Supreme Court of the Philippines

270 Phil. 151

EN BANC
G.R. No. 86889, December 04, 1990
LUZ FARMS, PETITIONER, VS. THE HONORABLE SECRETARY OF THE
DEPARTMENT OF AGRARIAN REFORM, RESPONDENT.

DECISION

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).

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, 1989 resolved to deny, among others,
Luz Farms’ prayer 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 x x x.”
(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-snaring plan mentioned in
Section 13 -?

"x x x (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. x x x."

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.

The Constitutional provision under consideration reads as follows:

ARTICLE XIII
xxx xxx xxx
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.
xxx xxx xxx."

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
residences for commercial livestock and raising purposes, under "contract-
growing arrangements," whereby they supplement the requirements of meat
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. Excluding
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 x x x.
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]).

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 186 of R.A. 3844, as land 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:

xxx xxx xxx

"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).
xxx xxx xxx."

The questions were answered and explained in the statement of then

Commissioner Tadeo, quoted as follows:

xxx xxx xxx

"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).

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 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 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.

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Gancayco, Padilla, Bidin,
Griño-Aquino, Medialdea, and Regalado, JJ., concur.
Feliciano, J., on leave.
Sarmiento, J., see separate opinion.

SEPARATE OPINION

SARMIENTO, J.:

I agree that the petition be granted.

It is my opinion however that the main issue on the validity of the assailed
provisions of R.A. 6657 (the Comprehensive Agrarian Reform Law of 1988) and its
Implementing Rules and Guidelines insofar as they include the raising of livestock,
poultry, and swine in their coverage can not be simplistically reduced to a question of
constitutional construction.
It is a well-settled rule that construction and interpretation come only after it has
been demonstrated that application is impossible or inadequate without them. A close
reading however of the constitutional text in point, specifically, Sec. 4, Art. XIII,
particularly the phrase, "xxx in case of other farmworkers, to receive a just share of the
fruits thereof," provides a basis for the clear and possible coverage of livestock, poultry,
and swine raising within the ambit of the comprehensive agrarian reform program. This
accords with the principle that every presumption should be indulged in favor of the
constitutionality of a statute and the court in considering the validity of a statute should
give it such reasonable construction as can be reached to bring it within the
fundamental law.[1]
The presumption against unconstitutionality, I must say, assumes greater weight
when a ruling to the contrary would, in effect, defeat the laudable and noble purpose of
the law, i.e., the welfare of the landless farmers and farmworkers in the promotion of
social justice, by the expedient conversion of agricultural lands into livestock, poultry,
and swine raising by scheming landowners, thus, rendering the comprehensive nature
of the agrarian program merely illusory.
The instant controversy, I submit, boils down to the question of whether or not the
assailed provisions violate the equal protection clause of the Constitution (Article II,
section 1) which teaches simply that all persons or things similarly situated should be
treated alike, both as to rights conferred and responsibilities imposed.[2]
There is merit in the contention of the petitioner that substantial distinctions exist
between land directed purely to cultivation and harvesting of fruits or crops and land
exclusively used for livestock, poultry and swine raising, that make real differences, to
wit:
xxx xxx xxx
No land is tilled and no crop is harvested in livestock and poultry
farming. There are no tenants nor landlords, only employers and employees.
Liverstock and poultry do not sprout from land nor are they "fruits of the land."
Land is not even a primary resource in this industry. The land input is
inconsequential that all the commercial hog and poultry farms combined occupy
less than one percent (1%) (0.4% for piggery, 0.2% for poultry) of the 5.45
million hectares of land supposedly covered by the CARP. And most farms
utilize only 2 to 5 hectares of land.
In every respect livestock and poultry production is an industrial activity. Its use
of an inconsequential portion of land is a mere incident of its operation, as in
any other undertaking, business or otherwise.
The fallacy of defining livestock and poultry production as an agricultural
enterprise is nowhere more evident when one considers that at least 95% of
total investment in these farms is in the form of fixed assets which are industrial
in nature.
These include (1) animal housing structures and facilities complete with
drainage, waterers, blowers, misters and in some cases even piped-in music; (2)
feedmills complete with grinders, mixers, conveyors, exhausts, generators, etc.;
(3) extensive warehousing facilities for feeds and other supplies; (4) anti-
pollution equipment such as bio-gas and digester plants augmented by lagoons
and concrete ponds; (5) deepwells, elevated water tanks, pumphouses and
accessory facilities; (6) modern equipment such as sprayers, pregnancy testers,
etc.; (7) laboratory facilities complete with expensive tools and equipment; and a
myriad other such technologically advanced appurtenances.
How then can livestock and poultry farmlands be arable when such are almost
totally occupied by these structures?
The fallacy of equating the status of livestock and poultry farmworkers with that
of agricultural tenants surfaces when one considers contribution to
output. Labor cost of livestock and poultry farms is no more than 4% of total
operating cost. The 96% balance represents inputs not obtained from the land
nor provided by the farmworkers -- inputs such as feeds and biochemicals (80%
of the total cost), power cost, cost of money and several others.
Moreover, livestock and poultry farmworkers are covered by minimum wage
law rather than by tenancy law. They are entitled to social security benefits
where tenant-farmers are not. They are paid fixed wages rather than crop
shares. And as in any other industry, they receive additional benefits such as
allowances, bonuses, and other incentives such as free housing privileges, light
and water.
Equating livestock and poultry farming with other agricultural activities is also
fallacious in the sense that like the manufacturing sector, it is a market for,
rather than a source of agricultural output. At least 60% of the entire domestic
supply of corn is absorbed by livestock and poultry farms. So are the by-
products of rice (rice-bran), coconut (copra meal), banana (banana pulp meal),
and fish (fish meal). [3]

xxx xxx xxx

In view of the foregoing, it is clear that both kinds of lands are not similarly situated
and hence, can not be treated alike. Therefore, the assailed provisions which allow for
the inclusion of livestock and poultry industry within the coverage of the agrarian reform
program constitute invalid classification and must accordingly be struck down as
repugnant to the equal protection clause of the Constitution.

[1]
In re Guarina, 24 Phil. 37; Yu Cong Eng v. Trinidad, 70 L. ed., p. 1059.
[2]
Ichong v. Hernandez, 101 Phil. 1155.
[3]
Rollo, 29-30.

Copyright 2016 - Batas.org

 Supreme Court of the Philippines

278 Phil. 312

FIRST DIVISION
G.R. No. 93661, September 04, 1991
SHARP INTERNATIONAL MARKETING, PETITIONER, VS. HON.
COURT OF APPEALS (14TH DIVISION), LAND BANK OF THE
PHILIPPINES AND DEOGRACIAS VISTAN, RESPONDENTS.

DECISION

CRUZ, J.:

This case involves the aborted sale of the Garchitorena estate to the
Government in connection with the Comprehensive Agrarian Reform
Program. This opinion is not intended as a pre-judgment of the informations
that have been filed with the Sandiganbayan for alleged irregularities in the
negotiation of the said transaction. We are concerned here only with the
demand of the petitioner that the private respondents sign the contract of sale
and thus give effect thereto as a perfected agreement. For this purpose, we shall
determine only if the challenged decision of the Court of Appeals denying that
demand should be affirmed or reversed.

The subject-matter of the proposed sale is a vast estate consisting of eight

parcels of land situated in the municipality of Garchitorena in Camarines Norte
and with an area of 1,887.819 hectares. The record shows that on April 27,
1988, United Coconut Planters Bank (UCPB) entered into a Contract to Sell the
property to Sharp International Marketing, the agreement to be converted into a
Deed of Absolute Sale upon payment by the latter of the full purchase price of
P3,183,333.33. On May 14, 1988, even before it had acquired the land, the
petitioner, through its President Alex Lina, offered to sell it to the Government
for P56,000,000.00, (later increased to P65,000,000.00). Although the land was
still registered in the name of UCPB, the offer was processed by various
government agencies during the months of June to November, 1988, resulting
in the recommendation by the Bureau of Land Acquisition and Distribution in
the Department of Agrarian Reform for the acquisition of the property at a
price of P35,532.70 per hectare, or roughly P67,000,000.00. On December 1,
1988, a Deed of Absolute Sale was executed between UCPB and Sharp by virtue
of which the former sold the estate to the latter for the stipulated consideration
of P3,183,333.33. The property was registered in the name of the petitioner on
December 6, 1988. On December 27, 1988, DAR and the Land Bank of the
Philippines created a Compensation Clearing Committee (CCC) to expedite
processing of the papers relating to the acquisition of the land and the
preparation of the necessary deed of transfer for signature by the DAR Secretary
and the LBP President. The following day, the CCC held its first meeting and
decided to recommend the acquisition of the property for P62,725,077.29. The
next day, December 29, 1988, DAR Secretary Philip Ella Juico issued an order
directing the acquisition of the estate for the recommended amount and
requiring LBP to pay the same to Sharp, 30% in cash and the balance in
government financial instruments negotiable within 30 days from issuance by
Sharp of the corresponding muniments of title.

On January 9, 1989, Secretary Juico and petitioner Lina signed the Deed of
Absolute Sale. On that same day, the LBP received a copy of the order issued
by Secretary Juico on December 29, 1988. On January 17, 1989, LBP Executive
Vice President Jesus Diaz signed the CCC evaluation worksheet but with
indicated reservations. For his part, LBP President Deogracias Vistan, taking
into account these reservations and the discovery that Sharp had acquired the
property from UCPB for only P3.1 million, requested Secretary Juico to
reconsider his December 29, 1988 order. Secretary Juico then sought the
opinion of the Secretary of Justice as to whether the LBP could refuse to pay
the seller the compensation fixed by the DAR Secretary. Meantime, on
February 3, 1989, Vistan informed Juico that LBP would not pay the stipulated
purchase price. The reply of the Justice Department on March 12, 1989, was
that the decision of the DAR Secretary fixing the compensation was not final if
seasonably questioned in court by any interested party (including the LBP);
otherwise, it would become final after 15 days from notice and binding on all
parties concerned, including the LBP, which then could not refuse to pay the
compensation fixed. Reacting to Sharp's repeated demands for payment, Juico
informed Lina on April 7, 1989, that DAR and LBP had dispatched a team to
inspect the land for re-assessment. Sharp then filed on April 18, 1989, a petition
for mandamus with this Court to compel the DAR and LBP to comply with the
contract, prompting Juico to issue the following order:
Since the whole property of 1,887 hectares was acquired by Claimant for a
consideration of P3 M, the buying price per hectare then was only about
P1,589.83. It is incomprehensible how the value of land per hectare in this
secluded Caramoan Peninsula can go so high after a short period of time. The
increase is difficult to understand since the land is neither fully cultivated nor
has it been determined to possess special and rich features or potentialities other
than agricultural purposes.

We cannot fail to note that the value of land under CARP, particularly in the
most highly developed sections of Camarines Sur, ranges from P18,000.00 to
P27,000 per hectare.

In view of the above findings of fact, the value of P62,725,077.29 is definitely

too high as a price for the property in question.

However, in order to be fair and just to the landowner, a re-evaluation of the

land in question by an impartial and competent third party shall be
undertaken. For this purpose, a well known private licensed appraiser shall be
commissioned by DAR.

WHEREFORE, premises considered, Order is hereby issued for the reappraisal

and re-evaluation of the subject property. For that purpose, DAR shall avail of
the services of Cuervo and Associates to undertake and complete the appraisal
of the subject property within 60 days from date of this Order.
On April 26, 1989, this Court referred the petition to the Court of Appeals,
which dismissed it on October 31, 1989. In an exhaustive and well-reasoned
decision penned by Justice Josue M. Bellosillo,[1] it held that mandamus did not lie
because the LBP was not a mere rubber stamp of the DAR and its signing of
the Deed of Absolute Sale was not a merely ministerial act. It especially noted
the failure of the DAR to take into account the prescribed guidelines in
ascertaining the just compensation that resulted in the assessment of the land
for the unconscionable amount of P62 million notwithstanding its original
acquisition cost of only P3 million. The decision also held that the opinion of
the Secretary of Justice applied only to compulsory acquisition of lands, not to
voluntary agreements as in the case before it. Moreover, the sale was null and
void ab initio because it violated Section 6 of RA 6657, which was in force at the
time the transaction was entered into.

The petitioners are now back with this Court, this time to question the decision
of the Court of Appeals on the following grounds:
The Court of Appeals seriously erred in including in its Decision findings of
facts which are not borne by competent evidence.

The Court of Appeals erred in holding that the valuation made on the
Garchitorena estate has not yet become final.

The Court of Appeals erred in holding that the opinion of the Secretary of
Justice is not applicable to the case at bar.

The Court of Appeals erred in holding that herein petitioner is not entitled to a
writ of mandamus.

The Court of Appeals erred in holding that the sale of Garchitorena estate from
UCPB in favor of the petitioner is void.

The Court of Appeals erred in holding that the P62 million is not a just
compensation.

We need not go into each of these grounds as the basic question that need only
to be resolved is whether or not the petitioners are entitled to a writ of mandamus
to compel the LBP President Deogracias Vistan to sign the Deed of Absolute
Sale dated January 9, 1989.

It is settled that mandamus is not available to control discretion. The writ may
issue to compel the exercise of discretion but not the discretion itself. Mandamus
can require action only but not specific action where the act sought to be performed
involves the exercise of discretion.[2]
Section 18 of RA 6657 reads 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 Secs. 16 and
17, and other pertinent provisions hereof, or as may be finally determined by the
court, as the just compensation for the land. x x x. (Italics supplied).
We agree with the respondent court that the act required of the LBP President
is not merely ministerial but involves a high degree of discretion. The
compensation to be approved was not trifling but amounted to as much as P62
million of public funds, to be paid in exchange for property acquired by the
seller only one month earlier for only P3 million. The respondent court was
quite correct when it observed:
As may be gleaned very clearly from EO 229, the LBP is an essential part of the
government sector with regard to the payment of compensation to the
landowner. It is, after all, the instrumentality that is charged with the
disbursement of public funds for purposes of agrarian reform. It is therefore
part, an indispensable cog, in the governmental machinery that fixes and
determines the amount compensable to the landowner. Were LBP to be
excluded from that intricate, if not sensitive, function of establishing the
compensable amount, there would be no amount "to be established by the
government" as required in Sec. 6, EO 229. This is precisely why the law
requires the DAS, even if already approved and signed by the DAR Secretary, to
be transmitted still to the LBP for its review, evaluation and approval.

It needs no exceptional intelligence to understand the implications of this

transmittal. It simply means that if LBP agrees on the amount stated in the
DAS, after its review and evaluation, it becomes its duty to sign the deed. But
not until then. For, it is only in that event that the amount to be compensated
shall have been "established" according to law. Inversely, if the LBP, after
review and evaluation, refuses to sign, it is because as a party to the contract it
does not give its consent thereto. This necessarily implies the exercise of
judgment on the part of LBP, which is not supposed to be a mere rubber stamp
in the exercise. Obviously, were it not so, LBP could not have been made a
distinct member of PARC, the super body responsible for the successful
implementation of the CARP. Neither would it have been given the power to
review and evaluate the DAS already signed by the DAR Secretary. If the
function of the LBP in this regard is merely to sign the DAS without the
concomitant power of review and evaluation, its duty to "review/evaluate"
mandated in Adm. Order No. 5 would have been a mere surplusage,
meaningless, and a useless ceremony.

Thus, in the exercise of such power of review and evaluation, it results that the
amount of P62,725,077.29 being claimed by petitioner is not the "amount to be
established by the government." Consequently, it cannot be the amount that
LBP is by law bound to compensate petitioner.

Under the facts, SHARP is not entitled to a writ of mandamus. For, it is essential
for the writ to issue that the plaintiff has a legal right to the thing demanded and
that it is the imperative duty of the defendant to perform the act required. The
legal right of the plaintiff to the thing demanded must be well-defined, clear and
certain. The corresponding duty of the defendant to perform the required act
must also be clear and specific (Enriquez v. Bidin, L-29620, October 12, 1972, 47
SCRA 183; Orencia v. Enrile, L-28997, February 22, 1974, 55 SCRA 580; Dionisio
v. Paterno, 103 SCRA 342; Lemi v. Valencia, 26 SCRA 203; Aquino v. Mariano, 129
SCRA 532).
Likewise, respondents cannot be compelled by a writ of mandamus to discharge a
duty that involves the exercise of judgment and discretion, especially where
disbursement of public funds is concerned. It is established doctrine that
mandamus will not issue to control the performance of discretionary, non-
ministerial, duties, that is, to compel a body discharging duties involving the
exercise of discretion to act in a particular way or to approve or disapprove a
specific application (B.F. Homes, Inc. v. National Water Resources Council, L-78529,
Sept. 17, 1987; 154 SCRA 88). Mandamus will not issue to control or review the
exercise of discretion by a public officer where the law imposes upon him the
right or duty to exercise judgment in reference to any matter in which he is
required to act (Mata v. San Diego, L-30447, March 21, 1975; 63 SCRA 170).

Even more explicit is R.A. 6657 with respect to the indispensable role of LBP in
the determination of the amount to be compensated to the landowner. Under
Sec. 18 thereof, "the LBP shall compensate the landowner in such amount as
may be agreed upon by the landowner and the DAR and LBP, in accordance with
the criteria provided in Secs. 16 and 17, and other pertinent provisions hereof,
or as may be finally determined by the court, as the just compensation for the land."

Without the signature of the LBP President, there was simply no contract
between Sharp and the Government. The Deed of Absolute Sale dated January
9, 1989, was incomplete and therefore had no binding effect at
all. Consequently, Sharp cannot claim any legal right thereunder that it can
validly assert in a petition for mandamus.

In National Marketing Corporation v. Cloribel,[3] this Court held:

... the action for mandamus had no leg to stand on because the writ was sought to
enforce alleged contractual obligations under a disputed contract — disputed
not only on the ground that it had failed of perfection but on the further ground
that it was illegal and against public interest and public policy ...
The petitioner argues that the LBP President was under obligation to sign the
agreement because he had been required to do so by Secretary Juico, who was
acting by authority of the President in the exercise of the latter's constitutional
power of control. This argument may be dismissed with only a brief
comment. If the law merely intended LBP's automatic acquiescence to the
DAR Secretary's decision, it would not have required the separate approval of the
sale by that body and the DAR. It must also be noted that the President herself,
apparently disturbed by public suspicion of anomalies in the transaction,
directed an inquiry into the matter by a committee headed by former Justice
Jose Y. Feria of this Court. Whatever presumed authority was given by her to
the DAR Secretary in connection with the sale was thereby impliedly withdrawn.

It is no argument either that the Government is bound by the official decisions

of Secretary Juico and cannot now renege on commitment. The Government is
never estopped from questioning the acts of its officials, more so if they are
erroneous, let alone irregular.[4]

Given the circumstances attending the transaction which plainly show that it is
not merely questionable but downright dishonest, the Court can only wonder at
the temerity of the petitioner in insisting on its alleged right to be paid the
questioned purchase price. The fact that criminal charges have been filed by the
Ombudsman against the principal protagonists of the sale has, inexplicably, not
deterred or discomfited it. It does not appear that the petitioner is affected by
the revelation that it offered the property to the Government even if it was not
yet the owner at the time; acquired it for P3 million after it had been assured
that the sale would materialize; and sold it a month later for the bloated sum of
P62 million, to earn a gross profit of P59 million in confabulation with some
suspect officials in the DAR. How the property appreciated that much during
that brief period has not been explained. What is clear is the public
condemnation of the transaction as articulated in the mass media and affirmed
in the results of the investigations conducted by the Feria Fact-Finding
Committee, the Senate House Joint Committee on Agrarian Matters, and the
Office of the Ombudsman.
It would seem to the Court that the decent thing for the petitioner to do, if only
in deference to a revolted public opinion, was to voluntarily withdraw from the
agreement. Instead, it is unabashedly demanding the exorbitant profit it would
derive from an illegal and unenforceable transaction that ranks as one of the
most cynical attempts to plunder the public treasury.

The above rulings render unnecessary discussion of the other points raised by
the petitioner. The Court has given this petition more attention than it
deserves. We shall waste no more time in listening to the petitioner's
impertinent demands. LBP President Deogracias Vistan cannot be faulted for
refusing to be a party to the shameful scheme to defraud the Government and
undermine the Comprehensive Agrarian Reform Program for the petitioner's
private profit. We see no reason at all to disturb his discretion. It merits in fact
the nation's commendation.

WHEREFORE, the petition is DENIED, with costs against the petitioner. It

is so ordered.

Narvasa, (Chairman), Griño-Aquino, and Medialdea, JJ., concur.

[1] With Marigomen and Sempio-Diy, JJ., concurring.

Association of Small Landowners in the Phil. v. Sec. of Agrarian Reform, 175 SCRA
[2]

343 citing Lambs v. Phipps, 22 Phil. 456.

[3] 131 Phil. Reports 924.

Republic v. Aquino, 120 SCRA 186; Republic v. Phil. Rabbit Bus Lines, Inc., 32
[4]

SCRA 211; Luciano v. Estrella, 34 SCRA 269.

Copyright 2016 - Batas.org

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

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 5and 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.

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 Tañada 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.

xxx

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.

xxx

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.

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.

Fernan, (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco, Padilla, Bidin,
Sarmiento, Cortes, Griño-Aquino, Medialdea and Regalado, JJ., concur.
Footnotes

1 Art. 11, Sec. 5.

2 1973 Constitution, Art. II, Sec. 6.

3 Ibid., Art. XIV, Sec. 12.

4 R.A. No. 6657, Sec. 15.

5 149 SCRA 305.

