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SUPREME COURT REPORTS ANNOTATED VOLUME 794
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Case Title:
URBANO F. ESTRELLA, petitioner, vs.
PRISCILLA P. FRANCISCO,
respondent.
Citation: 794 SCRA 590
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Search Result G.R. No. 209384. June 27, 2016.*
URBANO F. ESTRELLA, petitioner, vs. PRISCILLA P.

FRANCISCO, respondent.
Agrarian Reform; Social Justice; The State adopts a policy of

promoting social justice, establishing owner cultivatorship of
economic-size farms as the basis of Philippine agriculture, and
providing a vigorous and systematic land resettlement and
redistribution program.·The use and ownership of property
bears a social function, and all economic agents are expected to
contribute to the common good. To this end, property ownership
and economic activity are always subject to the duty of the State
to promote distributive justice and intervene when the common
good requires. As early as 1973, the Philippines has already
declared our goal of emancipating agricultural tenants from the
bondage of the soil. The State adopts a policy of promoting social
justice, establishing owner cultivatorship of economic-size farms
as the basis of Philippine agriculture, and providing a vigorous
and systematic land resettlement and redistribution program.
Same; Agricultural Leasehold; The agricultural leasehold
subsists, notwithstanding the resulting change in ownership of
the landholding, and the lesseeÊs rights are made enforceable
against the
_______________
* SECOND DIVISION.
591
VOL. 794, JUNE 27, 2016 591

Estrella vs. Francisco
transferee or other successor-in-interest of the original lessor.

·The existence of an agricultural tenancy relationship between
the lessor and the lessee gives the latter rights that attach to the
landholding, regardless of whoever may subsequently become its
owner. This strengthens the security of tenure of the tenants and
protects them from being dispossessed of the landholding or
ejected from their leasehold by the death of either the lessor or of
the tenant, the expiration of a term/period in the leasehold
contract, or the alienation of the landholding by the lessor. If
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Page 1 of 14
either party dies, the leasehold continues to bind the lessor (or
his heirs) in favor of the tenant (or his surviving
spouse/descendants). In case the lessor alienates the land, the
transferee is subrogated to the rights and substituted to the
obligations of the lessor-transferor. The agricultural leasehold
subsists, notwithstanding the resulting change in ownership of
the landholding, and the lesseeÊs rights are made enforceable
against the transferee or other successor-in-interest of the
original lessor.
Same; Same; Right of Preemption; To protect the lesseeÊs
security of tenure, the Agricultural Land Reform Code grants him
the right of preemption · the preferential right to buy the
landholding under reasonable terms and conditions if ever the
agricultural lessor decides to sell it.·To protect the lesseeÊs
security of tenure, the Code grants him the right of preemption
· the preferential right to buy the landholding under reasonable
terms and conditions if ever the agricultural lessor decides to sell
it. As an added layer of protection, the Code also grants him the
right to redeem the landholding from the vendee in the event
that the lessor sells it without the lesseeÊs knowledge.
Same; Same; Right of Redemption; In Mallari v. Court of
Appeals, 161 SCRA 503 (1988), the Supreme Court (SC) held that
the lesseeÊs right of redemption will not prescribe if he is not
served written notice of the sale.·In Mallari v. Court of Appeals,
161 SCRA 503 (1988), we held that the lesseeÊs right of
redemption will not prescribe if he is not served written notice of
the sale. We affirmed this ruling in Springsun Management
Systems Corporation v. Camerino, 449 SCRA 65 (2005), and
Planters Development Bank v. Garcia, 477 SCRA 185 (2005).
More recently in Po v. Dampal, 608 SCRA 627 (2009), we held
that the failure of the vendee to serve written notice of the sale
to the lessee and the DAR prevents the running of the 180-day
redemption period; the lesseeÊs constructive knowledge of
592
592 SUPREME COURT REPORTS ANNOTATED

the sale does not dispense with the vendeeÊs duty to give
written notice. Simply put, Section 12 expressly states that the
180-day period must be reckoned from written notice of sale. If
the agricultural lessee was never notified in writing of the sale of
the landholding, there is yet no prescription period to speak of.
Same; Same; Same; After the amendment of Section 12 of the
Agricultural Land Reform Code, a certification from the Land
Bank that it will finance the redemption will also suffice in lieu of
tender of payment or consignation.·After the amendment of
Section 12 of the Code, a certification from the Land Bank that it
will finance the redemption will also suffice in lieu of tender of
payment or consignation.
Same; Same; Same; Ordinarily, the one hundred eighty
(180)-day redemption period begins to run from the date that the
vendee furnishes written notice of the sale to the lessee. The filing
of a petition or request for redemption with the Department of
Agrarian Reform (DAR) (through the Provincial Agrarian Reform

Page 2 of 14
Adjudicator [PARAD]) suspends the running of the redemption
period.·In the present case, Estrella manifested his willingness
to pay the redemption price but failed to tender payment or
consign it with the PARAD when he filed his complaint. To be
sure, a tenantÊs failure to tender payment or consign it in court
upon filing the redemption suit is not necessarily fatal; he can
still cure the defect and complete his act of redemption by
consigning his payment with the court within the remaining
prescriptive period. Ordinarily, the 180-day redemption period
begins to run from the date that the vendee furnishes written
notice of the sale to the lessee. The filing of a petition or request
for redemption with the DAR (through the PARAD) suspends the
running of the redemption period.
Same; Same; Social Justice; While we endeavor to protect the
rights of agricultural lessees, we must be mindful not to do so at
the expense of trampling upon the landownersÊ rights which are
likewise protected by law.·The Agricultural Land Reform Code
is a social legislation designed to promote economic and social
stability. It must be interpreted liberally to give full force and
effect to its clear intent, which is „to achieve a dignified existence
for the small farmers‰ and to make them „more independent,
self-reliant and responsible citizens, and a source of genuine
strength in our democratic society.‰
593
VOL. 794, JUNE 27, 2016 593

Nevertheless, while we endeavor to protect the rights of

agricultural lessees, we must be mindful not to do so at the
expense of trampling upon the landownersÊ rights which are
likewise protected by law.
PETITION for review on certiorari of a resolution of the

Court of Appeals.
The facts are stated in the opinion of the Court.
Valeriano B. Mariano for petitioner.
BRION, J.:
This petition for review on certiorari seeks to reverse

and set aside the November 28, 2012 resolution1 of the
Court of Appeals (CA) in C.A.-G.R. S.P. No. 121519.2 The
CA dismissed petitioner Urbano F. EstrellaÊs (Estrella)
appeal from the Department of Agrarian Reform
Adjudication BoardÊs (DARAB) February 23, 2009
decision3 in DARAB Case No. 13185 which denied
EstrellaÊs right of redemption over an agricultural
landholding.
Antecedents
Lope Cristobal (Cristobal) was the owner of a twenty-

three thousand nine hundred and thirty-three-square-
meter (23,933 sq. m.) parcel of agricultural riceland
(subject landholding) in Cacarong Matanda, Pandi,
Bulacan, covered by Transfer Certificate of Title (TCT) No.

Page 3 of 14
T-248106 of the Register of Deeds of Bulacan. Estrella was
the registered agricultural tenant-lessee of the subject
landholding.
_______________
1 Rollo, p. 30.
2 Penned by Associate Justice Normandie B. Pizarro and concurred
in by Associate Justices Remedios A. Salazar-Fernando and Leoncia R.
Dimagiba.
3 Rollo, p. 91.
594

On September 22, 1997, Cristobal sold the subject

landholding to respondent Priscilla Francisco (Francisco)
for five hundred thousand pesos (P500,000.00),4 without
notifying Estrella.
Upon discovering the sale, Estrella sent Cristobal a
demand letter dated March 31, 1998, for the return of the
subject landholding.5 He also sent Francisco a similar
demand letter dated July 31, 1998. Neither Cristobal nor
Francisco responded to EstrellaÊs demands.6
On February 12, 2001, Estrella filed a complaint7
against Cristobal and Francisco for legal redemption,
recovery, and maintenance of peaceful possession before
the Office of the Provincial Agrarian Reform Adjudicator
(PARAD). His complaint was docketed as DCN. R-03-02-
2930Ê01.
Estrella alleged that the sale between Cristobal and
Francisco was made secretly and in bad faith, in violation
of Republic Act (R.A.) No. 3844, the Agricultural Land
Reform Code (the Code).8 He insisted that he never waived
his rights as a registered tenant over the property and that
he was willing to match the sale price. Estrella concluded
that as the registered tenant, he is entitled to legally
redeem the property from Francisco. He also manifested
his ability and willingness to deposit the amount of
P500,000.00 with the PARAD as the redemption price.9
Cristobal did not file an answer while Francisco denied
all the allegations in the complaint except for the fact of
the sale.10 Francisco claimed that she was an innocent
purchaser in good faith because she only bought the
property after: (1)
_______________
4 Id., at pp. 45 and 69.

5 Id., at p. 79.
6 Id., at p. 80.
7 Id., at p. 43.
8 The Agricultural Land Reform Code, R.A. No. 3844 (1963).
9 Rollo, p. 45.
10 Id., at p. 69.

