the Court, acting on HLIs motion, issued a temporary restraining
order,
75
enjoining the implementation of Resolution No. 2005-32-01 and the notice of coverage.
On July 13, 2006, the OSG, for public respondents PARC and the DAR, filed its Comment
76
on the
petition.
On December 2, 2006, Noel Mallari, impleaded by HLI as respondent in his capacity as "Sec-Gen.
AMBALA," filed his Manifestation and Motion with Comment Attached dated December 4, 2006
(Manifestation and Motion).
77
In it, Mallari stated that he has broken away from AMBALA with other
AMBALA ex-members and formed Farmworkers Agrarian Reform Movement, Inc. (FARM).
78
Should
this shift in alliance deny him standing, Mallari also prayed that FARM be allowed to intervene.
As events would later develop, Mallari had a parting of ways with other FARM members, particularly
would-be intervenors Renato Lalic, et al. As things stand, Mallari returned to the AMBALA fold,
creating the AMBALA-Noel Mallari faction and leaving Renato Lalic, et al. as the remaining members
of FARM who sought to intervene.
On January 10, 2007, the Supervisory Group
79
and the AMBALA-Rene Galang faction submitted
their Comment/Opposition dated December 17, 2006.
80

On October 30, 2007, RCBC filed a Motion for Leave to Intervene and to File and Admit Attached
Petition-In-Intervention dated October 18, 2007.
81
LIPCO later followed with a similar motion.
82
In
both motions, RCBC and LIPCO contended that the assailed resolution effectively nullified the TCTs
under their respective names as the properties covered in the TCTs were veritably included in the
January 2, 2006 notice of coverage. In the main, they claimed that the revocation of the SDP cannot
legally affect their rights as innocent purchasers for value. Both motions for leave to intervene were
granted and the corresponding petitions-in-intervention admitted.
On August 18, 2010, the Court heard the main and intervening petitioners on oral arguments. On the
other hand, the Court, on August 24, 2010, heard public respondents as well as the respective
counsels of the AMBALA-Mallari-Supervisory Group, the AMBALA-Galang faction, and the FARM
and its 27 members
83
argue their case.
Prior to the oral arguments, however, HLI; AMBALA, represented by Mallari; the Supervisory Group,
represented by Suniga and Andaya; and the United Luisita Workers Union, represented by Eldifonso
Pingol, filed with the Court a joint submission and motion for approval of a Compromise Agreement
(English and Tagalog versions) dated August 6, 2010.
On August 31, 2010, the Court, in a bid to resolve the dispute through an amicable settlement,
issued a Resolution
84
creating a Mediation Panel composed of then Associate Justice Ma. Alicia
Austria-Martinez, as chairperson, and former CA Justices Hector Hofilea and Teresita Dy-Liacco
Flores, as members. Meetings on five (5) separate dates, i.e., September 8, 9, 14, 20, and 27, 2010,
were conducted. Despite persevering and painstaking efforts on the part of the panel, mediation had
to be discontinued when no acceptable agreement could be reached.
The Issues
HLI raises the following issues for our consideration:
I.
WHETHER OR NOT PUBLIC RESPONDENTS PARC AND SECRETARY PANGANDAMAN
HAVE JURISDICTION, POWER AND/OR AUTHORITY TO NULLIFY, RECALL, REVOKE
OR RESCIND THE SDOA.
II.
[IF SO], x x x CAN THEY STILL EXERCISE SUCH JURISDICTION, POWER AND/OR
AUTHORITY AT THIS TIME, I.E., AFTER SIXTEEN (16) YEARS FROM THE EXECUTION
OF THE SDOA AND ITS IMPLEMENTATION WITHOUT VIOLATING SECTIONS 1 AND 10
OF ARTICLE III (BILL OF RIGHTS) OF THE CONSTITUTION AGAINST DEPRIVATION OF
PROPERTY WITHOUT DUE PROCESS OF LAW AND THE IMPAIRMENT OF
CONTRACTUAL RIGHTS AND OBLIGATIONS? MOREOVER, ARE THERE LEGAL
GROUNDS UNDER THE CIVIL CODE, viz, ARTICLE 1191 x x x, ARTICLES 1380, 1381
AND 1382 x x x ARTICLE 1390 x x x AND ARTICLE 1409 x x x THAT CAN BE INVOKED
TO NULLIFY, RECALL, REVOKE, OR RESCIND THE SDOA?
III.
WHETHER THE PETITIONS TO NULLIFY, RECALL, REVOKE OR RESCIND THE SDOA
HAVE ANY LEGAL BASIS OR GROUNDS AND WHETHER THE PETITIONERS THEREIN
ARE THE REAL PARTIES-IN-INTEREST TO FILE SAID PETITIONS.
IV.
WHETHER THE RIGHTS, OBLIGATIONS AND REMEDIES OF THE PARTIES TO THE
SDOA ARE NOW GOVERNED BY THE CORPORATION CODE (BATAS PAMBANSA
BLG. 68) AND NOT BY THE x x x [CARL] x x x.
On the other hand, RCBC submits the following issues:
I.
RESPONDENT PARC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR EXCESS OF JURISDICTION WHEN IT DID NOT EXCLUDE THE SUBJECT
PROPERTY FROM THE COVERAGE OF THE CARP DESPITE THE FACT THAT
PETITIONER-INTERVENOR RCBC HAS ACQUIRED VESTED RIGHTS AND
INDEFEASIBLE TITLE OVER THE SUBJECT PROPERTY AS AN INNOCENT
PURCHASER FOR VALUE.
A. THE ASSAILED RESOLUTION NO. 2005-32-01 AND THE NOTICE OF
COVERAGE DATED 02 JANUARY 2006 HAVE THE EFFECT OF NULLIFYING TCT
NOS. 391051 AND 391052 IN THE NAME OF PETITIONER-INTERVENOR RCBC.
B. AS AN INNOCENT PURCHASER FOR VALUE, PETITIONER-INTERVENOR
RCBC CANNOT BE PREJUDICED BY A SUBSEQUENT REVOCATION OR
RESCISSION OF THE SDOA.
II.
THE ASSAILED RESOLUTION NO. 2005-32-01 AND THE NOTICE OF COVERAGE
DATED 02 JANUARY 2006 WERE ISSUED WITHOUT AFFORDING PETITIONER-
INTERVENOR RCBC ITS RIGHT TO DUE PROCESS AS AN INNOCENT PURCHASER
FOR VALUE.
LIPCO, like RCBC, asserts having acquired vested and indefeasible rights over certain portions of
the converted property, and, hence, would ascribe on PARC the commission of grave abuse of
discretion when it included those portions in the notice of coverage. And apart from raising issues
identical with those of HLI, such as but not limited to the absence of valid grounds to warrant the
rescission and/or revocation of the SDP, LIPCO would allege that the assailed resolution and the
notice of coverage were issued without affording it the right to due process as an innocent purchaser
for value. The government, LIPCO also argues, is estopped from recovering properties which have
since passed to innocent parties.
Simply formulated, the principal determinative issues tendered in the main petition and to which all
other related questions must yield boil down to the following: (1) matters of standing; (2) the
constitutionality of Sec. 31 of RA 6657; (3) the jurisdiction of PARC to recall or revoke HLIs SDP; (4)
the validity or propriety of such recall or revocatory action; and (5) corollary to (4), the validity of the
terms and conditions of the SDP, as embodied in the SDOA.
Our Ruling
I.
We first proceed to the examination of the preliminary issues before delving on the more serious
challenges bearing on the validity of PARCs assailed issuance and the grounds for it.
Supervisory Group, AMBALA and their
respective leaders are real parties-in-interest
HLI would deny real party-in-interest status to the purported leaders of the Supervisory Group and
AMBALA, i.e., Julio Suniga, Windsor Andaya, and Rene Galang, who filed the revocatory petitions
before the DAR. As HLI would have it, Galang, the self-styled head of AMBALA, gained HLI
employment in June 1990 and, thus, could not have been a party to the SDOA executed a year
earlier.
85
As regards the Supervisory Group, HLI alleges that supervisors are not regular
farmworkers, but the company nonetheless considered them FWBs under the SDOA as a mere
concession to enable them to enjoy the same benefits given qualified regular farmworkers. However,
if the SDOA would be canceled and land distribution effected, so HLI claims, citing Fortich v.
Corona,
86
the supervisors would be excluded from receiving lands as farmworkers other than the
regular farmworkers who are merely entitled to the "fruits of the land."
87

The SDOA no less identifies "the SDP qualified beneficiaries" as "the farmworkers who appear in the
annual payroll, inclusive of the permanent and seasonal employees, who are regularly or periodically
employed by [HLI]."
88
Galang, per HLIs own admission, is employed by HLI, and is, thus, a qualified
beneficiary of the SDP; he comes within the definition of a real party-in-interest under Sec. 2, Rule 3
of the Rules of Court, meaning, one who stands to be benefited or injured by the judgment in the suit
or is the party entitled to the avails of the suit.
The same holds true with respect to the Supervisory Group whose members were admittedly
employed by HLI and whose names and signatures even appeared in the annex of the SDOA. Being
qualified beneficiaries of the SDP, Suniga and the other 61 supervisors are certainly parties who
would benefit or be prejudiced by the judgment recalling the SDP or replacing it with some other
modality to comply with RA 6657.
Even assuming that members of the Supervisory Group are not regular farmworkers, but are in the
category of "other farmworkers" mentioned in Sec. 4, Article XIII of the Constitution,
89
thus only
entitled to a share of the fruits of the land, as indeed Fortich teaches, this does not detract from the
fact that they are still identified as being among the "SDP qualified beneficiaries." As such, they are,
thus, entitled to bring an action upon the SDP.
90
At any rate, the following admission made by Atty.
Gener Asuncion, counsel of HLI, during the oral arguments should put to rest any lingering doubt as
to the status of protesters Galang, Suniga, and Andaya:
Justice Bersamin: x x x I heard you a while ago that you were conceding the qualified farmer
beneficiaries of Hacienda Luisita were real parties in interest?
Atty. Asuncion: Yes, Your Honor please, real party in interest which that question refers to the
complaints of protest initiated before the DAR and the real party in interest there be considered as
possessed by the farmer beneficiaries who initiated the protest.
91

Further, under Sec. 50, paragraph 4 of RA 6657, farmer-leaders are expressly allowed to represent
themselves, their fellow farmers or their organizations in any proceedings before the DAR.
Specifically:
SEC. 50. Quasi-Judicial Powers of the DAR.x x x
x x x x
Responsible farmer leaders shall be allowed to represent themselves, their fellow farmers or
their organizations in any proceedings before the DAR: Provided, however, that when there are
two or more representatives for any individual or group, the representatives should choose only one
among themselves to represent such party or group before any DAR proceedings. (Emphasis
supplied.)
Clearly, the respective leaders of the Supervisory Group and AMBALA are contextually real parties-
in-interest allowed by law to file a petition before the DAR or PARC.
This is not necessarily to say, however, that Galang represents AMBALA, for as records show and
as HLI aptly noted,
92
his "petisyon" filed with DAR did not carry the usual authorization of the
individuals in whose behalf it was supposed to have been instituted. To date, such authorization
document, which would logically include a list of the names of the authorizing FWBs, has yet to be
submitted to be part of the records.
PARCs Authority to Revoke a Stock Distribution Plan
On the postulate that the subject jurisdiction is conferred by law, HLI maintains that PARC is without
authority to revoke an SDP, for neither RA 6657 nor EO 229 expressly vests PARC with such
authority. While, as HLI argued, EO 229 empowers PARC to approve the plan for stock distribution
in appropriate cases, the empowerment only includes the power to disapprove, but not to recall its
previous approval of the SDP after it has been implemented by the parties.
93
To HLI, it is the court
which has jurisdiction and authority to order the revocation or rescission of the PARC-approved
SDP.
We disagree.
Under Sec. 31 of RA 6657, as implemented by DAO 10, the authority to approve the plan for stock
distribution of the corporate landowner belongs to PARC. However, contrary to petitioner HLIs
posture, PARC also has the power to revoke the SDP which it previously approved. It may be, as
urged, that RA 6657 or other executive issuances on agrarian reform do not explicitly vest the PARC
with the power to revoke/recall an approved SDP. Such power or authority, however, is deemed
possessed by PARC under the principle of necessary implication, a basic postulate that what is
implied in a statute is as much a part of it as that which is expressed.
94

We have explained that "every statute is understood, by implication, to contain all such provisions as
may be necessary to effectuate its object and purpose, or to make effective rights, powers, privileges
or jurisdiction which it grants, including all such collateral and subsidiary consequences as may be
fairly and logically inferred from its terms."
95
Further, "every statutory grant of power, right or privilege
is deemed to include all incidental power, right or privilege.
96

Gordon v. Veridiano II is instructive:
The power to approve a license includes by implication, even if not expressly granted, the power to
revoke it. By extension, the power to revoke is limited by the authority to grant the license, from
which it is derived in the first place. Thus, if the FDA grants a license upon its finding that the
applicant drug store has complied with the requirements of the general laws and the implementing
administrative rules and regulations, it is only for their violation that the FDA may revoke the said
license. By the same token, having granted the permit upon his ascertainment that the conditions
thereof as applied x x x have been complied with, it is only for the violation of such conditions that
the mayor may revoke the said permit.
97
(Emphasis supplied.)
Following the doctrine of necessary implication, it may be stated that the conferment of express
power to approve a plan for stock distribution of the agricultural land of corporate owners necessarily
includes the power to revoke or recall the approval of the plan.
As public respondents aptly observe, to deny PARC such revocatory power would reduce it into a
toothless agency of CARP, because the very same agency tasked to ensure compliance by the
corporate landowner with the approved SDP would be without authority to impose sanctions for non-
compliance with it.
98
With the view We take of the case, only PARC can effect such revocation. The
DAR Secretary, by his own authority as such, cannot plausibly do so, as the acceptance and/or
approval of the SDP sought to be taken back or undone is the act of PARC whose official
composition includes, no less, the President as chair, the DAR Secretary as vice-chair, and at least
eleven (11) other department heads.
99

On another but related issue, the HLI foists on the Court the argument that subjecting its
landholdings to compulsory distribution after its approved SDP has been implemented would impair
the contractual obligations created under the SDOA.
The broad sweep of HLIs argument ignores certain established legal precepts and must, therefore,
be rejected.
A law authorizing interference, when appropriate, in the contractual relations between or among
parties is deemed read into the contract and its implementation cannot successfully be resisted by
force of the non-impairment guarantee. There is, in that instance, no impingement of the impairment
clause, the non-impairment protection being applicable only to laws that derogate prior acts or
contracts by enlarging, abridging or in any manner changing the intention of the parties. Impairment,
in fine, obtains if a subsequent law changes the terms of a contract between the parties, imposes
new conditions, dispenses with those agreed upon or withdraws existing remedies for the
enforcement of the rights of the parties.
100
Necessarily, the constitutional proscription would not apply
to laws already in effect at the time of contract execution, as in the case of RA 6657, in relation to
DAO 10, vis--vis HLIs SDOA. As held in Serrano v. Gallant Maritime Services, Inc.:
The prohibition [against impairment of the obligation of contracts] is aligned with the general principle
that laws newly enacted have only a prospective operation, and cannot affect acts or contracts
already perfected; however, as to laws already in existence, their provisions are read into contracts
and deemed a part thereof. Thus, the non-impairment clause under Section 10, Article II [of the
Constitution] is limited in application to laws about to be enacted that would in any way derogate
from existing acts or contracts by enlarging, abridging or in any manner changing the intention of the
parties thereto.
101
(Emphasis supplied.)
Needless to stress, the assailed Resolution No. 2005-32-01 is not the kind of issuance within the
ambit of Sec. 10, Art. III of the Constitution providing that "[n]o law impairing the obligation of
contracts shall be passed."
Parenthetically, HLI tags the SDOA as an ordinary civil law contract and, as such, a breach of its
terms and conditions is not a PARC administrative matter, but one that gives rise to a cause of
action cognizable by regular courts.
102
This contention has little to commend itself. The SDOA is a
special contract imbued with public interest, entered into and crafted pursuant to the provisions of
RA 6657. It embodies the SDP, which requires for its validity, or at least its enforceability, PARCs
approval. And the fact that the certificate of compliance
103
to be issued by agrarian authorities upon
completion of the distribution of stocksis revocable by the same issuing authority supports the
idea that everything about the implementation of the SDP is, at the first instance, subject to
administrative adjudication.
HLI also parlays the notion that the parties to the SDOA should now look to the Corporation Code,
instead of to RA 6657, in determining their rights, obligations and remedies. The Code, it adds,
should be the applicable law on the disposition of the agricultural land of HLI.
Contrary to the view of HLI, the rights, obligations and remedies of the parties to the SDOA
embodying the SDP are primarily governed by RA 6657. It should abundantly be made clear that HLI
was precisely created in order to comply with RA 6657, which the OSG aptly described as the
"mother law" of the SDOA and the SDP.
104
It is, thus, paradoxical for HLI to shield itself from the
coverage of CARP by invoking exclusive applicability of the Corporation Code under the guise of
being a corporate entity.
Without in any way minimizing the relevance of the Corporation Code since the FWBs of HLI are
also stockholders, its applicability is limited as the rights of the parties arising from the SDP should
not be made to supplant or circumvent the agrarian reform program.
Without doubt, the Corporation Code is the general law providing for the formation, organization and
regulation of private corporations. On the other hand, RA 6657 is the special law on agrarian reform.
As between a general and special law, the latter shall prevailgeneralia specialibus non
derogant.
105
Besides, the present impasse between HLI and the private respondents is not an intra-
corporate dispute which necessitates the application of the Corporation Code. What private
respondents questioned before the DAR is the proper implementation of the SDP and HLIs
compliance with RA 6657. Evidently, RA 6657 should be the applicable law to the instant case.
HLI further contends that the inclusion of the agricultural land of Hacienda Luisita under the
coverage of CARP and the eventual distribution of the land to the FWBs would amount to a
disposition of all or practically all of the corporate assets of HLI. HLI would add that this contingency,
if ever it comes to pass, requires the applicability of the Corporation Code provisions on corporate
dissolution.
We are not persuaded.
Indeed, the provisions of the Corporation Code on corporate dissolution would apply insofar as the
winding up of HLIs affairs or liquidation of the assets is concerned. However, the mere inclusion of
the agricultural land of Hacienda Luisita under the coverage of CARP and the lands eventual
distribution to the FWBs will not, without more, automatically trigger the dissolution of HLI. As stated
in the SDOA itself, the percentage of the value of the agricultural land of Hacienda Luisita in relation
to the total assets transferred and conveyed by Tadeco to HLI comprises only 33.296%, following
this equation: value of the agricultural lands divided by total corporate assets. By no stretch of
imagination would said percentage amount to a disposition of all or practically all of HLIs corporate
assets should compulsory land acquisition and distribution ensue.
This brings us to the validity of the revocation of the approval of the SDP sixteen (16) years after its
execution pursuant to Sec. 31 of RA 6657 for the reasons set forth in the Terminal Report of the
Special Task Force, as endorsed by PARC Excom. But first, the matter of the constitutionality of said
section.
Constitutional Issue
FARM asks for the invalidation of Sec. 31 of RA 6657, insofar as it affords the corporation, as a
mode of CARP compliance, to resort to stock distribution, an arrangement which, to FARM, impairs
the fundamental right of farmers and farmworkers under Sec. 4, Art. XIII of the Constitution.
106

To a more specific, but direct point, FARM argues that Sec. 31 of RA 6657 permits stock transfer in
lieu of outright agricultural land transfer; in fine, there is stock certificate ownership of the farmers or
farmworkers instead of them owning the land, as envisaged in the Constitution. For FARM, this
modality of distribution is an anomaly to be annulled for being inconsistent with the basic concept of
agrarian reform ingrained in Sec. 4, Art. XIII of the Constitution.
107

Reacting, HLI insists that agrarian reform is not only about transfer of land ownership to farmers and
other qualified beneficiaries. It draws attention in this regard to Sec. 3(a) of RA 6657 on the concept
and scope of the term "agrarian reform." The constitutionality of a law, HLI added, cannot, as here,
be attacked collaterally.
The instant challenge on the constitutionality of Sec. 31 of RA 6657 and necessarily its counterpart
provision in EO 229 must fail as explained below.
When the Court is called upon to exercise its power of judicial review over, and pass upon the
constitutionality of, acts of the executive or legislative departments, it does so only when the
following essential requirements are first met, to wit:
(1) there is an actual case or controversy;
(2) that the constitutional question is raised at the earliest possible opportunity by a proper
party or one with locus standi; and
(3) the issue of constitutionality must be the very lis mota of the case.
108

Not all the foregoing requirements are satisfied in the case at bar.
While there is indeed an actual case or controversy, intervenor FARM, composed of a small minority
of 27 farmers, has yet to explain its failure to challenge the constitutionality of Sec. 3l of RA 6657,
since as early as November 21, l989 when PARC approved the SDP of Hacienda Luisita or at least
within a reasonable time thereafter and why its members received benefits from the SDP without so
much of a protest. It was only on December 4, 2003 or 14 years after approval of the SDP via PARC
Resolution No. 89-12-2 dated November 21, 1989 that said plan and approving resolution were
sought to be revoked, but not, to stress, by FARM or any of its members, but by petitioner AMBALA.
Furthermore, the AMBALA petition did NOT question the constitutionality of Sec. 31 of RA 6657, but
concentrated on the purported flaws and gaps in the subsequent implementation of the SDP. Even
the public respondents, as represented by the Solicitor General, did not question the constitutionality
of the provision. On the other hand, FARM, whose 27 members formerly belonged to AMBALA,
raised the constitutionality of Sec. 31 only on May 3, 2007 when it filed its Supplemental Comment
with the Court. Thus, it took FARM some eighteen (18) years from November 21, 1989 before it
challenged the constitutionality of Sec. 31 of RA 6657 which is quite too late in the day. The FARM
members slept on their rights and even accepted benefits from the SDP with nary a complaint on the
alleged unconstitutionality of Sec. 31 upon which the benefits were derived. The Court cannot now
be goaded into resolving a constitutional issue that FARM failed to assail after the lapse of a long
period of time and the occurrence of numerous events and activities which resulted from the
application of an alleged unconstitutional legal provision.
It has been emphasized in a number of cases that the question of constitutionality will not be passed
upon by the Court unless it is properly raised and presented in an appropriate case at the first
opportunity.
109
FARM is, therefore, remiss in belatedly questioning the constitutionality of Sec. 31 of
RA 6657. The second requirement that the constitutional question should be raised at the earliest
possible opportunity is clearly wanting.
The last but the most important requisite that the constitutional issue must be the very lis mota of the
case does not likewise obtain. The lis mota aspect is not present, the constitutional issue tendered
not being critical to the resolution of the case. The unyielding rule has been to avoid, whenever
plausible, an issue assailing the constitutionality of a statute or governmental act.
110
If some other
grounds exist by which judgment can be made without touching the constitutionality of a law, such
recourse is favored.
111
Garcia v. Executive Secretary explains why:
Lis Mota the fourth requirement to satisfy before this Court will undertake judicial review means
that the Court will not pass upon a question of unconstitutionality, although properly presented, if the
case can be disposed of on some other ground, such as the application of the statute or the general
law. The petitioner must be able to show that the case cannot be legally resolved unless the
constitutional question raised is determined. This requirement is based on the rule that every law
has in its favor the presumption of constitutionality; to justify its nullification, there must be a clear
and unequivocal breach of the Constitution, and not one that is doubtful, speculative, or
argumentative.
112
(Italics in the original.)
The lis mota in this case, proceeding from the basic positions originally taken by AMBALA (to which
the FARM members previously belonged) and the Supervisory Group, is the alleged non-compliance
by HLI with the conditions of the SDP to support a plea for its revocation. And before the Court,
the lis mota is whether or not PARC acted in grave abuse of discretion when it ordered the recall of
the SDP for such non-compliance and the fact that the SDP, as couched and implemented, offends
certain constitutional and statutory provisions. To be sure, any of these key issues may be resolved
without plunging into the constitutionality of Sec. 31 of RA 6657. Moreover, looking deeply into the
underlying petitions of AMBALA, et al., it is not the said section per se that is invalid, but rather it is
the alleged application of the said provision in the SDP that is flawed.
It may be well to note at this juncture that Sec. 5 of RA 9700,
113
amending Sec. 7 of RA 6657, has all
but superseded Sec. 31 of RA 6657 vis--vis the stock distribution component of said Sec. 31. In its
pertinent part, Sec. 5 of RA 9700 provides: "[T]hat after June 30, 2009, the modes of acquisition
shall be limited to voluntary offer to sell and compulsory acquisition." Thus, for all intents and
purposes, the stock distribution scheme under Sec. 31 of RA 6657 is no longer an available option
under existing law. The question of whether or not it is unconstitutional should be a moot issue.
It is true that the Court, in some cases, has proceeded to resolve constitutional issues otherwise
already moot and academic
114
provided the following requisites are present:
x x x first, there is a grave violation of the Constitution; second, the exceptional character of the
situation and the paramount public interest is involved; third, when the constitutional issue raised
requires formulation of controlling principles to guide the bench, the bar, and the public; fourth, the
case is capable of repetition yet evading review.
These requisites do not obtain in the case at bar.
For one, there appears to be no breach of the fundamental law. Sec. 4, Article XIII of the
Constitution reads:
The State shall, by law, undertake an agrarian reform program founded on the right of the farmers
and regular farmworkers, who are landless, to OWN directly or COLLECTIVELY THE LANDS THEY
TILL or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this end, the
State shall encourage and undertake the just distribution of all agricultural lands, subject to such
priorities and reasonable retention limits as the Congress may prescribe, taking into account
ecological, developmental, or equity considerations, and subject to the payment of just
compensation. In determining retention limits, the State shall respect the right of small landowners.
The State shall further provide incentives for voluntary land-sharing. (Emphasis supplied.)
The wording of the provision is unequivocalthe farmers and regular farmworkers have a right TO
OWN DIRECTLY OR COLLECTIVELY THE LANDS THEY TILL. The basic law allows two (2)
modes of land distributiondirect and indirect ownership. Direct transfer to individual farmers is the
most commonly used method by DAR and widely accepted. Indirect transfer through collective
ownership of the agricultural land is the alternative to direct ownership of agricultural land by
individual farmers. The aforequoted Sec. 4 EXPRESSLY authorizes collective ownership by farmers.
No language can be found in the 1987 Constitution that disqualifies or prohibits corporations or
cooperatives of farmers from being the legal entity through which collective ownership can be
exercised. The word "collective" is defined as "indicating a number of persons or things considered
as constituting one group or aggregate,"
115
while "collectively" is defined as "in a collective sense or
manner; in a mass or body."
116
By using the word "collectively," the Constitution allows for indirect
ownership of land and not just outright agricultural land transfer. This is in recognition of the fact that
land reform may become successful even if it is done through the medium of juridical entities
composed of farmers.
Collective ownership is permitted in two (2) provisions of RA 6657. Its Sec. 29 allows workers
cooperatives or associations to collectively own the land, while the second paragraph of Sec. 31
allows corporations or associations to own agricultural land with the farmers becoming stockholders
or members. Said provisions read:
SEC. 29. Farms owned or operated by corporations or other business associations.In the case of
farms owned or operated by corporations or other business associations, the following rules shall be
observed by the PARC.
In general, lands shall be distributed directly to the individual worker-beneficiaries.
In case it is not economically feasible and sound to divide the land, then it shall be owned
collectively by the worker beneficiaries who shall form a workers cooperative or association which
will deal with the corporation or business association. x x x (Emphasis supplied.)
SEC. 31. Corporate Landowners. x x x
x x x x
Upon certification by the DAR, corporations owning agricultural lands may give their qualified
beneficiaries the right to purchase such proportion of the capital stock of the corporation that the
agricultural land, actually devoted to agricultural activities, bears in relation to the companys total
assets, under such terms and conditions as may be agreed upon by them. In no case shall the
compensation received by the workers at the time the shares of stocks are distributed be reduced.
The same principle shall be applied to associations, with respect to their equity or participation. x x x
(Emphasis supplied.)
Clearly, workers cooperatives or associations under Sec. 29 of RA 6657 and corporations or
associations under the succeeding Sec. 31, as differentiated from individual farmers, are authorized
vehicles for the collective ownership of agricultural land. Cooperatives can be registered with the
Cooperative Development Authority and acquire legal personality of their own, while corporations
are juridical persons under the Corporation Code. Thus, Sec. 31 is constitutional as it simply
implements Sec. 4 of Art. XIII of the Constitution that land can be owned COLLECTIVELY by
farmers. Even the framers of the l987 Constitution are in unison with respect to the two (2) modes of
ownership of agricultural lands tilled by farmersDIRECT and COLLECTIVE, thus:
MR. NOLLEDO. And when we talk of the phrase "to own directly," we mean the principle of direct
ownership by the tiller?
MR. MONSOD. Yes.
MR. NOLLEDO. And when we talk of "collectively," we mean communal ownership, stewardship or
State ownership?
MS. NIEVA. In this section, we conceive of cooperatives; that is farmers cooperatives owning the
land, not the State.
MR. NOLLEDO. And when we talk of "collectively," referring to farmers cooperatives, do the farmers
own specific areas of land where they only unite in their efforts?
MS. NIEVA. That is one way.
MR. NOLLEDO. Because I understand that there are two basic systems involved: the "moshave"
type of agriculture and the "kibbutz." So are both contemplated in the report?
MR. TADEO. Ang dalawa kasing pamamaraan ng pagpapatupad ng tunay na reporma sa lupa ay
ang pagmamay-ari ng lupa na hahatiin sa individual na pagmamay-ari directly at ang tinatawag
na sama-samang gagawin ng mga magbubukid. Tulad sa Negros, ang gusto ng mga magbubukid
ay gawin nila itong "cooperative or collective farm." Ang ibig sabihin ay sama-sama nilang
sasakahin.
x x x x
MR. TINGSON. x x x When we speak here of "to own directly or collectively the lands they till," is this
land for the tillers rather than land for the landless? Before, we used to hear "land for the landless,"
but now the slogan is "land for the tillers." Is that right?
MR. TADEO. Ang prinsipyong umiiral dito ay iyong land for the tillers. Ang ibig sabihin ng "directly"
ay tulad sa implementasyon sa rice and corn lands kung saan inaari na ng mga magsasaka ang
lupang binubungkal nila. Ang ibig sabihin naman ng "collectively" ay sama-samang paggawa sa
isang lupain o isang bukid, katulad ng sitwasyon sa Negros.
117
(Emphasis supplied.)
As Commissioner Tadeo explained, the farmers will work on the agricultural land "sama-sama" or
collectively. Thus, the main requisite for collective ownership of land is collective or group work by
farmers of the agricultural land. Irrespective of whether the landowner is a cooperative, association
or corporation composed of farmers, as long as concerted group work by the farmers on the land is
present, then it falls within the ambit of collective ownership scheme.
Likewise, Sec. 4, Art. XIII of the Constitution makes mention of a commitment on the part of the
State to pursue, by law, an agrarian reform program founded on the policy of land for the landless,
but subject to such priorities as Congress may prescribe, taking into account such abstract variable
as "equity considerations." The textual reference to a law and Congress necessarily implies that the
above constitutional provision is not self-executoryand that legislation is needed to implement the
urgently needed program of agrarian reform. And RA 6657 has been enacted precisely pursuant to
and as a mechanism to carry out the constitutional directives. This piece of legislation, in fact,
restates
118
the agrarian reform policy established in the aforementioned provision of the Constitution
of promoting the welfare of landless farmers and farmworkers. RA 6657 thus defines "agrarian
reform" as "the redistribution of lands to farmers and regular farmworkers who are landless to
lift the economic status of the beneficiaries and all other arrangements alternative to the physical
redistribution of lands, such as production or profit sharing, labor administration and
the distribution of shares of stock which will allow beneficiaries to receive a just share of the fruits
of the lands they work."
With the view We take of this case, the stock distribution option devised under Sec. 31 of RA 6657
hews with the agrarian reform policy, as instrument of social justice under Sec. 4 of Article XIII of the
Constitution. Albeit land ownership for the landless appears to be the dominant theme of that policy,
We emphasize that Sec. 4, Article XIII of the Constitution, as couched, does not constrict Congress
to passing an agrarian reform law planted on direct land transfer to and ownership by farmers and
no other, or else the enactment suffers from the vice of unconstitutionality. If the intention were
otherwise, the framers of the Constitution would have worded said section in a manner mandatory in
character.
For this Court, Sec. 31 of RA 6657, with its direct and indirect transfer features, is not inconsistent
with the States commitment to farmers and farmworkers to advance their interests under the policy
of social justice. The legislature, thru Sec. 31 of RA 6657, has chosen a modality for collective
ownership by which the imperatives of social justice may, in its estimation, be approximated, if not
achieved. The Court should be bound by such policy choice.
FARM contends that the farmers in the stock distribution scheme under Sec. 31 do not own the
agricultural land but are merely given stock certificates. Thus, the farmers lose control over the land
to the board of directors and executive officials of the corporation who actually manage the land.
They conclude that such arrangement runs counter to the mandate of the Constitution that any
agrarian reform must preserve the control over the land in the hands of the tiller.
This contention has no merit.
While it is true that the farmer is issued stock certificates and does not directly own the land, still, the
Corporation Code is clear that the FWB becomes a stockholder who acquires an equitable interest in
the assets of the corporation, which include the agricultural lands. It was explained that the
"equitable interest of the shareholder in the property of the corporation is represented by the term
stock, and the extent of his interest is described by the term shares. The expression shares of stock
when qualified by words indicating number and ownership expresses the extent of the owners
interest in the corporate property."
119
A share of stock typifies an aliquot part of the corporations
property, or the right to share in its proceeds to that extent when distributed according to law and
equity and that its holder is not the owner of any part of the capital of the corporation.
120
However,
the FWBs will ultimately own the agricultural lands owned by the corporation when the corporation is
eventually dissolved and liquidated.
Anent the alleged loss of control of the farmers over the agricultural land operated and managed by
the corporation, a reading of the second paragraph of Sec. 31 shows otherwise. Said provision
provides that qualified beneficiaries have "the right to purchase such proportion of the capital stock
of the corporation that the agricultural land, actually devoted to agricultural activities, bears in
relation to the companys total assets." The wording of the formula in the computation of the number
of shares that can be bought by the farmers does not mean loss of control on the part of the farmers.
It must be remembered that the determination of the percentage of the capital stock that can be
bought by the farmers depends on the value of the agricultural land and the value of the total assets
of the corporation.
There is, thus, nothing unconstitutional in the formula prescribed by RA 6657. The policy on agrarian
reform is that control over the agricultural land must always be in the hands of the farmers. Then it
falls on the shoulders of DAR and PARC to see to it the farmers should always own majority of the
common shares entitled to elect the members of the board of directors to ensure that the farmers will
have a clear majority in the board. Before the SDP is approved, strict scrutiny of the proposed SDP
must always be undertaken by the DAR and PARC, such that the value of the agricultural land
contributed to the corporation must always be more than 50% of the total assets of the corporation to
ensure that the majority of the members of the board of directors are composed of the farmers. The
PARC composed of the President of the Philippines and cabinet secretaries must see to it that
control over the board of directors rests with the farmers by rejecting the inclusion of non-agricultural
assets which will yield the majority in the board of directors to non-farmers. Any deviation, however,
by PARC or DAR from the correct application of the formula prescribed by the second paragraph of
Sec. 31 of RA 6675 does not make said provision constitutionally infirm. Rather, it is the application
of said provision that can be challenged. Ergo, Sec. 31 of RA 6657 does not trench on the
constitutional policy of ensuring control by the farmers.
A view has been advanced that there can be no agrarian reform unless there is land distribution and
that actual land distribution is the essential characteristic of a constitutional agrarian reform program.
On the contrary, there have been so many instances where, despite actual land distribution, the
implementation of agrarian reform was still unsuccessful. As a matter of fact, this Court may take
judicial notice of cases where FWBs sold the awarded land even to non-qualified persons and in
violation of the prohibition period provided under the law. This only proves to show that the mere fact
that there is land distribution does not guarantee a successful implementation of agrarian reform.
As it were, the principle of "land to the tiller" and the old pastoral model of land ownership where
non-human juridical persons, such as corporations, were prohibited from owning agricultural lands
are no longer realistic under existing conditions. Practically, an individual farmer will often face
greater disadvantages and difficulties than those who exercise ownership in a collective manner
through a cooperative or corporation. The former is too often left to his own devices when faced with
failing crops and bad weather, or compelled to obtain usurious loans in order to purchase costly
fertilizers or farming equipment. The experiences learned from failed land reform activities in various
parts of the country are lack of financing, lack of farm equipment, lack of fertilizers, lack of
guaranteed buyers of produce, lack of farm-to-market roads, among others. Thus, at the end of the
day, there is still no successful implementation of agrarian reform to speak of in such a case.
Although success is not guaranteed, a cooperative or a corporation stands in a better position to
secure funding and competently maintain the agri-business than the individual farmer. While direct
singular ownership over farmland does offer advantages, such as the ability to make quick decisions
unhampered by interference from others, yet at best, these advantages only but offset the
disadvantages that are often associated with such ownership arrangement. Thus, government must
be flexible and creative in its mode of implementation to better its chances of success. One such
option is collective ownership through juridical persons composed of farmers.
Aside from the fact that there appears to be no violation of the Constitution, the requirement that the
instant case be capable of repetition yet evading review is also wanting. It would be speculative for
this Court to assume that the legislature will enact another law providing for a similar stock option.
As a matter of sound practice, the Court will not interfere inordinately with the exercise by Congress
of its official functions, the heavy presumption being that a law is the product of earnest studies by
Congress to ensure that no constitutional prescription or concept is infringed.
121
Corollarily, courts
will not pass upon questions of wisdom, expediency and justice of legislation or its provisions.
Towards this end, all reasonable doubts should be resolved in favor of the constitutionality of a law
and the validity of the acts and processes taken pursuant thereof.
122

