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[G.R. No. 93661. September 4, 1991.

]
SHARP INTERNATIONAL MARKETING, petitioner, vs. HON. COURT OF APPEALS (14th Division), LAND
BANK OF THE PHILIPPINES and DEOGRACIAS VISTAN, respondents.
DECISION
CRUZ, J p:
This case involves the aborted sale of the Garchitorena estate to the Government in connection with the
Comprehensive Agrarian Reform Program. This opinion is not intended as a pre judgment of the informations that have
been filed with the Sandiganbayan for alleged irregularities in the negotiation of the said transaction. We are concerned
here only with the demand of the petitioner that the private respondents sign the contract of sale and thus give effect
thereto as a perfected agreement. For this purpose, we shall determine only if the challenged decision of the Court of
Appeals denying that demand should be affirmed or reversed.
The subject-matter of the proposed sale is a vast estate consisting of eight parcels of land situated in the
municipality of Garchitorena in Camarines Norte and with an area of 1,887.819 hectares. The record shows that on
April 27, 1988, United Coconut Planters Bank (UCPB) entered into a Contract to Sell the property to Sharp
International Marketing, the agreement to be converted into a Deed of Absolute Sale upon payment by the latter of the
full purchase price of P3,183,333.33. On May 14, 1988, even before it had acquired the land, the petitioner, through its
President Alex Lina, offered to sell it to the Government for P56,000,000.00, (later increased to P65,000,000.00).
Although the land was still registered in the name of UCPB, the offer was processed by various government agencies
during the months of June to November, 1988, resulting in the recommendation by the Bureau of Land Acquisition and
Distribution in the Department of Agrarian Reform for the acquisition of the property at a price of P35,532.70 per
hectare, or roughly P67,000,000.00. On December 1, 1988, a Deed of Absolute Sale was executed between UCPB and
Sharp by virtue of which the former sold the estate to the latter for the stipulated consideration of P3,183,333.33. The
property was registered in the name of the petitioner on December 6, 1988. On December 27, 1988, DAR and the Land
Bank of the Philippines created a Compensation Clearing Committee (CCC) to expedite processing of the papers
relating to the acquisition of the land and the preparation of the necessary deed of transfer for signature by the DAR
Secretary and the LBP President. The following day, the CCC held its first meeting and decided to recommend the
acquisition of the property for P62,725,077.29. The next day, December 29, 1988, DAR Secretary Philip Ella Juico
issued an order directing the acquisition of the estate for the recommended amount and requiring LBP to pay the same
to Sharp, 30% in cash and the balance in government financial instruments negotiable within 30 days from issuance by
Sharp of the corresponding muniments of title.
On January 9, 1989, Secretary Juico and petitioner Lina signed the Deed of Absolute Sale. On that same day,
the LBP received a copy of the order issued by Secretary Juico on December 29, 1988. On January 17, 1989, LBP
Executive Vice President Jesus Diaz signed the CCC evaluation worksheet but with indicated reservations. For his part,
LBP President Deogracias Vistan, taking into account these reservations and the discovery that Sharp had acquired the
property from UCPB for only P3.1 million, requested Secretary Juico to reconsider his December 29, 1988 order.
Secretary Juico then sought the opinion of the Secretary of Justice as to whether the LBP could refuse to pay the seller
the compensation fixed by the DAR Secretary. Meantime, on February 3, 1989, Vistan informed Juico that LBP would
not pay the stipulated purchase price. The reply of the Justice Department on March 12, 1989, was that the decision of
the DAR Secretary fixing the compensation was not final if seasonably questioned in court by any interested party
(including the LBP); otherwise, it would become final after 15 days from notice and binding on all parties concerned,
including the LBP, which then could not refuse to pay the compensation fixed. Reacting to Sharp's repeated demands
for payment, Juico informed Lina on April 7, 1989, that DAR and LBP had dispatched a team to inspect the land for

reassessment. Sharp then filed on April 18, 1989, a petition for mandamus with this court to compel the DAR and LBP
to comply with the contract, prompting Juico to issue the following order:
Since the whole property of 1,887 hectares was acquired by Claimant for a consideration of P3 M, the buying price per
hectare then was only about P1,589.83 . It is incomprehensible how the value of land per hectare in this secluded
Caramoan Peninsula can go so high after a short period of time. The increase is difficult to understand since the land is
neither fully cultivated nor has it been determined to possess special and rich features or potentialities other than
agricultural purposes. We cannot fail to note that the value of land under CARP, particularly in the most highly
developed sections of Camarines Sur, ranges from P18,000.00 to P27,000 per hectare.
In view of the above findings of fact, the value of P62,725,077.29 is definitely too high as a price for the property in
question.
However, in order to be fair and just to the landowner, a re-evaluation of the land in question by an impartial and
competent third party shall be undertaken. For this purpose, a well known private licensed appraiser shall be
commissioned by DAR.
WHEREFORE, premises considered, Order is hereby issued for the reappraisal and re-evaluation of the subject
property. For that purpose, DAR shall avail of the services of Cuervo and Associates to undertake and complete the
appraisal of the subject property within 60 days from date of this Order.
On April 26, 1989, this Court referred the petition to the Court of Appeals, which dismissed it on October 31,
1989. In an exhaustive and well-reasoned decision penned by Justice Josue M. Bellosillo, 1 it held that mandamus did
not lie because the LBP was not a mere rubber stamp of the DAR and its signing of the Deed of Absolute Sale was not
a merely ministerial act. It especially noted the failure of the DAR to take into account the prescribed guidelines in
ascertaining the just compensation that resulted in the assessment of the land for the unconscionable amount of P62
million notwithstanding its original acquisition cost of only P3 million. The decision also held that the opinion of the
Secretary of Justice applied only to compulsory acquisition of lands, not to voluntary agreements as in the case before
it. Moreover, the sale was null and voidab initio because it violated Section 6 of RA 6657, which was in force at the
time the transaction was entered into.
The petitioners are now back with this Court, this time to question the decision of the Court of Appeals on the
following grounds:
The Court of Appeals seriously erred in including in its Decision findings of facts which are not borne by competent
evidence.
The Court of Appeals erred in holding that the valuation made on the Garchitorena estate has not yet become final.
The Court of Appeals erred in holding that the opinion of the Secretary of Justice is not applicable to the case at bar.
The Court of Appeals erred in holding that herein petitioner is not entitled to a writ of mandamus.
The Court of Appeals erred in holding that the sale of Garchitorena estate from UCPB in favor of the petitioner is void.
The Court of Appeals erred in holding that the P62 million is not a just compensation.
We need not go into each of these grounds as the basic question that need only to be resolved is whether or
not the petitioners are entitled to a writ of mandamus to compel the LBP President Deogracias Vistan to sign the Deed
of Absolute Sale dated January 9, 1989.

It is settled that mandamus is not available to control discretion. The writ may issue to compel the exercise of
discretion but not the discretion itself. Mandamus can require action only but not specific action where the act sought to
be performed involves the exercise of discretion. 2
Section 18 of RA 6657 reads as follows:
Sec. 18.

Valuation and mode of compensation. The LBP shall compensate the landowner in such amount as may

be agreed upon by the landowner and the DAR and the LBP, in accordance with the criteria provided for in Secs. 16
and 17, and other pertinent provisions hereof, or as may be finally determined by the court, as the just compensation for
the land. . . . (Emphasis supplied).
We agree with the respondent court that the act required of the LBP President is not merely ministerial but
involves a high degree of discretion. The compensation to be approved was not trifling but amounted to as much as P62
million of public funds, to be paid in exchange for property acquired by the seller only one month earlier for only P3
million. The respondent court was quite correct when it observed:
As may be gleaned very clearly from EO 229, the LBP is an essential part of the government sector with regard to the
payment of compensation to the landowner. It is, after all, the instrumentality that is charged with the disbursement of
public finds for purposes of agrarian reform. It is therefore part, an indispensable cog, in the governmental machinery
that fixes and determines the amount compensable to the landowner. Were LBP to be excluded from that intricate, if not
sensitive, function of establishing the compensable amount, there would be no amount "to be established by the
government" as required in Sec. 6, EO 229. This is precisely why the law requires the DAR, even if already approved
and signed by the DAR Secretary, to be transmitted still to the LBP for its review, evaluation and approval.
It needs no exceptional intelligence to understand the implications of this transmittal. It simply means that if LBP
agrees on the amount stated in the DAS, after its review and evaluation, it becomes its duty to sign the deed. But not
until then. For, it is only in that event that the amount to be compensated shall have been "established" according to
law. Inversely, if the LBP, after review and evaluation, refuses to sign, it is because as a party to the contract it does not
give its consent thereto. This necessarily implies the exercise of judgment on the part of LBP, which is not supposed to
be a mere rubber stamp in the exercise. Obviously, were it not so, LBP could not have been made a distinct member of
PARC, the super body responsible for the successful implementation of the CARP. Neither would it have been given
the power to review and evaluate the DAS already signed by the DAR Secretary. If the function of the LBP in this
regard is merely to sign the DAS without the concomitant power of review and evaluation, its duty to "review/evaluate"
mandated in Adm. Order No. 5 would have been a mere surplus age, meaningless, and a useless ceremony.
Thus, in the exercise of such power of review and evaluation, it results that the amount of P62,725,077.29 being
claimed by petitioner is not the "amount to be established by the government. Consequently, it cannot be the amount
that LBP is by law bound to compensate petitioner.
Under the facts, SHARP is not entitled to a writ of mandamus. For, it is essential for the writ to issue that the plaintiff
has a legal right to the thing demanded and that it is the imperative duty of the defendant to perform the act required.
The legal right of the plaintiff to the thing demanded must be well-defined, clear and certain. The corresponding duty
of the defendant to perform the required act must also be clear and specific (Enriquez v. Bidin, L 29620, October 12,
1972, 47 SCRA 183; Orencia v. Enrile, L-28997, February 22, 1974, 55 SCRA 580; Dionisio v. Paterno, 103 SCRA
342; Lemi v. Valencia, 26 SCRA 203; Aquino v. Mariano, 129 SCRA 532).

