LAND BANK OF THE PHILIPPINES v. LEONILA P.

CELADA
G.R. No. 164876
January 23, 2006
Just Compensation Formula

The DAR and the MARO likewise filed an Answer8 averring that the determination of just
compensation rests exclusively with the LBP. Thus, they are not liable to respondent and
are merely nominal parties in the case.

Respondent Leonila P. Celada owns 22.3167 hectares of agricultural land situated in

Calatrava, Carmen, Bohol registered under TCT No. 16436,1 of which 14.1939 hectares
was identified in 1998 by the Department of Agrarian Reform (DAR) as suitable for
compulsory acquisition under the Comprehensive Agrarian Reform Program (CARP). The
matter was then indorsed to petitioner Land Bank of the Philippines (LBP) for field
investigation and land valuation.

Meanwhile, the DARAB Provincial Adjudicator (PARAD) issued an Order9 dated April 12,
2000 affirming the valuation made by LBP. Respondent failed to appear in the DARAB
case despite due notice.

In due course, LBP valued respondents land at P2.1105517 per square meter for an
aggregate value of P299,569.61.2 The DAR offered the same amount to respondent as
just compensation, but it was rejected. Nonetheless, on August 27, 1999, LBP deposited
the said sum in cash and bonds in the name of respondent.3

WHEREFORE, the Affirmative Defense of x x x Land Bank is hereby denied. Besides, in

the mind of the court, the recourse to the DARAB is x x x of no moment since it is only
conciliatory to the parties.

Pursuant to Section 16(d) of Republic Act (RA) No. 6657 or the Comprehensive Agrarian
Reform Law of 1988, the matter was referred to the DAR Adjudication Board (DARAB),
Region VII-Cebu City, for summary administrative hearing on determination of just
compensation. The case was docketed as DARAB Case No. VII-4767-B-990.
While the DARAB case was pending, respondent filed, on February 10, 2000, a
petition4 for judicial determination of just compensation against LBP, the DAR and the
Municipal Agrarian Reform Officer (MARO) of Carmen, Bohol, before the Regional Trial
Court of Tagbilaran City. The same was docketed as Civil Case No. 6462 and raffled to
Branch 3, the designated Special Agrarian Court (SAC). Respondent alleged that the
current market value of her land is at least P150,000.00 per hectare based on the
following factors:
14.1. The land in question has been mortgaged to the defunct Rural Bank of
San Miguel (Bohol), Inc., for P1,220,000.00 on July 23, 1998 since it was
appraised at P15.00 per square meter;
14.2. Agricultural lands in said barangay are priced ranging from P140,000.00 to
P150,000.00 per hectare and current land transactions reveal said price range;
14.3. The land in question is titled or registered property, cultivated and fully
developed with rice5 and corn occupying the greater portion thereof;
14.4. The topography of the land, its soil condition, climate and productivity of
surrounding lots justify the just compensation requested or asked for;
14.5. Even the class and base unit market value for agricultural lands in Bohol is
about thirty (30) times higher than the price offered per hectare by DAR/LBP.6
On April 27, 2000, LBP filed its Answer7 raising non-exhaustion of administrative
remedies as well as forum-shopping as affirmative defense. According to petitioner,
respondent must first await the outcome of the DARAB case before taking any judicial
recourse; that its valuation was arrived at by applying the formula prescribed by law
whereas respondents was based only on the "current value of like properties".

On June 4, 2001, the SAC issued an order resolving petitioners affirmative defense in
this wise:

Upon agreement of the parties, the pre-trial is reset to June 11, 2001 at 9:00 in the
morning.
SO ORDERED.10
Thereafter, a pre-trial conference was conducted11 and trial on the merits ensued. On
March 1, 2003, the SAC rendered judgment as follows:
WHEREFORE, in view of all the foregoing, the Court hereby fixes the compensation of
the land of petitioner at P2.50 per square meter or a total of P354,847.50 for the portion
of 14.1939 hectares subject of compulsory acquisition under the CARP which it believes
just, fair and equitable under the present circumstances and which shall earn legal
interest of twelve percent (12%) per annum from the time of its taking by the DAR.
Furthermore, respondent Land Bank is hereby ordered to indemnify petitioner the amount
of P10,000.00 for attorneys fee and incidental expenses of P5,000.00 and costs.
SO ORDERED.12
LBP elevated the matter to the Court of Appeals which, however, dismissed the appeal
outright on the following grounds:
1. The petition is not accompanied with an affidavit of service, although there is
an explanation that respondent, respondents counsel and Judge Venancio J.
Amila were furnished with copies of the petition by registered mail x x x.
2. Petitioners counsel indicated his IBP and PTR but not his Roll of Attorneys
Number x x x.
3. Copies of (a) PARAD Decision x x x adverted to in the petition which fixed the
land valuation for just compensation at P299,569.11 and (b) petitioners Petition
for Judicial Determination of Just Compensationfiled with the Regional Trial
Court of Tagbilaran City, Branch 3, were not attached as annexes, x x x.13
Upon denial of its motion for reconsideration,14 LBP filed the instant petition under Rule
45 of the Rules of Court, alleging that:
1