Consequently, before a statute or its provisions duly challenged are voided, an unequivocal breach
of, or a clear conflict with the Constitution, not merely a doubtful or argumentative one, must be
demonstrated in such a manner as to leave no doubt in the mind of the Court. In other words, the
grounds for nullity must be beyond reasonable doubt.
123
FARM has not presented compelling
arguments to overcome the presumption of constitutionality of Sec. 31 of RA 6657.
The wisdom of Congress in allowing an SDP through a corporation as an alternative mode of
implementing agrarian reform is not for judicial determination. Established jurisprudence tells us that
it is not within the province of the Court to inquire into the wisdom of the law, for, indeed, We are
bound by words of the statute.
124

II.
The stage is now set for the determination of the propriety under the premises of the revocation or
recall of HLIs SDP. Or to be more precise, the inquiry should be: whether or not PARC gravely
abused its discretion in revoking or recalling the subject SDP and placing the hacienda under
CARPs compulsory acquisition and distribution scheme.
The findings, analysis and recommendation of the DARs Special Task Force contained and
summarized in its Terminal Report provided the bases for the assailed PARC revocatory/recalling
Resolution. The findings may be grouped into two: (1) the SDP is contrary to either the policy on
agrarian reform, Sec. 31 of RA 6657, or DAO 10; and (2) the alleged violation by HLI of the
conditions/terms of the SDP. In more particular terms, the following are essentially the reasons
underpinning PARCs revocatory or recall action:
(1) Despite the lapse of 16 years from the approval of HLIs SDP, the lives of the FWBs have
hardly improved and the promised increased income has not materialized;
(2) HLI has failed to keep Hacienda Luisita intact and unfragmented;
(3) The issuance of HLI shares of stock on the basis of number of hours workedor the so-
called "man days"is grossly onerous to the FWBs, as HLI, in the guise of rotation, can
unilaterally deny work to anyone. In elaboration of this ground, PARCs Resolution No. 2006-
34-01, denying HLIs motion for reconsideration of Resolution No. 2005-32-01, stated that
the man days criterion worked to dilute the entitlement of the original share beneficiaries;
125

(4) The distribution/transfer of shares was not in accordance with the timelines fixed by law;
(5) HLI has failed to comply with its obligations to grant 3% of the gross sales every year as
production-sharing benefit on top of the workers salary; and
(6) Several homelot awardees have yet to receive their individual titles.
Petitioner HLI claims having complied with, at least substantially, all its obligations under the SDP,
as approved by PARC itself, and tags the reasons given for the revocation of the SDP as unfounded.
Public respondents, on the other hand, aver that the assailed resolution rests on solid grounds set
forth in the Terminal Report, a position shared by AMBALA, which, in some pleadings, is
represented by the same counsel as that appearing for the Supervisory Group.
FARM, for its part, posits the view that legal bases obtain for the revocation of the SDP, because it
does not conform to Sec. 31 of RA 6657 and DAO 10. And training its sight on the resulting dilution
of the equity of the FWBs appearing in HLIs masterlist, FARM would state that the SDP, as couched
and implemented, spawned disparity when there should be none; parity when there should have
been differentiation.
126

The petition is not impressed with merit.
In the Terminal Report adopted by PARC, it is stated that the SDP violates the agrarian reform policy
under Sec. 2 of RA 6657, as the said plan failed to enhance the dignity and improve the quality of
lives of the FWBs through greater productivity of agricultural lands. We disagree.
Sec. 2 of RA 6657 states:
SECTION 2. Declaration of Principles and Policies.It is the policy of the State to pursue a
Comprehensive Agrarian Reform Program (CARP). The welfare of the landless farmers and farm
workers will receive the highest consideration to promote social justice and to move the nation
towards sound rural development and industrialization, and the establishment of owner cultivatorship
of economic-sized farms as the basis of Philippine agriculture.
To this end, a more equitable distribution and ownership of land, with due regard to the rights of
landowners to just compensation and to the ecological needs of the nation, shall be undertaken to
provide farmers and farm workers with the opportunity to enhance their dignity and improve the
quality of their lives through greater productivity of agricultural lands.
The agrarian reform program is founded on the right of farmers and regular farm workers, who are
landless, to own directly or collectively the lands they till or, in the case of other farm workers, to
receive a share of the fruits thereof. To this end, the State shall encourage the just distribution of all
agricultural lands, subject to the priorities and retention limits set forth in this Act, having taken into
account ecological, developmental, and equity considerations, and subject to the payment of just
compensation. The State shall respect the right of small landowners and shall provide incentives for
voluntary land-sharing. (Emphasis supplied.)
Paragraph 2 of the above-quoted provision specifically mentions that "a more equitable distribution
and ownership of land x x x shall be undertaken to provide farmers and farm workers with the
opportunity to enhance their dignity and improve the quality of their lives through greater productivity
of agricultural lands." Of note is the term "opportunity" which is defined as a favorable chance or
opening offered by circumstances.
127
Considering this, by no stretch of imagination can said
provision be construed as a guarantee in improving the lives of the FWBs. At best, it merely provides
for a possibility or favorable chance of uplifting the economic status of the FWBs, which may or may
not be attained.
Pertinently, improving the economic status of the FWBs is neither among the legal obligations of HLI
under the SDP nor an imperative imposition by RA 6657 and DAO 10, a violation of which would
justify discarding the stock distribution option. Nothing in that option agreement, law or department
order indicates otherwise.
Significantly, HLI draws particular attention to its having paid its FWBs, during the regime of the SDP
(1989-2005), some PhP 3 billion by way of salaries/wages and higher benefits exclusive of free
hospital and medical benefits to their immediate family. And attached as Annex "G" to HLIs
Memorandum is the certified true report of the finance manager of Jose Cojuangco & Sons
Organizations-Tarlac Operations, captioned as "HACIENDA LUISITA, INC. Salaries, Benefits and
Credit Privileges (in Thousand Pesos) Since the Stock Option was Approved by PARC/CARP,"
detailing what HLI gave their workers from 1989 to 2005. The sum total, as added up by the Court,
yields the following numbers: Total Direct Cash Out (Salaries/Wages & Cash Benefits) = PhP
2,927,848; Total Non-Direct Cash Out (Hospital/Medical Benefits) = PhP 303,040. The cash out
figures, as stated in the report, include the cost of homelots; the PhP 150 million or so representing
3% of the gross produce of the hacienda; and the PhP 37.5 million representing 3% from the
proceeds of the sale of the 500-hectare converted lands. While not included in the report, HLI
manifests having given the FWBs 3% of the PhP 80 million paid for the 80 hectares of land traversed
by the SCTEX.
128
On top of these, it is worth remembering that the shares of stocks were given by
HLI to the FWBs for free. Verily, the FWBs have benefited from the SDP.
To address urgings that the FWBs be allowed to disengage from the SDP as HLI has not anyway
earned profits through the years, it cannot be over-emphasized that, as a matter of common
business sense, no corporation could guarantee a profitable run all the time. As has been
suggested, one of the key features of an SDP of a corporate landowner is the likelihood of the
corporate vehicle not earning, or, worse still, losing money.
129

The Court is fully aware that one of the criteria under DAO 10 for the PARC to consider the
advisability of approving a stock distribution plan is the likelihood that the plan "would result in
increased income and greater benefits to [qualified beneficiaries] than if the lands were divided and
distributed to them individually."
130
But as aptly noted during the oral arguments, DAO 10 ought to
have not, as it cannot, actually exact assurance of success on something that is subject to the will of
man, the forces of nature or the inherent risky nature of business.
131
Just like in actual land
distribution, an SDP cannot guarantee, as indeed the SDOA does not guarantee, a comfortable life
for the FWBs. The Court can take judicial notice of the fact that there were many instances wherein
after a farmworker beneficiary has been awarded with an agricultural land, he just subsequently sells
it and is eventually left with nothing in the end.
In all then, the onerous condition of the FWBs economic status, their life of hardship, if that really be
the case, can hardly be attributed to HLI and its SDP and provide a valid ground for the plans
revocation.
Neither does HLIs SDP, whence the DAR-attested SDOA/MOA is based, infringe Sec. 31 of RA
6657, albeit public respondents erroneously submit otherwise.
The provisions of the first paragraph of the adverted Sec. 31 are without relevance to the issue on
the propriety of the assailed order revoking HLIs SDP, for the paragraph deals with the transfer of
agricultural lands to the government, as a mode of CARP compliance, thus:
SEC. 31. Corporate Landowners.Corporate landowners may voluntarily transfer ownership over
their agricultural landholdings to the Republic of the Philippines pursuant to Section 20 hereof or to
qualified beneficiaries under such terms and conditions, consistent with this Act, as they may agree,
subject to confirmation by the DAR.
The second and third paragraphs, with their sub-paragraphs, of Sec. 31 provide as follows:
Upon certification by the DAR, corporations owning agricultural lands may give their qualified
beneficiaries the right to purchase such proportion of the capital stock of the corporation that
the agricultural land, actually devoted to agricultural activities, bears in relation to the
companys total assets, under such terms and conditions as may be agreed upon by them. In no
case shall the compensation received by the workers at the time the shares of stocks are distributed
be reduced. x x x
Corporations or associations which voluntarily divest a proportion of their capital stock, equity or
participation in favor of their workers or other qualified beneficiaries under this section shall be
deemed to have complied with the provisions of this Act: Provided, That the following conditions are
complied with:
(a) In order to safeguard the right of beneficiaries who own shares of stocks to dividends and
other financial benefits, the books of the corporation or association shall be subject to
periodic audit by certified public accountants chosen by the beneficiaries;
(b) Irrespective of the value of their equity in the corporation or association, the beneficiaries
shall be assured of at least one (1) representative in the board of directors, or in a
management or executive committee, if one exists, of the corporation or association;
(c) Any shares acquired by such workers and beneficiaries shall have the same rights and
features as all other shares; and
(d) Any transfer of shares of stocks by the original beneficiaries shall be void ab initio unless
said transaction is in favor of a qualified and registered beneficiary within the same
corporation.
The mandatory minimum ratio of land-to-shares of stock supposed to be distributed or allocated to
qualified beneficiaries, adverting to what Sec. 31 of RA 6657 refers to as that "proportion of the
capital stock of the corporation that the agricultural land, actually devoted to agricultural activities,
bears in relation to the companys total assets" had been observed.
Paragraph one (1) of the SDOA, which was based on the SDP, conforms to Sec. 31 of RA 6657.
The stipulation reads:
1. The percentage of the value of the agricultural land of Hacienda Luisita (P196,630,000.00) in
relation to the total assets (P590,554,220.00) transferred and conveyed to the SECOND PARTY
is 33.296% that, under the law, is the proportion of the outstanding capital stock of the SECOND
PARTY, which is P355,531,462.00 or 355,531,462 shares with a par value of P1.00 per share, that
has to be distributed to the THIRD PARTY under the stock distribution plan, the said 33.296%
thereof being P118,391,976.85 or 118,391,976.85 shares.
The appraised value of the agricultural land is PhP 196,630,000 and of HLIs other assets is PhP
393,924,220. The total value of HLIs assets is, therefore, PhP 590,554,220.
132
The percentage of
the value of the agricultural lands (PhP 196,630,000) in relation to the total assets (PhP
590,554,220) is 33.296%, which represents the stockholdings of the 6,296 original qualified
farmworker-beneficiaries (FWBs) in HLI. The total number of shares to be distributed to said
qualified FWBs is 118,391,976.85 HLI shares. This was arrived at by getting 33.296% of the
355,531,462 shares which is the outstanding capital stock of HLI with a value of PhP 355,531,462.
Thus, if we divide the 118,391,976.85 HLI shares by 6,296 FWBs, then each FWB is entitled to
18,804.32 HLI shares. These shares under the SDP are to be given to FWBs for free.
The Court finds that the determination of the shares to be distributed to the 6,296 FWBs strictly
adheres to the formula prescribed by Sec. 31(b) of RA 6657.
Anent the requirement under Sec. 31(b) of the third paragraph, that the FWBs shall be assured of at
least one (1) representative in the board of directors or in a management or executive committee
irrespective of the value of the equity of the FWBs in HLI, the Court finds that the SDOA contained
provisions making certain the FWBs representation in HLIs governing board, thus:
5. Even if only a part or fraction of the shares earmarked for distribution will have been acquired from
the FIRST PARTY and distributed to the THIRD PARTY, FIRST PARTY shall execute at the
beginning of each fiscal year an irrevocable proxy, valid and effective for one (1) year, in favor of the
farmworkers appearing as shareholders of the SECOND PARTY at the start of said year which will
empower the THIRD PARTY or their representative to vote in stockholders and board of directors
meetings of the SECOND PARTY convened during the year the entire 33.296% of the outstanding
capital stock of the SECOND PARTY earmarked for distribution and thus be able to gain such
number of seats in the board of directors of the SECOND PARTY that the whole 33.296% of the
shares subject to distribution will be entitled to.
Also, no allegations have been made against HLI restricting the inspection of its books by
accountants chosen by the FWBs; hence, the assumption may be made that there has been no
violation of the statutory prescription under sub-paragraph (a) on the auditing of HLIs accounts.
Public respondents, however, submit that the distribution of the mandatory minimum ratio of land-to-
shares of stock, referring to the 118,391,976.85 shares with par value of PhP 1 each, should have
been made in full within two (2) years from the approval of RA 6657, in line with the last paragraph of
Sec. 31 of said law.
133

Public respondents submission is palpably erroneous. We have closely examined the last
paragraph alluded to, with particular focus on the two-year period mentioned, and nothing in it
remotely supports the public respondents posture. In its pertinent part, said Sec. 31 provides:
SEC. 31. Corporate Landowners x x x
If within two (2) years from the approval of this Act, the [voluntary] land or stock transfer envisioned
above is not made or realized or the plan for such stock distribution approved by the PARC within
the same period, the agricultural land of the corporate owners or corporation shall be subject to the
compulsory coverage of this Act. (Word in bracket and emphasis added.)
Properly viewed, the words "two (2) years" clearly refer to the period within which the corporate
landowner, to avoid land transfer as a mode of CARP coverage under RA 6657, is to avail of the
stock distribution option or to have the SDP approved. The HLI secured approval of its SDP in
November 1989, well within the two-year period reckoned from June 1988 when RA 6657 took
effect.
Having hurdled the alleged breach of the agrarian reform policy under Sec. 2 of RA 6657 as well as
the statutory issues, We shall now delve into what PARC and respondents deem to be other
instances of violation of DAO 10 and the SDP.
On the Conversion of Lands
Contrary to the almost parallel stance of the respondents, keeping Hacienda Luisita unfragmented is
also not among the imperative impositions by the SDP, RA 6657, and DAO 10.
The Terminal Report states that the proposed distribution plan submitted in 1989 to the PARC
effectively assured the intended stock beneficiaries that the physical integrity of the farm shall
remain inviolate. Accordingly, the Terminal Report and the PARC-assailed resolution would take HLI
to task for securing approval of the conversion to non-agricultural uses of 500 hectares of the
hacienda. In not too many words, the Report and the resolution view the conversion as an
infringement of Sec. 5(a) of DAO 10 which reads: "a. that the continued operation of the corporation
with its agricultural land intact and unfragmented is viable with potential for growth and increased
profitability."
The PARC is wrong.
In the first place, Sec. 5(a)just like the succeeding Sec. 5(b) of DAO 10 on increased income and
greater benefits to qualified beneficiariesis but one of the stated criteria to guide PARC in deciding
on whether or not to accept an SDP. Said Sec. 5(a) does not exact from the corporate landowner-
applicant the undertaking to keep the farm intact and unfragmented ad infinitum. And there is logic to
HLIs stated observation that the key phrase in the provision of Sec. 5(a) is "viability of corporate
operations": "[w]hat is thus required is not the agricultural land remaining intact x x x but the viability
of the corporate operations with its agricultural land being intact and unfragmented. Corporate
operation may be viable even if the corporate agricultural land does not remain intact or
[un]fragmented."
134

It is, of course, anti-climactic to mention that DAR viewed the conversion as not violative of any
issuance, let alone undermining the viability of Hacienda Luisitas operation, as the DAR Secretary
approved the land conversion applied for and its disposition via his Conversion Order dated August
14, 1996 pursuant to Sec. 65 of RA 6657 which reads:
Sec. 65. Conversion of Lands.After the lapse of five years from its award when the land ceases to
be economically feasible and sound for agricultural purposes, or the locality has become urbanized
and the land will have a greater economic value for residential, commercial or industrial purposes,
the DAR upon application of the beneficiary or landowner with due notice to the affected parties, and
subject to existing laws, may authorize the x x x conversion of the land and its dispositions. x x x
On the 3% Production Share
On the matter of the alleged failure of HLI to comply with sharing the 3% of the gross production
sales of the hacienda and pay dividends from profit, the entries in its financial books tend to indicate
compliance by HLI of the profit-sharing equivalent to 3% of the gross sales from the production of
the agricultural land on top of (a) the salaries and wages due FWBs as employees of the company
and (b) the 3% of the gross selling price of the converted land and that portion used for the SCTEX.
A plausible evidence of compliance or non-compliance, as the case may be, could be the books of
account of HLI. Evidently, the cry of some groups of not having received their share from the gross
production sales has not adequately been validated on the ground by the Special Task Force.
Indeed, factual findings of administrative agencies are conclusive when supported by substantial
evidence and are accorded due respect and weight, especially when they are affirmed by the
CA.
135
However, such rule is not absolute. One such exception is when the findings of an
administrative agency are conclusions without citation of specific evidence on which they are
based,
136
such as in this particular instance. As culled from its Terminal Report, it would appear that
the Special Task Force rejected HLIs claim of compliance on the basis of this ratiocination:
The Task Force position: Though, allegedly, the Supervisory Group receives the 3% gross
production share and that others alleged that they received 30 million pesos still others
maintain that they have not received anything yet. Item No. 4 of the MOA is clear and must
be followed. There is a distinction between the total gross sales from the production of the
land and the proceeds from the sale of the land. The former refers to the fruits/yield of the
agricultural land while the latter is the land itself. The phrase "the beneficiaries are entitled
every year to an amount approximately equivalent to 3% would only be feasible if the subject
is the produce since there is at least one harvest per year, while such is not the case in the
sale of the agricultural land. This negates then the claim of HLI that, all that the FWBs can be
entitled to, if any, is only 3% of the purchase price of the converted land.
Besides, the Conversion Order dated 14 August 1996 provides that "the benefits, wages and
the like, presently received by the FWBs shall not in any way be reduced or adversely
affected. Three percent of the gross selling price of the sale of the converted land shall be
awarded to the beneficiaries of the SDO." The 3% gross production share then is different
from the 3% proceeds of the sale of the converted land and, with more reason, the 33%
share being claimed by the FWBs as part owners of the Hacienda, should have been given
the FWBs, as stockholders, and to which they could have been entitled if only the land were
acquired and redistributed to them under the CARP.
x x x x
The FWBs do not receive any other benefits under the MOA except the aforementioned [(viz:
shares of stocks (partial), 3% gross production sale (not all) and homelots (not all)].
Judging from the above statements, the Special Task Force is at best silent on whether HLI has
failed to comply with the 3% production-sharing obligation or the 3% of the gross selling price of the
converted land and the SCTEX lot. In fact, it admits that the FWBs, though not all, have received
their share of the gross production sales and in the sale of the lot to SCTEX. At most, then, HLI had
complied substantially with this SDP undertaking and the conversion order. To be sure, this slight
breach would not justify the setting to naught by PARC of the approval action of the earlier PARC.
Even in contract law, rescission, predicated on violation of reciprocity, will not be permitted for a
slight or casual breach of contract; rescission may be had only for such breaches that are substantial
and fundamental as to defeat the object of the parties in making the agreement.
137

Despite the foregoing findings, the revocation of the approval of the SDP is not without basis as
shown below.
On Titles to Homelots
Under RA 6657, the distribution of homelots is required only for corporations or business
associations owning or operating farms which opted for land distribution. Sec. 30 of RA 6657 states:
SEC. 30. Homelots and Farmlots for Members of Cooperatives.The individual members of the
cooperatives or corporations mentioned in the preceding section shall be provided with homelots
and small farmlots for their family use, to be taken from the land owned by the cooperative or
corporation.
The "preceding section" referred to in the above-quoted provision is as follows:
SEC. 29. Farms Owned or Operated by Corporations or Other Business Associations.In the case
of farms owned or operated by corporations or other business associations, the following rules shall
be observed by the PARC.
In general, lands shall be distributed directly to the individual worker-beneficiaries.
In case it is not economically feasible and sound to divide the land, then it shall be owned
collectively by the worker-beneficiaries who shall form a workers cooperative or association which
will deal with the corporation or business association. Until a new agreement is entered into by and
between the workers cooperative or association and the corporation or business association, any
agreement existing at the time this Act takes effect between the former and the previous landowner
shall be respected by both the workers cooperative or association and the corporation or business
association.
Noticeably, the foregoing provisions do not make reference to corporations which opted for stock
distribution under Sec. 31 of RA 6657. Concomitantly, said corporations are not obliged to provide
for it except by stipulation, as in this case.
Under the SDP, HLI undertook to "subdivide and allocate for free and without charge among the
qualified family-beneficiaries x x x residential or homelots of not more than 240 sq. m. each, with
each family beneficiary being assured of receiving and owning a homelot in the barrio or barangay
where it actually resides," "within a reasonable time."
More than sixteen (16) years have elapsed from the time the SDP was approved by PARC, and yet,
it is still the contention of the FWBs that not all was given the 240-square meter homelots and, of
those who were already given, some still do not have the corresponding titles.
During the oral arguments, HLI was afforded the chance to refute the foregoing allegation by
submitting proof that the FWBs were already given the said homelots:
Justice Velasco: x x x There is also an allegation that the farmer beneficiaries, the qualified family
beneficiaries were not given the 240 square meters each. So, can you also [prove] that the qualified
family beneficiaries were already provided the 240 square meter homelots.
Atty. Asuncion: We will, your Honor please.
138