Likewise, respondents cannot be compelled by a writ of mandamus to discharge a duty that involves the exercise of
judgment and discretion, especially where disbursement of public funds is concerned. It is established doctrine that
mandamus will not issue to control the performance of discretionary, non-ministerial, duties, that is, to compel a body
discharging duties involving the exercise of discretion to act in a particular way or to approve or disapprove a specific
application (B.F. Homes, Inc. v. National Water Resources Council, L-78529, Sept. 17, 1987; 154 SCRA 88).
Mandamus will not issue to control or review the exercise of discretion by a public officer where the law imposes upon
him the right or duty to exercise judgment in reference to any matter in which he is required to act ( Mata v. San Diego,
L-30447, March 21, 1975; 63 SCRA 170).
Even more explicit is R.A. 6657 with respect to the indispensable role of LBP in the determination of the amount to be
compensated to the landowner. Under Sec. 18 thereof, "the LBP shall compensate the landowner in such amount as
may be agreed upon by the landowner and the DAR and LBP, in accordance with the criteria provided in Secs. 16 and
17, and other pertinent provisions hereof, or as may be finally determined by the court, as the just compensation for the
land."
Without the signature of the LBP President, there was simply no contract between Sharp and the Government.
The Deed of Absolute Sale dated January 9, 1989, was incomplete and therefore had no binding effect at all.
Consequently, Sharp cannot claim any legal right thereunder that it can validly assert in a petition for mandamus.
In National Marketing Corporation v. Cloribel, 3 this Court held:
. . . the action for mandamus had no leg to stand on because the writ was sought to enforce alleged contractual
obligations under a disputed contract disputed not only on the ground that it had failed of perfection but on the further
ground that it was illegal and against public interest and public policy . . .
The petitioner argues that the LBP President was under obligation to sign the agreement because he had been
required to do so by Secretary Juico, who was acting by authority of the resident in the exercise of the latter`s
constitutional power of control. This argument may be dismissed with only a brief comment. If the law merely intended
LBP's automatic acquiescence to the DAR Secretary's decision, it would not have required the separate approval of the
sale by that body and the DAR. It must also be noted that the President herself, apparently disturbed by public
suspicion of anomalies in the transaction, directed an inquiry into the matter by a committee headed by former Justice
Jose Y. Feria of this Court. Whatever presumed authority was given by her to the DAR Secretary in connection with the
sale was thereby impliedly withdrawn.
It is no argument either that the Government is bound by the official decisions of Secretary Juico and cannot
now renege on his commitment. The Government is never estopped from questioning the acts of its officials, more so if
they are erroneous, let alone irregular. 4
Given the circumstances attending the transaction which plainly show that it is not merely questionable but
downright dishonest, the Court can only wonder at the temerity of the petitioner in insisting on its alleged right to be
paid the questioned purchase price. The fact that criminal charges have been filed by the ombudsman against the
principal protagonists of the sale has, inexplicably, not deterred or discomfited it. It does not appear that the petitioner
is affected by the revelation that it offered the property to the Government even if it was not yet the owner at the time;
acquired it for P3 million after it had been assured that the sale would materialize; and sold it a month later for the
bloated sum of P62 million, to earn a gross profit of P59 million in confabulation with some suspect officials in the
DAR. How the property appreciated that much during that brief period has not been explained. What is clear is the
public condemnation of the transaction as articulated in the mass media and affirmed in the results of the investigations

conducted by the Feria Fact-Finding Committee, the Senate House Joint Committee on Agrarian Matters, and the
Office of the Ombudsman.
It would seem to the Court that the decent thing for the petitioner to do, if only in deference to a revolted
public opinion, was to voluntarily withdraw from the agreement. Instead, it is unabashedly demanding the exorbitant
profit it would derive from an illegal and unenforceable transaction that ranks as one of the most cynical attempts to
plunder the public treasury.
The above rulings render unnecessary discussion of the other points raised by the petitioner. The Court has
given this petition more attention than it deserves. We shall waste no more time in listening to the petitioner's
impertinent demands. LBP President Deogracias Vistan cannot be faulted for refusing to be a party to the shameful
scheme to defraud the Government and undermine the Comprehensive Agrarian Reform Program for the petitioner's
private profit. We see no reason at all to disturb his discretion. It merits in fact the nation's commendation.
WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered.

Association of Small Landowners in the


Philippines, Inc. vs Secretary of Agrarian
Reform
175 SCRA 343 Political Law Constitutional Law Bill of Rights Equal Protection Valid Classification
Eminent Domain Just Compensation
These are four consolidated cases questioning the constitutionality of the Comprehensive Agrarian Reform Act (R.A.
No. 6657 and related laws i.e., Agrarian Land Reform Code or R.A. No. 3844).
Brief background: Article XIII of the Constitution on Social Justice and Human Rights includes a call for the adoption
by the State of an agrarian reform program. The State shall, by law, undertake an agrarian reform program founded on
the right of farmers and regular farmworkers, who are landless, to own directly or collectively the lands they till or, in
the case of other farmworkers, to receive a just share of the fruits thereof. RA 3844 was enacted in 1963. P.D. No. 27
was promulgated in 1972 to provide for the compulsory acquisition of private lands for distribution among tenantfarmers and to specify maximum retention limits for landowners. In 1987, President Corazon Aquino issued E.O. No.
228, declaring full land ownership in favor of the beneficiaries of PD 27 and providing for the valuation of still
unvalued lands covered by the decree as well as the manner of their payment. In 1987, P.P. No. 131, instituting a
comprehensive agrarian reform program (CARP) was enacted; later, E.O. No. 229, providing the mechanics for its
(PP131s) implementation, was also enacted. Afterwhich is the enactment of R.A. No. 6657, Comprehensive Agrarian
Reform Law in 1988. This law, while considerably changing the earlier mentioned enactments, nevertheless gives them
suppletory effect insofar as they are not inconsistent with its provisions.
[Two of the consolidated cases are discussed below]
G.R. No. 78742: (Association of Small Landowners vs Secretary)

The Association of Small Landowners in the Philippines, Inc. sought exception from the land distribution scheme
provided for in R.A. 6657. The Association is comprised of landowners of ricelands and cornlands whose landholdings
do not exceed 7 hectares. They invoke that since their landholdings are less than 7 hectares, they should not be forced
to distribute their land to their tenants under R.A. 6657 for they themselves have shown willingness to till their own
land. In short, they want to be exempted from agrarian reform program because they claim to belong to a different
class.
G.R. No. 79777: (Manaay vs Juico)
Nicolas Manaay questioned the validity of the agrarian reform laws (PD 27, EO 228, and 229) on the ground that these
laws already valuated their lands for the agrarian reform program and that the specific amount must be determined by
the Department of Agrarian Reform (DAR). Manaay averred that this violated the principle in eminent domain which
provides that only courts can determine just compensation. This, for Manaay, also violated due process for under the
constitution, no property shall be taken for public use without just compensation.
Manaay also questioned the provision which states that landowners may be paid for their land in bonds and not
necessarily in cash. Manaay averred that just compensation has always been in the form of money and not in bonds.
ISSUE:
1. Whether or not there was a violation of the equal protection clause.
2. Whether or not there is a violation of due process.
3. Whether or not just compensation, under the agrarian reform program, must be in terms of cash.
HELD:
1. No. The Association had not shown any proof that they belong to a different class exempt from the agrarian reform
program. Under the law, classification has been defined as the grouping of persons or things similar to each other in
certain particulars and different from each other in these same particulars. To be valid, it must conform to the following
requirements:
(1) it must be based on substantial distinctions;
(2) it must be germane to the purposes of the law;
(3) it must not be limited to existing conditions only; and
(4) it must apply equally to all the members of the class.
Equal protection simply means that all persons or things similarly situated must be treated alike both as to the rights
conferred and the liabilities imposed. The Association have not shown that they belong to a different class and entitled
to a different treatment. The argument that not only landowners but also owners of other properties must be made to
share the burden of implementing land reform must be rejected. There is a substantial distinction between these two
classes of owners that is clearly visible except to those who will not see. There is no need to elaborate on this matter. In
any event, the Congress is allowed a wide leeway in providing for a valid classification. Its decision is accorded
recognition and respect by the courts of justice except only where its discretion is abused to the detriment of the Bill of
Rights. In the contrary, it appears that Congress is right in classifying small landowners as part of the agrarian reform
program.