6 150 SCRA 89.

7 55 SCRA 26.

8 91 SCRA 294.

9 113 SCRA 798.

10 136 SCRA 271; 146 SCRA 446.

11 Art. VIII, Sec. 4(2).

12 Dumlao v. COMELEC, 95 SCRA 392.

13 Ex Parte Levitt, 303 US 633.

14 Araneta v. Dinglasan, 84 Phil. 368.

15 Pascual v. Secretary of Public Works, 110 Phil. 331; PHILCONSA v. Gimenez, 15

SCRA 479; Sanidad v. COMELEC, 73 SCRA 333.

16 Angara v. Electoral Commission, 63 Phil. 139.

17 R.A. No. 6657, Sec. 75.

18 Ibid., Sec. 63.

19 Bengzon v. Secretary of Justice, 299 US 410.

20 Alalayan v. NPC, 24 SCRA 172; Sumulong v. COMELEC, 73 Phil. 288. Tio v.

Videogram Regulatory Board, 151 SCRA 208.

21 Supra.

22 Lamb v. Phipps, 22 Phil. 456.

23 Malabanan v. Ramento, 129 SCRA 359; Espanol v. Chairman, Philippine
Veterans Administration, 137 SCRA 314.

24 106 Phil. 144.

25 260 US 393.

26 Powell v. Pennsylvania, 127 US 678: Lutz v. Araneta, 98 Phil. 148; Tio v.

Videogram Regulatory Board, supra.

27 John J. Costonis "The Disparity Issue: A Context for the Grand Central Terminal
Decision," Harvard Law Review, Vol. 91:40,1977, p. 404.

28 348 US 1954.

29 438 US 104.

30 See note 27.

31 International Harvester Co. v. Missouri, 234 US 199.

32 People v. Cayat, 68 Phil. 12.

33 Ichong v. Hernandez, 101 Phil. 1155.

34 US v. Toribio, 15 Phil. 85; Fable v. City of Manila, 21 Phil. 486; Case v. Board of
Health, 24 Phil. 256.

35 Noble v. City of Manila, 67 Phil. 1.

36 100 Phil. 1101.

37 1987 Constitution, Art. VIII, Sec. 1.

38 57 L ed. 1063.

39 Manila Railroad Co. v. Velasquez, 32 Phil. 286.

40 Province of Tayabas v. Perez, 66 Phil. 467; J.M. Tuazon & Co., Inc. v. Land
Tenure Administration, 31 SCRA 413; Municipality of Daet v. Court of Appeals, 93
SCRA 503; Manotok v. National Housing Authority, 150 SCRA 89.

41 City of Manila v. Estrada, 25 Phil. 208.

42 58 SCRA 336.

43 Lewis, Law of Eminent Domain, 3rd Edition, pp. 1166- 1167.

44 149 SCRA 305.

45 Manila Railroad Co. v. Velasquez, 32 Phil. 286; Province of Tayabas v. Perez,
supra, at note 40.

46 31 SCRA 413.

47 Mandl v. City of Phoenix, 18 p 2d 273.

48 Sacramento Southern R. Co. v. Heilbron 156 Cal. 408,104 pp. 979, 980.

49 City of Waterbury v. Platt Bros. & Co., 56 A 856, 76 Conn, 435 citing Butler v.
Ravine Road Sewer Com'rs, 39 N.J.L. 665; Bloodgood v. Mohawk v. H.R.R. Co.,
N.Y. 18 Wend. 9 35, 31 Am. Dec. 313; Sanborn v. Helden, 51 Cal 266; Burlington &
C.R. Co. v. Schweikart, 14 p. 329, 10 Colo, 178; 23 Words and Phrases, pl. 460.

50 Record of the Constitutional Commission, Vol. 2, pp. 647, 704; Vol. 3, pp. 16-20,
243-247.

51 Chicago Park Dist. v. Downey Coal Co., 1 Ill. 2d 54.

52 Kennedy v. Indianapolis, 103 US 599, 26 L ed 550.

53 Ibid.

54 4 Blkf., 508.

55 11 NY 314.

56 40 Phil. 550.

57 Sec. 16(d).
 Supreme Court of the Philippines

278 Phil. 544

EN BANC
G.R. No. 60269, September 13, 1991
ENGRACIA VINZONS-MAGANA, PETITIONER, VS. HONORABLE
CONRADO ESTRELLA IN HIS CAPACITY AS MINISTER OF AGRARIAN
REFORM, SALVADOR PEJO, AS REGIONAL DIRECTOR, MINISTRY OF
AGRARIAN REFORM, AND JUANA S. VDA. DE PAITAN, RESPONDENTS.

DECISION

PARAS, J.:

Petitioner challenges in this petition for prohibition with prayer for restraining
order the validity and constitutionality of Letter of Instructions No. 474 and
Memorandum Circular No. 11, Series of 1978 enforced by the then Minister and
the Regional Director of the Ministry of Agrarian Reform and likewise seeks the
cancellation of Certificate of Land Transfer No. 0-046145 issued to Domingo
Paitan by the deposed President Ferdinand Marcos pursuant to Presidential
Decree No. 27.

The records show that petitioner Magana is the owner of a parcel of riceland
situated in the barrio of Talisay, Camarines Norte. The said riceland was
tenanted by the late Domingo Paitan, husband of private respondent herein,
Juana Vda. de Paitan, under an agricultural leasehold agreement. On October
20, 1977, Magana filed a petition for the termination of the leasehold agreement
allegedly due to (1) non-payment of rentals; (2) inability and failure of Domingo
Paitan to do the tilling and cultivation of the riceland due to his long illness; and
(3) subleasing of the landholding to third parties (Rollo, p. 2). On June 2, 1978,
the former Presiding Judge of the Court of Agrarian Relations, Judge Juan
Llaguno, referred the case to the Secretary of the Department of Agrarian
Reform for certification as to whether or not it was proper for trial in
accordance with Presidential Decree No. 316 (Ibid., pp. 10-11), but said office
failed to act upon the request for certification, for a period of more than three
(3) years. Instead on July 10, 1980, the riceland was placed under the Land
Transfer Program by virtue of Memorandum Circular No. 11, Series of 1978,
which implemented Letter of Instructions No. 474, which placed all tenanted
ricelands with areas of seven hectares or less belonging to landowners who own
agricultural lands of more than seven hectares in aggregate areas under the Land
Transfer Program of the government. The prescribed procedures therein were
subsequently undertaken and thereafter, on July 10, 1980, a certificate of Land
Transfer was finally awarded in favor of Domingo Paitan. As a consequence
thereof, the rentals were no longer paid to Magana but were deposited instead
with the Land Bank and credited as amortization payments for the
riceland. Apparently aggrieved by this turn of events, Magana took the present
recourse.

As earlier mentioned, the Court is now asked to resolve the constitutionality of

Memorandum Circular No. 11, Series of 1978, and Letter of Instructions No.
474.

The petition is devoid of merit.

The constitutionality of P.D. No. 27 from which Letter of Instructions No. 474
and Memorandum Circular No. 11, Series of 1978 are derived, is now well
settled (Chavez v. Zobel, 55 SCRA 26 [1974]; Gonzales v. Estrella, 91 SCRA 292
[1979]; Zurbano v. Estrella, 137 SCRA 334, 335 [1985]; Ass. of Small Landowners in
the Philippines, Inc. v. Secretary of Agrarian Reform, 175 SCRA 366 [1989]).

More specifically, this Court also upheld the validity and constitutionality of
Letter of Instructions No. 474 which directed then Secretary of Agrarian
Reform Conrado Estrella to "undertake to place under the Land Transfer
Program of the government pursuant to Presidential Decree No. 27, all tenanted
rice/corn lands with areas of seven hectares or less belonging to landowners
who own other agricultural lands of more than seven hectares in aggregate areas
or lands used for residential, commercial, industrial or other urban purposes
from which they derive adequate income to support themselves and their
families". It was held that LOI 474 is neither a class legislation nor does it
deprive a person of property without due process of law or just compensation
(Zurbano v. Estrella, 137 SCRA 333 [1985]). Moreover, LOI 474 was duly
published in the Official Gazette dated November 29, 1976 and has therefore
complied with the publication requirement as held by this Court in Tañada v.
Tuvera (146 SCRA 446 [1986]; Assn. of Small Landowners in the Philippines, Inc. v.
Secretary of Agrarian Reform, (175 SCRA 369 [1989]).

As to the constitutionality of DAR Memo Circular No. 11, it is evident that

DAR Memo Circular No. 11 merely implements LOI 474 whose
constitutionality has already been established, clarifying for DAR personnel the
guidelines set for under said LOI 474 (Rollo, p. 111). Moreover, it is an
elementary rule in administrative law that administrative regulations and policies
enacted by administrative bodies to interpret the law which they are entrusted to
enforce, have the force of law and are entitled to great respect (Rizal Empire Ins.
Group and/or Corpus, Sergio v. NLRC, et al., G.R. No. 73140, May 29, 1987).

The main thrust of this petition is that the issuance of Certificate of Land
Transfer to Domingo Paitan without first expropriating said property to pay
petitioner landowner the full market value thereof before ceding and
transferring the land to Paitan and/or heirs, is invalid and unconstitutional as it
is confiscatory and violates the due process clause of the Constitution (Rollo, p.
4).

The issue of the constitutionality of the taking of private property under the
CARP Law has already been settled by this Court holding that where the
measures under challenge merely prescribe the retention limits for landowners,
there is an exercise of police power by the government, 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, then there is definitely a
taking under the power of eminent domain for which payment of just
compensation is imperative. To be sure, the determination of just
compensation is a function addressed to the courts of justice and may not be
usurped by any branch or official of the government (Association of Small
Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, 175 SCRA 373
[1989]).

It must be stressed, however, that the mere issuance of the certificate of land
transfer does not vest in the farmer/grantee ownership of the land described
therein. At most, the certificate merely evidences the government's recognition
of the grantee as the party qualified to avail of the statutory mechanisms for the
acquisition of ownership of the land titled by him as provided under Presidential
Decree No. 27. Neither is this recognition permanent nor irrevocable. Thus,
failure on the part of the farmer/grantee to comply with his obligation to pay
his lease rentals or amortization payments when they fall due for a period of two
(2) years to the landowner or agricultural lessor is a ground for forfeiture of his
certificate of land transfer (Section 2, P.D. No. 816; Pagtalunan v. Tamayo, G.R.
No. 54281, March 19, 1990).

This Court has therefore clarified, that it is only compliance with the prescribed
conditions which entitles the farmer grantee to an emancipation patent by which
he acquires the vested right of absolute ownership in the landholding — a right
which has become fixed and established and is no longer open to doubt and
controversy. At best the farmer/grantee prior to compliance with these
conditions, merely possesses a contingent or expectant right of ownership over
the landholding (Ibid.).

Under the foregoing principles, a reading of Section 16 (d) of the CARP law will
readily show that it does not suffer from arbitrariness which makes it
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, such determination of just compensation by the DAR, as earlier
stated is by no 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." For obvious reasons, 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 (Association of Small Landowners in the Philippines, Inc. v. Secretary of
Agrarian Reform, supra, pp. 380-382).

Indeed, the delay in the preparation of the proper certification by the MAR field
office to the Court of Agrarian Relations as to whether or not the case was
proper for trial, is unfortunate and the officer concerned is under investigation
(Rollo, pp. 41-42). It will, however, be observed that from the outset under
P.D. No. 27, the tenant-farmer as of October 21, 1972 has already been deemed
in a certain sense, to be the owner of a portion of land, subject of course, to
certain conditions (Association of Small Landowners in the Philippines, Inc. v. Secretary
of Agrarian Reform, supra, p. 390). In fact, it appears that petitioner Magana was
not unaware that the land in question previous to the filing of the CAR case on
October 20, 1977, had already been identified as subject of land transfer. It also
appears that on September 20, 1976 Paitan had already been identified to be
cultivating the land to rice as tenant of petitioner and that his landholding was
the subject of land tenure survey and was found to be proper for OLT coverage
under Presidential Decree No. 27 (Rollo, pp. 41-42).

In any event, as already discussed, the proceedings herein are merely preliminary
and petitioner Magana is not without protection. Should she fail to agree on the
price of her land as fixed by the DAR, she can bring the matter to the court of
proper jurisdiction. Likewise, failure on the part of the farmer/grantee to pay
his lease rentals or amortization payments for a period of two (2) years is a
ground for forfeiture of his certificate of land transfer.

PREMISES CONSIDERED, the petition is DISMISSED without prejudice

to petitioner's filing of the proper action for the determination of just
compensation in the proper forum.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Padilla, Bidin, Griño-
Aquino, Medialdea, Regalado, and Davide, Jr., JJ., concur.
Feliciano and Sarmiento, JJ., on leave.

Copyright 2016 - Batas.org

 Supreme Court of the Philippines

G.R. No. 103302

EN BANC
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.

DECISION

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 prior to 15 June 1988, covered by R.A. 6657, otherwise known as the
[1] [2]

Comprehensive Agrarian Reform Law of 1988? This is the pivotal issue in this
petition for certiorari, assailing the Notice of Coverage of the Department of
[3]

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; for Phase II, with an area of 80,0000
[4]

hectares, on 13 October 1983; and for Phase III, which consisted of the
[5]

remaining 31,7707 hectares, on 25 April 1986. Petitioners were likewise issued

[6]

development permits after complying with the requirements. Thus the

[7]

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 brevity), filed a complaint against NATALIA and
EDIC before the DAR Regional Adjudicator to restrain petitioners from
developing areas under cultivation by SAMBA members. The Regional
[8]

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 undeveloped 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 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 to 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. And, in all
[10]

permits granted to petitioners, the Commission stated invariably therein that the
applications were in "conformance" or "conformity" or "conforming" with
[11] [12] [13]
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. Of course, this is contrary to its earlier position that there was
[15]

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." The deliberations of the
[16]

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 continue 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, DAR itself defined "agricultural
[18]

land" thus -

“x x x x Agricultural land 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 that lands covered by Presidential
[19]

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 dated 22 November
1990 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.

Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Griño-Aquino, Regalado, Davide, Jr.,
Romero, Nocon, Melo, Quiason, Puno, and Vitug, JJ., concur.

National Housing Authority and Human Settlements Regulatory Commission;

[1]

see C. T. Torres v. Hibionada, G.R. No. 80916, 9 November 1990, 191 SCRA
268.

Date of effectivity of R.A. 6657, otherwise known as the Comprehensive

[2]

Agrarian Reform Law of 1988.

[3] Annex "H", Petition; Rollo, p. 33.
[4] Annex "A", Petition; Rollo, p. 26.
[5] Annex "C", Petition; Rollo, p. 28.
[6] Annex "E", Petition; Rollo, p. 30.
[7] Annexes "B", "D" and "F", Petition; Rollo, pp. 27, 29 and 31.
[8] Complaint, p. 3; Rollo, p. 68.
[9] DARAB Resolution, 16 December 1991, p. 8; Rollo, p. 82.

Renamed Housing and Land Use Regulatory Board (HLURB) per E.O. No.
[10]

90, dated 17 December 1986.

[11] Annexes "A" and "C", Petition; Rollo, pp. 26 and 28.
[12] Annex "B", Petition; Rollo, p. 27.
[13] Annexes "D" and "E", Petition; Rollo, pp. 29-30.
 National Power Corporation v. Presiding Judge, RTC, Br. XXV, G.R. No.
[14]

72477, 16 October 1990, 190 SCRA 477.

[15] Comment, p. 8; Rollo, p. 63.
[16] Sec. 3 (c), R.A. 6657.

Luz Farms v. Secretary of the Department of Agrarian Reform, G.R. No.

[17]

86889, 4 December 1990, 192 SCRA 51, citing Record, CONCOM, 7 August
1986, Vol. III, p. 30.
[18] DAR Administrative Order No. 1, Series of 1990.
[19] Opinion No. 181, Series of 1990.

Rocamora v. RTC-Cebu, Br. VIII, G.R No. 65037, 23 November 1988, 167
[20]

SCRA 615.
Copyright 2016 - Batas.org
 SECOND DIVISION

[G.R. NO. 142359. May 25, 2004]

PASONG BAYABAS FARMERS ASSOCIATION, INC., represented by

DOMINGO BANAAG, JR., President; BERNARDO POBLETE,
Vice-President, and its Members, petitioners, vs. The Honorable
COURT OF APPEALS, CREDITO ASIATIC, INC., ERNESTO
TANCHI, SR., GEN. DIONISIO OJEDA (deceased), ELENA P.
BIGAY, and LANRICO MINISTERIO, respondents.

[G.R. No. 142980. May 25, 2004]

DEPARTMENT OF AGRARIAN REFORM (DEPARTMENT OF

AGRARIAN REFORM ADJUDICATION BOARD),petitioners,
vs. The Honorable COURT OF APPEALS, CREDITO ASIATIC,
INC., ERNESTO TANCHI, SR., GEN. DIONISIO OJEDA
(deceased), ELENA P. BIGAY, and LANRICO
MINISTERIO, respondents.

DECISION
CALLEJO, SR., J.:

Before the Court are petitions for review on certiorari of the Decision[1] of the Court
of Appeals, in C.A.-G.R. SP No. 49363, which set aside and reversed the decision of
the Department of Agrarian Reform Adjudication Board (DARAB), in DARAB Case No.
5191, and reinstated the decision of the Provincial Agrarian Reform Adjudication Board
(PARAD) of Trece Martirez City, in DARAB Case No. CA-0285-95 which, in turn,
ordered the dismissal of the complaint for Maintenance for Peaceful Possession and
Cultivation with Damages with Prayer for the Issuance of a Temporary Restraining
Order/Preliminary Injunction of petitioner Pasong Bayabas Farmers Association, Inc.
(PBFAI).

The Antecedents
 Sometime in 1964, Lakeview Development Corporation (LDC, for brevity) bought a
parcel of land with an area of 753,610 square meters (75.3610 hectares) located at
Barrio Kabilang-Baybay, Carmona, Cavite,[2] covered by Transfer Certificate of
Titles (TCT) No. T- 91584 and T-91585. On September 20, 1977, the aforesaid titles
were cancelled by TCT No. T-62972 issued to and in the name of the LDCs successor,
the Credito Asiatic, Incorporated (CAI).[3] The property was subsequently subdivided
into two parcels of land, one of which was covered by TCT No. 116658, with an area of
365,753 square meters, and the other covered by TCT No. 116659 with an area of
387,853 square meters.[4]
Meanwhile, the LDC/CAI undertook to develop its 75-hectare property into a
residential and industrial estate, where industrial sites and a low cost housing project
inceptually called the Tamanli Housing Project would be established. The LDC applied
with the Municipal Council of Carmona for an ordinance approving the zoning and the
subdivision of the property. The subdivision plan was referred by the council to the
National Planning Commission as mandated by Administrative Order No. 152, Series of
1968. The Commission approved the plan and on May 30, 1976, the Tanggapan Ng
Sangguniang Bayan ng Karmona (Municipal Council of Carmona)
approved Kapasiyahang Bilang 30, granting the application and affirming the
project. The resolution reads:

Kapasiyahang Bilang 30

Sapagkat, ang TAMANLI HOUSING PROJECT at LAKEVIEW DEVELOPMENT

CORP. ay nagharap ng kanilang kahilingan dito sa ating Kapulungan, sa pamamagitan
ni G. BENJAMIN F. GOMEZ, Chief, Physical Environmental Planning Service ng
DLGCD, upang makapagpatayo sila ng murang pabahay sa may Lote Blg. E-Psd-
11882, na nasa Bo. Cabilang Baybay ng bayang ito at Lote Blg. 4 (LRC) PCS 15453
saklaw ng bayang ito, ayon sa pagkakasunod-sunod;

SAPAGKAT, ang bagay na ito ay makatutulong ng malaki sa ating mga kababayan,

dahil sa ito ay nagbibigay ng murang pabahay;

SAPAGKAT, DAHIL DITO, sa mungkahi ni G. DOMINADOR ESPIRITU na

pinangalawahan ni G. MELQUIADES MAHABO, ay pinagtibay, tulad nang itoy
pinagtitibay, na pagtibayin ang kahilingan ng Tamanli Housing Project at Lakeview
Development Corp. na makapaglagay ng murang pabahay dito sa ating bayan, sa
isang pasubaling ang mga ito ay kailangang pumailalim sa hinihingi ng
Administrative Order No. 152, S-1968 ng Pangulo ng Bansang Pilipinas at sa umiiral
ng mga kautusan at patakaran ng ating Pamahalaang Pambansa at Pamahalaang
Pambayan.[5]

Subsequently, after a consolidated survey was approved by the Bureau of Lands,

the lots were subdivided and the aforesaid titles were cancelled. TCT Nos. 144149,
144150 and T-144151 were issued in lieu of the said titles.[6]
 The CAI embarked on the development of the housing project into three
phases: First Phase, the Hakone Subdivision; Second Phase, the Sunshine Village &
Casa de Monteverde; and, Third Phase, the Mandarin Homes. [7] The project was
registered with the National Housing Authority (NHA) as required by Presidential Decree
No. 957 which issued, on July 7, 1977, a license in favor of the LDC to sell the
subdivision lots.
The property was subdivided into 728 residential lots per the consolidation
subdivision plan approved by the Bureau of Lands, each with an average area of 240
square meters. Separate titles for each of the 728 lots were issued by the Register of
Deeds of Cavite to and in the name of the CAI on September 20, 1977.
Meanwhile, the CAI secured a locational clearance for the project from the Human
Settlements Regulatory Commission (HSRC).[8] Although the Municipal Council of
Carmona had already approved the conversion of the property into a residential area,
nevertheless, the CAI filed an application under Republic Act No. 3844 with the Office of
the Minister of Agrarian Reform for the conversion of a portion of the 75-hectare
property consisting of 35.80 hectares covered by TCT No. 62972 located in Barrio
Kabilang-Baybay, Carmona, Cavite, from agricultural to residential. The property was to
be used for the Hakone Housing Project. The Minister referred the matter to the
Regional Director for investigation and recommendation and to the Ministry of Local
Government and Community Development. On July 3, 1979, then Minister of Agrarian
Reform Conrado F. Estrella issued an Order granting the petition and approved the
conversion of the 35.80 hectare portion of TCT-62972 into a residential subdivision,
pursuant to Rep. Act No. 3844, as amended. In so doing, it took into account the
resolution of the Municipal Council of Carmona, the recommendation of the Regional
Director of the Ministry of Agrarian Reform, the clearance from the HSRC as well as the
Ministry of Local Government and Community Development. The order in part reads:

Considering the parcel of land to be not covered by P.D. 27, it being untenanted and
not devoted to the production of palay and/or corn as reported by the Agrarian Reform
Team Leader concerned and favorably recommended for conversion by him and
further, by the Regional Director for Region IV, Pasig, Metro Manila, and considering
further, that the parcel of land subject hereof was found to be suitable for conversion
to residential subdivision by the Ministry of Local Government and Community
Development and considering finally, that the herein petitioner was issued a locational
clearance by the Human Settlements Regulatory Commission, the instant request of
the petitioner is hereby GRANTED pursuant to the provisions of R.A. 3844, as
amended, and P.D. 815.[9]

The grant was, however, subjected to the fulfillment of the following conditions:

1. Physical development shall commence within one (1) year from receipt
hereof;
 2. A setback of three (3) meters measured from the property lines to the edge
of the normal high waterline of the Pasong Bayabas and Patayod Rivers
shall be observed pursuant to the Water Code (P.D. 705);

3. Applicant-proponent shall undertake flood protective measures such as the

construction of rip-rap walls or terracing and cribbing along the river
banks to avoid erosion and flood;

4. Clearance from the Laguna Lake Development Authority shall be secured

since the proposed project is within the Laguna Lake Basin; and

5. A permit to operate from the National Pollution Control Commission shall

be secured and Anti-Pollution laws (R.A. 3981, P.D. 984 and others)
shall be strictly observed.