Page 4 of 14
595
VOL. 794, JUNE 27, 2016 595

Cristobal assured her that there would be no problems

regarding the transfer of the property; and (2) Cristobal
personally undertook to compensate Estrella. Therefore,
Estrella had no cause of action against her.
On June 23, 2002, the PARAD rendered its decision
recognizing EstrellaÊs right of redemption.11 The PARAD
found that neither Cristobal nor Francisco notified Estrella
in writing of the sale. In the absence of such notice, an
agricultural lessee has a right to redeem the landholding
from the buyer pursuant to Section 12 of the Code.12
Francisco appealed the PARADÊs decision to the DARAB
where it was docketed as DARAB Case No. 13185.
On February 23, 2009, the DARAB reversed the
PARADÊs decision and denied Estrella the right of
redemption.13 Citing Section 12 of the Code as amended,
the DARAB held that the right of redemption may be
exercised within 180 days from written notice of the sale.
Considering that more than three years had lapsed
between EstrellaÊs discovery of the sale and his filing of the
case for redemption, the DARAB concluded that Estrella
slept on his rights and lost the right to redeem the
landholding.
Estrella moved for reconsideration but the DARAB
denied the motion.
On September 30, 2011, Estrella filed a motion before
the CA to declare himself as a pauper litigant and
manifested his intention to file a petition for review of the
DARABÊs decision.14 He alleged that he was living below
the poverty line and did not have sufficient money or
property for food, shelter, and other basic necessities.
_______________
11 Id., at p. 84.
12 Id., at p. 88.
13 Id., at p. 91.
14 Id., at p. 9.
596

On October 17, 2011, Estrella filed a petition for

review15 of the DARABÊs decision before the CA. The
petition was docketed as C.A.-G.R. S.P. No. 121519.
Estrella emphasized that the purpose of the State in
enacting the agrarian reform laws is to protect the welfare
of landless farmers and to promote social justice towards
establishing ownership over the agricultural land by the
tenant-lessees.16 He insisted that the DARAB erred in

Page 5 of 14
denying him the right of redemption based on a
technicality and that the redemption period in Sec. 12 of
the Code does not apply in his case because neither the
lessor nor the vendee notified him in writing of the sale.17
On November 28, 2012, the CA dismissed EstrellaÊs
petition for review for failure to show any reversible error
in the DARABÊs decision.18 Estrella received a copy of the
CAÊs resolution on April 10, 2013.19
On April 11, 2013, Estrella filed a motion for a twenty-
day extension of time (or until April 31, 2013) to file his
motion for reconsideration of the November 28, 2012
resolution.20
On April 30, 2013, Estrella requested another ten-day
extension of time (or until May 9, 2013) to file his motion
for reconsideration.21
On May 9, 2013, Estrella filed his Motion for
Reconsideration arguing that his right of redemption had
not yet prescribed because he was not given written notice
of the sale to Francisco.22
_______________
15 Id., at p. 51.
16 Id., at p. 61.
17 Id., at pp. 62 and 64.
18 Id., at p. 30.
19 Id., at p. 20.
20 Id., at pp. 20 and 36.
21 Id., at pp. 20 and 38.
22 Id., at pp. 20 and 40.
597
VOL. 794, JUNE 27, 2016 597

On May 30, 2013, the CA denied EstrellaÊs motions for

extension of time, citing the rule that the reglementary
period to file a motion for reconsideration is non-
extendible.23 The CA likewise denied EstreliaÊs Motion for
Reconsideration.
Hence, the present recourse to this Court.
On August 23, 2013, Estrella filed a motion for
extension of time to file his petition for review and a
motion to be declared as a pauper litigant.24 We granted
both motions on October 13, 2013.
The PartiesÊ Arguments
Estrella argues that an agricultural tenantÊs right of

redemption over the landholding cannot prescribe when
neither the lessor-seller nor the buyer has given him
written notice of the sale.
On the other hand, Francisco counters that Estrella
failed to make a formal tender of or to consign with the
PARAD the redemption price as required in Quiño v. Court
of Appeals.25 She also questioned the genuineness of
EstrellaÊs claim to be a pauper litigant. Francisco points
out that a person who claims to be willing to pay the

Page 6 of 14
redemption price of P500,000.00 is not, by any stretch of
the imagination, a pauper.26
Our Ruling
We find no merit in the petition.

The use and ownership of property bears a social
function, and all economic agents are expected to
contribute to the common good.27 To this end, property
ownership and economic
_______________
23 Id., at pp. 6 and 33.

24 Id., at p. 2.
25 353 Phil. 449; 291 SCRA 249 (1998).
26 Rollo, pp. 100-103.
27 Art. XII, Sec. 6, Constitution.
598

activity are always subject to the duty of the State to

promote distributive justice and intervene when the
common good requires.28
As early as 1973, the Philippines has already declared
our goal of emancipating agricultural tenants from the
bondage of the soil.29 The State adopts a policy of
promoting social justice, establishing owner cultivatorship
of economic-size farms as the basis of Philippine
agriculture, and providing a vigorous and systematic land
resettlement and redistribution program.30
In pursuit of land reform, the State enacted the
Agricultural Land Reform Code in 1963. The Code
established an agricultural leasehold system that replaced
all existing agricultural share tenancy systems at that
point.
The existence of an agricultural tenancy relationship
between the lessor and the lessee gives the latter rights
that attach to the landholding, regardless of whoever may
subsequently become its owner.31 This strengthens the
security of tenure of the tenants and protects them from
being dispossessed of the landholding or ejected from their
leasehold by the death of either the lessor or of the tenant,
the expiration of a term/period in the leasehold contract, or
the alienation of the landholding by the lessor.32 If either
party dies, the leasehold continues to bind the lessor (or
his heirs) in favor of the tenant (or his surviving
spouse/descendants). In case the lessor alienates the land,
the transferee is subrogated to the rights and substituted
to the obligations of the lessor-transferor. The
_______________
28 Id.
29 Art. XIV, Sec. 12, 1973 Constitution.
30 Sec. 2, Comprehensive Agrarian Reform Law of 1988, R.A. No.

Page 7 of 14
6657 (1988); Sec. 2, R.A. No. 6389 (1971).
31 Secs. 9 and 10, Agricultural Land Reform Code. See also Relucio
III v. Macaraig, Jr., 255 Phil. 613, 622; 173 SCRA 635, 643 (1989); and
Planters Development Bank v. Garcia, 513 Phil. 294, 307; 477 SCRA
185, 196 (2005).
32 Secs. 9 and 10, Agricultural Land Reform Code.
599
VOL. 794, JUNE 27, 2016 599

agricultural leasehold subsists, notwithstanding the

resulting change in ownership of the landholding, and the
lesseeÊs rights are made enforceable against the transferee
or other successor-in-interest of the original lessor.
To protect the lesseeÊs security of tenure, the Code
grants him the right of preemption · the preferential
right to buy the landholding under reasonable terms and
conditions if ever the agricultural lessor decides to sell it.33
As an added layer of protection, the Code also grants him
the right to redeem the landholding from the vendee in the
event that the lessor sells it without the lesseeÊs
knowledge.34
Originally, the lessee had a redemption period of two
years from registration of the sale:
Sec. 12. LesseeÊs Right of Redemption.·In case

the landholding is sold to a third person without
the knowledge of the agricultural lessee, the latter
shall have the right to redeem the same at a
reasonable price and consideration: Provided, That
the entire landholding sold must be redeemed:
Provided, further, That where there are two or
more agricultural lessees, each shall be entitled to
said right of redemption only to the extent of the
area actually cultivated by him. The right of
redemption under this Section may be exercised
within two years from the registration of the sale,
and shall have priority over any other right of legal
redemption.35
In Padasas v. Court of Appeals,36 we held that a lesseeÊs

actual knowledge of the sale of the landholding is
immaterial because the Code specifically and definitively
provides that the redemption period must be counted from
the registration
_______________
33 Sec. 11, Agricultural Land Reform Code, as amended.

34 Id., Sec. 12.
35 Sec. 12, Agricultural Land Reform Code (1963).
36 172 Phil. 243, 251-252; 82 SCRA 250, 259 (1978).
600

Page 8 of 14
of the sale. This ruling was subsequently affirmed in

Manuel v. Court of Appeals.37
In 1971, R.A. No. 6389 amended Section 12 of the Code
and shortened the redemption period:
Sec. 12. LesseeÊs right of Redemption.·In case

the landholding is sold to a third person without
the knowledge of the agricultural lessee, the latter
shall have the right to redeem the same at a
reasonable price and consideration: Provided, That
where there are two or more agricultural lessees,
each shall be entitled to said right of redemption
only to the extent of the area actually cultivated by
him. The right of redemption under this Section
may be exercised within one hundred eighty
days from notice in writing which shall be
served by the vendee on all lessees affected
and the Department of Agrarian Reform
upon the registration of the sale, and shall
have priority over any other right of legal
redemption. The redemption price shall be the
reasonable price of the land at the time of the sale.
Upon the filing of the corresponding petition or
request with the department or corresponding case
in court by the agricultural lessee or lessees, the
period of one hundred and eighty days shall cease
to run.
Any petition or request for redemption shall be
resolved within sixty days from the filing thereof;
otherwise, the said period shall start to run again.
The Department of Agrarian Reform shall
initiate, while the Land Bank shall finance, said
redemption as in the case of preemption.38
[Emphases and underscoring supplied]
In Mallari v. Court of Appeals,39 we held that the

lesseeÊs right of redemption will not prescribe if he is not
served writ-
_______________
37 204 Phil. 109, 116; 118 SCRA 477, 483 (1982).