2. No. It is true that the determination of just compensation is a power lodged in the courts. However, there is no law
which prohibits administrative bodies like the DAR from determining just compensation. In fact, just compensation can
be that amount agreed upon by the landowner and the government even without judicial intervention so long as both
parties agree. The DAR can determine just compensation through appraisers and if the landowner agrees, then judicial
intervention is not needed. What is contemplated by law however is that, the just compensation determined by an
administrative body is merely preliminary. If the landowner does not agree with the finding of just compensation by an
administrative body, then it can go to court and the determination of the latter shall be the final determination. This is
even so provided by RA 6657:
Section 16 (f): Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction for
final determination of just compensation.
3. No. Money as [sole] payment for just compensation is merely a concept in traditional exercise of eminent domain.
The agrarian reform program is a revolutionary exercise of eminent domain. The program will require billions of pesos
in funds if all compensation have to be made in cash if everything is in cash, then the government will not have
sufficient money hence, bonds, and other securities, i.e., shares of stocks, may be used for just compensation.
[G.R. No. 60269. September 13, 1991.]
ENGRACIA VINZONS-MAGANA, petitioner, vs. HONORABLE CONRADO ESTRELLA IN HIS CAPACITY
AS MINISTER OF AGRARIAN REFORM, SALVADOR PEJO, AS REGIONAL DIRECTOR, MINISTRY OF
AGRARIAN REFORM, and JUANA S. VDA. DE PAITAN, respondents.
DECISION
PARAS, J p:
Petitioner challenges in this petition for prohibition with prayer for restraining order the validity and
constitutionality of Letter of Instructions No. 474 and Memorandum Circular No. 11, Series of 1978 enforced by the
then Minister and the Regional Director of the Ministry of Agrarian Reform and likewise seeks the cancellation of
Certificate of Land Transfer No. 0046145 issued to Domingo Paitan by the deposed President Ferdinand Marcos
pursuant to Presidential Decree No. 27. Cdpr
The records show that petitioner Magana is the owner of a parcel of riceland situated in the barrio of Talisay,
Camarines Norte. The said riceland was tenanted by the late Domingo Paitan, husband of private respondent herein,
Juana Vda. de Paitan, under an agricultural leasehold agreement. On October 20, 1977, Magana filed a petition for the
termination of the leasehold agreement allegedly due to (1) non-payment of rentals; (2) inability and failure of
Domingo Paitan to do the tilling and cultivation of the riceland due to his long illness; and (3) subleasing of the land
holding to third parties (Rollo, p. 2). On June 2, 1978, the former Presiding Judge of the Court of Agrarian Relations,
Judge Juan Llaguno, referred the case to the Secretary of the Department of Agrarian Reform for certification as to
whether or not it was proper for trial in accordance with Presidential Decree No. 316, (Ibid., pp. 10-11), but said office
failed to act upon the request for certification, for a period of more than three (3) years. Instead on July 10, 1980, the
riceland was placed under the Land Transfer Program by virtue of Memorandum Circular No. 11, Series of 1978,
which implemented Letter of Instructions No. 474, which placed all tenanted ricelands with areas of seven hectares or
less belonging to landowners who own agricultural lands of more than seven hectares in aggregate areas under the
Land Transfer Program of the government. The prescribed procedures therein were subsequently undertaken and
thereafter, on July 10, 1980, a certificate of Land Transfer was finally awarded in favor of Domingo Paitan. As a
consequence thereof, the rentals were no longer paid to Magana but were deposited instead with the Land Bank and

credited as amortization payments for the riceland. Apparently aggrieved by this turn of events, Magana took the
present recourse.
As earlier mentioned, the Court is now asked to resolve the constitutionality of Memorandum Circular No. 11,
Series of 1978, and Letter of Instructions No. 474.
The petition is devoid of merit.
The constitutionality of P.D. No. 27 from which Letter of Instructions No. 474 and Memorandum Circular No.
11, Series of 1978 are derived, is now well settled (Chavez v. Zobel, 55 SCRA 26 [1974], Gonzales v. Estrella, 91
SCRA 292 [1979]; Zurbano v. Estrella, 137 SCRA 334, 335 [1985]; Ass. of Small Landowners in the Philippines, Inc.
v. Secretary of Agrarian Reform, 175 SCRA 366 [1989]).
More specifically, this Court also upheld the validity and constitutionality of Letter of Instructions No. 474
which directed then Secretary of Agrarian Reform Conrado Estrella to "undertake to place under the Land Transfer
Program of the government pursuant to Presidential Decree No. 27, all tenanted rice/corn lands with areas of seven
hectares or less belonging to landowners who own other agricultural lands of more than seven hectares in aggregate
areas or lands used for residential, commercial, industrial or other urban purposes from which they derive adequate
income to support themselves and their families". It was held that LOI 474 is neither a class legislation nor does it
deprive a person of property without due process of law or just compensation (Zurbano v. Estrella, 137 SCRA 333
[1985]). Moreover, LOI 474 was duly published in the Official Gazette dated November 29, 1976 and has therefore
complied with the publication requirement as held by this Court in Taada v. Tuvera (146 SCRA 446 [1986]); Assn. of
Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform (175 SCRA 369 [1989]).
As to the constitutionality of DAR Memo Circular No. 11, it is evident that DAR Memo Circular No. 11
merely implements LOI 474 whose constitutionality has already been established, clarifying for DAR personnel the
guidelines set for under said LOI 474 (Rollo, p. 111). Moreover, it is an elementary rule in administrative law that
administrative regulations and policies enacted by administrative bodies to interpret the law which they are entrusted to
enforce, have the force of law and are entitled to great respect (Rizal Empire Ins. Group and or Corpus, Sergio v.
NLRC, et al., G.R. No. 73140, May 29, 1987).
The main thrust of this petition is that the issuance of Certificate of Land Transfer to Domingo Paitan without
first expropriating said property to pay petitioner landowner the full market value thereof before ceding and
transferring the land to Paitan and or heirs, is invalid and unconstitutional as it is confiscatory and violates the due
process clause of the Constitution (Rollo, p. 4).
The issue of the constitutionality of the taking of private property under the CARP Law has already been settled by this
Court holding that where the measures under challenge merely prescribe the retention limits for landowners, there is an
exercise of police power by the government, but where to carry out such regulation, it becomes necessary to deprive
such owners of whatever lands they may own in excess of the maximum area allowed, then there is definitely a taking
under the power of eminent domain for which payment of just compensation is imperative. To be sure, the
determination of just compensation is a function addressed to the courts of justice and may not be usurped by any
branch or official of the government (Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian
Reform, 175 SCRA 373 [1989]).
It must be stressed, however, that the mere issuance of the certificate of land transfer does not vest in the
farmer/grantee ownership of the land described therein. At most, the certificate merely evidences the government's
recognition of the grantee as the party qualified to avail of the statutory mechanisms for the acquisition of ownership of
the land titled by him as provided under Presidential Decree No. 27. Neither is this recognition permanent nor
irrevocable. Thus, failure on the part of the farmer/grantee to comply with his obligation to pay his lease rentals or
amortization payments when they fall due for a period of two (2) years to the landowner or agricultural lessor is a

