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NataliaRealtyIncandEstateDevelopers&InvestorsCorpvsDAR

FACTS:
PetitionerNataliaistheownerofthreecontiguousparcelsoflandlocatedinBanaba,
Antipolo,Rizal.
On18April1979,PresidentialProclamationNo.1637setaside20,312hectaresof
landlocatedintheMunicipalitiesofAntipolo,SanMateoandMontalbanastownsite
areastoabsorbthepopulationoverspillinthemetropoliswhichweredesignatedas
theLungsodSilanganTownsite.TheNataliapropertiesaresituatedwithintheareas
proclaimedastownsitereservation.
EDIC,developerofNatalia,appliedforandwasgrantedpreliminaryapprovaland
locationalclearancesbytheHumanSettlementsRegulatoryCommission.Petitioners
werelikewiseissueddevelopmentpermitsaftercomplyingwiththerequirements.
ThustheNataliapropertieslaterbecametheAntipoloHillsSubdivision.
On15June1988,CARLwasenacted.
DAR,throughMARO,issuedaNoticeofCoverageontheundevelopedportionsof
theAntipoloHillsSubdivisionwhichconsistedofroughly90.3307hectares.
NataliaandEDICprotestedtothis.
MembersoftheSamahanngMagsasakasaBundokAntipolo,Inc.(SAMBA),fileda
complaint against Natalia and EDIC before the DAR Regional Adjudicator to
restrainpetitionersfromdevelopingareasundercultivationbySAMBAmembers.
DARRegionalruledbytemporarilyrestrainingpetitionersfromfurtherdeveloping
thesubdivision.
PetitionerselevatedtheircausetoDARABbutthelattermerelyremandedthecaseto
theRegionalAdjudicatorforfurtherproceedings
NataliawroterespondentSecretaryofAgrarianReformreiteratingitsrequesttoset
asidetheNoticeofCoverage.NeitherrespondentSecretarynorrespondentDirector
tookactionontheprotestletters.
Hence,thispetition.
Nataliascontention:Subjectpropertiesalreadyceasedtobeagriculturallandswhen
theywereincludedintheareasreservedbypresidentialfiatfortownsitereservation.
OSGs contention: The permits granted petitioners were not valid and binding
because they did not comply with the implementing Standards, Rules and
RegulationsofP.D.957,otherwiseknownas"TheSubdivisionandCondominium
Buyers'ProtectiveDecree,"inthatnoapplicationforconversionoftheNATALIA
landsfromagriculturaltoresidentialwaseverfiledwiththeDAR.Inotherwords,
therewasnovalidconversion.

Section4ofR.A.6657providesthattheCARLshall"cover,regardlessoftenurial
arrangementandcommodityproduced,allpublicandprivateagriculturallands."As
to what constitutes "agricultural land," it is referred to as "land devoted to
agricultural activity as defined in this Act andnot classified as mineral, forest,
residential,commercial or industrial land.The deliberationsof theConstitutional
Commissionconfirmthislimitation."Agriculturallands"areonlythoselandswhich
are "arable and suitable agricultural lands" and "do not include commercial,
industrialandresidentiallands."
Basedontheforegoing,itisclearthattheundevelopedportionsoftheAntipoloHills
Subdivisioncannotinanylanguagebeconsideredas"agriculturallands."Theselots
wereintendedforresidentialuse.Theyceasedtobeagriculturallandsuponapproval
oftheirinclusionintheLungsodSilanganReservation.
LuzFarmsvsSecofDAR
FACTS:
LuzFarmsisacorporationengagedinthelivestockandpoultrybusinessallegedly
standstobeadverselyaffectedbytheenforcementofsomeprovisionsofCARP.
LuzFarmsquestionsthefollowingprovisionsofR.A.6657,insofarastheyaremade
toapplytoit:
(a)Section 3(b)which includes the "raising of livestock (and poultry)" in the
definitionof"Agricultural,AgriculturalEnterpriseorAgriculturalActivity.
(b)Section11which defines "commercial farms" as "private agricultural lands
devotedtocommercial,livestock,poultryandswineraising..."
(c)Section13whichcallsuponpetitionertoexecuteaproductionsharingplan.
(d)Section16(d)and17whichvestontheDepartmentofAgrarianReformthe
authoritytosummarilydeterminethejustcompensationtobepaidforlandscovered
bytheComprehensiveAgrarianReformLaw
(e)Section32whichspellsouttheproductionsharingplanmentionedinSection
13
"...(W)herebythreepercent(3%)ofthegrosssalesfromtheproductionofsuch
lands are distributed within sixty (60) days of the end of the fiscal year as
compensationtoregularandotherfarmworkersinsuchlandsoverandabovethe
compensationtheycurrentlyreceivexxx

ISSUE:Whetherornotthesubjectpropertiesshallbeincludedinthecoverageof
CARP

ISSUE:ThemainissueinthispetitionistheconstitutionalityofSections3(b),11,13
and 32 of R.A. No. 6657 (the Comprehensive Agrarian Reform Law of 1988),
insofarasthesaidlawincludestheraisingoflivestock,poultryandswineinits
coverage

HELD:
NO.

HELD:
Saidprovisionsareunconstitutional.

ThetranscriptsofthedeliberationsoftheConstitutionalCommissionof1986onthe
meaningoftheword"agricultural,"clearlyshowthatitwasnevertheintentionof
the framers of the Constitution to include livestock and poultry industry in the
coverage of the constitutionallymandated agrarian reform program of the
Government.
CommissionerTadeo:IpinaaalamkokayCommissionerRegaladonahindinamin
inilagayangagriculturalworkersakadahilanangkasamaritoangpiggery,poultryat
livestockworkers.Anginilagaynaminditoayfarmworkerkayahindikasamaang
piggery,poultryatlivestockworkers.
It is evident from the foregoing discussion that Section II of R.A. 6657 which
includes "private agricultural lands devoted tocommercial livestock, poultryand
swineraising"inthedefinitionof"commercialfarms"isinvalid,totheextentthat
theaforecitedagroindustrialactivitiesaremadetobecoveredbytheagrarianreform
programoftheState.Thereissimplynoreasontoincludelivestockandpoultry
landsinthecoverageofagrarianreform.
AssociationofSmallLandownersvsSecretaryofAgrarianReform

hassofarnotissuedtheimplementingrulesofthedecree.Theythereforeaskthe
HonorableCourtforawritofmandamustocompeltherespondentstoissuethesaid
rules.
ISSUE:
WhetherornotthelawsbeingchallengedisavalidexerciseofPolicepoweror
PowerofEminentDomain.
RULING:
Police Power through the Power of Eminent Domain, though there
aretraditionaldistinction between the police power and the power of eminent
domain,propertycondemnedunderpolicepowerisnoxiousorintendedfornoxious
purpose, the compensation for the taking of such property is not subject to
compensation,unlikethetakingofthepropertyinEminentDomainorthepowerof
expropriationwhichrequiresthepaymentofjustcompensationtotheownerofthe
propertyexpropriated.

FACTS:
Theseareconsolidatedcasesinvolvingcommonlegalquestionsincludingserious
challenges to the constitutionality of R.A. No. 6657 also known as the
"ComprehensiveAgrarianReformLawof1988"

HaciendaLuisitaInc.(HLI)v.PresidentialAgrarianReformCouncil(PARC),etal.,
G.R.No.171101,July5,2011
DECISION

InG.R.No.79777,thepetitionersarequestioningtheP.DNo.27andE.ONos.228
and 229 on the grounds inter alia of separation of powers, due process, equal
protectionandtheconstitutionallimitationthatnoprivatepropertyshallbetakenfor
publicusewithoutjustcompensation.

VELASCO,JR.,J.:
I.THEFACTS
In 1958, the Spanish owners of Compaia General de Tabacos de Filipinas
(Tabacalera)soldHaciendaLuisitaandtheCentralAzucareradeTarlac,thesugar
millofthehacienda,totheTarlacDevelopmentCorporation(Tadeco),thenowned
andcontrolledbytheJoseCojuangcoSr.Group.TheCentralBankofthePhilippines
assistedTadecoinobtainingadollarloanfromaUSbank.Also,theGSISextended
aPhP5.911millionloaninfavorofTadecotopaythepesopricecomponentofthe
sale,withtheconditionthatthelotscomprisingtheHaciendaLuisitabesubdivided
bytheapplicantcorporationandsoldatcosttothetenants,shouldtherebeany,and
wheneverconditionsshouldexistwarrantingsuchactionundertheprovisionsofthe
LandTenureAct.Tadecohoweverdidnotcomplywiththiscondition.

InG.R.No.79310,thepetitionersinthiscaseclaimthatthepowertoprovidefora
ComprehensiveAgrarianReformProgramasdecreedbytheConstitutionbelongsto
theCongressandnottothePresident,thealsoallegethatProclamationNo.131and
E.ONo.229shouldbeannulledforviolationoftheconstitutionalprovisionsonjust
compensation, due process and equal protection. They contended that the taking
mustbesimultaneouswithpaymentofjustcompensationwhichsuchpaymentisnot
contemplatedinSection5oftheE.ONo.229.
InG.R.No.79744,thepetitionerarguesthatE.ONos.228and229wereinvalidly
issuedbythePresidentandthatthesaidexecutiveordersviolatetheconstitutional
provision that no private property shall be taken without due process or just
compensationwhichwasdeniedtothepetitioners.
InG.R.No78742thepetitionersclaimthattheycannotejecttheirtenantsandsoare
unabletoenjoytheirrightofretentionbecausetheDepartmentofAgrarianReform

OnMay7,1980,themartiallawadministrationfiledasuitbeforetheManilaRTC
againstTadeco,etal.,forthemtosurrenderHaciendaLuisitatothethenMinistryof
Agrarian Reform (MAR) so that the land can be distributed to farmers at cost.
Responding,TadecoallegedthatHaciendaLuisitadoesnothavetenants,besides
whichsugarlandsofwhichthehaciendaconsistedarenotcoveredbyexisting
agrarian reform legislations(PD 27rice and corn). The Manila RTC rendered

judgmentorderingTadecotosurrenderHaciendaLuisitatotheMAR.Therefrom,
TadecoappealedtotheCA.
On March 17, 1988, during the administration of President Corazon Cojuangco
Aquino,theOfficeoftheSolicitorGeneralmovedtowithdrawthegovernments
case against Tadeco,et al.The CA dismissed the case, subject to the PARCs
approval of Tadecos proposed stock distribution plan (SDP) in favor of its
farmworkers.[UnderEO229(Sec10)andlaterRA6657(Sec31),Tadecohadthe
optionofavailingstockdistributionasanalternativemodalitytoactuallandtransfer
tothefarmworkers.]OnAugust23,1988,Tadecoorganizedaspinoffcorporation,
hereinpetitionerHLI,asvehicletofacilitatestockacquisitionbythefarmworkers.
Forthispurpose,TadecoconveyedtoHLItheagriculturallandportion(4,915.75
hectares)andotherfarmrelatedpropertiesofHaciendaLuisitainexchangeforHLI
sharesofstock.
On May 9, 1989, some 93% of the then farmworkerbeneficiaries (FWBs)
complementofHaciendaLuisitasignifiedinareferendumtheiracceptanceofthe
proposed HLIs Stock Distribution Option Plan (SODP).On May 11, 1989, the
SDOAwasformallyenteredintobyTadeco,HLI,andthe5,848qualifiedFWBs.
ThisattestedtobythenDARSecretaryPhilipJuico.TheSDOAembodiedthebasis
andmechanicsofHLIsSDP,whichwaseventuallyapprovedbythePARCaftera
followupreferendumconductedbytheDARonOctober14,1989,inwhich5,117
FWBs,outof5,315whoparticipated,optedtoreceivesharesinHLI.
AsmaybegleanedfromtheSDOA,includedaspartofthedistributionplanare:(a)
productionsharing equivalent to three percent (3%) of gross sales from the
production of the agricultural land payable to the FWBs in cash dividends or
incentivebonus;and(b)distributionoffreehomelotsofnotmorethan240square
meterseachtofamilybeneficiaries.Theproductionsharing,astheSDPindicated,is
payable "irrespective of whether [HLI] makes money or not," implying that the
benefitsdonotpartakethenatureofdividends,asthetermisordinarilyunderstood
undercorporationlaw.(5,117outof5315=shares;132=landdistribution)
Priortoapproval,DARSecretaryMiriamDefensorSantiagoproposedthattheSDP
berevised,alongthefollowinglines:
1.Thatovertheimplementationperiodofthe[SDP],[Tadeco]/HLIshallensurethat
therewillbenodilutioninthesharesofstocksofindividual[FWBs];
2.Thatasafeguardshallbeprovidedby[Tadeco]/HLIagainstthedilutionofthe
percentage shareholdings of the [FWBs], i.e., that the 33% shareholdings of the
[FWBs]willbemaintainedatanygiventime
November 21, 1989 the PARC, under then Sec. DefensorSantiago, issued
ResolutionNo.89122,approvingtheSDPofTadeco/HLI.
From1989to2005,HLIclaimedtohaveextendedthefollowingbenefitstothe
FWBs:

(a)3billionpesos(P3,000,000,000)worthofsalaries,wagesandfringebenefits
(b)59millionsharesofstockdistributedforfreetotheFWBs;
(c)150millionpesos(P150,000,000)representing3%ofthegrossproduce;
(d)37.5millionpesos(P37,500,000)representing3%fromthesaleof500hectares
ofconvertedagriculturallandofHaciendaLuisita;
(e)240squaremeterhomelotsdistributedforfree;
(f)2.4millionpesos(P2,400,000)representing3%fromthesaleof80hectaresat80
millionpesos(P80,000,000)fortheSCTEX;
(g) Social service benefits, such as but not limited to free
hospitalization/medical/maternity services, old age/death benefits and no interest
bearingsalary/educationalloansandricesugaraccounts.
TwoseparategroupssubsequentlycontestedthisclaimofHLI.(thepetitions/protets)
CONVERSIONPROPER
OnAugust15,1995,HLIappliedfortheconversionof500hectaresoflandofthe
haciendafromagriculturaltoindustrialuse,pursuanttoSec.65ofRA6657.The
DAR approvedthe applicationonAugust 14,1996,subject topayment ofthree
percent (3%) of the gross selling price to the FWBs and to HLIs continued
compliancewithitsundertakingsundertheSDP,amongotherconditions.
OnDecember13,1996,HLI,inexchangeforsubscriptionof12,000,000sharesof
stocks of Centennary Holdings, Inc. (Centennary), ceded 300 hectares of the
convertedareatothelatter.Subsequently,Centennarysoldtheentire300hectares
forPhP750milliontoLuisitaIndustrialParkCorporation(LIPCO),whichuseditin
developinganindustrialcomplex.Fromthisareawascarvedout2parcels(180has
and4has),forwhich2separatetitleswereissuedinthenameofLIPCO.Later,
LIPCOtransferredthese2parcelstotheRizal CommercialBankingCorporation
(RCBC)in payment of LIPCOs PhP431,695,732.10 loan obligations to
RCBC(dacionenpago).LIPCOstitleswerecancelledandnewoneswereissuedto
RCBC.
The other 200 has was transferred to Luisita Realty Corporation (LRC) in two
separatetransactionsin1997and1998,bothuniformlyinvolving100hectaresfor
PhP250millioneach.
Apart from the 500 hectares, another 80.51 hectares were later detached from
HaciendaLuisitaandacquiredbythegovernmentaspartoftheSubicClarkTarlac
Expressway(SCTEX)complex.Thus,4,335.75hectaresremainedoftheoriginal
4,915hectaresTadecocededtoHLI.
Such,wasthestateofthingswhentwoseparatepetitionsreachedtheDARinthe
latterpartof2003.ThefirstwasfiledbytheSupervisoryGroupofHLI(Supervisory
Group), praying for a renegotiation of the SDOA, or, in the alternative, its
revocation.Thesecondpetition,prayingfortherevocationandnullificationofthe
SDOAandthedistributionofthelandsinthehacienda,wasfiledbyAlyansangmga
ManggagawangBukidngHaciendaLuisita(AMBALA).TheDARthenconstituted
aSpecialTaskForce(STF)toattendtoissuesrelatingtotheSDPofHLI.After