Failure, however, to comply with the aforestated terms and conditions, this Ministry
shall consider such violations as sufficient ground for the cancellation of the permit-
order and this Ministry by reason thereof may take any or all course of action
mentioned in the Memorandum-Agreement between this Ministry, the Ministry of
Local Government and Community Development and the Human Settlements
Regulatory Commission in addition to the penalties provided for in Presidential
Decree 815, if so applicable.[10]

On March 14, 1980, the Sangguniang Panlalawigan ng Cavite (Provincial Board of

Cavite) passed Resolution No. 40 declaring the midland areas composed of Carmona,
Dasmarias, parts of Silang and Trece Martirez (where the subject property is situated)
and parts of Imus, as industrial areas.[11] Under Batas Pambansa Blg. 76, approved on
June 13, 1980, the resettlement areas under the administration of the NHA in the
barangays of San Gabriel, San Jose and a portion of Cabilang Baybay, all in the
Municipality of Carmona, were separated from the said municipality and constituted into
a new and independent municipality known as General Mariano Alvarez (GMA),
Cavite.[12] In 1983, Asiatic Development Corporation (ADC), a sister company of CAI,
started developing the property located in GMA covered by TCT No. 144150 into a
residential housing project, called the Sunshine Village Phase IV (originally Hakone)
with an area of 20.05 hectares. The ADC also secured in 1983[13] a preliminary approval
and locational clearance from the HSRC for Sunshine Village Phase IV. [14]
The CAI also secured the following for its Hakone Housing Project:

1. HLURB License to Sell No. 0613 on November 7, 1983

2. HSRC Development Permit on April 11, 1984

 3. HLURB Preliminary Approval and Locational Clearance on November 11,
1985

4. HSRC Preliminary Approval and Locational Clearance on November 17,

1983

5. HSRC Certificate of Registration No. 1069 on February 1, 1985

6. HSRC License to Sell No. 1053 on March 18, 1985.[15]

In 1987, the CAI decided to continue with the development of its Hakone Housing
Project and contracted with E.M. Aragon Enterprises for the bulldozing of the
property. However, the project was stymied by a Complaint for Damages with Prayer for
Temporary Restraining Order and Preliminary Injunction filed on May 22, 1987 against
the CAI in the Regional Trial Court of Cavite.[16] The case was docketed as Civil Case
No. BCV-87-13 and was raffled to Branch 19.[17]
The plaintiffs alleged, inter alia, that while the defendant CAI was the owner of the
75.36-hectare land covered by TCT-62972, they were the actual tillers of the land. The
defendant had surreptitiously applied for the conversion of the 35.8-hectare portion of
the aforesaid property from agricultural to residential and the same was granted by the
Ministry of Agrarian Reform, as can be gleaned from the July 3, 1979 Order of Agrarian
Reform Minister Estrella. According to the plaintiffs, they came to know of the
conversion only in January 1987. Notwithstanding the issuance of the order of
conversion, Ramie Cabusbusan, the representative of the CAI, allowed them to
continue cultivating the aforementioned property. They were, however, required to pay a
rental of P400 a year per hectare.They paid the rental and continued to occupy and till
the aforesaid property pursuant to the agreement. On October 28, 1986 and November
11, 1986, the plaintiffs, together with other tillers of the land, met Cabusbusan at the
Municipal Branch of the then Ministry of Agrarian Reform and reached an agreement
that the plaintiffs would remain in the peaceful possession of their
farmholdings.Notwithstanding such agreement, the defendant ordered the bulldozing of
the property, by reason of which the plaintiffs suffered actual damages. Furthermore,
the plaintiffs alleged that the bulldozing was done without any permit from the
concerned public authorities.
The plaintiffs, thus, prayed that a temporary restraining order be issued against the
CAI from continuing with the bulldozing of the property, and that after due hearing,
judgment be rendered in their favor, ordering the defendants to refrain from
implementing the July 3, 1979 Order of Agrarian Reform Minister Estrella. [18]
In its answer to the complaint, the CAI admitted its ownership of the 753,610 square
meter property covered and described under TCT No. 62972 and the issuance of the
Order of Conversion of the 35.8 hectare portion thereof. However, it denied that it
allowed the plaintiffs to possess and cultivate the landholding with fixed rentals
therefor.[19] The CAI prayed that the prayer for preliminary injunction be denied and that
judgment be issued dismissing the complaint and absolving it from any liability. It
counterclaimed for the amount paid by it to E.M. Aragon Enterprises for expenses for
the rent of the bulldozer and moral damages.[20]
Meanwhile, the CAI and six of the fourteen plaintiffs, namely, Medy Vinzon, Luz
Alvarez, Godofredo Inciong, Bernardo Poblete, Estelita Gaut and Victoria Valerio,
entered into a compromise agreement whereby the defendant donated parcels of land
in consideration of the execution of deeds of quitclaims and waivers. Conformably to the
said agreement, the plaintiffs executed separate deeds of quitclaim in favor of the CAI
over the portion of the property which they claimed they occupied. The six plaintiffs filed
a Motion to Dismiss the complaint on June 19, 1989.[21] On June 20, 1989, the RTC of
Cavite issued an Order dismissing the complaint but only insofar as the plaintiffs
Vinzon, Alvarez, Inciong, Poblete, Gaut and Valerio were concerned. [22] With respect to
the other eight (8) plaintiffs, the court proceeded with the scheduled hearing.
The civil case notwithstanding, the CAI decided to proceed with the third phase of
its project. It developed its eleven-hectare property into a residential property called the
Mandarin Homes. The CAI applied for and was granted a separate Order of Conversion
on January 2, 1990 by the Department of Agrarian Reform (DAR). [23] In 1991, the CAI
started selling the houses in its Mandarin Homes Project.[24]
In the meantime, the remaining plaintiffs in Civil Case No. BCV-87-13 entered into a
compromise agreement in which the CAI executed Deeds of Donation[25] in their favor
over parcels of land. The said plaintiffs, in turn, executed quitclaims[26] and waivers over
the portions of the property which they claimed they occupied. Thereafter, the plaintiffs
and the CAI filed a motion to dismiss the complaint. The trial court issued an Order
granting the motion and dismissing the complaint on June 20, 1991.[27] Consequently,
all the plaintiffs were issued separate titles over the parcels of land donated to them by
the CAI which were declared, for taxation purposes, in the names of the latter.[28]
With the settlement of the civil case, the CAI continued with its development of the
rest of the Hakone Housing Project by causing a survey of the property. However, the
CAI was stymied anew when, on November 25, 1992, a Petition for Compulsory
Coverage under Rep. Act No. 6657, otherwise known as the Comprehensive Agrarian
Reform Law (CARL) was filed before the DAR by seventeen (17) individuals. [29] They
alleged that they were farmers of Bo. 14, Pasong Bayabas River, Barangay F. De
Castro, GMA, Cavite.[30] The petitioners claimed that since 1961, they had been
occupying a parcel of public agricultural land originally owned by General Dionisio
Ojeda with an area of twenty-seven hectares, more or less, adjacent to Pasong
Bayabas River. They tilled the said agricultural lands and planted it with rice, corn,
vegetables, root crops, fruit trees and raised small livestock for daily survival. [31]
The petitioners requested that the DAR order an official survey of the aforesaid
agricultural lands. Pending resolution of their petition, the petitioners and twenty (20)
others banded together and formed a group called Pasong Bayabas Farmers
Association, Inc. (PBFAI) affiliated with Kalipunan ng Samahan ng Mamamayan, Inc.
(KASAMA).[32]
On June 10, 1994, Domingo Banaag, in his capacity as President of PBFAI, filed a
petition for compulsory coverage of a portion of the CAI property covered by TCT No.
91585,[33] with an area of 47 hectares under Rep. Act No. 6657. On August 18, 1994,
Legal Officer Maria Laarni N. Morallos of the DAR, in her Memorandum to Regional
Director Percival C. Dalugdug, reported that the Municipal Agrarian Reform Office
(MARO) had taken preliminary steps for the compulsory coverage of the property and,
in fact, had interviewed its occupants. The processing was stalled, however, because
documents such as the titles and tax declarations covering the property had not yet
been submitted, and the formal application had yet to be made by the
petitioners.[34] She recommended that the petition be indorsed to the MARO Office.
Pending the resolution of the petition of the PBFAI, the CAI decided to continue with its
Hakone Housing Project and ordered a survey of the property on October 6, 1995. The
survey was completed on October 9, 1995.On October 14 and 15, 1995, the CAI
caused the bulldozing and other development activities, which resulted in the
destruction of plants and trees.
The PBFAI-KASAMA, representing the farmers-tenants, filed a complaint for
Maintenance of Peaceful Possession and Cultivation with Damages with Prayer for the
Issuance of a Temporary Restraining Order and Preliminary Injunction before the
Department of Agrarian Reform Adjudication Board (DARAB), Region IV, Trece Martirez
City, Cavite, against the CAI, Tan Chi, Dionisio Ojeda, Elena Bigay, Lanrico Ministerio
and Alfredo Espiritu over a portion of the property of the CAI. The case was docketed as
DARAB Case No. CA-0285-95.[35]
The plaintiffs therein alleged that since 1961, its members had been in actual
possession, as tenants of General Dionisio Ojeda, of the 27-hectare property, located in
Pasong Bayabas, Cabilang Baybay, Carmona, Cavite[36] covered by TCT No. T-69813
in the name of Pan Asiatic Commercial Co., Inc.;[37] T-91584[38] and T-69810 owned by
the LDC. They applied for the compulsory coverage of the property under CARL before
the DAR in 1992, and on October 6, 1995, the CAI caused the survey of the property.
The CAI commenced the bulldozing activities on the property on October 14, 1995
without any permit from the Department of Environment and Natural Resources (DENR)
or from the Office of the Barangay Captain. According to the petitioners, the said illegal
bulldozing activities would convert the land from agricultural to non-agricultural land,
thereby depriving the members of the PBFAI of their tenancy rights over the
property. For this reason, the petitioners prayed that a temporary restraining order be
issued ex-parte to stop the bulldozing of the property, and that a preliminary injunction
or a status quo order be later issued to enjoin the same.
The complainants prayed that, after due proceedings, judgment be rendered in their
favor, viz:

...

3. That the Defendants Tan Chi and Dionisio Ojeda, as the most responsible
officers of the Defendant Corporation be ordered to direct persons acting
under their authority to respect the peaceful possession and cultivation of
the Plaintiffs, of the subject land;
 4. That the Defendants Lanrico Ministerio and Alfredo Espiritu be ordered to
respect and maintain the peaceful tenancy of the Plaintiffs, of the subject
land;

5. That the Defendants be ordered jointly and severally to pay to the Plaintiffs:

P500,000.00 as moral damages;

P250,000.00 by way of exemplary damages;
P50,000.00 in reimbursement of litigation expenses.

6. That the Defendants pay for the costs of this suit; and

7. That other reliefs and remedies be afforded to the Plaintiffs as may be just
and equitable under the premises.[39]

On October 27, 1995, Provincial Adjudicator Barbara P. Tan issued a Temporary

Restraining Order worded as follows:

WHEREFORE, premises considered let a TEMPORARY RESTRAINING ORDER

hereby issue to take effect for a period of twenty (20) days from receipt hereof;

1) Enjoining the defendant landowner and any/all persons acting for and in its behalf
or under its authority to cease and desist from further bulldozing the premises in
question and committing acts of dispossession or tending to disturb the peaceful
possession and cultivation of the complainants of the landholdings in question.

Meantime, let the hearing of the Preliminary Injunction incident be set on November
9, 1995 at 1:30 P.M.[40]

The defendants filed their Answer with Motion to Lift Restraining Order and
Preliminary Injunction.[41] Therein, they denied the personal circumstances of the
plaintiffs and the personal circumstances of the defendants Lanrico Ministerio and
Alfredo Espiritu.The defendants admitted that the CAI was the registered owner of the
property, but specifically denied that the plaintiffs were recognized by the CAI as
tenants-occupants of the aforesaid property since 1961. They asserted that the CAI did
not consent to the cultivation of the property nor to the erection of the plaintiffs houses.
They further averred that the CAI had entered into a compromise agreement with the
occupants of the property, the plaintiffs in Civil Case No. BCV-87-13 in the RTC of
Cavite. They also alleged that they secured a permit from the Municipal Planning and
Development Offices before bulldozing activities on the property were ordered.
The defendants raised the following as their special and affirmative defenses: (a)
the plaintiffs action is barred by the dismissal of their complaint in Civil Case No. BCV-
87-13, per Order of the RTC of Cavite, Branch 19, dated June 20, 1991; (b) the plaintiffs
had waived their rights and interests over the property when they executed deeds of
waiver and quitclaim in favor of the defendant CAI; (c) then Agrarian Reform Minister
Estrella had issued an Order dated July 3, 1979, converting the property into a
residential area and withdrawing the property from the coverage of the CARL; (d) the
defendant partitioned the development of the area into Phase I, II, III and IV, while the
residential property subject of the petition is in Phase IV thereof; (e) before embarking in
the development of the property, the respondent CAI secured the following: (1)
preliminary approval and locational clearance for phase IV; (2) development permit for
844 units; (3) Certificate of Registration No. 1069 issued by the HSRC; and (4) License
to Sell No. 1053.[42] Finally, the defendants contended that the property had an 18%
slope and was undeveloped; as such, it was exempt from the coverage of the CARL,
under Section 10 of Rep. Act No. 6657.
As compulsory counterclaim, the defendants alleged that it had entered into an
Equipment Rental Requisition Contract with E.M. Aragon Enterprises for the bulldozing
of the property, for which it incurred the following expenses: an advance payment
of P200,000; rental rate of P1,000 per hour for 8 hours a day plus transportation
of P50,000; and, salaries of not less than P5,000 per month for the mechanics and
drivers. They prayed that after due proceedings, judgment be rendered dismissing the
plaintiffs complaint and absolving it of any liability.[43]
The plaintiffs, for their part, averred that Civil Case No. BCV-87-13 was not decided
on the merits, but was merely based upon a compromise agreement between the
parties. Moreover, there was no identity of parties between Civil Case No. BCV-87-13
and the present case, as the sole defendant was the CAI, while of the plaintiffs in
DARAB Case No. CA No. 0285-95, only Domingo Banaag and Leoncio Banaag were
the plaintiffs in Civil Case No. BCV-87-13. On the claim of the defendants that the CAI
was released and discharged from any and all liabilities of the plaintiffs by virtue of the
Deeds of Waiver and Quitclaim executed by the fourteen plaintiffs in Civil Case No.
BCV-87-13, the plaintiffs averred that only two of the plaintiffs, namely, Domingo
Banaag and Leoncio Banaag were among the thirty-seven (37) complainants-members
of PBFAI who filed the petition before the DARAB.
The plaintiffs posited that the conversion orders and other deeds issued by the
HSRC and its successor, the HLURB, were issued before the effectivity of Rep. Act No.
6657 when agricultural land was limited to those planted with rice and corn crops. But
upon the enactment of Rep. Act No. 6657, the reclassification of agricultural lands
included those planted with fruit-bearing trees, such as, the subject property. Hence,
Agrarian Reform Minister Estrella did not have the authority to exempt the property from
the coverage of Rep. Act No. 6657. The plaintiffs averred that the documents procured
by the respondents from the HSRC and the HLURB cannot be given probative weight,
as the authority to issue the said clearance/license is vested solely in the DAR.
As to the defense that the property subject of the suit has some parts with an 18%
slope, the plaintiffs contended that what the law exempts are undeveloped parcels of
land with an 18% slope. The entire property, however, was fully developed and planted
with fruit-bearing trees of varied kinds, with houses of strong materials constructed
thereon by the members of the PBFAI.
 To determine the veracity of the conflicting claims of the parties, the Provincial
Agrarian Reform Adjudicator (PARAD) issued an Order on November 23, 1995, setting
an ocular inspection of the property. The parties were required to submit their respective
position papers.[44] The ocular inspection proceeded as scheduled. On December 12,
1995, the PARAD issued an Order[45]containing the results of the inspection.
The individual tillages of the complainants were not inspected, and, as agreed upon,
the physical inventory thereof was to be undertaken by Brgy. Captain Lanrico
Ministerio. The inventory was designed to determine who among the petitioners were
actual tillers, the area of tillage and the crops produced thereon; and to determine the
value of the improvements in connection with a possible pay off, as the landowner had
offered to reimburse the planters the value of their permanent improvements. The
PARAD noted that the area over which the respondent CAI conducted quarrying
activities had not been cultivated by any of the members of the PBFAI, and permitted
the grading and leveling activities thereon.
On April 16, 1996, the PARAD issued an order directing the provincial sheriff of
Cavite to conduct a physical inventory of the permanent improvements introduced by
each of the complainants consisting of fruits and other horticultural growths, in
substitution of the Barangay Captain.
On July 15, 1996, the DAR Region IV issued a Cease and Desist Order against the
respondents.[46] The defendants, in a Letter dated July 16, 1996, informed the DAR,
Region IV Office, that the land subject of the cease and desist order was also subject of
DARAB Case No. 0285-95 and, as such, was under the jurisdiction of PARAD Barbara
Tan. The defendants, likewise, raised the issue of forum shopping, per our ruling
in Crisostomo v. SEC.[47]
After due hearings, PARAD Barbara P. Tan rendered a Decision on August 8, 1996
in DARAB Case No. CA-0285-95 in favor of the defendants. The dispositive portion
of the decision reads:

WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered:

1. Finding Plaintiffs Domingo Banaag, Conrado Banaag, Leoncio Banaag, Herminia

Demillo, Myrna Javier, Elena, Layaban, Maria Layaban and Oscar Layaban to have
abandoned and renounced their tenancy rights over the land in question and barred
from instituting the instant complaint on the ground of Res Judicata;

2. Finding the remaining Twenty-Nine (29) other Plaintiffs not bonafide tenants but
mere interlopers on the land in question and consequently not entitled to security of
tenure;

3. Ordering the instant complaint DISMISSED for lack of merit.

No pronouncement as to damages, attorneys fees, litigation expenses and cost of

suit.[48]
 The PARAD held that the plaintiffs were bound by the order of dismissal of the RTC
in Civil Case No. BCV-87-13. It declared that the plaintiffs in Civil Case No. BCV-87-13
were the kins, siblings or spouses of the complainants in the case before it. Moreover,
the complainants had executed deeds of quitclaim or waiver covering the portions of the
property which they purportedly occupied. Thus, the complainants had already waived
their rights of possession and cultivation over the portions of the property which they
claimed to be occupying.
As to the remaining complainants, the PARAD ruled that they failed to prove that
their cultivation and possession, were based on a valid agricultural tenancy. It held that
the complainants were merely farm helpers of their relatives. However, the PARAD
ruled that it had no jurisdiction to resolve the issues of whether the property was
covered by Rep. Act No. 6657 and exempted from the said coverage, or whether the
conversion of the property to non-agricultural was legal and efficacious; hence, the
PARAD declined to resolve the same.
Aggrieved, the plaintiffs interposed an appeal to the Department of Agrarian Reform
Adjudication Board on the following grounds:

1. That errors in the findings of fact and conclusions of law were committed
which, if not corrected, would cause grave and irreparable damage and
injury to the plaintiffs/complainants-appellants; and

2. That there is grave abuse of discretion on the part of the Provincial

Agrarian Reform Adjudicator of Cavite. [49]

The appeal was docketed as DARAB Case No. 5191. The defendants, for their part,
filed a motion for reconsideration of the decision, on the ground that it failed to rule that
the order of conversion of then Agrarian Reform Minister Estrella merely confirmed the
re-classification of the property, from agricultural to residential, made by the Municipal
Council of Carmona, the HSRC and the HLURB as early as 1976, and that the PARAD
failed to order the eviction of the complainants despite its finding that some had
abandoned their tenancy rights by entering into a compromise settlement and executing
quitclaims with the CAI. The respondents, thus, prayed:

a. That the subject property has been reclassified as residential land as early as
30 May 1976;

b. That the Certificate of Registration No. RS-0495, dated 9 July 1977 and
License to Sell LS-0449, dated 09 July 1977 were issued in compliance
to NHA Circular No. 1, Series of 1976;

c. That the approval of the Consolidation Subdivision Plan and the consequent
issuance of individual titles by the Bureau of Lands were made in
compliance of the requirements of NHA Circular No. 1;
 d. That the Order of Conversion dated 3 July 1979 was merely a confirmation
of a 1976 valid re-classification of the subject property from agricultural
to residential and said Order is still valid and subsisting;

e. That an Order of ejectment be issued against the complainants.