38 Sec. 12, Agricultural Land Reform Code, as amended by Sec. 4,
R.A. No. 6389 (1971).
39 244 Phil. 518, 523; 161 SCRA 503, 507-508 (1988).
601
VOL. 794, JUNE 27, 2016 601

ten notice of the sale. We affirmed this ruling in

Springsun Management Systems Corporation v.
Camerino40 and Planters Development Bank v. Garcia.41
More recently in Po v. Dampal,42 we held that the

Page 9 of 14
failure of the vendee to serve written notice of the sale to
the lessee and the DAR prevents the running of the 180-
day redemption period; the lesseeÊs constructive knowledge
of the sale does not dispense with the vendeeÊs duty to give
written notice.
Simply put, Section 12 expressly states that the 180-day
period must be reckoned from written notice of sale. If the
agricultural lessee was never notified in writing of the sale
of the landholding, there is yet no prescription period to
speak of.43
As the vendee, respondent Francisco had the express
duty to serve written notice on Estrella, the agricultural
lessee, and on the DAR. Her failure to discharge this legal
duty prevented the commencement of the 180-day
redemption period. Francisco only gave written notice of
the sale in her answer44 before the PARAD wherein she
admitted the fact of the sale.45 Thus, Estrella timely
exercised his right of redemption. To hold otherwise would
allow Francisco to profit from her own neglect to perform a
legally mandated duty.
_______________
40 Springsun Management Systems Corporation v. Camerino, 489

Phil. 769, 790; 449 SCRA 65, 86 (2005).
41 Planters Development Bank v. Garcia, supra note 31 at pp. 313-
314; p. 203.
42 623 Phil. 523, 530; 608 SCRA 627, 635 (2009).
43 Springsun Management Systems Corp. v. Camerino, supra;
and Planters Development Bank v. Garcia, supra note 31 at pp. 313-314;
pp. 201-202.
44 Rollo, p. 69.
45 See Planters Development Bank v. Garcia, supra note 31 at pp.
314-315; p. 203, citing Quiño v. Court of Appeals, supra note 25 at p.
457; p. 255, where we considered summons and the accompanying
petition as written notice of the sale.
602

However, despite the timely filing of the redemption

suit, Estrella did not validly exercise his right to redeem
the property. As early as 1969 in Basbas v. Entena,46 this
Court had already held that the valid exercise of the right
of redemption requires either tender of the purchase price
or valid consignation thereof in Court:
x x x the right of legal redemption must be

exercised within specified time limits; and the
statutory periods would be rendered meaningless
and of easy evasion unless the redemptioner is
required to make an actual tender in good faith of
what he believed to be the reasonable price of the
land sought to be redeemed. The existence of the
right of redemption operates to depress the market
value of the land until the period expires, and to
render that period indefinite by permitting the

Page 10 of 14
tenant to file a suit for redemption, with either
party unable to foresee when final judgment will
terminate the action, would render nugatory the
period of two years [now 180 days] fixed by the
statute for making the redemption and virtually
paralyze any efforts of the landowner to realize the
value of his land. No buyer can be expected to
acquire it without any certainty as to the amount
for which it may be redeemed, so that he can
recover at least his investment in case of
redemption. In the meantime, the landownerÊs
needs and obligations cannot be met. It is doubtful
if any such result was intended by the statute,
absent clear wording to that effect.
The situation becomes worse when, as shown by
the evidence in this case, the redemptioner has no
funds and must apply for them to the Land
Authority, which, in turn, must depend on the
availability of funds from the Land Bank. It then
becomes practically certain that the landowner will
not be able to realize the value of his property for
an indefinite time beyond the two years
redemption period.47
_______________
46 138 Phil. 721; 28 SCRA 665 (1969).

47 Id., at p. 728; pp. 671-672.
603
VOL. 794, JUNE 27, 2016 603

After the amendment of Section 12 of the Code, a

certification from the Land Bank that it will finance the
redemption will also suffice in lieu of tender of payment or
consignation.48
In the present case, Estrella manifested his willingness
to pay the redemption price but failed to tender payment
or consign it with the PARAD when he filed his complaint.
To be sure, a tenantÊs failure to tender payment or consign
it in court upon filing the redemption suit is not
necessarily fatal; he can still cure the defect and complete
his act of redemption by consigning his payment with the
court within the remaining prescriptive period.49
Ordinarily, the 180-day redemption period begins to run
from the date that the vendee furnishes written notice of
the sale to the lessee. The filing of a petition or request for
redemption with the DAR (through the PARAD) suspends
the running of the redemption period.
However, as the cases of Basbas and Almeda v. Court of
Appeals50 · as well the amendment to Section 12 of the
Code · evidently show, Congress did not intend the
redemption period to be indefinite. This 180-day period
resumes running if the petition is not resolved within sixty
days.51
Because Francisco failed to serve Estrella written notice
of the sale, EstrellaÊs 180-day redemption period was intact

Page 11 of 14
when he filed the complaint before the PARAD. The filing
of the complaint prevented the running of the prescription
period and gave Estrella time to cure the defect of his
redemption through consignment of the redemption price.
After the lapse of sixty days, EstrellaÊs 180-day
redemption period began running pursuant to Section 12 of
the Code.
_______________
48 Mallari v. Court of Appeals, supra note 39 at p. 524; p. 509.

49 Lusung v. Vda. de Santos, 204 Phil. 302, 309; 118 SCRA 669, 676
(1982).
50 168 Phil. 348, 355; 78 SCRA 194, 200 (1977).
51 Sec. 12, Agricultural Land Reform Code, as amended.
604

Nevertheless, Estrella could still have consigned

payment within this 180-day period.
The exercise of the right of redemption must be made in
accordance with the law. Tender of the redemption price or
its valid consignation must be made within the prescribed
redemption period.52 The reason for this rule is simple:
x x x Only by such means can the buyer

become certain that the offer to redeem is
one made seriously and in good faith. A buyer
cannot be expected to entertain an offer of
redemption without attendant evidence that
the redemptioner can, and is willing to
accomplish the repurchase immediately. A
different rule would leave the buyer open to
harassment by speculators or crackpots as
well as to unnecessary prolongation of the
redemption period, contrary to the policy of
the law. While consignation of the tendered price
is not always necessary because legal redemption
is not made to discharge a preexisting debt, a valid
tender is indispensable, for the reasons already
stated. Of course, consignation of the price would
remove all controversy as to the redemptionerÊs
ability to pay at the proper time.53 [Emphasis
supplied]
Unfortunately, even after the lapse of the 240 days (the

60-day freeze period and the 180-day redemption period),
there was neither tender nor judicial consignation of the
redemption price. Even though Estrella repeatedly
manifested his willingness to consign the redemption price,
he never actually did.
_______________
52 Almeda v. Court of Appeals, supra note 50 at pp. 355-356; pp. 199-

200; Baltazar v. Court of Appeals, 192 Phil. 137, 154; 104 SCRA 619, 633

Page 12 of 14
(1981); and Lusung v. Vda. de Santos, supra note 49 at pp. 307, 309; p.
676.
53 Conejero v. Court of Appeals, No. L-21812, April 29, 1966, 16
SCRA 775, 781-782, cited in Basbas v. Entena, supra note 46 at p. 727;
p. 200 and in Almeda v. Court of Appeals, supra note 50 at p. 356; p.
670.
605
VOL. 794, JUNE 27, 2016 605

While Estrella exercised his right of redemption in a

timely manner, the redemption was ineffective because he
failed to exercise this right in accordance with the law.
Notably, he had also repeatedly manifested his inability to
even pay judicial costs and docket fees. He has been
declared (twice) as a pauper litigant who was „living below
the poverty threshold level because of limited income.‰54
This casts considerable doubt on EstrellaÊs ability to pay
the full price of the property. In sum, we have no choice but
to deny the petition.
The Agricultural Land Reform Code is a social
legislation designed to promote economic and social
stability. It must be interpreted liberally to give full force
and effect to its clear intent, which is „to achieve a
dignified existence for the small farmers‰ and to make
them „more independent, self-reliant and responsible
citizens, and a source of genuine strength in our
democratic society.‰55 Nevertheless, while we endeavor to
protect the rights of agricultural lessees, we must be
mindful not to do so at the expense of trampling upon the
landownersÊ rights which are likewise protected by law.
WHEREFORE, we hereby DENY the petition for lack
of merit; accordingly, we AFFIRM the November 28, 2012
resolution of the Court of Appeals in C.A.-G.R. S.P. No.
121519. No costs.
SO ORDERED.
Carpio (Chairperson), Mendoza and Leonen, JJ.,

concur.
Del Castillo, J., On Leave.
Petition denied, resolution affirmed.
_______________
54 Rollo, p. 34.
55 Catorce v. Court of Appeals, 214 Phil. 181, 184-185; 129 SCRA
210, 215 (1984).
606


Page 13 of 14
Notes.·Under Section 8 of R.A. No. 3844, the
agricultural leasehold relation shall be abandoned only
under any of the following three circumstances, to wit: „(1)
abandonment of the landholding without the knowledge of
the agricultural lessor; (2) voluntary surrender of the
landholding by the agricultural lessee, written notice of
which shall be served three months in advance; or (3)
absence of the persons under Section 9 to succeed the
lessee.‰ (Coderias vs. Estate of Juan Chioco, 699 SCRA 684
[2013])
Under Section 7 of R.A. No. 3844, once the leasehold
relation is established, the agricultural lessee is entitled to
security of tenure and acquires the right to continue
working on the landholding. (Davao New Town
Development Corporation vs. Saliga, 712 SCRA 260 [2013])
··o0o··
© Copyright 2010 CentralBooks Inc. All rights reserved.

Page 14 of 14
Close Reader
Case Title:
LUZ FARMS, petitioner, vs. THE
HONORABLE SECRETARY OF THE
DEPARTMENT OF AGRARIAN VOL. 192, DECEMBER 4, 1990 51
REFORM, respondent.
Luz Farms vs. Secretary of the Department of Agrarian
Citation: 192 SCRA 51 Reform
More...
*
G.R. No. 86889. December 4, 1990.
Search Result
LUZ FARMS, petitioner, vs. THE HONORABLE
SECRETARY OF THE DEPARTMENT OF AGRARIAN
REFORM, respondent.
Agrarian Law; Constitutional Law; Comprehensive Agrarian

Reform Law; Statutes; In construing constitutional provisions
which are ambiguous or of doubtful meaning, the courts may
consider the intent of the framers of the Constitution.·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]).
Same; Same; Same; Same; 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.·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.
_______________
* EN BANC.
52
Luz Farms vs. Secretary of the Department of Agrarian Reform
Same; Same; Elements of Judicial Inquiry.·It has been

established that this Court will assume jurisdiction over a
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Page 1 of 11
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).
PETITION for prohibition to review the decision of the

Secretary of the Department of Agrarian Reform.