investigation and evaluation, the STF found that HLI has not complied with its
obligations under RA 6657 despite the implementation of the SDP, AND
RECOMMENDED. On December 22, 2005, the PARC issued the assailed
Resolution No. 20053201, recalling/revoking the SDO plan of Tadeco/HLI. It
further resolvedthat the subject landsbe forthwithplacedunder thecompulsory
coverageormandatedlandacquisitionschemeoftheCARP.
From the foregoing resolution, HLI sought reconsideration. Its motion
notwithstanding,HLIalsofiledapetitionbeforetheSupremeCourtinlightofwhat
it considers as the DARs hasty placing of Hacienda Luisita under CARP even
beforePARCcouldruleorevenreadthemotionforreconsideration.PARCwould
eventually deny HLIs motion for reconsiderationviaResolution No. 20063401
datedMay3,2006.
II.THEISSUES
(1)DoesthePARCpossessjurisdictiontorecallorrevokeHLIsSDP?
(2) [IssueraisedbyintervenorFARM(groupoffarmworkers)]IsSec.31ofRA
6657,whichallowsstocktransferinlieuofoutrightlandtransfer,unconstitutional?
(3) Is the revocation of the HLIs SDP valid? [Did PARC gravely abuse its
discretion in revoking the subject SDP and placing the hacienda under CARPs
compulsoryacquisitionanddistributionscheme?]
(4)ShouldthoseportionsoftheconvertedlandwithinHaciendaLuisitathatRCBC
andLIPCOacquiredbypurchasebeexcludedfromthecoverageoftheassailed
PARC resolution?[Didthe PARC gravelyabuseitsdiscretionwhenitincluded
LIPCOs and RCBCs respective properties that once formed part of Hacienda
LuisitaundertheCARPcompulsoryacquisitionschemeviatheassailedNoticeof
Coverage?]
III.THERULING
HLI:PARChasnoauthoritytorevoketheSDP;ithasthepowertodisapprove,but
nottorecallitspreviousapprovaloftheSDP.Itisthecourtwhichhasjurisdiction
andauthoritytoordertherevocationorrescissionofthePARCapprovedSDP
(1)YES,thePARChasjurisdictiontorevokeHLIsSDPunderthedoctrineof
necessaryimplication.
UnderSec.31ofRA6657,asimplementedbyDAO10,theauthoritytoapprovethe
planforstockdistributionofthecorporatelandownerbelongstoPARC.Contraryto
petitioner HLIs posture, PARC also has the power to revoke the SDPwhich it
previouslyapproved.Itmaybe,asurged,thatRA6657orotherexecutiveissuances
onagrarianreformdonotexplicitlyvestthePARCwiththepowertorevoke/recall
anapprovedSDP.Suchpowerorauthority,however,isdeemedpossessedbyPARC
undertheprincipleofnecessaryimplication,abasicpostulatethatwhatisimpliedin
astatuteisasmuchapartofitasthatwhichisexpressed.

Followingthedoctrineofnecessaryimplication,itmaybestatedthattheconferment
ofexpresspowertoapproveaplanforstockdistributionoftheagriculturallandof
corporateownersnecessarilyincludesthepowertorevokeorrecalltheapprovalof
theplan.TodenyPARCsuchrevocatorypowerwouldreduceitintoatoothless
agencyofCARP,becausetheverysameagencytaskedtoensurecompliancebythe
corporatelandownerwiththeapprovedSDPwouldbewithoutauthoritytoimpose
sanctionsfornoncompliancewithit.
HLI:thepartiestotheSDOAshouldnowlooktotheCorporationCode,insteadofto
RA6657,indeterminingtheirrights,obligationsandremedies.TheCodeshouldbe
theapplicablelawonthedispositionoftheagriculturallandofHLI.
SC:NO!therights,obligationsandremediesofthepartiestotheSDOAembodying
theSDPareprimarilygovernedbyRA6657.Itshouldabundantlybemadeclearthat
HLIwaspreciselycreatedinordertocomplywithRA6657,whichtheOSGaptly
describedasthe"motherlaw"oftheSDOAandtheSDP.Itis,thus,paradoxicalfor
HLItoshielditselffromthecoverageofCARPbyinvokingexclusiveapplicability
oftheCorporationCodeundertheguiseofbeingacorporateentity.
(2) NO,Sec.31ofRA6657isnotunconstitutional.[TheCourtactually
refusedtopassupontheconstitutional questionbecauseit wasnot raisedat the
earliestopportunityandbecausetheresolutionthereofisnotthelismotaofthecase.
Moreover,theissuehasbeenrenderedmootandacademicsinceSDOisnolonger
oneofthemodesofacquisitionunderRA9700.]
Whilethereisindeedanactualcaseorcontroversy,intervenorFARM,composedof
a small minority of 27 farmers, has yet to explain its failure to challenge the
constitutionalityofSec.31ofRA6657asearlyasNovember21,1989whenPARC
approvedtheSDPofHaciendaLuisitaoratleastwithinareasonabletimethereafter,
andwhyitsmembersreceivedbenefitsfromtheSDPwithoutsomuchofaprotest.It
wasonlyonDecember4,2003or14yearsafterapprovaloftheSDPthatsaidplan
andapprovingresolutionweresoughttoberevoked,butnot,tostress,byFARMor
any of its members, but by petitioner AMBALA. Furthermore, the AMBALA
petition did NOT question the constitutionality of Sec. 31 of RA 6657, but
concentratedonthepurportedflawsandgapsinthesubsequentimplementationof
theSDP.Eventhepublicrespondents,asrepresentedbytheSolicitorGeneral,did
notquestiontheconstitutionalityoftheprovision.Ontheotherhand,FARM,whose
27membersformerlybelongedtoAMBALA,raisedtheconstitutionalityofSec.31
onlyonMay3,2007whenitfileditsSupplementalCommentwiththeCourt.Thus,
it took FARM some eighteen (18) years from November 21, 1989 before it
challengedtheconstitutionalityofSec.31ofRA6657whichisquitetoolateinthe
day.TheFARMmemberssleptontheirrightsandevenacceptedbenefitsfromthe
SDPwithnaryacomplaintontheallegedunconstitutionalityofSec.31uponwhich
the benefits were derived.The Court cannot now be goaded into resolving a

constitutionalissuethatFARMfailedtoassailafterthelapseofalongperiodoftime
and the occurrence of numerous events and activities which resulted from the
applicationofanallegedunconstitutionallegalprovision.
Thelastbutthemostimportantrequisitethattheconstitutionalissuemustbethe
verylismotaofthecasedoesnotlikewiseobtain.Thelismotaaspectisnotpresent,
theconstitutionalissuetenderednotbeingcriticaltotheresolutionofthecase.If
someothergroundsexist bywhich judgment canbe made without touchingthe
constitutionalityofalaw,suchrecourseisfavored.
Thelismotainthiscase,proceedingfromthebasicpositionsoriginallytakenby
AMBALA(towhichtheFARMmemberspreviouslybelonged)andtheSupervisory
Group,istheallegednoncompliancebyHLIwiththeconditionsoftheSDPto
supportapleaforitsrevocation.AndbeforetheCourt,thelismotaiswhetherornot
PARCactedingraveabuseofdiscretionwhenitorderedtherecalloftheSDPfor
such noncompliance and the fact that the SDP, as couched and implemented,
offendscertainconstitutionalandstatutoryprovisions.Tobesure,anyofthesekey
issuesmayberesolvedwithoutplungingintotheconstitutionalityofSec.31ofRA
6657.Moreover,lookingdeeplyintotheunderlyingpetitionsofAMBALA,etal.,it
isnotthesaidsectionpersethatisinvalid,butratheritistheallegedapplicationof
thesaidprovisionintheSDPthatisflawed.
ItmaybewelltonoteatthisjuncturethatSec.5ofRA9700,amendingSec.7
ofRA 6657, has all but superseded Sec. 31 of RA 6657 visvis the stock
distributioncomponent ofsaidSec.31.Initspertinent part,Sec.5ofRA9700
provides:[T]hatafterJune30,2009,themodesofacquisitionshallbelimitedto
voluntary offer to sell and compulsory acquisition. Thus, for all intents and
purposes,thestockdistributionschemeunderSec.31ofRA6657isnolongeran
available option under existing law. The question of whether or not it is
unconstitutionalshouldbeamootissue.
(3)YES,therevocationoftheHLIsSDPvalid.[NO,thePARCdidNOTgravely
abuseitsdiscretioninrevokingthesubject SDP andplacingthehaciendaunder
CARPscompulsoryacquisitionanddistributionscheme.]
TherevocationoftheapprovaloftheSDPisvalid:(1)themechanicsandtimelines
of HLIs stock distribution violate DAO 10 because the minimum individual
allocationofeachoriginalFWBof18,804.32shareswasdilutedasaresultoftheuse
ofmandaysandthehiringofadditionalfarmworkers;(2)the30yeartimeframe
forHLItoFWBsstocktransferiscontrarytowhatSec.11ofDAO10prescribes.

Inourreviewandanalysisofpar.3oftheSDOAonthemechanicsandtimelinesof
stockdistribution,Wefindthatitviolatestwo(2)provisionsofDAO10.Par.3of
theSDOAstates:
3.Attheendofeachfiscalyear,foraperiodof30years,theSECONDPARTY
[HLI]shallarrangewiththeFIRSTPARTY[TDC]theacquisitionanddistribution
totheTHIRDPARTY[FWBs]onthebasisofnumberofdaysworkedandatnocost
tothemofonethirtieth(1/30)of118,391,976.85sharesofthecapitalstockofthe
SECONDPARTYthatarepresentlyownedandheldbytheFIRSTPARTY,until
suchtimeastheentireblockof118,391,976.85sharesshallhavebeencompletely
acquiredanddistributedtotheTHIRDPARTY.
[I]tisclearasdaythattheoriginal6,296FWBs,whowerequalifiedbeneficiariesat
thetimeoftheapprovaloftheSDP,sufferedfromwateringdownofshares.As
determined earlier, each original FWB is entitled to 18,804.32 HLI shares.The
originalFWBsgotlessthantheguaranteed18,804.32HLIsharesperbeneficiary,
becausetheacquisitionanddistributionoftheHLIshareswerebasedonmandays
ornumberofdaysworkedbytheFWBinayearstime.AsexplainedbyHLI,a
beneficiary needs towork for at least 37 days in a fiscal year before he orshe
becomesentitledtoHLIshares.Ifitfallsbelow37days,theFWB,unfortunately,
doesnotgetanyshareatyearend.ThenumberofHLIsharesdistributedvaries
depending on the number of days the FWBs were allowed to work in one
year.Worse,HLIhiredfarmworkersinadditiontotheoriginal6,296FWBs,such
that,asindicatedintheCompliancedatedAugust2,2010submittedbyHLItothe
Court,thetotalnumberoffarmworkersofHLIasofsaiddatestoodat10,502.All
thesefarmworkers,whichincludetheoriginal6,296FWBs,weregivensharesoutof
the118,931,976.85HLIsharesrepresentingthe33.296%ofthetotal outstanding
capitalstockofHLI.Clearly, theminimumindividualallocationofeachoriginal
FWBof18,804.32shareswasdilutedasaresultoftheuseofmandaysandthe
hiringofadditionalfarmworkers.
Goingintoanotherbutrelatedmatter,par.3oftheSDOAexpresslyprovidingfora
30yeartimeframeforHLItoFWBsstocktransferisanarrangement contraryto
whatSec.11ofDAO10prescribes.SaidSec.11providesfortheimplementationof
theapprovedstockdistributionplanwithinthree(3)monthsfrom receipt bythe
corporatelandowneroftheapprovaloftheplanbyPARC.Infact,basedonthesaid
provision,thetransferofthesharesofstockinthenamesofthequalifiedFWBs
shouldberecordedinthestockandtransferbooksandmustbesubmittedtotheSEC
withinsixty(60)daysfromimplementation.
TotheCourt,thereisapurpose,whichisatoncediscernibleasitispractical,forthe
threemonth threshold. Remove this timeline and the corporate landowner can
veritablyevadecompliancewithagrarianreformbysimplydeferringtoabsurdlimits
theimplementationofthestockdistributionscheme.thereasonunderpinningthe30
yearaccommodationdoesnotapplytocorporatelandownersindistributingsharesof

stocktothequalifiedbeneficiaries,asthesharesmaybeissuedinamuchshorter
periodoftime.
Taking into account the above discussion, the revocation of the SDP by PARC
shouldbeupheld[becauseofviolationsof]DAO10.Itbearsstressingthatunder
Sec.49ofRA6657,thePARCandtheDARhavethepowertoissuerulesand
regulations,substantiveorprocedural.Beingaproductofsuchrulemakingpower,
DAO10hastheforceandeffectoflawandmustbedulycompliedwith.ThePARC
is,therefore,correctinrevokingtheSDP.Consequently,thePARCResolutionNo.
89122datedNovember21,l989approvingtheHLIsSDPisnullifiedandvoided.
(4)YES,thoseportionsoftheconvertedlandwithinHaciendaLuisitathatRCBC
and LIPCO acquired by purchase should be excluded from the coverage of the
assailedPARCresolution.
[T]herearetwo(2)requirementsbeforeonemaybeconsideredapurchaseringood
faith,namely:(1)thatthepurchaserbuysthepropertyofanotherwithoutnoticethat
some other person has a right to or interest in such property; and (2) that the
purchaserpaysafullandfairpriceforthepropertyatthetimeofsuchpurchaseor
beforeheorshehasnoticeoftheclaimofanother.
ItcanrightfullybesaidthatbothLIPCOandRCBCarepurchasersingoodfaithfor
valueentitledtothebenefitsarisingfromsuchstatus.
First, at the time LIPCO purchased theentire three hundred (300) hectares of
industrial land, there was no notice of any supposed defect in the title of its
transferor,Centennary,orthatanyotherpersonhasarighttoorinterestinsuch
property.Infact,atthetimeLIPCOacquiredsaidparcelsofland,onlythefollowing
annotations appeared on the TCT in the name of Centennary: the Secretarys
CertificateinfavorofTeresitaLopa,theSecretarysCertificateinfavorofShintaro
Murai, and the conversionof the property from agricultural to industrial and
residentialuse.
ThesameistruewithrespecttoRCBC.AtthetimeitacquiredportionsofHacienda
Luisita,onlythefollowinggeneralannotationsappearedontheTCTsofLIPCO:the
DeedofRestrictions,limitingitsusesolelyasanindustrialestate;theSecretarys
CertificateinfavorofKojiKomaiandKyosukeHori;andtheRealEstateMortgage
infavorofRCBCtoguaranteethepaymentofPhP300million.
To be sure, intervenor RCBC and LIPCO knew that the lots they bought were
subjectedtoCARP coveragebymeansofastockdistributionplan,astheDAR
conversion order was annotated at the back of the titles of the lots they
acquired.However,theyareofthehonestbeliefthatthesubjectlotswerevalidly
convertedtocommercialorindustrialpurposesandforwhichsaidlotsweretaken
outoftheCARPcoveragesubjectofPARCResolutionNo.89122and,hence,can

belegallyandvalidlyacquiredbythem.Afterall,Sec.65ofRA6657explicitly
allowsconversionanddispositionofagriculturallandspreviouslycoveredbyCARP
landacquisitionafterthelapseoffive(5)yearsfromitsawardwhenthelandceases
tobeeconomicallyfeasibleandsoundforagriculturalpurposesorthelocalityhas
becomeurbanizedandthelandwillhaveagreatereconomicvalueforresidential,
commercialorindustrialpurposes.Moreover,DARnotifiedalltheaffectedparties,
moreparticularlytheFWBs,andgavethemtheopportunitytocommentoroppose
theproposedconversion.DAR,aftergoingthroughthenecessaryprocesses,granted
the conversion of 500 hectares of Hacienda Luisita pursuant to its primary
jurisdictionunderSec.50ofRA6657todetermineandadjudicateagrarianreform
matters and its original exclusive jurisdiction over all matters involving the
implementationofagrarianreform.TheDARconversionorderbecamefinaland
executoryafternoneoftheFWBsinterposedanappealtotheCA.Inthisfactual
setting,RCBCandLIPCOpurchasedthelotsinquestionontheirhonestandwell
foundedbeliefthatthepreviousregisteredownerscouldlegallysellandconveythe
lots though these were previously subject of CARP coverage.Ergo, RCBC and
LIPCOactedingoodfaithinacquiringthesubjectlots.
Andsecond, both LIPCOand RCBC purchased portions of Hacienda Luisita for
value.Undeniably,LIPCOacquired300hectaresoflandfromCentennaryforthe
amountofPhP750millionpursuanttoaDeedofSaledatedJuly30,1998.Onthe
otherhand,inaDeedofAbsoluteAssignmentdatedNovember25,2004,LIPCO
conveyed portions of Hacienda Luisita in favor of RCBC by way ofdacion en
pagotopayforaloanofPhP431,695,732.10.
Inrelyingupontheabovementionedapprovals,proclamationandconversionorder,
both RCBC and LIPCO cannot be considered at fault for believing that certain
portionsofHaciendaLuisitaareindustrial/commerciallandsandare,thus,outside
the ambit of CARP. The PARC, and consequently DAR, gravely abused its
discretionwhenitplacedLIPCOsandRCBCspropertywhichonceformedpartof
HaciendaLuisitaundertheCARPcompulsoryacquisitionschemeviatheassailed
NoticeofCoverage.
[TheCourtwentontoapplytheoperativefactdoctrinetodeterminewhatshouldbe
doneintheaftermathofitsdispositionoftheaboveenumeratedissues:
WhileWeaffirmtherevocationoftheSDPonHaciendaLuisitasubjectofPARC
Resolution Nos. 20053201 and 20063401, the Court cannot close its eyes to
certainoperativefactsthathadoccurredintheinterim.Pertinently,theoperative
factdoctrinerealizesthat,indeclaringalaworexecutiveactionnullandvoid,or,
by extension, no longer without force and effect, undue harshness and resulting
unfairnessmustbeavoided.Thisisasitshouldrealisticallybe,sincerightsmight
haveaccruedinfavorofnaturalorjuridicalpersonsandobligationsjustlyincurredin
themeantime.Theactualexistenceofastatuteorexecutiveactis,priortosucha
determination,anoperativefactandmayhaveconsequenceswhichcannotjustlybe
ignored;thepastcannotalwaysbeerasedbyanewjudicialdeclaration.