As a corollary, other reliefs which are just and proper under the premises are likewise
prayed.[50]

The PARAD treated the motion as an appeal, and transmitted the same to the
DARAB.[51]
On September 26, 1996, the plaintiffs Clarito Sanganbayan, Edgardo Uniforme and
Francisco Joven, in consideration ofP40,000, executed quitclaims, waiving their rights
from the property in suit.[52] Likewise, plaintiffs Manuel Layaban, Dante Javier, Ederlinda
dela Cruz, Conrado Banaag, Eduardo Sabalsa, Diosdado Canaria, Herminia Demillo,
Elizabeth Cristo, Buena Layaban, Elena Layaban, Maria Layaban, Betty Banaag, Oscar
Layaban, Carmelita Caalete, Manuel Canaria, Alfredo Diaz, Alejandro Sanganbayan,
Soledad Alcantara, Felicisimo Galzote, Vivencio Boral, Edilberto Banaag and Jose
Canaria, executed quitclaims in favor of the CAI after receiving money from it.[53]
On October 16, 1996, the respondents filed a Motion to Lift Status Quo Order and
Motion to Dismiss[54] alleging that the status quo order illegally extended the restraining
order issued on September 13, 1996. It was also alleged that the complainants-
appellants were not qualified beneficiaries of the CARL. The CAI asserted that the re-
classification of the land use was valid and legal, and concluded that since the property
was not agricultural, it was not covered by the CARL and, thus, beyond the jurisdiction
of the DARAB. The CAI, thus, prayed:

WHEREFORE, premises considered, it is respectfully prayed that the status quo order
be immediately lifted and the writ of preliminary injunction applied for be denied for
utter lack of merit by upholding the Decision of the Honorable Provincial Adjudicator
dated 8 August 1996 with a modification which shall include an order of
ejectment. [55]

In the meantime, more members of the PBFAI executed deeds of quitclaims on

October 1, 1996, October 9, 1996, November 18, 1996, February 28, 1997 and March
6, 1997, respectively, all in favor of the respondent CAI over the property subject of their
petition.All in all, during the period from September 26 1996 to March 6,
1997,[56] twenty-five complainants (members of PBFAI) executed separate deeds of
quitclaims in favor of the CAI.[57] The foregoing notwithstanding, the DARAB rendered a
Decision on September 2, 1997 reversing the decision of PARAD. The dispositive
portion of the decision reads:

WHEREFORE, premises considered the challenged decision is hereby REVERSED

and a new judgment is hereby rendered as follows:
 1. Declaring the subject landholding to be within the coverage of Section 4 of
R.A. 6657;

2. Ordering the PARO, MARO and all DAR officials concerned to take the
necessary steps for the acquisition of the subject land pursuant to
Administrative Order No. 9, Series of 1990; and

3. Ordering the PARO, MARO and all DAR officials concerned to distribute the
subject land to qualified farmer-beneficiaries pursuant to Administrative
Order No. 10, series of 1990, giving preference to the plaintiffs as actual
occupants and cultivators of the subject land.[58]

The respondents-appellees filed a motion for reconsideration[59] of the decision

which was denied by the DARAB in a Resolution dated August 28, 1998.[60]

The Case in the Court of Appeals

Aggrieved, the CAI filed a petition for review in the Court of Appeals under Rule
45[61] of the Revised Rules of Court seeking the reversal of the Resolution dated August
28, 1998. The following issues were raised:

1. WHETHER OR NOT THE LAND IN SUIT IS COVERED BY CARP;

2. WHETHER OR NOT THE MEMBERS OF PBFAI NUMBERING 37

ARE LEGITIMATE TENANTS THEREOF;

3. WHETHER OR NOT THE DARAB APPRECIATED THE FACTS AND

LAW OF THE CASE;

4. WHETHER OR NOT THE DARAB IN THE EXERCISE OF ITS

POWERS ACTED WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION.[62]

On March 15, 2000, the CA rendered a Decision reversing the decision of the
DARAB and reinstating the decision of the PARAD, to wit:

WHEREFORE, the petition is GIVEN DUE COURSE, the assailed DARAB Decision
is hereby REVERSED and SET ASIDE, while the PARO Decision is REINSTATED
and AFFIRMED.[63]

The CA ruled that under Section 10 of Rep. Act No. 6657, all lands with eighteen
percent (18%) slope and over, except those already developed, shall be exempt from
the coverage of the said Act. The CA noted that the exception speaks of 18% in slope
and undeveloped land. Per report of the PARAD, the property subject of the suit has an
18% slope and was still undeveloped; hence, it falls within the exemption.
Further, the CA held that as early as May 30, 1976, the Municipality of Carmona,
Cavite, already reclassified the land as residential in Resolution No. 30, when it allowed
the LDC to build low-cost housing projects in the subject area. According to the Court,
the ruling in Fortich v. Corona[64] and reiterated in Province of Camarines Sur, et al. v.
Court of Appeals,[65] settled is the rule that local government units need not obtain the
approval of DAR to convert or reclassify lands from agricultural to non-agricultural
use. Thus, the subject land was validly declared residential since 1976 by competent
authority through Kapasiyahang Bilang 30. As such, the DARAB erred in ruling that the
land in suit was still covered by Rep. Act No. 6657. Consequently, since the subject
land is not agricultural and not covered by the CARL, the PBFAI members could not be
considered tillers/beneficiaries thereof.[66]
Aggrieved, the PBFAI filed a petition for review under Rule 45 of the Rules of Court
on April 11, 2000 before this Court. For its part, DARAB filed a motion for extension of
time to file a petition for the reversal of the decision in CA-GR SP No. 49363. The same
was docketed as G.R. No. 142980. On May 11, 2000, the DARAB manifested that it
was adopting as its own the petition for review filed by PBFAI. In our Resolution dated
June 28, 2000, we granted the motion of the DARAB and ordered the consolidation of
G.R. Nos. 142980 and 142359.

The Issues

The core issues for resolution are the following: (1) whether the property subject of
the suit is covered by Rep. Act No. 6657, the Agrarian Reform Law (CARL); (2) whether
the DARAB had original and appellate jurisdiction over the complaint of the petitioner
PBFAI against the private respondent; (3) whether the petitioners-members of the
PBFAI have a cause of action against the private respondent for possession and
cultivation of the property in suit; (4) whether the dismissal by the RTC of the complaint
in Civil Case No. BCV-87-13 is a bar to the complaint of the petitioners-members of the
PBFAI; and (5) whether the appellate court committed a reversible error in dismissing
the petition for review in CA-G.R. SP No. 49363.
It is well-settled that in a petition for review on certiorari under Rule 45 of the Rules
of Court, only questions of law may be raised.[67] We have time and again ruled that the
factual findings of fact by administrative agencies are generally accorded great respect,
if not finality, by the courts[68] because of the special knowledge and expertise of
administrative departments over matters falling under their jurisdiction. [69] However, due
to the divergence of the findings of the PARAD, on the one hand, and the DARAB on
the other, and considering the findings of the DARAB and the Court of Appeals, we are
constrained to review the records and resolve the factual and the legal issues involved.
On the first and second issues, the petitioners contend that the property subject of
the suit is agricultural land; hence, covered by the CARL, more particularly, Rep. Act
No. 6657. They assert that the reclassification of the property made by the Municipal
Council of Carmona, Cavite, under Kapasiyahang Blg. 30 on May 30, 1976 was subject
to the approval of the HSRC, now the HLURB, as provided for by Section 5 of Executive
Order No. 648.[70] Since there was no such approval, the said resolution of the Municipal
Council of Carmona was ineffective. The petitioners aver that, the appellate courts
reliance on the ruling of this Court in Province of Camarines Sur v. Court of Appeals, et
al.[71] is misplaced because the said case involves the power of local government units
to initiate condemnation proceedings of properties for public use or purpose. They
argue that under Section 65 of Rep. Act No. 6657, the DAR is vested with exclusive
authority to reclassify a landholding from agricultural to residential. The petitioners
submit that the exclusive authority of the DAR is not negated by Section 20 of Rep. Act
No. 7160, otherwise known as the Local Government Code of 1991. They also insist
that the conversion of the property under Kapasiyahang Blg. 30 of the Municipal Council
of Carmona on May 30, 1976, was subject to the approval of the DAR, conformably to
DOJ Opinion No. 44, Series of 1990. Moreover, the development of the property had
not yet been completed even after Rep. Act No. 6657 took effect. Hence, it was
incumbent upon the respondent to secure an exemption thereto, after complying with
DAR Administrative Order No. 6, Series of 1994.
In its Comment on the petition, the respondent CAI asserts that the property was
validly reclassified by the Municipal Council of Carmona on May 30, 1976, pursuant to
its authority under Section 3, Rep. Act No. 2264, otherwise known as the Local
Autonomy Act of 1959. Until revoked, the reclassification made by the council remained
valid. Per DOJ Opinion No. 40, Series of 1990, the private respondent was not required
to secure clearance or approval from the DAR since the reclassification took place on
June 15, 1988, when Rep. Act No. 6657 took effect. The respondent asserts that it had
complied with all the requirements under P.D. No. 957, as amended.
The respondent contends that, aside from the Municipal Council of Carmona, the
Secretary of Agrarian Reform and administrative agencies of the government such as
the NHA, the Bureau of Lands, the HSRC, and the HLURB, found the property
unsuitable for agricultural purposes. The respondent asserts that the petitioners-
individuals are mere squatters and not tenants on the property of the private
respondent. Hence, the PARAD had no jurisdiction over the petition of the PBFAI, as
well as the individual petitioners. Consequently, the DARAB had no appellate
jurisdiction over the appeals from the decision of the PARAD.

The Courts Ruling

The contention of the petitioners has no merit.

Under Section 3(c) of Rep. Act No. 6657, agricultural lands refer to lands devoted to
agriculture as conferred in the said law and not classified as industrial land. Agricultural
lands are only those lands which are arable or suitable lands that do not include
commercial, industrial and residential lands.[72] Section 4(e) of the law provides that it
covers all private lands devoted to or suitable for agriculture regardless of the
agricultural products raised or that can be raised thereon. Rep. Act No. 6657 took effect
only on June 15, 1988. But long before the law took effect, the property subject of the
suit had already been reclassified and converted from agricultural to non-agricultural or
residential land by the following administrative agencies: (a) the Bureau of Lands, when
it approved the subdivision plan of the property consisting of 728 subdivision lots; (b)
the National Planning Commission which approved the subdivision plan subdivided by
the LDC/CAI for the development of the property into a low-cost housing project; (c) the
Municipal Council of Carmona, Cavite, when it approved Kapasiyahang Blg. 30 on May
30, 1976; (d) Agrarian Reform Minister Conrado F. Estrella, on July 3, 1979, when he
granted the application of the respondent for the development of the Hakone Housing
Project with an area of 35.80 hectares upon the recommendation of the Agrarian
Reform Team, Regional Director of Region IV, which found, after verification and
investigation, that the property was not covered by P.D. No. 27, it being untenanted and
not devoted to the production of palay/or corn and that the property was suitable for
conversion to residential subdivision; (e) by the Ministry of Local Government and
Community Development; (f) the Human Settlements Regulatory Commission which
issued a location clearance, development permit, Certificate of Inspection and License
to Sell to the LDC/private respondent; and, (g) the Housing and Land Use Regulatory
Board which also issued to the respondent CAI/LDC a license to sell the subdivision
lots.
In issuing a location clearance, a development permit, a certificate of inspection
over the housing project, and a license to sell the subdivision lots in favor of LDC/CAI
pursuant to its charter, the HSRC approved and confirmed the reclassification and
conversion of the land made by the Municipal Council of Carmona and Agrarian Reform
Minister Estrella.
In Natalia Realty Inc. and Estate Developers and Investors Corp. v. Department of
Agrarian Reform, et al.,[73] we held, thus:

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. 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.

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
snails 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, DAR itself defined agricultural land
thus

x x x Agricultural land 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.[74]

Our ruling in Natalia Realty, Inc. v. DAR was reiterated in National Housing
Authority v. Allarde,[75] and Sta. Rosa Realty Development Corporation v. Court of
Appeals,[76] where we stated, viz:

The authority of the municipality of Cabuyao, Laguna to issue zoning classification is

an exercise of its police power, not the power of eminent domain. A zoning ordinance
is defined as a local city or municipal legislation which logically arranges, prescribed,
defines and apportions a given political subdivision into specific land uses as present
and future projection of needs.

Section 3 of Rep. Act No. 2264,[77] amending the Local Government Code,
specifically empowers municipal and/or city councils to adopt zoning and subdivision
ordinances or regulations in consultation with the National Planning Commission. A
zoning ordinance prescribes, defines, and apportions a given political subdivision into
specific land uses as present and future projection of needs. [78]The power of the local
government to convert or reclassify lands to residential lands to non-agricultural lands
reclassified is not subject to the approval of the Department of Agrarian
Reform.[79] Section 65 of Rep. Act No. 6657 relied upon by the petitioner applies only to
applications by the landlord or the beneficiary for the conversion of lands previously
placed under the agrarian reform law after the lapse of five years from its award. It does
not apply to agricultural lands already converted as residential lands prior to the
passage of Rep. Act No. 6657.[80]
When Agrarian Reform Minister Conrado F. Estrella confirmed the reclassification of
the property by the Municipal Council of Carmona to non-agricultural land when he
approved, on July 3, 1979, the application of the private respondent/LDC for the
conversion of 35.80 hectares of the property covered by TCT No. 62972 into non-
agricultural land, he did so pursuant to his authority under Rep. Act No. 3844, as
amended, by P.D. No. 815 and P.D. No. 946.[81]
It bears stressing that in his Order, the Agrarian Reform Minister declared that the
property was not tenanted and not devoted to the production of palay and/or corn, and
that the land was suitable for conversion to a residential subdivision. The order of the
Minister was not reversed by the Office of the President; as such, it became final and
executory. By declaring, in its Decision ofSeptember 2, 1997, that the property subject
of the suit, was agricultural land, the petitioner DARAB thereby reversed the Order of
Agrarian Reform Minister Estrella, issued almost eighteen (18) years before, and
nullified Resolution No. 30 of the Municipal Council of Carmona, approved twenty-one
(21) years earlier, on May 30, 1976, as well as the issuances of the NHA, the HSRC,
the HLURB, the Ministry of Local Government and the National Planning
Commission. Thus, the petitioner DARAB acted with grave abuse of its discretion
amounting to excess or lack of jurisdiction.
The failure of the respondent to complete the housing project before June 15, 1988,
even if true, did not have the effect of reverting the property as agricultural land.
The petitioners reliance on DOJ Opinion No. 44, Series of 1990 and DAR
Administrative Order No. 6, Series of 1994 is misplaced. 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 the 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.

With our finding that the property subject of the suit was classified as residential
land since 1976, the DARAB had no original and appellate jurisdiction over the property
subject of the action of the petitioner PBFAI and its members. Consequently, the
DARAB should have ordered the dismissal of the complaint.
The jurisdiction of a tribunal or quasi-judicial body over the subject matter is
determined by the averments of the complaint/petition and the law extant at the time of
the commencement of the suit/complaint/petition.[82] All proceedings before a tribunal
or quasi-judicial agency bereft of jurisdiction over the subject matter of the action are
null and void.[83]
Section 1, Rule II of the Revised Rules of Procedure of the DARAB provides that:

SECTION 1. Primary. Original and appellate jurisdiction The Agrarian Reform

Adjudication Board shall have primary jurisdiction, both original and appellate, to
determine and adjudicate all agrarian disputes, cases, controversies, and matters or
incidents involving the implementation of the Comprehensive Agrarian Reform
Program under Republic Act No. 6657, Executive Order Nos. 229, 228 and 129-A,
Republic Act No. 3844 as amended by Republic Act No. 6389, Presidential Decree
No. 27 and other agrarian laws and their implementing rules and regulations.

Section 3(d) of Rep. Act No. 6657 defines an agrarian dispute as:

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
negotiating, fixing, maintaining, changing or seeking to arrange terms or conditions of
such tenurial arrangements.

It includes any controversy relating to compensation of lands acquired under this Act
and other terms and conditions of transfer of ownership from landowners to
farmworkers, tenants and other agrarian reform beneficiaries, whether the disputants
stand in the proximate relation of farm operator and beneficiary, landowner and
tenant, or lessor and lessee.

In Monsanto v. Zerna,[84] we held that for the DARAB to have jurisdiction over a
case, there must exist a tenancy relationship between the parties. In order for a tenancy
agreement to take hold over a dispute, it is essential to establish all the indispensable
elements, to wit:

(1) The parties are the landowner and the tenant or agricultural lessee;

(2) The subject matter of the relationship is an agricultural land;

(3) There is consent between the parties to the relationship;

(4) The purpose of the relationship is to bring about agricultural production;

(5) There is personal cultivation on the part of the tenant or agricultural lessee;
and

(6) The harvest is shared between the landowner and the tenant or agricultural
lessee.[85]

There is no allegation in the complaint of the petitioner PBFAI in DARAB Case No.
CA-0285-95 that its members were tenants of the private respondent CAI. Neither did
the petitioner adduce substantial evidence that the private respondent was the landlord
of its members from 1961, nor at any time for that matter. Indeed, as found by the
PARAD:

Moreover, their waiver of rights constitutes abandonment of their rights of possession

and cultivation which may yet be borne out of a legitimate tenancy relationship. Their
re-entry or continuous possession and cultivation of the land in question without the
landowners knowledge and/or consent negates the existence of tenancy
relationship. Since security of tenure is a right to which only a bona fide tenant farmer
is entitled their lack of such tenurial status denies them of its exercise and enjoyment.

As to the remaining twenty and more other complainants, it is unfortunate that they
have not shown that their cultivation, possession and enjoyment of the lands they
claim to till have been by authority of a valid contract of agricultural tenancy. On the
contrary, as admitted in their complaint a number of them have simply occupied the
premises in suit without any specific area of tillage being primarily mere farm helpers
of their relatives. Banking on their application for CARP coverage still awaiting
action and disposition in some DAR operations office, these complainants have
tenaciously held on to their occupied areas in the hope of eventual redemption under
the Comprehensive Agrarian Reform Program. [86]

Since the members of the petitioner PBFAI were not the tenants of the private
respondent CAI, the petitioners and its members had no cause of action against the
private respondent for possession of the landholding to maintain possession thereof and
for damages. Besides, when the complaint was filed, twenty-five (25) of the thirty-seven
(37) members of the petitioners had already executed separate deeds of quitclaim in
favor of the private respondent CAI over the portions of the landholding they
respectively claimed, after receiving from the private respondent CAI varied sums of
money. In executing the said deeds, the members of the petitioner PBFAI thereby
waived their respective claims over the property. Hence, they have no right whatsoever
to still remain in possession of the same.
IN LIGHT OF THE FOREGOING, the petitions are DENIED. The assailed decision
of the Court of Appeals is AFFIRMED WITH MODIFICATIONS. The complaint of the
petitioner PBFAI in DARAB Case No. CA-0285-95 is DISMISSED. The counterclaim of
the private respondent for damages in DARAB Case No. CA-0285-95 is, likewise,
DISMISSED. The thirty-seven (37) members of the petitioner PBFAI and all those
occupying the property subject of the complaint in DARAB Case No. CA-0285-95 in
their behalf are ORDERED to vacate the landholding.
SO ORDERED.
Quisumbing, (Acting Chairman), Austria-Martinez, and Tinga, JJ., concur.
Puno, J., (Chairman), on official leave.