ground for forfeiture of his certificate of land transfer (Section 2, P.D. No. 816; Pagtalunan v. Tamayo, G.R. No. 54281,
March 9, 1990).
This Court has therefore clarified, that it is only compliance with the prescribed conditions which entitles the
farmer/grantee to an emancipation patent by which he acquires the vested right of absolute ownership in the
landholding a right which has become fixed and established and is no longer open to doubt and controversy. At best
the farmer/grantee prior to compliance with these conditions, merely possesses a contingent or expectant right of
ownership over the land holding (Ibid.).
Under the foregoing principles, a reading of Section 16 (d) of the CARP law will readily show that it does not
suffer from arbitrariness which makes it constitutionally objectionable. Although the proceedings are described as
summary, the landowner and other interested parties are nevertheless allowed an opportunity to submit evidence on the
real value of the property. But more importantly, such determination of just compensation by the DAR, as earlier stated
is by no means final and conclusive upon the landowner or any other interested party for Section 16 (f) clearly
provides: "Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction for final
determination of just compensation." For obvious reasons, the determination made by the DAR is only preliminary
unless accepted by all parties concerned. Otherwise, the courts of justice will still have the right to renew with finality
the said determination in the exercise of what is admittedly a judicial function (Association of Small Landowners in the
Philippines, Inc. v. Secretary of Agrarian Reform, supra, pp. 380-382).
Indeed, the delay in the preparation of the proper certification by the MAR field office to the Court of
Agrarian Relations as to whether or not the case was proper for trial, is unfortunate and the officer concerned is under
investigation (Rollo, pp. 41-42). It will, however, be observed that from the outset under P.D. No. 27, the tenant-farmer
as of October 21, 1972 has already been deemed in a certain sense, to be the owner of a portion of land, subject of
course, to certain conditions (Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian
Reform, supra p. 390). In fact, it appears that petitioner Magana was not unaware that the land in question previous to
the filing of the CAR case on October 20, 1977, had already been identified as subject of land transfer. It also appears
that on September 20, 1976 Paitan had already been identified to be cultivating the land to rice as tenant of petitioner
and that his land holding was the subject of land tenure survey and was found to be proper for OLT coverage under
Presidential Decree No. 27 (Rollo, pp. 41-42).
In any event, as already discussed, the proceedings herein are merely preliminary and petitioner Magana is not
without protection. Should she fail to agree on the price of her land as fixed by the DAR, she can bring the matter to the
court of proper jurisdiction. Likewise, failure on the part of the farmer/grantee to pay his lease rentals or amortization
payments for a period of two (2) years is a ground for forfeiture of his certificate of land transfer.
PREMISES CONSIDERED, the petition is DISMISSED without prejudice to petitioner's filing of the proper
action for the determination of just compensation in the proper forum.
SO ORDERED.
[G.R. No. 103302. August 12, 1993.]
NATALIA
REALTY,
INC.,
and
ESTATE
DEVELOPERS
AND
INVESTORS
CORP., petitioners, vs.DEPARTMENT OF AGRARIAN REFORM, SEC. BENJAMIN T. LEONG and DIR.
WILFREDO LEANO, DAR-REGION IV, respondents.
DECISION
BELLOSILLO, J p:

Are lands already classified for residential, commercial or industrial use, as approved by the Housing and
Land Use Regulatory Board and its precursor agencies 1 prior to 15 June 1988, 2 covered by R.A. 6657, otherwise
known as the Comprehensive Agrarian Reform Law of 1988? This is the pivotal issue in this petition for certiorari
assailing the Notice of Coverage 3 of the Department of Agrarian Reform over parcels of land already reserved as
townsite areas before the enactment of the law.
Petitioner Natalia Realty, Inc. (NATALIA, for brevity) is the owner of three (3) contiguous parcels of land
located in Banaba, Antipolo, Rizal, with areas of 120.9793 hectares, 1.3205 hectares and 2.7080 hectares, or a total of
125.0078 hectares, and embraced in Transfer Certificate of Title No. 31527 of the Register of Deeds of the Province of
Rizal.
On 18 April 1979, Presidential Proclamation No. 1637 set aside 20,312 hectares of land located in the
Municipalities of Antipolo, San Mateo and Montalban as townsite areas to absorb the population overspill in the
metropolis which were designated as the Lungsod Silangan Townsite. The NATALIA properties are situated within the
areas proclaimed as townsite reservation.
Since private landowners were allowed to develop their properties into low-cost housing subdivisions within
the reservation, petitioner Estate Developers and Investors Corporation (EDIC, for brevity), as developer of NATALIA
properties, applied for and was granted preliminary approval and locational clearances by the Human Settlements
Regulatory Commission. The necessary permit for Phase I of the subdivision project, which consisted of 13.2371
hectares, was issued sometime in 1982; 4 for Phase II, with an area of 80.0000 hectares, on 13 October 1983; 5 and for
Phase III, which consisted of the remaining 31.7707 hectares, on 25 April 1986. 6 Petitioners were likewise issued
development permits 7 after complying with the requirements. Thus the NATALIA properties later became the Antipolo
Hills Subdivision.
On 15 June 1988, R.A. 6657, otherwise known as the "Comprehensive Agrarian Reform Law of 1988"
(CARL, for brevity), went into effect. Conformably therewith, respondent Department of Agrarian Reform (DAR, for
brevity), through its Municipal Agrarian Reform Officer, issued on 22 November 1990 a Notice of Coverage on the
undeveloped portions of the Antipolo Hills Subdivision which consisted of roughly 90.3307 hectares. NATALIA
immediately registered its objection to the Notice of Coverage.
EDIC also protested to respondent Director Wilfredo Leano of the DAR Region IV Office and twice wrote
him requesting the cancellation of the Notice of Coverage.
On 17 January 1991, members of the Samahan ng Magsasaka sa Bundok Antipolo, Inc. (SAMBA, for brevity), filed a
complaint against NATALIA and EDIC before the DAR Regional Adjudicator to restrain petitioners from developing
areas under cultivation by SAMBA members. 8 The Regional Adjudicator temporarily restrained petitioners from
proceeding with the development of the subdivision. Petitioners then moved to dismiss the complaint; it was denied.
Instead, the Regional Adjudicator issued on 5 March 1991 a Writ of Preliminary Injunction.
Petitioners NATALIA and EDIC elevated their cause to the DAR Adjudication Board (DARAB); however, on
16 December 1991 the DARAB merely remanded the case to the Regional Adjudicator for further proceedings. 9
In the interim, NATALIA wrote respondent Secretary of Agrarian Reform reiterating its request to set aside
the Notice of Coverage. Neither respondent Secretary nor respondent Director took action on the protest-letters, thus
compelling petitioners to institute this proceeding more than a year thereafter.
NATALIA and EDIC both impute grave abuse of discretion to respondent DAR for including undeveloped
portions of the Antipolo Hills Subdivision within the coverage of the CARL. They argue that NATALIA properties
already ceased to be agricultural lands when they were included in the areas reserved by presidential fiat for townsite
reservation.

Public respondents through the Office of the Solicitor General dispute this contention. They maintain that the
permits granted petitioners were not valid and binding because they did not comply with the implementing Standards,
Rules and Regulations of P.D. 957, otherwise known as "The Subdivision and Condominium Buyers' Protective
Decree," in that no application for conversion of the NATALIA lands from agricultural to residential was ever filed
with the DAR. In other words, there was no valid conversion. Moreover, public respondents allege that the instant
petition was prematurely filed because the case instituted by SAMBA against petitioners before the DAR Regional
Adjudicator has not yet terminated. Respondents conclude, as a consequence, that petitioners failed to fully exhaust
administrative remedies available to them before coming to court.
The petition is impressed with merit. A cursory reading of the Preliminary Approval and Locational
Clearances as well as the Development Permits granted petitioners for Phases I, II and III of the Antipolo Hills
Subdivision reveals that contrary to the claim of public respondents, petitioners NATALIA and EDIC did in fact
comply with all the requirements of law.
Petitioners first secured favorable recommendations from the Lungsod Silangan Development Corporation,
the agency tasked to oversee the implementation of the development of the townsite reservation, before applying for
the necessary permits from the Human Settlements Regulatory Commission. 10 And, in all permits granted to
petitioners, the Commission stated invariably therein that the applications were in "conformance" 11 or
"conformity" 12 or "conforming" 13 with the implementing Standards, Rules and Regulations of P.D. 957. Hence, the
argument of public respondents that not all of the requirements were complied with cannot be sustained. llcd
As a matter of fact, there was even no need for petitioners to secure a clearance or prior approval from DAR.
The NATALIA properties were within the areas set aside for the Lungsod Silangan Reservation. Since Presidential
Proclamation No. 1637 created the townsite reservation for the purpose of providing additional housing to the
burgeoning population of Metro Manila, it in effect converted for residential use what were erstwhile agricultural lands
provided all requisites were met. And, in the case at bar, there was compliance with all relevant rules and requirements.
Even in their applications for the development of the Antipolo Hills Subdivision, the predecessor agency of HLURB
noted that petitioners NATALIA and EDIC complied with all the requirements prescribed by P.D. 957
The implementing Standards, Rules and Regulations of P.D. 957 applied to all subdivisions and
condominiums in general. On the other hand, Presidential Proclamation No. 1637 referred only to the Lungsod
Silangan Reservation, which makes it a special law. It is a basic tenet in statutory construction that between a general
law and a special law, the latter prevails. 14
Interestingly, the Office of the Solicitor General does not contest the conversion of portions of the Antipolo
Hills Subdivision which have already been developed. 15 Of course, this is contrary to its earlier position that there was
no valid conversion. The applications for the developed and undeveloped portions of subject subdivision were similarly
situated. Consequently, both did not need prior DAR approval.
We now determine whether such lands are covered by the CARL. Section 4 of R.A. 6657 provides that the
CARL shall "cover, regardless of tenurial arrangement and commodity produced, all public and private agricultural
lands." As to what constitutes "agricultural land," it is referred to as "land devoted to agricultural activity as defined in
this Act and not classified as mineral, forest, residential, commercial or industrial land. 16The deliberations of the
Constitutional Commission confirm this limitation. "Agricultural lands" are only those lands which are "arable and
suitable agricultural lands" and "do not include commercial, industrial and residential lands." 17
Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills Subdivision cannot in
any language be considered as "agricultural lands." These lots were intended for residential use. They ceased to be
agricultural lands upon approval of their inclusion in the Lungsod Silangan Reservation. Even today, the areas in
question continue to be developed as a low-cost housing subdivision, albeit at a snail's pace. This can readily be