WhiletheassailedPARCresolutionseffectivelynullifyingtheHaciendaLuisitaSDP
areupheld,therevocationmust,byapplicationoftheoperativefactprinciple,give
waytotherightoftheoriginal6,296qualifiedFWBstochoosewhethertheywantto
remainasHLIstockholdersornot.TheCourtcannotturnablindeyetothefactthat
in1989,93%oftheFWBsagreedtotheSDOA(ortheMOA),whichbecamethe
basisoftheSDPapprovedbyPARCperitsResolutionNo.89122datedNovember
21, 1989. From 1989 to 2005, the FWBs were said to have received from HLI
salariesandcashbenefits,hospitalandmedicalbenefits,240squaremeterhomelots,
3%ofthegrossproducefromagriculturallands,and3%oftheproceedsofthesale
ofthe500hectareconvertedlandandthe80.51hectarelotsoldtoSCTEX.HLI
sharestotaling118,391,976.85weredistributedasofApril22,2005.OnAugust6,
20l0,HLIandprivaterespondentssubmittedaCompromiseAgreement,inwhich
HLIgavetheFWBstheoptionofacquiringapieceofagriculturallandorremainas
HLI stockholders, andas a matter of fact, most FWBs indicated their choice of
remainingasstockholders.Thesefactsandcircumstancestendtoindicatethatsome,
if not all, of theFWBs mayactually desire tocontinue as HLI shareholders.A
matterbestlefttotheirowndiscretion.]
ThedissentsintheJuly5,2011decision
Thedissentsoftheminorityjusticeswereontheotherfinepointsofthedecision.
ChiefJusticeCoronadissentedinsofarasthemajorityrefusedtodeclareSec.31of
RA6657unconstitutional.Theprovisiongrantstocorporatelandownerstheoption
togivequalifiedFWBstherighttoowncapitalstockofthecorporationinlieuof
actual land distribution. The Chief Justice was of the view that by allowing the
distributionofcapitalstock,andnotland,ascompliancewithagrarianreform,Sec.
31 of RA 6657 contravenes Sec. 4, Article XIII of the Constitution, which, he
argued, requires that the law implementing the agrarian reform program should
employ[actual]landredistributionmechanism.UnderSec.31ofRA6657,henoted,
thecorporatelandownerremainstobetheowneroftheagriculturalland.Qualified
beneficiariesaregivenownershiponlyofsharesofstock,not[of]thelandstheytill.
He concluded that since an unconstitutional provision cannot be the basis of a
constitutionalact,theSDPofpetitionerHLIbasedonSection31ofRA6657isalso
unconstitutional.
JusticeMendozafullyconcurredwithChiefJusticeCoronaspositionthatSec.31of
RA6657isunconstitutional.HehoweveragreedwiththemajoritythattheFWBsbe
giventheoptiontoremainasshareholdersofHLI.HealsojoinedJusticeBrions
proposal that that the reckoning date for purposes of just compensation should
beMay11,1989,whentheSDOAwasexecutedbyTadeco,HLIandtheFWBs.
Finally,heaverredthatconsideringthatmorethan10yearshaveelapsedfromMay
11,1989,thequalifiedFWBs,whocanvalidlydisposeoftheirdueshares,maydo
so,infavorofLBPorotherqualifiedbeneficiaries.The10yearperiodneednotbe
counted from the issuance oftheEmancipationTitle(EP) orCertificateof Land
OwnershipAwardCLOA)because,undertheSDOA,shares,notland,weretobe
awardedanddistributed.

Justice Brions dissent centered on the consequences of the revocation of HLIs


SDP/SDOA. He argued that that the operative fact doctrine only applies in
consideringtheeffectsofadeclarationofunconstitutionalityofastatuteorarule
issuedbytheExecutiveDepartmentthatisaccordedthestatusofastatute.The
SDOA/SDPisneitherastatutenoranexecutiveissuancebutacontractbetweenthe
FWBsandthelandowners;hence,theoperativefactdoctrineisnotapplicable.A
contractstandsonadifferentplanethanastatuteoranexecutiveissuance. Whena
contractiscontrarytolaw,itisdeemedvoidabinitio.Itproducesnolegaleffects
whatsoever.Thus,JusticeBrionquestionedtheoptiongivenbythemajoritytothe
FWBstoremainasstockholdersinanalmostbankrupt corporationlikeHLI.He
arguedthatthenullityofHLIsSDP/SDOAgoesintoitsveryexistence,andthe
partiestoitmustgenerallyreverttotheirrespectivesituationspriortoitsexecution.
Restitution,hesaid,isthereforeinorder.WiththeSDPbeingvoid,theFWBsshould
return everything they are proven to have received pursuant to the terms of the
SDOA/SDP.JusticeBrionthenproposedthatallaspectsoftheimplementationof
themandatoryCARPcoveragebedeterminedbytheDARbystartingwithaclean
slatefrom[May11,]1989,thepointintimewhenthecompulsoryCARPcoverage
shouldstart,andproceedingtoadjusttherelationsofthepartieswithdueregardto
theeventsthatintervened[thereafter].Healsoheldthatthetimeofthetaking(when
thecomputationofjustcompensationshallbereckoned)shallbeMay11,1989,
whentheSDOAwasexecutedbyTadeco,HLIandtheFWBs.
JusticeSerenodissentedwithrespecttohowthemajoritymodifiedthequestioned
PARC Resolutions (i.e., no immediate land distribution, give first the original
qualifiedFWBstheoptiontoeitherremainasstockholdersofHLIorchooseactual
land distribution) and the applicability of the operative fact doctrine. She would
insteadordertheDARtoforthwithdeterminetheareaofHaciendaLuisitathatmust
becoveredbythecompulsorycoverageandmonitorthelanddistributiontothe
qualifiedFWBs.
ErroneousinterpretationoftheCourtsdecision
The High Tribunal actually voted unanimously (110) to DISMISS/DENY the
petitionofHLIandtoAFFIRMthePARCresolutions.Thisiscontrarytomedia
reportsthattheCourtvoted64todismisstheHLIpetition.Thefive(notfour)
minorityjustices(ChiefJusticeCorona,andJusticesBrion,Villarama,Mendoza,and
Sereno)onlypartiallydissentedfrom thedecisionofthemajorityofsix(Justice
VelascoJr.,LeonardoDeCastro,Bersamin,DelCastillo,Abad,andPerez).Justice
AntonioCarpiotooknopartinthedeliberationsandinthevoting,whileJustice
DiosdadoPeraltawasonofficialleave.The14thand15thseatsintheCourtwere
earliervacatedbytheretirementsofJusticesEduardoAntonioNachura(June13,
2011)andConchitaCarpioMorales(June19,2011).
AnothermisinterpretationcamefromnolessthantheSupremeCourtadministrator
and spokesperson, Atty. Midas Marquez. In a press conference called after the
promulgationoftheCourtsdecision,Marquezinitiallyusedthetermreferendum
inexplainingtheHighCourtsruling.Thiscreatedconfusionamongthepartiesand
theinterestedpublicsinceareferendumimpliesthattheFWBswillhavetovote

onacommonmodebywhichtopursuetheirclaimsoverHaciendaLuisita.The
decisionwasthusmetwithcriesofcondemnationbythemisinformedfarmersand
thevariouspeoplesorganizationsandmilitantgroupssupportiveoftheircause.
Marquezwouldlatercorrecthimselfinasubsequentpressbriefing.Butsincebythen
thepartieshadalreadyfiledtheirrespectivemotionsforreconsideration,hecalled
upon everyone to just wait for the final resolution of the motion[s], which is
forthcominganyway.Theresolutionoftheconsolidatedmotionsforreconsideration
camerelativelyearlyonNovember22,2011,or lessthanfive monthsfrom the
promulgationofthedecision.

G.R.No.171101November22,2011
MotionforClarificationandPartialReconsiderationdatedJuly21,2011filedby
petitionerHaciendaLuisita,Inc.(HLI);
itisnotpropertodistributetheproceedsoftheconversionsaletotheFWBsthe
proceeds of the sale belong tothe corporationfor havingsold its asset, and the
distributionwouldbeconsidereddissolutionofHLI
theactualtakingisNOTNovember21,1989,butshouldbereckonedfromfinality
oftheDecisionofthisCourt,orattheveryleast,thereckoningperiodmaybetacked
toJanuary2,2006,thedatewhentheNoticeofCoveragewasissuedbytheDAR
MotionforPartialReconsiderationdatedJuly20,2011filedbyPARCandDAR
DoctrineofOperativefactdoesnotapplybecausenolawwasdeclaredvoid.
MotionforReconsiderationdatedJuly19,2011filedbyAMBALA
RA6657isunconstitutional
"operativefactdoctrine"doesnotapply.theoptiongiventothefarmerstoremainas
stockholdersof HLI isequivalent to an option for HLI toretain landin direct
violationoftheCARL,theSDPhavingbeenrevoked.Itshouldnotapplyifitwould
resulttoinequity
CAerredinholdingthatimprovingtheeconomicstatusofFWBsisnotamongthe
legalobligationsofHLIundertheSDPandanimperativeimpositionbyRA6657
andDAO10
CAerredinholdingthatLIPCOandRCBCwerepurchasersforvalue
Motion for Reconsideration dated July 21, 2011 filed by respondentintervenor
FarmworkersAgrarianReformMovement,Inc.(FARM);
samewithAMBALA
issueofconstitutionalityisthelismotaofthecasewhichmustbedecidedupon
MotionforReconsiderationdatedJuly21,2011filedbyprivaterespondentsNoel
Mallari, Julio Suniga, Supervisory Group of Hacienda Luisita, Inc. (Supervisory
Group)andWindsorAndaya(collectivelyreferredtoas"Mallari,etal.");and
MotionforReconsiderationdatedJuly22,2011filedbyprivaterespondentsRene
Galangand

ISSUES:
(1)applicabilityoftheoperativefactdoctrine;
(2)constitutionalityofSec.31ofRA6657ortheComprehensiveAgrarianReform
Lawof1988;
(3)coverageofcompulsoryacquisition;
(4)justcompensation;
(5)saletothirdparties;
(6)theviolationsofHLI;and
(7)controloveragriculturallands(revocationofSDP)
OPERATIVEFACTDOCTRINE(notmuchrelated)
Bearing in mind that PARC Resolution No. 8912
2http://www.lawphil.net/judjuris/juri2011/nov2011/gr_171101_2011.htmlfnt10
anexecutiveactwasdeclaredinvalidintheinstantcase,theoperativefactdoctrine
isclearlyapplicable.
itshouldberecognizedthatSC,initsJuly5,2011Decision,affirmedtherevocation
ofResolutionNo.89122andruledforthecompulsorycoverageoftheagricultural
landsofHaciendaLuisitainviewofHLIsviolationoftheSDPandDAO10.By
applying the doctrine, this Court merely gave the qualified FWBs the option to
remainasstockholdersofHLIandruledthattheywillretainthehomelotsandother
benefitswhichtheyreceivedfromHLIbyvirtueoftheSDP.
TheapplicationofthedoctrineisfavorabletotheFWBsbecausenotonlywerethe
FWBsallowedtoretainthebenefitsandhomelotstheyreceivedunderthestock
distribution scheme, they were also given the option to choose for themselves
whethertheywanttoremainasstockholdersofHLIornot.
CONSTITUTIONALITY
(Upheldpreviousruling)
FARMis,therefore,remissinbelatedlyquestioningtheconstitutionalityofSec.31
ofRA6657.Thesecondrequirementthattheconstitutionalquestionshouldberaised
attheearliestpossibleopportunityisclearlywanting.
Thelastbutthemostimportantrequisitethattheconstitutionalissuemustbethe
verylismotaofthecasedoesnotlikewiseobtain.Thelismotaaspectisnotpresent,
theconstitutionalissuetenderednotbeingcriticaltotheresolutionofthecase.
COVERAGEOFCOMPULSORYACQUISITION
FARM argues that this Court ignored certain material facts when it limited the
maximumareatobecoveredto4,915.75hectares,whereastheareathatshould,at

the least, be covered is 6,443 hectares, which is the agricultural land allegedly
covered by RA 6657 and previously held by Tarlac Development Corporation
(Tadeco).http://www.lawphil.net/judjuris/juri2011/nov2011/gr_171101_2011.html
fnt27
Wecannotsubscribetothisview.SincewhatisputinissuebeforetheCourtisthe
propriety of the revocation of the SDP, which only involves 4,915.75 has. of
agriculturallandandnot6,443has.,thenWeareconstrainedtoruleonlyasregards
the4,915.75has.ofagriculturalland.
DAR,however,contendsthatthedeclarationoftheareatobeawardedtoeachFWB
istoorestrictive.ItstressesthatinagriculturallandholdingslikeHaciendaLuisita,
thereareroads,irrigationcanals,andotherportionsofthelandthatareconsidered
commonlyownedbyfarmworkers,andthismaynecessarilyresultinthedecreaseof
the area size that may be awarded per
FWB.http://www.lawphil.net/judjuris/juri2011/nov2011/gr_171101_2011.html
fnt33DARalsoarguesthattheJuly5,2011Decisiondoesnotgiveitanyleewayin
adjusting the area that may be awarded per FWB in case the number of actual
qualified