A
THE COURT OF APPEALS ERRED IN X X X RIGIDLY OR STRICTLY
APPLYING PROCEDURAL LAW AT THE EXPENSE OF SUBSTANTIAL
JUSTICE AND THE RIGHT TO APPEAL.
B
THE SAC A QUO ERRED IN ASSUMING JURISDICTION OVER THE
PETITION FOR DETERMINATION OF JUST COMPENSATION WHILE
ADMINISTRATIVE PROCEEDINGS IS ON-GOING BEFORE THE DARAB,
REGION VII, CEBU CITY.
C
THE SAC A QUO ERRED IN FIXING THE JUST COMPENSATION OF THE
LAND BASED NOT ON ITS ACTUAL LAND USE BUT ON THE VALUATION OF
NEIGHBORING LANDS.
D
THE SAC A QUO ERRED IN AWARDING ATTORNEYS FEES AND
INCIDENTAL EXPENSES X X X.15
On the first assigned error, petitioner asserts that the Court of Appeals should have
liberally construed the rules of procedure and not dismissed its appeal on technical
grounds.
We agree with petitioner.
The Court of Appeals dismissed petitioners appeal on three technical grounds, namely:
(a) lack of affidavit of service; (b) failure of counsel to indicate his Roll of Attorneys
number; and (c) failure to attach material portions of the records. However, the lack of
affidavit of service is not deemed fatal where the petition filed below is accompanied by
the original registry receipts showing that the petition and its annexes were served upon
the parties.16 On the other hand, the failure of counsel to indicate his Roll of Attorneys
number would not affect respondents substantive rights, such that petitioners counsel
could have been directed to comply with the latter requirement rather than dismiss the
petition on purely technical grounds. As for petitioners failure to attach material portions
of the records, we held in Donato v. Court of Appeals17 that:
[T]he failure of the petitioner to x x x append to his petition copies of the pleadings and
other material portions of the records as would support the petition, does not justify the
outright dismissal of the petition. It must be emphasized that the RIRCA (Revised Internal
Rules of the Court of Appeals) gives the appellate court a certain leeway to require
parties to submit additional documents as may be necessary in the interest of substantial
justice. Under Section 3, paragraph d of Rule 3 of the RIRCA, the CA may require the
parties to complete the annexes as the court deems necessary, and if the petition is given
due course, the CA may require the elevation of a complete record of the case as
provided for under Section 3(d)(5) of Rule 6 of the RIRCA x x x.18

An examination of the records and pleadings filed before the Court of Appeals reveals
that there was substantial compliance with procedural requirements. Moreover, we have
held time and again that cases should, as much as possible, be determined on the merits
after the parties have been given full opportunity to ventilate their causes and defenses,
rather than on technicality or some procedural imperfection.19 After all, technical rules of
procedure are not ends in themselves but are primarily devised to help in the proper and
expedient dispensation of justice. In appropriate cases, therefore, the rules may be
construed liberally in order to meet and advance the cause of substantial justice.20
While a remand of the case to the appellate court would seem to be in order, we deem it
proper to resolve the case on the merits if only to write finis to the present controversy.
We do not agree with petitioners submission that the SAC erred in assuming jurisdiction
over respondents petition for determination of just compensation despite the pendency of
the administrative proceedings before the DARAB. In Land Bank of the Philippines v.
Court of Appeals,21 the landowner filed an action for determination of just compensation
without waiting for the completion of the DARABs re-evaluation of the land. The Court
nonetheless held therein that the SAC acquired jurisdiction over the action for the
following reason:
It is clear from Sec. 57 that the RTC, sitting as a Special Agrarian Court, has original and
exclusive jurisdiction over all petitions for the determination of just compensation to
landowners. This original and exclusive jurisdiction of the RTC would be undermined if
the DAR would vest in administrative officials original jurisdiction in compensation cases
and make the RTC an appellate court for the review of administrative decision. Thus,
although the new rules speak of directly appealing the decision of adjudicators to the
RTCs sitting as Special Agrarian Courts, it is clear from Sec. 57 that the original and
exclusive jurisdiction to determine such cases is in the RTCs. Any effort to transfer such
jurisdiction to the adjudicators and to convert the original jurisdiction of the RTCs into
appellate jurisdiction would be contrary to Sec. 57 and therefore would be void. Thus,
direct resort to the SAC by private respondent is valid.22
It would be well to emphasize that the taking of property under RA No. 6657 is an
exercise of the power of eminent domain by the State.23 The valuation of property or
determination of just compensation in eminent domain proceedings is essentially a
judicial function which is vested with the courts and not with administrative
agencies.24 Consequently, the SAC properly took cognizance of respondents petition for
determination of just compensation.
In the same vein, there is no merit to petitioners contention that respondent failed to
exhaust administrative remedies when she directly filed the petition for determination of
just compensation with the SAC even before the DARAB case could be resolved. The
issue is now moot considering that the valuation made by petitioner had long been
affirmed by the DARAB in its order dated April 12, 2000. As held in Land Bank of the
Philippines v. Wycoco,25 the doctrine of exhaustion of administrative remedies is
inapplicable when the issue is rendered moot and academic, as in the instant case.
With regard to the third assigned error, however, we agree with petitioner that the SAC
erred in setting aside petitioners valuation of respondents land on the sole basis of the
higher valuation given for neighboring properties. In this regard, the SAC held:

It appears from the evidence of petitioner that the neighboring lands of similar
classification were paid higher than what was quoted to her land by respondent Land
Bank as the value per square meter to her land was only quoted at P2.1105517 while the
others which were of the same classification were paid by respondent Bank at P2.42
more or less, per square meter referring to the land of Consuelito Borja (Exh. D) and
Cesar Borja (Exh. F). Furthermore, the land of petitioner was allegedly mortgaged for a
loan of P1,200,000.00 before the Rural Bank of San Miguel, Bohol and that it was
purchased by her from a certain Felipe Dungog for P450,000.00 although no documents
therefor were shown to support her claim. Nevertheless, the Court finds a patent disparity
in the price quotations by respondent Land Bank for the land of petitioner and that of the
other landowners brought under CARP which could be caused by deficient or erroneous
references due to the petitioners indifference and stubborn attitude in not cooperating
with respondent bank in submitting the data needed for the evaluation of the property. x x
x At any rate, the price quotation by respondent Land Bank on the land of the petitioner is
low more so that it was done some four years ago, particularly, on June 22, 1998 (Exh. 1)
and the same has become irrelevant in the course of time due to the devaluation of the
peso brought about by our staggering economy.26

as well as the nonpayment of taxes or loans secured from any government financing
institution on the said land shall be considered as additional factors to determine its
valuation.
As stated earlier, the above provision is implemented through DAR AO No. 5, s. of 1998,
which provides that:
A. There shall be one basic formula for the valuation of lands covered by VOS or CA:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
Where: LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales

As can be gleaned from above ruling, the SAC based its valuation solely on the
observation that there was a "patent disparity" between the price given to respondent and
the other landowners. We note that it did not apply the DAR valuation formula since
according to the SAC, it is Section 17 of RA No. 6657 that "should be the principal basis
of computation as it is the law governing the matter".27 The SAC further held that said
Section 17 "cannot be superseded by any administrative order of a government
agency",28 thereby implying that the valuation formula under DAR Administrative Order
No. 5, Series of 1998 (DAR AO No. 5, s. of 1998),29 is invalid and of no effect.
While SAC is required to consider the acquisition cost of the land, the current value of like
properties, its nature, actual use and income, the sworn valuation by the owner, the tax
declaration and the assessments made by the government assessors30 to determine just
compensation, it is equally true that these factors have been translated into a basic
formula by the DAR pursuant to its rule-making power under Section 49 of RA No.
6657.31 As the government agency principally tasked to implement the agrarian reform
program, it is the DARs duty to issue rules and regulations to carry out the object of the
law. DAR AO No. 5, s. of 1998 precisely "filled in the details" of Section 17, RA No. 6657
by providing a basic formula by which the factors mentioned therein may be taken into
account. The SAC was at no liberty to disregard the formula which was devised to
implement the said provision.

MV = Market Value per Tax Declaration

The above formula shall be used if all three factors are present, relevant, and applicable.
A1. When the CS factor is not present and CNI and MV are applicable, the formula shall
be:
LV = (CNI x 0.9) + (MV x 0.1)
A2. When the CNI factor is not present, and CS and MV are applicable, the formula shall
be:
LV = (CS x 0.9) + (MV x 0.1)
A3. When both the CS and CNI are not present and only MV is applicable, the formula
shall be:
LV = MV x 2

It is elementary that rules and regulations issued by administrative bodies to interpret the
law which they are entrusted to enforce, have the force of law, and are entitled to great
respect.32 Administrative issuances partake of the nature of a statute33 and have in their
favor a presumption of legality.34 As such, courts cannot ignore administrative issuances
especially when, as in this case, its validity was not put in issue. Unless an administrative
order is declared invalid, courts have no option but to apply the same.
Thus, Section 17 of RA No. 6657 states:
SEC. 17. Determination of Just Compensation. In determining just compensation, the
cost of acquisition of the land, the current value of like properties, its nature, actual use
and income, the sworn valuation by the owner, the tax declarations, and the assessment
made by government assessors, shall be considered. The social and economic benefits
contributed by the farmers and the farmworkers and by the Government to the property

In no case shall the value of idle land using the formula MV x 2 exceed the lowest value
of land within the same estate under consideration or within the same barangay or
municipality (in that order) approved by LBP within one (1) year from receipt of
claimfolder.
Accordingly, petitioner applied the formula under A1 above since the comparable sales
factor ("CS factor") was not present. As observed by the SAC itself, respondent refused
to cooperate with the local valuation office of petitioner and did not provide the necessary
data to arrive at a proper "CS factor". DAR AO No. 5, s. of 1998 defines "CS factor" as
follows:

C. CS shall refer to any one or the average of all the applicable sub-factors, namely ST,
AC and MVM:

In contrast, petitioner arrived at its valuation by using available factors culled from the
Department of Agriculture and Philippine Coconut Authority,35 and by computing the same
in accordance with the formula provided, thus

Where: ST = Peso Value of Sales Transactions as defined under Item C.2

COMPUTATION (Applicable Formula) : LV = 0.90 CNI + 0.10 MV
AC = Acquisition Cost as defined under Item C.3
Comparable Land Transactions (P x x x x ____ ) = P x-x-x
MVM = Market Value Based on Mortgage as defined under Item C.4
Capitalized Net Income: Cassava 16,666.67 x 0.90 = 15,000.00
xxxx
Corn/Coco 26,571.70 = 23,914.53
C.2. The criteria in the selection of the comparable sales transaction (ST) shall be as
follows:
a. When the required number of STs is not available at the barangay level, additional STs
may be secured from the municipality where the land being offered/covered is situated to
complete the required three comparable STs. In case there are more STs available than
what is required at the municipal level, the most recent transactions shall be considered.
The same rule shall apply at the provincial level when no STs are available at the
municipal level. In all cases, the combination of STs sourced from the barangay,
municipality and province shall not exceed three transactions.