[1] Penned by Associate Justice Roberto A. Barrios with Associate Justices Eubulo G. Verzola and
Eriberto U. Rosario, Jr., concurring.
[2] Now Barangay F. del Rosario, General Mariano Alvarez, Cavite.
[3] Records, Vol. IV, p. 300; Exhibit D, Plaintiffs Folder of Exhibits, pp. 8-10.
[4] Exhibits 38 and 38-B; Records, Vol. IV, pp. 262-265.
[5] Exhibit 2-A, Defendants Folder of Exhibits, p. 32.
[6] Id. at 356-361; 442.
[7] Rollo, p. 93 (G.R. No. 142359).
[8] Exhibit 10; Defendants Folder of Exhibits, pp. 57-58.
[9] Exhibit 10, Defendants Folder of Exhibits, pp. 57-58.
[10] Ibid.
[11] Records, Vol. III, pp. 85-86.
[12] Exhibit 3-A; Defendants Folder of Exhibits, pp. 33-36.
[13] Exhibit 11-B; Id. at 61.
[14] Exhibit 11, Id. at 59.
[15] Rollo, p. 91.
[16] The plaintiffs in Civil Case No. BCV-87-13 were as follows: Medy Vinzon, Elenita Canaria, Luz
Alvarez, Elena Layaban, Leoncio Demillo, Lolita Banaag, Godofredo Inciong, Cresencio Layaban,
Bernardo Poblete, Leoncio Banaag, Estelita Gaut, Jose Sumallo, Victoria Valerio and Casimiro
Mabilangan, known as the Pamilya Katorse.
[17] Exhibit 2; Records, Vol. IV, pp. 205-210.
[18] Records, Vol. IV, pp. 208-209.
[19] Exhibit 3; Id. at 213-217; In 1987, TCT No. T-62972 was cancelled and TCT No. 156224 was
issued.
[20] Id. at 217.
[21] Exhibit 6; Records, Vol. IV, p. 221.
[22] Exhibit 5; Id. at 220.
[23] Rollo, p. 19 (G.R. No. 142359).
[24] Records, Vol. IV, pp. 705-709.
[25] Exhibits 13-A; 13, Defendants Folder of Exhibits, pp. 69-73.
[26] Exhibits 14 to 14-C; Id. at 74-80.
[27] Exhibit 12;Id. at 66.
[28] Exhibits 15, 15-A, 15-B, 15-C, 15-D, 16, 16-A, 16-B, 16-C, Id. at 81-91.
[29] The said individuals are as follows: Domingo G. Banaag, Vivencia Poblete, Gerardo Banaag, Loreto
Banaag, Victoriano Banaag, Lucio B. Banaag, Elegio Banaag, Florencio Poblete, Maricel Poblete,
Jovencio Calica, Francisco Villareal, Arcenio L. Cayabyab, Felicisima Garsote, Ma. Christina
Banaag, Elena Layaban, Alijandro Sanganbayan and Lolita Garcia.
[30] Exhibit H; Plaintiffs Folder of Exhibits, pp. 17-18.
[31] According to the petitioners, they cultivated a total of 13 hectares, as follows:

AREA

NAME

1. Domingo Banaag 2 hectares

2. Vivencia Poblete 2 hectares

3. Gerardo Banaag 1 hectare

4. Loreto Banaag 1 hectares

5. Victoriano Banaag 1 hectares

6. Lucio B. Banaag 1 hectare

7. Elegio Banaag 1 hectare

8. Florencio Poblete 1 hectare

9. Maricel Poblete 1 hectare

10. Jovencio Calica 2,500 square meters

 11. Francisco Villareal 5,000 square meters

12. Arcenio L.Cayabyab 2,500 square meters (Id. at

18).

[32] Records, Vol. IV, pp. 8 to 8-1.

[33] Cancelled by TCT No. 62972, registered under the name of CAI.
[34] Exhibit F; Records, Vol. IV, p. 149.
[35] Records, Vol. IV, pp. 2-8.
[36] Now Barangay F. de Castro, GMA, Cavite.
[37] Exhibit B, Plaintiffs Folder of Exhibits, p. 51.
[38] TCT Nos. 91584-85 were cancelled and a new one TCT No. T-62972 was issued in the name of
Lakeview Development Corporation on September 20, 1977.
[39] Records, Vol. IV, p. 4.
[40] Id. at 53-54.
[41] Id. at 56-68.
[42] Records, Vol. IV, p. 63.
[43] Id. at 65.
[44] Id. at 133-134.
[45] Id. at 138-140.
[46] Id. at 426.
[47] Id. at 426-427; 179 SCRA 146 (1989).
[48] Id. at 447-448.
[49] Id. at 493.
[50] Id. at 497.
[51] Id. at 499.
[52] Exhibit 20 20-B; Defendants Folder of Exhibits, pp. 102-104.
[53] Records, Vol. IV, pp. 714-735.
[54] Id. at 524-541.
[55] Id. at 541.
[56] Records, Vol. IV, pp. 711-735.
[57] The following complainants-members of PBFAI executed separate deeds of quitclaim in favor of the
CAI:

1. Edgardo Uniforme 14. Maria Layaban

2. Clarito Sanganbayan 15. Betty Banaag
 3. Francisco Joven 16. Oscar Layaban
4. Manuel Layaban 17. Carmelita Caalete
5. Dante Javier 18. Manuel Canaria
6. Ederlinda dela Cruz 19. Alfredo Diaz
7. Conrado Banaag 20. Alejandro Sanganbayan
8. Eduardo Sabalsa 21. Soledad Alcantara
9. Diosdado Canaria 22. Felicisimo Galzote
10. Herminia Demillo 23. Vivencio Boral
11. Elizabeth Cristo 24. Edilberto Banaag
12. Buena Layaban 25. Jose Canaria
13. Elena Layaban

[58] Id. at 677-678.

[59] Id. at 683-704.
[60] Id. at 736-739.
[61] Treated as a Petition for Review under Rule 43 of the Rules of Court by the Court of Appeals.
[62] CA Rollo, p. 15.
[63] Id. at 173.
[64] 298 SCRA 678 (1998).
[65] 222 SCRA 173 (1993).
[66] CA Rollo, pp. 172-173.
[67] Calvo v. Vergara, 372 SCRA 650 (2001).
[68] Ibid.
[69] Palele v. Court of Appeals, 362 SCRA 141 (2001).
[70] E.O. No. 648 was approved on February 7, 1981.
[71] 222 SCRA 173 (1993).
[72] Luz Farms v. Secretary of the Department of Agrarian Reform, 192 SCRA 51 (1990).
[73] 225 SCRA 278 (1993).
[74] Ibid. (Emphasis ours.)
[75] 318 SCRA 22 (1999).
[76] 367 SCRA 175 (2001).
[77]Power to adopt zoning and planning ordinances. - Any provision of law to the contrary notwithstanding,
Municipal Boards or City Councils in municipalities are hereby authorized to adopt zoning and
subdivision ordinances or regulations for their respective cities and municipalities subject to the
approval of the City Mayor or Municipal Mayor, as the case may be. Cities and municipalities
 may, however, consult the National Planning Commission on matters pertaining to planning and
zoning.
[78] Section 4(b) of P.D. No. 449.
[79] Fortich v. Corona, 298 SCRA 678 (1998).
[80] Province of Camarines Sur v. Court of Appeals, 222 SCRA 173 (1993).
[81] Ortigas & Co., Limited Partnership v. Feati Bank and Trust Co., 94 SCRA 533 (1979).
[82] Mercado v. Judge Ubay, 187 SCRA 719 (1990).
[83] Javelosa v. Court of Appeals, 265 SCRA 493 (1996).
[84] 371 SCRA 664 (2001).
[85] Almuete v. Andres, 369 SCRA 619 (2001).
[86] Records, Vol. IV, p. 485.
 Supreme Court of the Philippines

G.R. No. 147146

THIRD DIVISION
G.R. NO. 147146, August 29, 2005
JOSE, JULIO AND FEDERICO, ALL SURNAMED JUNIO, PETITIONERS,
VS. ERNESTO D. GARILAO, IN HIS CAPACITY AS SECRETARY OF
AGRARIAN REFORM, RESPONDENT.

DECISION

PANGANIBAN, J.:

Lands already classified and identified as commercial, industrial or residential

before June 15, 1988 -- the date of effectivity of the Comprehensive Agrarian
Reform Law (CARL) -- are outside the coverage of this law. Therefore, they no
longer need any conversion clearance from the Department of Agrarian Reform
(DAR).

The Case

Before the Court is a Petition for Review[1] under Rule 45 of the Rules of Court,
seeking to set aside the February 24, 2000 Decision[2] of the Court of Appeals
(CA), in CA-GR SP No. 37217. The Decision denied petitioners’ Petition for
Certiorari[3] for its failure to show that the DAR had acted with grave abuse of
discretion amounting to lack or excess of jurisdiction when it issued its
Exemption Order dated September 13, 1994. The Order, issued by then DAR
Secretary Ernesto D. Garilao, had excluded Lot 835-B from the coverage of
Republic Act 6657, otherwise known as the “Comprehensive Agrarian Reform
Law (CARL).”

In its Resolution dated April 4, 2001, this Court (through the Second Division)
immediately denied the Petition for failure of petitioners (1) to attach the
duplicate original/certified true copy of the CA Resolution denying their Motion
for Reconsideration of the CA Decision; and (2) to state the dates of their
receipt and filing of a Motion for Reconsideration of that Decision.

In their Motion for Reconsideration[4] of the April 4, 2001 Resolution,

petitioners alleged that they had received the assailed CA Decision on March 8,
2000 and filed their Motion for Reconsideration on March 22, 2000. They
likewise submitted a duplicate original of the February 2, 2001 CA Resolution,[5]
which had denied that Motion.

On January 22, 2002, petitioners filed a Manifestation.[6] It stated that in a

clarificatory letter dated July 30, 1997,[7] Salvador S. Malibong, the deputized
zoning administrator of Bacolod City, completely reversed the false Certification
he had issued earlier. That Certification had been the basis of the DAR
secretary’s assailed Exemption Order.

On February 18, 2002, public respondent submitted its Comment on the

Motion for Reconsideration filed by petitioners. They in turn submitted their
Reply to the Comment on June 14, 2002, in compliance with the Court’s
Resolution dated April 10, 2002. In its Resolution dated August 13, 2003, the
Court (Second Division) resolved to grant their Motion for Reconsideration and
to require the solicitor general to comment on the Petition within ten days from
notice.

On October 9, 2003, the Office of the Solicitor General (OSG) submitted a

Manifestation in Lieu of Comment. The OSG stated that its Comment on the
Motion for Reconsideration filed by petitioners on February 18, 2002, had fully
addressed the issues presented in their Petition for Review. On November 12,
2003, the Court resolved to give due course to the Petition and required the
parties to submit their respective memoranda within thirty days from
notice. Thereafter, the case was transferred to the First Division, and finally to
the Third, which will now resolve the controversy.

The Facts

The CA summarized the antecedents of the case as follows:

“In a Complaint dated February 12, 1994, filed with the [Department of
Agrarian Reform Adjudication Board (DARAB)] by complainants (some of
whom are herein petitioners), identified as ‘Potential CARP Beneficiaries’ per
Certification of OIC [Municipal Agrarian Reform Officer (MARO)] dated
November 21, 1991 x x x, it is prayed that a writ of preliminary injunction be
issued against the registered owners of a certain parcel of agricultural land
consisting of 71 hectares, more or less, known as Lot No. 835-B of Bacolod
Cadastre, Brgy. Pahanocoy, Bacolod City, covered by Transfer Certificate of
Title No. T-79622. Petitioners claim that x x x Sta. Lucia Realty Corporation
and the Estate of Guillermo Villasor, represented by Irving Villasor, are
bulldozing and leveling the subject property for the purpose of converting it
into a residential subdivision; that as prospective CARP beneficiaries of the land
in question, ‘being former laborers, actual occupants and permanent residents of
Barangay Pahanocoy,’ their rights will be prejudiced by the illegal conversion of
the land into a residential subdivision x x x.

“On April 13, 1994, the DARAB OIC Executive Director forwarded the
complaint to [Provincial Agrarian Reform Adjudicator (PARAD)], DAR, Region
VI, Bacolod City for appropriate action x x x. Before any hearing could be
conducted thereon, the Secretary of the Department of Agrarian Reform issued
an Order dated September 13, 1994 in ‘RE: PETITION FOR EXEMPTION
FROM CARP COVERAGE PURSUANT TO DOJ OPINION NO. 44,
SERIES OF 1990, IRVING P. VILLASOR, et al., Rep. by Atty. Angel Lobaton,
Jr., Petitioners,’ portions of which read as follows:

‘After a careful study of the facts of the case and the evidences presented by the
parties, this Office finds the petition for exemption to be well founded. Under
DOJ Opinion No. 44, Series of 1990, it provides that lands which has already
been classified as mineral, forest, residential, commercial and industrial areas,
prior to June 15, 1988 shall be excluded from CARP coverage. To this, it is an
[i]nescapable conclusion that the subject property is exempted from CARP
coverage considering the fact that the same was classified as residential as
evidenced by the Resolution No. 5153-A, Series of 1976 of the City Council of
Bacolod and as approved by the Human Settlements Regulatory Commission
(now HLURB) in its Resolution dated September 24, 1980 as per Certification
dated June 22, 1994 issued by the said Commission. The Certification of the
National Irrigation Administration (NIA) dated June 9, 1994 stated that the
subject land is not irrigable or is outside the service area of the irrigation system
in the locality. In effect the said application had conformed to the requirements
of the law on exemption. In accord thereto, the stand of Mr. Espanola that the
portion, which he planted to trees and developed into mini-forest should be
covered by CARP[,] is beyond recognition as the program does not apply to
those which are already classified as residential lands prior to the effectivity of
CARL on June 15, 1988. Instead, it is confined only to agricultural lands, which
under R.A. 6657, Sec. 3(c), it defines agricultural lands as lands devoted to
agricultural activity as defined in this Act and not classified as mineral, forest,
residential or industrial land. With the above stated definition, it is beyond
reason that the placing of the said portion under CARP coverage (1.5 hectare) is
devoid of legal and factual basis.’”[8]
As earlier said, the Exemption Order was challenged before the appellate court
via a Petition for Certiorari.

Ruling of the Court of Appeals

The Court of Appeals sustained the Exemption Order issued by public

respondent. It found that prior to June 15, 1988, Lot 835-B had been
reclassified from agricultural to residential land. It relied on the Court’s
pronouncement in Natalia Realty v. Department of Agrarian Reform[9] that lands were
outside the coverage of the CARL if they had been converted to non-
agricultural uses by government agencies, other than the DAR, prior to the
effectivity of that law.

Further, the CA ruled that neither the CARL nor the Local Government Code
of 1991 had nullified the reclassification of Lot 835-B. The appellate court
noted that the land had been validly reclassified from agricultural to residential
in 1976, prior to the effective date of both laws. It added that neither of those
two laws could be applied retroactively, since they contained no provision
authorizing their retroactivity.

Hence, this Petition.[10]

Issues

In their Memorandum, petitioners submit this lone issue for our consideration:
“Whether the respondent DAR secretary had the inherent authority or power to
exclude or exempt at will from the coverage of the Comprehensive Agrarian
Reform Program (CARP) the subject agricultural land which was already
automatically covered by the CARL (RA 6657) upon its effectivity on June 15,
1988 without affording due process to herein petitioners and without the
necessity of Congress having first to amend Section 4 of the said law authorizing
such exemption or exclusion from CARP coverage.”[11]
The Court’s Ruling

The Petition is devoid of merit.

Sole Issue:
Coverage

Section 4 of RA 6657 sets forth the coverage of the CARL 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:

xxx xxx xxx

“(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) of the CARL defines agricultural land as that which is “devoted to
agricultural activity x x x and not classified as mineral, forest, residential,
commercial or industrial land.”

The meaning of agricultural lands covered by the CARL was explained further by
the DAR in its Administrative Order No. 1, Series of 1990,[12] entitled “Revised
Rules and Regulations Governing Conversion of Private Agricultural Land to
Non-Agricultural Uses,” issued pursuant to Section 49 of CARL, which we
quote:
“x x x. Agricultural land 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.” (Emphasis supplied)
Prior to this Order, Department of Justice Opinion No. 44 dated March 16,
1990, which was addressed to then DAR Secretary Florencio Abad, recognized
the fact that before the date of the law’s effectivity on June 15, 1988, the
reclassification or conversion of lands was not exclusively done by the DAR.[13]
Rather, it was a “coordinated effort” of all concerned agencies; namely, the
Department of Local Governments and Community Development, the Human
Settlements Commission and the DAR.[14] Then Justice Secretary Franklin M.
Drilon explained the coordination in this wise:
“x x x. Under R.A. No. 3844,[15] as amended by R.A. No. 6389,[16] an
agricultural lessee may, by order of the court, be dispossessed of his landholding
if after due hearing, it is shown that the ‘landholding is declared by the [DAR]
upon the recommendation of the National Planning Commission to be suited
for residential, commercial, industrial or some other urban purposes.’[17]

“Likewise, under various Presidential Decrees (P.D. Nos. 583, 815 and 946)
which were issued to give teeth to the implementation of the agrarian reform
program decreed in P.D. No. 27, the DAR was empowered to authorize
conversions of tenanted agricultural lands, specifically those planted to rice
and/or corn, to other agricultural or to non-agricultural uses, ‘subject to studies
on zoning of the Human Settlements Commissions’ (HSC). This non-exclusive
authority of the DAR under the aforesaid laws was, x x x recognized and
reaffirmed by other concerned agencies, such as the Department of Local
Government and Community Development (DLGCD) and the then Human
Settlements Commission (HSC) in a Memorandum of Agreement executed by
the DAR and these two agencies on May 13, 1977, which is an admission that
with respect to land use planning and conversions, the authority is not exclusive
to any particular agency but is a coordinated effort of all concerned agencies.

“It is significant to mention that in 1978, the then Ministry of Human

Settlements was granted authority to review and ratify land use plans and zoning
ordinance of local governments and to approve development proposals which
include land use conversions (see LOI No. 729 [1978]). This was followed by
[E.O.] No. 648 (1981) which conferred upon the Human Settlements Regulatory
Commission (the predecessors of the Housing and Land Use Regulatory Board
[HLURB] the authority to promulgate zoning and other land use control
standards and guidelines which shall govern land use plans and zoning
ordinances of local governments, subdivision or estate development projects of
both the public and private sector and urban renewal plans, programs and
projects; as well as to review, evaluate and approve or disapprove
comprehensive land use development plans and zoning components of civil
works and infrastructure projects, of national, regional and local governments,
subdivisions, condominiums or estate development projects including industrial
estates.”
Hence, the justice secretary opined that the authority of the DAR to approve
conversions of agricultural lands to non-agricultural uses could be exercised only
from the date of the law’s effectivity on June 15, 1988.

Following the opinion of the Department of Justice (DOJ), the DAR issued
Administrative Order (AO) No. 6, Series of 1994,[18] stating that conversion
clearances were no longer needed for lands already classified as non-agricultural
before the enactment of Republic Act 6657. Designed to “streamline the
issuance of exemption clearances, based on DOJ Opinion No. 44,” the AO
provided guidelines and procedures for the issuance of exemption clearances.

Thereafter, DAR issued AO 12,[19] Series of 1994, entitled “Consolidated and

Revised Rules and Procedures Governing Conversion of Agricultural Lands to
Non-Agricultural Uses.” It provided that the guidelines on how to secure an
exemption clearance under DAR AO No. 6, Series of 1994, shall apply to
agricultural lands classified or zoned for non-agricultural uses by local
government units (LGUs); and approved by the Housing and Land Use
Regulatory Board (HLURB) before June 15, 1988. Under this AO, the DAR
secretary had the ultimate authority to issue orders granting or denying
applications for exemption filed by landowners whose lands were covered by
DOJ Opinion No. 44.

Contrary to petitioners’ stance, the CA properly applied Natalia Realty v.

Department of Agrarian Reform,[20] which had earlier held that lands previously
converted by government agencies, other than DAR, to non-agricultural uses
prior to the effectivity of the CARL were outside the coverage of that law. Our
ruling in Natalia was not confined solely to agricultural lands located within
townsite reservations, but applied also to real estate converted to non-
agricultural uses prior to the effectivity of the CARL,[21] provided the conversion
was made by government agencies other than the DAR --like the HLURB and
its predecessor, the Human Settlement Regulatory Commission (HSRC).[22]
The Court’s ruling in Natalia was reiterated in Pasong Bayabas Farmers Association
v. Court of Appeals,[23] which affirmed the authority of the Municipal Council of
Carmona to issue a zoning classification and to reclassify the property in
question from agricultural to residential, as approved by the HSRC (now the
HLURB). The Court held that Section 3 of RA 2264,[24] amending the Local
Government Code, specifically empowered municipal and/or city councils, in
consultation with the National Planning Commission, to adopt zoning and
subdivision ordinances or regulations. Hence, the power of the local
government to convert or reclassify lands to residential or non-agricultural was
not subject to the approval of the DAR.[25]

It is thus settled that with respect to areas classified and identified as zonal areas
not for agricultural uses, like those approved by the HSRC before the effectivity
of RA 6657 on June 15, 1988, the DAR’s clearance is no longer necessary for
conversion.

The next question before us is whether the subject landholding was in fact
reclassified as residential before June 15, 1988, the date of effectivity of the
CARL. The Exemption Order of the DAR secretary pointed out that the parcel
had indeed been reclassified as residential under Resolution No. 5153-A of the
City Council of Bacolod. This reclassification was later affirmed by the HSRC.

The courts generally accord great respect, if not finality, to factual findings of
administrative agencies because of their special knowledge and expertise over
matters falling under their jurisdiction.[26] It must be stressed at this point that
with the DAR lies the power to determine whether Lot 835-B is non-agricultural
and, hence, exempt from the coverage of the CARL.