gleaned from the fact that SAMBA members even instituted an action to restrain petitioners from continuing with such
development. The enormity of the resources needed for developing a subdivision may have delayed its completion but
this does not detract from the fact that these lands are still residential lands and outside the ambit of the CARL.
Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These include lands
previously converted to non-agricultural uses prior to the effectivity of CARL by government agencies other than
respondent DAR. In its Revised Rules and Regulations Governing Conversion of Private Agricultural Lands to NonAgricultural Uses, 18 DAR itself defined "agricultural land" thus
". . . Agricultural land refers to those devoted to agricultural activity as defined in R.A. 6657 and not classified as
mineral or forest by the Department of Environment and Natural Resources (DENR) and its predecessor agencies,
and not classified in town plans and zoning ordinances as approved by the Housing and Land Use Regulatory Board
(HLURB) and its preceding competent authorities prior to 15 June 1988 for residential, commercial or industrial use."
Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is bound by such
conversion. It was therefore error to include the undeveloped portions of the Antipolo Hills Subdivision within the
coverage of CARL.
Be that as it may, the Secretary of Justice, responding to a query by the Secretary of Agrarian Reform, noted
in an Opinion 19 that lands covered by Presidential Proclamation No. 1637, inter alia, of which the NATALIA lands
are part, having been reserved for townsite purposes "to be developed as human settlements by the proper land and
housing agency," are "not deemed 'agricultural lands' within the meaning and intent of Section 3 (c) of R.A. No. 6657."
Not being deemed "agricultural lands," they are outside the coverage of CARL.
Anent the argument that there was failure to exhaust administrative remedies in the instant petition, suffice it
to say that the issues raised in the case filed by SAMBA members differ from those of petitioners. The former involve
possession; the latter, the propriety of including under the operation of CARL lands already converted for residential
use prior to its effectivity.
Besides, petitioners were not supposed to wait until public respondents acted on their letter-protests, this after
sitting it out for almost a year. Given the official indifference, which under the circumstances could have continued
forever, petitioners had to act to assert and protect their interests. 20
In fine, we rule for petitioners and hold that public respondents gravely abused their discretion in issuing the
assailed Notice of Coverage dated 22 November 1990 of lands over which they no longer have jurisdiction.
WHEREFORE, the Petition for Certiorari is GRANTED. The Notice of Coverage of 22 November 1990 by
virtue of which undeveloped portions of the Antipolo Hills Subdivision were placed under CARL coverage is hereby
SET ASIDE.
SO ORDERED.
[G.R. No. 54281. March 19, 1990.]
CELSO PAGTALUNAN and PAULINA P. PAGTALUNAN, petitioners, vs. HON. ROQUE A. TAMAYO,
Presiding Judge of the CFI of Bulacan, Branch VI, REPUBLIC OF THE PHILIPPINES and TURANDOT,
TRAVIATA, MARCELITA, MARLENE PACITA, MATTHEW and ROSARY, all surnamed
ALDABA,respondents.
DECISION
CORTES, J p:

On January 17, 1978, respondent Republic of the Philippines filed a complaint with the Court of First Instance
of Bulacan for expropriation of a parcel of land located in Bo. Tikay, Malolos, Bulacan, and owned by private
respondents herein as evidenced by TCT No. 24006, issued by the Register of Deeds of the province of Bulacan
[Petition, p. 2; Rollo, p. 10]. The complaint was docketed as Civil Case No. 5257-M and entitled "Republic of the
Philippines v. Turandot Aldaba, et al."
On March 2, 1978, the Court of First Instance issued a writ of possession placing the Republic in possession
of the land, upon its deposit of the amount of Seven Thousand Two Hundred Pesos (P7,200.00) as provisional value of
the land. On June 8, 1978, petitioners herein filed a supplemental motion for leave to intervene, with complaint in
intervention attached thereto, alleging that petitioner Celso Pagtalunan has been the bona fide agricultural tenant of a
portion of the land. Petitioners asked the trial court to order payment to Celso Pagtalunan of just compensation far his
landholding or, in the alternative, to order payment of his disturbance compensation as bona fide tenant in an amount
not less than Fifteen Thousand Pesos (P15,000.00) per hectare.
On December 8, 1978, respondent Judge Roque A. Tamayo issued an order denying the petitioners'
supplemental motion, holding that to admit petitioners' complaint in intervention would be tantamount to allowing a
person to sue the State without its consent since the claim for disturbance compensation is a claim against the State. On
January 12, 1979, petitioners filed a motion for reconsideration but this was denied by respondent judge in an order
dated February 13, 1979.
On July 23, 1980, the instant petition was filed and was docketed as G.R. No. 54281. On January 14, 1981,
this Court issued a resolution denying the instant petition for lack of merit. On March 10, 1981, petitioners filed a
motion for reconsideration, limiting the discussion on the issue of lack of jurisdiction of the trial court over the
expropriation case. On August 19, 1981, this Court issued a resolution granting the motion for reconsideration and gave
due course to the petition.
Meanwhile on December 22, 1978, the Office of the Solicitor General filed in behalf of the Republic of the
Philippines a notice of appeal, as well as a first motion for extension of thirty (30) days from January 12, 1979 within
which to file record on appeal which was granted by respondent court. The Solicitor General was appealing from that
portion of the December 8, 1978 decision of the Court of First Instance which fixed the compensation for the land
expropriated at Thirty Pesos (P30.00) per square meter. Counsel for private respondents filed an objection to the public
respondent's record on appeal claiming that the same was filed beyond the reglementary period. On August 13, 1979
the Court of First Instance dismissed the appeal interposed by the Republic. The Office of the Solicitor General moved
for reconsideration but this was denied for lack of merit. Thereafter, public respondent filed with the Court of Appeals a
petition for certiorari, prohibition and mandamus with preliminary injunction seeking the annulment of the orders of the
Court of First Instance. On April 29, 1980, the Court of Appeals rendered a decision dismissing public respondent's
petition. On October 24, 1980, public respondent filed with this Court a petition, docketed as G.R. No. 54886, asking
this Court to annul the decision of the Court of Appeals and to direct and compel the lower court to approve the
Government's record on appeal and to elevate the same to the Court of Appeals. In a decision dated August 10, 1981,
the Court granted the petition and directed the trial court to approve the Government's record on appeal and to elevate
the same to the Court of Appeals.
I
The principal issue raised in the petition centers on the alleged right of petitioners to intervene in the expropriation
proceedings instituted by the State against private respondents as registered owner of the subject property.
Intervention is not a matter of right but may be permitted by the courts when the applicant shows facts which
satisfy the requirements of the law authorizing intervention [Gibson v. Revilla, G.R. No. L-41432, July 30, 1979, 92
SCRA 219]. Under Section 2, Rule 12 of the Revised Rules of Court, what qualifies a person to intervene is his