Other than the financial report, however, no other substantial proof showing that all the qualified
beneficiaries have received homelots was submitted by HLI. Hence, this Court is constrained to rule
that HLI has not yet fully complied with its undertaking to distribute homelots to the FWBs under the
SDP.
On "Man Days" and the Mechanics of Stock Distribution
In our review and analysis of par. 3 of the SDOA on the mechanics and timelines of stock
distribution, We find that it violates two (2) provisions of DAO 10. Par. 3 of the SDOA states:
3. At the end of each fiscal year, for a period of 30 years, the SECOND PARTY [HLI] shall arrange
with the FIRST PARTY [TDC] the acquisition and distribution to the THIRD PARTY [FWBs] on the
basis of number of days worked and at no cost to them of one-thirtieth (1/30) of 118,391,976.85
shares of the capital stock of the SECOND PARTY that are presently owned and held by the FIRST
PARTY, until such time as the entire block of 118,391,976.85 shares shall have been completely
acquired and distributed to the THIRD PARTY.
Based on the above-quoted provision, the distribution of the shares of stock to the FWBs, albeit not
entailing a cash out from them, is contingent on the number of "man days," that is, the number of
days that the FWBs have worked during the year. This formula deviates from Sec. 1 of DAO 10,
which decrees the distribution of equal number of shares to the FWBs as the minimum ratio of
shares of stock for purposes of compliance with Sec. 31 of RA 6657. As stated in Sec. 4 of DAO 10:
Section 4. Stock Distribution Plan.The [SDP] submitted by the corporate landowner-applicant shall
provide for the distribution of an equal number of shares of the same class and value, with the same
rights and features as all other shares, to each of the qualified beneficiaries. This distribution plan in
all cases, shall be at least the minimum ratio for purposes of compliance with Section 31 of R.A. No.
6657.
On top of the minimum ratio provided under Section 3 of this Implementing Guideline, the corporate
landowner-applicant may adopt additional stock distribution schemes taking into account factors
such as rank, seniority, salary, position and other circumstances which may be deemed desirable as
a matter of sound company policy. (Emphasis supplied.)
The above proviso gives two (2) sets or categories of shares of stock which a qualified beneficiary
can acquire from the corporation under the SDP. The first pertains, as earlier explained, to the
mandatory minimum ratio of shares of stock to be distributed to the FWBs in compliance with Sec.
31 of RA 6657. This minimum ratio contemplates of that "proportion of the capital stock of the
corporation that the agricultural land, actually devoted to agricultural activities, bears in relation to
the companys total assets."
139
It is this set of shares of stock which, in line with Sec. 4 of DAO 10, is
supposed to be allocated "for the distribution of an equal number of shares of stock of the same
class and value, with the same rights and features as all other shares, to each of the qualified
beneficiaries."
On the other hand, the second set or category of shares partakes of a gratuitous extra grant,
meaning that this set or category constitutes an augmentation share/s that the corporate landowner
may give under an additional stock distribution scheme, taking into account such variables as rank,
seniority, salary, position and like factors which the management, in the exercise of its sound
discretion, may deem desirable.
140

Before anything else, it should be stressed that, at the time PARC approved HLIs SDP, HLI
recognized 6,296individuals as qualified FWBs. And under the 30-year stock distribution program
envisaged under the plan, FWBs who came in after 1989, new FWBs in fine, may be
accommodated, as they appear to have in fact been accommodated as evidenced by their receipt of
HLI shares.
Now then, by providing that the number of shares of the original 1989 FWBs shall depend on the
number of "man days," HLI violated the afore-quoted rule on stock distribution and effectively
deprived the FWBs of equal shares of stock in the corporation, for, in net effect, these 6,296
qualified FWBs, who theoretically had given up their rights to the land that could have been
distributed to them, suffered a dilution of their due share entitlement. As has been observed during
the oral arguments, HLI has chosen to use the shares earmarked for farmworkers as reward system
chips to water down the shares of the original 6,296 FWBs.
141
Particularly:
Justice Abad: If the SDOA did not take place, the other thing that would have happened is that there
would be CARP?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: Thats the only point I want to know x x x. Now, but they chose to enter SDOA instead
of placing the land under CARP. And for that reason those who would have gotten their shares of
the land actually gave up their rights to this land in place of the shares of the stock, is that correct?
Atty. Dela Merced: It would be that way, Your Honor.
Justice Abad: Right now, also the government, in a way, gave up its right to own the land because
that way the government takes own [sic] the land and distribute it to the farmers and pay for the land,
is that correct?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: And then you gave thirty-three percent (33%) of the shares of HLI to the farmers at
that time that numbered x x x those who signed five thousand four hundred ninety eight (5,498)
beneficiaries, is that correct?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: But later on, after assigning them their shares, some workers came in from 1989,
1990, 1991, 1992 and the rest of the years that you gave additional shares who were not in the
original list of owners?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: Did those new workers give up any right that would have belong to them in 1989 when
the land was supposed to have been placed under CARP?
Atty. Dela Merced: If you are talking or referring (interrupted)
Justice Abad: None! You tell me. None. They gave up no rights to land?
Atty. Dela Merced: They did not do the same thing as we did in 1989, Your Honor.
Justice Abad: No, if they were not workers in 1989 what land did they give up? None, if they become
workers later on.
Atty. Dela Merced: None, Your Honor, I was referring, Your Honor, to the original (interrupted)
Justice Abad: So why is it that the rights of those who gave up their lands would be diluted, because
the company has chosen to use the shares as reward system for new workers who come in? It is not
that the new workers, in effect, become just workers of the corporation whose stockholders were
already fixed. The TADECO who has shares there about sixty six percent (66%) and the five
thousand four hundred ninety eight (5,498) farmers at the time of the SDOA? Explain to me. Why,
why will you x x x what right or where did you get that right to use this shares, to water down the
shares of those who should have been benefited, and to use it as a reward system decided by the
company?
142

From the above discourse, it is clear as day that the original 6,296 FWBs, who were qualified
beneficiaries at the time of the approval of the SDP, suffered from watering down of shares. As
determined earlier, each original FWB is entitled to 18,804.32 HLI shares. The original FWBs got
less than the guaranteed 18,804.32 HLI shares per beneficiary, because the acquisition and
distribution of the HLI shares were based on "man days" or "number of days worked" by the FWB in
a years time. As explained by HLI, a beneficiary needs to work for at least 37 days in a fiscal year
before he or she becomes entitled to HLI shares. If it falls below 37 days, the FWB, unfortunately,
does not get any share at year end. The number of HLI shares distributed varies depending on the
number of days the FWBs were allowed to work in one year. Worse, HLI hired farmworkers in
addition to the original 6,296 FWBs, such that, as indicated in the Compliance dated August 2, 2010
submitted by HLI to the Court, the total number of farmworkers of HLI as of said date stood at
10,502. All these farmworkers, which include the original 6,296 FWBs, were given shares out of the
118,931,976.85 HLI shares representing the 33.296% of the total outstanding capital stock of HLI.
Clearly, the minimum individual allocation of each original FWB of 18,804.32 shares was diluted as a
result of the use of "man days" and the hiring of additional farmworkers.
Going into another but related matter, par. 3 of the SDOA expressly providing for a 30-year
timeframe for HLI-to-FWBs stock transfer is an arrangement contrary to what Sec. 11 of DAO 10
prescribes. Said Sec. 11 provides for the implementation of the approved stock distribution plan
within three (3) months from receipt by the corporate landowner of the approval of the plan by
PARC. In fact, based on the said provision, the transfer of the shares of stock in the names of the
qualified FWBs should be recorded in the stock and transfer books and must be submitted to the
SEC within sixty (60) days from implementation. As stated:
Section 11. Implementation/Monitoring of Plan.The approved stock distribution plan shall
be implemented within three (3) months from receipt by the corporate landowner-applicant of the
approval thereof by the PARC, and the transfer of the shares of stocks in the names of the qualified
beneficiaries shall be recorded in stock and transfer books and submitted to the Securities and
Exchange Commission (SEC) within sixty (60) days from the said implementation of the stock
distribution plan. (Emphasis supplied.)
It is evident from the foregoing provision that the implementation, that is, the distribution of the
shares of stock to the FWBs, must be made within three (3) months from receipt by HLI of the
approval of the stock distribution plan by PARC. While neither of the clashing parties has made a
compelling case of the thrust of this provision, the Court is of the view and so holds that the intent is
to compel the corporate landowner to complete, not merely initiate, the transfer process of shares
within that three-month timeframe. Reinforcing this conclusion is the 60-day stock transfer recording
(with the SEC) requirement reckoned from the implementation of the SDP.
To the Court, there is a purpose, which is at once discernible as it is practical, for the three-month
threshold. Remove this timeline and the corporate landowner can veritably evade compliance with
agrarian reform by simply deferring to absurd limits the implementation of the stock distribution
scheme.
The argument is urged that the thirty (30)-year distribution program is justified by the fact that, under
Sec. 26 of RA 6657, payment by beneficiaries of land distribution under CARP shall be made in
thirty (30) annual amortizations. To HLI, said section provides a justifying dimension to its 30-year
stock distribution program.
HLIs reliance on Sec. 26 of RA 6657, quoted in part below, is obviously misplaced as the said
provision clearly deals with land distribution.
SEC. 26. Payment by Beneficiaries.Lands awarded pursuant to this Act shall be paid for by the
beneficiaries to the LBP in thirty (30) annual amortizations x x x.
Then, too, the ones obliged to pay the LBP under the said provision are the beneficiaries. On the
other hand, in the instant case, aside from the fact that what is involved is stock distribution, it is the
corporate landowner who has the obligation to distribute the shares of stock among the FWBs.
Evidently, the land transfer beneficiaries are given thirty (30) years within which to pay the cost of
the land thus awarded them to make it less cumbersome for them to pay the government. To be
sure, the reason underpinning the 30-year accommodation does not apply to corporate landowners
in distributing shares of stock to the qualified beneficiaries, as the shares may be issued in a much
shorter period of time.
Taking into account the above discussion, the revocation of the SDP by PARC should be upheld for
violating DAO 10. It bears stressing that under Sec. 49 of RA 6657, the PARC and the DAR have the
power to issue rules and regulations, substantive or procedural. Being a product of such rule-making
power, DAO 10 has the force and effect of law and must be duly complied with.
143
The PARC is,
therefore, correct in revoking the SDP. Consequently, the PARC Resolution No. 89-12-2 dated
November 21, l989 approving the HLIs SDP is nullified and voided.
III.
We now resolve the petitions-in-intervention which, at bottom, uniformly pray for the exclusion from
the coverage of the assailed PARC resolution those portions of the converted land within Hacienda
Luisita which RCBC and LIPCO acquired by purchase.
Both contend that they are innocent purchasers for value of portions of the converted farm land.
Thus, their plea for the exclusion of that portion from PARC Resolution 2005-32-01, as implemented
by a DAR-issued Notice of Coverage dated January 2, 2006, which called for mandatory CARP
acquisition coverage of lands subject of the SDP.
To restate the antecedents, after the conversion of the 500 hectares of land in Hacienda Luisita, HLI
transferred the 300 hectares to Centennary, while ceding the remaining 200-hectare portion to LRC.
Subsequently, LIPCO purchased the entire three hundred (300) hectares of land from Centennary
for the purpose of developing the land into an industrial complex.
144
Accordingly, the TCT in
Centennarys name was canceled and a new one issued in LIPCOs name. Thereafter, said land
was subdivided into two (2) more parcels of land. Later on, LIPCO transferred about 184 hectares to
RCBC by way of dacion en pago, by virtue of which TCTs in the name of RCBC were subsequently
issued.
Under Sec. 44 of PD 1529 or the Property Registration Decree, "every registered owner receiving a
certificate of title in pursuance of a decree of registration and every subsequent purchaser of
registered land taking a certificate of title for value and in good faith shall hold the same free from all
encumbrances except those noted on the certificate and enumerated therein."
145

It is settled doctrine that one who deals with property registered under the Torrens system need not
go beyond the four corners of, but can rely on what appears on, the title. He is charged with notice
only of such burdens and claims as are annotated on the title. This principle admits of certain
exceptions, such as when the party has actual knowledge of facts and circumstances that would
impel a reasonably cautious man to make such inquiry, or when the purchaser has knowledge of a
defect or the lack of title in his vendor or of sufficient facts to induce a reasonably prudent man to
inquire into the status of the title of the property in litigation.
146
A higher level of care and diligence is
of course expected from banks, their business being impressed with public interest.
147

Millena v. Court of Appeals describes a purchaser in good faith in this wise:
x x x A purchaser in good faith is one who buys property of another, without notice that some other
person has a right to, or interest in, such property at the time of such purchase, or before he has
notice of the claim or interest of some other persons in the property. Good faith, or the lack of it, is in
the final analysis a question of intention; but in ascertaining the intention by which one is actuated on
a given occasion, we are necessarily controlled by the evidence as to the conduct and outward acts
by which alone the inward motive may, with safety, be determined. Truly, good faith is not a visible,
tangible fact that can be seen or touched, but rather a state or condition of mind which can only be
judged by actual or fancied tokens or signs. Otherwise stated, good faith x x x refers to the state of
mind which is manifested by the acts of the individual concerned.
148
(Emphasis supplied.)
In fine, there are two (2) requirements before one may be considered a purchaser in good faith,
namely: (1) that the purchaser buys the property of another without notice that some other person
has a right to or interest in such property; and (2) that the purchaser pays a full and fair price for the
property at the time of such purchase or before he or she has notice of the claim of another.
It can rightfully be said that both LIPCO and RCBC arebased on the above requirements and with
respect to the adverted transactions of the converted land in questionpurchasers in good faith for
value entitled to the benefits arising from such status.
First, at the time LIPCO purchased the entire three hundred (300) hectares of industrial land, there
was no notice of any supposed defect in the title of its transferor, Centennary, or that any other
person has a right to or interest in such property. In fact, at the time LIPCO acquired said parcels of
land, only the following annotations appeared on the TCT in the name of Centennary: the
Secretarys Certificate in favor of Teresita Lopa, the Secretarys Certificate in favor of Shintaro
Murai, and the conversion of the property from agricultural to industrial and residential use.
149

The same is true with respect to RCBC. At the time it acquired portions of Hacienda Luisita, only the
following general annotations appeared on the TCTs of LIPCO: the Deed of Restrictions, limiting its
use solely as an industrial estate; the Secretarys Certificate in favor of Koji Komai and Kyosuke
Hori; and the Real Estate Mortgage in favor of RCBC to guarantee the payment of PhP 300 million.
It cannot be claimed that RCBC and LIPCO acted in bad faith in acquiring the lots that were
previously covered by the SDP. Good faith "consists in the possessors belief that the person from
whom he received it was the owner of the same and could convey his title. Good faith requires a
well-founded belief that the person from whom title was received was himself the owner of the land,
with the right to convey it. There is good faith where there is an honest intention to abstain from
taking any unconscientious advantage from another."
150
It is the opposite of fraud.
To be sure, intervenor RCBC and LIPCO knew that the lots they bought were subjected to CARP
coverage by means of a stock distribution plan, as the DAR conversion order was annotated at the
back of the titles of the lots they acquired. However, they are of the honest belief that the subject lots
were validly converted to commercial or industrial purposes and for which said lots were taken out of
the CARP coverage subject of PARC Resolution No. 89-12-2 and, hence, can be legally and validly
acquired by them. After all, Sec. 65 of RA 6657 explicitly allows conversion and disposition of
agricultural lands previously covered by CARP land acquisition "after the lapse of five (5) years from
its award when the land ceases to be economically feasible and sound for agricultural purposes or
the locality has become urbanized and the land will have a greater economic value for residential,
commercial or industrial purposes." Moreover, DAR notified all the affected parties, more particularly
the FWBs, and gave them the opportunity to comment or oppose the proposed conversion. DAR,
after going through the necessary processes, granted the conversion of 500 hectares of Hacienda
Luisita pursuant to its primary jurisdiction under Sec. 50 of RA 6657 to determine and adjudicate
agrarian reform matters and its original exclusive jurisdiction over all matters involving the
implementation of agrarian reform. The DAR conversion order became final and executory after
none of the FWBs interposed an appeal to the CA. In this factual setting, RCBC and LIPCO
purchased the lots in question on their honest and well-founded belief that the previous registered
owners could legally sell and convey the lots though these were previously subject of CARP
coverage. Ergo, RCBC and LIPCO acted in good faith in acquiring the subject lots.
And second, both LIPCO and RCBC purchased portions of Hacienda Luisita for value. Undeniably,
LIPCO acquired 300 hectares of land from Centennary for the amount of PhP 750 million pursuant to
a Deed of Sale dated July 30, 1998.
151
On the other hand, in a Deed of Absolute Assignment dated
November 25, 2004, LIPCO conveyed portions of Hacienda Luisita in favor of RCBC by way
of dacion en pago to pay for a loan of PhP 431,695,732.10.
As bona fide purchasers for value, both LIPCO and RCBC have acquired rights which cannot just be
disregarded by DAR, PARC or even by this Court. As held in Spouses Chua v. Soriano:
With the property in question having already passed to the hands of purchasers in good faith, it is
now of no moment that some irregularity attended the issuance of the SPA, consistent with our
pronouncement in Heirs of Spouses Benito Gavino and Juana Euste v. Court of Appeals, to wit:
x x x the general rule that the direct result of a previous void contract cannot be valid, is inapplicable
in this case as it will directly contravene the Torrens system of registration. Where innocent third
persons, relying on the correctness of the certificate of title thus issued, acquire rights over
the property, the court cannot disregard such rights and order the cancellation of the
certificate. The effect of such outright cancellation will be to impair public confidence in the
certificate of title. The sanctity of the Torrens system must be preserved; otherwise, everyone
dealing with the property registered under the system will have to inquire in every instance as to
whether the title had been regularly or irregularly issued, contrary to the evident purpose of the law.
Being purchasers in good faith, the Chuas already acquired valid title to the property. A
purchaser in good faith holds an indefeasible title to the property and he is entitled to the
protection of the law.
152
x x x (Emphasis supplied.)
To be sure, the practicalities of the situation have to a point influenced Our disposition on the fate of
RCBC and LIPCO. After all, the Court, to borrow from Association of Small Landowners in the
Philippines, Inc.,
153
is not a "cloistered institution removed" from the realities on the ground. To note,
the approval and issuances of both the national and local governments showing that certain portions
of Hacienda Luisita have effectively ceased, legally and physically, to be agricultural and, therefore,
no longer CARPable are a matter of fact which cannot just be ignored by the Court and the DAR.
Among the approving/endorsing issuances:
154

(a) Resolution No. 392 dated 11 December 1996 of the Sangguniang Bayan of Tarlac
favorably endorsing the 300-hectare industrial estate project of LIPCO;
(b) BOI Certificate of Registration No. 96-020 dated 20 December 1996 issued in
accordance with the Omnibus Investments Code of 1987;
(c) PEZA Certificate of Board Resolution No. 97-202 dated 27 June 1997, approving
LIPCOs application for a mixed ecozone and proclaiming the three hundred (300) hectares
of the industrial land as a Special Economic Zone;
(d) Resolution No. 234 dated 08 August 1997 of the Sangguniang Bayan of Tarlac,
approving the Final Development Permit for the Luisita Industrial Park II Project;
(e) Development Permit dated 13 August 1997 for the proposed Luisita Industrial Park II
Project issued by the Office of the Sangguniang Bayan of Tarlac;
155

(f) DENR Environmental Compliance Certificate dated 01 October 1997 issued for the
proposed project of building an industrial complex on three hundred (300) hectares of
industrial land;
156

(g) Certificate of Registration No. 00794 dated 26 December 1997 issued by the HLURB on
the project of Luisita Industrial Park II with an area of three million (3,000,000) square
meters;
157

(h) License to Sell No. 0076 dated 26 December 1997 issued by the HLURB authorizing the
sale of lots in the Luisita Industrial Park II;
(i) Proclamation No. 1207 dated 22 April 1998 entitled "Declaring Certain Parcels of Private
Land in Barangay San Miguel, Municipality of Tarlac, Province of Tarlac, as a Special
Economic Zone pursuant to Republic Act No. 7916," designating the Luisita Industrial Park II
consisting of three hundred hectares (300 has.) of industrial land as a Special Economic
Zone; and
(j) Certificate of Registration No. EZ-98-05 dated 07 May 1998 issued by the PEZA, stating
that pursuant to Presidential Proclamation No. 1207 dated 22 April 1998 and Republic Act
No. 7916, LIPCO has been registered as an Ecozone Developer/Operator of Luisita
Industrial Park II located in San Miguel, Tarlac, Tarlac.
While a mere reclassification of a covered agricultural land or its inclusion in an economic zone does
not automatically allow the corporate or individual landowner to change its use,
158
the reclassification
process is a prima facie indicium that the land has ceased to be economically feasible and sound for
agricultural uses. And if only to stress, DAR Conversion Order No. 030601074-764-(95) issued in
1996 by then DAR Secretary Garilao had effectively converted 500 hectares of hacienda land from
agricultural to industrial/commercial use and authorized their disposition.
In relying upon the above-mentioned approvals, proclamation and conversion order, both RCBC and
LIPCO cannot be considered at fault for believing that certain portions of Hacienda Luisita are
industrial/commercial lands and are, thus, outside the ambit of CARP. The PARC, and consequently
DAR, gravely abused its discretion when it placed LIPCOs and RCBCs property which once formed
part of Hacienda Luisita under the CARP compulsory acquisition scheme via the assailed Notice of
Coverage.
As regards the 80.51-hectare land transferred to the government for use as part of the SCTEX, this
should also be excluded from the compulsory agrarian reform coverage considering that the transfer
was consistent with the governments exercise of the power of eminent domain
159
and none of the
parties actually questioned the transfer.
While We affirm the revocation of the SDP on Hacienda Luisita subject of PARC Resolution Nos.
2005-32-01 and 2006-34-01, the Court cannot close its eyes to certain "operative facts" that had
occurred in the interim. Pertinently, the "operative fact" doctrine realizes that, in declaring
a law or executive action null and void, or, by extension, no longer without force and effect, undue
harshness and resulting unfairness must be avoided. This is as it should realistically be, since rights
might have accrued in favor of natural or juridical persons and obligations justly incurred in the
meantime.
160
The actual existence of a statute or executive act is, prior to such a determination, an
operative fact and may have consequences which cannot justly be ignored; the past cannot always
be erased by a new judicial declaration.
161