FWBs
decreases.http://www.lawphil.net/judjuris/juri2011/nov2011/gr_171101_2011.html
fnt34
The argument is meritorious. In order to ensure the proper distribution of the
agricultural lands of Hacienda Luisita per qualified FWB, and considering that
matters involving strictly the administrative implementation and enforcement of
agrarian reform laws are within the jurisdiction of the
DAR,http://www.lawphil.net/judjuris/juri2011/nov2011/gr_171101_2011.html
fnt35itisthelatterwhichshalldeterminetheareawithwhicheachqualifiedFWB
willbeawarded.
500HECTARES
RCBCandLIPCOknewthatthelotstheyboughtweresubjectedtoCARPcoverage
bymeansofastockdistributionplan,astheDARconversionorderwasannotatedat
thebackofthetitlesofthelotstheyacquired.However,theyareofthehonestbelief
thatthesubjectlotswerevalidlyconvertedtocommercialorindustrialpurposesand
for which said lots were taken out of the CARP coverage subject of PARC
ResolutionNo.89122and,hence,canbelegallyandvalidlyacquiredbythem.
PROCEEDSOFSALE
Considering that the 500hectare converted land, as well as the 80.51hectare
SCTEXlot,shouldhavebeenincludedinthecompulsorycoveragewereitnotfor
theirconversionandvalidtransfers,thenitisonlybutproperthatthepricereceived
for the sale of these lots should be given to the qualified FWBs. In effect, the
proceedsfromthesaleshalltaketheplaceofthelots.
JUSTCOMPENSATIONTAKING

InOurJuly5,2011Decision,Westatedthat"HLIshallbepaidjustcompensation
for the remaining agricultural land that will be transferred to DAR for land
distributiontotheFWBs."Wealsoruledthatthedateofthe"taking"isNovember
21,1989,whenPARCapprovedHLIsSDPperPARCResolutionNo.89122.
Mallari,etal.arguedthatthevaluationofthelandcannotbebasedonNovember21,
1989.Instead,theyaverthatthedateof"taking"forvaluationpurposesisafactual
issuebestlefttothedeterminationofthetrialcourts.
AMBALA alleged that HLI should no longer be paid just compensation for the
agricultural land that will be distributed to the FWBs, since the RTC already
renderedadecisionordering"theCojuangcostotransferthecontrolofHacienda
LuisitatotheMinistryofAgrarianReform,whichwilldistributethelandtosmall
farmersaftercompensatingthelandownersP3.988million."Intheevent,however,
that this Court will rule that HLI isindeed entitled to compensation, AMBALA
contendedthatitshouldbepeggedatfortythousandpesos(PhP40,000)perhectare,
sincethiswasthesamevaluethatTadecodeclaredin1989tomakesurethatthe
farmerswillnotownthemajorityofitsstocks.
SC:thedateof"taking"isNovember21,1989,thedatewhenPARCapprovedHLIs
SDPinviewofthefactthatthisisthetimethattheFWBswereconsideredtoown
andpossesstheagriculturallandsinHaciendaLuisita.Tobeprecise,theselands
became subject of the agrarian reform coverage through the stock distribution
schemeonlyupontheapprovaloftheSDP,thatis,November21,1989.Thus,such
approval is akin to a notice of coverage ordinarily issued under compulsory
acquisition.Further,anydoubtshouldberesolvedinfavoroftheFWBs.
SALETOTHIRDPARTIES
ThereisaviewthatsincetheagriculturallandsinHaciendaLuisitawereplaced
underCARPcoveragethroughtheSDOAschemeonMay11,1989,thenthe10year
periodprohibitiononthetransferofawardedlandsunderRA6657lapsedonMay
10,1999,and,consequently,thequalifiedFWBsshouldalreadybeallowedtosell
these lands with respect to their land interests to third parties, including HLI,
regardlessofwhethertheyhavefullypaidforthelandsornot.
The proposition is erroneous. If the land has not yet been fully paid by the
beneficiary,therighttothelandmaybetransferredorconveyed,withpriorapproval
oftheDAR,toanyheirofthebeneficiaryortoanyotherbeneficiarywho,asa
conditionforsuchtransferorconveyance,shallcultivatethelandhimself.Failing
complianceherewith,thelandshallbetransferredtotheLBPwhichshallgivedue
noticeoftheavailabilityofthelandinthemannerspecifiedintheimmediately
precedingparagraph.
IntheeventofsuchtransfertotheLBP,thelattershallcompensatethebeneficiaryin
onelumpsumfortheamountsthelatterhasalreadypaid,togetherwiththevalueof
improvementshehasmadeontheland.

Without a doubt, under RA 6657 and DAO 1, the awarded lands may only be
transferredorconveyedafterten(10)yearsfromtheissuanceandregistrationofthe
emancipation patent (EP) or certificate of land ownership award (CLOA).
ConsideringthattheEPsorCLOAshavenotyetbeenissuedtothequalifiedFWBs
intheinstantcase,the10yearprohibitiveperiodhasnotevenstarted.Significantly,
thereckoningpointistheissuanceoftheEPorCLOA,andnottheplacingofthe
agriculturallandsunderCARPcoverage.
ifWemaintainthepositionthatthequalifiedFWBsshouldbeimmediatelyallowed
theoptiontosellorconveytheagriculturallandsinHaciendaLuisita,thenallefforts
atagrarianreformwouldberenderednugatorybythisCourt,since,attheendofthe
day,theselandswilljustbetransferredtopersonsnotentitledtolanddistribution
underCARP.
CONTROLOVERAGRICULTURALLANDS
SCrealizedthattheFWBswillneverhavecontrolovertheseagriculturallandsforas
longastheyremainasstockholdersofHLI.
bearinginmindthatwiththerevocationoftheapprovaloftheSDP,HLIwillno
longer be operating under SDP and will only be treated as an ordinary private
corporation; the FWBs who remain as stockholders of HLI will be treated as
ordinarystockholdersandwillnolongerbeundertheprotectivemantleofRA6657.
Inadditiontotheforegoing,inviewoftheoperativefactdoctrine,allthebenefits
andhomelots80 receivedbyalltheFWBsshallberespectedwithnoobligationto
refundorreturnthem,since,asWehavementionedinourJuly5,2011Decision,
"thebenefitsxxxwerereceivedbytheFWBsasfarmhandsintheagricultural
enterpriseofHLIandotherfringebenefitsweregrantedtothempursuanttothe
existingcollectivebargainingagreementwithTadeco."
Onelastpoint,theHLIlandshallbedistributedonlytothe6,296originalFWBs.
Theremaining4,206FWBsarenotentitledtoanyportionoftheHLIland,because
therightstosaidlandwerevestedonlyinthe6,296originalFWBspursuanttoSec.
22ofRA6657.Withthese,PARC/DARs,AMBALAs,andFARMsMotions
GRANTED.
The order giving option to the FWBs to choose whether or not to stay as
shareholders

was

thereby

recalled.

G.R.No.171101April24,2012
BeforetheCourtaretheMotiontoClarifyandReconsiderResolutionofNovember
22,2011datedDecember16,2011filedbypetitionerHaciendaLuisita,Inc.(HLI)

andtheMotionforReconsideration/ClarificationdatedDecember9,2011filedby
private respondents Noel Mallari, Julio Suniga, Supervisory Group of Hacienda
Luisita,Inc.andWindsorAndaya(collectivelyreferredtoas"Mallari,etal.").
Basically,theissuesraisedbyHLIandMallari,etal.boildowntothefollowing:(1)
determinationofthedateof"taking";(2)proprietyoftherevocationoftheoptionon
thepartoftheoriginalFWBstoremainasstockholdersofHLI;(3)proprietyof
distributingtothequalifiedFWBstheproceedsfromthesaleoftheconvertedland
andofthe80.51hectareSubicClarkTarlacExpressway(SCTEX)land;and(4)just
compensationforthehomelotsgiventotheFWBs.
PAYMENTOFJUSTCOMPENSATION
HLIcontendsthatsincetheSDPisamodalitywhichtheagrarianreformlawgives
the landowner as alternative to compulsory coverage, then the FWBs cannot be
consideredasownersandpossessorsoftheagriculturallandsofHaciendaLuisitaat
thetimetheSDPwasapprovedbyPARC.Itfurtherclaimsthattheapprovalofthe
SDPisnotakintoaNoticeofCoverageincompulsorycoveragesituationsbecause
stockdistributionoptionandcompulsoryacquisitionaretwo(2)differentmodalities
withindependentandseparaterulesandmechanisms.Concomitantly,HLImaintains
thattheNoticeofCoverageissuedonJanuary2,2006may,attheveryleast,be
consideredasthedateof"taking"asthiswastheonlytimethattheagriculturallands
ofHaciendaLuisitawereplacedundercompulsoryacquisitioninviewofitsfailure
toperformcertainobligationsundertheSDP.
UPHELDPREVIOUSDECISION:takingwaseffectedonNovember21,1989
Whatisnotable,however,isthatthedivestmentbyTadecooftheagriculturallands
ofHaciendaLuisitaandthegivingofthesharesofstockforfreeisnothingbutan
enticementorincentivefortheFWBstoagreewiththestockdistributionoption
schemeandnotfurtherpushforlanddistribution.Andthestubbornfactisthatthe
"mandays"schemeofHLIimpelledtheFWBstoworkinthehaciendainexchange
forsuchsharesofstock.
WhentheagriculturallandsofHaciendaLuisitaweretransferredbyTadecotoHLI
inordertocomplywithCARPthroughthestockdistributionoptionscheme,sealed
withtheimprimaturofPARCunderPARCResolutionNo.89122datedNovember
21,1989,Tadecowasconsequentlydispossessedoftheaforementionedattributesof
ownership.Notably,TadecoandHLIaretwodifferententitieswithseparateand
distinctlegalpersonalities.Ownershipbyonecannotbeconsideredasownershipby
theother.
Corollarily,itistheofficialactbythegovernment,thatis,thePARCsapprovalof
theSDP,whichshouldbeconsideredasthereckoningpointforthe"taking"ofthe
agriculturallandsofHaciendaLuisita.Althoughthetransferofownershipoverthe
agriculturallandswasmadepriortotheSDPsapproval,itisthisCourtsconsistent
view that these lands officially became subject of the agrarian reform coverage
throughthestockdistributionschemeonlyupontheapprovaloftheSDP.AndasWe

havementionedinOurNovember22,2011Resolution,suchapprovalisakintoa
noticeofcoverageordinarilyissuedundercompulsoryacquisition.
FWBSENTITLEDTOPROCEEDSOFSALE
HLIreiteratesitsclaimovertheproceedsofthesalesofthe500hectaresand80.51
hectaresofthelandascorporateownerandarguesthatthereturnofsaidproceedsto
theFWBsisunfairandviolativeoftheCorporationCode.
Thisclaimisbereftofmerit.
UPHELDPREVIOUSRULINGwereitnotfortheapprovaloftheSDPbyPARC,
theselargeparcelsoflandwouldhavebeendistributedandownershiptransferredto
the FWBs,subject topayment of just compensation,given that, as of1989, the
subject4,915hectaresofHaciendaLuisitawerealreadycoveredbyCARP.

OntheproprietyoftherevocationoftheoptionoftheFWBstoremainasHLI
stockholders, the Court, by unanimous vote, agreed to reiterate its ruling in its
November22,2011ResolutionthattheoptiongrantedtotheFWBsstaysrevoked;
OntheproprietyofreturningtotheFWBstheproceedsofthesaleofthe500hectare
convertedlandandofthe80.51hectareSCTEXland,theCourtunanimouslyvoted
tomaintainitsrulingtoorderthepaymentoftheproceedsofthesaleofthesaidland
totheFWBslessthe3%share,taxesandexpensesspecifiedinthefalloofthe
November22,2011Resolution;
On the payment of just compensation for the homelots to HLI, the Court, by
unanimousvote,resolvedtoamenditsJuly5,2011DecisionandNovember22,
2011Resolutionbyorderingthegovernment,throughtheDAR,topaytoHLIthe
justcompensationforthehomelotsthusdistributedtotheFWBS.
the government, through DAR, is ordered to pay Hacienda Luisita, Inc. the just
compensationforthe240squaremeterhomelotsdistributedtotheFWBs.

HOMELOTS
Inthepresentrecourse,HLIalsoharpsonthefactthatsincethehomelotsgivento
theFWBsdonotformpartofthe4,915.75hectarescoveredbytheSDP,thenthe
valueofthesehomelotsshould,withtherevocationoftheSDP,bepaidtoTadecoas
thelandowner.
Wedisagree.AsWehaveexplainedinOurJuly5,2011Decision,thedistributionof
homelotsisrequiredunderRA6657onlyforcorporationsorbusinessassociations
owningoroperatingfarmswhichoptedforlanddistribution.Thisisprovidedunder
Sec.30ofRA6657.
Sincenoneoftheprovisionsmadereferencetocorporationswhichoptedforstock
distributionunderSec.31ofRA6657,thenitisapparentthatsaidcorporationsare
notobligedtoprovideforhomelots.Nonetheless,HLIundertookto"subdivideand
allocateforfreeandwithoutchargeamongthequalifiedfamilybeneficiariesxxx
residential or homelots of not more than 240 sq. m. each, with each family
beneficiary being assured of receiving and owning a homelot in the barrio or
barangaywhereitactuallyresides."Infact,HLIwasabletodistributehomelotsto
someifnotalloftheFWBs.
Thus,inourNovember22,2011Resolution,Wedeclaredthatthehomelotsalready
receivedbytheFWBsshallberespectedwithnoobligationtorefundortoreturn
them.However,sincetheSDPwasalreadyrevokedwithfinality,theCourtdirects
the government through the DAR to pay HLI the just compensation for said
homelotsinconsonancewithSec.4,ArticleXIIIofthe1987Constitutionthatthe
takingoflandforuseintheagrarianreformprogramis"subjecttothepaymentof
justcompensation."

Daezv.CA

Torecapitulate,theCourtvotedonthefollowingissuesinthismanner:
Indeterminingthedateof"taking,"theCourtvoted86tomaintaintherulingfixing
November21,1989asthedateof"taking,"thevalueoftheaffectedlandstobe
determinedbytheLBPandtheDAR;

DARSecretaryBenjaminT.Leong
Leongaffirmedtheassailedorderuponfindingprivaterespondentstobebonafide
tenantsofthesubjectland.Disregardedtheaffidavitofthefarmersunderduress.

Facts:PetitionerDaezowneda4.1685hectarelandinMeycauayan,Bulacanwhich
wasbeingcultivatedbytherespondentfarmersSorienteetal.Theproblemarose
whenthelandwassubjectedtotheOLTpursuanttoPD27asamendedbyLOI474.
Thus,thelandwastransferredtotheownershipofbeneficiariesonDecember9,
1980.
On May 31, 1981, private respondents made an affidavit under duress
statingtheyarenottenantsbuthiredworkers.Hence,Daezaplliedforexemptionof
OLTclaimingherlandisuntenantedandthecancellationoftheCLTs.(notmajorly
relatedtothetopic)
In their Affidavit dated October 2, 1983, Eudosia Daez and her husband, Lope,
declared ownership over 41.8064 hectares of agricultural lands located in
Meycauayan,Bulacanandfourteen(14)hectaresofriceland,sixteen(16)hectaresof
forestland,ten(10)hectaresof"batuhan"and1.8064hectaresofresidentiallandsin
Penaranda,NuevaEcija.Includedintheir41.8064hectarelandholdinginBulacan,
wasthesubject4,1685hectarericelandinMeycauayan.
DARUndersecretaryJoseCMedina:
DenyingEudosiaDaezsapplicationforexemptionuponfindingthather
subjectlandiscoveredunderLOINo.474,petitionerbeingowneroftheaforesaid
agriculturallandsexceedingseven(7)hectares.