Enrique M. Belo for petitioner.
PARAS, J.:
This is a petition for prohibition with prayer for

restraining order and/or preliminary and permanent
injunction against the Honorable Secretary of the
Department of Agrarian Reform for acting without
jurisdiction in enforcing the assailed provisions of R.A. No.
6657, otherwise known as the Comprehensive Agrarian
Reform Law of 1988 and in promulgating the Guidelines
and Procedure Implementing Production and Profit
Sharing under R.A. No. 6657, insofar as the same apply to
herein petitioner, and further from performing an act in
violation of the constitutional rights of the petitioner.
As gathered from the records, the factual background of
this case, is as follows:
On June 10,1988, the President of the Philippines
approved R.A. No. 6657, which includes the raising of
livestock, poultry and swine in its coverage (Rollo, p. 80).
On January 2, 1989, the Secretary of Agrarian Reform
promulgated the Guidelines and Procedures Implementing
Production and Profit Sharing as embodied in Sections 13
and 32 of R.A. No. 6657 (Rollo, p. 80).
On January 9, 1989, the Secretary of Agrarian Reform
promulgated its Rules and Regulations implementing
Section 11 of
53
VOL. 192, DECEMBER 4, 1990 53

Reform
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

Page 2 of 11
(Rollo, pp. 2-36). Hence, this petition praying that
aforesaid laws, guidelines and rules be declared
unconstitutional. Meanwhile, it is also prayed that a writ
of preliminary injunction or restraining order be issued
enjoining public respondents from enforcing the same,
insofar as they are made to apply to Luz Farms and other
livestock and poultry raisers.
This Court in its Resolution dated July 4, 1989 resolved
to deny, among others, Luz Farms' prayer 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. 186187).
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
54

raising x x x."
(c) Section 13 which calls upon petitioner to execute a
production-sharing plan.
(d) Section 16(d) and 17 which vest on the Department of
Agrarian Reform the authority to summarily determine
the just compensation to be paid for lands covered by the
Comprehensive Agrarian Reform Law.
(e) Section 32 which spells out the production-sharing plan
mentioned in Section 13·
"x x x (W)hereby three percent (3%) of the gross sales from the
production of such lands are distributed within sixty (60) days of the
end of the fiscal year as compensation to regular and other farmworkers
in such lands over and above the compensation they currently receive:
Provided, That these individuals or entities realize gross sales in excess
of five million pesos per annum unless the DAR, upon proper
application, determine a lower ceiling.
In the event that the individual or entity realizes a profit, an
additional ten (10%) of the net profit after tax shall be distributed to
said regular and other farmworkers within ninety (90) days of the end of
the fiscal year. x x x."
The main issue in this petition is the constitutionality of

Sections 3(b), 11, 13 and 32 of R.A. No. 6657 (the

Page 3 of 11
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 pre-
55
VOL. 192, DECEMBER 4, 1990 55

scribe, 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. Excluding backyard raisers, about 80% of those
in commercial livestock and poultry production occupy five
hectares or less. The remaining 20% are mostly corporate
farms (Rollo, p. 11).
On the other hand, the public respondent argued that
livestock and poultry raising is embraced in the term

Page 4 of 11
"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.
56

Reform
It includes farming, horticulture, forestry, dairying, sugarmaking

xxx.
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 cove rage 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 land
devoted to any growth, including but not limited to crop
lands, saltbeds, fishponds, idle and abandoned land
(Record, CONCOM, August 7, 1986, Vol. III, p.11).

Page 5 of 11
57
VOL. 192, DECEMBER 4, 1990 57

Reform
The intention of the Committee is to limit the application

of the word "agriculture." Commissioner Jamir proposed to
insert the word "ARABLE" to distinguish this kind of
agricultural land from such lands as commercial and
industrial lands and residential properties because all of
them fall under the general classification of the word
"agricultural". This proposal, however, was not considered
because the Committee contemplated that agricultural
lands are limited to arable and suitable agricultural lands
and therefore, do not include commercial, industrial and
residential lands (Record, CONCOM, August 7, 1986, Vol.
III, p. 30).
In the interpellation, then Commissioner Regalado (now
a Supreme Court Justice), posed several questions, among
others, quoted as follows:
xxx xxx xxx

"Line 19 refers to genuine reform program founded on the
primary right of farmers and farmworkers. I wonder if it means
that leasehold tenancy is thereby proscribed under this provision
because it speaks of the primary right of farmers and
farmworkers to own directly or collectively the lands they till. As
also mentioned by Commissioner Tadeo, farmworkers include
those who work in piggeries and poultry projects.
I was wondering whether I am wrong in my appreciation that
if somebody puts up a piggery or a poultry project and for that
purpose hires farmworkers therein, these farmworkers will
automatically have the right to own eventually, directly or
ultimately or collectively, the land on which the piggeries and
poultry projects were constructed. (Record, CONCOM, August
2,1986, p. 618).
xxx xxx xxx."
The questions were answered and explained in the

statement of then Commissioner Tadeo, quoted as follows:
xxx xxx xxx

"Sa pangalawang katanungan ng Ginoo ay medyo hindi kami
nagkaunawaan. Ipinaaalam ko kay Commissioner Regalado na
hindi namin inilagay ang agricultural worker sa kadahilanang
kasama rito ang piggery, poultry at livestock workers. Ang
inilagay namin dito ay farm worker kaya hindi kasama ang
piggery, poultry at livestock workers (Record, CONCOM, August
2,1986, Vol. II, p. 621).
58

Reform
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

Page 6 of 11
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,
59
VOL. 192, DECEMBER 4, 1990 59

Reform
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

Page 7 of 11
Constitution, and Article VIII, Section 1 of the 1987
Constitution) and which power this Court has exercised in
many instances (Demetria v. Alba, 148 SCRA 208 [1987]).
PREMISES CONSIDERED, the instant petition is
hereby GRANTED. Sections 3(b), 11, 13 and 32 of R.A. No.
6657 insofar as the inclusion of the raising of livestock,
poultry and swine in its coverage as well as the
Implementing Rules and Guidelines promulgated in
accordance therewith, are hereby DECLARED null and
void for being unconstitutional and the writ of preliminary
injunction issued is hereby MADE permanent.
SO ORDERED.
Fernan (C.J.), Narvasa, Melencio-Herrera,

Gutierrez, Jr., Cruz, Gancayco, Padilla, Bidin, Griño-
Aquino, Medialdea and Regalado, JJ., concur.
Feliciano, J., On leave.
Sarmiento, J., See separate opinion.
SEPARATE OPINION
SARMIENTO, J.:
I agree that the petition be granted.

It is my opinion however that the main issue on the
validity of the assailed provisions of R.A. 6657 (the
Comprehensive Agrarian Reform Law of 1988) and its
Implementing Rules and Guidelines insofar as they
include the raising of livestock,
60

Reform
poultry, and swine in their coverage can not be

simplistically reduced to a question of constitutional
construction.
It is a well-settled rule that construction and
interpretation come only after it has been demonstrated
that application is impossible or inadequate without them.
A close reading however of the constitutional text in point,
specifically, Sec. 4, Art. XIII, particularly the phrase, "xxx
in case of other farmworkers, to receive a just share of the
fruits thereof," provides a basis for the clear and possible
coverage of livestock, poultry, and swine raising within the
ambit of the comprehensive agrarian reform program. This
accords with the principle that every presumption should
be indulged in favor of the constitutionality of a statute
and the court in considering the validity of a statute should
give it such reasonable construction1 as can be reached to
bring it within the fundamental law.
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,

Page 8 of 11
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,
2
both as to rights
conferred and responsibilities imposed.
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:
_______________
1 In re Guarina, 24 Phil. 37; Yu Cong Eng v. Trinidad, 70 L. ed., p.
1059.
2 Ichong v. Hernandez, 101 Phil. 1155.
61
VOL. 192, DECEMBER 4, 1990 61

Reform
xxx xxx xxx

No land is tilled and no crop is harvested in livestock and
poultry farming. There are no tenants nor landlords, only
employers and employees.
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

Page 9 of 11
farmworkers with that of agricultural tenants surfaces when one
considers contribution to output. Labor cost of livestock and
poultry farms is no more than 4% of total operating cost. The
96% balance represents inputs not obtained from the land nor
provided by the farmworkers·inputs such as feeds and
biochemicals (80% of the total cost), power cost, cost of money
and several others.
Moreover, livestock and poultry farmworkers are covered by
minimum wage law rather than by tenancy law. They are
entitled to social security benefits where tenant-farmers are not.
They are paid fixed wages rather than crop shares. And as in
any other industry, they receive additional benefits such as
allowances, bonuses, and other
62

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 3 (copra meal), banana
(banana pulp meal), and fish (fish meal).
xxx xxx xxx
In view of the foregoing, it is clear that both kinds of lands

are not similarly situated and hence, can not be treated
alike. Therefore, the assailed provisions which allow for
the inclusion of livestock and poultry industry within the
coverage of the agrarian reform program constitute invalid
classification and must accordingly be. struck down as
repugnant to the equal protection clause of the
Constitution.
Petition granted.
Notes.·The manner and content of the just

compensation provided in the CARP is not violative of the
Constitution. (Association of Small Landowners in the
Phil. Inc. vs. Sec. of Agrarian Reform, 175 SCRA 343).
Tenancy relations cannot be bargained away except for
strong reasons. These must be proved by competent
evidence. (Talavera vs. Court of Appeals, 182 SCRA 778).
··o0o··
________________
3 Rollo, 29-30.
63