The oft-cited De Agbayani v. Philippine National Bank
162
discussed the effect to be given to a
legislative or executive act subsequently declared invalid:
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 government 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." x x x
Given the above perspective and considering that more than two decades had passed since the
PARCs approval of the HLIs SDP, in conjunction with numerous activities performed in good faith
by HLI, and the reliance by the FWBs on the legality and validity of the PARC-approved SDP,
perforce, certain rights of the parties, more particularly the FWBs, have to be respected pursuant to
the application in a general way of the operative fact doctrine.
A view, however, has been advanced that the operative fact doctrine is of minimal or altogether
without relevance to the instant case as it applies only in considering the effects of a declaration of
unconstitutionality of a statute, and not of a declaration of nullity of a contract. This is incorrect, for
this view failed to consider is that it is NOT the SDOA dated May 11, 1989 which was revoked in the
instant case. Rather, it is PARCs approval of the HLIs Proposal for Stock Distribution under CARP
which embodied the SDP that was nullified.
A recall of the antecedent events would show that on May 11, 1989, Tadeco, HLI, and the qualified
FWBs executed the SDOA. This agreement provided the basis and mechanics of the SDP that was
subsequently proposed and submitted to DAR for approval. It was only after its review that the
PARC, through then Sec. Defensor-Santiago, issued the assailed Resolution No. 89-12-2 approving
the SDP. Considerably, it is not the SDOA which gave legal force and effect to the stock distribution
scheme but instead, it is the approval of the SDP under the PARC Resolution No. 89-12-2 that gave
it its validity.
The above conclusion is bolstered by the fact that in Sec. Pangandamans recommendation to the
PARC Excom, what he proposed is the recall/revocation of PARC Resolution No. 89-12-2 approving
HLIs SDP, and not the revocation of the SDOA. Sec. Pangandamans recommendation was
favorably endorsed by the PARC Validation Committee to the PARC Excom, and these
recommendations were referred to in the assailed Resolution No. 2005-32-01. Clearly, it is not the
SDOA which was made the basis for the implementation of the stock distribution scheme.
That the operative fact doctrine squarely applies to executive actsin this case, the approval by
PARC of the HLI proposal for stock distributionis well-settled in our jurisprudence. In Chavez v.
National Housing Authority,
163
We held:
Petitioner postulates that the "operative fact" doctrine is inapplicable to the present case because it
is an equitable doctrine which could not be used to countenance an inequitable result that is contrary
to its proper office.
On the other hand, the petitioner Solicitor General argues that the existence of the various
agreements implementing the SMDRP is an operative fact that can no longer be disturbed or simply
ignored, citing Rieta v. People of the Philippines.
The argument of the Solicitor General is meritorious.
The "operative fact" doctrine is embodied in De Agbayani v. Court of Appeals, wherein it is stated
that a legislative or executive act, prior to its being declared as unconstitutional by the courts, is valid
and must be complied with, thus:
x x x x x x x x x
This doctrine was reiterated in the more recent case of City of Makati v. Civil Service Commission,
wherein we ruled that:
Moreover, we certainly cannot nullify the City Government's order of suspension, as we have no
reason to do so, much less retroactively apply such nullification to deprive private respondent of a
compelling and valid reason for not filing the leave application. For as we have held, a void act
though in law a mere scrap of paper nonetheless confers legitimacy upon past acts or omissions
done in reliance thereof. Consequently, the existence of a statute or executive order prior to its being
adjudged void is an operative fact to which legal consequences are attached. It would indeed be
ghastly unfair to prevent private respondent from relying upon the order of suspension in lieu of a
formal leave application. (Citations omitted; Emphasis supplied.)
The applicability of the operative fact doctrine to executive acts was further explicated by this Court
in Rieta v. People,
164
thus:
Petitioner contends that his arrest by virtue of Arrest Search and Seizure Order (ASSO) No. 4754
was invalid, as the law upon which it was predicated General Order No. 60, issued by then
President Ferdinand E. Marcos was subsequently declared by the Court, in Taada v. Tuvera, 33
to have no force and effect. Thus, he asserts, any evidence obtained pursuant thereto is
inadmissible in evidence.
We do not agree. In Taada, the Court addressed the possible effects of its declaration of the
invalidity of various presidential issuances. Discussing therein how such a declaration might affect
acts done on a presumption of their validity, the Court said:
". . .. In similar situations in the past this Court had taken the pragmatic and realistic course set forth
in Chicot County Drainage District vs. Baxter Bank 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. . . . 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 [the determination of its invalidity], 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, of 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.
x x x x x x x x x
"Similarly, the implementation/enforcement of presidential decrees prior to their publication in the
Official Gazette is an operative fact which may have consequences which cannot be justly ignored.
The past cannot always be erased by a new judicial declaration . . . that an all-inclusive statement of
a principle of absolute retroactive invalidity cannot be justified."
The Chicot doctrine cited in Taada advocates that, prior to the nullification of a statute, there is an
imperative necessity of taking into account its actual existence as an operative fact negating the
acceptance of "a principle of absolute retroactive invalidity." Whatever was done while the legislative
or the executive act was in operation should be duly recognized and presumed to be valid in all
respects. The ASSO that was issued in 1979 under General Order No. 60 long before our
Decision in Taada and the arrest of petitioner is an operative fact that can no longer be disturbed
or simply ignored. (Citations omitted; Emphasis supplied.)
To reiterate, although the assailed Resolution No. 2005-32-01 states that it revokes or recalls the
SDP, what it actually revoked or recalled was the PARCs approval of the SDP embodied in
Resolution No. 89-12-2. Consequently, what was actually declared null and void was an executive
act, PARC Resolution No. 89-12-2,
165
and not a contract (SDOA). It is, therefore, wrong to say that it
was the SDOA which was annulled in the instant case. Evidently, the operative fact doctrine is
applicable.
IV.
While the assailed PARC resolutions effectively nullifying the Hacienda Luisita SDP are upheld, the
revocation must, by application of the operative fact principle, give way to the right of the original
6,296 qualified FWBs to choose whether they want to remain as HLI stockholders or not. The Court
cannot turn a blind eye to the fact that in 1989, 93% of the FWBs agreed to the SDOA (or the MOA),
which became the basis of the SDP approved by PARC per its Resolution No. 89-12-2 dated
November 21, 1989. From 1989 to 2005, the FWBs were said to have received from HLI salaries
and cash benefits, hospital and medical benefits, 240-square meter homelots, 3% of the gross
produce from agricultural lands, and 3% of the proceeds of the sale of the 500-hectare converted
land and the 80.51-hectare lot sold to SCTEX. HLI shares totaling 118,391,976.85 were distributed
as of April 22, 2005.
166
On August 6, 20l0, HLI and private respondents submitted a Compromise
Agreement, in which HLI gave the FWBs the option of acquiring a piece of agricultural land or
remain as HLI stockholders, and as a matter of fact, most FWBs indicated their choice of remaining
as stockholders. These facts and circumstances tend to indicate that some, if not all, of the FWBs
may actually desire to continue as HLI shareholders. A matter best left to their own discretion.
With respect to the other FWBs who were not listed as qualified beneficiaries as of November 21,
1989 when the SDP was approved, they are not accorded the right to acquire land but shall,
however, continue as HLI stockholders. All the benefits and homelots
167
received by the 10,502
FWBs (6,296 original FWBs and 4,206 non-qualified FWBs) listed as HLI stockholders as of August
2, 2010 shall be respected with no obligation to refund or return them since the benefits (except the
homelots) were received by the FWBs as farmhands in the agricultural enterprise of HLI and other
fringe benefits were granted to them pursuant to the existing collective bargaining agreement with
Tadeco. If the number of HLI shares in the names of the original FWBs who opt to remain as HLI
stockholders falls below the guaranteed allocation of 18,804.32 HLI shares per FWB, the HLI shall
assign additional shares to said FWBs to complete said minimum number of shares at no cost to
said FWBs.
With regard to the homelots already awarded or earmarked, the FWBs are not obliged to return the
same to HLI or pay for its value since this is a benefit granted under the SDP. The homelots do not
form part of the 4,915.75 hectares covered by the SDP but were taken from the 120.9234 hectare
residential lot owned by Tadeco. Those who did not receive the homelots as of the revocation of the
SDP on December 22, 2005 when PARC Resolution No. 2005-32-01 was issued, will no longer be
entitled to homelots. Thus, in the determination of the ultimate agricultural land that will be subjected
to land distribution, the aggregate area of the homelots will no longer be deducted.
There is a claim that, since the sale and transfer of the 500 hectares of land subject of the August
14, 1996 Conversion Order and the 80.51-hectare SCTEX lot came after compulsory coverage has
taken place, the FWBs should have their corresponding share of the lands value. There is merit in
the claim. Since the SDP approved by PARC Resolution No. 89-12-2 has been nullified, then all the
lands subject of the SDP will automatically be subject of compulsory coverage under Sec. 31 of RA
6657. Since the Court excluded the 500-hectare lot subject of the August 14, 1996 Conversion Order
and the 80.51-hectare SCTEX lot acquired by the government from the area covered by SDP, then
HLI and its subsidiary, Centennary, shall be liable to the FWBs for the price received for said lots.
HLI shall be liable for the value received for the sale of the 200-hectare land to LRC in the amount of
PhP 500,000,000 and the equivalent value of the 12,000,000 shares of its subsidiary, Centennary,
for the 300-hectare lot sold to LIPCO for the consideration of PhP 750,000,000. Likewise, HLI shall
be liable for PhP 80,511,500 as consideration for the sale of the 80.51-hectare SCTEX lot.
We, however, note that HLI has allegedly paid 3% of the proceeds of the sale of the 500-hectare
land and 80.51-hectare SCTEX lot to the FWBs. We also take into account the payment of taxes and
expenses relating to the transfer of the land and HLIs statement that most, if not all, of the proceeds
were used for legitimate corporate purposes. In order to determine once and for all whether or not all
the proceeds were properly utilized by HLI and its subsidiary, Centennary, DAR will engage the
services of a reputable accounting firm to be approved by the parties to audit the books of HLI to
determine if the proceeds of the sale of the 500-hectare land and the 80.51-hectare SCTEX lot were
actually used for legitimate corporate purposes, titling expenses and in compliance with the August
14, 1996 Conversion Order. The cost of the audit will be shouldered by HLI. If after such audit, it is
determined that there remains a balance from the proceeds of the sale, then the balance shall be
distributed to the qualified FWBs.
A view has been advanced that HLI must pay the FWBs yearly rent for use of the land from 1989.
We disagree. It should not be forgotten that the FWBs are also stockholders of HLI, and the benefits
acquired by the corporation from its possession and use of the land ultimately redounded to the
FWBs benefit based on its business operations in the form of salaries, and other fringe benefits
under the CBA. To still require HLI to pay rent to the FWBs will result in double compensation.
For sure, HLI will still exist as a corporation even after the revocation of the SDP although it will no
longer be operating under the SDP, but pursuant to the Corporation Code as a private stock
corporation. The non-agricultural assets amounting to PhP 393,924,220 shall remain with HLI, while
the agricultural lands valued at PhP 196,630,000 with an original area of 4,915.75 hectares shall be
turned over to DAR for distribution to the FWBs. To be deducted from said area are the 500-hectare
lot subject of the August 14, 1996 Conversion Order, the 80.51-hectare SCTEX lot, and the total
area of 6,886.5 square meters of individual lots that should have been distributed to FWBs by DAR
had they not opted to stay in HLI.
HLI shall be paid just compensation for the remaining agricultural land that will be transferred to DAR
for land distribution to the FWBs. We find that the date of the "taking" is November 21, 1989, when
PARC approved HLIs SDP per PARC Resolution No. 89-12-2. DAR shall coordinate with LBP for
the determination of just compensation. We cannot use May 11, 1989 when the SDOA was
executed, since it was the SDP, not the SDOA, that was approved by PARC.
The instant petition is treated pro hac vice in view of the peculiar facts and circumstances of the
case.
WHEREFORE, the instant petition is DENIED. PARC Resolution No. 2005-32-01 dated December
22, 2005 and Resolution No. 2006-34-01 dated May 3, 2006, placing the lands subject of HLIs SDP
under compulsory coverage on mandated land acquisition scheme of the CARP, are hereby
AFFIRMED with the MODIFICATION that the original 6,296 qualified FWBs shall have the option to
remain as stockholders of HLI. DAR shall immediately schedule meetings with the said 6,296 FWBs
and explain to them the effects, consequences and legal or practical implications of their choice,
after which the FWBs will be asked to manifest, in secret voting, their choices in the ballot, signing
their signatures or placing their thumbmarks, as the case may be, over their printed names.
Of the 6,296 FWBs, he or she who wishes to continue as an HLI stockholder is entitled to 18,804.32
HLI shares, and, in case the HLI shares already given to him or her is less than 18,804.32 shares,
the HLI is ordered to issue or distribute additional shares to complete said prescribed number of
shares at no cost to the FWB within thirty (30) days from finality of this Decision. Other FWBs who
do not belong to the original 6,296 qualified beneficiaries are not entitled to land distribution and
shall remain as HLI shareholders. All salaries, benefits, 3% production share and 3% share in the
proceeds of the sale of the 500-hectare converted land and the 80.51-hectare SCTEX lot and
homelots already received by the 10,502 FWBs, composed of 6,296 original FWBs and 4,206 non-
qualified FWBs, shall be respected with no obligation to refund or return them.
Within thirty (30) days after determining who from among the original FWBs will stay as
stockholders, DAR shall segregate from the HLI agricultural land with an area of 4,915.75 hectares
subject of PARCs SDP-approving Resolution No. 89-12-2 the following: (a) the 500-hectare lot
subject of the August 14, l996 Conversion Order; (b) the 80.51-hectare lot sold to, or acquired by,
the government as part of the SCTEX complex; and (c) the aggregate area of 6,886.5 square meters
of individual lots that each FWB is entitled to under the CARP had he or she not opted to stay in HLI
as a stockholder. After the segregation process, as indicated, is done, the remaining area shall be
turned over to DAR for immediate land distribution to the original qualified FWBs who opted not to
remain as HLI stockholders.
The aforementioned area composed of 6,886.5-square meter lots allotted to the FWBs who stayed
with the corporation shall form part of the HLI assets.
HLI is directed to pay the 6,296 FWBs the consideration of PhP 500,000,000 received by it from
Luisita Realty, Inc. for the sale to the latter of 200 hectares out of the 500 hectares covered by the
August 14, 1996 Conversion Order, the consideration of PhP 750,000,000 received by its owned
subsidiary, Centennary Holdings, Inc. for the sale of the remaining 300 hectares of the
aforementioned 500-hectare lot to Luisita Industrial Park Corporation, and the price of PhP
80,511,500 paid by the government through the Bases Conversion Development Authority for the
sale of the 80.51-hectare lot used for the construction of the SCTEX road network. From the total
amount of PhP 1,330,511,500 (PhP 500,000,000 + PhP 750,000,000 + PhP 80,511,500 = PhP
1,330,511,500) shall be deducted the 3% of the total gross sales from the production of the
agricultural land and the 3% of the proceeds of said transfers that were paid to the FWBs, the taxes
and expenses relating to the transfer of titles to the transferees, and the expenditures incurred by
HLI and Centennary Holdings, Inc. for legitimate corporate purposes. For this purpose, DAR is
ordered to engage the services of a reputable accounting firm approved by the parties to audit the
books of HLI and Centennary Holdings, Inc. to determine if the PhP 1,330,511,500 proceeds of the
sale of the three (3) aforementioned lots were used or spent for legitimate corporate purposes. Any
unspent or unused balance as determined by the audit shall be distributed to the 6,296 original
FWBs.
HLI is entitled to just compensation for the agricultural land that will be transferred to DAR to be
reckoned from November 21, 1989 per PARC Resolution No. 89-12-2. DAR and LBP are ordered to
determine the compensation due to HLI.
DAR shall submit a compliance report after six (6) months from finality of this judgment. It shall also
submit, after submission of the compliance report, quarterly reports on the execution of this
judgment to be submitted within the first 15 days at the end of each quarter, until fully implemented.
The temporary restraining order is lifted.
SO ORDERED.
G.R. No. 159674 June 30, 2006
SAMUEL ESTRIBILLO, CALIXTO P. ABAYATO, JR., RONGIE D. AGUILAR, TACIANA D.
AGUILAR, ARTEMIO G. DE JUAN, ESTANISLAO DELA CRUZ, SR., EDGAR DUENAS, MARIO
ERIBAL, REYNALDO C. ESENCIA, EMMA GONZAGA, RUBEN A. IBOJO, SAMUEL
JAMANDRE, HILARION V. LANTIZA, ANSELMO LOPEZ, TERESITA NACION, CHARIE E.
NASTOR, NELSON L. NULLAS, CARLITO S. OLIA, ANA PATIO, ROBERTO T. PATIO,
ANTONIO P. ROCHA, FERNANDO C. RUFINO, PATERNO P. SAIN, CLAUDIO S. SAYSON, and
JOEMARIE VIBO, Petitioners,
vs.
DEPARTMENT OF AGRARIAN REFORM and HACIENDA MARIA, INC., Respondents.
D E C I S I O N
CHICO-NAZARIO, J .:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking the review
and reversal of the Resolutions
1
of the Court of Appeals dated 27 January 2003 and 28 August
2003, respectively.
The factual and procedural antecedents are as follows:
The petitioners, with the exception of two, are the recipients of Emancipation Patents (EPs) over
parcels of land located at Barangay Angas, Sta. Josefa, Agusan del Sur, with their respective
Transfer Certificate of Title (TCT) and EP numbers presented below:
Petitioners TCT/EP Nos.
Areas
(has.)
1. SAMUEL ESTRIBILLO TCT No. T-287/EP No. A-037675 1.7833
2. CALIXTO P. ABAYATO, JR. TCT No. T-297/EP No. A-037814
TCT No. T-829/EP No. A-027293
2.0000
0.1565
3. RONGIE D. AGUILAR TCT No. T-913/EP No. A-027295 3.1441
4. TACIANA D. AGUILAR TCT No. T-944/EP No. A-027296 4.2405
5. ARTEMIO G. DE JUAN TCT No. T-302/EP No. A-037809 3.3082
6. ESTANISLAO DELA CRUZ, SR. TCT No. T-290/EP No. A-035676 3.1437
7. EDGAR DUENAS TCT No. T-949/EP No. A-037658 4.0128
8. MARIO P. ERIBAL TCT No. T-952/EP No. A-037836 2.3087
9. REYNALDO C. ESENCIA TCT No. T-950/EP No. A-037844 2.0950
10. RUBEN A. IBOJO TCT No. T-928/EP No. A-037873 1.5737
11. SAMUEL JAMANDRE TCT No. T-909/EP No. A-159348 2.2670
12. HILARION V. LANTIZA TCT No. T-288/EP No. A-037674
TCT No. T-401/EP No. A-037825
4.5526
0.4579
13. ANSELMO LOPEZ TCT No. T-973/EP No. A-037840 4.4939
14. TERESITA NACION TCT No. T-900/EP No. A-037849 2.2140
15. CHARIE E. NASTOR TCT No. T-825/EP No. A-037829 3.9291
16. NELSON L. NULLAS TCT No. T-396/EP No. A-037826 2.7491
17. CARLITO S. OLIA TCT No. T-910/EP No. A-037673 1.7954
18. ROBERTO T.PATIO TCT No. T-912/EP No. A-037860 6.4266
19. ANTONIO P. ROCHA TCT No. T-914/EP No. A-037830 2.2143
20. FERNANDO C. RUFINO TCT No. T-923/EP No. A-037848 4.5322
21. PATERNO P. SAIN TCT No. T-954/EP No. A-037813 4.3223
22. CLAUDIO S. SAYSON, and TCT No. T-891/EP No. A-037880 3.7151
23. JOEMARIE VIBO TCT No. T-893/EP No. A-037827 1.3185
2

The two other petitioners, Emma Gonzaga and Ana Patio, are the surviving spouses of deceased
recipients of EPs over parcels of land also located at Barangay Angas, Sta. Josefa, Agusan del Sur,
with their corresponding TCT and EP numbers identified as follows:
(Deceased) Registered Owners TCT/EP Nos.
Areas
(has.)
1. MANUEL S. GONZAGA TCT No. T-920/EP No. A-037832 4.1953
2. RAFAEL PATIO TCT No. T-929/EP No. A-037861 3.0078
3

The parcels of land described above, the subject matters in this Petition, were formerly part of a
forested area which have been denuded as a result of the logging operations of respondent
Hacienda Maria, Inc. (HMI). Petitioners, together with other persons, occupied and tilled these areas
believing that the same were public lands. HMI never disturbed petitioners and the other occupants
in their peaceful cultivation thereof.
HMI acquired such forested area from the Republic of the Philippines through Sales Patent No. 2683
in 1956 by virtue of which it was issued OCT No. P-3077-1661. The title covered three parcels of
land with a total area of 527.8308 hectares, to wit:
Lot No.
Area
(in hectares)
Lot No. 1620, Pls 4 28.52
Lot No. 1621, Pls 4 11.64
Lot No. 1622, Pls 4 487.47
TOTAL 527.83
4

On 21 October 1972, Presidential Decree No. 27
5
was issued mandating that tenanted rice and corn
lands be brought under Operation Land Transfer and awarded to farmer-beneficiaries.
HMI, through a certain Joaquin Colmenares, requested that 527.8308 hectares of its landholdings be
placed under the coverage of Operation Land Transfer. Receiving compensation therefor, HMI
allowed petitioners and other occupants to cultivate the landholdings so that the same may be
covered under said law.
In 1973, the Department of Agrarian Reform (DAR) conducted a parcellary mapping of the entire
landholdings of 527.8308 hectares covered by OCT No. P-3077-1661. In 1975 and 1976, the DAR
approved the Parcellary Map Sketching (PMS) and the Amended PMS covering the entire
landholdings.
HMI, through its representatives, actively participated in all relevant proceedings, including the
determination of the Average Gross Production per hectare at the Barangay Committee on Land
Production, and was a signatory of an undated Landowner and Tenant Production Agreement
(LTPA), covering the 527.8308 hectares. The LTPA was submitted to the Land Bank of the
Philippines (LBP) in 1977.
Also in 1977, HMI executed a Deed of Assignment of Rights in favor of petitioners, among other
persons, which was registered with the Register of Deeds and annotated at the back of OCT No. P-
3077-1661. The annotation in the OCT showed that the entire 527.8308 hectares was the subject of
the Deed of Assignment.
In 1982, a final survey over the entire area was conducted and approved. From 1984 to 1988, the
corresponding TCTs and EPs covering the entire 527.8308 hectares were issued to petitioners,
among other persons.
In December 1997, HMI filed with the Regional Agrarian Reform Adjudicator (RARAD) of CARAGA,
Region XIII, 17 petitions seeking the declaration of erroneous coverage under Presidential Decree
No. 27 of 277.5008 hectares of its former landholdings covered by OCT No. P-3077-1661. HMI
claimed that said area was not devoted to either rice or corn, that the area was untenanted, and that
no compensation was paid therefor. The 17 petitions, which were later consolidated, sought for the
cancellation of the EPs covering the disputed 277.5008 hectares which had been awarded to
petitioners. HMI did not question the coverage of the other 250.3300 hectares under Presidential
Decree No. 27 despite claiming that the entire landholdings were untenanted and not devoted to rice
and corn.
On 27 November 1998, after petitioners failed to submit a Position Paper, the RARAD rendered a
Decision declaring as void the TCTs and EPs awarded to petitioners because the land covered was
not devoted to rice and corn, and neither was there any established tenancy relations between HMI
and petitioners when Presidential Decree No. 27 took effect on 21 October 1972. The Decision was
based on a 26 March 1998 report submitted by the Hacienda Maria Action Team. Petitioners TCTs
and EPs were ordered cancelled. Petitioners filed a Motion for Reconsideration, but the same was
denied. Petitioners appealed to the Department of Agrarian Reform Adjudication Board (DARAB)
which affirmed the RARAD Decision.
After the DARAB denied petitioners Motion for Reconsideration, the latter proceeded to the Court of
Appeals with their Petition for Review on Certiorari. The Court of Appeals issued the following
assailed Resolution:
A perusal of the petition reveals that the Verification and Certification of Non-Forum Shopping was
executed by Samuel A. Estribillo who is one of the petitioners, without the corresponding Special
Power of Attorneys executed by the other petitioners authorizing him to sign for their behalf in
violation of Section 5, Rule 7 of the 1997 Rules of Civil Procedure, as amended.
WHEREFORE, the petition is DENIED DUE COURSE and necessarily DISMISSED.
6

Petitioners filed a "Motion for Reconsideration With Alternative Prayer with Leave of Court for the
Admission of Special Power of Attorney (SPA) Granted to Petitioner Samuel Estribillo by his Co-
Petitioners." The Court of Appeals denied the motion by issuing the following assailed Resolution:
Petitioners seek the reconsideration of Our Resolution promulgated on January 27, 2003 which
dismissed the petition for certiorari.
We find no reason to reverse, alter or modify the resolution sought to be reconsidered, since
petitioners have failed to show that their belated submission of the special power of attorney can be
justified as against the unequivocal requirements set forth by Sec. 5, Rule 7 of the 1997 Rules of
Civil Procedure, as amended.
While it is true that the Supreme Court has recognized special circumstances that justify the
relaxation of the rules on non-forum shopping, such circumstances, however, are not present in the
case at bar.
More importantly, said Rules cannot be relaxed in view of the Supreme Courts ruling in Loquias vs.
Ombudsman, 338 SCRA 62, which stated that, substantial compliance will not suffice in a matter
involving strict observance by the rules. The attestation contained in the certification [on] non-forum
shopping requires personal knowledge by the party who executed the same.
Since the Verification and Certification on Non-Forum shopping was executed without the proper
authorization from all the petitioners, such personal knowledge cannot be presumed to exist thereby
rendering the petition fatally defective.
Par. 2, Sec. 5 of Rule 7 of the 1997 Rules of Civil Procedure, as amended states:
"Failure to comply with the foregoing requirements shall not be curable by mere amendment of the
complaint or other initiatory pleading but shall be cause for the dismissal of the case without
prejudice x x x"
It is, thus, clear that the Motion for Reconsideration has no legal basis to support it and should be
dismissed forthwith. Moreover, granting arguendo that a special power of attorney belatedly filed
could cure the petitions defect, the requirement of personal knowledge of all the petitioners still has
not been met since some of the other petitioners failed to sign the same.
WHEREFORE, in view of the foregoing, the Motion for Reconsideration is hereby DENIED.
7

Petitioners now file this present Petition contending that there had been compliance with Rule 7,
Section 5 of the 1997 Rules of Civil Procedure. They further reiterate their argument that the EPs are
ordinary titles which become indefeasible one year after their registration.
The petition is impressed with merit.1awphil. net
Petitioners have sufficiently complied with Rule 7, Section 5 of the 1997 Rules of Civil Procedure
concerning the Certification Against Forum shopping
Rule 7, Section 5 of the 1997 Rules of Civil Procedure was preceded by Revised Circular No. 28-91
and Administrative Circular No. 04-94, which required a certification against forum shopping to avoid
the filing of multiple petitions and complaints involving the same issues in the Supreme Court, the
Court of Appeals, and other tribunals and agencies. Stated differently, the rule was designed to
avoid a situation where said courts, tribunals and agencies would have to resolve the same issues.
Rule 7, Section 5, now provides:
Sec. 5. Certification against forum shopping. The plaintiff or principal party shall certify under oath
in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification
annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any
action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and,
to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such
other pending action or claim, a complete statement of the present status thereof; and (c) if he
should thereafter learn that the same or similar action or claim has been filed or is pending, he shall
report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory
pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable by mere amendment of the
complaint or other initiatory pleading but shall be cause for the dismissal of the case without
prejudice, unless otherwise provided, upon motion and after hearing. The submission of a false
certification or non-compliance with any of the undertakings therein shall constitute indirect contempt
of court, without prejudice to the corresponding administrative and criminal actions. If the acts of the
party or his counsel clearly constitute willful and deliberate forum shopping, the same shall be
ground for summary dismissal with prejudice and shall constitute direct contempt as well as a cause
for administrative sanctions.
Revised Circular No. 28-91 "was designed x x x to promote and facilitate the orderly administration
of justice and should not be interpreted with such absolute literalness as to subvert its own ultimate
and legitimate objective or the goal of all rules of procedure which is to achieve substantial justice
as expeditiously as possible."
8
Technical rules of procedure should be used to promote, not frustrate,
justice.
9
The same guidelines should still apply in interpreting what is now Rule 7, Section 5 of the
1997 Rules of Civil Procedure.
Petitioner Samuel A. Estribillo, in signing the Verification and Certification Against Forum Shopping,
falls within the phrase "plaintiff or principal party" who is required to certify under oath the matters
mentioned in Rule 7, Section 5 of the 1997 Rules of Civil Procedure. Such was given emphasis by
this Court when we held in Mendigorin v. Cabantog
10
and Escorpizo v. University of Baguio
11
that the
certification of non-forum shopping must be signed by the plaintiff or any of the principal parties and
not only by the legal counsel. In Condo Suite Club Travel, Inc. v. National Labor Relations
Commission,
12
we likewise held that:
The certification in this petition was improperly executed by the external legal counsel of petitioner.
For a certification of non-forum shopping must be by the petitioner, or any of the principal parties and
not by counsel unless clothed with a special power of attorney to do so. This procedural lapse on the
part of petitioner is also a cause for the dismissal of this action. (Emphasis supplied)
The Court of Appeals heavily relied on the seemingly conflicting case of Loquias v. Office of the
Ombudsman,
13
where this Court ruled that:
At the outset, it is noted that the Verification and Certification was signed by Antonio Din, Jr., one of
the petitioners in the instant case. We agree with the Solicitor General that the petition is defective.
Section 5, Rule 7 expressly provides that it is the plaintiff or principal party who shall certify under
oath that he has not commenced any action involving the same issues in any court, etc. Only
petitioner Din, the Vice-Mayor of San Miguel, Zamboanga del Sur, signed the certification. There is
no showing that he was authorized by his co-petitioners to represent the latter and to sign the
certification. It cannot likewise be presumed that petitioner Din knew, to the best of his knowledge,
whether his co-petitioners had the same or similar actions or claims filed or pending. We find that
substantial compliance will not suffice in a matter involving strict observance by the rules. The
attestation contained in the certification on non-forum shopping requires personal knowledge by the
party who executed the same. Petitioners must show reasonable cause for failure to personally sign
the certification. Utter disregard of the rules cannot justly be rationalized by harking on the policy of
liberal construction. (Emphasis supplied)
Loquias, however, was a case involving only five petitioners seeking relief from the Resolution of the
Ombudsman charging them with violation of Republic Act No. 3019, where the above declaration "at
the outset" was made together with a determination on the lack of jurisdiction on our part to decide
the Petition.
14
There being only five petitioners in Loquias, the unreasonableness of the failure to
obtain the signatures of Antonio Din, Jr.s four co-accused is immediately apparent, hence the
remark by this Court that "[p]etitioners must show reasonable cause for failure to personally sign the
certification." In the present petition, petitioners allege that they are farmer-beneficiaries who reside
in a very remote barangay in Agusan del Sur. While they reside in the same barangay, they
allegedly have to walk for hours on rough terrain to reach their neighbors due to the absence of
convenient means of transportation. Their houses are located far apart from each other and the
mode of transportation, habal-habal, is scarce and difficult. Majority of them are also nearing old
age. On the other hand, their lawyers (who are members of a non-government organization engaged
in development work) are based in Quezon City who started assisting them at the latter part of the
RARAD level litigation in 1998, and became their counsel of record only at the DARAB level. The
petitioner who signed the initiatory pleading, Samuel Estribillo, was the only petitioner who was able
to travel to Manila at the time of the preparation of the Petition due to very meager resources of their
farmers organization, the Kahiusahan sa Malahutayong mga Mag-uugma Para sa Ekonomikanhong
Kalambuan (KAMMPE). When the Petition a quo was dismissed, petitioners counsel went to
Agusan del Sur and tried earnestly to secure all the signatures for the SPA. In fact, when the SPA
was being circulated for their signatures, 24 of the named petitioners therein failed to sign for various
reasons some could not be found within the area and were said to be temporarily residing in other
towns, while some already died because of old age.
15
Be that as it may, those who did not sign the
SPA did not participate, and are not parties to this petition.
The Court of Appeals merely said that the special circumstances recognized by this Court that justify
the relaxation of the rules on the certification against forum shopping are not present in the case at
bar,
16
without discussing the circumstances adduced by the petitioners in their Motion for
Reconsideration. Thus, assuming for the sake of argument that the actuation of petitioners was not
strictly in consonance with Rule 7, Section 5 of the 1997 Rules of Civil Procedure, it should still be
determined whether there are special circumstances that would justify the suspension or relaxation
of the rule concerning verification and certification against forum shopping, such as those which we
appreciated in the ensuing cases.
In General Milling Corporation v. National Labor Relations Commission,
17
the appeal to the Court of
Appeals had a certificate against forum shopping, but was dismissed as it did not contain a board
resolution authorizing the signatory of the Certificate. Petitioners therein attached the board
resolution in their Motion for Reconsideration but the Court of Appeals, as in this case, denied the
same. In granting the Petition therein, we explained that:
[P]etitioner complied with this procedural requirement except that it was not accompanied by a board
resolution or a secretarys certificate that the person who signed it was duly authorized by petitioner
to represent it in the case. It would appear that the signatory of the certification was, in fact, duly
authorized as so evidenced by a board resolution attached to petitioners motion for reconsideration
before the appellate court. It could thus be said that there was at least substantial compliance with,
and that there was no attempt to ignore, the prescribed procedural requirements.
The rules of procedure are intended to promote, rather than frustrate, the ends of justice, and while
the swift unclogging of court dockets is a laudable objective, it, nevertheless, must not be met at the
expense of substantial justice. Technical and procedural rules are intended to help secure, not
suppress, the cause of justice and a deviation from the rigid enforcement of the rules may be
allowed to attain that prime objective for, after all, the dispensation of justice is the core reason for
the existence of courts. [Acme Shoe, Rubber and Plastic Corp. vs. Court of Appeals; BA Savings
Bank vs. Sia, 336 SCRA 484].
In Shipside Incorporated v. Court of Appeals,
18
the authority of petitioners resident manager to sign
the certification against forum shopping was submitted to the Court of Appeals only after the latter
dismissed the Petition. It turned out, in the Motion for Reconsideration, that he already had board
authority ten days before the filing of the Petition. We ratiocinated therein that:
On the other hand, the lack of certification against forum shopping is generally not curable by the
submission thereof after the filing of the petition. Section 5, Rule 45 of the 1997 Rules of Civil
Procedure provides that the failure of the petitioner to submit the required documents that should
accompany the petition, including the certification against forum shopping, shall be sufficient ground
for the dismissal thereof. The same rule applies to certifications against forum shopping signed by a
person on behalf of a corporation which are unaccompanied by proof that said signatory is
authorized to file a petition on behalf of the corporation.
In certain exceptional circumstances, however, the Court has allowed the belated filing of the
certification. In Loyola v. Court of Appeals, et al. (245 SCRA 477 [1995]), the Court considered the
filing of the certification one day after the filing of an election protest as substantial compliance with
the requirement. In Roadway Express, Inc. v. Court of Appeals, et al. (264 SCRA 696 [1996]), the
Court allowed the filing of the certification 14 days before the dismissal of the petition. In Uy v.
Landbank, supra, the Court had dismissed Uys petition for lack of verification and certification
against non-forum shopping. However, it subsequently reinstated the petition after Uy submitted a
motion to admit certification and non-forum shopping certification. In all these cases, there were
special circumstances or compelling reasons that justified the relaxation of the rule requiring
verification and certification on non-forum shopping.
In the instant case, the merits of petitioners case should be considered special circumstances or
compelling reasons that justify tempering the requirement in regard to the certificate of non-forum
shopping. Moreover, in Loyola, Roadway, and Uy, the Court excused non-compliance with the
requirement as to the certificate of non-forum shopping. With more reason should we allow the
instant petition since petitioner herein did submit a certification on non-forum shopping, failing only to
show proof that the signatory was authorized to do so. That petitioner subsequently submitted a
secretarys certificate attesting that Balbin was authorized to file an action on behalf of petitioner
likewise mitigates this oversight.
It must also be kept in mind that while the requirement of the certificate of non-forum shopping is
mandatory, nonetheless the requirements must not be interpreted too literally and thus defeat the
objective of preventing the undesirable practice of forum-shopping. Lastly, technical rules of
procedure should be used to promote, not frustrate justice. While the swift unclogging of court
dockets is a laudable objective, the granting of substantial justice is an even more urgent ideal.
In Uy v. Land Bank of the Philippines,
19
we, likewise, considered the apparent merits of the
substantive aspect of the case as a special circumstance or compelling reason for the reinstatement
of the case, and invoked our power to suspend our rules to serve the ends of justice. Thus:
The admission of the petition after the belated filing of the certification, therefore, is not
unprecedented. In those cases where the Court excused non-compliance with the requirements,
there were special circumstances or compelling reasons making the strict application of the rule
clearly unjustified. In the case at bar, the apparent merits of the substantive aspects of the case
should be deemed as a "special circumstance" or "compelling reason" for the reinstatement of the
petition. x x x
There were even cases where we held that there was complete non-compliance with the rule on
certification against forum shopping, but we still proceeded to decide the case on the merits. In De
Guia v. De Guia,
20
petitioners raised in their Petition for Review the allowance of respondents Appeal
Brief which did not contain a certificate against forum shopping. We held therein that:
With regard to the absence of a certification of non-forum shopping, substantial justice behooves us
to agree with the disquisition of the appellate court. We do not condone the shortcomings of
respondents counsel, but we simply cannot ignore the merits of their claim. Indeed, it has been held
that "[i]t is within the inherent power of the Court to suspend its own rules in a particular case in
order to do justice."
In Damasco v. National Labor Relations Commission,
21
the non-compliance was disregarded
because of the principle of social justice, which is equally applicable to the case at bar:
We note that both petitioners did not comply with the rule on certification against forum shopping.
The certifications in their respective petitions were executed by their lawyers, which is not correct.
The certification of non-forum shopping must be by the petitioner or a principal party and not the
attorney. This procedural lapse on the part of petitioners could have warranted the outright dismissal
of their actions.
But, the court recognizes the need to resolve these two petitions on their merits as a matter of social
justice involving labor and capital. After all, technicality should not be allowed to stand in the way of
equitably and completely resolving herein the rights and obligations of these parties. Moreover, we
must stress that technical rules of procedure in labor cases are not to be strictly applied if the result
would be detrimental to the working woman.
The foregoing cases show that, even if we assume for the sake of argument that there was violation
of Rule 7, Section 5 of the 1997 Rules of Civil Procedure, a relaxation of such rule would be justified
for two compelling reasons: social justice considerations and the apparent merit of the Petition, as
shall be heretofore discussed.
Certificates of Title issued pursuant to Emancipation Patents are as indefeasible as TCTs issued in
registration proceedings.
Petitioners claim that the EPs have become indefeasible upon the expiration of one year from the
date of its issuance. The DARAB, however, ruled that the EP "is a title issued through the agrarian
reform program of the government. Its issuance, correction and cancellation is governed by the rules
and regulations issued by the Secretary of the Department of Agrarian Reform (DAR). Hence, it is
not the same as or in the same category of a Torrens title."
The DARAB is grossly mistaken.
Ybaez v. Intermediate Appellate Court,
22
provides that certificates of title issued in administrative
proceedings are as indefeasible as certificates of title issued in judicial proceedings:
It must be emphasized that a certificate of title issued under an administrative proceeding pursuant
to a homestead patent, as in the instant case, is as indefeasible as a certificate of title issued under
a judicial registration proceeding, provided the land covered by said certificate is a disposable public
land within the contemplation of the Public Land Law.
There is no specific provision in the Public Land Law (C.A. No. 141, as amended) or the Land
Registration Act (Act 496), now P.D. 1529, fixing the one (1) year period within which the public land
patent is open to review on the ground of actual fraud as in Section 38 of the Land Registration Act,
now Section 32 of P.D. 1529, and clothing a public land patent certificate of title with indefeasibility.
Nevertheless, the pertinent pronouncements in the aforecited cases clearly reveal that Section 38 of
the Land Registration Act, now Section 32 of P.D. 1529 was applied by implication by this Court to
the patent issued by the Director of Lands duly approved by the Secretary of Natural Resources,
under the signature of the President of the Philippines in accordance with law. The date of issuance
of the patent, therefore, corresponds to the date of the issuance of the decree in ordinary registration
cases because the decree finally awards the land applied for registration to the party entitled to it,
and the patent issued by the Director of Lands equally and finally grants, awards, and conveys the
land applied for to the applicant. This, to our mind, is in consonance with the intent and spirit of the
homestead laws, i.e. conservation of a family home, and to encourage the settlement, residence and
cultivation and improvement of the lands of the public domain. If the title to the land grant in favor of
the homesteader would be subjected to inquiry, contest and decision after it has been given by the
Government through the process of proceedings in accordance with the Public Land Law, there
would arise uncertainty, confusion and suspicion on the governments system of distributing public
agricultural lands pursuant to the "Land for the Landless" policy of the State.
The same confusion, uncertainty and suspicion on the distribution of government-acquired lands to
the landless would arise if the possession of the grantee of an EP would still be subject to contest,
just because his certificate of title was issued in an administrative proceeding. The silence of
Presidential Decree No. 27 as to the indefeasibility of titles issued pursuant thereto is the same as
that in the Public Land Act where Prof. Antonio Noblejas commented:
Inasmuch as there is no positive statement of the Public Land Law, regarding the titles granted
thereunder, such silence should be construed and interpreted in favor of the homesteader who come
into the possession of his homestead after complying with the requirements thereof. Section 38 of
the Land Registration Law should be interpreted to apply by implication to the patent issued by the
Director of Lands, duly approved by the Minister of Natural Resources, under the signature of the
President of the Philippines, in accordance with law.
23