possession of a legal interest in the matter in litigation, or in the success of either of the parties, or an interest against
both, or when he is so situated as to be adversely affected by a distribution or other disposition of property in the
custody of the court or an officer thereof. The Court has ruled that such interest must be actual, direct and material, and
not simply contingent and expectant [Garcia v. David, 67 Phil. 279 (1939)]; Batama Farmer's Cooperative Marketing
Association, Inc. v. Rosal, G.R. No. L-30526, November 29, 1971, 42 SCRA 408; Gibson v. Revilla, supra].
In the present case, petitioners claim that Celso Pagtalunan possesses legal interest in the matter in litigation
for he, not private respondents herein, is the party entitled to just compensation for the subject property sought to be
expropriated or, in the alternative, disturbance compensation as a bona fide tenant based on Section 36 (1) of Rep. Act
No. 3844, as amended by Rep. Act No. 6389.
Petitioners base their claim for just compensation on Certificate of Land Transfer No. NS-054560 issued to
them, where the tenant farmer/grantee is "deemed owner" of the agricultural land identified therein.** Petitioners
contend that the certificate is a muniment of title evidencing their legal ownership of a portion of the subject property.
Thus, they conclude that they are entitled to a portion of the proceeds from the expropriation proceedings instituted
over the subject property.
There is no merit to the above contention.
The Court is fully aware that the phrase "deemed to be the owner" is used to describe the grantee of a
certificate of land transfer. But the import of such phrase must be construed within the policy framework of Pres.
Decree No. 27, and interpreted with the other stipulations of the certificate issued pursuant to this decree.
Pres. Decree No. 27 (otherwise known as the "Tenant Emancipation Decree") was anchored upon the
fundamental objective of addressing valid and legitimate grievances of land ownership giving rise to violent conflict
and social tension in the countryside. More importantly, it recognized the necessity to encourage a more productive
agricultural base of the country's economy. To achieve this end, the decree laid down a system for the purchase by
small farmers, long recognized as the backbone of the economy, of the lands they were tilling. Landowners of
agricultural lands which were devoted primarily to rice and corn production and exceeded the minimum retention area
were thus compelled to sell, through the intercession of the government, their lands to qualified farmers at liberal terms
and conditions. However, a careful study of the provisions of Pres. Decree No. 27, and the certificate of land transfer
issued to qualified farmers, will reveal that the transfer of ownership over these lands is subject to particular terms and
conditions the compliance with which is necessary in order that the grantees can claim the right of absolute ownership
over them.
A certificate of land transfer issued pursuant to Pres. Decree No. 27 provides:
xxx

xxx

xxx

I, Ferdinand E. Marcos, President of the Philippines, declare that ________________ having manifested his
desire to own the land under his cultivation and having complied with the implementing rules and regulations of the
Department of Agrarian Reform, is hereby deemed to be the owner of the agricultural land described as follows:
xxx

xxx

xxx

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

xxx

xxx

xxx

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


And under Pres. Decree No. 266 which specifies the procedure for the registration of title to lands acquired
under Pres. Decree No. 27, full compliance by the grantee with the abovementioned undertakings is required for a grant
of title under the Tenant Emancipation Decree and the subsequent issuance of an emancipation patent in favor of the
farmer/grantee [Section 2, Pres. Decree No. 226]. It is the emancipation patent which constitutes conclusive authority
for the issuance of an Original Certificate of Transfer, or a Transfer Certificate of Title, in the name of the grantee. prcd
Hence, the mere issuance of the certificate of land transfer does not vest in the farmer/grantee ownership of
the land described therein. The certificate simply evidences the government's recognition of the grantee as the party
qualified to avail of the statutory mechanisms for the acquisition of ownership of the land tilled by him as provided
under Pres. Decree No. 27. Neither is this recognition permanent nor irrevocable. Failure on the part of the
farmer/grantee to comply with his obligation to pay his lease rentals or amortization payments when they fall due for a
period of two (2) years to the landowner or agricultural lessor is a ground for forfeiture of his certificate of land transfer
[Section 2, Pres. Decree No. 816].
Clearly, it is only after compliance with the above conditions which entitle a farmer/grantee to
anemancipation patent that he acquires the vested right of absolute ownership in the landholding a right which has
become fixed and established, and is no longer open to doubt or controversy [See definition of "vested right" or "vested
interest" in Balbao v. Farrales, 51 Phil. 498 (1928); Republic of the Philippines v. de Porkan, G.R. No. 66866, June 18,
1987, 151 SCRA 88]. At best, the farmer/grantee, prior to compliance with these conditions, merely possesses a
contingent or expectant right of ownership over the landholding.
In the present case, the State in the exercise of its sovereign power of eminent domain has decided to
expropriate the subject property for public use as a permanent site for the Bulacan Area Shop of the Department of
Public Works and Highways. On the other hand, petitioners have not been issued anemancipation patent. Furthermore,
they do not dispute private respondents' allegation that they have not complied with the conditions enumerated in their
certificate of land transfer which would entitle them to a patent [See Private Respondents' Comment, p. 3; Rollo, p.
34. And also Memorandum of Private Respondents, p. 6; Rollo, p. 109]. In fact, petitioners do not even claim that they
had remitted to private respondents, through the Land Bank of the Philippines, even a single amortization payment for
the purchase of the subject property.
Under these circumstances, petitioners cannot now successfully argue that Celso Pagtalunan is legally entitled
to a portion of the proceeds from the expropriation proceedings corresponding to the value of the landholding.
Anent petitioners' claim for disturbance compensation, the Court finds that the law cited by petitioners,
Section 36 (1) of Rep. Act No. 3844, as amended by Rep. Act No. 6389, cannot be invoked to hold the State liable for
disturbance compensation [See Campos v. CA, G.R. No. 51904, October 1,1980] where this Court by resolution denied
for lack of merit therein petitioner's claim that, as agricultural lessee or tenant, he was entitled to disturbance
compensation against the State. It refers to situations where the peaceful enjoyment and possession by the agricultural
tenants or lessees of the land is disturbed or interrupted by the owner/lessor thereof. Paragraphs l to 7 of the said
section enumerate the instances when the lessees may be evicted by the owner/lessor, and paragraph 1 thereof provides
that lessees shall be entitled to disturbance compensation from the owner/lessor, if the land will be converted by the
latter into a residential, commercial or industrial land. Thus, Section 36 (1) of Rep. Act No. 3844, as amended, deals
with the liability of an owner/lessor to his agricultural tenant lessee and cannot be invoked to make the State liable to
petitioners herein for disturbance compensation.
Nor may petitioners invoke this section as basis to hold private respondents liable for disturbance
compensation. Section 36 (1) of Rep. Act No. 3844, as amended, is applicable only when it is the owner/lessor who

voluntarily opts for the conversion of his land into non-agricultural land. In the present case, it is the State, not the
private respondents, who disturbed petitioners' possession of the subject property. The conversion of the property into a
permanent site for the Bulacan Area Shop of the Department of Public Works and Highways was undertaken by the
government independent of the will of private respondents herein.
Parenthetically, it should be noted that the government has already paid petitioner Celso Pagtalunan
approximately FIVE THOUSAND PESOS (P5,000.00) to compensate the latter for improvements introduced on the
property, and expenses for relocating his home [Petitioners' Reply to the Opposition to their Motion for
Reconsideration, p. 2; Rollo, p. 98. And also Private Respondents' Comment, p. 3; Rollo, p. 93].
Considering, therefore, that petitioners are not entitled to just compensation for the expropriation of the
subject property, nor to disturbance compensation under Rep. Act No. 3844, as amended, the Court finds that the trial
court committed no reversible error in denying petitioners' motion for leave to intervene in the expropriation
proceedings below.
II
On the issue of jurisdiction, petitioners contend that since their motion to intervene alleges as justification therefor that
petitioner Celso Pagtalunan is the bona fide tenant of the subject property, the case should have been referred to the
Court of Agrarian Relations which has original and exclusive jurisdiction over expropriation proceedings for public
purpose of all kinds of tenanted properties.
The Court finds no reason to dwell on this point. The issue of what court has jurisdiction over the
expropriation proceedings in this case has been rendered moot and academic by B.P. Blg. 129. Under Paragraph 7,
Section 19 of B.P. Blg. 129, all civil actions and special proceedings which were then under the exclusive jurisdiction
of the Court of Agrarian Relations were placed under the exclusive and original jurisdiction of the Regional Trial
Courts [formerly the Courts of First Instance]. cdrep
WHEREFORE, the present petition is hereby DENIED for lack of merit.
SO ORDERED.

[G.R. No. 86889. December 4, 1990.]