According to DAR AO 6-94, an application for exemption from the coverage of

the CARP must be accompanied by a certification from the HLURB that the
pertinent zoning ordinance has been approved by the Board prior to June 15,
1988 (the date of effectivity of the CARL). In the instant case, the landowner
did file an accompanying Certification from the HLURB.

The Certification issued by the Board expressly mentioned that the “property x
x x, Lot 835-B located at Brgy. Tangub, Bacolod City, covered by TCT T-79622,
x x x was identified for residential use under the 1976 Framework Plan of the
City of Bacolod prepared pursuant to the Program of the then Ministry of Local
Government and approved by the City Council in its Resolution No. 5153-A,
Series of 1976.”[27] It also certified that the “area where the aforecited property is
located was likewise identified for residential use under the Town Planning,
Housing Zoning Program of the National Coordinating Council of the then
Ministry of Human Settlements as approved under the City Council Resolution
No. 5792, Series of 1977. x x x.”[28]

These Certifications carried the presumption of regularity in their

issuance. Petitioners did not present any evidence to overcome that
presumption.[29] The letter of the deputized zoning administrator of Bacolod
City -- cited by petitioners to contradict the Certifications -- did not touch on,
much less corroborate, their claim that the subject landholding remained
classified as agricultural. It merely restated what was already provided in the law
-- that only the Sangguniang Panlungsod of Bacolod City could reclassify lands.

Petitioners next assert that, for tax purposes, the subject property was declared
by its owners as agricultural land since time immemorial until at least 1994.[30] It
is settled, however, that a tax declaration is not conclusive of the nature of the
property for zoning purposes.[31] It may have been declared by its owner as
residential for real estate taxation purposes, but it may well be within a
commercial zone.[32] In the determination of the nature of a piece of property, a
discrepancy would thus exist between its classification for real estate taxation
purposes vis-à-vis that for zoning purposes.

Under the Real Property Tax Code, a tax declaration serves only to enable the
assessor to identify a property for assessment levels,[33] not to bind a
provincial/city assessor. Under Section 220 of the Real Estate Tax Code,
appraisal and assessment are based on the actual use, regardless of “any previous
assessment or taxpayer’s valuation thereon” which, in turn, is based on a
taxpayer's declaration.

Republic v. Court of Appeals[34] ruled thus:

“There is no law or jurisprudence that holds that the land classification
embodied in the tax declarations is conclusive and final nor would proscribe any
further inquiry. Furthermore, the tax declarations are clearly not the sole basis
of the classification of a land. In fact, DAR Administrative Order No. 6 lists
other documents, aside from tax declarations, that must be submitted when
applying for exemption from CARP. In Halili v. Court of Appeals, we sustained
the trial court when it ruled that the classification made by the Land Regulatory
Board of the land in question outweighed the classification stated in the tax
declaration.”
Consequently, even if the subject landholding has been declared as agricultural
for taxation purposes, once a local government has reclassified it as residential,
that determination must prevail for zoning purposes.

WHEREFORE, the Petition is DENIED, and the assailed Decision

AFFIRMED. Costs against the petitioners.

SO ORDERED.

Sandoval-Gutierrez, Carpio-Morales, and Garcia, JJ., concur.

Corona, J., on official leave.

[1] Rollo, pp. 3-7. This was erroneously entitled “Petition for Certiorari.”

Annex “A” of Petition; id., pp. 8-13. Sixth Division. Penned by Justice Ma.
[2]

Alicia Austria-Martinez (Division chair, now a member of this Court) and

concurred in by Justices Oswaldo D. Agcaoili and Wenceslao I. Agnir Jr.
(members).

Entitled “In the Matter of Petition for Declaratory Judgment regarding the
[3]

Validity of the Order of Exemption of DAR Secretary Ernesto D. Garilao dated

September 13, 1994. Ramon de la Torre, Rudy Balena, Jose Junio, Romulo
Obag, Loreto Pahilona, Emilia Junio, Julio Junio, Danilo Maban and Romulo M.
Matti in his official capacity as Chairman of the Barangay Agrarian Reform
Committee (BARC) for Brgy. Pahanocoy, Bacolod City, Petitioners, versus
Ernesto D. Garilao in his official capacity as the Secretary of Agrarian Reform,
Respondent.”

[4] Rollo, p. 20.

[5] Id., p. 21.

[6] Id., p. 71.

[7] Id., p. 91. The pertinent portion of the letter reads:

“Let it be stated clearly that the City Planning and Development Office (CPDO)
did not reclassify subject lands, it merely identified areas for expansion under
the 1976 Framework Plan of Bacolod City under City Council Resolution No.
5153-A Ser. of 1976 and Resolution No. 5792 Ser. of 1977, only the
Sangguniang Panlungsod (SP) of Bacolod City can reclassify land and only the
Department of Agrarian Reform (DAR) can convert lands.”

[8] CA Decision, pp. 2-3; rollo, pp. 9-10.

[9] 225 SCRA 278, August 12, 1993.

This case was deemed submitted for decision on March 23, 2004, upon this
[10]

Court’s receipt of public respondent’s Memorandum, signed by Assistant

Solicitor General Nestor J. Ballacillo and Associate Solicitor Louella Vieve B.
Fernandez. Petitioners’ seven-page Memorandum, signed by Atty. Romulo A.
Deles, was received by this Court on February 6, 2004.

[11] Memorandum, pp. 4-5; rollo, pp. 217-218. Original in uppercase.

[12] March 22, 1990.

§4(j) of Executive Order No. 129-A, (which took effect on July 26, 1987),
[13]

specifically provides that the Department of Agrarian Reform shall be

responsible for implementing the Comprehensive Agrarian Reform Program
and, for that purpose, is authorized to approve or disapprove the conversion,
restructuring, or readjustment of agricultural lands into non-agricultural
uses. §5(l) of the same EO also provides that, pursuant to its mandate and in
order to ensure the successful implementation of the Comprehensive Agrarian
Reform Program, the DAR has 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.

[14] See also DOJ Opinion No. 136, Series of 1993.

 Entitled “An Act to Ordain the Agricultural Land Reform Code and to
[15]

Institute Land Reforms in the Philippines, Including the Abolition of Tenancy

and the Channeling of Capital into Industry, Provide for the Necessary
Implementing Agencies, Appropriate Funds therefor and for other purposes;”
which took effect on August 8, 1963.

Code of Agrarian Reforms, September 10, 1971. Designed as an

[16]

improvement of RA No. 3844, this amendatory Act featured the creation of the
Department of Agrarian Reforms (DAR), which was vested with powers and
duties to resolve all agrarian conflicts thru the exercise of its quasi-judicial
functions.

[17] §36(1).

[18] May 27, 1994.

[19] Dated October 24, 1994.

[20] 225 SCRA 278, August 12, 1993.

Advincula-Velasquez v. Court of Appeals et al., 431 SCRA 165, June 8, 2004. See
[21]

also National Housing Authority v. Allarde, 318 SCRA 22, November 16, 1999.

Section 5 of Executive Order No. 648 dated February 7, 1981 provides as

[22]

follows:

“Powers and Duties of the Commission.

“a) Promulgate zoning and other land use control standards and guidelines
which shall govern land use plans and zoning ordinances of local governments;
the zoning components of civil works and infrastructure projects of the
national, regional and local governments; subdivision or estate development
projects of both the public and private sectors; and urban renewal plans,
programs and projects: provided that the zoning and other land use control
standards and guidelines to be promulgated hereunder shall respect the
classification of public lands for forest purposes as certified by the Ministry of
Natural Resources.
“b) Review, evaluate and approve or disapprove comprehensive land use
development plans and zoning ordinances of local governments; and the zoning
component of civil works and infrastructure projects of national, regional and
local governments, subdivisions, condominiums or estate development projects
including industrial estates, of both the public and private sectors and urban
renewal plans, programs and projects: Provided, that the land use Development
Plans and Zoning Ordinances of Local Governments herein subject to review,
evaluation and approval of the commission shall respect the classification of
public lands for forest purposes as certified by the Ministry of Natural
Resources: Provided, further, that the classification of specific alienable and
disposable lands by the Bureau of Lands shall be in accordance with the relevant
zoning ordinance of Local government where it exists: and provided, finally that
in cities and municipalities where there are as yet no zoning ordinances, the
Bureau of Lands may dispose of specific alienable and disposable lands in
accordance with its own classification scheme subject to the condition that the
classification of these lands may be subsequently changed by the local
governments in accordance with their particular zoning ordinances which may
be promulgated later.
“c) Issue rules and regulations to enforce the land use policies and human
settlements as provided for in Presidential Decrees No. 399, 815, 933, 957,
1216, 1344, 1396, 1517, Letter of Instructions No. 713, 729, 833, 935, and other
related laws regulating the use of land including the regulatory aspects of the
Urban Land Reform Act and all decrees relating to regulation of the value of
land and improvements, and their rental.”

[23] 429 SCRA 109, May 25, 2004.

[24] Otherwise known as the Local Autonomy Act of 1959.

“Sec. 3. Power to adopt zoning and planning ordinances. — Any provision of law to the
contrary notwithstanding, Municipal Boards or City Councils in cities, and
Municipal Councils in municipalities are hereby authorized to adopt zoning and
subdivision ordinances or regulations for their respective cities and
municipalities subject to the approval of the City Mayor or Municipal Mayor, as
the case may be. Cities and municipalities may, however, consult the National
Planning Commission on matters pertaining to planning and zoning.”

[25] Pasong Bayabas Farmers Association, Inc. v. Court of Appeals et al., id.
[26]Pasong Bayabas Farmers Association, Inc. v. Court of Appeals et al., supra; Sps. Calvo
v. Sps. Vergara, 423 Phil. 939, December 19, 2001; Palele v. Court of Appeals, 362
SCRA 141, July 31, 2001.

[27] Rollo, p. 126.

[28] Ibid.

Sec. 3, Rule 131 of the Revised Rules of Court. Lercana v. Jalandoni, 426 Phil.
[29]

319, February 1, 2002.

[30] Memorandum, p. 3; rollo, p. 216.

[31] Patalinghug v. Court of Appeals, 229 SCRA 554, January 27, 1994.

In Article 217 of the LGC 1991 on Real Property Taxation, it is provided

[32]

that “real property shall be classified, valued and assessed on the basis of its
actual use regardless of where located, whoever owns it, and whoever uses it.”

[33] Article 202, Real Property Taxation, LGC 1991.

[34] 342 SCRA 189, 190, October 5, 2000 per Gonzaga-Reyes, J.

Copyright 2016 - Batas.org

 Supreme Court of the Philippines

262 Phil. 267

THIRD DIVISION
G.R. NO. 54281, March 19, 1990
CELSO PAGTALUNAN AND PAULINA P. PAGTALUNAN, PETITIONERS,
VS. HON. ROQUE A. TAMAYO, PRESIDING JUDGE OF THE CFI OF
BULACAN, BRANCH VI, REPUBLIC OF THE PHILIPPINES AND
TURANDOT, TRAVIATA, MARCELITA, MARLENE PACITA MATTHEW
AND ROSARY, ALL SURNAMED ALDABA, RESPONDENTS.

DECISION

CORTES, J.:

On January 17, 1978, respondent Republic of the Philippines filed a complaint

with the Court of First Instance of Bulacan for expropriation of a parcel of land
located in Bo. Tikay, Malolos, Bulacan, and owned by private respondents
herein as evidenced by TCT No. 24006, issued by the Register of Deeds of the
province of Bulacan [Petition, p. 2; Rollo, p. 10.] The complaint was docketed as
Civil Case No. 5257-M and entitled "Republic of the Philippines v. Turandot Aldaba,
et al.”

On March 2, 1978, the Court of First Instance issued a writ of possession

placing the Republic in possession of the land, upon its deposit of the amount
of Seven Thousand Two Hundred Pesos (P7,200.00) as provisional value of the
land. On June 8, 1978, petitioners herein filed a supplemental motion for leave
to intervene, with complaint in intervention attached thereto, alleging that
petitioner Celso Pagtalunan has been the bona fide agricultural tenant of a portion
of the land. Petitioners asked the trial court to order payment to Celso
Pagtalunan of just compensation for his landholding or, in the alternative, to
order payment of his disturbance compensation as bona fide tenant in an amount
not less than Fifteen Thousand Pesos (P15,000.00) per hectare.
On December 8, 1978, respondent Judge Roque A. Tamayo issued an order
denying the petitioners’ supplemental motion, holding that to admit petitioners’
complaint in intervention would be tantamount to allowing person to sue the
State without its consent since the claim for disturbance compensation is a claim
against the State. On January 12, 1979, petitioners filed a motion for
reconsideration but this was denied by respondent judge in an order dated
February 13, 1979.

On July 23, 1980, the instant petition was filed and was docketed as G.R. No.
54281. On January 14, 1981, this Court issued a resolution denying the instant
petition for lack of merit. On March 10, 1981, petitioners filed a motion for
reconsideration, limiting the discussion on the issue of lack of jurisdiction of the
trial court over the expropriation case. On August 19, 1981, this Court issued a
resolution granting the motion for reconsideration and gave due course to the
petition.

Meanwhile on December 22, 1978, the Office of the Solicitor General filed in
behalf of the Republic of the Philippines a notice of appeal, as well as a first
motion for extension of thirty (30) days from January 12, 1979 within which to
file record on appeal which was granted by respondent court. The Solicitor
General was appealing from that portion of the December 8, 1978 decision of
the Court of First Instance which fixed the compensation for the land
expropriated at Thirty Pesos (P30.00) per square meter. Counsel for private
respondents filed an objection to the public respondent's record on appeal
claiming that the same was filed beyond the reglementary period. On August
13, 1979 the Court of First Instance dismissed the appeal interposed by the
Republic. The Office of the Solicitor General moved for reconsideration but
this was denied for lack of merit. Thereafter, public respondent filed with the
Court of Appeals a petition for certiorari, prohibition and mandamus with
preliminary injunction seeking the annulment of the orders of the Court of First
Instance. On April 29, 1980, the Court of Appeals rendered a decision
dismissing public respondent's petition. On October 24, 1980, public
respondent filed with this Court a petition, docketed as G.R. No. 54886, asking
this Court to annul the decision of the Court of Appeals and to direct and
compel of the lower court to approve the Government's record on appeal and
to elevate the same to the Court of Appeals. In a decision dated August 10,
1981, the Court granted the petition and directed the trial court to approve the
Government's record on appeal and to elevate the same to the Court of
Appeals.

The principal issue raised in the petition centers on the alleged right of
petitioners to intervene in the expropriation proceedings instituted by the State
against private respondents as registered owner of the subject property.

Intervention is not a matter of right but may permitted by the courts when the
applicant shows facts which satisfy the requirements of the law authorizing
intervention [Gibson v. Revilla, G.R. No. L-41432, July 30, 1979, 92 SCRA 219.]
Under Section 2, Rule 12 of the Revised Rules of Court, what qualifies a person
to intervene is his possession of a legal interest in the matter in litigation, or in
the success of either of the parties, or an interest against both, or when he is so
situated as to be adversely affected by a distribution or other disposition of
property in the custody of the court or an officer thereof. The Court has ruled
that such interest must be actual, direct and material, and not simply contingent
and expectant [Garcia v. David, 67 Phil. 279 (1939); Batama Farmers' Cooperative
Marketing Association, Inc. v. Rosal, G.R. No. L-30526, November 29, 1971, 42
SCRA 408; Gibson v. Revilla, supra.]

In the present case, petitioners claim that Celso Pagtalunan possesses legal
interest in the matter in litigation for he, not private respondents herein, is the
party entitled to just compensation for the subject property sought to be
expropriated or, in the alternative, disturbance compensation as a bona fide
tenant based on Section 36 (1) of Rep. Act No. 3844, as amended by Rep. Act
No. 6389.

Petitioners base their claim for just compensation on Certificate of Land

Transfer No. NS-054560 issued to them, where the tenant farmer/grantee is
"deemed owner" of the agricultural land identified therein.* Petitioners contend
that the certificate is a muniment of title evidencing their legal ownership of a
portion of the subject property. Thus, they conclude that they are entitled to a
portion of the proceeds from the expropriation proceedings instituted over the
subject property.

There is no merit to the above contention.

The Court is fully aware that the phrase "deemed to be the owner" is used to
describe the grantee of a certificate of land transfer. But the import of such
phrase must be construed within the policy framework of Pres. Decree No. 27,
and interpreted with the other stipulations of the certificate issued pursuant to
this decree.

Pres. Decree No. 27 (otherwise known as the "Tenant Emancipation Decree")

was anchored upon the fundamental objective of addressing valid and legitimate
grievances of land ownership giving rise to violent conflict and social tension in
the countryside. More importantly, it recognized the necessity to encourage a
more productive agricultural base of the country's economy. To achieve this
end, the decree laid down a system for the purchase by small farmers, long
recognized as the backbone of the economy, of the lands they were
tilling. Landowners of agricultural lands which were devoted primarily to rice
and corn production and exceeded the minimum retention area were thus
compelled to sell, through the intercession of the government, their lands to
qualified farmers at liberal terms and conditions. However, a careful study of
the provisions of Pres. Decree No. 27, and the certificate of land transfer issued
to qualified farmers, will reveal that the transfer of ownership over these lands is
subject to particular terms and conditions the compliance with which is
necessary in order that the grantees can claim the right of absolute ownership
over them.

A certificate of land transfer issued pursuant to Pres. Decree No. 27 provides:

xxx xxx xxx

I, Ferdinand E. Marcos, President of the Philippines, declare that

_________________ having manifested his desire to own the land under his
cultivation and having complied with the implementing rules and regulations of
the Department of Agrarian Reform, is hereby deemed to be the owner of the
agricultural land described as follows:

xxx xxx xxx

subject to the conditions that the cost of the portion herein transferred to the tenant
farmer as fixed by the authorities concerned, including the interest rate at the rate of six
percentum (6%) per annum shall be paid by the tenant farmer in fifteen (15) equal annual
amortization, that the tenant farmer must be a member of a Barrio Association upon
organization of such association in locality, and that the title to the land herein shall not be
transferred except by hereditary succession or to the Government in accordance with the
provisions of Presidential Decree Number 27, the Code of Agrarian Reform and other
existing laws and regulations.

xxx xxx xxx

[Annex "B" to the Petition; Rollo, p. 26, Underscoring supplied.]

And under Pres. Decree No. 266 which specifies the procedure for the
registration of title to lands acquired under Pres. Decree No. 27, full compliance
by the grantee with the above-mentioned undertakings is required for a grant of
title under the Tenant Emancipation Decree and the subsequent issuance of an
emancipation patent in favor of the farmer/grantee [Section 2, Pres. Decree No.
266.] It is the emancipation patent which constitutes conclusive authority for the
issuance of an Original Certificate of Transfer, or a Transfer Certificate of Title,
in the name of the grantee.

Hence, the mere issuance of the certificate of land transfer does not vest in the
farmer/grantee ownership of the land described therein. The certificate simply
evidences the government's recognition of the grantee as the party qualified to
avail of the statutory mechanisms for the acquisition of ownership of the land
tilled by him as provided under Pres. Decree No. 27. Neither is this recognition
permanent nor irrevocable. Failure on the part of the farmer/grantee to comply
with his obligation to pay his lease rentals or amortization payments when they
fall due for a period of two (2) years to the landowner or agricultural lessor is a
ground for forfeiture of his certificate of land transfer [Section 2, Pres. Decree.
No. 816.]

Clearly, it is only after compliance with the above conditions which entitle a
farmer/grantee to an emancipation patent that he acquires the vested right of
absolute ownership in the landholding - a right which has become fixed and
established, and is no longer open to doubt or controversy [See definition of
"vested right" or "vested interest" in Balbao v. Farrales, 51 Phil. 498 (1928);
Republic of the Philippines v. de Porkan, G.R. No. 66866, June 18, 1987, 151 SCRA
88.] At best, the farmer/grantee, prior to compliance with these conditions,
merely possesses a contingent or expectant right of ownership over the
landholding.
In the present case, the State in the exercise of its sovereign power of eminent
domain has decided to expropriate the subject property for public use as a
permanent site for the Bulacan Area Shop of the Department of Public Works
and Highways. On the other hand, petitioners have not been issued an
emancipation patent. Furthermore, they do not dispute private respondents'
allegation that they have not complied with the conditions enumerated in their
certificate of land transfer which would entitle them to a patent [See Private
Respondents’ Comment, p. 3; Rollo, p. 34. And also Memorandum of Private
Respondents, p. 6; Rollo, p. 109.] In fact, petitioners do not even claim that they
had remitted to private respondents, through the Land Bank of the Philippines,
even a single amortization payment for the purchase of the subject property.

Under these circumstances, petitioners cannot now successfully argue that Celso
Pagtalunan is legally entitled to a portion of the proceeds from the expropriation
proceedings corresponding to the value of the landholding.

Anent petitioners' claim for disturbance compensation, the Court finds that the
law cited by petitioners, Section 36 (1) of Rep. Act No. 3844, as amended by
Rep. Act No. 6389, cannot be invoked to hold the State liable for disturbance
compensation [See Campos v. CA [G.R. No. 51904, October 1, 1980] where this
Court by resolution denied for lack of merit therein petitioner's claim that, as
agricultural lessee or tenant, he was entitled to disturbance compensation against
the State. It refers to situations where the peaceful enjoyment and possession
by the agricultural tenants or lessees of the land is disturbed or interrupted by
the owner/lessor thereof. Paragraphs 1 to 7 of the said section enumerate the
instances when the lessees may be evicted by the owner/lessor, and paragraph 1
thereof provides that lessees shall be entitled to disturbance compensation from
the owner/lessor, if the land will be converted by the latter into a residential,
commercial or industrial land. Thus, Section 36 (1) of Rep. Act No. 3844, as
amended, deals with the liability of an owner/lessor to his agricultural
tenant/lessee and cannot be invoked to make the State liable to petitioners
herein for disturbance compensation.