Page 10 of 11

Page 11 of 11
Close Reader
Case Title:
DEPARTMENT OF AGRARIAN
REFORM, represented by OIC-
SECRETARY NASSER C. G.R. No. 170018. September 23, 2013.*
PANGANDAMAN, petitioner, vs. THE DEPARTMENT OF AGRARIAN REFORM, represented by
COURT OF APPEALS and BASILAN OIC-SECRETARY NASSER C. PANGANDAMAN,
AGRICULTURAL TRADING petitioner, vs. THE COURT OF APPEALS and BASILAN
CORPORATION (BATCO), AGRICULTURAL TRADING CORPORATION (BATCO),
respondents. respondents.
More... Agrarian Reform; Agricultural Lands; Comprehensive
Agrarian Reform Program (CARP); Under RA 6657, the
Comprehensive Agrarian Reform Program (CARP) shall cover all
Search Result public and private agricultural lands, including other lands of
the public domain suitable for agriculture, regardless of tenurial
arrangement and commodity produced; Lands devoted to
livestock, poultry, and swine raising are classified as industrial,
not agricultural lands and, thus, exempt from agrarian
reform.―Under RA 6657, the CARP shall cover all public and
private agricultural lands, including other lands of the
_______________
* SECOND DIVISION.
214
Department of Agrarian Reform vs. Court of Appeals
public domain suitable for agriculture, regardless of tenurial

arrangement and commodity produced. Section 3(c) thereof
defines „agricultural land‰ as land devoted to agricultural
activity and not classified as mineral, forest, residential,
commercial or industrial land. Lands devoted to livestock,
poultry, and swine raising are classified as industrial, not
agricultural lands and, thus, exempt from agrarian reform. As
such, the DAR has no power to regulate livestock farms.
Same; Same; Department of Agrarian Reform (DAR);
Jurisdiction; The determination of the landÊs classification as
either an agricultural or industrial land · and, in turn, whether
or not the land falls under agrarian reform exemption · must be
preliminarily threshed out before the Department of Agrarian
Reform (DAR), particularly, before the DAR Secretary.―The
determination of the landÊs classification as either an
agricultural or industrial land · and, in turn, whether or not
the land falls under agrarian reform exemption · must be
preliminarily threshed out before the DAR, particularly, before
the DAR Secretary. Verily, issues of exclusion or exemption
partake the nature of Agrarian Law Implementation (ALI) cases
which are well within the competence and jurisdiction of the
DAR Secretary. Towards this end, the latter is ordained to
exercise his legal mandate of excluding or exempting a property
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Page 1 of 17
from CARP coverage based on the factual circumstances of each
case and in accordance with the law and applicable
jurisprudence. Thus, considering too his technical expertise on
the matter, courts cannot simply brush aside his
pronouncements regarding the status of the land in dispute, i.e.,
as to whether or not it falls under CARP coverage.
Same; Same; In order to be entitled to exclusion/exemption, it
must be shown that the land is exclusively devoted to livestock,
swine or poultry raising.―It is settled that in order to be entitled
to exclusion/exemption, it must be shown that the land is
exclusively devoted to livestock, swine or poultry raising. The
land must be shown to have been used for such purposes as of
the effectivity of RA 6657, or on June 15, 1988, in order to
prevent any fraudulent declaration of areas supposedly used for
these purposes as well as to protect the rights of agrarian
beneficiaries therein. This is in consonance with Section 73(c) of
RA 6657 which prohibits the conversion by any landowner of his
agricultural land into any non-agricultural use with
215
VOL. 706, SEPTEMBER 23, 2013 215
intent to avoid the application of RA 6657 to his landholdings

and to dispossess his tenant farmers of the land tilled by them.
Same; Same; In order to be entitled to exemption, the
applicant must prove that: (a) the land sought to be excluded
from Comprehensive Agrarian Reform Program (CARP) coverage
is exclusively, directly and actually used for livestock, poultry and
swine raising as of June 15, 1988; (b) there should be one head of
cattle per hectare of land and seven heads of goat per hectare of
land; and (c) there should be 21 heads of cattle for every 1.7815
has. of infrastructure, 147 heads of goat or sheep for every 0.7205
hectare of infrastructure, and 21 heads of swine for every 0.5126
hectare of infrastructure.―Under DAR AO 09-93, in order to be
entitled to exemption, the applicant must prove that: (a) the land
sought to be excluded from CARP coverage is exclusively, directly
and actually used for livestock, poultry and swine raising as of
June 15, 1988; (b) there should be one head of cattle per hectare
of land and seven heads of goat per hectare of land; and (c) there
should be 21 heads of cattle for every 1.7815 has. of
infrastructure, 147 heads of goat or sheep for every 0.7205
hectare of infrastructure, and 21 heads of swine for every 0.5126
hectare of infrastructure. Consistent with the prohibition under
Section 73(c) of RA 6657, DAR AO 09-93 likewise provided that
„[a]ny act of a landowner to change or convert his agricultural
land to livestock, poultry and swine raising after [June 15, 1988],
with the intent to avoid the application of [RA 6657] to his
landholdings, shall be considered invalid and illegal and shall
not affect the coverage of his landholding under CARP.‰
SPECIAL CIVIL ACTION in the Supreme Court.

Certiorari.
De los Reyes & De los Reyes-Kong Law Offices for
respondent.
Ong, Saavedra, Doctolero Law Offices co-counsel for
respondent.

Page 2 of 17
216

PERLAS-BERNABE, J.:
Assailed in this petition for certiorari1 is the Decision2
dated September 6, 2005 of the Court of Appeals (CA) in
CA-G.R. SP No. 55377 which: (a) reversed and set aside
the Order3 dated February 25, 1999 of the Secretary of the
Department of Agrarian Reform (DAR); (b) cancelled
Transfer Certificates of Title (TCT) Nos. T-1012,4 T-1013,5
and T-10146 in the name of Malo-ong Canal Farmers
Agrarian Reform Multi-Purpose Cooperative
(MCFARMCO); and (c) directed the Registry of Deeds of
the Province of Basilan (Basilan RD) to issue a new set of
titles in favor of private respondent Basilan Agricultural
Trading Corporation (BATCO).
The Facts
BATCO was the owner of several parcels of agricultural
land, with an aggregate area of 206.5694 hectares (has.),
situated in Malo-ong7 Canal, Lamitan, Province of Basilan
(Basilan) and covered by TCT Nos. T-7454,8 T-7455,9 and T-
745610 (subject lands).11 On September 20, 1989, the
aforesaid lands were voluntarily offered for sale (VOS) to
the govern-
_______________
1 Rollo, pp. 2-21.
2 Id., at pp. 23-37. Penned by Associate Justice Arturo G. Tayag, with
Associate Justices Rodrigo F. Lim, Jr. and Normandie B. Pizarro,
concurring.
3 CA Rollo, pp. 11-15. Penned by then DAR Secretary Horacio R.
Morales, Jr.
4 Id., at pp. 65-66. Including the dorsal portion.
7 „Maloong‰ in some parts of the records.
8 CA Rollo, pp. 49-50.
217
VOL. 706, SEPTEMBER 23, 2013 217

ment pursuant to Section 1912 of Republic Act No. (RA)

6657,13 otherwise known as the „Comprehensive Agrarian
Reform Law of 1988,‰ for a consideration of
P12,360,000.00.14 In 1992, BATCO was notified15 that the
153.8801 hectare portion of the subject lands (subject
portion), consisting of Lot Nos. 3, 4, and 5, was being
placed under the compulsory acquisition scheme by the
DAR. 16
On January 6, 1993, BATCO reiterated its offer to sell
the entire 206.5694 has. of the subject lands, but this time
to include the improvements thereon, and for a higher
consideration of P32,000,000.00.17 On May 6, 1997,

Page 3 of 17
BATCO received a Notice of Land Valuation and
Acquisition18 dated April 15, 1997 from the DAR Provincial
Agrarian Reform Officer (PARO), offering it the amount of
P7,501,228.39 for the subject portion.19 BATCO rejected20
the valuation and opposed the same before the DAR
Adjudication Board (DARAB).21 In view of BATCOÊs
rejection, the DAR · following the procedure
_______________
12 Section 19. Incentives for Voluntary Offers for Sales.·
Landowners, other than banks and other financial institutions, who
voluntarily offer their lands for sale shall be entitled to an additional
five percent (5%) cash payment.
13 „AN ACT INSTITUTING A COMPREHENSIVE AGRARIAN REFORM PROGRAM TO
PROMOTE SOCIAL JUSTICE AND INDUSTRIALIZATION, PROVIDING THE MECHANISM
FOR ITS IMPLEMENTATION, AND FOR OTHER PURPOSES.‰
14 Rollo, p. 38.
15 The 1992 Notice of Coverage, however, is not appended to the
records of the case.
16 Rollo, pp. 45, 55, and 327.
17 Id., at pp. 41-42.
18 Id., at p. 44.
19 Id., at pp. 55 and 272.
20 Id., at p. 45. LandownerÊs Reply to Notice of Land Valuation and
Acquisition.
21 Id., at p. 48. To note, the records do not show the outcome of the
case.
218

under Section 16(e)22 of RA 6657 · directed the Land

Bank of the Philippines (LBP) to deposit the compensation
in cash and in agrarian reform bonds23 and thereafter
requested24 the Basilan RD to issue TCTs in the name of
the Republic of the Philippines (Republic). In the
meantime, the subject portion was surveyed and the
beneficiaries were accordingly identified. After which, DAR
Regional Director Rogelio E. Tamin (Director Tamin)
directed the PARO to generate and issue the corresponding
Certificates of Land Ownership (CLOAs) in favor of the
identified beneficiaries even over BATCOÊs protest.25
On February 9, 1998, then DAR Secretary Ernesto
Garilao directed Director Tamin and the PARO to proceed
with the registration and distribution of the CLOAs to the
said identified beneficiaries.26
_______________
22 Section 16. Procedure for Acquisition of Private Lands.·For
purposes of acquisition of private lands, the following procedures shall
be followed:
xxxx
e) Upon receipt by the landowner of the corresponding
payment or, in case of rejection or no response from the
landowner, upon the deposit with an accessible bank
designated by the DAR of the compensation in cash or
in LBP bonds in accordance with this Act, the DAR shall

Page 4 of 17
take immediate possession of the land and shall request
the proper Register of Deeds to issue a Transfer
Certificate of Title (TCT) in the name of the Republic of
the Philippines. The DAR shall thereafter proceed with the
redistribution of the land to the qualified beneficiaries.
(Emphases supplied)
23 Rollo, p. 46. See Certification of Deposit dated June 13, 1997.
24 Id., at p. 326.
25 Id., at pp. 47-50. See Order dated December 3, 1997.
26 Id., at p. 55.
219
VOL. 706, SEPTEMBER 23, 2013 219