After complying with the procedure, therefore, in Section 105 of Presidential Decree No. 1529,
otherwise known as the Property Registration Decree (where the DAR is required to issue the
corresponding certificate of title after granting an EP to tenant-farmers who have complied with
Presidential Decree No. 27),
24
the TCTs issued to petitioners pursuant to their EPs acquire the
same protection accorded to other TCTs. "The certificate of title becomes indefeasible and
incontrovertible upon the expiration of one year from the date of the issuance of the order for the
issuance of the patent, x x x. Lands covered by such title may no longer be the subject matter of a
cadastral proceeding, nor can it be decreed to another person."
25

As we held through Justice J.B.L. Reyes in Lahora v. Dayanghirang, Jr.
26
:
The rule in this jurisdiction, regarding public land patents and the character of the certificate of title
that may be issued by virtue thereof, is that where land is granted by the government to a private
individual, the corresponding patent therefor is recorded, and the certificate of title is issued to the
grantee; thereafter, the land is automatically brought within the operation of the Land Registration
Act, the title issued to the grantee becoming entitled to all the safeguards provided in Section 38 of
the said Act. In other words, upon expiration of one year from its issuance, the certificate of title shall
become irrevocable and indefeasible like a certificate issued in a registration proceeding. (Emphasis
supplied.)
The EPs themselves, like the Certificates of Land Ownership Award (CLOAs) in Republic Act No.
6657 (the Comprehensive Agrarian Reform Law of 1988), are enrolled in the Torrens system of
registration. The Property Registration Decree in fact devotes Chapter IX
27
on the subject of EPs.
Indeed, such EPs and CLOAs are, in themselves, entitled to be as indefeasible as certificates of title
issued in registration proceedings.
The only defense of respondents, that the issue of indefeasibility of title was raised for the first time
on appeal with the DARAB, does not hold water because said issue was already raised before the
RARAD.
28

The recommendation of the Hacienda Maria Action Team to have the EPs cancelled and the lots
covered under the Republic Act No. 6657,
29
with the farmer-beneficiaries later on being issued with
CLOAs, would only delay the application of agrarian reform laws to the disputed 277.5008 hectares,
leading to the expenditure of more time and resources of the government.
The unreasonable delay of HMI in filing the Petition for cancellation more than 20 years after the
alleged wrongful annotation of the Deed of Assignment in OCT No. P-3077-1661, and more than ten
years after the issuance of the TCTs to the farmers, is apparently motivated by its desire to receive a
substantially higher valuation and just compensation should the disputed 277.5008 hectares be
covered under Republic Act No. 6657 instead of Presidential Decree No. 27.
30
This is further proved
by the following uncontested allegations by petitioners:
(i) HMI neither asked for rentals nor brought any action to oust petitioners from the farm they
were cultivating;
(ii) HMI had not paid realty taxes on the disputed property from 1972 onwards and never
protested petitioners act of declaring the same for realty taxation;
(iii) HMI, represented by a certain Angela Colmenares, signed the LTPA covering the entire
landholdings or the area of 527.8308 hectares, which was then represented to be rice and
corn lands;
(iv) HMI abandoned the entire landholdings after executing the Deed of Assignment of Rights
in 1977.
WHEREFORE, the Resolutions of the Court of Appeals in CA-G.R. SP No. 73902 are REVERSED
and SET ASIDE. The following EPs and the corresponding TCTs issued to petitioners or to their
successors-in-interest are hereby declared VALID and SUBSISTING:
Original Grantees TCT/EP Nos.
1. SAMUEL ESTRIBILLO TCT No. T-287/EP No. A-037675
2. CALIXTO P. ABAYATO, JR. TCT No. T-297/EP No. A-037814
TCT No. T-829/EP No. A-027293
3. RONGIE D. AGUILAR TCT No. T-913/EP No. A-027295
4. TACIANA D. AGUILAR TCT No. T-944/EP No. A-027296
5. ARTEMIO G. DE JUAN, TCT No. T-302/EP No. A-037809
6. ESTANISLAO DELA CRUZ, SR. TCT No. T-290/EP No. A-035676
7. EDGAR DUENAS TCT No. T-949/EP No. A-037658
8. MARIO P. ERIBAL TCT No. T-952/EP No. A-037836
9. REYNALDO C. ESENCIA TCT No. T-950/EP No. A-037844
10. RUBEN A. IBOJO TCT No. T-928/EP No. A-037873
11. SAMUEL JAMANDRE TCT No. T-909/EP No. A-159348
12. HILARION V. LANTIZA TCT No. T-288/EP No. A-037674
TCT No. T-401/EP No. A-037825
13. ANSELMO LOPEZ TCT No. T-973/EP No. A-037840
14. TERESITA NACION TCT No. T-900/EP No. A-037849
15. CHARIE E. NASTOR TCT No. T-825/EP No. A-037829
16. NELSON L. NULLAS TCT No. T-396/EP No. A-037826
17. CARLITO S. OLIA TCT No. T-910/EP No. A-037673
18. ROBERTO T.PATIO TCT No. T-912/EP No. A-037860
19. ANTONIO P. ROCHA TCT No. T-914/EP No. A-037830
20. FERNANDO C. RUFINO TCT No. T-923/EP No. A-037848
21. PATERNO P. SAIN TCT No. T-954/EP No. A-037813
22. CLAUSIO S. SAYSON TCT No. T-891/EP No. A-037880
23. JOEMARIE VIBO TCT No. T-893/EP No. A-037827
24. MANUEL S. GONZAGA TCT No. T-920/EP No. A-037832
25. RAFAEL PATIO TCT No. T-297/EP No. A-037861
Costs against respondent Hacienda Maria, Inc.
SO ORDERED.
G.R. No. 152085 July 8, 2003
MARCIANA ALARCON, ERENCIO AUSTRIA, JUAN BONIFACIO, PETRONILA DELA CRUZ,
RUFINA DELA CRUZ, CELESTINO LEGASPI, JOSE MAYONDAG and DAVID
SANTOS, petitioners,
vs.
HONORABLE COURT OF APPEALS and PASCUAL AND SANTOS, INC., respondents.
YNARES-SANTIAGO, J .:
Before us is a petition for review on certiorari seeking to set aside the decision dated September 28,
2001 of the Court of Appeals in CA-G.R. SP No. 63680,
1
which reversed the decision dated January
10, 2001 of the Department of Agrarian Reform Adjudication Board (DARAB).
The facts are undisputed.
Respondent corporation, Pascual and Santos, Inc., is the owner of several saltbeds with an area of
4.1763 hectares, situated in Barangay San Dionisio, Manuyo, Paraaque. In 1950, it instituted
petitioners as tenants of the saltbeds under a fifty-fifty share tenancy agreement.
The harmonious tenurial relationship between petitioners and private respondent was interrupted in
1994, when the city government of Paraaque, represented by then Mayor Pablo Olivares,
authorized the dumping of garbage on the adjoining lot. The garbage polluted the main source of salt
water, which adversely affected salt production on the subject landholding.
Petitioners informed respondent of this development, but it failed to take any step to stop the
dumping of garbage on the adjoining lot. This prompted petitioners to file a formal protest with the
City Government of Paraaque. However, their complaint was likewise ignored.
Thus petitioners were constrained to file with the Regional Agrarian Reform Adjudicator of Region IV
(RARAD-IV) a complaint against respondent and Mayor Pablo Olivares for maintenance of peaceful
possession and security of tenure with damages. Subsequently, they amended their complaint to
one for damages and disturbance compensation, with prayer for temporary restraining order and
injunction. Petitioners invoked Sections 7,
2
30(1)
3
and 31(1)
4
of Republic Act No. 3844, as amended,
otherwise known as the Agricultural Land Reform Code of the Philippines.
On July 28, 1997, Regional Adjudicator Fe Arche-Manalang rendered a decision holding that under
Metro Manila Zoning Ordinance No. 81-01, issued in 1981, the subject saltbeds have been
reclassified to residential lands. Consequently, the juridical tie between petitioners and respondent
was severed, for no tenurial relationship can exist on a land that is no longer agricultural. This
notwithstanding, petitioners are entitled to disturbance compensation, pursuant to Section 36, par. 1
of R.A. 3844,
5
as amended.
On the other hand, the Regional Adjudicator held that the DAR had no jurisdiction over the complaint
against Mayor Pablo Olivares, and dismissed the same. The dispositive portion of the decision
reads:
WHEREFORE, premises considered, judgment is hereby rendered:
1. Directing the Respondent Pascual and Santos Inc., to pay to each complainant as and by
way of disturbance compensation 1,500 cavans of salt or their money equivalent at the
prevailing market value;
2. Dismissing all other claims for lack of basis;
3. Without pronouncement as to costs.
SO ORDERED.
6

On appeal, the DARAB affirmed in toto the above decision of the RARAD. Aggrieved, respondent
filed a petition for review with the Court of Appeals, which was docketed as CA-G.R. SP No. 63680.
On September 28, 2001, the appellate court rendered the assailed judgment reversing the decision
of the DARAB,
7
and ordering the dismissal of petitioners complaint against respondent. Petitioners
motion for reconsideration was denied.
Hence, the instant petition based on the following arguments:
I. THAT A LANDOWNER IS NOT LIABLE TO PAY DISTURBANCE COMPENSATION TO A
TENANT ON A MERE RECLASSIFICATION WITHOUT THE ACTIVE PARTICIPATION OF
THE LANDOWNER BECAUSE IT WOULD RENDER NUGATORY SECTION 31, PAR. 1 OF
RA 3844.
II. THAT METRO MANILA ZONING ORDINANCE NO. 81-01, SERIES OF 1981, DID NOT
EXTINGUISH THE TENURIAL RELATIONSHIP OF LANDLORD AND TENANT AND
RECLASSIFICATION OF THE LAND DOES NOT ENTITLE THE TENANTS TO
DISTURBANCE COMPENSATION FOR PARTIES CAN CONTINUE WITH THEIR
TENURIAL RELATIONS EVEN AFTER RECLASSIFICATION.
8

At the core of the controversy is the issue of whether or not a mere reclassification of the land from
agricultural to residential, without any court action by the landowner to eject or dispossess the
tenant, entitles the latter to disturbance compensation.
Before we address the above issue, we need to resolve a procedural issue raised by private
respondent regarding the law that must govern the instant case. Is it Republic Act No. 1199,
otherwise known as the Agricultural Tenancy Act of the Philippines, which allows a share tenancy
system for landlord-tenant relationship, or RA 3844, as amended, which declares share tenancy as
contrary to public policy and provides for the automatic conversion of landlord-tenant relationship
from agricultural share tenancy to agricultural leasehold? Respondent contends that RA 1199 must
govern the instant petition because Section 35 of RA 3844 clearly exempts the saltbeds from
leasehold and provides that the provisions of RA 1199 shall govern the consideration as well as the
tenancy system prevailing on saltbeds. The said provision reads:
Section 35. Notwithstanding the provisions of the preceding Sections, in the case of fishponds,
saltbeds, and land principally planted to citrus, coconuts, cacao, coffee, durian, and other similar
permanent trees at the time of the approval of this Code, the consideration as well as the tenancy
system prevailing, shall be governed by the provisions of Republic Act Number Eleven Hundred and
Ninety-Nine, as amended.
We do not agree. Section 76 of Republic Act No. 6657, or the Comprehensive Agrarian Reform
Law,
9
expressly repealed Section 35 of RA 3844. It therefore abolished the exemption applied to
saltbeds and provided that all tenanted agricultural lands shall be subject to leasehold.
Consequently, RA 3844, not RA 1199, must govern the instant petition.
Coming now to the main issue, petitioners argue that they are entitled to disturbance compensation
for being dispossessed of their tenancy.
Respondent counters that under Sections 30
10
and 31(1)
11
of RA 3844, a landowner of agricultural
land is liable to pay disturbance compensation only when he petitioned the court to eject or
dispossess the tenant on the ground that the land has already been reclassified from agricultural to
non-agricultural. Without such a petition, he has no obligation to pay disturbance compensation
because the mere reclassification of the land does not ipso facto extinguish the tenancy relationship
between tenant and landowner. Hence, when the subject landholding was reclassified in 1981 by the
enactment of Metro Manila Zoning Ordinance No. 81-01, petitioners and private respondent
continued with their tenancy relationship. It was only in 1994 that their relationship was disturbed
due to the dumping of garbage by the city government which polluted the source of saltwater.
The petition is devoid of merit.
A tenancy relationship, once established, entitles the tenant to a security of tenure.
12
He can only be
ejected from the agricultural landholding on grounds provided by law. This is clearly stated in Section
7 of RA 3844, which provides:
SEC. 7. Tenure of Agricultural Leasehold Relation. The agricultural leasehold relation once
established shall confer upon the agricultural lessee the right to continue working on the
landholding until such leasehold relation is extinguished. The agricultural lessee shall be
entitled to security of tenure on his landholding and cannot be ejected therefrom unless
authorized by the Court for causes herein provided.
Section 36 provides the different grounds and manner by which a tenant can be lawfully ejected or
dispossessed of his landholding. One of them is the reclassification of the landholding from
agricultural to non-agricultural. For purposes of this petition, the pertinent provision of said Section
36 reads:
SEC. 36. Possession of Landholding; Exceptions. Notwithstanding any agreement as to
the period or future surrender of the land, an agricultural lessee shall continue in the
enjoyment and possession of his landholding except when his dispossession has been
authorized by the Court in a judgment that is final and executory if after due hearing it is
shown that:
1. The landholding is declared by the department head upon recommendation of the National
Planning Commission to be suited for residential, commercial, industrial or some other urban
purposes: Provided, That the agricultural lessee shall be entitled to disturbance
compensation equivalent to five times the average of the gross harvests on his landholding
during the last five preceding calendar years; x x x.
It is clear that a tenant can be lawfully ejected only if there is a court authorization in a judgment that
is final and executory and after a hearing where the reclassification of the landholding was duly
determined. If the court authorizes the ejectment, the tenant who is dispossessed of his tenancy is
entitled to disturbance compensation.
Petitioners argue that the RARAD decision, which was affirmed by the DARAB, was the court
judgment required by law.
The argument is not well-taken. The RARAD decision is not yet final and executory. It was made the
subject of a petition for review with the Court of Appeals and is pending with this Court.
Petitioners likewise contend that the dispossession of the tenant need not be at the instance of the
landowner for him to be entitled to disturbance compensation.
The contention is without merit.
Section 37
13
of RA 3844 expressly imposes on the landowner or agricultural lessor the burden of
proof to show the existence of the grounds enumerated in Section 36 thereof. It is settled that one
who alleges a fact has the burden of proving it.
14
This implies that the action which resulted in the
tenants dispossession was commenced by the landowner, who therefore has the burden of proof to
show the existence of any of the grounds for the ejectment of the tenant.
Moreover, contrary to petitioners claim, the reclassification of the land is not enough to entitle them
to disturbance compensation. The law is clear that court proceedings are indispensable where the
reclassification of the landholding is duly determined before ejectment can be effected, which in turn
paves the way for the payment of disturbance compensation. As held by the Court of Appeals, the
parties can still continue with their tenurial relationship even after such reclassification. In fact, it is
undisputed that in this case, the parties continued with their landlord-tenant relationship even after
the enactment of Metro Manila Zoning Ordinance No. 81-01. It was only in 1994 when this
relationship was interrupted because of the dumping of garbage by the Paraaque City Government.
Clearly, it was this latter event which caused petitioners dispossession, and it would be unfair to
oblige respondent to pay compensation for acts it did not commit.
Finally, the case of Bunye v. Aquino,
15
does not apply in the instant case. We allowed the payment of
disturbance compensation in the said case because there was an order of conversion issued by the
Department of Agrarian Reform of the landholding from agricultural to residential. The decree was
never questioned and thus became final. Consequently, the tenants were ejected from the land and
were thus awarded disturbance compensation.
In the case at bar, there is no final order of conversion. The subject landholding was merely
reclassified. Conversion is different from reclassification. Conversion is the act of changing the
current use of a piece of agricultural land into some other use as approved by the Department of
Agrarian Reform.
16
Reclassification, on the other hand, is the act of specifying how agricultural lands
shall be utilized for non-agricultural uses such as residential, industrial, commercial, as embodied in
the land use plan, subject to the requirements and procedure for land use conversion.
17
Accordingly,
a mere reclassification of agricultural land does not automatically allow a landowner to change its
use and thus cause the ejectment of the tenants. He has to undergo the process of conversion
before he is permitted to use the agricultural land for other purposes.
Since in this case, there is neither a final order of conversion by the DAR nor a court judgment
authorizing the tenants ejectment on the ground of reclassification, as a result of the landowners
court action, there is no legal basis to make respondent liable to pay disturbance compensation.
Accordingly, the Court of Appeals committed no error in ordering the dismissal of the complaint
before the DARAB.
WHEREFORE, in view of the foregoing disquisitions, the instant petition for review is DENIED and
the decision dated September 28, 2001 of the Court of Appeals in CA-G.R. SP No. 63680, ordering
the dismissal of DARAB Case No. 6408 (Reg. Case No. IV-MM-0083-94), is AFFIRMED.
SO ORDERED.
G.R. No. 103125 May 17, 1993
PROVINCE OF CAMARINES SUR, represented by GOV. LUIS R. VILLAFUERTE and HON.
BENJAMIN V. PANGA as Presiding Judge of RTC Branch 33 at Pili, Camarines
Sur, petitioners,
vs.
THE COURT OF APPEALS (THIRD DIVISION), ERNESTO SAN JOAQUIN and EFREN SAN
JOAQUIN,respondents.
The Provincial Attorney for petitioners.
Reynaldo L. Herrera for Ernesto San Joaquin.

QUIASON, J .:
In this appeal by certiorari from the decision of the Court of Appeals in AC-G.R. SP No. 20551
entitled "Ernesto N. San Joaquin, et al., v. Hon. Benjamin V. Panga, et al.," this Court is asked to
decide whether the expropriation of agricultural lands by local government units is subject, to the
prior approval of the Secretary of the Agrarian Reform, as the implementator of the agrarian reform
program.
On December 22, 1988, the Sangguniang Panlalawigan of the Province of Camarines Sur passed
Resolution No. 129, Series of 1988, authorizing the Provincial Governor to purchase or expropriate
property contiguous to the provincial capitol site, in order to establish a pilot farm for non-food and
non-traditional agricultural crops and a housing project for provincial government employees.
The "WHEREAS" clause o:f the Resolution states:
WHEREAS, the province of Camarines Sur has adopted a five-year Comprehensive
Development plan, some of the vital components of which includes the establishment
of model and pilot farm for non-food and non-traditional agricultural crops, soil testing
and tissue culture laboratory centers, 15 small scale technology soap making, small
scale products of plaster of paris, marine biological and sea farming research
center,and other progressive feasibility concepts objective of which is to provide the
necessary scientific and technology know-how to farmers and fishermen in
Camarines Sur and to establish a housing project for provincial government
employees;
WHEREAS, the province would need additional land to be acquired either by
purchase or expropriation to implement the above program component;
WHEREAS, there are contiguous/adjacent properties to be (sic) present Provincial
Capitol Site ideally suitable to establish the same pilot development center;
WHEREFORE . . . .
Pursuant to the Resolution, the Province of Camarines Sur, through its Governor, Hon. Luis
R.Villafuerte, filed two separate cases for expropriation against Ernesto N. San Joaquin and Efren N.
San Joaquin, docketed as Special Civil Action Nos. P-17-89 and P-19-89 of the Regional Trial Court,
Pili, Camarines Sur, presided by the Hon. Benjamin V. Panga.
Forthwith, the Province of Camarines Sur filed a motion for the issuance of writ of possession. The
San Joaquins failed to appear at the hearing of the motion.
The San Joaquins moved to dismiss the complaints on the ground of inadequacy of the price offered
for their property. In an order dated December 6, 1989, the trial court denied the motion to dismiss
and authorized the Province of Camarines Sur to take possession of the property upon the deposit
with the Clerk of Court of the amount of P5,714.00, the amount provisionally fixed by the trial court to
answer for damages that private respondents may suffer in the event that the expropriation cases do
not prosper. The trial court issued a writ of possession in an order dated January18, 1990.
The San Joaquins filed a motion for relief from the order, authorizing the Province of Camarines Sur
to take possession of their property and a motion to admit an amended motion to dismiss. Both
motions were denied in the order dated February 1990.
In their petition before the Court of Appeals, the San Joaquins asked: (a) that Resolution No. 129,
Series of 1988 of the Sangguniang Panlalawigan be declared null and void; (b) that the complaints
for expropriation be dismissed; and (c) that the order dated December 6, 1989 (i) denying the motion
to dismiss and (ii) allowing the Province of Camarines Sur to take possession of the property subject
of the expropriation and the order dated February 26, 1990, denying the motion to admit the
amended motion to dismiss, be set aside. They also asked that an order be issued to restrain the
trial court from enforcing the writ of possession, and thereafter to issue a writ of injunction.
In its answer to the petition, the Province of Camarines Sur claimed that it has the authority to initiate
the expropriation proceedings under Sections 4 and 7 of Local Government Code (B.P. Blg. 337)
and that the expropriations are for a public purpose.
Asked by the Court of Appeals to give his Comment to the petition, the Solicitor General stated that
under Section 9 of the Local Government Code (B.P. Blg. 337), there was no need for the approval
by the Office of the President of the exercise by the Sangguniang Panlalawigan of the right of
eminent domain. However, the Solicitor General expressed the view that the Province of Camarines
Sur must first secure the approval of the Department of Agrarian Reform of the plan to expropriate
the lands of petitioners for use as a housing project.
The Court of Appeals set aside the order of the trial court, allowing the Province of Camarines Sur to
take possession of private respondents' lands and the order denying the admission of the amended
motion to dismiss. It also ordered the trial court to suspend the expropriation proceedings until after
the Province of Camarines Sur shall have submitted the requisite approval of the Department of
Agrarian Reform to convert the classification of the property of the private respondents from
agricultural to non-agricultural land.
Hence this petition.
It must be noted that in the Court of Appeals, the San Joaquins asked for: (i) the dismissal of the
complaints for expropriation on the ground of the inadequacy of the compensation offered for the
property and (ii) the nullification of Resolution No. 129, Series of 1988 of the Sangguniang
Panlalawigan of the Province of Camarines Sur.
The Court of Appeals did not rule on the validity of the questioned resolution; neither did it dismiss
the complaints. However, when the Court of Appeals ordered the suspension of the proceedings
until the Province of Camarines Sur shall have obtained the authority of the Department of Agrarian
Reform to change the classification of the lands sought to be expropriated from agricultural to non-
agricultural use, it assumed that the resolution is valid and that the expropriation is for a public
purpose or public use.
Modernly, there has been a shift from the literal to a broader interpretation of "public purpose" or
"public use" for which the power of eminent domain may be exercised. The old concept was that the
condemned property must actually be used by the general public (e.g. roads, bridges, public plazas,
etc.) before the taking thereof could satisfy the constitutional requirement of "public use". Under the
new concept, "public use" means public advantage, convenience or benefit, which tends to
contribute to the general welfare and the prosperity of the whole community, like a resort complex for
tourists or housing project (Heirs of Juancho Ardano v. Reyes, 125 SCRA 220 [1983]; Sumulong v.
Guerrero, 154 SC.RA 461 [1987]).
The expropriation of the property authorized by the questioned resolution is for a public purpose.
The establishment of a pilot development center would inure to the direct benefit and advantage of
the people of the Province of Camarines Sur. Once operational, the center would make available to
the community invaluable information and technology on agriculture, fishery and the cottage
industry. Ultimately, the livelihood of the farmers, fishermen and craftsmen would be enhanced. The
housing project also satisfies the public purpose requirement of the Constitution. As held
in Sumulong v. Guerrero, 154 SCRA 461, "Housing is a basic human need. Shortage in housing is a
matter of state concern since it directly and significantly affects public health, safety, the environment
and in sum the general welfare."
It is the submission of the Province of Camarines Sur that its exercise of the power of eminent
domain cannot be restricted by the provisions of the Comprehensive Agrarian Reform Law (R.A. No.
6657), particularly Section 65 thereof, which requires the approval of the Department of Agrarian
Reform before a parcel of land can be reclassified from an agricultural to a non-agricultural land.
The Court of Appeals, following the recommendation of the Solicitor General, held that the Province
of Camarines Sur must comply with the provision of Section 65 of the Comprehensive Agrarian
Reform Law and must first secure the approval of the Department of Agrarian Reform of the plan to
expropriate the lands of the San Joaquins.
In Heirs of Juancho Ardana v. Reyes, 125 SCRA 220, petitioners raised the issue of whether the
Philippine Tourism Authority can expropriate lands covered by the "Operation Land Transfer" for use
of a tourist resort complex. There was a finding that of the 282 hectares sought to be expropriated,
only an area of 8,970 square meters or less than one hectare was affected by the land reform
program and covered by emancipation patents issued by the Ministry of Agrarian Reform. While the
Court said that there was "no need under the facts of this petition to rule on whether the public
purpose is superior or inferior to another purpose or engage in a balancing of competing public
interest," it upheld the expropriation after noting that petitioners had failed to overcome the showing
that the taking of 8,970 square meters formed part of the resort complex. A fair and reasonable
reading of the decision is that this Court viewed the power of expropriation as superior to the power
to distribute lands under the land reform program.
The Solicitor General denigrated the power to expropriate by the Province of Camarines Sur by
stressing the fact that local government units exercise such power only by delegation. (Comment,
pp. 14-15; Rollo, pp. 128-129)
It is true that local government units have no inherent power of eminent domain and can exercise it
only when expressly authorized by the legislature (City of Cincinnati v. Vester, 28l US 439, 74 L.ed.
950, 50 SCt. 360). It is also true that in delegating the power to expropriate, the legislature may
retain certain control or impose certain restraints on the exercise thereof by the local governments
(Joslin Mfg. Co. v. Providence, 262 US 668 67 L. ed. 1167, 43 S Ct. 684). While such delegated
power may be a limited authority, it is complete within its limits. Moreover, the limitations on the
exercise of the delegated power must be clearly expressed, either in the law conferring the power or
in other legislations.
Resolution No. 129, Series of 1988, was promulgated pursuant to Section 9 of B.P. Blg. 337, the
Local Government Code, which provides:
A local government unit may, through its head and acting pursuant to a resolution of
its sanggunian exercise the right of eminent domain and institute condemnation
proceedings for public use or purpose.
Section 9 of B.P. Blg. 337 does not intimate in the least that local government, units must first secure
the approval of the Department of Land Reform for the conversion of lands from agricultural to non-
agricultural use, before they can institute the necessary expropriation proceedings. Likewise, there is
no provision in the Comprehensive Agrarian Reform Law which expressly subjects the expropriation
of agricultural lands by local government units to the control of the Department of Agrarian Reform.
The closest provision of law that the Court of Appeals could cite to justify the intervention of the
Department of Agrarian Reform in expropriation matters is Section 65 of the Comprehensive
Agrarian Reform Law, which reads:
Sec. 65. Conversion of Lands. After the lapse of five (5) years from its award,
when the land ceases to be economically feasible and sound for, agricultural
purposes, or the locality has become urbanized and the land will have a greater
economic value for residential, commercial or industrial purposes, the DAR, upon
application of the beneficiary or the landowner, with due notice to the affected
parties, and subject to existing laws, may authorize the reclassification or conversion
of the land and its disposition: Provided, That the beneficiary shall have fully paid his
obligation.
The opening, adverbial phrase of the provision sends signals that it applies to lands previously
placed under the agrarian reform program as it speaks of "the lapse of five (5) years from its award."
The rules on conversion of agricultural lands found in Section 4 (k) and 5 (1) of Executive Order No.
129-A, Series of 1987, cannot be the source of the authority of the Department of Agrarian Reform
to determine the suitability of a parcel of agricultural land for the purpose to which it would be
devoted by the expropriating authority. While those rules vest on the Department of Agrarian Reform
the exclusive authority to approve or disapprove conversions of agricultural lands for residential,
commercial or industrial uses, such authority is limited to the applications for reclassification
submitted by the land owners or tenant beneficiaries.
Statutes conferring the power of eminent domain to political subdivisions cannot be broadened or
constricted by implication (Schulman v. People, 10 N.Y. 2d. 249, 176 N.E. 2d. 817, 219 NYS 2d.
241).
To sustain the Court of Appeals would mean that the local government units can no longer
expropriate agricultural lands needed for the construction of roads, bridges, schools, hospitals, etc,
without first applying for conversion of the use of the lands with the Department of Agrarian Reform,
because all of these projects would naturally involve a change in the land use. In effect, it would then
be the Department of Agrarian Reform to scrutinize whether the expropriation is for a public purpose
or public use.
Ordinarily, it is the legislative branch of the local government unit that shall determine whether the
use of the property sought to be expropriated shall be public, the same being an expression of
legislative policy. The courts defer to such legislative determination and will intervene only when a
particular undertaking has no real or substantial relation to the public use (United States Ex Rel
Tennessee Valley Authority v. Welch, 327 US 546, 90 L. ed. 843, 66 S Ct 715; State ex rel Twin City
Bldg. and Invest. Co. v. Houghton, 144 Minn. 1, 174 NW 885, 8 ALR 585).
There is also an ancient rule that restrictive statutes, no matter how broad their terms are, do not
embrace the sovereign unless the sovereign is specially mentioned as subject thereto (Alliance of
Government Workers v. Minister of Labor and Employment, 124 SCRA 1 [1983]). The Republic of
the Philippines, as sovereign, or its political subdivisions, as holders of delegated sovereign powers,
cannot be bound by provisions of law couched in general term.
The fears of private respondents that they will be paid on the basis of the valuation declared in the
tax declarations of their property, are unfounded. This Court has declared as unconstitutional the
Presidential Decrees fixing the just compensation in expropriation cases to be the value given to the
condemned property either by the owners or the assessor, whichever was lower ([Export Processing
Zone Authority v. Dulay, 149 SCRA 305 [1987]). As held in Municipality of Talisay v. Ramirez, 183
SCRA 528 [1990], the rules for determining just compensation are those laid down in Rule 67 of the
Rules of Court, which allow private respondents to submit evidence on what they consider shall be
the just compensation for their property.
WHEREFORE, the petition is GRANTED and the questioned decision of the Court of Appeals is set
aside insofar as it (a) nullifies the trial court's order allowing the Province of Camarines Sur to take
possession of private respondents' property; (b) orders the trial court to suspend the expropriation
proceedings; and (c) requires the Province of Camarines Sur to obtain the approval of the
Department of Agrarian Reform to convert or reclassify private respondents' property from
agricultural to non-agricultural use.
The decision of the Court of Appeals is AFFIRMED insofar as it sets aside the order of the trial court,
denying the amended motion to dismiss of the private respondents.
SO ORDERED.
G.R. No. 131457 April 24, 1998
HON. CARLOS O. FORTICH, PROVINCIAL GOVERNOR OF BUKIDNON, HON. REY B. BAULA,
MUNICIPAL MAYOR OF SUMILAO, BUKIDNON, NQSR MANAGEMENT AND DEVELOPMENT
CORPORATION, petitioners,
vs.
HON. RENATO C. CORONA, DEPUTY EXECUTIVE SECRETARY, HON. ERNESTO D.
GARILAO, SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM, respondents.