Nor may petitioners invoke this section as basis to hold private respondents
liable for disturbance compensation. Section 36 (1) of Rep. Act No. 3844, as
amended, is applicable only when it is the owner/lessor who voluntarily opts for
the conversion of his land into non-agricultural land. In the present case, it is
the State, not the private respondents, who disturbed petitioners' possession of
the subject property. The conversion of the property into a permanent site for
the Bulacan Area Shop of the Department of Public Works and Highways was
undertaken by the government independent of the will of private respondents
herein.

Parenthetically, it should be noted that the government has already paid

petitioner Celso Pagtalunan approximately FIVE THOUSAND PESOS
(P5,000.00) to compensate the latter for improvements introduced on the
property, and expenses for relocating his home [Petitioners' Reply to the
Opposition to their Motion for Reconsideration, p. 2; Rollo, p. 98. And also
Private Respondents' Comment, p. 3; Rollo, p. 93.]

Considering, therefore, that petitioners are not entitled to just compensation for
the expropriation of the subject property, nor to disturbance compensation
under Rep. Act No. 3844, as amended, the Court finds that the trial court
committed no reversible error in denying petitioners' motion for leave to
intervene in the expropriation proceedings below.

II.

On the issue of jurisdiction, petitioners contend that since their motion to

intervene alleges as justification therefor that petitioner Celso Pagtalunan is the
bona fide tenant of the subject property, the case should have been referred to the
Court of Agrarian Relations which has original and exclusive jurisdiction over
expropriation proceedings for public purpose of all kinds of tenanted properties.

The Court finds no reason to dwell on this point. The issue of what court has
jurisdiction over the expropriation proceedings in this case has been rendered
moot and academic by B.P. Blg. 129. Under Paragraph 7, Section 19 of B.P.
Blg. 129, all civil actions and special proceedings which were then under the
exclusive jurisdiction of the Court of Agrarian Relations were placed under the
exclusive and original jurisdiction of the Regional Trial Courts [formerly the
Courts of First Instance].

WHEREFORE, the present petition is hereby DENIED for lack of merit.

SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Feliciano, and Bidin, JJ., concur.

* Although the CLT was issued in the name of Paulina Pagtalunan, petitioners
allege that it is petitioner Celso Pagtalunan who is the bona fide tenant of the
subject property and that the CLT was only erroneously issued to
Paulina. Paulina herself has admitted the error and expressed her willingness to
transfer the said CLT in the name of her brother Celso. At the time the present
petition was filed, petitioners have commenced proceedings in the Bulacan
District Office of the Department of Agrarian Reform for the reissuance of
subject CLT in the name of petitioner Celso Pagtalunan as the rightful grantee
[See Annex "A" to Memorandum of Private Respondents, p. 3; Rollo, p. 114.]

Copyright 2016 - Batas.org

 Supreme Court of the Philippines

510 Phil. 177

EN BANC
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.

DECISION

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 Reform's 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.

Petitioner's 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 the conversion 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.

Davide, Jr., C.J., Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio,

Austria-Martinez, Corona, Carpio Morales, Callejo, Sr., Azcuna, Tinga, Chico-Nazario,
and Garcia, JJ., concur.
[1]This is a transaction entered into by the landowner and the government, thru
the DAR, the purchase price of the land being the one agreed upon between
them, and paid by the Land Bank of the Philippines. Under E.O. No. 229, such
transactions shall be exempt from the payment of the capital gains tax and other
taxes and fees. As an additional incentive, Section 19 of the CARP gives to
landowners who voluntarily offer to sell their land an additional five percent
(5%) cash payment.

[2] 192 SCRA 51 (1990).

[3] CA Rollo, pp. 65-66.

[4] Id., pp. 67-68.

[5] Id., pp. 57-62.

[6] Id., pp. 69-71.

[7] Id., pp. 72-76.

[8] Order, dated October 5, 1995; CA Rollo, pp. 87-89.

[9] O.P. Case No. 96-A-6361.

[10] CA Rollo, pp. 50-54.

CA Decision dated September 19, 2003, penned by Associate Justice

[11]

Buenaventura J. Guerrero and concurred in by Associate Justices Andres B.

Reyes, Jr. and Regalado E. Maambong; Rollo, pp. 32-43.

Administrative Law and Process in a Nutshell, Gellhorn and Levin, 1990 ed.,
[12]

p. 315.

[13] Pagpalain Haulers, Inc. v. Trajano, 310 SCRA 354 (1999).

[14] Conte v. Commission on Audit, 264 SCRA 19 (1996).

[15] Luz Farms case, supra, p. 61.

[16] 225 SCRA 278 (1993).

This same ruling was adapted on February 21, 1995 by then Executive
[17]

Secretary Teofisto Guingona, Jr., by authority of the President, in his Decision

exempting from the coverage of agrarian reform the landholdings of Golden
Country Farms, Inc., used in its cattle, swine and poultry operations. See O.P.
Case No. 5454, CA Rollo, pp. 103-111.

[18] Opposition to Respondent's Motion for Reconsideration, pp. 310-311.

[19] Administrative Law, A Text, Reginald Parker, p. 157.

[20] Enacted on July 25, 1994.

[21] Sections 1 and 3 of R.A. No. 7881.

[22] Conte v. Commission on Audit, supra.

Copyright 2016 - Batas.org

 Supreme Court of the Philippines

544 Phil. 308

THIRD DIVISION
G.R. NO. 169277, February 09, 2007
DEPARTMENT OF AGRARIAN REFORM, [1] REPRESENTED BY OIC -
SECRETARY NASSER C. PANGANDAMAN, PETITIONER, VS. VICENTE
K. UY, RESPONDENT.

DECISION

CALLEJO, SR., J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the
Revised Rules of Court of the Amended Decision[2] of the Court of Appeals
(CA) in CA-G.R. SP No. 70541 and the Resolution[3] of the appellate court
denying the motion for reconsideration thereof. The CA reversed and set aside
the Decision[4] of the Office of the President (OP) which had affirmed the
Order[5] of the Department of Agrarian Reform (DAR) exempting only a
portion (219.50 hectares) of respondent Vicente K. Uy's 349.9996-ha
landholding from the coverage of the Comprehensive Agrarian Reform
Program (CARP).

On December 4, 1990, this Court promulgated its decision in Luz Farms v.

Secretary of the Department of Agrarian Reform[6] where it declared unconstitutional
Sections 3(b), 11, 13 and 32 of Republic Act (R.A.) No. 6657.[7] The nullified
provisions pertain to the inclusion of land used in raising livestock, poultry, and
swine in the coverage of the law. The Court likewise nullified the Implementing
Rules and Guidelines promulgated in accordance therewith.[8]

On December 27, 1993, the DAR issued Administrative Order (A.O.) No. 9,
Series of 1993[9] primarily to curb the pernicious practice of landowners who
convert their lands from agricultural to livestock and poultry in order to
circumvent the law. The prefatory statement reads:
x x x, the Supreme Court held that lands devoted to the raising of livestock,
poultry and swine are excluded from the coverage of R.A. No. 6657. Following
the said decision, numerous reports have been received that some landowners
had taken steps to convert their agricultural lands to livestock, poultry and swine
raising.

In order to prevent circumvention of the Comprehensive Agrarian Reform

Program and to protect the rights of the [a]grarian reform beneficiaries,
specifically against their possible unlawful ejectment due to the unauthorized
change or conversion or fraudulent declaration of areas actually, directly, and
exclusively used for livestock, poultry and swine raising purposes, the following
rules and regulations are hereby prescribed for the guidance of all concerned.[10]
The DAR also declared that as of June 15, 1988, the date R.A. No. 6657 took
effect, the following rules shall apply in determining the "areas qualified for
exclusion":

A. Private Agricultural lands or portions thereof exclusively, directly and

actually used for livestock, poultry and swine raising as of 15 June 1998 shall
be excluded from the coverage of CARP.

B. In determining the areas qualified for exclusion under this Administrative

Order, the following ratios of land, livestock, poultry and swine raising
shall be adopted:

1.0 Grazing
1.1 Cattle, Carabao [11] and Horse Raising
- cattle, carabao and horse (regardless of age) - the maximum ratio is one
(1) head to one (1) hectare

xxxx

2.0 Infrastructure
2.1 Cattle, Horses and Carabao Raising - a ratio of 21 heads for every
1.7815 hectares of infrastructure x x x. [12]
Dr. Vicente K. Uy, Wellington K. Ong, Jaime Chua, and Daniel Sy, among
others, are owners of a 349.9996-ha parcel of land located in Barangay
Camaflora, Barrio of San Andres, Municipality of San Narciso, Province of
Quezon. The property is covered by Transfer Certificate of Title (TCT) No.
160988.

Sometime in 1993, some 44 farmers who occupied portions of the property filed
petitions in the DAR, seeking to be declared as owners- beneficiaries. On
December 20, 1994, the DAR issued a Notice of Coverage under the CARP
over the property. For his part, respondent, in behalf of the co-owners, filed an
Application for Exclusion[13] in the form of a letter dated May 10, 1995, through
Provincial Agrarian Reform Officer (PARO) Durante L. Ubeda. To substantiate
his request to exclude their landholding from CARP coverage under the Luz
Farms ruling, respondent declared that their property had been exclusively used
for livestock-raising for several years prior to June 15, 1988. According to the
applicants, they had 400 heads of cattle, 5 horses, and 25 carabaos in the
landholding and -
Our private landholding has been devoted and actually used for cattle
and/or livestock raising, together with raising of carabaos, and horses
continuously from the time it was owned by our predecessors-in-interest,
Emiterio Florido, and even when we acquired title over the property in 1979, we
continually devoted and actually used the said landholding for cattle raising from
1979 up to the present.[14]
On May 10, 1995, the Provincial Task Force on Exclusion led by Municipal
Agrarian Reform Officer (MARO) Belen T. Babalcon conducted an ocular
inspection of the property and an actual "headcount" was conducted. The
following were present to witness the inspection: the Mayor of San Andres, the
Barangay Agrarian Reform Committee Chairman, Legal Officer III James Carigo,
and representatives of the applicants, farmers-beneficiaries, the Provincial
Agrarian Reform Office, and the Philippine National Police. The findings of
the Task Force are contained in the Investigation Report:
Registered Owner/s: (If deceased, indicate name of heirs)

OWNER

1. Dr. Vicente K. Uy
2. Wellington K. Ong, mrd. to So Ngo Grace Ong
3. Jaime Chua, mrd. to Letty Ong Chua
4. Daniel Sy, mrd. to Carolyn T. Ngo
5. Nancy Ong Uy
6. Emily Ong Uy
7. Lucy Ong
8. Wilson Ong
9. John Ong Uy

E. Actual Land No. of Actual Approximate Topography

Use Animal Area Area used
heads/birds (has.) for
used infrastructure
for
grazing
1. Livestock
346.00 3.00 more or
1.1 cattle 401 ) Flat to
hectares less
1.2 horse 20 ) undulating
more or
1.3 carabao 8)
less

2. Goat allegedly owned by

Sheep FBs and overseer

3. Swine none

4. Poultry none
4.1 layers
4.2 broilers

F. Other Land
Uses No. of FWs
Agriculture No. of &
Crops No. of Has. Tenants employees
Planted
1. Coconut 346.00 more or less more than 29
and auxillary and 44 presently
crops utilized for pasture
and grazing of
livestock.
Others (specify)

20 hectares more or less are sporadically planted to coconut with "aroma

shrubs" also utilized for pasture at sitio Ipil.

G. Improvements and Infrastructures. Describe the kind of improvements and

infrastructures whether constructed with strong or light materials and indicate
the date constructed.

2 corral made of coco lumber. The old one have constructed in 1980 and the
other one constructed sometime on February 1995. Barb wire and fences on
the perimeter of the area, wooden primary and secondary gate, feed storage,
embankments. Cayab and potot creek are utilized for drinking purposes of
the livestock.

H. Finishing.

The landholding are entirely planted to bearing coconut trees "tenanted by more or
less 44 FBs with sharing arrangement of 60:40 in favor of the landowner. The tenanted
coconut land are presently used as pasture and grazing of the livestock." Landowner alleged
that they are engaged in livestock raising prior to June 15, 1988. FBs are now petitioning
for the acquisition and distribution of their occupied area under CARP
coverage.[15]
The Task Force made the following declaration:
I. Comments/Remarks/Recommendations:

The density required on commercial farming as far as the number of livestock is

concerned have been met; however, the necessary infrastructure and facilities
like paddocks, dike, water trough and others were not present much more per
information revealed by farmers in the area majority of the cattles were only
brought in the early part of this year. Therefore, it is recommended that the areas
actually cultivated and occupied by the tenants be covered by CARP and only areas not
affected be excluded from CARP coverage.[16]
Thus, on the basis of the aforesaid findings, MARO Belen Babalcon made a
Final Report, declaring that 346.000 ha, more or less, is devoted to coconut and
livestock farming; the registered owner is Dr. Vicente K. Uy; 346 ha is used for
grazing and 3 ha for infrastructure. She declared that while a total of 429
livestock heads (401 cows, 20 horses, 8 carabaos) are being raised in the
property, "the total area for exclusion is undetermined because there are portions occupied by
tenants which should not be excluded from CARP coverage."[17]

Meanwhile, PARO Durante L. Ubeda submitted a separate Report[18] dated July

4, 1995 where he declared:

1) THAT the total number of Certificate[s] of Ownership is 434 which

is more than the actual headcount of 401;

2) THAT the number of cattle 7 years old and above totaled 134 heads with 13
males and 121 females as of date of certification;

3) THAT 300 cattles were of ages 6 years old and below with 76 males and 234
females, [also as of the date of certification.][19]
Ubeda's basis for exclusion is the Certificate of Ownership of Large Cattle
issued by the Municipal Treasurer of San Andres on May 12-29, 1995, submitted
by the landowner, which, according to Ubeda is "more conclusive" (although
issued fairly recently). He recommended the exclusion from CARP coverage a total of
219.50 has: 134 has. for cattle-grazing, 28 has. for horse and carabao grazing, 12.5 has. for
infrastructure and 45 has. for retention of nine landowners.

The applicants, through Uy, wrote a letter[20] to DAR Region IV Director

Percival C. Dalugdug dated July 18, 1995, requesting for a reinvestigation of the
Report of PARO Ubeda. This request was reiterated in an August 11, 1995
letter[21] where the applicants requested, for the first time, the exclusion of
another parcel of land - 22.2639 ha and covered by TCT No. T-11948 - which is
contiguous to the 349.9996-ha lot covered by their earlier application.

On August 14, 1995, the Regional Director issued an Order affirming the
findings and recommendation of PARO Ubeda. Respondent and his co-owners
appealed the order to the DAR Secretary on August 28, 1995. They argued that
the properties have been devoted to livestock-raising even prior to 1977. Thus,
the landholdings should be excluded from CARP coverage.[22] They further
argued that for purposes of determining the area for exclusion under A.O. No.
9, the entire number of livestock should be credited in applying the ratio of one
head to one hectare. Considering that the landholdings totaled only 370 ha and
there are 429 heads of livestock, they have more than complied with A.O. No.
9, Series of 1993.[23]

On March 15, 1996, the DAR issued an Order suspending the processing and
issuance of Certificates of Land Ownership Awards to the farmers-beneficiaries
of the landholding covered by TCT No. 160988 pending the resolution of the
appeal.[24]

On October 7, 1996, the DAR issued an Order[25] partially granting the

application for exclusion. It held that, in accordance with the Luz Farms ruling
and A.O. No. 9, private agricultural lands are considered excluded from the
CARP if already devoted to livestock, poultry, and swine-raising as of June 15,
1988. According to the DAR, this means that the livestock must have been in
the area at the time the law took effect. Since the Certificates of Ownership of
Large Cattle were issued only on May 12 to 29, 1995, only those livestock which
are seven years of age or more can be presumed to be within the area as of June
15, 1988. Consequently, following the animal to land ratio provided in A.O. No.
9 for 134 cattle and 28 horses and carabaos, only 162 ha should be exempted
from CARP coverage.

The DAR also ruled that additional exemptions include 12.50 ha for
infrastructure (following the ratio 21 heads for every 1.7815 ha) and 45 ha for
retention of nine landowners, for a total of 219.50 ha. The dispositive portion of
the Order reads:
WHEREFORE, premises considered, Order is hereby issued:

1. GRANTING the instant application for exclusion/exemption from

CARP coverage pursuant to Administrative Order No. 09 Series [o]f 1993
but only with respect to a total of TWO HUNDRED NINETEEN
POINT FIFTY (219.50) hectares. The remainder of ONE HUNDRED
THIRTY POINT FOUR NINE NINE SIX (130.4996) hectares are
hereby placed under CARP coverage;
2. Directing the MARO/PARO concerned to cause the survey of the entire
area for purposes of segregating the areas which are covered from those
which are excluded.

SO ORDERED.[26]
On October 15, 1996, the applicants appealed the order to the OP via an
Appeal with Prayer for Status Quo/Stay of Execution. The case was docketed
as OP Case No. 98-D-8316.

On April 13, 1998, the President, through then Deputy Executive Secretary
Renato C. Corona (now a member of the Court), rendered a decision dismissing
the appeal for lack of merit, as follows:
The language of DAR Administrative Order No. 09 appears to be quite explicit:
"Private agricultural lands or portions thereof exclusively, directly and actually
used for livestock, poultry and swine raising as of 15 June 1988 shall be
excluded from the coverage of CARP." By simple reading, it is obvious that the
livestock, poultry and swine, in order to be included in the computation of the
area to be exempted from CARP coverage, should have been existing in the area
sought to be exempted at the time of the effectivity of RA 6657, which is June
15, 1988. Thus, in ascertaining the animal/land ratio, the age of the cattle
should be reckoned with. From the certification of the Municipal Treasurer of
San Andres, Quezon, it appears that only 134 of the 434 cattles are found to be
at least seven years of age. Accordingly, only 162 hectares (134 for the cattle
and 28 for the horses and carabaos) are exempted from CARP coverage
following the one hectare per one head of cattle ratio provided under the same
administrative order. This, of course, does not include the retention area of the
appellants-landowners and the area reserved for the infrastructures.[27]
Respondent and his co-owners filed a Motion for Reconsideration dated May
21, 1998 of the decision. In an Order dated September 15, 1998 signed by the
then Executive Secretary Ronaldo Zamora, by authority of the President, the
appeal was denied for being devoid of substantial merit.[28]

However, on October 5, 1998, then Chief Presidential Legal Adviser Harriet

Demetriou submitted the following Memorandum to the President:
1. For total exemption:

Administrative Order No. 9 provides that the maximum ratio in determining

areas to be exempted is one head to one hectare "regardless of age."

Hence, if Administrative Order No. 9 does not distinguish, neither should we.

The use of age as a reference when not so required is arbitrary and very
dangerous because it would then variably depend on the arbitrary decision of
the DAR on when to conduct an inspection, and this is no fault of the
landowner. Thus, the more recent the inspection is made, the higher the age
requirement will be just to reckon the animals' existence from 15 June
1988. The ultimate result is that an owner will never be able to augment his
herd, or replace lost or deceased livestock, after 1988, which is absurd and an
undue limitation of property rights.

The arbitrary use of age to determine the number of head of livestock as of 15

June 1988 is based on an unwieldy theory that the business of raising livestock
involves a fixed number of head of livestock. At any rate, Mr. Uy's land
admittedly has always been devoted to livestock. Therefore, there should be no
apprehension that the land was merely converted to circumvent the application
of the CARL. Hence, in the absence of collusion or intent to circumvent the
law, the number of heads of livestock should be counted as of the date of
inspection.

Finally, we would like to inform the following that the dispute is pending
resolution before the Office of the President to which the case was
elevated. Hence, the case also merits the opinion of Hon. Secretary Ronaldo B.
Zamora as the final reviewing authority.[29]
On October 19, 1998, the respondent and his co-owners filed a Second Motion
for Reconsideration of the decision of the OP. On April 16, 2002, the
President, through Deputy Executive Secretary Arthur P. Autea, issued an
Order denying the October 19, 1998 second motion for reconsideration for
being a prohibited pleading and for lack of merit.[30] Citing Ortigas and Company
Limited Partnership v. Velasco,[31] the OP also declared that the Second Motion for
Reconsideration was a prohibited pleading. Furthermore, Section 7 of A.O. No.
18 dated February 12, 1987 allows only one motion for reconsideration save for
exceptionally meritorious cases.

On December 22, 2002, the OP, through Executive Secretary Ronaldo B.