In a letter dated March 2, 1998 to Director Tamin,27

BATCO requested for the exemption of the subject portion,
citing the case of Luz Farms v. DAR Secretary28 (Luz
Farms) and DAR Administrative Order No. (AO) 09, Series
of 199329 (DAR AO 09-93).30 On May 6, 1998, BATCO filed
before the DAR Regional Office a petition31 for the
exemption of the subject portion from the coverage of the
governmentÊs Comprehensive Agrarian Reform Program
(CARP). It alleged that almost all of the entire subject
lands have been devoted to cattle and livestock production
since their acquisition in 1987,32 warranting their
exemption from CARP coverage in accordance with the
ruling in Luz Farms and the provisions of DAR AO 09-93.
It claimed that as of March 15, 1998, there were 150 heads
of cattle, 50 heads of swine, and 50 heads of goats in the
subject portion.33 Meanwhile, BATCOÊs certificates of title
over the foregoing were cancelled and new titles were
issued in the name of the Republic on July 17, 1998.34
The DAR Regional DirectorÊs Ruling
On August 12, 1998, Director Tamin issued an Order35
(August 12, 1998 Order) dismissing BATCOÊs petition,
holding
_______________
27 Id., at p. 56. A copy of BATCOÊs letter was not appended to the
records. See Order dated August 12, 1998.
28 G.R. No. 86889, December 4, 1990, 192 SCRA 51.
29 „RULES AND REGULATIONS GOVERNING THE EXCLUSION OF AGRICULTURAL
LANDS USED FOR LIVESTOCK, POULTRY AND SWINE RAISING FROM THE COVERAGE
OF THE COMPREHENSIVE AGRARIAN REFORM PROGRAM (CARP).‰
30 Rollo, p. 86.
31 Id., at pp. 51-53. Docketed as PPARU Case No. 0905-0005-98.
32 Id., at p. 52.
33 Id., at pp. 51-52.
34 CA Rollo, pp. 59-64. TCT Nos. T-12101, T-12102, and T-12103.
Including the dorsal portions.
35 Rollo, pp. 54-58.
220

that based on the DARÊs ocular inspection/investigation,

Page 5 of 17
the subject portion was „not exclusively, directly and
actually used for livestock, poultry, and swine raising as of
June 15, 1988[,] the date of effectivity of RA 6657, and
contrary to the spirit and intent of [DAR AO 09-93].‰36
Hence, the subject portion is not exempt from CARP
coverage. Moreover, under DAR AO 09, Series of 1990,
VOS of lands to the government, with the exception of
lands within the retention limits, may no longer be
withdrawn.37
BATCO appealed38 to the Office of the DAR Secretary,
reiterating39 its claim that the subject portion was devoted
to cattle production prior to June 15, 1988 as evidenced by
the appended certificates of ownership of large cattle
(certificates of livestock ownership) which, according to it,
„should have been the major basis in the determination of
whether or not a particular landholding is devoted to such
production, as claimed.‰40
In the interim, the RepublicÊs certificates of title were
cancelled on October 6, 1998 with the registration of the
CLOAs in the name of MCFARMCO for the benefit of its
54 members. Accordingly, new certificates of title,41 i.e.,
TCT Nos. T-1012, T-1013, and T-1014, were issued in favor
of MCFARMCO.
The DAR SecretaryÊs Ruling
On February 25, 1999, then DAR Secretary Horacio R.
Morales, Jr. (Secretary Morales) issued an Order42
(February 25, 1999 Order), denying the appeal on the
ground that BATCO failed: 1) to present substantial
evidence to show that
_______________
36 Id., at p. 57.
37 Id., at pp. 56-57.
38 Id., at p. 59. See Notice of Appeal dated September 15, 1998.
39 Id., at pp. 60-68. See Appeal Memorandum.
40 Id., at p. 65.
41 CA Rollo, pp. 65-70. Including the dorsal portions.
42 Id., at pp. 11-15.
221
VOL. 706, SEPTEMBER 23, 2013 221

the subject portion was exclusively, directly and actually

used for livestock, poultry, and swine raising prior to June
15, 1988; and 2) to comply with the livestock and
infrastructure requirements under DAR AO 09-93.43
Secretary Morales ob-
_______________
43 Part III (B) and (C) of DAR AO 09-93 provide:
B. In determining the areas qualified for exclusion under
this Administrative Order, the following ratios of land,
livestock, poultry, and swine raising shall be adopted:
1.0 Grazing
1.1 Cattle, Carabao and Horse Raising
― cattle, carabao and horses (regardless of age) ― the
maximum ratio is one (1) head to one (1) hectare.
1.2 Sheep and Goat Raising
― sheep and goat (regardless of age) ― the maximum ratio is

Page 6 of 17
seven (7) heads to one (1) hectare.
2.0 Infrastructure
2.1 Cattle, Horses and Carabao Raising ― a ratio of 21
heads, for every 1.7815 hectares of infrastructure
xxxx
2.2 Swine Raising ― a ratio of 21 heads of hogs for every
0.5126 hectare of infrastructure.
xxxx
2.3 Sheep and Goat Raising ― a ratio of 147 heads for every
0.7205 hectare of infrastructure.
xxxx
2.4 Poultry Raising ― a ratio of 500 layers for every 0.53
hectare of infrastructure or 1,000 broilers for every 1.428
hectares of infrastructure.
xxxx
C. Any act of a landowner to change or convert his agricultural
land to livestock, poultry and swine raising after, 15 June 1988,
with the intent to avoid the application of R.A. No. 6657 to his
landholdings, shall be considered invalid and illegal and shall
not affect the coverage of his landholding under CARP
Conversion of crop lands to livestock, poultry and swine raising
after the effectivity of this Administrative Order shall be
governed by DAR Administrative Order Nos. 1 and 2, Series of
1990.
However, in lieu of Documentary Requirement Nos. 5 and 6
under Section VII of said Administrative Order No. 1-90, i.e.,
222

served that: (a) none of the certificates of livestock

ownership appended to the records predates the effectivity
of RA 6657;44 (b) more than half45 of the cattle „was
registered and presumably brought into the property only
on March 13, 1998 onwards, barely three months before
[BATCO] filed [its] application for exemption with the DAR
Provincial Office on May 6, 1998‰;46 and (c) BATCOÊs act of
submitting the subject lands (including the subject portion)
under the VOS scheme is an admission that they were
subject to CARP coverage.47 Finding that the act of
changing or converting the lands to livestock, poultry and
swine raising after June 15, 1988 was without an approved
conversion, Secretary Morales directed the Municipal
Agrarian Reform Officer concerned to conduct an
investigation48 for possible violations of Section 73(c) and
(e) of RA 6657.49
_______________
Certification from the Department of Agriculture (DA) or
Housing Land Use Regulatory Board (HLURB) respectively, the
consent of Agrarian Reform Beneficiaries and/or their waiver of
rights, and a certification from the Regional Director of the DA
that the poultry, livestock or swine project is of greater economic
value than the present agricultural usage, shall be required.
44 Rollo, p. 70.
45 Id. The dates of the certificates of ownership of large cattle and
the corresponding heads of cattle thereon are as follows:

Page 7 of 17
July 21, 1988 10
July 22, 1988 17
March 4, 1990 19
March 9, 1990 30
March 13, 1998 55 55
April 1, 1998 6 6
April 2, 1998 19 19
156 80
46 Id., at p. 71.
47 Id.
48 Id., at p. 72.
49 Section 73(c) and (e) of RA 6657 provide:
223
VOL. 706, SEPTEMBER 23, 2013 223

BATCO filed a motion for reconsideration50 and a

supplemental motion,51 averring that prior to its
acquisition of the subject lands from the Marcelo Mendoza
Development Corporation (Mendoza Plantation) on
February 4, 1987, the latter was already engaged in
livestock raising and had facilities such as shade/barn, feed
storage, corals and gates, which BATCO subsequently
improved and developed.52 BATCO further admitted that
only a portion (about 100 has.) of the subject lands was
devoted to livestock raising, for which the corresponding
exemption was prayed.53 It explained that the necessary
documents were in the possession of the previous owner,
hence, it was unable to produce the same before the DAR
Regional Director.54 In support of the foregoing motions,
BATCO submitted,55 among others, Certificates of
Ownership
_______________
Sec. 73. Prohibited Acts and Omissions.·The following are
prohibited:
xxxx
(c) The conversion by any landowner of his agricultural land into
any non-agricultural use with intent to avoid the application of this Act
to his landholdings and to dispossess his tenant farmers of the land
tilled by them.
xxxx
(e) The sale, transfer, conveyance or change of the nature of lands
outside of urban centers and city limits either in whole or in part after
the effectivity of this Act. The date of the registration of the deed of
conveyance in the Register of Deeds with respect to titled lands and the
date of the issuance of the tax declaration to the transferee of the
property with respect to unregistered lands, as the case may be, shall be
conclusive for the purpose of this Act.
xxxx
50 Rollo, pp. 74-76.
51 Id., at pp. 77-82.
52 Id., at p. 78.
53 Id., at p. 81.
54 Id., at pp. 74-75.
55 Id., at pp. 79-80.
224

Page 8 of 17
of Large Cattle Nos. B-3144051 to B-314415056 dated

between July 10, 1987 to August 15, 1987,57 and the Joint
Affidavit58 of barangay officials of Barangays Tumakid,
Maloong San Jose, Maloong Canal, and Buahan, all in
Lamitan, Basilan declaring that BATCO is engaged in
large cattle raising. Nonetheless, BATCO affirmed that it
is still offering 100 has. of the subject lands for the
CARP.59
On August 31, 1999, Secretary Morales issued an
Order60 denying BATCOÊs motion for reconsideration. He
gave no credence to the certificates of livestock ownership
belatedly submitted by BATCO, observing that the absence
of a sufficient justification for its failure to present such
certificates earlier casts doubt to their veracity and
genuineness.61 Further, he held that laches had set in,
especially considering that the petition was filed only in
1998, or long after the orders for coverage were issued in
1992.62 Finally, he pointed out that BATCO failed to
present proof that it has met the infrastructure
requirements under DAR AO 09-93.63
The Proceedings Before the CA
BATCOÊs appeal was initially dismissed64 but

subsequently reinstated by the CA.65
_______________
56 Not appended to the records of the case.
57 Rollo, pp. 85-86.
58 CA Rollo, pp. 216-217.
59Rollo, p. 81.
60 Id., at pp. 83-90.
61 Id., at p. 87.
62 Id., at pp. 87-88.
63 Id., at p. 89.
64 CA Rollo, pp. 353-356. See Resolution dated December 29, 1999.
Penned by Associate Justice Ruben T. Reyes (now retired Associate
Justice of the Supreme Court), with Associate Justices Teodoro P.
Regino and Edgardo P. Cruz, concurring.
65 Id., at pp. 365-367. See Resolution dated April 6, 2004. Penned by
Associate
225
VOL. 706, SEPTEMBER 23, 2013 225