MARTINEZ, J .:
The dramatic and well-publicized hunger strike staged by some alleged farmer-beneficiaries in front
of the Department of Agrarian Reform compound in Quezon City on October 9, 1997 commanded
nationwide attention that even church leaders and some presidential candidates tried to intervene for
the strikers' "cause."
The strikers protested the March 29, 1996 Decision
1
of the Office of the President (OP), issued through then Executive
Secretary Ruben D. Torres in OP Case No. 96-C-6424, which approved the conversion of a one hundred forty-four (144)-hectare land from
agricultural to agro-industrial/institutional area. This led the Office of the President, through then Deputy Executive Secretary Renato C.
Corona, to issue the so-called "Win-Win" Resolution
2
on November 7, 1997, substantially modifying its earlier Decision after it had already
become final and executory. The said Resolution modified the approval of the land conversion to agro-industrial area only to the extent of
forty-four (44) hectares, and ordered the remaining one hundred (100) hectares to be distributed to qualified farmer-beneficiaries.
But, did the "Win-Win" Resolution culminate in victory for all the contending parties?
The above-named petitioners cried foul. They have come to this Court urging us to annul and set
aside the "Win-Win" Resolution and to enjoin respondent Secretary Ernesto D. Garilao of the
Department of Agrarian Reform from implementing the said Resolution.
Thus, the crucial issue to be resolved in this case is: What is the legal effect of the "Win-Win"
Resolution issued by the Office of the President on its earlier Decision involving the same subject
matter, which had already become final and executory?
The antecedent facts of this controversy, as culled from the pleadings, may be stated as follows:
1. This case involves a 144-hectare land located at San Vicente, Sumilao, Bukidnon, owned by the
Norberto Quisumbing, Sr. Management and Development Corporation (NQSRMDC), one of the
petitioners. The property is covered by a Transfer Certificate of Title No. 14371
3
of the Registry of Deeds of
the Province of Bukidnon.
2. In 1984, the land was leased as a pineapple plantation to the Philippine Packing Corporation, now
Del Monte Philippines, Inc. (DMPI), a multinational corporation, for a period of ten (10) years under
the Crop Producer and Grower's Agreement duly annotated in the certificate of title. The lease
expired in April, 1994.
3. In October, 1991, during the existence of the lease, the Department of Agrarian Reform (DAR)
placed the entire 144-hectare property under compulsory acquisition and assessed the land value at
P2.38 million.
4

4. NQSRMDC resisted the DAR's action. In February, 1992, it sought and was granted by the DAR
Adjudication Board (DARAB), through its Provincial Agrarian Reform Adjudicator (PARAD) in
DARAB Case No. X-576, a writ of prohibition with preliminary injunction which ordered the DAR
Region X Director, the Provincial Agrarian Reform Officer (PARO) of Bukidnon, the Municipal
Agrarian Reform Office (MARO) of Sumilao, Bukidnon, the Land Bank of the Philippines (Land
Bank), and their authorized representatives "to desist from pursuing any activity or activities"
concerning the subject land "until further orders."
5

5. Despite the DARAB order of March 31, 1992, the DAR Regional Director issued a memorandum,
dated May 21, 1992, directing the Land Bank to open a trust account for P2.38 million in the name of
NQSRMDC and to conduct summary proceedings to determine the just compensation of the subject
property. NQSRMDC objected to these moves and filed on June 9, 1992 an Omnibus Motion to
enforce the DARAB order of March 31, 1992 and to nullify the summary proceedings undertaken by
the DAR Regional Director and Land Bank on the valuation of the subject property.
6. The DARAB, on October 22, 1992, acted favorably on the Omnibus Motion by (a) ordering the
DAR Regional Director and Land Bank "to seriously comply with the terms of the order dated March
31, 1992;" (b) nullifying the DAR Regional Director's memorandum, dated May 21, 1992, and the
summary proceedings conducted pursuant thereto; and (c) directing the Land Bank "to return the
claim folder of Petitioner NQSRMDC's subject Property to the DAR until further orders."
6

7. The Land Bank complied with the DARAB order and cancelled the trust account it opened in the
name of petitioner NQSRMDC.
7

8. In the meantime, the Provincial Development Council (PDC) of Bukidnon, headed by Governor
Carlos O. Fortich, passed Resolution No. 6,
8
dated January 7, 1993, designating certain areas along Bukidnon-Sayre
Highway as part of the Bukidnon Agro-Industrial Zones where the subject property is situated.
9. What happened thereafter is well-narrated in the OP (TORRES) Decision of March 29, 1996,
pertinent portions of which we quote:
Pursuant to Section 20 of R.A. No. 7160, otherwise known as the Local Government
Code, the Sangguniang Bayan of Sumilao, Bukidnon, on March 4, 1993, enacted
Ordinance No. 24 converting or re-classifying 144 hectares of land in Bgy. San
Vicente, said Municipality, from agricultural to industrial/institutional with a view of
providing an opportunity to attract investors who can inject new economic vitality,
provide more jobs and raise the income of its people.
Parenthetically, under said section, 4th to 5th class municipalities may authorize the
classification of five percent (5%) of their agricultural land area and provide for the
manner of their utilization or disposition.
On 12 October 1993, the Bukidnon Provincial Land Use Committee approved the
said Ordinance. Accordingly, on 11 December 1993, the instant application for
conversion was filed by Mr. Gaudencio Beduya in behalf of NQSRMDC/BAIDA
(Bukidnon Agro-Industrial Development Association).
Expressing support for the proposed project, the Bukidnon Provincial Board, on the
basis of a Joint Committee Report submitted by its Committee on Laws, Committee
on Agrarian Reform and Socio-Economic Committee approved, on 1 February 1994,
the said Ordinance now docketed as Resolution No. 94-95. The said industrial area,
as conceived by NQSRMDC (project proponent) is supposed to have the following
components:
1. Development Academy of Mindanao which constitutes following: Institute for
Continuing Higher Education; Institute for Livelihood Science (Vocational and
Technical School); Institute for Agribusiness Research; Museum, Library, Cultural
Center, and Mindanao Sports Development Complex which covers an area of 24
hectares;
2. Bukidnon Agro-Industrial Park which consists of corn processing for corn oil, corn
starch, various corn products; rice processing for wine, rice-based snacks,
exportable rice; cassava processing for starch, alcohol and food delicacies;
processing plants, fruits and fruit products such as juices; processing plants for
vegetables processed and prepared for market; cold storage and ice plant; cannery
system; commercial stores; public market; and abattoir needing about 67 hectares;
3. Forest development which includes open spaces and parks for recreation, horse-
back riding, memorial and mini-zoo estimated to cover 33 hectares; and
4. Support facilities which comprise the construction of a 360-room hotel,
restaurants, dormitories and a housing project covering an area of 20 hectares.
The said NQSRMDC Proposal was, per Certification dated January 4, 1995, adopted
by the Department of Trade and Industry, Bukidnon Provincial Office, as one of its
flagship projects. The same was likewise favorably recommended by the Provincial
Development Council of Bukidnon; the municipal, provincial and regional office of the
DAR; the Regional Office (Region X) of the DENR (which issued an Environmental
Compliance Certificate on June 5, 1995); the Executive Director, signing "By
Authority of PAUL G. DOMINGUEZ," Office of the President Mindanao; the
Secretary of DILG; and Undersecretary of DECS Wilfredo D. Clemente.
In the same vein, the National Irrigation Administration, Provincial Irrigation Office,
Bagontaas Valencia, Bukidnon, thru Mr. Julius S. Maquiling, Chief, Provincial
Irrigation Office, interposed NO. OBJECTION to the proposed conversion "as long as
the development cost of the irrigation systems thereat which is P2,377.00 per
hectare be replenished by the developer . . . ." Also, the Kisolon-San Vicente
Irrigators Multi Purpose Cooperative, San Vicente, Sumilao, Bukidnon, interposed no
objection to the proposed conversion of the land in question "as it will provide more
economic benefits to the community in terms of outside investments that will come
and employment opportunities that will be generated by the projects to be put up . . .
.
On the same score, it is represented that during the public consultation held at the
Kisolan Elementary School on 18 March 1995 with Director Jose Macalindong of
DAR Central Office and DECS Undersecretary Clemente, the people of the affected
barangay rallied behind their respective officials in endorsing the project.
Notwithstanding the foregoing favorable recommendation, however, on November
14, 1994, the DAR, thru Secretary Garilao, invoking its powers to approve conversion
of lands under Section 65 of R.A. No. 6657, issued an Order denying the instant
application for the conversion of the subject land from agricultural to agro-industrial
and, instead, placed the same under the compulsory coverage of CARP and directed
the distribution thereof to all qualified beneficiaries on the following grounds:
1. The area is considered as a prime agricultural land with irrigation facility;
2. The land has long been covered by a Notice of Compulsory Acquisition (NCA);
3. The existing policy on withdrawal or lifting on areas covered by NCA is not
applicable;
4. There is no clear and tangible compensation package arrangements for the
beneficiaries;
5. The procedures on how the area was identified and reclassified for agro-industrial
project has no reference to Memo Circular No. 54, Series of 1993, E.O. No. 72,
Series of 1993, and E.O. No. 124, Series of 1993.
A Motion for Reconsideration of the aforesaid Order was filed on January 9, 1995 by
applicant but the same was denied (in an Order dated June 7, 1995). 9
10. Thus, the DAR Secretary ordered the DAR Regional Director "to proceed with the compulsory
acquisition and distribution of the property."
10

11. Governor Carlos O. Fortich of Bukidnon appealed" the order of denial to the Office of the
President and prayed for the conversion/reclassification of the subject land as the same would be
more beneficial to the people of Bukidnon.
12. To prevent the enforcement of the DAR Secretary's order, NQSRMDC, on June 29, 1995, filed
with the Court of Appeals a petition for certiorari, prohibition with preliminary injunction,
12
docketed as
CA-G.R. SP No. 37614.
13. Meanwhile, on July 25, 1995, the Honorable Paul G. Dominguez, then Presidential Assistant for
Mindanao, after conducting an evaluation of the proposed project, sent a memorandum
13
to the
President favorably endorsing the project with a recommendation that the DAR Secretary reconsider his decision in denying the application
of the province for the conversion of the land.
14. Also, in a memorandum
14
to the President dated August 23, 1995, the Honorable Rafael Alunan III, then Secretary of the
Department of the Interior and Local Government (DILG), recommended the conversion of the subject land to industrial/institutional use with
a request that the President "hold the implementation of the DAR order to distribute the land in question."
15. On October 23, 1995, the Court of Appeals, in CA-G.R. SP No. 37614, issued a
Resolution
15
ordering the parties to observe status quo pending resolution of the petition. At the hearing held in said case on October 5,
1995, the DAR, through the Solicitor General, manifested before the said court that the DAR was merely "in the processing stage of the
applications of farmers-claimants" and has agreed to respect status quo pending the resolution of the petition.
16

16. In resolving the appeal, the Office of the President, through then Executive Secretary Ruben D.
Torres, issued a Decision in OP Case No. 96-C-6424, dated March 29, 1996, reversing the DAR
Secretary's decision, the pertinent portions of which read:
After a careful evaluation of the petition vis-a-vis the grounds upon which the denial
thereof by Secretary Garilao was based, we find that the instant application for
conversion by the Municipality of Sumilao, Bukidnon is impressed with merit. To be
sure, converting the land in question from agricultural to agro-industrial would open
great opportunities for employment and bring about real development in the area
towards a sustained economic growth of the municipality. On the other hand,
distributing the land to would-be beneficiaries (who are not even tenants, as there
are none) does not guarantee such benefits.
Nevertheless, on the issue that the land is considered a prime agricultural land with
irrigation facility it maybe appropriate to mention that, as claimed by petitioner, while
it is true that there is, indeed, an irrigation facility in the area, the same merely
passes thru the property (as a right of way) to provide water to the ricelands located
on the lower portion thereof. The land itself, subject of the instant petition, is not
irrigated as the same was, for several years, planted with pineapple by the Philippine
Packing Corporation.
On the issue that the land has long been covered by a Notice of Compulsory
Acquisition (NCA) and that the existing policy on withdrawal or lifting on areas
covered by NCA is not applicable, suffice it to state that the said NCA was declared
null and void by the Department of Agrarian Reform Adjudication Board (DARAB) as
early as March 1, 1992. Deciding in favor of NQSRMDC, the DARAB correctly
pointed out that under Section 8 of R.A. No. 6657, the subject property could not
validly be the subject of compulsory acquisition until after the expiration of the lease
contract with Del Monte Philippines, a Multi-National Company, or until April 1994,
and ordered the DAR Regional Office and the Land Bank of the Philippines, both in
Butuan City, to "desist from pursuing any activity or activities covering petitioner's
land.
On this score, we take special notice of the fact that the Quisumbing family has
already contributed substantially to the land reform program of the government, as
follows: 300 hectares of rice land in Nueva Ecija in the 70's and another 400 hectares
in the nearby Municipality of Impasugong, Bukidnon, ten(10) years ago, for which
they have not received "just compensation" up to this time.
Neither can the assertion that "there is no clear and tangible compensation package
arrangements for the beneficiaries' hold water as, in the first place, there are no
beneficiaries to speak about, for the land is not tenanted as already stated.
Nor can procedural lapses in the manner of identifying/reclassifying the subject
property for agro-industrial purposes be allowed to defeat the very purpose of the law
granting autonomy to local government units in the management of their local affairs.
Stated more simply, the language of Section 20 of R.A. No. 7160, supra, is clear and
affords no room for any other interpretation. By unequivocal legal mandate, it grants
local government units autonomy in their local affairs including the power to convert
portions of their agricultural lands and provide for the manner of their utilization and
disposition to enable them to attain their fullest development as self-reliant
communities.
WHEREFORE, in pursuance of the spirit and intent of the said legal mandate and in
view of the favorable recommendations of the various government agencies
abovementioned, the subject Order, dated November 14, 1994 of the Hon.
Secretary, Department of Agrarian Reform, is hereby SET ASIDE and the instant
application of NQSRMDC/BAIDA is hereby APPROVED. 17
17. On May 20, 1996, DAR filed a motion for reconsideration of the OP decision.
18. On September 11, 1996, in compliance with the OP decision of March 29, 1996, NQSRMDC and
the Department of Education, Culture and Sports (DECS) executed a Memorandum of Agreement
whereby the former donated four (4) hectares from the subject land to DECS for the establishment of
the NQSR High School.
18

When NQSRMDC was about to transfer the title over the 4-hectare donated to DECS, it discovered
that the title over the subject property was no longer in its name. It soon found out that during the
pendency of both the Petition for Certiorari, Prohibition, with Preliminary Injunction it filed against
DAR in the Court of Appeals and the appeal to the President filed by Governor Carlos O. Fortich, the
DAR, without giving just compensation, caused the cancellation of NQSRMDC's title on August 11,
1995 and had it transferred in the name of the Republic of the Philippines under TCT No. T-
50264
19
of the Registry of Deeds of Bukidnon. Thereafter, on September 25, 1995, DAR caused the issuance of Certificates of Land
Ownership Award (CLOA) No. 00240227 and had it registered in the name of 137 farmer-beneficiaries under TCT No. AT-3536
20
of the
Registry of Deeds of Bukidnon.
19. Thus, on April 10, 1997, NQSRMDC filed a complaint
21
with the Regional Trial Court (RTC) of Malaybalay,
Bukidnon (Branch 9), docketed as Civil Case No. 2687-97, for annulment and cancellation of title, damages and injunction against DAR and
141 others. The RTC then issued a Temporary Restraining Order on April 30, 1997
22
and a Writ of Preliminary Injunction on May 19,
1997,
23
restraining the DAR and 141 others from entering, occupying and/or wresting from NQSRMDC the possession of the subject land.
20. Meanwhile, on June 23, 1997, an Order
24
was issued by then Executive Secretary Ruben D. Torres denying DAR's
motion for reconsideration for having been filed beyond the reglementary period of fifteen (15) days. The said order further declared that the
March 29, 1996 OP decision had already become final and executory.
21. The DAR filed on July 11, 1997 a second motion for reconsideration of the June 23, 1997 Order
of the President.
22. On August 12, 1997, the said writ of preliminary injunction issued by the RTC was challenged by
some alleged farmers before the Court of Appeals through a petition for certiorari and prohibition,
docketed as CA-G.R. SP No. 44905, praying for the lifting of the injunction and for the issuance of a
writ of prohibition from further trying the RTC case.
23. On October 9, 1997, some alleged farmer-beneficiaries began their hunger strike in front of the
DAR Compound in Quezon City to protest the OP Decision of March 29, 1996. On October 10,
1997, some persons claiming to be farmer-beneficiaries of the NQSRMDC property filed a motion for
intervention (styled as Memorandum In Intervention) in O.P. Case No. 96-C-6424, asking that the
OP Decision allowing the conversion of the entire 144-hectare property be set aside.
25

24. President Fidel V. Ramos then held a dialogue with the strikers and promised to resolve their
grievance within the framework of the law. He created an eight (8)-man Fact Finding Task Force
(FFTF) chaired by Agriculture Secretary Salvador Escudero to look into the controversy and
recommend possible solutions to the problem.
26

25. On November 7, 1997, the Office of the President resolved the strikers' protest by issuing the so-
called "Win/Win" Resolution penned by then Deputy Executive Secretary Renato C. Corona, the
dispositive portion of which reads:
WHEREFORE, premises considered, the decision of the Office of the President,
through Executive Secretary Ruben Torres, dated March 29, 1996, is hereby
MODIFIED as follows:
1. NQSRMDC's application for conversion is APPROVED only with respect to the
approximately forty-four (44) hectare portion of the land adjacent to the highway, as
recommended by the Department of Agriculture.
2. The remaining approximately one hundred (100) hectares traversed by an
irrigation canal and found to be suitable for agriculture shall be distributed to qualified
farmer-beneficiaries in accordance with RA 6657 or the Comprehensive Agrarian
Reform Law with a right of way to said portion from the highway provided in the
portion fronting the highway. For this purpose, the DAR and other concerned
government agencies are directed to immediately conduct the segregation survey of
the area, valuation of the property and generation of titles in the name of the
identified farmer-beneficiaries.
3. The Department of Agrarian Reform is hereby directed to carefully and
meticulously determine who among the claimants are qualified farmer-beneficiaries.
4. The Department of Agrarian Reform is hereby further directed to expedite payment
of just compensation to NQSRMDC for the portion of the land to be covered by the
CARP, including other lands previously surrendered by NQSRMDC for CARP
coverage.
5. The Philippine National Police is hereby directed to render full assistance to the
Department of Agrarian Reform in the implementation of this Order.
We take note of the Memorandum in Intervention filed by 113 farmers on October 10,
1997 without ruling on the propriety or merits thereof since it is unnecessary to pass
upon it at this time.
SO ORDERED. 27
A copy of the "Win-Win" Resolution was received by Governor Carlos O. Fortich of Bukidnon, Mayor
Rey B. Baula of Sumilao, Bukidnon, and NQSRMDC on November 24, 1997
28
and, on December 4, 1997,
they filed the present petition forcertiorari, prohibition (under Rule 65 of the Revised Rules of Court) and injunction with urgent prayer for a
temporary restraining order and/or writ of preliminary injunction (under Rule 58, ibid.), against then Deputy Executive Secretary Renato C.
Corona and DAR Secretary Ernesto D. Garilao.
On December 12, 1997, a Motion For Leave To Intervene
29
was filed by alleged farmer-beneficiaries, through
counsel, claiming that they are real parties in interest as they were "previously identified by respondent DAR as agrarian reform beneficiaries
on the 144-hectare" property subject of this case. The motion was vehemently opposed
30
by the petitioners.
In seeking the nullification of the "Win-Win" Resolution, the petitioners claim that the Office of the
President was prompted to issue the said resolution "after a very well-managed hunger strike led by
fake farmer-beneficiary Linda Ligmon succeeded in pressuring and/or politically blackmailing the
Office of the President to come up with this purely political decision to appease the 'farmers,' by
reviving and modifying the Decision of 29 March 1996which has been declared final and executory
in an Order of 23 June 1997. . . ."
31
Thus, petitioners further allege, respondent then Deputy Executive Secretary Renato C.
Corona "committed grave abuse of discretion and acted beyond his jurisdiction when he issued the questioned Resolution of 7 November
1997. . . ."
32
They availed of this extraordinary writ of certiorari "because there is no other plain, speedy and adequate remedy in the
ordinary course of law."
33
They never filed a motion for reconsideration of the subject Resolution "because (it) is patently illegal or contrary
to law and it would be a futile exercise to seek a reconsideration. . . ."
34

The respondents, through the Solicitor General, opposed the petition and prayed that it be dismissed
outright on the following grounds:
(1) The proper remedy of petitioners should have been to file a petition for review directly with the
Court of Appeals in accordance with Rule 43 of the Revised Rules of Court;
(2) The petitioners failed to file a motion for reconsideration of the assailed "Win-Win" Resolution
before filing the present petition; and
(3) Petitioner NQSRMDC is guilty of forum-shopping.
These are the preliminary issues which must first be resolved, including the incident on the motion
for intervention filed by the alleged farmer-beneficiaries.
Anent the first issue, in order to determine whether the recourse of petitioners is proper or not, it is
necessary to draw a line between an error of judgment and an error of jurisdiction. An error of
judgment is one which the court may commit in the exercise of its jurisdiction, and which error is
reviewable only by an appeal.
35
On the other hand, anerror of jurisdiction is one where the act complained of was issued by the
court, officer or a quasi-judicial body without or in excess of jurisdiction, or with grave abuse of discretion which is tantamount to lack or in
excess of jurisdiction.
36
This error is correctable only by the extraordinary writ of certiorari.
37

It is true that under Rule 43, appeals from awards, judgments, final orders or resolutions of any
quasi-judicial agency exercising quasi-judicial functions,
38
including the Office of the President,
39
may be taken to
the Court of Appeals by filing a verified petition for review
40
within fifteen (15) days from notice of the said judgment, final order or
resolution,
41
whether the appeal involves questions of fact, of law, or mixed questions of fact and law.
42

However, we hold that, in this particular case, the remedy prescribed in Rule 43 is inapplicable
considering that the present petition contains an allegation that the challenged resolution is "patently
illegal"
43
and was issued with "grave abuse of discretion" and "beyond his (respondent Secretary Renato C. Corona's)
jurisdiction"
44
when said resolution substantially modified the earlier OP Decision of March 29, 1996 which had long become final and
executory. In other words, the crucial issue raised here involves an error of jurisdiction, not an error of judgment which is reviewable by an
appeal under Rule 43. Thus, the appropriate remedy to annul and set aside the assailed resolution is an original special civil action
for certiorari under Rule 65, as what the petitioners have correctly done. The pertinent portion of Section 1 thereof provides:
Sec. 1. Petition for certiorari. When any tribunal, board or officer exercising judicial
or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or
with grave abuse of discretion amounting to lack or excess of jurisdiction, and there
is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of
law, a person aggrieved thereby may file a verified petition in the proper court,
alleging the facts with certainty and praying that judgment be rendered annulling or
modifying the proceedings of such tribunal, board or officer, and granting such
incidental reliefs as law and justice may require.
xxx xxx xxx
The office of a writ of certiorari is restricted to truly extraordinary cases cases in which the
act of the lower court or quasi-judicial body is wholly void.
45