LUZ FARMS, petitioner, vs. THE HONORABLE SECRETARY OF THE DEPARTMENT OF AGRARIAN
REFORM, respondent
DECISION
PARAS, J p:
This is a petition for prohibition with prayer for restraining order and/or preliminary and permanent injunction
against the Honorable Secretary of the Department of Agrarian Reform for acting without jurisdiction in enforcing the
assailed provisions of R.A. No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988 and in
promulgating the Guidelines and Procedure Implementing Production and Profit Sharing under R.A. No. 6657, insofar
as the same apply to herein petitioner, and further from performing an act in violation of the constitutional rights of the
petitioner.
As gathered from the records, the factual background of this case, is as follows:

On June 10, 1988, the President of the Philippines approved R.A. No. 6657, which includes the raising of
livestock, poultry and swine in its coverage (Rollo, p. 80).
On January 2, 1989, the Secretary of Agrarian Reform promulgated the Guidelines and Procedures
Implementing Production and Profit Sharing as embodied in Sections 13 and 32 of R.A. No. 6657 (Rollo, p. 80).
On January 9, 1989, the Secretary of Agrarian Reform promulgated its Rules and Regulations implementing
Section 11 of R.A. No. 6657 (Commercial Farms). (Rollo, p. 81).
Luz Farms, petitioner in this case, is a corporation engaged in the livestock and poultry business and together
with others in the same business allegedly stands to be adversely affected by the enforcement of Section 3(b), Section
11, Section 13, Section 16(d) and 17 and Section 32 of R.A. No. 6657 otherwise known as Comprehensive Agrarian
Reform Law and of the Guidelines and Procedures Implementing Production and Profit Sharing under R.A. No. 6657
promulgated on January 2, 1989 and the Rules and Regulations Implementing Section 11 thereof as promulgated by the
DAR on January 9, 1989 (Rollo, pp. 2-36).
Hence, this petition praying that aforesaid laws, guidelines and rules be declared unconstitutional. Meanwhile,
it is also prayed that a writ of preliminary injunction or restraining order be issued enjoining public respondents from
enforcing the same, insofar as they are made to apply to Luz Farms and other livestock and poultry raisers.
This Court in its Resolution dated July 4, 1939 resolved to deny, among others, Luz Farms' prayer for the
issuance of a preliminary injunction in its Manifestation dated May 26, and 31, 1989. (Rollo, p. 98).
Later, however, this Court in its Resolution dated August 24, 1989 resolved to grant said Motion for
Reconsideration regarding the injunctive relief, after the filing and approval by this Court of an injunction bond in the
amount of P100,000.00. This Court also gave due course to the petition and required the parties to file their respective
memoranda (Rollo, p. 119).
The petitioner filed its Memorandum on September 6, 1989 (Rollo, pp. 131-168).
On December 22, 1989, the Solicitor General adopted his Comment to the petition as his Memorandum
(Rollo, pp. 186-187).
Luz Farms questions the following provisions of R.A. 6657, insofar as they are made to apply to it:
(a)

Section 3(b) which includes the "raising of livestock (and poultry)" in the definition of "Agricultural, Agricultural

Enterprise or Agricultural Activity."


(b)

Section 11 which defines "commercial farms" as "private agricultural lands devoted to commercial, livestock,

poultry and swine raising . . ."


(c)

Section 13 which calls upon petitioner to execute a production-sharing plan.

(d)

Section 16(d) and 17 which vest on the Department of Agrarian Reform the authority to summarily determine the

just compensation to be paid for lands covered by the Comprehensive Agrarian Reform Law.
(e)

Section 32 which spells out the production-sharing plan mentioned in Section 13

". . . (W)hereby three percent (3%) of the gross sales from the production of such lands are distributed within sixty (60)
days of the end of the fiscal year as compensation to regular and other farmworkers in such lands over and above the
compensation they currently receive: Provided, That these individuals or entities realize gross sales in excess of five
million pesos per annum unless the DAR, upon proper application, determine a lower ceiling.

In the event that the individual or entity realizes a profit, an additional ten (10%) of the net profit after tax shall be
distributed to said regular and other farmworkers within ninety (90) days of the end of the fiscal year . . ."
The main issue in this petition is the constitutionality of Sections 3(b), 11, 13 and 32 of R.A. No. 6657 (the
Comprehensive Agrarian Reform Law of 1988), insofar as the said law includes the raising of livestock, poultry and
swine in its coverage as well as the Implementing Rules and Guidelines promulgated in accordance therewith.
The constitutional provision under consideration reads as follows:
ARTICLE XIII
xxx

xxx

xxx

AGRARIAN AND NATURAL RESOURCES REFORM


Section 4.

The State shall, by law, undertake an agrarian reform program founded on the right of farmers and regular

farmworkers, who are landless, to own directly or collectively the lands they till or, in the case of other farmworkers, to
receive a just share of the fruits thereof. To this end, the State shall encourage and undertake the just distribution of all
agricultural lands, subject to such priorities and reasonable retention limits as the Congress may prescribe, taking into
account ecological, developmental, or equity considerations, and subject to the payment of just compensation. In
determining retention limits, the State shall respect the rights of small landowners. The State shall further provide
incentives for voluntary land-sharing.
xxx
xxx
xxx"
Luz Farms contended that it does not seek the nullification of R.A. 6657 in its entirety. In fact, it
acknowledges the correctness of the decision of this Court in the case of the Association of Small Landowners in the
Philippines, Inc. vs. Secretary of Agrarian Reform (G.R. 78742, 14 July 1989) affirming the constitutionality of the
Comprehensive Agrarian Reform Law. It, however, argued that Congress in enacting the said law has transcended the
mandate of the Constitution, in including land devoted to the raising of livestock, poultry and swine in its coverage
(Rollo, p. 131). Livestock or poultry raising is not similar to crop or tree farming. Land is not the primary resource in
this undertaking and represents no more than five percent (5%) of the total investment of commercial livestock and
poultry raisers. Indeed, there are many owners of residential lands all over the country who use available space in their
residence for commercial livestock and raising purposes, under "contract-growing arrangements," whereby processing
corporations and other commercial livestock and poultry raisers (Rollo, p. 10). Lands support the buildings and other
amenities attendant to the raising of animals and birds. The use of land is incidental to but not the principal factor or
consideration in productivity in this industry. Including backyard raisers, about 80% of those in commercial livestock
and poultry production occupy five hectares or less. The remaining 20% are mostly corporate farms (Rollo, p. 11).
On the other hand, the public respondent argued that livestock and poultry raising is embraced in the term
"agriculture" and the inclusion of such enterprise under Section 3(b) of R.A. 6657 is proper. He cited that Webster's
International Dictionary, Second Edition (1954), defines the following words:
"Agriculture the art or science of cultivating the ground and raising and harvesting crops, often, including also,
feeding, breeding and management of livestock, tillage, husbandry, farming.
It includes farming, horticulture, forestry, dairying, sugarmaking . . .
Livestock domestic animals used or raised on a farm, especially for profit.
Farm a plot or tract of land devoted to the raising of domestic or other animals." (Rollo, pp. 82-83).
The petition is impressed with merit.