Market Value Cassava 8,963.78 x 0.10 = 896.38

per Tax Declaration: Corn/Coco 10,053.93 = 1,005.39
Computed Value per Hectare: Cassava 15,896.38; Corn/Coco 24,919.92
xxx
Value per hectare used: Cassava 15,896.38 x 6.0000 has. = 95,378.28

b. The land subject of acquisition as well as those subject of comparable sales

transactions should be similar in topography, land use, i.e., planted to the same crop.
Furthermore, in case of permanent crops, the subject properties should be more or less
comparable in terms of their stages of productivity and plant density.

Corn/Coco 24,919.92 x 8.1939 has. = 204,191.33

Payment due to LO : P299, 569.61

c. The comparable sales transactions should have been executed within the period
January 1, 1985 to June 15, 1988, and registered within the period January 1, 1985, to
September 13, 1988.

The above computation was explained by Antero M. Gablines, Chief of the Claims,
Processing, Valuation and Payment Division of the Agrarian Operations Center of the
Land Bank, to wit:

xxxx

ATTY. CABANGBANG: (On direct):

C.3. Acquisition Cost (AC) AC shall be deemed relevant when the property subject of
acquisition was acquired through purchase or exchange with another property within the
period January 1, 1985 to June 15, 1988 and registered within the period January 1,
1985 to September 13, 1988, and the condition of said property is still substantially
similar from the date of purchase or exchange to the date of FI.

xxxx

xxxx
C.4. Market Value Based on Mortgage (MVM) For MVM to be relevant or applicable,
the property subject of acquisition should have been mortgaged as of June 15, 1988 and
the condition of the property is still substantially similar up to the date of FI. MVM shall
refer to the latest available appraised value of the property.
In the case at bar, while respondent attempted to prove during the hearings before the
SAC, comparable sales transactions, the acquisition cost of the property as well as its
mortgage value, she failed to submit adequate documentary evidence to support the
same. Consequently, there was nothing from which the "CS factor" could be determined.

q. What are the items needed for the Land Bank to compute?
a. In accordance with Administrative Order No. 5, series of 1998, the value of the land
should be computed using the capitalized net income plus the market value. We need the
gross production of the land and its output and the net income of the property.
q. You said "gross production". How would you fix the gross production of the property?
a. In that Administrative Order No. 5, if the owner of the land is cooperative, he is
required to submit the net income. Without submitting all his sworn statements, we will
get the data from the DA (Agriculture) or from the coconut authorities.
xxxx
4

q. In this recommended amount which you approved, how did you arrive at this figure?
a. We used the data from the Philippine (Coconut) Authority and the Agriculture and the
data stated that Cassava production was only 10,000 kilos per hectare; corn, 2,000 kilos;
and coconuts, 15.38 kilos per hectare. The data stated that in the first cropping of 1986,
the price of cassava was P1.00 per kilo; corn was sold at P7.75 per kilo; and the
Philippine Coconut Authority stated that during that time, the selling price of coconuts was
P8.23 per kilo.
q. After these Production data and selling price, there is here a "cost of operation", what
is this?
a. It is the expenses of the land owner or farmer. From day one of the cultivation until
production. Without the land owners submission of the sworn statement of the income,
production and the cost, x x x Administrative Order No. 5 states that x x x we will use 20%
as the net income, meaning 80% of the production in peso. This is the cost of valuation.
q. 80 % for what crops?
a. All crops except for coconuts where the cost of expenses is only 20%.
q. Summing all these data, what is the value per hectare of the cassava?
a. The cassava is P15,896.38.
q. How about the corn x x x intercropped with coconuts?
a. P24,919.92.36
Under the circumstances, we find the explanation and computation of petitioner to be
sufficient and in accordance with applicable laws. Petitioners valuation must thus be
upheld.
Finally, there is no basis for the SACs award of 12% interest per annum in favor of
respondent. Although in some expropriation cases, the Court allowed the imposition of
said interest, the same was in the nature of damages for delay in payment which in effect
makes the obligation on the part of the government one of forbearance.37 In this case,
there is no delay that would justify the payment of interest since the just compensation
due to respondent has been promptly and validly deposited in her name in cash and LBP
bonds. Neither is there factual or legal justification for the award of attorneys fees and
costs of litigation in favor of respondent.
WHEREFORE, the instant petition is GRANTED. The Decision of the Regional Trial
Court, Tagbilaran City, Branch 3 in Civil Case No. 6462 dated March 1, 2003
is REVERSED and SET ASIDE. A new judgment is entered fixing the just compensation
for respondents land at P2.1105517 per square meter or a total of P299,569.61.
Footnotes
5