On September 6, 2005, the CA issued a Decision66

reversing and setting aside Secretary MoralesÊ February
25, 1999 Order. It ruled that estoppel does not lie against
BATCO considering that the pertinent law and regulations
did not provide for a prescriptive period for the filing of
exemption from CARP coverage.67 Moreover, in the light of
Luz Farms, a petition for exemption is not even necessary
so long as the landholdings are devoted to livestock,
poultry, and swine raising, thus, rendering DAR AO 09-93
ineffective and inconsequential.68
The CA gave credence to BATCOÊs documentary
evidence to support its claim of the existence and presence

Page 9 of 17
of livestock in the lands in question starting the year 1987
consisting of: (a) the Certification69 dated March 26, 1998
of the Municipal Agriculturist of Lamitan, Basilan
(Municipal Agriculturist Certification) as to the number of
cattle found in the area; (b) the photographs70 of the
livestock therein allegedly taken on May 31, 2001 and July
5, 2005; and (c) the affidavits71 of former municipal
mayors72 of Lamitan, Basilan · namely, Wilfrido C.
Furigay and Ramon Garcia, Jr. · attesting to the
existence and presence of livestock in the subject lands
starting the year 1987. The CA likewise condemned the
cancellation of BATCOÊs certificates of title prior to full
payment of the compensation and prior to the decision on
the petition for exemption as violative of BATCOÊs right to
procedural and
_______________
Justice Ruben T. Reyes (now retired Associate Justice of the Supreme
Court), with Associate Justices Edgardo P. Cruz and Rosalinda
Asuncion-Vicente, concurring.
66 Rollo, pp. 23-37.
67 Id., at pp. 27-28.
68 Id., at pp. 28-29.
69 CA Rollo, p. 218.
70 Id., at pp. 205-212.
71 Id., at pp. 213-215.
72 Id., at p. 221. Mayor Inocente J. Ramos, on the other hand, merely
certified as to the number of cattle owned by BATCO as of January 6,
2003.
226

substantive due process.73 Corollarily, the CA cancelled

TCT Nos. T-1012, T-1013 and T-1014 in the name of
MCFARMCO and directed the Basilan RD to issue a new
set of titles in BATCOÊs favor.74
The Issue Before the Court
The essential issue in this case is whether or not the CA
gravely abused its discretion in excluding/exempting the
subject lands from CARP coverage despite BATCOÊs
admission that only a portion thereof was devoted to
livestock raising and considering its previous voluntary
offer of the lands to the government under the VOS
scheme.
The CourtÊs Ruling
The petition is meritorious.
Under RA 6657, the CARP shall cover all public and
private agricultural lands, including other lands of the
public domain suitable for agriculture, regardless of
tenurial arrangement and commodity produced.75 Section
3(c) thereof
_______________
73 Rollo, p. 33.
74 Id., at p. 36.
75 Section 4 of RA 6657 provides:
SEC. 4. Scope.·The Comprehensive Agrarian Reform Law of 1988
shall cover, regardless of tenurial arrangement and commodity

Page 10 of 17
produced, all public and private agricultural lands as provided in
Proclamation No. 131 and Executive Order No. 229, including other
lands of the public domain suitable for agriculture.
More specifically, the following lands are covered by the Comprehensive
Agrarian Reform Program:
(a) All alienable and disposable lands of the public domain devoted to
or suitable for agriculture. No reclassification of forest or mineral lands
to agricultural lands shall be undertaken after the approval of this Act
until Congress, taking into ac-
227
VOL. 706, SEPTEMBER 23, 2013 227

defines „agricultural land‰ as land devoted to agricultural

activity and not classified as mineral, forest, residential,
commercial or industrial land. Lands devoted to livestock,
poultry, and swine raising are classified as industrial, not
agricultural lands and, thus, exempt from agrarian reform.
As such, the DAR has no power to regulate livestock
farms.76
Nevertheless, the determination of the landÊs
classification as either an agricultural or industrial land ·
and, in turn, whether or not the land falls under agrarian
reform exemption · must be preliminarily threshed out
before the DAR, particularly, before the DAR Secretary.
Verily, issues of exclusion or exemption partake the nature
of Agrarian Law Implementation (ALI) cases which are
well within the competence and jurisdiction of the DAR
Secretary.77 Towards this end, the latter is ordained to
exercise his legal mandate of excluding or exempting a
property from CARP coverage based on the factual
circumstances of each case and in accordance with the law
and applicable jurisprudence.78 Thus, considering too his
technical expertise on the matter, courts cannot simply
brush aside his pronouncements regarding the status of
the land in dispute, i.e., as to whether or not it falls under
CARP coverage. As held in DAR v. Oroville Development
Corp.:79
_______________
count ecological, developmental and equity considerations,
shall have determined by law, the specific limits of the public
domain;
(b) All lands of the public domain in excess of the specific limits as
determined by Congress in the preceding paragraph;
(c) All private lands devoted to or suitable for agriculture regardless of
the agricultural products raised or that can be raised thereon.
76 DAR v. Sutton, G.R. No. 162070, October 19, 2005, 473 SCRA 392,
400.
77 Milestone Farms, Inc. v. Office of the President, G.R. No. 182332,
February 23, 2011, 644 SCRA 217, 239.
78 Id., at p. 240.
79 548 Phil. 51, 58; 519 SCRA 112, 118 (2007).
228


Page 11 of 17
We cannot simply brush aside the DARÊs
pronouncements regarding the status of the
subject property as not exempt from CARP
coverage considering that the DAR has
unquestionable technical expertise on these
matters. Factual findings of administrative agencies
are generally accorded respect and even finality by this
Court, if such findings are supported by substantial
evidence, a situation that obtains in this case. The
factual findings of the Secretary of Agrarian
Reform who, by reason of his official position, has
acquired expertise in specific matters within his
jurisdiction, deserve full respect and, without
justifiable reason, ought not to be altered,
modified or reversed. (Emphases supplied)
It is settled that in order to be entitled to exclusion/

exemption, it must be shown that the land is exclusively
devoted to livestock, swine or poultry raising.80 The land
must be shown to have been used for such purposes as of
the effectivity of RA 6657, or on June 15, 1988,81 in order
to prevent any fraudulent declaration of areas supposedly
used for these purposes as well as to protect the rights of
agrarian beneficiaries therein. This is in consonance with
Section 73(c) of RA 6657 which prohibits the conversion by
any landowner of his agricultural land into any non-
agricultural use with intent to avoid the application of RA
6657 to his landholdings and to dispossess his tenant
farmers of the land tilled by them.
A thorough review of the records reveals no substantial
evidence to show that the entirety of the subject lands
were exclusively devoted to livestock production since June
15, 1988 so as to warrant their exclusion/exemption from
CARP coverage and the consequent cancellation of
MCFARMCOÊs certificates of title. In fact, contrary to its
original submission that almost all of the entire 206.5694
has. landholding has been
_______________
80 See DAR v. Sutton, supra note 76, at p. 399.
81 See Junio v. Garilao, G.R. No. 147146, July 29, 2005, 465 SCRA
173.
229
VOL. 706, SEPTEMBER 23, 2013 229

devoted to cattle and livestock production since their

acquisition in 1987,82 BATCO subsequently admitted in its
Supplemental Motion for Reconsideration of the Order
dated 25 February 199983 (supplemental motion for
reconsideration) that only a portion of the subject lands
was actually devoted to livestock raising, for which the
exemption of not less than 100 has. was sought.84 On this
score alone, the CA gravely abused its discretion in
declaring the subject lands as exempt from CARP coverage
and ordering the cancellation of MCFARMCOÊs certificates
of title and the issuance of new titles in BATCOÊs favor.
It must be further pointed out that the subject lands
were offered by BATCO to the government under the VOS
scheme on September 20, 1989,85 which offer was

Page 12 of 17
reiterated on January 6, 199386 without any claim of
exemption, notwithstanding the existence of the Luz
Farms ruling (which was promulgated on December 4,
1990). In fact, the subject portion was acquired by the
government in 1992 and still BATCO never sought
exemption under Luz Farms. While it protested the
valuation of the DAR87 during its VOS, it did not, at that
time, seek any exemption from CARP coverage. BATCO
only raised the claimed exemption when it filed the
petition for exemption before the DAR Regional Director on
May 6, 1998. However, the petition was filed on the basis of
DAR AO 09-93,88 and accordingly denied by the DAR
Regional Director89 and the DAR Secretary90 for failing to
meet the requirements set
_______________
82 Rollo, p. 52.
83 Id., at pp. 77-82.
84 Id., at p. 81.
85 Id., at p. 38.
86 Id., at pp. 41-42.
87 Id., at pp. 47-50. See Order dated December 3, 1997.
88 Id., at pp. 52-53.
89 Id., at pp. 54-58. See Order dated August 12, 1998.
90 Id., at pp. 69-73 (Order dated February 25, 1999) and id., at pp.
83-90 (Order dated August 31, 1999).
230

forth therein. While the Court struck down DAR AO 09-93

as unconstitutional in the case of DAR v. Sutton91 (Sutton)
on October 19, 2005, the DAR Decisions and even the CA
Decision dated September 6, 2005 in CA-G.R. SP No.
55377 were all rendered at the time that the said AO was
still subsisting and in full force and effect. Consequently, in
view of the prospectivity principle of judicial decisions92
and the operative fact doctrine,93 the petition for
exemption must be resolved under the provisions of the
said AO.
Under DAR AO 09-93, in order to be entitled to
exemption, the applicant must prove that: (a) the land
sought to be excluded from CARP coverage is exclusively,
directly and actually used for livestock, poultry and swine
raising as of June 15, 1988; (b) there should be one head of
cattle per hectare of land and seven heads of goat per
hectare of land; and (c) there should be 21 heads of cattle
for every 1.7815 has. of infrastructure, 147 heads of goat or
sheep for every 0.7205 hectare of infrastructure, and 21
heads of swine for every 0.5126 hectare of infrastructure.
Consistent with the prohibition under Section 73(c) of RA
6657, DAR AO 09-93 likewise provided that „[a]ny act of a
landowner to change or convert his agricultural land to
livestock, poultry and swine raising after [June 15, 1988],
with the intent to avoid the application of [RA 6657] to his
landholdings, shall be considered invalid and illegal and
shall not affect the coverage of his landholding under
CARP.‰
It bears noting that the denial of the petition for