CourtofAppeals
SustainedthedecisionofbothDARsecretaries
SupremeCourt
Deniedtheirprayersandsustainedthedecisions
MainIssueRelatedtoourtopic
Exemptionofthe4.1685ricelandfromcoveragebyP.D.No.27havingbeenfinally
deniedher,EudosiaDaeznextfiledanapplicationforretentionofthesamericeland,
thistimeunderR.A.No.6657.
DARRegionalDirector
March 22, 1994, DAR Region III OICDirector Eugenio B. Bernardo allowed
EudosiaDaeztoretainthesubjectricelandbuthedeniedtheapplicationofhereight
(8)childrentoretainthree(3)hectareseachfortheirfailuretoproveactualtillageof
thelandordirectmanagementthereofasrequiredbylaw.TheyappealedtoDAR
Secretary.
DARSecretary
Affirmed the decision of the regional director. Appealed to the Office of the
President(OP).
OfficeofthePresident
RuledinfavorofDaezorherheirsandrenderedjudgmentauthorizingthe
retentionofthe4.1685hectareofland.Stilldeniedtheapplicationofthechildren.
HencetheappealinCA.
CourtofAppeals
ReversedandsetasidethedecisionoftheOfficeofthePresident.
Issue:WONDaezmayretainthedisputed4.1685hectaresland
Held:
PetitionerDaezhastherighttoretainthe4.1685hectarelandpursuanttoherright
ofretentionunder6657.ThedecisionoftheOfficeofthePresidentisreinstated.
Ratio:
ReadSec.6ofR.A.No.6657
Paezwasdeniedtherighttochoosewhatshewantstoretain.
THE TENANTS OF THE ESTATE OF DR. JOSE SISON, Represented by
FERNANDO CAYABYAB,petitioners, vs. THE HON. COURT OF APPEALS,
SECRETARY PHILIP ELLA JUICO of the DEPARTMENT OF AGRARIAN

REFORM, AND THE HEIRS OF DR. JOSE SISON, represented by MANUEL


SISON,respondents.
Facts:ThisisapetitionforreviewofthedecisiondatedMarch29,1990oftheCourt
of Appealsupholding anorder of the Secretary of Agrarian Reform, PhilipElla
Juico, setting aside the previous orders of his predecessors who had issued
certificatesoflandtransfertothetenantsofthericeandcornlandsofthelateDr.
JoseSisonwithoutdueregardfortherightofhislegalheirstoretainownershipof
theirsharesiftheydidnotownmorethanseven(7)hectaresofriceorcornland.
CertificatesoflandtransferwereissuedbytheMinistryofAgrarianReformtothe
petitioners, tenants of the Estate of Dr. Jose Sison, for their respective areas of
cultivation.theheirsofDr.SisonprotestedtothethenMinisterofAgrarianReform,
Conrado Estrella, who ordered that the certificates of land transfer be marked,
"UNDERPROTEST."
Minister Estrella ordered an investigation of the case which revealed that the
landholdingsofthelateDr.JoseSisonatBayambang,Pangasinan,weresubdivided
amonghisheirsproindivisounderaDeedofExtrajudicialPartitiondatedApril2,
1966. Consequently, the acting MAR District Officer of Lingayen, Pangasinan,
recommendedthecancellationofthecertificatesoflandtransferthathadbeenissued
tothepetitionerstenants.However,aReinvestigationReport,datedOctober8,1981
recommendedthatthelandholdingsbeincludedintheOperationLandTransfer.
PetitionfiledbyManuelSison,asrepresentativeofalltheHeirsofDr.Sison,for
exemptionoftheirlandholdingsfromthecoverageofOperationLandTransferwas
denied.Motionforreconsiderationwasdeniedaswell.
Afterorderingareinvestigationofthelandholdingsoftheindividualheirs,anorder
wasissuedonSeptember7,1988bySecretaryJuico,modifyingtheordersofhis
predecessors.HeruledthatthericelandsofConsueloS.NazarenoandPeterSison
areexemptfromtheOperationLandTransferandthatElisaS.Reyes,RenatoSison,
JoseSison,JosefinaS.ZuluetaandJaimeSison,areentitledtoretainnotmorethan
seven(7)hectaresoftheirricelands,sincetheyarenotownersofmorethanseven(7)
hectaresofotherlands,andthatAlfredoSisonandManuelSisonarenotentitledto
retentionorexemptionoftheirricelandsfromtheOperationLandTransferbecause
theyeachownmorethanseven(7)hectaresofotheragriculturalland.
ISSUE:WhetherornottheSecretaryofAgrarianReformhastheauthoritytocancel
certificatesissues?
RULING:
PetitionerscontentionthattheSecretaryofAgrarianReformhadnomareauthority
orjurisdictiontocanceltheCertificatesofLandTransferaftertheyhadbeenissued
tothetenantsbeneficiaries,isnotcorrect.Theissuance,recallorcancellationof
certificatesoflandtransferfallwithintheSecretarysadministrativejurisdictionas
implementorofP.D.27.HavingfoundthatcertainheirsofDr.Sisonwereentitledto
retaintheirricelands(whichdidnotexceedseven[7]hectares)andhadbeenillegally
deniedthatright,SecretaryJuicoproperlyorderedthecancellationoftheCertificates
ofLandTransferwhichhadbeenerroneouslyissuedtothepetitioners.

LUCIA RODRIGUEZ AND PRUDENCIA RODRIGUEZ, PETITIONERS, VS.


TERESITAV.SALVADOR,RESPONDENT.
Facts:Respondentallegedthatsheistheabsoluteownerofaparceloflandcovered
byOriginalCertificateofTitle(OCT)No.P27140issuedbyvirtueofFreePatent
No. (VII5) 2646 in the name of the Heirs of Cristino Salvador represented by
TeresitaSalvadorthatpetitionersacquiredpossessionofthesubjectlandbymere
toleranceofherpredecessorsininterestandthatdespiteseveralverbalandwritten
demandsmadebyher,petitionersrefusedtovacatethesubjectland.
IntheirAnswerpetitionersinterposedthedefenseofagricultural tenancy. Lucia
claimedthatsheandherdeceasedhusband,Serapio,enteredthesubjectlandwiththe
consentandpermissionofrespondent'spredecessorsininterest,siblingsCristinoand
Sana Salvador, under the agreement that Lucia and Serapio would devote the
propertytoagriculturalproductionandsharetheproducewiththeSalvadorsiblings.
Sincethereisatenancyrelationshipbetweentheparties,petitionersarguedthatitis
the Department of Agrarian Reform Adjudication Board (DARAB) which has
jurisdictionoverthecaseandnottheMTC.
TheMetropolitanTrialCourtdismissedthecomplaintforlackofjurisdiction.The
Regional Trial Court remanded the case to the MTC for preliminary hearing to
determinewhethertenancyrelationshipexistsbetweentheparties.Petitionersmoved
forreconsiderationarguingthatthepurposeofapreliminaryhearingwasservedby
the parties' submission of their respective position papers and other supporting
evidence.OnJune23,2004,theRTCgrantedthereconsiderationandaffirmedthe
MTCDecisiondatedSeptember10,2003.OnAugust24,2005,theCArendered
judgmentinfavorofrespondent.Itruledthatnotenancyrelationshipexistsbetween
thepartiesbecausepetitionersfailedtoprovethatrespondentorherpredecessorsin
interestconsentedtothetenancyrelationship.
ISSUE:WHETHERXXXTHECOURTOFAPPEALSACTEDWITHGRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF
JURISDICTIONINRULINGTHATPETITIONERSDEFENDANTS ARENOT
TENANTSOFTHESUBJECTLAND
RULING:
Agricultural

tenancy

relationship
does

not

exist

in

the

instant

case.
Agricultural tenancy exists when all the following requisites are present: 1) the
partiesarethelandownerandthetenantoragriculturallessee;2)thesubjectmatter
oftherelationshipisanagriculturalland;3)thereisconsentbetweenthepartiesto
the relationship; 4) the purpose of the relationship is to bring about agricultural
production;5)thereispersonalcultivationonthepartofthetenantoragricultural
lessee;and6)theharvestissharedbetweenlandownerandtenantoragricultural
lessee.
Inthiscase,toprovethatanagricultural tenancyrelationshipexistsbetweenthe
parties,petitionerssubmittedasevidencetheaffidavitsofpetitionerLuciaandtheir
neighbors. The statements in the affidavits presented by the petitioners are not

sufficient to prove the existence of an agricultural tenancy.


AscorrectlyfoundbytheCA,theelementofconsentislacking.Exceptfortheself
servingaffidavitofLucia,nootherevidencewassubmittedtoshowthatrespondent's
predecessorsininterestconsentedtoatenancyrelationshipwithpetitioners. Self
servingstatements,however,willnot sufficetoproveconsent ofthelandowner;
independent

evidence

is

necessary.

Aside from consent, petitioners also failed to prove sharing of harvest. The
affidavitsofpetitioners'neighborsdeclaringthatrespondentandherpredecessorsin
interestreceivedtheirshareintheharvestarenotsufficient.Petitionersshouldhave
presentedreceiptsoranyotherevidencetoshowthattherewassharingofharvest
andthattherewasanagreedsystemofsharingbetweenthemandthelandowners.
Alitav.CA
petitionseekingthereversalCourtofAppealsdecision:1)DeclaringPresidential
DecreeNo.27inapplicabletolandsobtainedthruthehomesteadlaw;2)Declaring
thatthe4registeredcoownerswillcultivateandoperatethefarmholdingthemselves
as owners; & 3) Ejecting tenants, namely; Gabino Alita, Jesus Julian, Sr., Jesus
Julian, Jr., Pedro Ricalde, Vicente Ricalde and Rolando Salamar, as the owners
wouldwanttocultivatethefarmholdingthemselves.
2 parcels of land at Guilinan, Tungawan, Zamboanga del Sur acquired by
respondentsReyesthroughhomesteadpatentunderCommonwealthActNo.141
Reyeswantstopersonallycultivatetheselands,butAlitarefusetovacate,relying
ontheprovisionsofP.D.27andP.D.316andregulationsofMAR/DAR
June18,1981:RespondentsReyes(Plaintiff)institutedacomplaintagainstMinister
of Agrarian Reform Estrella, Regional Director of MAR Region IX P.D.
Macarambon,andAlitaet.alforthedeclarationofP.D.27andallotherDecrees,
Letters of Instructions and General Orders inapplicable to homestead lands.
DefendantsAlitafiledtheiranswerwithspecialandaffirmativedefenses.
July19,1982:Reyesfiledurgentmotiontoenjointhedefendantsfromdeclaringthe
landsinlitigationunderOperationLandTransferandfrombeingissuedlandtransfer
certificates
November5,1982:CourtofAgrarianRelations16thRegionalDistrict,BranchIV,
PagadianCity(RegionalTrialCourt,9thJudicialRegion,BranchXVIII)renderedits
decisiondismissingcomplaintandthemotiontoenjoin
OnJanuary4,1983,plaintiffsmovedtoreconsidertheOrderofdismissal,towhich
defendantsfiledtheiroppositiononJanuary10,1983.
RTC:issueddecisionpromptingdefendantsAlitaetaltomoveforreconsideration
butwasdenied
CA:thesamewassustained

ISSUE:whetherornotlandsobtainedthroughhomesteadpatentarecoveredbythe
AgrarianReformunderP.D.27.NO
We agree with the petitioners Alita et.al in saying that P.D. 27 decreeing the
emancipation of tenants from the bondage of the soil and transferring to them
ownershipofthelandtheytillisasweepingsociallegislation,aremedialmeasure
promulgatedpursuanttothesocialjusticepreceptsoftheConstitution.However,
suchcontentioncannotbeinvokedtodefeatthepurposeoftheenactmentofthe
PublicLandActorCommonwealthActNo.141toprotectonesrighttolifeitselfby
giveaneedycitizenalandwhereintheycouldbuildahouseandplantfornecessary
subsistence.
Art XIII, Sec 6 of the Constitution likewise respects the superiority of the
homesteaders' rights over the rights of the tenants guaranteed by the Agrarian
Reformstatute.
Section6.TheStateshallapplytheprinciplesofagrarianreformorstewardshipin
thedispositionorutilizationofothernatural resources,includinglandsofpublic
domain under lease or concession suitable to agriculture, subject to prior rights,
homesteadrightsofsmallsettlers,andtherightsofindigenouscommunitiestotheir
ancestrallands.
ComprehensiveAgrarianReformLawof1988orRepublicActNo.6657likewise
supportstheinapplicabilityofP.D.27tolandscoveredbyhomesteadpatentslike
thoseofthepropertyinquestion,
Section6.RetentionLimits....
... Provided further, That original homestead grantees or their direct compulsory
heirswhostillowntheoriginalhomesteadatthetimeoftheapprovalofthisAct
shallretainthesameareasaslongastheycontinuetocultivatesaidhomestead.'
WHEREFORE, premises considered, the decision of the respondent Court of
AppealssustainingthedecisionoftheRegionalTrialCourtisherebyAFFIRMED.
RepublicRep.bytheDARvs.CAandGreenCityEstateDevelopmentCorporation
G.R.No.139592(October5,2000)
Facts:

Thefive(5)parcelsoflandinissuewithacombinedareaof112.0577
hectares situated at Barangay Punta, Municipality ofJalaJala, Province of Rizal
were acquired by private respondent through purchase on May 26, 1994 from
Marcela Borja vda. de Torres. The tax declarations classified the properties as
agricultural.OnJune16,1994,petitionerDARissuedaNoticeofCoverageofthe
subjectparcelsoflandundercompulsoryacquisitionpursuanttoSection7,Chapter
IIofR.A.No.6657ortheComprehensiveLandReform Lawof1988(CARL).
PrivaterespondentfiledwiththeDARRegionalOfficeanapplicationforexemption
ofthelandfromagrarianreformpursuanttoDARAdministrativeOrderNo.6,series

of 1994 and DOJ Opinion No. 44, series of 1990. The DAR Regional Director
recommendedadenialofthesaidpetitiononthegroundthatprivaterespondent
"ailed to substantiate their (sic) allegation that the properties are indeed in the
Municipality's residential and forest conservation zone and that portions of the
propertiesarenotirrigatednorirrigable".
Private respondent filed an Amended Petition for Exemption/Exclusion
fromCARPcoverage,thistimeallegingthatthepropertyiswithintheresidential
andforestconservationzonesandofferingaportionofabout15hectaresofland
(irrigatedriceland)toselltofarmerbeneficiariesortoDAR.OnOctober19,1995,
theDARSecretaryissuedanOrderdenyingtheapplicationforexemption.Private
respondentmovedforreconsiderationbutthesamewaslikewisedenied.Appealwas
madetotheCourtofAppeals.Thelatterinturncreatedacommissiontoconduct
ocularinspectionandsurvey.DARlikewiseconstituteditsownteamtoconductan
inspectionandthereafterobjectedtothereportfiledbythecommission.
OnDecember9,1998,theCourtofAppealsissueditsDecisionreversing
theAssailedDAROrdersanddeclaringthemountainousandresidentialportionsof
the petitioner's land to be exempt from the Comprehensive Agrarian Reform
Program(CARP).Hence,thispetitionforreview.
Issue:Whetherornotthelandholdingssubjectofthiscontroversyareexemptfrom
CARLcoverage.
Law:ComprehensiveAgrarianReformLawof1988[RepublicActNo.6657]
Held:
The commissioner's report on the actual condition of the properties
confirmsthefactthatthepropertiesarenotwhollyagricultural.Inessence,thereport
of the commission showed that the land of private respondent consists of a
mountainousareawithanaverage28degreeslopecontaining66.5hectares;alevel,
unirrigatedareaof34hectaresofwhich5to6hectaresareplantedtopalay;anda
residentialareaof8hectares.Thefindingthat66.5hectaresofthe112.0577hectares
oflandofprivaterespondenthaveanaverageslopeof28degreesprovidesanother
cogentreasontoexempttheseportionsofthepropertiesfromtheCARL.Section10
oftheCARLisclearonthispointwhenitprovidesthat"alllandswitheighteen
percent(18%)slopeandover,exceptthosealreadydevelopedshallbeexemptfrom
thecoverageofthisAct."
Thecruxofthecontroversyiswhetherthesubjectparcelsoflandinissue
areexemptfromthecoverageoftheCARL.PetitionerDARdidnotobjecttothe
creationofateamofcommissionerswhenitverywellknewthatthesurveyand
ocularinspection wouldeventuallyinvolvethe determinationof theslopeofthe
subjectparcelsofland.Itistheprotestationofpetitionerthatcomesatabelated
hour.Intheabsenceofanyirregularityinthesurveyandinspectionofthesubject
properties,andnoneisalleged,thereportofthecommissionersdeservesfullfaith
andcreditandwefindnoreversibleerrorinthereliancebytheappellatecourtupon
saidreport.
Opinion:Thedeterminationoftheclassificationandphysicalconditionofthelands
wassignificantlymaterialinthedispositionofthiscase.Thiswasmainlythereason

whytheCourtofAppealsconstitutedthecommissiontoinspectandsurveysaid
properties.AgreeingonthewordsoftheSC,thereportofthecommissionersindeed
deservesfullfaithandcreditastheyweretheonestaskedtodosuchandinproperty
law,theremustalwaysbeapresumptionofgoodfaith.