LBP determined that the land is planted to cassava, corn and coconuts.
5

DAR Regional Director Antonio S. Maraya, acting on the petition of Grio for the
cancellation of the CLTs, dismissed the same by Order6 of September 25, 1989 (Maraya
Order), citing Letter of Instructions No. 474 (LOI 474),7 the pertinent portions of which
Order read:
HEIRS OF JUAN GRIO, SR. REPRESENTED BY REMEDIOS C. GRIO v.
DEPARTMENT OF AGRARIAN REFORM (DAR)
G.R. No. 165073
June 30, 2006
LOI 474
On challenge via petition for certiorari are the October 17, 2003 Decision and the June
21, 2004 Resolution of the Court of Appeals in CA-GR SP No. 73368, "Heirs of Juan
Grio, Sr. represented by Remedios C. Grio v. Department of Agrarian Reform."1
Juan Grio, Sr. (Grio), now deceased, was the owner of a parcel of agricultural land, Lot
1505-B, covered by Transfer Certificate of Title (TCT) No. T-533502 of the Register of
Deeds of Iloilo containing an area of 9.35 hectares, located in Barangay Gua-an,
Leganes, Iloilo.
Grio was also the owner of a 50-hectare parcel of land located in Barangay Tad-y, Sara,
Iloilo which he, on February 8, 1972, mortgaged to the Development Bank of the
Philippines (DBP) to secure the payment of a loan.
On October 21, 1972, then President Ferdinand E. Marcos issued Presidential Decree
No. 27 (PD 27), "decreeing the emancipation of tenants from the bondage of the soil
transferring to them the ownership of the land they till and providing the instruments and
mechanism therefor."
Grios 9.35 hectare land was placed under the coverage of PD 27 on account of which
Certificates of Land Transfer (CLTs) covering a portion thereof were issued in favor of his
tenants Marianito Gulmatico, Ludovico Hubero, Rodolfo Hubero, Placida Catahay and
Roberto Gula.
Grio later filed in the early 80s a letter-petition for the cancellation of the above-said
CLTs, contending that they were issued to the tenants without giving him an opportunity
to be heard; the land was the only riceland he had in the Municipality of Leganes; the
area planted with palay was only a little over 6 hectares; the land had a very great
sentimental value to him; and several of his children and grandchildren who had no
suitable residential lots might need the land to build their homes.
In lieu of the land covered by the CLTs, Grio offered seven hectares for each of the
tenants from his above-said 50-hectare land.3
Grio, however, later ceded to the DBP his 50-hectare land via dacion en pago to settle
his obligation to it.
On July 10, 1985, Grio died.4 He was survived by his wife and seven children. On June
22, 1988, his wife also passed away.5
On June 15, 1988, Republic Act 6657 or the COMPREHENSIVE AGRARIAN REFORM
LAW (CARL) took effect.

Based from the foregoing, Atty. Rex Tupas, then Legal Officer III, Agrarian Reform Team,
Leganes, Iloilo recommended in his report dated April 5, 1982 the dismissal of herein
petition of Juan Grio for lack of merit and the maintenance of the Certificates of Land
Transfer issued in favor of the above enumerated tenants covering the subject
farmholdings, the petitioner, Juan Grio, being an owner of fifty hectares
untenanted other agricultural lands which will not entitle him for
exemption/retention pursuant to LOI 474, as implemented by MAR Memorandum
Circular No. 11 dated April 21, 1978. This recommendation was concurred in by the
Regional Director, Department of Agrarian Reform, Region VI, Iloilo City.
WHEREFORE, premises considered, the instant petition filed by Juan Grio for the
cancellation of the Certificates of Land Transfer issued in favor of his tenants covering
certain parcels of land situated at Brgy. Gua-an, Leganes, Iloilo, is hereby DISMISSED
for lack of merit, and accordingly, the Certificates of Land Transfer issued shall be
maintained.8 (Emphasis and underscoring supplied)
The Land Bank of the Philippines later advised Grios heirs, herein petitioners, by
letter9 of June 6, 1996, of the DARs submission of Grios 9.35 hectare land transfer
claim for payment under PD 27, its approval on June 5, 1996, and the requirements for
the proceeds of the claim to be released.
Petitioners later filed with the DAR Regional Office an application for retention10 dated
March 14, 1997 of the 9.35 hectare land pursuant to Section 6 of the CARL which reads:
SECTION 6. Retention Limits. Except as otherwise provided in this Act, no person may
own or retain, directly or indirectly, any public or private agricultural land, the size of which
shall vary according to factors governing a viable family-sized farm, such as commodity
produced, terrain, infrastructure, and soil fertility as determined by the Presidential
Agrarian Reform Council (PARC) created hereunder, but in no case shall retention by
the landowner exceed five (5) hectares. Three (3) hectares may be awarded to each
child of the landowner, subject to the following qualifications: (1) that he is at least
fifteen (15) years of age; and (2) that he is actually tilling the land or directly
managing the farm: Provided, that landowners whose lands have been covered by
Presidential Decree No. 27 shall be allowed to keep the area originally retained by
them thereunder, Provided, further, That original homestead grantees or their direct
compulsory heirs who still own the original homestead at the time of the approval of this
Act shall retain the same areas as long as they continue to cultivate said homestead.
x x x x (Emphasis and underscoring supplied)
Petitioners sought the exemption of the 9.35 hectare land from the coverage of either PD
27 or the CARL, contending that Grio had seven children and if a landowner is entitled
to five hectares as retention limit, the remaining land of Grio would not be enough for his
children, the 50-hectare land of Grio having already been ceded to the DBP.11
In the meantime or on June 5 and 25, 1997, Emancipation Patents were issued in favor
of Grios above-named tenants.12
6