The aforequoted Section 1 of Rule 65 mandates that the person aggrieved by the assailed illegal act
"may file a verified petition (for certiorari) in the proper court." The proper court where the petition
must be filed is stated in Section 4 of the same Rule 65 which reads:
Sec. 4. Where petition filed. The petition may be filed not later than sixty (60) days
from notice of the judgment, order or resolution sought to be assailed in the Supreme
Court or, if it relates to the acts or omissions of a lower court or of a corporation,
board, officer or person, in the Regional Trial Court exercising jurisdiction over the
territorial area as defined by the Supreme Court. It may also be filed in the Court of
Appeals whether or not the same is in aid of its appellate jurisdiction, or in the
Sandiganbayan if it is in aid of its jurisdiction. If it involves the acts or omissions of a
quasi-judicial agency, and unless otherwise provided by law or these Rules, the
petition shall be filed in and cognizable only by the Court of Appeals. (4a)
Under the above-qouted Section 4, the Supreme Court, Court of Appeals and Regional Trial Court
have original concurrent jurisdiction to issue a writ of certiorari,
46
prohibition
47
and mandamus.
48
But the
jurisdiction of these three (3) courts are also delineated in that, if the challenged act relates to acts or omissions of a lower court or of a
corporation, board, officer or person, the petition must be filed with the Regional Trial Court which exercises jurisdiction over the territorial
area as defined by the Supreme Court. And if it involves the act or omission of a quasi-judicial agency, the petition shall be filed only with the
Court of Appeals, unless otherwise provided by law or the Rules of Court. We have clearly discussed this matter of concurrence of
jurisdiction in People vs. Cuaresma, et. al.,
49
through now Chief Justice Andres R. Narvasa, thus:
. . . . This Court's original jurisdiction to issue writs of certiorari (as well as
prohibition, mandamus, quo warranto, habeas corpus and injunction) is not
exclusive. It is shared by this Court with Regional Trial Courts (formerly Courts of
First Instance), which may issue the writ, enforceable in any part of their respective
regions. It is also shared by this Court, and by the Regional Trial Court, with the
Court of Appeals (formerly, Intermediate Appellate Court), although prior to the
effectivity of Batas Pambansa Bilang 129 on August 14, 1981, the latter's
competence to issue the extraordinary writs was restricted to those "in aid of its
appellate jurisdiction." This concurrence of jurisdiction is not, however, to be taken as
according to parties seeking any of the writs an absolute, unrestrained freedom of
choice of the court to which application therefor will be directed. There is after all a
hierarchy of courts. That hierarchy is determinative of the venue of appeals, and
should also serve as a general determinant of the appropriate forum for petitions for
the extraordinary writs. A becoming regard for that judicial hierarchy most certainly
indicates that petitions for the issuance of extraordinary writs against first level
("inferior") courts should be filed with the Regional Trial Court, and those against the
latter, with the Court of Appeals. (Citations omitted)
But the Supreme Court has the full discretionary power to take cognizance of the petition filed
directly to it if compelling reasons, or the nature and importance of the issues raised, warrant. This
has been the judicial policy to be observed and which has been reiterated in subsequent cases,
namely:
50
Uy vs. Contreras, et. al.,
51
Torres vs. Arranz,
52
Bercero vs. De Guzman,
53
and Advincula vs. Legaspi, et. al.
54
As we have
further stated in Cuaresma:
. . . . A direct invocation of the Supreme Court's original jurisdiction to issue these
writs should be allowed only when there are special and important reasons therefor,
clearly and specifically set out in the petition. This is established policy. It is a policy
that is necessary to prevent inordinate demands upon the Court's time and attention
which are better devoted to those matters within its exclusive jurisdiction, and to
prevent further over-crowding of the Court's docket.
Pursuant to said judicial policy, we resolve to take primary jurisdiction over the present petition in the
interest of speedy justice
55
and to avoid future litigations so as to promptly put an end to the present controversy which, as
correctly observed by petitioners, has sparked national interest because of the magnitude of the problem created by the issuance of the
assailed resolution. Moreover, as will be discussed later, we find the assailed resolution wholly void and requiring the petitioners to file their
petition first with the Court of Appeals would only result in a waste of time and money.
That the Court has the power to set aside its own rules in the higher interests of justice is well-
entrenched, in our jurisprudence. We reiterate what we said in Piczon vs. Court of Appeals:
56

Be it remembered that rules of procedure are but mere tools designed to facilitate the
attainment of justice. Their strict and rigid application, which would result in
technicalities that tend to frustrate rather than promote substantial justice, must
always be avoided. Time and again, this Court has suspended its own rules and
excepted a particular case from their operation whenever the higher interests of
justice so require. In the instant petition, we forego a lengthy disquisition of the
proper procedure that should have been taken by the parties involved and proceed
directly to the merits of the case.
As to the second issue of whether the petitioners committed a fatal procedural lapse when they
failed to file a motion for reconsideration of the assailed resolution before seeking judicial recourse,
suffice it to state that the said motion is not necessary when the questioned resolution is a patent
nullity,
57
as will be taken up later.
With respect to the third issue, the respondents claim that the filing by the petitioners of: (a) a
petition forcertiorari, prohibition with preliminary injunction (CA-G.R. SP No. 37614) with the Court of
Appeals; (b) a complaint for annulment and cancellation of title, damages and injunction against
DAR and 141 others (Civil Case No. 2687-97) with the Regional Trial Court of Malaybalay,
Bukidnon; and (c) the present petition, constitute forum shopping.
We disagree.
The rule is that:
There is forum-shopping whenever, as a result of an adverse opinion in one forum, a
party seeks a favorable opinion (other than by appeal or certiorari) in another. The
principle applies not only with respect to suits filed in the courts but also in
connection with litigation commenced in the courts while an administrative
proceeding is pending, as in this case, in order to defeat administrative processes
and in anticipation of an unfavorable administrative ruling and a favorable court
ruling. This specially so, as in this case, where the court in which the second suit was
brought, has no jurisdiction (citations omitted).
The test for determining whether a party violated the rule against forum shopping has
been laid down in the 1986 case of Buan vs. Lopez (145 SCRA 34), . . . and that is,
forum shopping exists where the elements of litis pendentia are present or where a
final judgment in one case will amount to res judicata in the other, as follows:
There thus exists between the action before this Court and RTC Case
No. 86-36563 identity of parties, or at least such parties as represent
the same interests in both actions, as well as identity of rights
asserted and relief prayed for, the relief being founded on the same
facts, and the identity on the two preceding particulars is such that
any judgment rendered in the other action, will, regardless of which
party is successful, amount to res adjudicata in the action under
consideration: all the requisites, in fine, ofauter action pendant. 58
It is clear from the above-quoted rule that the petitioners are not guilty of forum shopping. The test
for determining whether a party has violated the rule against forum shopping is where a final
judgment in one case will amount tores adjudicata in the action under consideration. A cursory
examination of the cases filed by the petitioners does not show that the said cases are similar with
each other. The petition for certiorari in the Court of Appeals sought the nullification of the DAR
Secretary's order to proceed with the compulsory acquisition and distribution of the subject property.
On the other hand, the civil case in RTC of Malaybalay, Bukidnon for the annulment and cancellation
of title issued in the name of the Republic of the Philippines, with damages, was based on the
following grounds: (1) the DAR, in applying for cancellation of petitioner NQSRMDC's title, used
documents which were earlier declared null and void by the DARAB; (2) the cancellation of
NQSRMDC's title was made without payment of just compensation; and (3) without notice to
NQSRMDC for the surrender of its title. The present petition is entirely different from the said two
cases as it seeks the nullification of the assailed "Win-Win" Resolution of the Office of the President
dated November 7, 1997, which resolution was issued long after the previous two cases were
instituted.
The fourth and final preliminary issue to be resolved is the motion for intervention filed by alleged
farmer-beneficiaries, which we have to deny for lack of merit. In their motion, movants contend that
they are the farmer-beneficiaries of the land in question, hence, are real parties in interest. To prove
this, they attached as Annex "I" in their motion a Master List of Farmer-Beneficiaries. Apparently, the
alleged master list was made pursuant to the directive in the dispositive portion of the assailed "Win-
Win" Resolution which directs the DAR "to carefully and meticulously determine who among the
claimants are qualified farmer-beneficiaries." However, a perusal of the said document reveals that
movants are those purportedly "Found Qualified and Recommended for Approval." In other words,
movants are merely recommendee farmer-beneficiaries.
The rule in this jurisdiction is that a real party in interest is a party who would be benefited or injured
by the judgment or is the party entitled to the avails of the suit. Real interest means a present
substantial interest, as distinguished from a mere expectancy or a future, contingent, subordinate or
consequential interest.
59
Undoubtedly, movants' interest over the land in question is a mere expectancy. Ergo, they are not real
parties in interest.
Furthermore, the challenged resolution upon which movants based their motion is, as intimated
earlier, null and void. Hence, their motion for intervention has no leg to stand on.
Now to the main issue of whether the final and executory Decision dated March 29, 1996 can still be
substantially modified by the "Win-Win" Resolution.
We rule in the negative.
The rules and regulations governing appeals to the Office of the President of the Philippines are
embodied in Administrative Order No. 18. Section 7 thereof provides:
Sec. 7. Decisions/resolutions/orders of the Office of the President shall, except as
otherwise provided for by special laws, become final after the lapse of fifteen (15)
days from receipt of a copy thereof by the parties, unless a motion for
reconsideration thereof is filed within such period.
Only one motion for reconsideration by any one party shall be allowed and
entertained, save in exceptionally meritorious cases. (Emphasis ours).
It is further provided for in Section 9 that "The Rules of Court shall apply in a suppletory
character whenever practicable.
When the Office of the President issued the Order dated June 23, 1997 declaring the Decision of
March 29, 1996 final and executory, as no one has seasonably filed a motion for reconsideration
thereto, the said Office had lost its jurisdiction to re-open the case, more so modify its Decision.
Having lost its jurisdiction, the Office of the President has no more authority to entertain the second
motion for reconsideration filed by respondent DAR Secretary, which second motion became the
basis of the assailed "Win-Win" Resolution. Section 7 of Administrative Order No. 18 and Section 4,
Rule 43 of the Revised Rules of Court mandate that only one (1) motion for reconsideration is
allowed to be taken from the Decision of March 29, 1996. And even if a second motion for
reconsideration was permitted to be filed in "exceptionally meritorious cases," as provided in the
second paragraph of Section 7 of AO 18, still the said motion should not have been entertained
considering that the first motion for reconsideration was not seasonably filed, thereby allowing the
Decision of March 29, 1996 to lapse into finality. Thus, the act of the Office of the President in re-
opening the case and substantially modifying its March 29, 1996 Decision which had already
become final and executory, was in gross disregard of the rules and basic legal precept that
accord finality to administrative determinations.
In San Luis, et al. vs. Court of Appeals, et al.
60
we held:
Since the decisions of both the Civil Service Commission and the Office of the
President had long become final and executory, the same can no longer be reviewed
by the courts. It is well-established in our jurisprudence that the decisions and orders
of administrative agencies, rendered pursuant to their quasi-judicial authority, have
upon their finality, the force and binding effect of a final judgment within the purview
of the doctrine of res judicata [Brillantes v. Castro, 99 Phil. 497 (1956), Ipekdijna
Merchandizing Co., Inc. v. Court of Tax Appeals, G.R. No. L-15430, September 30,
1963, 9 SCRA 72.] The rule of res judicata which forbids the reopening of a matter
once judicially determined by competent authority applies as well to the judicial and
quasi-judicial acts of public, executive or administrative officers and boards acting
within their jurisdiction as to the judgments of courts having general judicial powers
[Brillantes v. Castro, supra at 503].
The orderly administration of justice requires that the judgments/resolutions of a court or quasi-
judicial body must reach a point of finality set by the law, rules and regulations. The noble purpose is
to write finis to disputes once and for all.
61
This is a fundamental principle in our justice system, without which there would
no end to litigations. Utmost respect and adherence to this principle must always be maintained by those who wield the power of
adjudication. Any act which violates such principle must immediately be struck down.
Therefore, the assailed "Win-Win" Resolution which substantially modified the Decision of March 29,
1996 after it has attained finality, is utterly void. Such void resolution, as aptly stressed by Justice
Thomas A. Street
62
in a 1918 case,
63
is "a lawless thing, which can be treated as an outlaw and slain at sight, or ignored wherever
and whenever it exhibits its head."
64

WHEREFORE, the present petition is hereby GRANTED. The challenged Resolution dated
November 7, 1997, issued by the Office of the President in OP Case No. 96-C-6424, is hereby
NULLIFIED and SET ASIDE. The Motion For Leave To Intervene filed by alleged farmer-
beneficiaries is hereby DENIED.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 132477 August 31, 2005
JOSE LUIS ROS, ANDONI F. ABOITIZ, XAVIER ABOITIZ, ROBERTO E. ABOITIZ, ENRIQUE
ABOITIZ, MATTHIAS G. MENDEZONA, CEBU INDUSTRIAL PARK DEVELOPERS, INC. and
FBM ABOITIZ MARINE, INC., Petitioners,
vs.
DEPARTMENT OF AGRARIAN REFORM, HON. ERNESTO GARILAO, in his capacity as DAR
Secretary, and DIR. JOSE LLAMES, in his capacity as Director of DAR-Regional
7, Respondent.
D E C I S I O N
CHICO-NAZARIO, J .:
Petitioners are the owners/developers of several parcels of land located in Arpili, Balamban, Cebu.
By virtue of Municipal Ordinance No. 101 passed by the Municipal Council of Balamban, Cebu,
these lands were reclassified as industrial lands.
1
On 03 April 1995, the Provincial Board of Cebu
approved Balambans land use plan and adopted en toto Balambans Municipal Ordinance No. 101
with the passage of Resolution No. 836-95 and Provincial Ordinance No. 95-8, respectively.
2
As part
of their preparation for the development of the subject lands as an industrial park, petitioners
secured all the necessary permits and appropriate government certifications.
3

Despite these permits and certifications, petitioner Matthias Mendezona received a letter from Mr.
Jose Llames, Director of the Department of Agrarian Reform (DAR) Regional Office for Region 7,
informing him that the DAR was disallowing the conversion of the subject lands for industrial use and
directed him to cease and desist from further developments on the land to avoid the incurrence of
civil and criminal liabilities.
4

Petitioners were thus constrained to file with the Regional Trial Court (RTC) of Toledo City a
Complaint dated 29 July 1996 for Injunction with Application for Temporary Restraining Order and a
Writ of Preliminary Injunction, docketed as Civil Case No. T-590.
5
In an order
6
dated 12 August 1996,
the RTC, ruling that it is the DAR which has jurisdiction, dismissed the Complaint for lack of
jurisdiction.
7
It justified the dismissal in this wise:
A perusal of Section 20 of the Local Government Code expressly provides that the Municipalities
through an Ordinance by the Sanggunian may authorize the reclassification of the agricultural land
within their area into non-agricultural. Paragraph (e) of the aforesaid Section, provides further: that
nothing in this Section shall be construed as repealing or modifying in any manner the provision of
Republic Act 6657. In an opinion of the Secretary of Justice, quoted: With respect of (sic) conversion
of agricultural land to non-agricultural uses the authority of the DAR to approve the same may be
exercise (sic) only from the date of the effectivity of the Agrarian Reform Law on June 15, 1988. It
appears that the petitioners had applied for conversion on June 13, 1995 and therefore the petitioner
(sic) are estopped from questioning the authority and jurisdiction of the Department of Agrarian
Reform. The application having been filed after June 15, 1988, the reclassification by the Municipal
Council of Balamban was just a step in the conversion of the aforestated lands according to its
purpose. Executive Order No. 129-A, Section 5, "The Department shall be responsible for
implementing Comprehensive Agrarian Reform and for such purpose it is authorized to (J) approve
or disapprove the conversion, restructuring or readjustment of agricultural land into non-agricultural
uses." Said Executive Order amended Section 36 of Republic Act No. 3644 which clearly mandates
that the DAR Secretary (sic) approve or disapprove conversion are not impliedly repealed. In fact,
under Section 75 of Republic Act 6657 the above laws and other laws not inconsistent of (sic) this
act shall have suppletory effect. Further, Section 68 of Republic Act 6657 provides: No injunction,
restraining order, prohibition or mandamus shall be issued by the lower court against the
Department of Agrarian Reform, DENR and Department of Justice in their implementation of the
program. With this provision, it is therefore clear (sic) when there is conflict of laws determining
whether the Department of Agrarian Reform has been exclusively empowered by law to approve
land conversion after June 15, 1988 and (sic) the final ruling falls only with the Supreme Court or
Office of the President.
WHEREFORE, in view of the foregoing, the Application for Restraining Order is hereby ordered
DENIED and the main case is DISMISSED, this Court having no jurisdiction over the same.
8

In an order dated 18 September 1996, the trial court denied the motion for reconsideration filed by
the petitioners.
9
Petitioners filed before this Court a Petition for Review on Certiorari with application
for Temporary Restraining Order and Writ of Preliminary Injunction.
10
In a resolution
11
dated 11
November 1996, this Court referred the petition to the Court of Appeals.
12
Petitioners moved for a
reconsideration of the said resolution but the same was denied in a resolution dated 27 January
1997.
13

At the Court of Appeals, the public respondents were ordered
14
to file their Comments on the
petition. Two sets of comments from the public respondents, one from the Department of Agrarian
Reform Provincial Office
15
and another from the Office of the Solicitor General,
16
were submitted, to
which petitioners filed their Consolidated Reply.
17

On 02 December 1997, the Court of Appeals rendered a decision
18
affirming the Order of Dismissal
issued by the RTC.
19
A motion for reconsideration filed by the petitioners was denied in a resolution
dated 30 January 1998.
20

Hence, this petition.
The following issues
21
are raised by the petitioners for resolution:
(a) Whether or not the reclassification of the subject lands to industrial use by the Municipality of
Balamban, Cebu pursuant to its authority under Section 20(a) of Republic Act No. 7160 or the Local
Government Code of 1991 (the "LGC") has the effect of taking such lands out of the coverage of the
CARL and beyond the jurisdiction of the DAR;
(b) Whether or not the Complaint for Injunction may be dismissed under the doctrine of primary
jurisdiction;
(c) Whether or not the Complaint for Injunction is an appropriate remedy against the order of the
DAR enjoining development works on the subject lands;
(d) Whether or not the Regional Trial Court of Toledo City had authority to issue a writ of injunction
against the DAR.
In sum, petitioners are of the view that local governments have the power to reclassify portions of
their agricultural lands, subject to the conditions set forth in Section 20
2223
of the Local Government
Code. According to them, if the agricultural land sought to be reclassified by the local government is
one which has already been brought under the coverage of the Comprehensive Agrarian Reform
Law (CARL) and/or which has been distributed to agrarian reform beneficiaries, then such
reclassification must be confirmed by the DAR pursuant to its authority under Section 6522 of the
CARL, in order for the reclassification to become effective. If, however, the land sought to be
reclassified is not covered by the CARL and not distributed to agrarian reform beneficiaries, then no
confirmation from the DAR is necessary in order for the reclassification to become effective as such
case would not fall within the DARs conversion authority. Stated otherwise, Section 65 of the CARL
does not, in all cases, grant the DAR absolute, sweeping and all-encompassing power to approve or
disapprove reclassifications or conversions of all agricultural lands. Said section only grants the DAR
exclusive authority to approve or disapprove conversions of agricultural lands which have already
been brought under the coverage of the CARL and which have already been distributed to farmer
beneficiaries.
The petition lacks merit.
After the passage of Republic Act No. 6657, otherwise known as Comprehensive Agrarian Reform
Program, agricultural lands, though reclassified, have to go through the process of conversion,
jurisdiction over which is vested in the DAR. However, agricultural lands already reclassified before
the effectivity of Rep. Act No. 6657 are exempted from conversion.
Department of Justice Opinion No. 44, Series of 1990, provides:
". . . True, the DARs express power over land use conversion is limited to cases in which agricultural
lands already awarded have, after five years, ceased to be economically feasible and sound for
agricultural purposes, or the locality has become urbanized and the land will have a greater
economic value for residential, commercial or industrial purposes. But to suggest that these are the
only instances when the DAR can require conversion clearances would open a loophole in R.A. No.
6657, which every landowner may use to evade compliance with the agrarian reform program.
Hence, it should logically follow from the said departments express duty and function to execute and
enforce the said statute that any reclassification of a private land as a residential, commercial or
industrial property should first be cleared by the DAR."
The requirement that agricultural lands must go through the process of conversion despite having
undergone reclassification was underscored in the case of Alarcon v. Court of Appeals,
24
where it
was held that reclassification of land does not suffice:
In the case at bar, there is no final order of conversion. The subject landholding was merely
reclassified. Conversion is different from reclassification. Conversion is the act of changing the
current use of a piece of agricultural land into some other use as approved by the Department of
Agrarian Reform. Reclassification, on the other hand, is the act of specifying how agricultural lands
shall be utilized for non-agricultural uses such as residential, industrial, commercial, as embodied in
the land use plan, subject to the requirements and procedure for land use conversion. Accordingly, a
mere reclassification of agricultural land does not automatically allow a landowner to change its use
and thus cause the ejectment of the tenants. He has to undergo the process of conversion before he
is permitted to use the agricultural land for other purposes.
Rep. Act No. 6657 took effect on 15 June 1988. Municipal Ordinance No. 101 of Balamban, Cebu,
which reclassified the subject lands, was passed on 25 March 1992, and Provincial Ordinance No.
95-8 of the Provincial Board of Cebu, which adopted Municipal Ordinance No. 101, was passed on
03 April 1995, long after Rep. Act No. 6657 has taken effect. Section 4 of Rep. Act No. 6657
provides:
SEC. 4. Scope. The Comprehensive Agrarian Reform Law of 1988 shall cover, regardless of
tenurial arrangement and commodity produced, all public and private agricultural lands as provided
in Proclamation No. 131 and Executive Order No. 229, including other lands of the public domain
suitable for agriculture.
. . .
(d) All private lands devoted to or suitable for agriculture regardless of the agricultural products
raised or that can be raised thereon.
To further clarify any doubt on its authority, the DAR issued Administrative Order No. 12 dated
October 1994 which reads:
Administrative Order No. 12
Series of 1994
SUBJECT: CONSOLIDATED AND REVISED RULES AND PROCEDURES GOVERNING
CONVERSION OF ARICULTURAL LANDS TO NON-AGRICULTURAL USES
I. PREFATORY STATEMENT
The guiding principles on land use conversion is to preserve prime agricultural lands. On the other
hand, conversion of agricultural lands, when coinciding with the objectives of the Comprehensive
Agrarian Reform Law to promote social justice, industrialization, and the optimum use of land as a
national resource for public welfare, shall be pursued in a speedy and judicious manner.
To rationalize these principles, and by virtue of Republic Act (R.A.) No. 3844, as amended,
Presidential Decree (P.D.) No. 27, P.D. No. 946, Executive Order (E.O.) No. 129-A and R.A. No.
6657, the Department of Agrarian Reform (DAR) has issued several policy guidelines to regulate
land use conversion. This Administrative Order consolidates and revises all existing implementing
guidelines issued by the DAR, taking into consideration, other Presidential issuances and national
policies related to land use conversion.
II. LEGAL MANDATE
A. The Department of Agrarian Reform (DAR) is mandated to "approve or disapprove applications
for conversion, restructuring or readjustment of agricultural lands into non-agricultural uses,"
pursuant to Section 4(i) of Executive Order No. 129-A, Series of 1987.
B. Section 5(i) of E.O. No. 129-A, Series of 1987, vests in the DAR, exclusive authority to approve or
disapprove applications for conversion of agricultural lands for residential, commercial, industrial,
and other land uses.
C. Section 65 of R.A. No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of
1988, likewise empowers the DAR to authorize under certain conditions, the reclassification or
conversion of agricultural lands.
D. Section 4 of Memorandum Circular No. 54, Series of 1993 of the Office of the President, provides
that "action on applications for land use conversion on individual landholdings shall remain as the
responsibility of the DAR, which shall utilize as its primary reference, documents on the
comprehensive land use plans and accompanying ordinances passed upon and approved by the
local government units concerned, together with the National Land Use Policy, pursuant to R.A. No.
6657 and E.O. No. 129-A."
III. DEFINITION OF TERMS
A. Agricultural land refers to land devoted to agricultural activity and not classified as mineral, forest,
residential, commercial or industrial land (Section 3[c], R.A. No. 6657).
B. Conversion is the act of changing the current use of a piece of agricultural land into some other
use.
C. Reclassification of agricultural lands is the act of specifying how agricultural lands shall be utilized
for non-agricultural uses such as residential, industrial, commercial, as embodied in the land use
plan. It also includes the reversion of non-agricultural lands to agricultural use.
. . .
V. COVERAGE
These rules shall cover all private agricultural lands as defined herein regardless of tenurial
arrangement and commodity produced. It shall also include agricultural lands reclassified by LGUs
into non-agricultural uses, after June 15, 1988, pursuant to Memorandum Circular (M.C.) No. 54,
Series of 1993 of the Office of the President and those proposed to be used for livestock, poultry and
swine raising as provided in DAR Administrative Order No. 9, Series of 1993.
In the case of Advincula-Velasquez v. Court of Appeals,
25
we held:
Our ruling in the Natalia case was reiterated in National Housing Authority v. Allarde (318 SCRA 22
[1999]).
The Court of Appeals reliance on DOJ Opinion No. 44, Series of 1990, is in order. In the said
opinion, the Secretary of Justice declared, viz:
Based on the foregoing premises, we reiterate the view that with respect to conversions of
agricultural lands covered by R.A. No. 6657 to non-agricultural uses, the authority of DAR to approve
such conversions may be exercised from the date of the laws effectivity on June 15, 1988. This
conclusion is based on a liberal interpretation of R.A. No. 6657 in the light of DARs mandate and
extensive coverage of the agrarian reform program.
Following the DOJ opinion, the DAR issued Administrative Order No. 6, Series of 1994, stating that
lands already classified as non-agricultural before the enactment of Rep. Act No. 6657 no longer
needed any conversion clearance:
I. Prefatory Statement
In order to streamline the issuance of exemption clearances, based on DOJ Opinion No. 44, the
following guidelines are being issued for the guidance of the DAR and the public in general.
II. Legal Basis
Sec. 3(c) of RA 6657 states that agricultural lands refers to the land devoted to agricultural activity
as defined in this act and not classified as mineral, forest, residential, commercial or industrial land.
Department of Justice Opinion No. 44, series of 1990 has ruled that, with respect to the conversion
of agricultural lands covered by RA No. 6657 to non-agricultural uses, the authority of DAR to
approve such conversion may be exercised from the date of its effectivity, on June 15, 1988. Thus,
all lands that are already classified as commercial, industrial, or residential before 15 June 1988 no
longer need any conversion clearance.
The authority of the DAR to approve conversions of agricultural lands covered by Rep. Act No. 6657
to non-agricultural uses has not been pierced by the passage of the Local Government Code. The
Code explicitly provides
26
that "nothing in this section shall be construed as repealing or modifying in
any manner the provisions of Rep. Act No. 6657."
It being settled that jurisdiction over conversion of land is vested in the DAR, the complaint for
injunction was correctly dismissed by the trial and appellate courts under the doctrine of primary
jurisdiction. This Court, inBautista v. Mag-isa Vda. De Villena,
27
found occasion to reiterate the
doctrine of primary jurisdiction
The doctrine of primary jurisdiction precludes the courts from resolving a controversy over which
jurisdiction has initially been lodged with an administrative body of special competence. For agrarian
reform cases, jurisdiction is vested in the Department of Agrarian Reform (DAR); more specifically, in
the Department of Agrarian Reform Adjudication Board (DARAB).
Executive Order 229 vested the DAR with (1) quasi-judicial powers to determine and adjudicate
agrarian reform matters; and (2) jurisdiction over all matters involving the implementation of agrarian
reform, except those falling under the exclusive original jurisdiction of the Department of Agriculture
and the Department of Environment and Natural Resources. This law divested the regional trial
courts of their general jurisdiction to try agrarian reform matters.
Under Republic Act 6657, the DAR retains jurisdiction over all agrarian reform matters. The pertinent
provision reads:
"Section 50. Quasi-Judicial Powers of the DAR. The DAR is hereby vested with the primary
jurisdiction to determine and adjudicate agrarian reform matters and shall have exclusive original
jurisdiction over all matters involving the implementation of agrarian reform, except those falling
under the exclusive jurisdiction of the Department of Agriculture and the Department of Environment
and Natural Resources.
"It shall not be bound by technical rules of procedure and evidence but shall proceed to hear and
decide all cases, disputes or controversies in a most expeditious manner, employing all reasonable
means to ascertain the facts of every case in accordance with justice and equity and the merits of
the case. Toward this end, it shall adopt a uniform rule of procedure to achieve a just, expeditious
and inexpensive determination of every action or proceeding before it. . . ."
Finally, the third and fourth issues which may be summed up into whether or not an injunction is the
appropriate remedy against the order of the DAR enjoining petitioners in developing the subject land,
we rule in the negative. Section 68 of Rep. Act No. 6657 provides:
SEC. 68. Immunity of Government Agencies from Undue Interference. No injunction, restraining
order, prohibition or mandamus shall be issued by the lower courts against the Department of
Agrarian Reform (DAR), the Department of Agriculture (DA), the Department of Environment and
Natural Resources (DENR), and the Department of Justice (DOJ) in their implementation of the
program.
Wherefore, premises considered, the instant petition is Denied for lack of merit. The decision of the
Court of Appeals in CA-G.R. SP No. 42666 dated 02 December 1997 affirming the order dated 12
August 1996 of the Regional Trial Court of Toledo City, Branch 29, in Civil Case No. T-590 is
AFFIRMED. Costs against petitioners.
SO ORDERED.
G.R. No. 183409 June 18, 2010
CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC. (CREBA), petitioner,
vs.
THE SECRETARY OF AGRARIAN REFORM, Respondent.
D E C I S I O N
PEREZ, J .:
This case is a Petition for Certiorari and Prohibition (with application for temporary restraining order
and/or writ of preliminary injunction) under Rule 65 of the 1997 Revised Rules of Civil Procedure,
filed by herein petitioner Chamber of Real Estate and Builders Associations, Inc. (CREBA) seeking
to nullify and prohibit the enforcement of Department of Agrarian Reform (DAR) Administrative Order
(AO) No. 01-02, as amended by DAR AO No. 05-07,
1
and DAR Memorandum No. 88,
2
for having
been issued by the Secretary of Agrarian Reform with grave abuse of discretion amounting to lack or
excess of jurisdiction as some provisions of the aforesaid administrative issuances are illegal and
unconstitutional.
Petitioner CREBA, a private non-stock, non-profit corporation duly organized and existing under the
laws of the Republic of the Philippines, is the umbrella organization of some 3,500 private
corporations, partnerships, single proprietorships and individuals directly or indirectly involved in land
and housing development, building and infrastructure construction, materials production and supply,
and services in the various related fields of engineering, architecture, community planning and
development financing. The Secretary of Agrarian Reform is named respondent as he is the duly
appointive head of the DAR whose administrative issuances are the subject of this petition.
The Antecedent Facts
The Secretary of Agrarian Reform issued, on 29 October 1997, DAR AO No. 07-97,
3
entitled
"Omnibus Rules and Procedures Governing Conversion of Agricultural Lands to Non-Agricultural
Uses," which consolidated all existing implementing guidelines related to land use conversion. The
aforesaid rules embraced all private agricultural lands regardless of tenurial arrangement and
commodity produced, and all untitled agricultural lands and agricultural lands reclassified by Local
Government Units (LGUs) into non-agricultural uses after 15 June 1988.
Subsequently, on 30 March 1999, the Secretary of Agrarian Reform issued DAR AO No. 01-
99,
4
entitled "Revised Rules and Regulations on the Conversion of Agricultural Lands to Non-
agricultural Uses," amending and updating the previous rules on land use conversion. Its coverage
includes the following agricultural lands, to wit: (1) those to be converted to residential, commercial,
industrial, institutional and other non-agricultural purposes; (2) those to be devoted to another type of
agricultural activity such as livestock, poultry, and fishpond the effect of which is to exempt the
land from the Comprehensive Agrarian Reform Program (CARP) coverage; (3) those to be
converted to non-agricultural use other than that previously authorized; and (4) those reclassified to
residential, commercial, industrial, or other non-agricultural uses on or after the effectivity of
Republic Act No. 6657
5
on 15 June 1988 pursuant to Section 20
6
of Republic Act No. 7160
7
and
other pertinent laws and regulations, and are to be converted to such uses.
On 28 February 2002, the Secretary of Agrarian Reform issued another Administrative Order, i.e.,
DAR AO No. 01-02, entitled "2002 Comprehensive Rules on Land Use Conversion," which further
amended DAR AO No. 07-97 and DAR AO No. 01-99, and repealed all issuances inconsistent
therewith. The aforesaid DAR AO No. 01-02 covers all applications for conversion from agricultural
to non-agricultural uses or to another agricultural use.
Thereafter, on 2 August 2007, the Secretary of Agrarian Reform amended certain provisions
8
of DAR
AO No. 01-02 by formulating DAR AO No. 05-07, particularly addressing land conversion in time of
exigencies and calamities.
To address the unabated conversion of prime agricultural lands for real estate development, the
Secretary of Agrarian Reform further issued Memorandum No. 88 on 15 April 2008, which
temporarily suspended the processing and approval of all land use conversion applications.
By reason thereof, petitioner claims that there is an actual slow down of housing projects, which, in
turn, aggravated the housing shortage, unemployment and illegal squatting problems to the
substantial prejudice not only of the petitioner and its members but more so of the whole nation.
Hence, this petition.
The Issues
In its Memorandum, petitioner posits the following issues:
I.
WHETHER THE DAR SECRETARY HAS JURISDICTION OVER LANDS THAT HAVE BEEN
RECLASSIFIED AS RESIDENTIAL, COMMERCIAL, INDUSTRIAL, OR FOR OTHER NON-
AGRICULTURAL USES.
II.
WHETHER THE DAR SECRETARY ACTED IN EXCESS OF HIS JURISDICTION AND GRAVELY
ABUSED HIS DISCRETION BY ISSUING AND ENFORCING [DAR AO NO. 01-02, AS AMENDED]
WHICH SEEK TO REGULATE RECLASSIFIED LANDS.
III.
WHETHER [DAR AO NO. 01-02, AS AMENDED] VIOLATE[S] THE LOCAL AUTONOMY OF
LOCAL GOVERNMENT UNITS.
IV.
WHETHER [DAR AO NO. 01-02, AS AMENDED] VIOLATE[S] THE DUE PROCESS AND EQUAL
PROTECTION CLAUSE[S] OF THE CONSTITUTION.
V.
WHETHER MEMORANDUM NO. 88 IS A VALID EXERCISE OF POLICE POWER.
9