Buklod ng Magbubukid sa Lupaing Ramos, Inc. v. E.M. Ramos and Sons, Inc.
(2011)
Doctrine: A state may not impair vested rights by legislative enactment, by the
enactmentorbythesubsequentrepealofamunicipalordinance,orbyachangein
theconstitutionoftheState,exceptinalegitimateexerciseofthepolicepower.
Facts:(WARNING:Itsalengthycase.)
Nature: Consolidated Petitions for Review on Certiorari filed by the Buklod ng
Magbubukid Sa Lupaing Ramos, Inc. (Buklod) and the Department of Agrarian
Regorm(DAR),assailingadecisionoftheCourtofAppealsinwhichitdeclaredthe
parcelsoflandownedbyE.M.RamosandSons,Inc.(EMRASON)inCaviteexempt
fromthecoverageoftheComprehensiveAgrarianReformProgram(CARP),thus,
nullifyingandsettingasidetheDecisionoftheOfficeofthePresident.
Severalparcelsofunirrigatedlandwhichformpartofalargerexpanseoriginally
ownedbytheManilaGolfandCountryClubwasaquiredbyEMRASONforthe
purposeofdevelopingthesameintoaresidentialsubdivisionknownas"Traveller's
LifeHomes".
TheMunicipalCouncilofDasmarias,Cavite,actingpursuanttoRepublicActNo.
2264,otherwiseknownasthe"LocalAutonomyAct",enactedMunicipalOrdinance
No. 1 entitled "An Ordinance Providing Subdivision Regulation and Providing
PenaltiesforViolationThereof."EMRASONappliedforanauthoritytoconvertand
developmentitspropertyintoaresidentialsubdivision.ThemMunicipalCouncilof
Dasmarias,CavitepassedMunicipalOrdinanceNo.29AapprovingEMRASON's
application.
The actual implementation of the subdivision project suffered delay because the
property was mortgaged to, and the titles thereto were in the possession of, the
OverseasBankofManila,whichduringtheperiodmaterialwasunderliquidation.
OnJune15.1988,RepublicActNo.6657,otherwiseknownastheComprehensive
Agrarian Reform LaworCARL,tookeffect, usheringinanew processofland
classification,acquisitionanddistribution.ThencametheAquinogovernment'splan
toconvertthetenantedneighboringpropertyoftheNationalDevelopmentCompany
(NDC)intoanindustrialestatetobemanagedthroughajointventureschemeby
NDCandtheMarubeniCorporation.Partoftheoverallconversionpackagecalled

forprovidingthetenantfarmers,optingtoremainattheNDCproperty,withthree
hectareseach.However,thesizeoftheNDCpropertyturnedouttobeinsufficient
forboththedemandsoftheproposedindustrialprojectaswellasthegovernment's
commitmenttothetenantfarmers.Toaddressthiscommitment,theDepartmentof
AgrarianReform(DAR)wasthustaskedwithacquiringadditionallandsfromthe
nearby areas. The DAR earmarked for this purpose the subject property of
EMRASON.DARSecretaryBenjaminLeongsentoutthefirstoffourbatchesof
noticesofacquisition,eachofwhichdrewprotestfromEMRASON.
EMRASONfiledwiththe DARAB separatepetitionstonullifythe notices.The
LegalDivisionofDARrenderedadecisiondeclaringasnullandvoidallthenotices
of acquisitions, observing that the property covered thereby is, pursuant to
DepartmentofJustice(DOJ)OpinionNo.44,seriesof1990,exemptfromCARP.
Supposedly,thiswaspursuanttoaDOJOpinionrenderedbythenJusticeSecretary
Franklin Drilon, clarifying that lands already converted to nonagricultural uses
beforeJune15,1988werenolongercoveredbyCARP.
RegionIVDARRegionalDirectormotupropioelevatedthecasetotheOfficeofthe
Agrarian Reform Secretary. DAR Secretary Ernesto Garilao issued an order
affirmingtheNoticesofAcquisition MRdenied>AppealtotheOfficeofthe
President
AppealdismissedbyOPbecauseEMRASONspropertyhassupposedlyremained
agriculturalinclassificationandthuswithinthecoverageoftheCARPbecauseit
failed to comply with the mandatory requirements and conditions of Municipal
OrdinanceNos.1and29A,specifically,amongothers,theneedforapprovalofthe
National Planning CommissionthroughtheHighwayDistrictEngineer,andthe
BureauofLandsbeforefinalsubmissiontotheMunicipalCouncilandMunicipal
Mayor, and there was a certification of the Human Settlements Regulatory
Commission(HSRC) in 1981 andtheHousingandLandUseRegulatoryBoard
(HLRB) in 1992 that the property is agricultural MR denied Petition for
ReviewwiththeCA
DAR had already prepared Certificates of Land Ownership Award (CLOAs) to
distribute the subject property to farmerbeneficiaries. However, a writ of
preliminaryinjunctionissuedbytheCourtofAppealsenjoinedthereleaseofthe
CLOAs.Buklod,onbehalfofthealleged300farmerbeneficiariesofthesubject
property,filedaManifestationandOmnibusMotion,whereinitmovedthatitbe
allowedtointerveneasanindispensableparty.
CourtofAppealsruledinfavorofEMRASONbecausethesubjectpropertywas
alreadyconverted/classifiedasresidentialbytheMunicipalityofDasmariaspriorto
the effectivity of the CARL. The appellate court reasoned mainly that the
municipality,conformablywithitsstatutoryconferredlocalautonomy,hadpasseda
subdivisionmeasure,I.e.,OrdinanceNo.1,andhadapprovedinlinethereto,through
themediumofOrdinanceNo.29A,[EMRASON's]applicationforsubdivision,or
with like effect approved the conversion/classification of the lands in dispute as
residential.Significantly,theMunicipalMayorofDasmarias,Cavite,inhisletterof
September23,1988to[EMRASON],clarifiedthatsuchconversionconformswith

theapproveddevelopmentplanofthemunicipality.(Ifinterestedinthediscussion
atCAlevel,pleasereadthecase)
Petitionersarguments:
DAR:
ThesubjectpropertycouldbecompulsorilyacquiredbytheStatefromEMRASON
anddistributedtoqualifiedfarmerbeneficiariesundertheCARPsinceitwasstill
agricultural landwhentheCARPbecameeffectiveonJune15,1988.Ordinance
Nos.1and29A,approvedbytheMunicipalityofDasmariasonJuly13,1971and
July9,1972,respectively,didnotreclassifythesubjectpropertyfromagriculturalto
nonagricultural.ThepowertoreclassifylandsisaninherentpoweroftheNational
LegislatureunderSection9ofCommonwealthActNo.141,otherwiseknownasthe
Public Land Act, as amended, which, absent a specific delegation, could not be
exercisedbyanylocalgovernmentunit(LGU).TheLocalAutonomyActof1959
ineffectwhentheMunicipalityofDasmariasapprovedOrdinanceNos.1and29A
merelydelegatedtocitiesandmunicipalitieszoningauthority,tobeunderstoodas
theregulationoftheusesofpropertyinaccordancewiththeexistingcharacterofthe
landandstructures. ItwasonlySection20ofRepublicActNo.7160,otherwise
known as the Local Government Code of 1991, which extended to cities and
municipalitieslimitedauthoritytoreclassifyagriculturallands.
Evenconcedingthatcitiesandmunicipalitieswerealreadyauthorizedin1972to
issue an ordinance reclassifying lands from agricultural to nonagricultural,
OrdinanceNo.29AoftheMunicipalityofDasmariaswasnotvalidsinceitfailed
tocomplywithSection3oftheLocalAutonomyActof1959,Section16(a)of
OrdinanceNo.1oftheMunicipalityofDasmarinas,andAdministrativeOrderNo.
152,whichallrequiredreviewandapprovalofsuchanordinancebytheNational
PlanningCommission(NPC).Subsequentdevelopmentsfurthernecessitatedreview
and approval of Ordinance No. 29A by the Human Settlements Regulatory
Commission(HSRC),whichlaterbecametheHousingandLandUseRegulatory
Board(HLURB).
ReliancebytheCourtofAppealsonNataliaRealty,Inc.v.DepartmentofAgrarian
Reform is misplaced because the lands involved therein were converted from
agriculturaltoresidentialusebyPresidentialProclamationNo.1637,issuedpursuant
totheauthoritydelegatedtothePresidentunderSection71,etseq.,ofthePublic
LandAct.
Buklod:
PriortoOrdinanceNos.1and29A,therewerealreadylawsimplementingagrarian
reform,particularly:(1)RepublicActNo.3844,otherwiseknownastheAgricultural
LandReformCode,ineffectsinceAugust8,1963,andsubsequentlyamendedby
RepublicActNo.6389onSeptember10,1971,afterwhichitbecameknownasthe
CodeofAgrarianReforms;and(2)PresidentialDecreeNo.27,otherwiseknownas
the Tenants Emancipation Decree, which took effect on November 19, 1972.
Agriculturallandcouldnotbeconvertedforthepurposeofevadinglandreformfor

therewerealreadylawsgrantingfarmertenantssecurityoftenure,protectionfrom
ejectmentwithoutjustcause,andvestedrightstothelandtheyworkon.
EMRASONfailedtocomplywithSection36oftheCodeofAgrarianReforms,
whichprovidedthattheconversionoflandshouldbeimplementedwithinoneyear,
otherwise,theconversionisdeemedinbadfaith.GiventhefailureofEMRASONto
complywithmanyotherrequirementsforavalidconversion,thesubjectproperty
hasremainedagricultural.Simplyput,nocompliancemeansnoconversion.Infact,
Buklodpointsout,thesubjectpropertyisstill declaredas"agricultural"forreal
estatetaxpurposes.Consequently,EMRASONisnowestoppedfrominsistingthat
thesubjectpropertyisactually"residential."
Land reform is a constitutional mandate which should be given paramount
consideration.Pursuanttosaidconstitutionalmandate,theLegislatureenactedthe
CARP.It isabasiclegal principlethat alegislativestatuteprevailsoveramere
municipalordinance.ARGUMENTMOSTRELEVANTTOTHETOPIC
Respondentsarguments:
EMRASON:
ThesubjectpropertyisexemptfromCARPbecauseithadalreadybeenreclassified
as residential with the approval of Ordinance No. 29A by the Municipality.
EMRASONcitesOrtigas&Co.,Ltd.Partnershipv.FeatiBankandTrustCowhere
this Court ruled that a municipal council is empowered to adopt zoning and
subdivisionordinancesorregulationsunderSection3oftheLocalAutonomyActof
1959.EMRASONavowsthattheMunicipalityofDasmarias,takingintoaccount
theconditionsprevailinginthearea,couldvalidlyzoneandreclassifythesubject
propertyintheexerciseofitspolicepowerinordertosafeguardthehealth,safety,
peace,goodorder,andgeneralwelfareofthepeopleinthelocality.EMRASON
describesthewholeareasurroundingthesubjectpropertyasresidentialsubdivisions
(i.e.,DonGregorio,MetroGate,VineVillage,andCitylandGreenbreeze1and2
Subdivisions) and industrial estates (i.e., Reynolds Aluminum Philippines, Inc.
factory; NDCMarubeni industrial complex, San Miguel CorporationMonterey
cattleandpiggeryfarmandslaughterhouse),traversedbynationalhighways(i.e.,
Emilio Aguinaldo National Highway, Trece Martirez, Puerto Azul Road, and
Governor'sDrive).EMRASONmentionsthatonMarch25,1988,theSangguniang
PanlalawiganoftheProvinceofCavitepassedResolutionNo.105whichdeclared
the area where subject property is located as "industrialresidentialinstitutional
mix."
OrdinanceNo.29AoftheMunicipalityofDasmariasisvalid.OrdinanceNo.29A
iscompleteinitself,andthereisnomoreneedtocomplywiththeallegedrequisites
whichDARandBuklodareinsistingupon.EMRASONquotesfromPatalinghugv.
Court of Appeals that "once a local government has reclassified an area as
commercial,thatdeterminationforzoningpurposesmustprevail."
Ordinance No. 29A, reclassifying the subject property, was approved by the
MunicipalityofDasmariasonJuly9,1972.ExecutiveOrderNo.648,otherwise
knownastheCharteroftheHumanSettlementsRegulatoryCommission(HSRC

Charter)whichconferredupontheHSRCthepoweranddutytoreview,evaluate,
and approve or disapprove comprehensive land use and development plans and
zoningordinancesofLGUswasissuedonlyonFebruary7,1981.Theexerciseby
HSRC of such power could not be applied retroactively to this case without
impairingvestedrightsofEMRASON.
ThereisnoabsolutenecessityofsubmittingOrdinanceNo.29AtotheNPCfor
approval.BasedonthelanguageofSection3oftheLocalAutonomyActof1959,
whichusedtheword"may,"reviewbytheNPCofthelocalplanningandzoning
ordinanceswasmerelypermissive.EMRASONadditionallypositsthatOrdinance
No.1oftheMunicipalityofDasmariassimplyrequiredapprovalbytheNPCofthe
finalplatorplan,map,orchartofthesubdivision,andnotofthereclassification
and/orconversionbytheMunicipalityofthesubjectpropertyfromagriculturalto
residential.AsforAdministrativeOrderNo.152datedDecember16,1968,itwas
directedtoandshouldhavebeencompliedwithbythecityandmunicipalboardsand
councils.Thus,EMRASONshouldnotbemadetosufferforthenoncomplianceby
theMunicipalCouncilofDasmarinaswithsaidadministrativeorder.
Since the subject property was already reclassified as residential with the mere
approvalofOrdinanceNo.29AbytheMunicipalityofDasmarinas,EMRASONdid
not have to immediately undertake actual development of the subject property.
Reclassification and/or conversion of a parcel of land are different from the
implementationoftheconversion.
Buklodmembersarenotfarmertenantsofthesubjectproperty.Thesubjectproperty
hasnofarmertenantsbecause,astheCourtofAppealsobserved,thepropertyis
unirrigatedandnotdevotedtoanyagriculturalactivity.Thesubjectpropertywas
placed under the CARP only to accommodate the farmertenants of the NDC
propertywhoweredisplacedbytheNDCMarubeniIndustrialProject.Moreover,the
BuklodmembersarestillundergoingascreeningprocessbeforetheDARRegion
IV, and are yet to be declared as qualified farmerbeneficiaries of the subject
property.Hence,Buklodmemberstailedtoestablishtheyalreadyhavevestedright
overthesubjectproperty.
Issue/s:WhetherthesubjectpropertycouldbeplacedundertheCARP