DAR Regional Director Dominador B. Andres subsequently dismissed petitioners

application for retention, by Order13 dated April 27, 1998, ratiocinating as follows:

The fact that the 50-hectare property was mortgaged to the DBP in 1972 is of no moment
in relation to PD 27. The naked title of said property remained with Juan Grio, Sr. and he
was still the owner thereof when PD 27 took effect.

xxxx
The reckoning date for the application of Operation Land Transfer is October 21, 1972,
the date of effectivity of P.D. 27, which is the law applicable in this case, and not the date
of effectivity of R.A. 6657 (June 15, 1988), which is applicable here only in suppletory
manner. By operation of law, as of October 21, 1972, the subject landholdings were
covered by Operation Land Transfer under Presidential Decree No. 27 in view of the fact
that the landholdings, subject of this case are tenanted and Juan Grio, Sr. has other
landholdings located at Sara, Iloilo with an area of 50.0000 hectares, more or less. The
conveyance of the 50.0000 hectares landholdings in favor of the Development Bank of
the Philippines sometime in 1985 has no legal effect of exempting the tenanted
landholdings from Operation Land Transfer considering that the conveyance happened
only in 1985, several years after the subjecting of the said properties under the coverage
of Operation Land Transfer.
x x x x14 (Emphasis and underscoring supplied)
Petitioners moved to reconsider15 the April 27, 1998 Order of the DAR Regional Director
but it was denied by Order16 of August 18, 1998.

However, we agree with herein applicants-appellants that the reversion of the 50-hectare
property to the DBP by way of dacion en pago in 1985 was not done in circumvention of
PD 27. Said property was untenanted coconut land, hence, beyond the coverage of PD
27. However, said transaction merely confirmed the fact that Juan Grio, Sr. was the
owner of the 50-hectare property when PD 27 took effect on 21 October 1972.
Since Juan Grio, Sr. cannot retain any portion of his tenanted riceland in Leganes, Iloilo,
herein applicants-appellants, who are his successors-in-interest, cannot also retain the
same property under PD 27. Herein applicants-appellants merely succeeded to the rights
of their predecessor-in-interest by virtue of the Law on Succession under the New Civil
Code. It should be noted that under DAR AO 4 (1991), no retention rights are granted to
the children of landowners.
Applicants-appellants next assert their right of retention and their right to choose the area
to be retained as provided in Section 6 of RA 6657.
The contention is likewise without merit.
xxx

Petitioners appealed to the DAR Secretary, arguing that the Regional Director erred in:
I. . . . NOT CANCELING RESPONDENTS [CLTs] WHICH WERE NULL AND VOID FOR
HAVING BEEN ISSUED WITHOUT DUE PROCESS OF LAW AND WITHOUT PAYMENT
OF JUST COMPENSATION.
II. . . . HOLDING THAT GRIO DID NOT HAVE A RIGHT OF RETENTION/EXEMPTION
OVER HIS TENANTED AGRICULTURAL LAND (LOT 1505-B) BECAUSE HE OWNED
50 HECTARES OF UNTENANTED OTHER AGRICULTURAL LAND IN SARA WHEN PD
NO. 27 TOOK EFFECT.
III. . . . HOLDING THAT THE REVERSION OF THE 50- HECTARE LAND IN SARA,
ILOILO TO THE DBP IN PAYMENT OF GRIOS MORTGAGE DEBT, WAS
CIRCUMVENTION OF PD 27.
IV. . . . NOT ALLOWING GRIO AND (LATER) HIS HEIRS THE RIGHT TO CHOOSE TO
RETAIN HIS 9-HECTARE- LOT 1505-B IN LEGANES, ILOILO, IN LIEU OF THE 50HECTARE LAND IN SARA, ILOILO, AS PROVIDED IN SECTION 6 O[F] RA 6657
WHICH WAS ALREADY THE LAW WHEN THE APPEALED ORDERS WERE ISSUED.17
By Order18 dated September 3, 2002, then DAR Secretary Hernani A. Braganza denied
petitioners appeal:
xxxx