The question raised is one of constitutional construction. The primary task in constitutional construction is to
ascertain and thereafter assure the realization of the purpose of the framers in the adoption of the Constitution (J.M.
Tuazon & Co. vs. Land Tenure Administration, 31 SCRA 413 [1970]).
Ascertainment of the meaning of the provision of Constitution begins with the language of the document
itself. The words used in the Constitution are to be given their ordinary meaning except where technical terms are
employed in which case the significance thus attached to them prevails (J.M. Tuazon & Co. vs. Land Tenure
Administration, 31 SCRA 413 [1970]).
It is generally held that, in construing constitutional provisions which are ambiguous or of doubtful meaning,
the courts may consider the debates in the constitutional convention as throwing light on the intent of the framers of the
Constitution. It is true that the intent of the convention is not controlling by itself, but as its proceeding was preliminary
to the adoption by the people of the Constitution the understanding of the convention as to what was meant by the
terms of the constitutional provision which was the subject of the deliberation, goes a long way toward explaining the
understanding of the people when they ratified it (Aquino, Jr. v. Enrile, 59 SCRA 183 [1974]).
The transcripts of the deliberations of the Constitutional Commission of 1986 on the meaning of the word
"agricultural," clearly show that it was never the intention of the framers of the Constitution to include livestock and
poultry industry in the coverage of the constitutionally-mandated agrarian reform program of the Government.
The Committee adopted the definition of "agricultural land" as defined under Section 166 of R.A. 3844, as
laud devoted to any growth, including but not limited to crop lands, saltbeds, fishponds, idle and abandoned land
(Record, CONCOM, August 7, 1986, Vol. III, p. 11).
The intention of the Committee is to limit the application of the word "agriculture." Commissioner Jamir
proposed to insert the word "ARABLE" to distinguish this kind of agricultural land from such lands as commercial and
industrial lands and residential properties because all of them fall under the general classification of the word
"agricultural". This proposal, however, was not considered because the Committee contemplated that agricultural lands
are limited to arable and suitable agricultural lands and therefore, do not include commercial, industrial and residential
lands (Record, CONCOM, August 7, 1986, Vol. III, p. 30).
In the interpellation, then Commissioner Regalado (now a Supreme Court Justice), posed several questions,
among others, quoted as follows:
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"Line 19 refers to genuine reform program founded on the primary right of farmers and farmworkers. I wonder if it
means that leasehold tenancy is thereby proscribed under this provision because it speaks of the primary right of
farmers and farmworkers to own directly or collectively the lands they till. As also mentioned by Commissioner Tadeo,
farmworkers include those who work in piggeries and poultry projects.
I was wondering whether I am wrong in my appreciation that if somebody puts up a piggery or a poultry project and for
that purpose hires farmworkers therein, these farmworkers will automatically have the right to own eventually, directly
or ultimately or collectively, the land on which the piggeries and poultry projects were constructed. (Record,
CONCOM, August 2, 1986, p. 618).
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The questions were answered and explained in the statement of then Commissioner Tadeo, quoted as follows:
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"Sa pangalawang katanungan ng Ginoo ay medyo hindi kami nagkaunawaan. Ipinaaalam ko kay Commissioner
Regalado na hindi namin inilagay ang agricultural worker sa kadahilanang kasama rito ang piggery, poultry at livestock
workers. Ang inilagay namin dito ay farm worker kaya hindi kasama ang piggery, poultry at livestock workers (Record,
CONCOM, August 2, 1986, Vol. II, p. 621).
It is evident from the foregoing discussion that Section II of R.A. 6657 which includes "private agricultural
lands devoted to commercial livestock, poultry and swine raising" in the definition of "commercial farms" is invalid, to
the extent that the aforecited agro-industrial activities are made to be covered by the agrarian reform program of the
State. There is simply no reason to include livestock and poultry lands in the coverage of agrarian reform. (Rollo, p.
21).
Hence, there is merit in Luz Farms' argument that the requirement in Sections 13 and 32 of R.A. 6657
directing "corporate farms" which include livestock and poultry raisers to execute and implement "production-sharing
plans" (pending final redistribution of their landholdings) whereby they are called upon to distribute from three percent
(3%) of their gross sales and ten percent (10%) of their net profits to their workers as additional compensation is
unreasonable for being confiscatory, and therefore violative of due process (Rollo, p. 21).
It has been established that this Court will assume jurisdiction over a constitutional question only if it is
shown that the essential requisites of a judicial inquiry into such a question are first satisfied. Thus, there must be an
actual case or controversy involving a conflict of legal rights susceptible of judicial determination, the constitutional
question must have been opportunely raised by the proper party, and the resolution of the question is unavoidably
necessary to the decision of the case itself (Association of Small Landowners of the Philippines, Inc. v. Secretary of
Agrarian Reform, G.R. 78742; Acuna v. Arroyo, G.R. 79310; Pabico v. Juico, G.R. 79744; Manaay v. Juico, G.R.
79777, 14 July 1989, 175 SCRA 343).
However, despite the inhibitions pressing upon the Court when confronted with constitutional issues, it will
not hesitate to declare a law or act invalid when it is convinced that this must be done. In arriving at this conclusion, its
only criterion will be the Constitution and God as its conscience gives it in the light to probe its meaning and discover
its purpose. Personal motives and political considerations are irrelevancies that cannot influence its decisions.
Blandishment is as ineffectual as intimidation, for all the awesome power of the Congress and Executive, the Court will
not hesitate "to make the hammer fall heavily," where the acts of these departments, or of any official, betray the
people's will as expressed in the Constitution (Association of Small Landowners of the Philippines, Inc. v. Secretary of
Agrarian Reform, G.R. 78742; Acuna v. Arroyo, G.R. 79310; Pabico v. Juico, G.R. 79744; Manaay v. Juico, G.R.
79777, 14 July 1989).
Thus, where the legislature or the executive acts beyond the scope of its constitutional powers, it becomes the duty of
the judiciary to declare what the other branches of the government had assumed to do, as void. This is the essence of
judicial power conferred by the Constitution "(I)n one Supreme Court and in such lower courts as may be established
by law" (Art. VIII, Section 1 of the 1935 Constitution; Article X, Section I of the 1973 Constitution and which was
adopted as part of the Freedom Constitution, and Article VIII, Section 1 of the 1987 Constitution) and which power this
Court has exercised in many instances (Demetria v. Alba, 148 SCRA 208 [1987]).
PREMISES CONSIDERED, the instant petition is hereby GRANTED. Sections 3(b), 11, 13 and 32 of R.A.
No. 6657 insofar as the inclusion of the raising of livestock, poultry and swine in its coverage as well as the
Implementing Rules and Guidelines promulgated in accordance therewith, are hereby DECLARED null and void for
being unconstitutional and the writ of preliminary injunction issued is hereby MADE permanent.
SO ORDERED.
Separate Opinions

SARMIENTO, J., concurring:


I agree that the petition be granted.
It is my opinion however that the main issue on the validity of the assailed provisions of R.A. 6657 (the
Comprehensive Agrarian Reform Law of 1988) and its Implementing Rules and Guidelines insofar as they include the
raising of livestock, poultry, and swine in their coverage can not be simplistically reduced to a question of
constitutional construction.
It is a well-settled rule that construction and interpretation come only after it has been demonstrated that
application is impossible or inadequate without them. A close reading however of the constitutional text in point,
specifically, Sec. 4, Art. XIII, particularly the phrase, ". . . in case of other farmworkers, to receive a just share of the
fruits thereof," provides a basis for the clear and possible coverage of livestock, poultry, and swine raising within the
ambit of the comprehensive agrarian reform program. This accords with the principle that every presumption should be
indulged in favor of the constitutionality of a statute and the court in considering the validity of a statute should give it
such reasonable construction as can be reached to bring it within the fundamental law. 1
The presumption against unconstitutionality, I must say, assumes greater weight when a ruling to the contrary
would, in effect, defeat the laudable and noble purpose of the law, i.e., the welfare of the landless farmers and
farmworkers in the promotion of social justice, by the expedient conversion of agricultural lands into livestock, poultry,
and swine raising by scheming landowners, thus, rendering the comprehensive nature of the agrarian program merely
illusory.
The instant controversy, I submit, boils down to the question of whether or not the assailed provisions violate
the equal protection clause of the Constitution (Article II, section 1) which teaches simply that all persons or things
similarly situated should be treated alike, both as to rights conferred and responsibilities imposed. 2
There is merit in the contention of the petitioner that substantial distinctions exist between land directed
purely to cultivation and harvesting of fruits or crops and land exclusively used for livestock, poultry and swine raising,
that make real differences, to wit:
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No land is tilled and no crop is harvested in livestock and poultry farming. There are no tenants nor landlords, only
employers and employees.
Livestock and poultry do not sprout from land nor are they "fruits of the land."
Land is not even a primary resource in this industry. The land input is inconsequential that all the commercial hog and
poultry farms combined occupy less than one percent (1%) (0.4% for piggery, 0.2% for poultry) of the 5.45 million
hectares of land supposedly covered by the CARP. And most farms utilize only 2 to 5 hectares of land.
In every respect livestock and poultry production is an industrial activity. Its use of an inconsequential portion of land
is a mere incident of its operation, as in any other undertaking, business or otherwise.
The fallacy of defining livestock and poultry production as an agricultural enterprise is nowhere more evident when
one considers that at least 95% of total investment in these farms is in the form of fixed assets which are industrial in
nature.
These include (1) animal housing structures and facilities complete with drainage, waterers, blowers, misters and in
some cases even piped-in music; (2) feedmills complete with grinders, mixers, conveyors, exhausts, generators, etc.;
(3) extensive warehousing facilities for feeds and other supplies; (4) anti-pollution equipment such as bio-gas and

digester plants augmented by lagoons and concrete ponds; (5) deepwells, elevated water tanks, pumphouses and
accessory facilities; (6) modern equipment such as sprayers, pregnancy testers, etc.; (7) laboratory facilities complete
with expensive tools and equipment; and a myriad other such technologically advanced appurtances.
How then can livestock and poultry farmlands be arable when such are almost totally occupied by these structures?
The fallacy of equating the status of livestock and poultry farmworkers with that of agricultural tenants surfaces when
one considers contribution to output. Labor cost of livestock and poultry farms is no more than 4% of total operating
cost. The 98% balance represents inputs not obtained from the land nor provided by the farmworkers inputs such as
feeds and biochemicals (80% of the total cost), power cost, cost of money and several others.
Moreover, livestock and poultry farmworkers are covered by minimum wage law rather than by tenancy law. They are
entitled to social security benefits where tenant-farmers are not. They are paid fixed wages rather than crop shares. And
as in any other industry, they receive additional benefits such as allowances, bonuses, and other incentives such as free
housing privileges, light and water.
Equating livestock and poultry farming with other agricultural activities is also fallacious in the sense that like the
manufacturing sector, it is a market for, rather than a source of agricultural output. At least 60% of the entire domestic
supply of corn is absorbed by livestock and poultry farms. So are the by-products of rice (rice-bran), coconut (copra
meal), banana (banana pulp meal), and fish (fish meal). 3
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In view of the foregoing, it is clear that both kinds of lands are not similarly situated and hence, can not be
treated alike. Therefore, the assailed provisions which allow for the inclusion of livestock and poultry industry within
the coverage of the agrarian reform program constitute invalid classification and must accordingly be struck down as
repugnant to the equal protection clause of the Constitution.