Held/Ratio:SCaffirmstheCourtofAppealsandrulesinfavorofEMRASON.
CARPcoveragelimitedtoagriculturalland
Section4,ChapterIIoftheCARL,asamended,24particularlydefinesthecoverage
oftheCARP,towit:SEC.4.Scope.TheComprehensiveAgrarianReformLawof
1988shallcover,regardlessoftenurialarrangementandcommodityproduced,all
public and private agricultural lands as provided in Proclamation No. 131 and
ExecutiveOrderNo.229,includingotherlandsofthepublicdomainsuitablefor
agriculture:Provided,Thatlandholdingsoflandownerswithatotalareaoffive(5)
hectaresandbelowshallnotbecoveredforacquisitionanddistributiontoqualified
beneficiaries.Morespecifically,thefollowinglandsarecoveredbytheCARL:(d)
Allprivatelandsdevotedtoorsuitableforagricultureregardlessoftheagricultural

productsraisedorthatcanberaisedthereon.Section3(c),ChapterIoftheCARL
furthernarrowsdownthedefinitionofagriculturallandthatissubjecttoCARLto
"landdevotedtoagricultural activityasdefinedinthisActandnotclassifiedas
mineral,forest,residential,commercialorindustrialland."TheCARLtookeffecton
June15,1988.Tobeexempt from theCARL,thesubject propertyshouldhave
alreadybeenreclassifiedasresidentialpriortosaiddate.
TheLocalAutonomyActof1959
TheLocalAutonomyActof1959,precursoroftheLocalGovernmentCodeof1991,
provided:SEC.3.Additionalpowersofprovincialboards,municipalboardsorcity
councilsandmunicipalandregularlyorganizedmunicipaldistrictcouncils.xxx
Powertoadoptzoningandplanningordinances.Anyprovisionoflawtothe
contrary notwithstanding, Municipal Boards or City Councils in cities, and
Municipal Councils in municipalities are hereby authorized to adopt zoning and
subdivisionordinancesorregulationsfortheirrespectivecitiesandmunicipalities
subjecttotheapprovaloftheCityMayororMunicipalMayor,asthecasemaybe.
Citiesandmunicipalitiesmay,however,consulttheNationalPlanningCommission
onmatterspertainingtoplanningandzoning.
The Court observes that the OP, the Court of Appeals, and even the parties
themselvesreferredtoResolutionNo.29Aasanordinance.Althoughitmaynotbe
itsofficialdesignation,callingResolutionNo.29AasOrdinanceNo.29Aisnot
completelyinaccurate.
Ortigas&Co.case,theCourtfounditimmaterialthatthethenMunicipalCouncilof
Mandaluyongdeclaredcertainlotsaspart ofthecommercial andindustrial zone
througharesolution,ratherthananordinance,because:Section3ofR.A.No.2264,
otherwiseknownastheLocalAutonomyAct,empowersaMunicipalCouncil"to
adopt zoning and subdivision ordinances or regulations" for the municipality.
Clearly,thelawdocsnotrestricttheexerciseofthepowerthroughanordinance.
Therefore, granting that Resolution No. 27 is not an ordinance, it certainly is a
regulatorymeasurewithintheintendmentorambitoftheword"regulation"under
theprovision.Asamatteroi'factthesamesectiondeclaresthatthepowerexists
"(A)nyprovisionoflawtothecontrarynotwithstandingxxx."
Whilethesubjectpropertymaybephysicallylocatedwithinanagriculturalzone
under the 1981 Comprehensive Zoning Ordinance of Dasmarinas, said property
retaineditsresidentialclassification.AccordingtoSection17,theRepealingClause,
ofthe1981ComprehensiveZoningOrdinanceofDasmarinas:"AHotherordinances,
rules or regulations in conflict with the provision of this Ordinance are hereby
repealed: Provided, that rights that have vested before the effectivity of this
Ordinanceshallnotbeimpaired."
Ayogv.Cusi,Jr.:Thatvestedrighthastoberespected.Itcouldnotbeabrogatedby
thenewConstitution.Section2,ArticleXIIIofthe1935Constitutionallowsprivate
corporationstopurchasepublicagriculturallandsnotexceedingonethousandand
twentyfour hectares. Petitioners' prohibition action is barred by the doctrine of
vestedrightsinconstitutionallaw.

Thedueprocessclauseprohibitstheannihilationofvestedrights."Astatemaynot
impairvestedrightsbylegislativeenactment,bytheenactmentorbythesubsequent
repeal ofamunicipal ordinance,orbyachangeintheconstitutionoftheState,
exceptinalegitimateexerciseofthepolicepower"
Alawenactedintheexerciseofpolicepowertoregulateorgoverncertainactivities
ortransactionscouldbegivenretroactiveeffectandmayreasonablyimpairvested
rightsorcontracts.Policepowerlegislationisapplicablenotonlytofuturecontracts,
but equallytoIhosealreadyinexistence.Nonimpairment ofcontractsorvested
rightsclauseswillhavetoyieldtothesuperiorandlegitimateexercisebytheStateof
policepowertopromotethehealth,morals,peace,education,goodorder,safety,and
generalwelfareofthepeople,xxx.
EMRASONmentionsResolutionNo.105,DefiningandDeclaringtheBoundariesof
IndustrialandResidentialLandUsePlanintheMunicipalitiesofImusandPartsof
Dasmariflas, Carmona, Gen. Mariano Alvarez, Gen. Trias, Silang, Tanza, Naic,
Rosario,andTreceMartiresCity,Provinceo[Cavite,approvedbytheSangguniang
Panlalawigan of Cavite on March 25, 1988. The Sangguniang Panlalawigan
determinedthat"thelandsextendingfromthesaiddesignatedindustrialareaswould
havegreatereconomicvalueforresidentialandinstitutionaluses,andwouldserve
theinterestandwelfareforthegreatestgoodofthegreatestnumberofpeople."50
ResolutionNo.105,approvedbytheHLURBin1990,partlyreads:Tractsoflandin
theMunicipalityofCarmonafromthePeople'sTechnologyComplextopartsofthe
MunicipalityofSilang,partsoftheMunicipalitiesofDasmarias,GeneralTrias,
Trece MartiresCity,Municipalitiesof TanzaandNaicforming the stripofland
traversedbythePuertoAzulRoadextendingtwokilometersmoreorlessfromeach
sideoftheroadwhichareherebydeclaredasindustrialresidentialinstitutionalmix.
(Emphasessupplied.)
Thereisnoquestionthatthesubjectpropertyislocatedwithintheaforedescribed
area.AndeventhoughResolutionNo.105hasnodirectbearingontheclassification
ofthesubjectpropertypriortotheCARLittakingeffectonlyin1990afterbeing
approvedbytheHLURBitisaconfirmationthatatpresent,thesubjectproperty
anditssurroundingareasaredeemedbytheProvinceofCavitebettersuitedand
prioritizedforindustrialandresidentialdevelopment,thanagriculturalpurposes.
CARPexemption:
Section4ofR.A.6657providesthattheCARLshall"cover,regardlessoftenurial
arrangementandcommodityproduced,allpublicandprivateagriculturallands."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,commercialorindustrialland."ThedeliberationsoftheConstitutional
Commissionconfirmthislimitation."Agriculturallands"arconlythoselandswhich
are "arable and suitable agricultural lands" and "do not include commercial,
industrialandresidentiallands."
Basedontheforegoing,itisclearthattheundevelopedportionsoftheAntipoloHills
Subdivisioncannotinanylanguagebeconsideredas"agriculturallands."Theselots
wereintendedforresidentialuse.Theyceasedtobeagriculturallandsuponapproval

oftheirinclusionintheLungsodSilanganReservation.Eventoday,theareasin
questioncontinue tobedevelopedasa lowcost housingsubdivision,albeit at a
snail'space,xxxTheenormityoftheresourcesneededfordevelopingasubdivision
mayhavedelayeditscompletionbutthisdoesnotdetractfromthefactthatthese
landsarestillresidentiallandsandoutsidetheambitoftheCARL.
Digestby:P.M.R.Gairanod
HeirsofJoseDelestev.LandbankofthePhilippines
Facts:
ThespousesGregorioNanaman(Gregorio)andHilariaTabuclin(Hilaria)werethe
ownersofaparcelofagriculturallandlocatedinTambo,IliganCity.Saidspouses
were childless, but Gregorio had a son named Virgilio Nanaman (Virgilio) by
anotherwoman.
WhenGregoriodiedin1945,HilariaandVirgilioadministeredthesubjectproperty
andsoldthesubjectpropertytoDr.JoseDeleste(Deleste)forPhP16,000.Thedeed
ofsalewasnotarizedonFebruary17,1954andregisteredonMarch2,1954.Also,
thetaxdeclarationinthenameofVirgiliowascanceledandanewtaxdeclaration
wasissuedinthenameofDeleste.
OnMay15,1954,Hilariadied.Gregoriosbrother,JuanNanaman,wasappointedas
specialadministratoroftheestateofthedeceasedspouses.Subsequently,Edilberto
Noel(Noel)wasappointedastheregularadministratorofthejointestate.Noel,as
the administrator of the intestate estate of the deceased spouses, filed an action
against Deleste for the reversion of title over the subject property. The decision
stated thatthe subject property was the conjugal property of the late spouses
GregorioandHilariaandthatthelattercouldonlysellheronehalf(1/2)shareofthe
subjectpropertytoDeleste.Asaresult,Deleste,whodiedin1992,andtheintestate
estateofGregoriowereheldtobethecoownersofthesubjectproperty,eachwitha
onehalf(1/2)interestinit.
Thereafter, Presidential Decree No. (PD) 27was issued. This law mandates that
tenantedriceandcornlandsbebroughtundertheOperationLandTransfer(OLT)
Programandawardedtofarmerbeneficiaries.Thus,thesubjectpropertywasplaced
underthesaidprogram.
However,onlytheheirsofGregoriowereidentifiedbytheDepartmentofAgrarian
Reform (DAR) asthelandowners.Petitionerscontend that DAR failed tonotify
themthatitissubjectingthesubjectpropertyunderthecoverageoftheagrarian
reformprogram;hence,theirrighttodueprocessoflawwasviolated
Eventually,onFebruary12,1984,DARissuedCertificatesofLandTransfer(CLTs)
infavorofprivaterespondentswhoweretenantsandactualcultivatorsofthesubject
property.

ISSUE:Whetherornottheefailureoftheadministrativebodytogivewrittennotice
thatthepropertyboughtbytheascendantofthepetitionerissubjecttoPD27a
violationoftheheirsdueprocess.
RULING:
YES.PD27isastatutorynoticetoallownersofagriculturallandsdevoted
toriceand/orcornproduction,implyingthattherewasnoneedforanactualnotice.
Theimportanceofanactualnoticeinsubjectingapropertyundertheagrarianreform
programcannotbeunderrated,asnoncompliancewithittrodsroughshodwiththe
essentialrequirementsofadministrativedueprocessoflaw.
Since land acquisition under either Presidential Decree No. 27 and the
Comprehensive Agrarian Reform Law govern the extraordinary method of
expropriating private property, the law must be strictly construed. Faithful
compliancewithlegalprovisions,especiallythosewhichrelatetotheprocedurefor
acquisitionofexpropriatedlandsshouldthereforebeobserved.Intheinstantcase,no
proper notice was given to Virginia A. Roa by the DAR. Neither did the DAR
conductanocularinspectionandinvestigation.Hence,anyactcommittedbythe
DARoranyofitsagenciesthatresultsfromitsfailuretocomplywiththeproper
procedureforexpropriationoflandisaviolationofconstitutionaldueprocessand
shouldbedeemedarbitrary,capricious,whimsicalandtaintedwithgraveabuseof
discretion.
Inaddition,DARmusthavenotifiedDeleste,beingthelandownerofthe
subjectproperty.ItshouldbenotedthatthedeedofsaleexecutedbyHilariainfavor
of Deleste wasregistered on March 2, 1954, and such registration serves as a
constructivenoticetothewholeworldthatthesubjectpropertywasalreadyowned
byDelestebyvirtueofthesaiddeedofsale.DARdoesnothavethereasontofeign
ignoranceofthetransferofownershipoverthesubjectproperty.

Moreover,DARshouldhavesentthenoticetoDeleste,andnottotheNanamans,
sincethetaxdeclarationinthenameofVirgiliowasalreadycanceledandanewone
issuedinthenameofDeleste.Althoughtaxdeclarationsarenotconclusiveevidence
ofownership,theyarenonethelessgoodindiciaofpossessionintheconceptofan
owner,fornooneinhisrightmindwouldbepayingtaxesforapropertythatisnotin
hisactualor,atleast,constructivepossession.

Petitionersrighttodueprocessoflawwas,indeed,violatedwhentheDARfailedto
notify them that it is subjecting the subject property under the coverage of the
agrarianreformprogram.
CENTRALMINDANAOUNIVERSITY,petitioner,vs.DARAB,et.al.,respondents
Facts:

Thepetitioner,theCMU,isanagriculturaleducationinstitutionownedandrunby
theestatelocatedinthetownofMusuan,Bukidnonprovince.Itstartedasafarm
schoolatMarilag,Bukidnon,inearly1910,inresponsetothepublicdemandforan
agriculturalschoolinMindanao.Intheearly1960's,itwasconvertedintoacollege
untilitbecamewhatisnowknownastheCMU,butstillprimarilyanagricultural
university.OnJanuary16,1958thelateCarlosP.Garcia,issuedProclamationNo.
467, withdrawing from sale or settlement and reserving for the Mindanao
AgriculturalCollege,asitewhichwouldbethefuturecampusofwhatisnowthe
CMU.Atotallandareacomprising3,080hectareswassurveyedandregisteredand
titledinthenameofthepetitioner.Severaltribesbelongingtoculturalcommunities,
opposedthepetitionclaimingownershipofcertainancestrallandsformingpartof
thetribalreservations.Someoftheclaimsweregrantedsothatwhatwastitledtothe
presentpetitionerschoolwasreducedfrom3,401hectaresto3,080hectares.
In 1984,the CMU approved ResolutionNo.160,adopting alivelihoodprogram
called "Kilusang Sariling Sikap Program" under which the landresources ofthe
Universitywereleasedtoitsfacultyandemployees.Thisarrangementwascovered
byawrittencontract.Thefacultyandstaffcombinethemselvestogroupsoffive
memberseach,andtheCMUprovidedtechnicalknowhow,practicaltrainingandall
kindsofassistance,toenableeachgrouptocultivate4to5hectaresoflandforthe
lowlandriceprojects.EachgrouppaystheCMUaservicefeeandalsoalanduse
participant's fee. It was expressly stipulated that no landlordtenant relationship
existedbetweentheCMUandthefacultyand/oremployees.Thisparticularprogram
wasconceivedasamultidisciplinaryappliedresearchextensionandproductivity
programtoutilizeavailableland,trainpeopleinmodernagriculturaltechnologyand
atthesametimegivethefacultyandstaffopportunitywithintheconfinesofthe
CMUreservationtoearnadditionalincometoaugmenttheirsalaries.
AmongtheparticipantsinthisprogramwereAlvinObrique,FelixGuinanao,Joven
Caballero, Nestor Pulao, Danilo Vasquez, Aronio Pelayo and other complainants
(respondents).ObriquewasaPhysicsInstructorattheCMUwhiletheotherswere
employeesinthelowlandriceproject.
In1986,theagribusinessprojectfortheproductionofrice,cornandsugarcane
knownasAgriBusinessManagementandTrainingProjectwasdiscontinueddueto
lossesincurredwhilecarryingonthesaidproject.SomeCMUpersonnel,among
whomwerethecomplainants,werelaidoffwhenthisprojectwasdiscontinued.The
CMUlaterlaunchedaselfhelpprojectcalledCMUIncomeEnhancementProgram
(CMUIEP)todevelopunutilizedlandresources,mobilizeandpromotethespiritof
selfreliance,providesocioeconomicandtechnicaltraininginactualfieldproject
implementationandaugmenttheincomeofthefacultyandthestaff.Theoneyear
contractsexpiredonJune30,1988.Somecontractswererenewed.Thosewhose
contractswerenotrenewedwereservedwithnoticestovacate.

Thenonrenewalofthecontracts,thediscontinuanceoftherice,cornandsugarcan
project,thelossofjobsduetoterminationorseparationfromtheserviceandthe
alleged harassment by school authorities, all contributed to, and precipitated the
filingof,thecomplaint.
ISSUES:
1.)WhetherornottheDARABhasjurisdictiontohearanddecideCaseNo.005
forDeclarationofStatusofTenantsandcoverageoflandundertheCARP.
2.) Whetherornotrespondent Court ofAppealscommittedseriouserrorsand
graveabuseofdiscretionamountingtolackofjurisdictionindismissingthePetition
forReviewonCertiorariandaffirmingthedecisionofDARAB.
Ruling:
DARAB JURISDICTION LIMITED ONLY TO MATTERS INVOLVING
IMPLEMENTATIONOFCARP.UnderSection4andSection10ofR.A.6657,
it is crystal clear that the jurisdiction of the DARAB is limited only to matters
involving the implementation of the CARP. More specifically, it is restricted to
agrariancasesandcontroversiesinvolvinglandsfallingwithinthecoverageofthe
aforementionedprogram.Itdoesnotincludethosewhichareactually,directlyand
exclusivelyusedandfoundtobenecessaryfor,amongsuchpurposes,schoolsites
and campuses for setting up experimental farm stations, research and pilot
productioncenters,etc.Consequently,theDARABhasnopowertotry,hearand
adjudicatethecasependingbeforeitinvolvingaportionoftheCMU'stitledschool
site, as the portion of the CMU land reservation ordered segregated is actually,
directly and exclusively used and found by the school to be necessary for its
purposes.
SEGREGATING SOME HECTARES OF LAND WITHOUT FINDING THAT
COMPLAINANTS ARE TENANTS: GRAVE ABUSE OF DISCRETION.
Wherethequasijudicialbodyfindsthatthecomplainants/petitionersarenotentitled
totherightstheyaredemanding,itisanerroneousinterpretationofauthorityforthat
quasijudicialbodytoorderprivatepropertytobeawardedtofuturebeneficiaries.
Theordersegregating400hectaresoftheCMUlandwasissuedonafindingthatthe
complainantsarenotentitledasbeneficiaries,andonanerroneousassumptionthat
the CMU land which is excluded or exempted under the law is subject to the
coverageoftheCARP.Goingbeyondwhatwasaskedbythecomplainantswhowere
notentitledtothereliefprayedfor,constitutesagraveabuseofdiscretionbecauseit
impliessuchcapriciousandwhimsicalexerciseofjudgmentasisequivalenttolack
ofjurisdiction.