The . . . statement of the Supreme Court clearly indicates that a landowner who failed to
exercise his retention right of land under PD 27 may do so under RA 6657 provided he is
qualified to do so under the regime of PD 27. Stated differently, where a landowner is not
entitled to retain land under PD 27, he cannot avail of the right of retention over the same
land under RA 6657.
In the case at hand, it is established that Juan Grio, Sr. was not entitled to exercise his
retention right over subject property under PD 27. As such, he is also not entitled to
exercise said right under RA 6657. If Juan Grio, Sr. had no retention rights under PD 27
and RA 6657, it follows that his heirs, who are his successors-in-interest, cannot also
exercise the same right under PD 27 and RA 6657.
x x x x (Underscoring supplied)19
Before the Court of Appeals to which petitioners elevated the case via petition for review,
it raised the following arguments:
1. Grio had the right to retain subject land, because LOI 474 exempted from
OLT landowners of ricelands who owned other agricultural lands exceeding 7
hectares if they did not derive sufficient income from the latter.
2. Petitioners had each inherited a 1.33 hectare share of the subject land as of
1985, which was already way below the retention limits of PD 27 and RA 6657.20
By Decision21 dated October 17, 2003, the appellate court affirmed the September 3,
2002 Order of the DAR Secretary, the pertinent portions of which decision read:
7

x x x Juan Grios disputed land came within the coverage of P.D. 27 because it is
tenanted riceland. Because P.D. 27 initially lacked implementing rules and regulations,
there were a lot of uncertainties at the start on how the transfer of ownership to tenantframers would operate. As the above outline of the major post-P.D. 27 developments
showed, the government started with the landed estates and worked its way down to
seven hectares of tenanted rice and corn land by the time it came out with LOI 474. What
was certain at that point was that from the combined application of P.D. 27 and LOI
474, Juan Grio, Sr. had no right of retention because he owned 9 hectares of
tenanted riceland and 50 hectares of coconut land. Thus, his tenants were given in
1981, during the lifetime of Juan Grio, Sr. their Certificates of Land Transfers
preparatory to the Emancipation Patents they would receive if they can perfect their
payments of their portion of the covered riceland. Juan Grio, Sr. objected to the
issuance of the CLTs soon after. This was the status of Juan Grio, Sr.s retention rights
when he died in 1985.
xxxx
While Juan Grio seasonably objected to the CLTs, the objection was simply a pending
remedial action passed on to the heirs. This remedial action lost its efficacy for the
heirs when the DAR dismissed the petition on September 25, 1989 and their heirs
failed to appeal the dismissal. x x x
xxxx
Additionally, when the heirs of Juan Grio, Sr. filed their application for retention
under RA 6657 in 1997 they had to contend with an existing adverse ruling by the
DAR the order of September 25, 1989 and the CLTs the ruling confirmed. In
1997, the estate of Juan Grio, Sr. could no longer file a petition that would
question the denial of Juan Grio, Sr.s retention rights as res adjudicata had then
set in. The DAR was the agency vested by law with the authority to rule on
retention issues and its ruling lapsed to finality fifteen (15) days after its
service. That the ruling has been duly served and has reached finalityappear to us
to be uncontroverted. The DAR ruling is a ruling on the merits of Juan Grio, Sr.s
petition for cancellation of the issued CLTs, and laid to rest any issue of retention as
between Juan Grio, Sr. and his successors, and the government. Thus, res
adjudicata fully applies.
The estate and the individual heirs are likewise estopped by laches from
questioning the denial of Juan Grio, Sr.s claim for retention. The denial was made
on September 25, 1989 and the heirs present petition, assuming that it can be
characterized as an attack on the denial of Juan Grio, Sr.s retention rights, was
made only on March 17, 1997 or 7 years later. At this point, laches has set in,
laches being "the failure or neglect, for an unreasonable and unexplained length of
time, to do that which by exercising due diligence, could or should have been done
earlier. x x x

against the new owners would be doubly unjust since they were never heard in this
present petition.
x x x x22 (Emphasis and underscoring supplied;
citations omitted)
Petitioners moved to reconsider the appellate courts decision upon the following
arguments:
1. The Order of DAR Regional Director Maraya dated September
1989 purportedly denying Juan Grio, Sr.s petition for cancellation of
CLTs appeared only in 1998 6 months after the PARO had declared in the EPs
issued in 1997 that no CLTs had been issued. Hence, the supposed Maraya
Order upholding said CLTs could not be held against herein Petitioners, as even
the PARO did not know of their existence (assuming they existed at all).
2. There was no substitution of heirs in relation to the supposed Petition for
Cancellations of CLTs, hence herein Petitioners cannot be held bound by the
DAR Regional Directors Order dated September 1989.
3. Addressing the Order to a dead person, without showing that it was validly
served upon any heir or representative, does not constitute valid notice upon
herein Petitioners.
4. A Petition for Cancellation of CLTs is not tantamount to an Application for
Retention. The issuance of CLTs is not a bar to the Petitioners exercise of their
Constitutionally-guaranteed right of retention.
5. The case of Daez v. CA which also involves a denial of a petition for
cancellation of CLTs, shows that the right of retention can still be exercised
under RA 6657 after such denial.23 (Underscoring supplied)
By Resolution24 dated June 21, 2004, the appellate court denied petitioners motion for
reconsideration, holding that, among other things, the issues raised therein "were never
raised in the proceedings below nor in their petition for review"; and that "it is against all
rules of procedural orderliness and fair play for the petitioners to claim that [its] [d]ecision
is wrong because the underlying facts stated in the petitioners Statement of Facts and
submissions are incorrect or incomplete" and "[p]etitioners are in fact estopped . . . .
from making this claim after [it has] relied on their statements and submissions in
rendering [its] Decision."

xxxx

The appellate court likewise held that the DAR could not be faulted if there was no
substitution of parties, for although the DARAB rules do not contain any provision bearing
on the death of a party, the Rules of Court makes it the duty of counsel to inform the
tribunal the fact of death of the party and the name and address of his representative.