The subject of the submission that the DAR Secretary gravely abused his discretion is AO No. 01-
02, as amended, which states:
Section 3. Applicability of Rules. These guidelines shall apply to all applications for conversion,
from agricultural to non-agricultural uses or to another agricultural use, such as:
x x x x
3.4 Conversion of agricultural lands or areas that have been reclassified by the LGU or by way of a
Presidential Proclamation, to residential, commercial, industrial, or other non-agricultural uses on or
after the effectivity of RA 6657 on 15 June 1988, x x x. [Emphasis supplied].
Petitioner holds that under Republic Act No. 6657 and Republic Act No. 8435,
10
the term agricultural
lands refers to "lands devoted to or suitable for the cultivation of the soil, planting of crops, growing
of fruit trees, raising of livestock, poultry or fish, including the harvesting of such farm products, and
other farm activities and practices performed by a farmer in conjunction with such farming operations
done by a person whether natural or juridical, and not classified by the law as mineral, forest,
residential, commercial or industrial land." When the Secretary of Agrarian Reform, however, issued
DAR AO No. 01-02, as amended, he included in the definition of agricultural lands "lands not
reclassified as residential, commercial, industrial or other non-agricultural uses before 15 June
1988." In effect, lands reclassified from agricultural to residential, commercial, industrial, or other
non-agricultural uses after 15 June 1988 are considered to be agricultural lands for purposes of
conversion, redistribution, or otherwise. In so doing, petitioner avows that the Secretary of Agrarian
Reform acted without jurisdiction as he has no authority to expand or enlarge the legal signification
of the term agricultural lands through DAR AO No. 01-02. Being a mere administrative issuance, it
must conform to the statute it seeks to implement, i.e., Republic Act No. 6657, or to the Constitution,
otherwise, its validity or constitutionality may be questioned.
In the same breath, petitioner contends that DAR AO No. 01-02, as amended, was made in violation
of Section 65
11
of Republic Act No. 6657 because it covers all applications for conversion from
agricultural to non-agricultural uses or to other agricultural uses, such as the conversion of
agricultural lands or areas that have been reclassified by the LGUs or by way of Presidential
Proclamations, to residential, commercial, industrial or other non-agricultural uses on or after 15
June 1988. According to petitioner, there is nothing in Section 65 of Republic Act No. 6657 or in any
other provision of law that confers to the DAR the jurisdiction or authority to require that non-
awarded lands or reclassified lands be submitted to its conversion authority. Thus, in issuing and
enforcing DAR AO No. 01-02, as amended, the Secretary of Agrarian Reform acted with grave
abuse of discretion amounting to lack or excess of jurisdiction.
Petitioner further asseverates that Section 2.19,
12
Article I of DAR AO No. 01-02, as amended,
making reclassification of agricultural lands subject to the requirements and procedure for land use
conversion, violates Section 20 of Republic Act No. 7160, because it was not provided therein that
reclassification by LGUs shall be subject to conversion procedures or requirements, or that the
DARs approval or clearance must be secured to effect reclassification. The said Section 2.19 of
DAR AO No. 01-02, as amended, also contravenes the constitutional mandate on local autonomy
under Section 25,
13
Article II and Section 2,
14
Article X of the 1987 Philippine Constitution.
Petitioner similarly avers that the promulgation and enforcement of DAR AO No. 01-02, as amended,
constitute deprivation of liberty and property without due process of law. There is deprivation of
liberty and property without due process of law because under DAR AO No. 01-02, as amended,
lands that are not within DARs jurisdiction are unjustly, arbitrarily and oppressively prohibited or
restricted from legitimate use on pain of administrative and criminal penalties. More so, there is
discrimination and violation of the equal protection clause of the Constitution because the aforesaid
administrative order is patently biased in favor of the peasantry at the expense of all other sectors of
society.
As its final argument, petitioner avows that DAR Memorandum No. 88 is not a valid exercise of
police power for it is the prerogative of the legislature and that it is unconstitutional because it
suspended the land use conversion without any basis.
The Courts Ruling
This petition must be dismissed.
Primarily, although this Court, the Court of Appeals and the Regional Trial Courts have concurrent
jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and
injunction, such concurrence does not give the petitioner unrestricted freedom of choice of court
forum.
15
In Heirs of Bertuldo Hinog v. Melicor,
16
citing People v. Cuaresma,
17
this Court made the
following pronouncements:
This Court's original jurisdiction to issue writs of certiorari is not exclusive. It is shared by this Court
with Regional Trial Courts and with the Court of Appeals. This concurrence of jurisdiction is not,
however, to be taken as according to parties seeking any of the writs an absolute, unrestrained
freedom of choice of the court to which application therefor will be directed. There is after all a
hierarchy of courts. That hierarchy is determinative of the venue of appeals, and also serves as a
general determinant of the appropriate forum for petitions for the extraordinary writs. A becoming
regard for that judicial hierarchy most certainly indicates that petitions for the issuance of
extraordinary writs against first level ("inferior") courts should be filed with the Regional Trial Court,
and those against the latter, with the Court of Appeals. A direct invocation of the Supreme Courts
original jurisdiction to issue these writs should be allowed only when there are special and important
reasons therefor, clearly and specifically set out in the petition. This is [an] established policy. It is a
policy necessary to prevent inordinate demands upon the Courts time and attention which are better
devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of the
Courts docket.
18
(Emphasis supplied.)
The rationale for this rule is two-fold: (a) it would be an imposition upon the precious time of this
Court; and (b) it would cause an inevitable and resultant delay, intended or otherwise, in the
adjudication of cases, which in some instances had to be remanded or referred to the lower court as
the proper forum under the rules of procedure, or as better equipped to resolve the issues because
this Court is not a trier of facts.
19

This Court thus reaffirms the judicial policy that it will not entertain direct resort to it unless the
redress desired cannot be obtained in the appropriate courts, and exceptional and compelling
circumstances, such as cases of national interest and of serious implications, justify the availment of
the extraordinary remedy of writ of certiorari, calling for the exercise of its primary jurisdiction.
20

Exceptional and compelling circumstances were held present in the following cases: (a) Chavez v.
Romulo,
21
on citizens right to bear arms; (b) Government of [the] United States of America v. Hon.
Purganan,
22
on bail in extradition proceedings; (c) Commission on Elections v. Judge Quijano-
Padilla,
23
on government contract involving modernization and computerization of voters registration
list; (d) Buklod ng Kawaning EIIB v. Hon. Sec. Zamora,
24
on status and existence of a public office;
and (e) Hon. Fortich v. Hon. Corona,
25
on the so-called "Win-Win Resolution" of the Office of the
President which modified the approval of the conversion to agro-industrial area.
26

In the case at bench, petitioner failed to specifically and sufficiently set forth special and important
reasons to justify direct recourse to this Court and why this Court should give due course to this
petition in the first instance, hereby failing to fulfill the conditions set forth in Heirs of Bertuldo Hinog
v. Melicor.
27
The present petition should have been initially filed in the Court of Appeals in strict
observance of the doctrine on the hierarchy of courts. Failure to do so is sufficient cause for the
dismissal of this petition.
Moreover, although the instant petition is styled as a Petition for Certiorari, in essence, it seeks the
declaration by this Court of the unconstitutionality or illegality of the questioned DAR AO No. 01-02,
as amended, and Memorandum No. 88. It, thus, partakes of the nature of a Petition for Declaratory
Relief over which this Court has only appellate, not original, jurisdiction.
28
Section 5, Article VIII of the
1987 Philippine Constitution provides:
Sec. 5. The Supreme Court shall have the following powers:
(1) Exercise original jurisdiction over cases affecting ambassadors, other public ministers
and consuls, and over petitions for certiorari, prohibition, mandamus, quo warranto, and
habeas corpus.
(2) Review, revise, reverse, modify, or affirm on appeal or certiorari as the law or the Rules
of Court may provide, final judgments and orders of lower courts in:
(a) All cases in which the constitutionality or validity of any treaty, international or
executive agreement, law, presidential decree, proclamation, order, instruction,
ordinance, or regulation is in question. (Emphasis supplied.)
With that, this Petition must necessarily fail because this Court does not have original jurisdiction
over a Petition for Declaratory Relief even if only questions of law are involved.
Even if the petitioner has properly observed the doctrine of judicial hierarchy, this Petition is still
dismissible.
The special civil action for certiorari is intended for the correction of errors of jurisdiction only or
grave abuse of discretion amounting to lack or excess of jurisdiction. Its principal office is only to
keep the inferior court within the parameters of its jurisdiction or to prevent it from committing such a
grave abuse of discretion amounting to lack or excess of jurisdiction.
29

The essential requisites for a Petition for Certiorari under Rule 65 are: (1) the writ is directed against
a tribunal, a board, or an officer exercising judicial or quasi-judicial functions; (2) such tribunal,
board, or officer has acted without or in excess of jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction; and (3) there is no appeal or any plain, speedy, and
adequate remedy in the ordinary course of law.
30

Excess of jurisdiction as distinguished from absence of jurisdiction means that an act, though within
the general power of a tribunal, board or officer, is not authorized and invalid with respect to the
particular proceeding, because the conditions which alone authorize the exercise of the general
power in respect of it are wanting.
31
Without jurisdiction means lack or want of legal power, right or
authority to hear and determine a cause or causes, considered either in general or with reference to
a particular matter. It means lack of power to exercise authority.
32
Grave abuse of discretion implies
such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction or, in other
words, where the power is exercised in an arbitrary manner by reason of passion, prejudice, or
personal hostility, and it must be so patent or gross as to amount to an evasion of a positive duty or
to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.
33

In the case before this Court, the petitioner fails to meet the above-mentioned requisites for the
proper invocation of a Petition for Certiorari under Rule 65. The Secretary of Agrarian Reform in
issuing the assailed DAR AO No. 01-02, as amended, as well as Memorandum No. 88 did so in
accordance with his mandate to implement the land use conversion provisions of Republic Act No.
6657. In the process, he neither acted in any judicial or quasi-judicial capacity nor assumed unto
himself any performance of judicial or quasi-judicial prerogative. A Petition for Certiorari is a special
civil action that may be invoked only against a tribunal, board, or officer exercising judicial functions.
Section 1, Rule 65 of the 1997 Revised Rules of Civil Procedure is explicit on this matter, viz.:
SECTION 1. Petition for certiorari. When any tribunal, board or officer exercising judicial or quasi-
judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy,
and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified
petition in the proper court, alleging the facts with certainty and praying that judgment must be
rendered annulling or modifying the proceedings of such tribunal, board or officer.1avvphi1
A tribunal, board, or officer is said to be exercising judicial function where it has the power to
determine what the law is and what the legal rights of the parties are, and then undertakes to
determine these questions and adjudicate upon the rights of the parties. Quasi-judicial function, on
the other hand, is "a term which applies to the actions, discretion, etc., of public administrative
officers or bodies x x x required to investigate facts or ascertain the existence of facts, hold hearings,
and draw conclusions from them as a basis for their official action and to exercise discretion of a
judicial nature."
34

Before a tribunal, board, or officer may exercise judicial or quasi-judicial acts, it is necessary that
there be a law that gives rise to some specific rights of persons or property under which adverse
claims to such rights are made, and the controversy ensuing therefrom is brought before a tribunal,
board, or officer clothed with power and authority to determine the law and adjudicate the respective
rights of the contending parties.
35

The Secretary of Agrarian Reform does not fall within the ambit of a tribunal, board, or officer
exercising judicial or quasi-judicial functions. The issuance and enforcement by the Secretary of
Agrarian Reform of the questioned DAR AO No. 01-02, as amended, and Memorandum No. 88 were
done in the exercise of his quasi-legislative and administrative functions and not of judicial or quasi-
judicial functions. In issuing the aforesaid administrative issuances, the Secretary of Agrarian
Reform never made any adjudication of rights of the parties. As such, it can never be said that the
Secretary of Agrarian Reform had acted with grave abuse of discretion amounting to lack or excess
of jurisdiction in issuing and enforcing DAR AO No. 01-02, as amended, and Memorandum No. 88
for he never exercised any judicial or quasi-judicial functions but merely his quasi-legislative and
administrative functions.
Furthermore, as this Court has previously discussed, the instant petition in essence seeks the
declaration by this Court of the unconstitutionality or illegality of the questioned DAR AO No. 01-02,
as amended, and Memorandum No. 88. Thus, the adequate and proper remedy for the petitioner
therefor is to file a Petition for Declaratory Relief, which this Court has only appellate and not original
jurisdiction. It is beyond the province of certiorari to declare the aforesaid administrative issuances
unconstitutional and illegal because certiorari is confined only to the determination of the existence
of grave abuse of discretion amounting to lack or excess of jurisdiction. Petitioner cannot simply
allege grave abuse of discretion amounting to lack or excess of jurisdiction and then invoke certiorari
to declare the aforesaid administrative issuances unconstitutional and illegal. Emphasis must be
given to the fact that the writ of certiorari dealt with in Rule 65 of the 1997 Revised Rules of Civil
Procedure is a prerogative writ, never demandable as a matter of right, "never issued except in the
exercise of judicial discretion."
36

At any rate, even if the Court will set aside procedural infirmities, the instant petition should still be
dismissed.
Executive Order No. 129-A
37
vested upon the DAR the responsibility of implementing the CARP.
Pursuant to the said mandate and to ensure the successful implementation of the CARP, Section
5(c) of the said executive order authorized the DAR to establish and promulgate operational policies,
rules and regulations and priorities for agrarian reform implementation. Section 4(k) thereof
authorized the DAR to approve or disapprove the conversion, restructuring or readjustment of
agricultural lands into non-agricultural uses. Similarly, Section 5(l) of the same executive order has
given the DAR the exclusive authority to approve or disapprove conversion of agricultural lands for
residential, commercial, industrial, and other land uses as may be provided for by law. Section 7 of
the aforesaid executive order clearly provides that "the authority and responsibility for the exercise of
the mandate of the [DAR] and the discharge of its powers and functions shall be vested in the
Secretary of Agrarian Reform x x x."
Under DAR AO No. 01-02, as amended, "lands not reclassified as residential, commercial, industrial
or other non-agricultural uses before 15 June 1988" have been included in the definition of
agricultural lands. In so doing, the Secretary of Agrarian Reform merely acted within the scope of his
authority stated in the aforesaid sections of Executive Order No. 129-A, which is to promulgate rules
and regulations for agrarian reform implementation and that includes the authority to define
agricultural lands for purposes of land use conversion. Further, the definition of agricultural lands
under DAR AO No. 01-02, as amended, merely refers to the category of agricultural lands that may
be the subject for conversion to non-agricultural uses and is not in any way confined to agricultural
lands in the context of land redistribution as provided for under Republic Act No. 6657.
More so, Department of Justice Opinion No. 44, Series of 1990, which Opinion has been recognized
in many cases decided by this Court, clarified that after the effectivity of Republic Act No. 6657 on 15
June 1988 the DAR has been given the authority to approve land conversion.
38
Concomitant to such
authority, therefore, is the authority to include in the definition of agricultural lands "lands not
reclassified as residential, commercial, industrial or other non-agricultural uses before 15 June 1988"
for purposes of land use conversion.
In the same vein, the authority of the Secretary of Agrarian Reform to include "lands not reclassified
as residential, commercial, industrial or other non-agricultural uses before 15 June 1988" in the
definition of agricultural lands finds basis in jurisprudence. In Ros v. Department of Agrarian
Reform,
39
this Court has enunciated that after the passage of Republic Act No. 6657, agricultural
lands, though reclassified, have to go through the process of conversion, jurisdiction over which is
vested in the DAR. However, agricultural lands, which are already reclassified before the effectivity
of Republic Act No. 6657 which is 15 June 1988, are exempted from conversion.
40
It bears stressing
that the said date of effectivity of Republic Act No. 6657 served as the cut-off period for automatic
reclassifications or rezoning of agricultural lands that no longer require any DAR conversion
clearance or authority.
41
It necessarily follows that any reclassification made thereafter can be the
subject of DARs conversion authority. Having recognized the DARs conversion authority over lands
reclassified after 15 June 1988, it can no longer be argued that the Secretary of Agrarian Reform
was wrongfully given the authority and power to include "lands not reclassified as residential,
commercial, industrial or other non-agricultural uses before 15 June 1988" in the definition of
agricultural lands. Such inclusion does not unduly expand or enlarge the definition of agricultural
lands; instead, it made clear what are the lands that can be the subject of DARs conversion
authority, thus, serving the very purpose of the land use conversion provisions of Republic Act No.
6657.
The argument of the petitioner that DAR AO No. 01-02, as amended, was made in violation of
Section 65 of Republic Act No. 6657, as it covers even those non-awarded lands and reclassified
lands by the LGUs or by way of Presidential Proclamations on or after 15 June 1988 is specious. As
explained in Department of Justice Opinion No. 44, series of 1990, it is true that the DARs express
power over land use conversion provided for under Section 65 of Republic Act No. 6657 is limited to
cases in which agricultural lands already awarded have, after five years, ceased to be economically
feasible and sound for agricultural purposes, or the locality has become urbanized and the land will
have a greater economic value for residential, commercial or industrial purposes. To suggest,
however, that these are the only instances that the DAR can require conversion clearances would
open a loophole in Republic Act No. 6657 which every landowner may use to evade compliance with
the agrarian reform program. It should logically follow, therefore, from the said departments express
duty and function to execute and enforce the said statute that any reclassification of a private land as
a residential, commercial or industrial property, on or after the effectivity of Republic Act No. 6657 on
15 June 1988 should first be cleared by the DAR.
42

This Court held in Alarcon v. Court of Appeals
43
that reclassification of lands does not suffice.
Conversion and reclassification differ from each other. Conversion is the act of changing the current
use of a piece of agricultural land into some other use as approved by the DAR while reclassification
is the act of specifying how agricultural lands shall be utilized for non-agricultural uses such as
residential, industrial, and commercial, as embodied in the land use plan, subject to the
requirements and procedures for land use conversion. In view thereof, a mere reclassification of an
agricultural land does not automatically allow a landowner to change its use. He has to undergo the
process of conversion before he is permitted to use the agricultural land for other purposes.
44

It is clear from the aforesaid distinction between reclassification and conversion that agricultural
lands though reclassified to residential, commercial, industrial or other non-agricultural uses must
still undergo the process of conversion before they can be used for the purpose to which they are
intended.
Nevertheless, emphasis must be given to the fact that DARs conversion authority can only be
exercised after the effectivity of Republic Act No. 6657 on 15 June 1988.
45
The said date served as
the cut-off period for automatic reclassification or rezoning of agricultural lands that no longer require
any DAR conversion clearance or authority.
46
Thereafter, reclassification of agricultural lands is
already subject to DARs conversion authority. Reclassification alone will not suffice to use the
agricultural lands for other purposes. Conversion is needed to change the current use of reclassified
agricultural lands.
It is of no moment whether the reclassification of agricultural lands to residential, commercial,
industrial or other non-agricultural uses was done by the LGUs or by way of Presidential
Proclamations because either way they must still undergo conversion process. It bears stressing that
the act of reclassifying agricultural lands to non-agricultural uses simply specifies how agricultural
lands shall be utilized for non-agricultural uses and does not automatically convert agricultural lands
to non-agricultural uses or for other purposes. As explained in DAR Memorandum Circular No. 7,
Series of 1994, cited in the 2009 case of Roxas & Company, Inc. v. DAMBA-NFSW and the
Department of Agrarian Reform,
47
reclassification of lands denotes their allocation into some specific
use and providing for the manner of their utilization and disposition or the act of specifying how
agricultural lands shall be utilized for non-agricultural uses such as residential, industrial, or
commercial, as embodied in the land use plan. For reclassified agricultural lands, therefore, to be
used for the purpose to which they are intended there is still a need to change the current use
thereof through the process of conversion. The authority to do so is vested in the DAR, which is
mandated to preserve and maintain agricultural lands with increased productivity. Thus,
notwithstanding the reclassification of agricultural lands to non-agricultural uses, they must still
undergo conversion before they can be used for other purposes.
Even reclassification of agricultural lands by way of Presidential Proclamations to non-agricultural
uses, such as school sites, needs conversion clearance from the DAR. We reiterate that
reclassification is different from conversion. Reclassification alone will not suffice and does not
automatically allow the landowner to change its use. It must still undergo conversion process before
the landowner can use such agricultural lands for such purpose.
48
Reclassification of agricultural
lands is one thing, conversion is another. Agricultural lands that are reclassified to non-agricultural
uses do not ipso facto allow the landowner thereof to use the same for such purpose. Stated
differently, despite having reclassified into school sites, the landowner of such reclassified
agricultural lands must apply for conversion before the DAR in order to use the same for the said
purpose.
Any reclassification, therefore, of agricultural lands to residential, commercial, industrial or other non-
agricultural uses either by the LGUs or by way of Presidential Proclamations enacted on or after 15
June 1988 must undergo the process of conversion, despite having undergone reclassification,
before agricultural lands may be used for other purposes.
It is different, however, when through Presidential Proclamations public agricultural lands have been
reserved in whole or in part for public use or purpose, i.e., public school, etc., because in such a
case, conversion is no longer necessary. As held in Republic v. Estonilo,
49
only a positive act of the
President is needed to segregate or reserve a piece of land of the public domain for a public
purpose. As such, reservation of public agricultural lands for public use or purpose in effect
converted the same to such use without undergoing any conversion process and that they must be
actually, directly and exclusively used for such public purpose for which they have been reserved,
otherwise, they will be segregated from the reservations and transferred to the DAR for distribution
to qualified beneficiaries under the CARP.
50
More so, public agricultural lands already reserved for
public use or purpose no longer form part of the alienable and disposable lands of the public domain
suitable for agriculture.
51
Hence, they are outside the coverage of the CARP and it logically follows
that they are also beyond the conversion authority of the DAR.
Clearly from the foregoing, the Secretary of Agrarian Reform did not act without jurisdiction or in
excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction in
(1) including lands not reclassified as residential, commercial, industrial or other non-agricultural
uses before 15 June 1988 in the definition of agricultural lands under DAR AO No. 01-02, as
amended, and; (2) issuing and enforcing DAR AO No. 01-02, as amended, subjecting to DARs
jurisdiction for conversion lands which had already been reclassified as residential, commercial,
industrial or for other non-agricultural uses on or after 15 June 1988.
Similarly, DAR AO No. 01-02, as amended, providing that the reclassification of agricultural lands by
LGUs shall be subject to the requirements of land use conversion procedure or that DARs approval
or clearance must be secured to effect reclassification, did not violate the autonomy of the LGUs.
Section 20 of Republic Act No. 7160 states that:
SECTION 20. Reclassification of Lands. (a) A city or municipality may, through an ordinance
passed by the sanggunian after conducting public hearings for the purpose, authorize the
reclassification of agricultural lands and provide for the manner of their utilization or disposition in the
following cases: (1) when the land ceases to be economically feasible and sound for agricultural
purposes as determined by the Department of Agriculture or (2) where the land shall have
substantially greater economic value for residential, commercial, or industrial purposes, as
determined by the sanggunian concerned: Provided, That such reclassification shall be limited to the
following percentage of the total agricultural land area at the time of the passage of the ordinance:
x x x x
(3) For fourth to sixth class municipalities, five percent (5%): Provided, further, That agricultural
lands distributed to agrarian reform beneficiaries pursuant to Republic Act Numbered Sixty-six
hundred fifty-seven (R.A. No. 6657), otherwise known as "The Comprehensive Agrarian Reform
Law," shall not be affected by the said reclassification and the conversion of such lands into other
purposes shall be governed by Section 65 of said Act.
x x x x
(e) Nothing in this Section shall be construed as repealing, amending, or modifying in any manner
the provisions of R.A. No. 6657.
The aforequoted provisions of law show that the power of the LGUs to reclassify agricultural lands is
not absolute. The authority of the DAR to approve conversion of agricultural lands covered by
Republic Act No. 6657 to non-agricultural uses has been validly recognized by said Section 20 of
Republic Act No. 7160 by explicitly providing therein that, "nothing in this section shall be construed
as repealing or modifying in any manner the provisions of Republic Act No. 6657."
DAR AO No. 01-02, as amended, does not also violate the due process clause, as well as the equal
protection clause of the Constitution. In providing administrative and criminal penalties in the said
administrative order, the Secretary of Agrarian Reform simply implements the provisions of Sections
73 and 74 of Republic Act No. 6657, thus:
Sec. 73. Prohibited Acts and Omissions. The following are prohibited:
x x x x
(c) The conversion by any landowner of his agricultural land into any non-agricultural use with intent
to avoid the application of this Act to his landholdings and to disposes his tenant farmers of the land
tilled by them;
x x x x
(f) The sale, transfer or conveyance by a beneficiary of the right to use or any other usufructuary
right over the land he acquired by virtue of being a beneficiary, in order to circumvent the provisions
of this Act.
x x x x
Sec. 74. Penalties. Any person who knowingly or willfully violates the provisions of this Act shall be
punished by imprisonment of not less than one (1) month to not more than three (3) years or a fine
of not less than one thousand pesos (P1,000.00) and not more than fifteen thousand pesos
(P15,000.00), or both, at the discretion of the court.
If the offender is a corporation or association, the officer responsible therefor shall be criminally
liable.
And Section 11 of Republic Act No. 8435, which specifically provides:
Sec. 11. Penalty for Agricultural Inactivity and Premature Conversion. x x x.
Any person found guilty of premature or illegal conversion shall be penalized with imprisonment of
two (2) to six (6) years, or a fine equivalent to one hundred percent (100%) of the government's
investment cost, or both, at the discretion of the court, and an accessory penalty of forfeiture of the
land and any improvement thereon.
In addition, the DAR may impose the following penalties, after determining, in an administrative
proceedings, that violation of this law has been committed:
a. Consolation or withdrawal of the authorization for land use conversion; and
b. Blacklisting, or automatic disapproval of pending and subsequent conversion applications
that they may file with the DAR.
Contrary to petitioners assertions, the administrative and criminal penalties provided for under DAR
AO No. 01-02, as amended, are imposed upon the illegal or premature conversion of lands within
DARs jurisdiction, i.e., "lands not reclassified as residential, commercial, industrial or for other non-
agricultural uses before 15 June 1998."
The petitioners argument that DAR Memorandum No. 88 is unconstitutional, as it suspends the land
use conversion without any basis, stands on hollow ground.
It bears emphasis that said Memorandum No. 88 was issued upon the instruction of the President in
order to address the unabated conversion of prime agricultural lands for real estate development
because of the worsening rice shortage in the country at that time. Such measure was made in order
to ensure that there are enough agricultural lands in which rice cultivation and production may be
carried into. The issuance of said Memorandum No. 88 was made pursuant to the general welfare of
the public, thus, it cannot be argued that it was made without any basis.
WHEREFORE, premises considered, the instant Petition for Certiorari is DISMISSED. Costs against
petitioner.
SO ORDERED.