NEITHER DARAB OR COURTOF APPEALS HAS RIGHT TOPASS UPON


NEEDSOFSCHOOL.Astothedeterminationofwhenandwhatlandsarefound
tobenecessaryforusebytheCMU,theschoolisinthebestpositiontoresolveand
answerthequestionandpassupontheproblemofitsneedsinrelationtoitsavowed
objectivesforwhichthelandwasgiventoitbytheState.NeithertheDARABnor
theCourtofAppealshastherighttosubstituteitsjudgmentordiscretiononthis
matter,unlesstheevidentiaryfactsaresomanifestastoshowthattheCMUhasno
realneedfortheland.
The evidence is sufficient to sustain a finding of grave abuse of discretion by
respondentsCourtofAppealsandDARAdjudicationBoard.TheCourtdeclaredthe
decisionoftheDARABandtheCourtofAppealsasnullandvoidandherebyorders
thattheybesetaside,withcostsagainsttheprivaterespondents.
DepartmentofAgrarianReformv.DepartmentofEducation,CultureandSports
Facts:Petitionforreviewoncertiorari tosetasidedecisionofCAwhichdenied
petitionersmotionforreconsideration
LotNo.2509andLotNo.817Dconsistsofanaggregateareaof189.2462hectares
locatedatHaciendaFe,Escalante,NegrosOccidentalandBrgy.Gen.Luna,Sagay,
NegrosOccidental,respectively.OnOctober21,1921,theselandsweredonatedby
Esteban Jalandoni to respondent DECS. Titles were transferred in the name of
respondentDECS.
DECSleasedthelandstoAngloAgriculturalCorporationfor10agriculturalcrop
years,commencingfromcropyear19841985tocropyear19931994.Thecontract
of lease was subsequently renewed for another 10 agricultural crop years,
commencingfromcropyear19951996tocropyear20042005.
June10,1993:EugenioAlparet.al,claimtobepermanentandregularfarmworkers
of the subject lands, filed a petition for Compulsory Agrarian Reform Program
(CARP) coverage with the Municipal Agrarian Reform Office (MARO) of
Escalante.
After investigation, MARO Jacinto R. Piosa, sent a Notice of Coverage to
respondent DECS, stating that the lands are covered by CARP and inviting its
representativesforaconferencewiththefarmerbeneficiaries.Then,MAROPiosa
submittedhisreporttoOICPAROStephenM.Leonidas,whorecommendedtothe
DARRegionalDirectortheapprovalofthecoverageofthelandholdings.

August7,1998:DARRegionalDirectorAndresapprovedtherecommendationand
directedProvincialAgrarianReformOfficetofacilitateacquisitionanddistribution
oflandholdingstoqualifiedbeneficiaries.
DECSappealedthecasetotheSecretaryofAgrarianReformwhichaffirmedthe
OrderoftheRegionalDirector.
AggrievedDECSfiledapetitionforcertiorariwiththeCourtofAppeals,whichset
asidethedecisionoftheSecretaryofAgrarianReform.Hence,theinstantpetition
forreview.
ISSUES:
1.WhetherornotthesubjectpropertiesareexemptfromthecoverageofRepublic
ActNo.6657/ComprehensiveAgrarianReformLawof1998(CARL)NO
2.WhetherornotthefarmersarequalifiedbeneficiariesofCARPYES
ThegeneralpolicyunderCARListocoverasmuchlandssuitableforagricultureas
possible.Section4ofR.A.No.6657setsoutthecoverageofCARP.Theprogram
shall: cover, regardless of tenurial arrangement and commodity produced,
allpublicandprivateagricultural landsasprovidedinProclamationNo.131and
ExecutiveOrderNo.229,includingotherlandsofthepublicdomainsuitablefor
agriculture.

The records of the case show that the subject properties were formerly private
agricultural lands owned by the late Esteban Jalandoni, and were donated to
respondent DECS.From that time until they were leased to Anglo Agricultural
Corporation,thelandscontinuedtobeagriculturalprimarilyplantedtosugarcane,
albeitpartofthepublicdomainbeingownedbyanagencyofthegovernment.There
isnolegislativeorpresidentialact,beforeandaftertheenactmentofR.A.No.6657,
classifying thesaidlandsas mineral,forest,residential,commercial or industrial
land.Indubitably,thesubjectlandsfallundertheclassificationoflandsofthepublic
domaindevotedtoorsuitableforagriculture.
DECS:soughtexemptionfromCARPcoverageonthegroundthatalltheincome
derivedfromitscontractofleasewithAngloAgriculturalCorporationwereactually,
directlyandexclusivelyusedforeducationalpurposes.
DAR:thelandssubjectarenotexemptfromtheCARPcoveragebecausethesame
arenotactually,directlyandexclusivelyusedasschoolsitesorcampuses,asthey
areinfactleasedtoAngloAgriculturalCorporation.Further,tobeexemptfromthe
coverage,itisthelandperse,nottheincomederivedthatmustbeactually,directly
andexclusivelyusedforeducationalpurposes.

FollowinglandsarecoveredbytheComprehensiveAgrarianReformProgram:

Ruling:

(a)All alienable and disposable lands of the public domain devoted to or


suitableforagriculture.Noreclassificationofforestorminerallandstoagricultural
landsshallbeundertakenaftertheapprovalofthisActuntilCongress,takinginto
account,ecological,developmentalandequityconsiderations,shallhavedetermined
bylaw,thespecificlimitsofthepublicdomain;
(b)All lands of the public domain in excess of the specific limits as
determinedbyCongressintheprecedingparagraph;
(c)All other lands owned by the Government devoted to or suitable for
agriculture;and
(d)Allprivatelandsdevotedtoorsuitableforagricultureregardlessofthe
agriculturalproductsraisedorthatcanberaisedthereon.

I.WeagreewiththepetitionerDARthattheyarenotexempted.
Section10ofR.A.No.6657enumeratesthetypesoflandswhichareexemptedfrom
thecoverageofCARPaswellasthepurposesoftheirexemption:

Section3(c):agriculturallandlanddevotedtoagriculturalactivityasdefinedin
thisActandnotclassifiedasmineral,forest,residential,commercialorindustrial
land.
agricultureoragriculturalactivitymeansthecultivationofthesoil,plantingof
crops, growing of fruit trees, raising of livestock, poultry or fish, including the
harvestingofsuchfarmproducts,andotherfarmactivities,andpracticesperformed
byafarmerinconjunctionwithsuchfarmingoperationsdonebypersonswhether
naturalorjuridical.

c)Landsactually,directlyandexclusivelyusedandfoundtobenecessaryfor
national defense,school sitesandcampuses,includingexperimentalfarmstations
operatedbypublicorprivateschoolsforeducationalpurposes,,shallbeexempt
fromthecoverageofthisAct.
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Inordertobeexemptfromthecoverage:1)thelandmustbeactually,directly,and
exclusivelyusedandfoundtobenecessary;and2)thepurposeisforschoolsites
andcampuses,includingexperimentalfarmstationsoperatedbypublicorprivate
schoolsforeducationalpurposes.
Theimportanceofthephraseactually,directly,andexclusivelyusedandfoundto
be necessarycannot be understated. The words of the law are clear and
unambiguous.The plain meaning rule orverba legisis applicable.Where the
wordsofastatuteareclear,plainandfreefromambiguity,itmustbegivenitsliteral
meaningandappliedwithoutattemptedinterpretation.
WearenotunawareofourrulinginthecaseofCentral MindanaoUniversityv.
DepartmentofAgrarianReformAdjudicationBoard,whereinwedeclaredtheland

subject exempt from CARP coverage.However, DECS reliance is misplaced


becausethefactualcircumstancesaredifferentinthecaseatbar.
1st,intheCMUcase,thelandinvolvedwasnotalienableanddisposablelandofthe
publicdomainbecauseitwasreservedbythelatePresidentCarlosP.Garciaunder
Proc. No. 476 for the use ofMindanaoAgriculturalCollege(now CMU).In this
case,however,thelandsfallunderthecategoryofalienableanddisposablelandsof
thepublicdomainsuitableforagriculture.
2nd,intheCMUcase,thelandwasactually,directlyandexclusivelyusedandfound
tobenecessaryforschoolsitesandcampuses.Althoughaportionofitwasbeing
usedbythePhilippinePackingCorporation(nowDelMontePhils.,Inc.)undera
ManagementandDevelopmentAgreement,theundertakingwasthatthelandshall
beusedbythePhilippinePackingCorporationaspartoftheCMUresearchprogram,
withdirectparticipationoffacultyandstudents.Theretentionofthelandwasfound
tobenecessaryforthepresentandfutureeducationalneeds.Ontheotherhand,the
lands in this case were notactuallyandexclusivelyutilized as school sites and
campuses.TheywereleasedtoAngloAgriculturalCorporation,notforeducational
butbusinesspurposes.Also,itwastheincomeandnotthelandsthatwasdirectly
usedfortherepairsandrenovationsoftheschools.
II. We disagree with the Court of Appeals finding that they were not qualified
beneficiaries.
TheidentificationofactualandpotentialbeneficiariesunderCARPisvestedinthe
SecretaryofAgrarianReformpursuanttoSection15,R.A.No.6657:
SECTION15.RegistrationofBeneficiaries.TheDARincoordinationwith
theBarangayAgrarianReformCommittee(BARC)asorganizedinthisAct,shall
registerall agricultural lessees, tenantsandfarmworkerswho are qualifiedtobe
beneficiariesoftheCARP.Thesepotentialbeneficiarieswiththeassistanceofthe
BARCandtheDARshallprovidethefollowingdata:
(a)namesandmembersoftheirimmediatefarmhousehold;
(b)owners or administrators of the lands they work on and the length of
tenurialrelationship;
(c)locationandareaofthelandtheywork;
(d)cropsplanted;and
(e)theirshareintheharvestoramountofrentalpaidorwagesreceived.
AcopyoftheregistryorlistofallpotentialCARPbeneficiariesinthebarangayshall
be posted inthebarangay hall,school orother public buildingsinthebarangay
whereitshallbeopentoinspectionbythepublicatallreasonablehours.
In the case at bar, the BARC certified that the farmers were potential CARP
beneficiariesofthesubjectproperties.Further,onNovember23,1994,theSecretary
ofAgrarianReformthroughtheMunicipalAgrarianReformOffice(MARO)issued
a Notice of Coverage placing the subject properties under CARP.Since the
identificationandselectionofCARPbeneficiariesaremattersinvolvingstrictlythe

administrativeimplementationoftheCARP,itbehoovesthecourtstoexercisegreat
cautioninsubstitutingitsowndeterminationoftheissue,unlessthereisgraveabuse
ofdiscretioncommittedbytheadministrativeagency.Inthiscase,therewasnone.
The Comprehensive Agrarian Reform Program (CARP) is the bastion of social
justice of poor landless farmers, the mechanism designed to redistribute to the
underprivileged the natural right to toil the earth, and to liberate them from
oppressive tenancy.The objective of the State is that: landless farmers and
farmworkerswillreceivethehighestconsiderationtopromotesocialjusticeandto
movethenationtowardsoundruraldevelopmentandindustrialization.
WHEREFORE,inviewoftheforegoing,thepetitionisGRANTED.Thedecisionof
the Court of Appeals dated October 29, 2002, in CAG.R. SP No. 64378 is
REVERSEDandSETASIDE.ThedecisiondatedAugust30,2000oftheSecretary
of Agrarian Reform placing the subject lands under CARP coverage, is
REINSTATED.
MilestoneFarms,Petitionerv.OfficeofthePresident,Respondent
Facts:
AmongthepertinentsecondarypurposesofMilestoneFarmsare1)toengageinthe
raisingofcattle,pigs,andotherlivestock;2)tobreed,raise,andsellpoultry;and3)
toimportcattle,pigs,andotherlivestock,andanimalfoodnecessaryfortheraising
ofsaidcattle,pigs,andotherlivestock
On June 10, 1988, CARL took effect. In May 1993, petitioner applied for the
exemption/exclusionofits316.0422hectarepropertypursuanttotheaforementioned
rulingofthisCourtinLuzFarms.
Meanwhile,onDecember27,1993,DARissuedAONo.9,Seriesof1993,setting
forthrulesandregulationstogoverntheexclusionofagricultural landsusedfor
livestock,poultry,andswineraisingfromCARPcoverage.
Milestone redocumented its application pursuant to said AO. DARs Land Use
ConversionandExemptionCommittee(LUCEC)conductedanocularinspectionon
petitioners property and recommended the exemption of petitioners 316.0422
hectarepropertyfromthecoverageofCARP.
DARRegionalDirectorDalugdugadoptedLUCECsrecommendation
ThePinugayFarmers,representedbyBalajadia,movedforthereconsiderationofthe
saidOrder,butthesamewasdeniedbyDirectorDalugdug.Hence,theyfiledan

appealwithDARSecretary.Subsequently,MilestonefiledacomplaintforForcible
EntryagainstBalajadiaandcompanybeforetheMCTC.MCTCruledinfavorof
Milestone
RTCreversedthedecisionofMCTC
CAruledinfavorofMilestone
DAR Secretary Garilao issued an Order exempting from CARP only 240.9776
hectaresofthe316.0422hectarespreviouslyexemptedbyDirectorDalugdug,and
declaring75.0646hectaresofthepropertytobecoveredbyCARP.
OfficeofthePresidentprimarilyreinstatedthedecisionofDirectorDalugdugbut
when the farmers filed a motion for reconsideration, Office of the President
reinstatedthedecisionofDirectorGarilao.
CAprimarilyruledinfavorofMilestoneinexemptingtheentirepropertyfromthe
coverageofCARP.However,sixmonthsearlier,withouttheknowledgeoftheCA
asthepartiesdidnotinformtheappellatecourtthenDARSecretaryVillaissued
DARconversionordergrantingpetitionersapplicationtoconvertportionsofthe
316.0422hectarepropertyfromagriculturaltoresidentialandgolfcoursesuse.The
portionsconvertedwaswithatotalareaof153.3049hectares.WiththisConversion
Order,theareaofthepropertysubjectofthecontroversywaseffectivelyreducedto
162.7373hectares.

WiththeCAnowmadeawareofthesedevelopments,particularlySecretaryVillas
Conversion Order, CA had to acknowledge that the property subject of the
controversywouldnowbelimitedtotheremaining162.7373hectares.CA,inits
amendeddecision,statesthatthesubjectlandholdingfromthecoverageofCARPis
hereby lifted, and the 162.7373 hectareagricultural portion thereof is hereby
declaredcoveredbytheCARP.
ISSUE:WhetherornotMilestonespropertyshouldbeexemptedfromthecoverage
ofCARP
Ruling:
No.
WhenCAmadeitsdecision,DARAONo.9wasnotyetdeclaredunconstitutional
bytheSupremeCourt.Thus,itcouldnotbesaidthattheCAerredorgravelyabused
its discretion in respecting the mandate of DAR A.O. No. 9, which was then
subsistingandinfullforceandeffect.
AscorrectlyheldbyrespondentOP,theCAcorrectlyheldthatthesubjectproperty
isnotexemptfromthecoverageoftheCARP,assubstantialpiecesofevidenceshow
thatthesaidpropertyisnotexclusivelydevotedtolivestock,swine,and/orpoultry