In our view, allowing the heirs to resurrect the long entombed issue of retention under the
circumstances of this case would not only be a major setback for the governments
agrarian reform program, but would be unjust as well to the individual tenantsbeneficiaries who are now full-pledged owners of the lands they till. Any adverse ruling

Furthermore, the appellate court held that even without above-stated rule, "ordinary
common sense . . . dictate[s] that the heirs of a deceased litigant cannot sleep on their
duty to attend the estate of the deceased" and "[s]ince no notification appears to have
been undertaken by the heirs, [it] find[s] no merit in petitioners claim that there was no
8

substitution of heirs and the denial of Grios petition for cancellation of CLTs does not
bind them."
Hence, the present petition for certiorari, petitioners faulting the appellate court to have
committed grave abuse of discretion:
In refusing to recognize [its] Constitutional right of retention as embodied in RA 6657
which the Association of Small Landowners case had already acknowledged by the time
the Maraya Order was supposedly issued[.]
In refusing to recognize these strange discoveries of glaring irregularities of facts
gleaned from the DARs records submitted to the Court and made available to herein
Petitioners only after the Petition for Review had been filed before the Court of Appeals[.]
In insisting that [they] had already lost [their] right of retention because the Maraya Order
had become final, despite the PAROs unequivocal certification at the back of each
Emancipation Patent that there were no CLTs issued, and the Maraya Order was
conveniently "discovered" within the DAR itself only in 1998[.]25

As the appellate court ruled, however, petitioners are guilty of laches in their attempt to
"resurrect the retention issue [seven and a half] years after its denial was decreed and
came to finality."
As the appellate court ruled too, the DAR cannot be faulted if no substitution of parties
took place when Grio died, it being the duty of the heirs to attend to the estate of the
deceased, which duty includes notification to adjudicating tribunals the fact of death of
the litigant.
At all events, these issues raised by petitioners, which substantially reiterate those raised
in their motion for reconsideration before the appellate court, were as the appellate court
observed, never raised in the proceedings below nor in petitioners petition for review
before said court.
WHEREFORE, the petition is DISMISSED.
Footnotes
7

The proper remedy for petitioners to challenge the appellate courts decision and
resolution was to file a petition for review on certiorari under Rule 45 on or before July 20,
2004 or 15 days after they received a copy of the appellate courts resolution on July 5,
2004 denying their motion for reconsideration. They, however, filed the present petition
for certiorari under Rule 65 on September 20, 2004.
It is well settled, however, that certiorari cannot be used as a substitute for lost appeal.
Certiorari lies only when there is no appeal nor any plain, speedy, and adequate remedy
in the ordinary course of law. Why the question being raised by petitioners, i.e., whether
the appellate court committed grave abuse of discretion could not have been raised on
appeal,26 no reason therefor has been advanced.
While this Court, in accordance with the liberal spirit pervading the Rules of Court and in
the interest of justice, has the discretion to treat a petition for certiorari as having been
filed under Rule 45, especially if filed within the reglementary period under said Rule, it
finds nothing in the present case to warrant a liberal application of the Rules, no
justification having been proffered, as just stated, why the petition was filed beyond the
reglementary period.27
Technicality aside, the petition just the same fails.
Petitioners fault the appellate court for ignoring the "evidence" they discovered when they
had the opportunity to examine the records forwarded by the DAR to the appellate court
"that Grio was misled into believing that [the] CLTs had been issued, when there were
none, or that the [September 25, 1989] Maraya Order denying Grios petition for
cancellation of [the] CLTs was without legal effect because the (1) CLTs were inexistent,
(2) he was dead by the time the Order was rendered, and the property had long passed
on to his heirs, and (3) the heirs were never notified of said order, and there is no
showing that it was sent even to Juan Grio, Sr.s address of record either."

LETTER OF INSTRUCTIONS No. 474

TO: The Secretary of the Agrarian Reform
WHEREAS, last year, I ordered that small landowners of tenanted rice/corn
lands with areas of less than twenty-four hectares but above seven hectares
shall retain not more than seven hectares of such lands except when they won
other agricultural lands containing more than seven hectares or land used for
residential, commercial, industrial or other urban purposes form which they
derive adequate income to support themselves and their families;
WHEREAS, the Department of Agrarian Reform found that in the course of
implementing any directive there are many landowners of tenanted rice/corn
lands with areas of seven hectares or less who also own other agricultural lands
containing more than seven hectares or lands used for residential, commercial,
industrial or other urban purposes where they derive adequate income to
support themselves and their families;
WHEREAS, it is therefore necessary to cover said lands under the Land
Transfer Program of the government to emancipate the tenant-farmers therein.
NOW, THEREFORE, I FERDINAND E. MARCOS, President of the Philippines,
do hereby order the following:
1. You shall under take 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 of lands used for residential, commercial,
industrial or other urban purposes from which they derive adequate
income to support themselves and their families.

2. Landowners who may choose to be paid the cost of their lands by

the Land Banks of the Philippines shall be paid in accordance with

mode of payment provided in Letter of Instructions No. 273 dated May

7, 1973.

10