Zamora, issued a Memorandum[32] for DAR Secretary Horacio Morales referring
the case for the Secretary's final disposition, on the matter of exemption from
CARP coverage the subject landholding, as indicated in the aforesaid
Memorandum of the Chief Presidential Legal Adviser to the President.[33]

Respondent for himself and in behalf of other owners then filed a "Petition for
Review with Application/Prayer for Status Quo and/or Stay of Execution"[34]
before the CA, docketed as CA-G.R. SP. No. 70541. They alleged that the OP
committed the following errors:
I
IT UNILATERALLY RE-ASSUMED JURISDICTION OVER THE CASE
AND ISSUED THE ORDER OF APRIL 16, 2002, DENYING THE
SECOND MOTION FOR RECONSIDERATION AND FOR RULING
THAT IT WAS NOT "EXCEPTIONALLY MERITORIOUS ENOUGH,"
EITHER OF WHICH CONSTITUTES GRAVE ABUSE OF DISCRETION
AND/OR EXCESS OF JURISDICTION, AND THEREFORE,
REVERSIBLE.[35]

II
IT DECLINED TO PASS UPON A JURISDICTIONAL ISSUE RAISED;
THAT IS THE ASSUMPTION OF JURISDICTION BY DAR OVER
SUBJECT LANDHOLDING/S, POPULARLY KNOWN AND ACCEPTED
AS DEVOTED TO LIVESTOCK RAISING DESPITE JURISPRUDENCE
EXPLICITLY DECLARING IT, TOGETHER WITH POULTRY AND
SWINE RAISING, AS NOT COVERED BY THE AGRARIAN REFORM
PROGRAM OF THE GOVERNMENT, THEREFORE, BEYOND THE
OFFICIAL COMPETENCE OF DAR.[36]

III
IT UPHELD DAR ADMINISTRATIVE ORDER NO. 9, SERIES OF 1993,
BUT, IN EFFECT, ONLY AS TO THE GENERAL RULE PRESCRIBED,
FOR IT DISREGARDED THE CONDITIONS AND/OR
QUALIFICATIONS ATTACHED THERETO [AND] THEREBY
CONSTITU[TING] AN ARBITRARY AND DISCRIMINATORY
APPLICATION OF THE RULE, A GRAVE ABUSE OF DISCRETION.[37]
The appellate court rendered judgment affirming the decision of the OP and,
consequently, the October 7, 1996 DAR Order. According to the appellate
court -
The DAR has the power to establish and promulgate operational policies, rules
and regulations and priorities for agrarian reform implementation (Executive
Order 129-A, Section 5(c), July 26, 1987). The Comprehensive Agrarian
Reform Law (R.A. 6657) itself mandates that:
"SECTION 49. Rules and Regulations. - The PARC and the DAR shall have the
power to issue rules and regulations, whether substantive or procedural, to carry
out the objects and purposes of this Act. Said rules shall take effect ten (10)
days after publication in two (2) national newspapers of general circulation."
Thus, applying DAR Administrative Order No. 9, Series of 1993, and based on
the ocular inspection and Certificate of Ownership of Large Cattle issued by the
Municipal Treasurer, the DAR exempted 219.50 hectares of the subject
landholding from CARP coverage. It was found that of the 434 heads of cattle,
only 134 were over seven years of age. Added to this number of cattle were the
28 heads of horses and carabaos, totaling 162 heads. Accordingly, pursuant to
the one hectare per one head ratio, 162 hectares were exempted. The retention
areas of the landowners amounting to 45 hectares and the 12.50 hectares
allotted for infrastructure was also exempted.

Such application by the DAR is in accordance with the spirit of the law and its
aim of preventing unlawful conversion of agricultural lands to escape coverage
under the CARP.

It is well-settled that factual findings of administrative agencies, which have

acquired expertise in their field, are generally binding and conclusive upon the
Court. (Cagayan Robina Sugar Milling Co. v. Court of Appeals, 342 SCRA 663)[38]
Respondent and his co-owners filed a motion for reconsideration of the
decision, praying that the entire 349.9996 ha be exempted from CARP coverage.

On May 24, 2004, the CA rendered an Amended Decision[39] reversing and

setting aside its previous decision. The fallo reads:
WHEREFORE, based on the foregoing premises, the instant motion for
reconsideration is hereby GRANTED. The Decision of this Court promulgated
on February 18, 2003 is accordingly RECONSIDERED and SET ASIDE.
Consequently, the April 13, 1998 Decision of the Office of the President is
REVERSED and the areas under TCT No. T-160988 and T-111948 are
declared EXEMPTED from CARP coverage.

SO ORDERED.[40]
This time the CA declared that A.O. No. 9, Series of 1993, requires that the
landholding be devoted to cattle-raising when R.A. No. 6657 took effect. It also
pointed out that Section III-B of the A.O. provides that in determining the areas
qualified for exclusion, the ratio shall be one head of livestock to one hectare of
land, regardless of age. Neither the law nor the A.O. requires that the livestock
during inspection should be those that already existed on the landholding on or
before June 15, 1988. Consequently, the appellate court declared that in order to
determine the area for exclusion, the counting of livestock should be, as stated
in the administrative order, "regardless of age" during actual inspection. The
appellate court concluded that all 434 heads of cattle present in the subject
property should have been considered in determining the exempt area used for
livestock raising.

On June 21, 2004, the DAR, represented by the Secretary of Agrarian Reform,
filed a motion for reconsideration[41] of the appellate court's amended decision.
It reiterated that the pronouncement by this Court that "the law only requires
that for exemption of CARP to apply, the subject landholding should be
devoted to cattle-raising as of June 15, 1988" is not entirely correct, for the law
requires that it be exclusively, directly and actually used for livestock as of June 15, 1988.
Under A.O. No. 9, Series of 1993, two conditions must be established:

1) It must be shown that the subject landholding was EXCLUSIVELY,

DIRECTLY AND ACTUALLY used for livestock, poultry or swine
on or before June 15, 1988; and

2) The farm must satisfy the ratios of land to livestock.[42]

It must be shown that the entire landholding, and not just portions of it, should
be devoted to livestock raising. The words "regardless of age" in the order
should be interpreted to mean only those heads of cattle existing as of June 15,
1988. Accordingly, the ratio of land to livestock should be based on those
livestock found existing in the landholding at the time R.A. No. 6657 took
effect on June 15, 1988. This is consistent with the intent of the law to prevent
fraudulent declaration of areas actually, directly and exclusively used for
livestock as well as to protect the rights of agrarian beneficiaries therein.

It was not proven that the entire landholding was exclusively used for livestock
as of June 15, 1988. In fact, the ocular inspection of the property conducted by
the Provincial Task Force on Exclusion reported that about 20 ha were planted
with coconuts. It also revealed that the topography is flat and undulated, and
that 44 farmers-beneficiaries occupied portions of the said landholding. On
these bases alone, it is hard to imagine how the said landholding could have
been "exclusively, directly and actually used for livestock as of June 15, 1988."

Moreover, out of the 434 heads of cattle found in the subject landholding as of
May 1995, only 134 heads of cattle and 28 horses and carabaos could have been
present in the subject landholding. This is based on the finding that only 134
heads of cattle were 7 years and older, and, consequently, were the only ones
that could have existed as of June 15, 1988. Hence, they could not be made as
basis for the computation of the areas qualified for exclusion, for to do so
would clearly violate the first condition that the heads of cattle must be in
existence as of June 15, 1988.[43]

The appellate court was not persuaded and resolved to deny, for lack of merit,
the motion for the reconsideration of its amended decision.[44]

The DAR, now the petitioner, filed the instant petition for review, alleging that
the appellate court erred as follows:
I
IT GAVE DUE COURSE AND GRANTED RESPONDENT�S [DR. UY]
PETITION DESPITE BEING FILED OUT OF TIME.[45]

II
IT DECLARED THE ENTIRE 349.9996 HECTARE-PROPERTY OF
RESPONDENT AS EXEMPT FROM COVERAGE OF THE
COMPREHENSIVE AGRARIAN REFORM PROGRAM.[46]
Thus, the pivotal issues to be resolved here are (1) whether or not the second
motion for reconsideration filed by respondent tolled the reglementary period to
appeal; and (2) whether or not the phrase "regardless of age" in Section III-B of
DAR A.O. No. 9, Series of 1993 should be reckoned from June 15, 1988, or
from the date of inspection.

On the first issue, petitioner claims that, under the OP Rules of Procedure,
specifically the second paragraph of Section 7, A.O. No. 18, Series of 1987, only
one motion for reconsideration is allowed except in meritorious cases. Hence,
the period to file the petition for review had already expired 15 days after the
denial of the first motion for reconsideration. Petitioner insists that the filing of
the second motion for reconsideration is of no consequence since the OP had
already concluded that the case was "not exceptionally meritorious to justify
additional motions for reconsiderations."

On the second issue, petitioner contends that in the Luz Farms case, the entire
property therein was devoted to livestock and poultry prior to June 15, 1988; in
the present case, only a minimal portion of the property involved is so
devoted. It further insists that the report of the Task Force on Exclusion
revealed that 20 ha are planted with coconut trees while undetermined portions
are occupied by 44 farmers-beneficiaries. Thus, the 20 ha planted with coconuts
were not intended for cattle grazing, neither do they serve the purpose of shade
and fodder for the bovines. The presence of farmers-beneficiaries who tend to
the trees indicates that respondent is also engaged in the coconut industry,
belying the fact that the entire 349.9996 ha is exclusively devoted to livestock-
raising. Petitioner further claims that Luz Farms was a corporation engaged in
the livestock and poultry business even before 1988. On the other hand,
respondent did not present any business permit or articles of incorporation to
prove that the entire 349.9996 ha is devoted to the livestock business.

Petitioner further avers that it had received reports that A.O. No. 9 was issued
to prescribe the rules for exclusion of the land used for livestock production.
Petitioner posits that the order is curative in nature and retroactive in
application; and the phrase "regardless of age" refers to heads of cattle in the
year 1988 and not during actual inspection. Petitioner argues that if the phrase
were to be given any other meaning, landowners could easily fill their land with
livestock and apply for exemption, defeating the purpose of agrarian
reform. Thus, during actual inspection, the headcount should be based on the
existence of the animals in 1988 through available records; if there be none, then
the tallying must be done according to the age of the animals alive at that time.

By way of Comment,[47] respondent maintains that Section 7 of A.O. No. 18,

Series of 1987 does not totally rule out a second motion for reconsideration; the
governing principle in the resolution of the case is its merits. Citing a plethora of
cases, he avers that substantial justice should overrule rules of procedure.
Respondent further points out that even his predecessor-in-interest was engaged
in the business of livestock raising on the landholding. This livestock business
was evident during the ocular inspection of the Task Force on
Exclusion. Contrary to petitioner's claim, he does have a business permit, and
the absence of the articles of incorporation is irrelevant because no corporate
personality is involved here.

Respondent further asserts that the 20 ha planted with coconut trees is a

minimal part of the 349.9996 ha. The diminutive size of the area is in keeping
with the purpose of providing shade to the animals and the young leaves used as
fodder when grasses are scarce during dry weather. Respondent also asserts that
the DAR interpretation of the phrase "regardless of age" referring to the year
1988 is an "amendment under the guise of interpretation." He emphasized that
since the law does not distinguish, petitioner should not distinguish. He argues
that the DAR interpretation falls short of acceptability even on practical
considerations, because in the business of raising livestock, the inventory is
never fixed at any given time especially for long periods, i.e., seven years. It
constantly changes either due to natural causes prevalent in the business or the
interplay of market forces or the peace and order condition within the area.

The petition is partially granted.

In Land Car, Inc. v. Bachelor Express Inc. and Vallacar Transit, Inc.,[48] the Court
ruled that the doctrine of exhaustion of administrative remedies empowers the
OP to review any determination or disposition of a department head. In fact,
the doctrine requires an administrative decision to first be appealed to the
administrative superiors up to the highest level before it may be elevated to a
court of justice for review. Thus, if a remedy within the administrative machinery can
still be had by giving the administrative officer concerned every opportunity to decide on the
matter that comes within his jurisdiction, then such remedy should be priorly exhausted before
the court's judicial power is invoked.[49]

Appeals to the OP are governed by A.O. No. 18, Series of 1987. Section 7
thereof, provides the rule on filing a motion for reconsideration:
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.
It is clear then that only one motion for reconsideration is allowed to be filed
from a decision, resolution or order of the OP. However, the filing of a second
motion for reconsideration is not absolutely prohibited. A second motion for
reconsideration is allowed in exceptionally meritorious cases.[50]

Furthermore, the explanation of the OP that the second motion for

reconsideration deserves scant merit because the "grounds therein are not
substantially different from the same ones discussed in the first motion for
reconsideration" is untenable.

A rehash of arguments may not necessarily be pro forma per se. In Security Bank and
Trust Company, Inc. v. Cuenca,[51] the Court declared that a motion for
reconsideration is not pro forma just because it reiterated the arguments earlier
passed upon and rejected by the appellate court; a movant may raise the same
arguments precisely to convince the court that its ruling was erroneous.[52] The
Court also held that the pro forma rule will not be applicable if the arguments
were not sufficiently passed upon and answered in the decision sought to be
reconsidered, and elucidated the raison d' etre of the pro forma principle as follows:
x x x a pro forma motion had no other purpose than to gain time and to delay
or impede the proceedings. Hence, "where the circumstances of a case do not
show an intent on the part of the movant merely to delay the proceedings, our
Court has refused to characterize the motion as simply pro forma." x x x

We note finally that because the doctrine relating to pro forma motions for
reconsideration impacts upon the reality and substance of the statutory right of
appeal, that doctrine should be applied reasonably, rather than literally. The right
to appeal, where it exists, is an important and valuable right. Public policy would
be better served by according the appellate court an effective opportunity to
review the decision of the trial court on the merits, rather than by aborting the
right to appeal by a literal application of the procedural rules relating to pro forma
motions for reconsideration.
Respondent certainly did not intend to delay the proceedings here; in fact, it
would adversely affect his cause if he were to delay his appeal to the regular
courts because he would certainly lose vast tracts of land which are integral
elements of his trade. In this case, not only was a second motion for
reconsideration allowed by the OP rules, more importantly, the OP decision and
the order denying the first motion for reconsideration failed to provide its basis
in law. The ends of justice would have been served if the OP decision did more
than copy the DAR order and turned toward the important issues presented
before it.

In any event, even if we considered the second motion for reconsideration as pro
forma or not "exceptionally meritorious," the argument of petitioner would still
be untenable. It is settled that rules of procedure are, as a matter of course,
construed liberally in proceedings before administrative bodies. Thus, technical
rules of procedure imposed in judicial proceedings are unavailing in cases before
administrative bodies. Administrative bodies are not bound by the technical
niceties of law and procedure and the rules obtaining in the courts of law. Rules
of procedure are not to be applied in a very rigid and technical manner, as they
are used only to help secure and not to override substantial justice.[53]

It bears stressing that the threshold substantive issue is the validity and
implementation of DAR Administrative Order No. 9, Series of 1993 on the
respondent's landholding of more or less 472 ha in light of the ruling of this
Court in Department of Agrarian Reform v. Sutton,[54] where DAR Administrative
Order No. 9, Series of 1993 was declared unconstitutional.
The fundamental rule in administrative law is that, to be valid, administrative rules
and regulations must be issued by authority of law and must not contravene the
provisions of the Constitution. 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.

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.

The subsequent case of Natalia Realty, Inc. v. DAR 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. 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. 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 the conversion 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. In the case at bar,
after the passage of the 1988 CARL, Congress enacted R.A. No. 7881 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. 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. 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.[55]
The Report[56] of MARO Babalcon clearly declared that 346 ha are used for
grazing of the 429 heads of livestock; and indicated that the density required on
commercial farming as far as the number of livestock is concerned was
satisfied. This was confirmed in the DAR Order stating that the land has been
devoted to livestock-raising since its acquisition in 1979, and that the 20 ha
planted with coconut trees are simultaneously used as pasture land. These facts
are borne by the records and undisputed by the parties. The courts generally
accord great respect, if not finality, to factual findings of administrative agencies
because of their special knowledge and expertise over matters falling under their
jurisdiction.[57]

It is not uncommon for an enormous landholding to be intermittently planted

with trees, and this would not necessarily detract it from the purpose of
livestock farming and be immediately considered as an agricultural land. It
would be surprising if there were no trees on the land. Also, petitioner did not
adduce any proof to show that the coconut trees were planted by respondent
and used for agricultural business or were already existing when the land was
purchased in 1979. In the present case, the area planted with coconut trees bears
an insignificant value to the area used for the cattle and other livestock-raising,
including the infrastructure needed for the business. There can be no
presumption, other than that the "coconut area" is indeed used for shade and to
augment the supply of fodder during the warm months; any other use would be
only be incidental to livestock farming. The substantial quantity of livestock
heads could only mean that respondent is engaged in farming for this purpose.
The single conclusion gathered here is that the land is entirely devoted to
livestock farming and exempted from the CARP.

This Court's ruling in the Luz Farms case and Natalia Realty, Inc. v. DAR[58] was
emphatic on the exemption from CARP of land devoted to residential,
commercial and industrial purposes without any other qualifications. Moreover,
after the passage of the 1988 CARL, Congress enacted R.A. No. 7881,
amending 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. 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.[59]

Notably, however, a careful review of the records of the case reveal that the
Notice of Coverage, the Investigation Report by MARO Babalcon and Report
of PARO Ubeda, the DAR Order, and the OP Decision referred only to the
349.9996-ha landholding covered by TCT No. 160988. There is no showing in
the records that the landholding covered by TCT No. 11948 had been included
for CARP coverage; or that any investigation had been conducted by the
MARO or PARO on whether such landholding is exempt from CARP
coverage. The Court notes that respondent sought exemption of their property covered by
TCT No. 11948 only in their letter dated August 11, 1995 when they appealed from the
Report of the PARO. Absent any evidence showing that this land was investigated
by the DAR, there can be no basis as to whether the said landholding is exempt
from CARP coverage or not.

IN LIGHT OF THE FOREGOING, the instant petition is PARTIALLY

GRANTED. The Amended Decision of the Court of Appeals in CA-G.R. SP
No. 70541 exempting the parcel of land under TCT No. T-160988 with an area
of 349.9996 hectares from coverage of the Comprehensive Agrarian Reform
Law is AFFIRMED. However, the Amended Decision exempting the 22.2639-
hectare landholding covered by TCT No. 11948 from the coverage of the
CARP is REVERSED and SET ASIDE.

No pronouncement as to costs.
SO ORDERED.

Ynares-Santiago, Austria-Martinez, and Chico-Nazario, JJ., concur.

On September 27, 2004, President Gloria Macapagal Arroyo signed Executive

[1]

Order No. 364, and the Department of Agrarian Reform was renamed to
Department of Land Reform. This EO also broadened the scope of the
department, making it responsible for all land reform in the country. On
August 23, 2005, President Arroyo signed Executive Order No. 456 and
renamed the agency "Department of Agrarian Reform," since the
Comprehensive Agrarian Reform Law "goes beyond just land reform and
includes the totality of all factors and support services designed to lift the
economic status of the beneficiaries."

Penned by Associate Justice Elvi John S. Asuncion, with Associate Justices

[2]

Conrado M. Vasquez, Jr. and Rosalinda Asuncion-Vicente, concurring; rollo, pp.

31-34.

[3] Rollo, p. 35.

By Renato C. Corona, in his capacity as Chief Presidential Legal

[4]

Counsel/Deputy Executive Secretary, id. at 45-50.

[5] By Ernesto D. Garilao, in his capacity as Secretary; id. at 40-44.

[6] G.R. No. 86889, December 4, 1990, 192 SCRA 51.

[7] Otherwise known as Comprehensive Agrarian Reform Law of 1988.

[8] Supra note 6, at 59.

Entitled "Rules and Regulations Governing the Exclusion of Agricultural

[9]

Lands Used for Livestock, Poultry and Swine-Raising From the Coverage of the
Comprehensive Agrarian Reform Program (CARP)"; CA rollo, pp. 141-147.

[10] Id. at 141.

[11] Water buffalo.

[12] CA rollo, p.143. (emphasis supplied)

[13] Id. at 87-88.

[14] Id. at 88.

[15] Id. at 135-136. (emphasis supplied)

[16] Id. at 137. (emphasis supplied)

[17] Id. at 138. (emphasis supplied)

[18] Id. at 139-140.

[19] Id. at 140.

[20] Id. at 95-96.

[21] Id. at 97-98.

[22] Id. at 89-91.

[23] Id. at 90.

[24] Id. at 69-70, by Atty. Hector D. Soliman, Undersecretary - LAFMA.

[25] Rollo, pp. 40-44.

[26] Id. at 44.

[27] CA rollo, p. 54.

[28] Id. at 56-57.

[29] Id. at 67-68.

[30] Rollo, pp. 54-56.

[31] G.R. No. 109645, March 4, 1996, 254 SCRA 234.

[32] CA rollo, p. 66.

[33] Id.

[34] Id. at 11-49.

[35] Rollo, p. 68.

[36] Id. at 68-69.

[37] Id. at 69.

[38] Id. at 112.

[39] Id. at 31-34.

[40] Id. at 33.

[41] Id. at 133-140.

[42] Id. at 135.

[43] CA rollo, pp. 261-267.

[44] Rollo, p. 35.

[45] Id. at 18.

[46] Id.

[47] Id. at 150-163.

[48] G.R. No. 154377, December 8, 2003, 417 SCRA 307.

[49] Id. at 312.

[50] Amadore v. Romulo, G.R. No. 161608, August 9, 2005, 466 SCRA 397, 410.

[51] G.R. No. 138544, October 3, 2000, 341 SCRA 781.

[52] Id. at 794.

[53] Supra note 50, at 412-413.

[54] G.R. No. 12070, October 19, 2005, 473 SCRA 392.

[55] Id. at 399-402.

[56] Supra note 17.

[57] Junio v. Garilao, G.R. No. 147146, July 29, 2005, 465 SCRA 173, 186.

[58] G.R. No. 103302, August 12, 1993, 225 SCRA 278.

[59] Supra note 54, at 401.

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