Page 13 of 17
exemption by the DAR Regional Director was based on an
ocular inspection/investigation conducted by the DAR
provincial personnel in Basilan.94 The rationale for the
denial of the petition was
_______________
91 Supra note 76.
92 See Co v. Court of Appeals, G.R. No. 100776, October 28, 1993, 227
SCRA 444.
93 See Chavez v. Judicial and Bar Council, G.R. No. 202242, July 17,
2012, 676 SCRA 579.
94 Rollo, p. 57.
231
VOL. 706, SEPTEMBER 23, 2013 231

also clearly outlined in the February 25, 1999 Order95 of

the DAR Secretary who observed that: (a) none of the 156
certificates of livestock ownership submitted by BATCO
predates the effectivity of RA 6657;96 (b) more than half (80
out of 156)97 of the cattle was brought into the property
only a few months before the petition was filed; (c) the
municipal agriculturist certified the presence of only 120
heads of cattle,98 which is short of the minimum
requirement under DAR AO 09-93;99 and (d) no evidence
was presented to prove the presence of hogs and goats as
well as of BATCO having met the infrastructure
requirements under DAR AO 09-93.100 There being no
cogent reason to deviate from the foregoing, the Court is
impelled to sustain the DAR SecretaryÊs findings.
To note, in denying BATCOÊs motion for reconsideration,
the DAR Secretary also observed that, contrary to
BATCOÊs claim that the additional certificates of livestock
ownership it undertook to produce further were in the
name of the Mendoza Plantation from which it purchased
the subject lands in 1987, the certificates eventually
submitted with its supplemental motion for
reconsideration were actually under its name. Accordingly,
the DAR Secretary cannot be faulted for not giving
credence to the same.
In fact, even if the Court were to apply Sutton
retroactively and disregard DAR AO 09-93, the pieces of
evidence relied upon by the CA actually failed to establish
the theory that the entirety of the subject lands or specific
portions thereof are exclusively devoted to the raising of
cattle, swine and goat as of June 15, 1988. The Court notes
that the Municipal Agriculturist Certification101 dated
March 26, 1998, which the CA
_______________
95 CA Rollo, pp. 11-15.
96Rollo, p. 70.
97 Id. See also footnote 45.
99 Rollo, p. 71.
100 Id.
101 CA Rollo, p. 218.
232

Page 14 of 17
appreciated in favor of BATCO, merely stated that the

subject lands are „suitable for cattle production since
before it was acquired and transferred to BATCO
PLANTATION.‰102 On the other hand, the Affidavits103 of
former municipal mayors confirming their issuance of
several certificates of livestock ownership during their
respective terms were only presented before the CA and
were not backed up by copies of the certificates themselves.
Moreover, while the former municipal mayors attested to
the existence and presence of livestock in the subject lands
starting the year 1987, they commonly described the
subject lands as a vast tract of land principally devoted to
coconut production, which was extensively inter-cropped
with coffee, rubber, black pepper, and cacao trees after
BATCOÊs acquisition.104 These descriptions are insufficient
to establish BATCOÊs claimed exemption as what is
required is exclusive devotion of the lands to the raising of
cattle, swine and goat as of June 15, 1988.
More pertinently, the Court further notes that contrary
to BATCOÊs representations in its petition for exemption,
the primary land use of the subject lands105 as declared by
BATCO itself in its landownerÊs reply to notice of land
valuation and acquisition106 (landowners reply) dated May
6, 1997, negates its own claim that the said lands were
exclusively devoted for the raising of cattle, swine and
goat, viz.:
Lot Land Use Area

AcqÊd
3 Cocoland 8.9917
Cocoland/Coffee 10.0000
Sub-total 18.9917
_______________
102 Id.
103 Id., at pp. 213-217.
104 Id.
105 Namely, Lot Nos. 3, 4, and 5 of TCT Nos. T-7454, T-7455, and T-
7456.
106 Rollo, p. 45.
233
VOL. 706, SEPTEMBER 23, 2013 233

4 Cocoland 44.4733
Coco/Coffee 8.0000
Coco/Rubber 1.5000
Coco/Black Pepper 1.5000
Coco/Black Pepper/Rubber 1.5000
Sub-total 56.9733
5 Cocoland 10.0000
Cocoland/Coffee 67.9151
Sub-total 77.9151
GRAND TOTAL
153.8801107

Page 15 of 17
In this accord, the Court finds that BATCOÊs claim of a
different land use in its petition for exemption was only a
mere afterthought which, therefore, cannot be
countenanced.
Finally, the Court cannot give credence to BATCOÊs
claim of denial of due process when its certificates of title
were cancelled and new ones were issued in favor of the
Republic prior to the issuance of the DAR Regional
DirectorÊs August 12, 1998 Order. While the final
resolution of petitions for exemption, as a rule, should
precede the placing of the property under the CARP and
the issuance of the CLOA to the beneficiaries,108 it bears
stressing that the subject lands had already been placed
under the CARP coverage in 1992, or long before the
petition for exemption was filed by BATCO on May 6, 1998.
In the meantime, the actions undertaken by BATCO such
as the VOS on January 6, 1993,109 the counter-offer of
valuation for the subject lands according to their declared
land uses as contained in the aforementioned landownerÊs
reply110 dated May 6, 1997, the letter-protest dated May
23, 1997 (which challenged the survey of the lands), and
the iden-
_______________
107 Id.
108 See DAR v. Estate of Pureza Herrera, G.R. No. 149837, July 8,
2005, 463 SCRA 107, 123-124.
109 Rollo, pp. 41-42.
110 Id., at p. 4
234

tification of the beneficiaries grounded on its alleged

failure to choose the retention area,111 all affirmed the
coverage of the subject lands under the CARP. Considering
further that the claim of denial of due process was never
raised in the proceedings before the DAR but belatedly
brought up only in its Memorandum112 dated July 28, 2005
filed before the CA113 and in the absence of showing that
the same prevented it from presenting its case before the
DAR officials, it cannot be said that BATCO was denied
due process. Neither was it deprived of its properties
without just compensation given that after it rejected the
DARÊs valuation on May 6, 1997, the DAR immediately
caused the deposit of the compensation in cash and in
agrarian reform bonds on June 11, 1997.114 All told, the
denial of BATCOÊs petition for exemption was proper. In
view of its contrary ruling, and the absence of any
substantial bases therefor, the Court finds that the CA
gravely abused its discretion in reversing the DAR
SecretaryÊs February 25, 1999 Order.
WHEREFORE, the petition is GRANTED. The
Decision dated September 6, 2005 of the Court of Appeals
in CA-G.R. SP No. 55377 is hereby REVERSED AND
SET ASIDE and a new judgment is rendered
REINSTATING the Order dated February 25, 1999 of the

Page 16 of 17
Department of Agrarian Reform Secretary dismissing
private respondent Basilan Agricultural Trading
CorporationÊs petition for exemption.
SO ORDERED.
Carpio (Chairperson), Brion, Del Castillo and Perez,

JJ., concur.
_______________
111 Id., at p. 47.
112 CA Rollo, pp. 166-188.
113 It was not even raised in BATCOÊs petition for review before the
CA. See id., at pp. 25-35.
114 Rollo, p. 46.
235
VOL. 706, SEPTEMBER 23, 2013 235

Petition granted, judgment reversed and set aside.
Notes.―Pubic lands not shown to have been

reclassified or released as alienable agricultural land or
alienated to a private person by the State remain part of
the inalienable public domain. (Republic vs. Espinosa, 623
SCRA 382 [2010])
Vested rights which have already accrued cannot just be
taken away by the expedience of issuing a local zoning
ordinance reclassifying an agricultural land into a
residential/commercial area. (Heirs of Dr. Jose Deleste vs.
Land Bank of the Philippines [LBP], 651 SCRA 352 [2011])
――o0o――

Page 17 of 17
Close Reader
Case Title:
REFORM, QUEZON CITY PABLO
MENDOZA, petitioners, vs. ROMEO
C. CARRIEDO, respondent. G.R. No. 176549. January 20, 2016.*
More... DEPARTMENT OF AGRARIAN REFORM, QUEZON
CITY & PABLO MENDOZA, petitioners, vs. ROMEO C.
CARRIEDO, respondent.
Search Result
Agrarian Reform; Retention Limit; The 1987 Constitution
expressly recognizes landowner retention rights under Article
XIII, Section 4.·The 1987 Constitution expressly recognizes
landowner retention rights under Article XIII, Section 4, to wit:
Section 4. The State shall, by law, undertake an agrarian
reform program founded on the right of farmers and regular
farmworkers, who are
_______________
* THIRD DIVISION.
302

Department of Agrarian Reform, Quezon City vs. Carriedo
landless, to own directly or collectively the lands they till or,

in the case of other farmworkers, to receive a just share of the
fruits thereof. To this end, the State shall encourage and
undertake the just distribution of all agricultural lands,
subject to such priorities and reasonable retention limits
as the Congress may prescribe, taking into account
ecological, developmental, or equity considerations, and subject
to the payment of just compensation. In determining retention
limits, the State shall respect the right of small landowners. The
State shall further provide incentives for voluntary land-sharing.
(Emphasis supplied) RA No. 6657 implements this directive,
thus: 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-size 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. x x x
The right to choose the area to be retained, which shall be
compact or contiguous, shall pertain to the landowner: Provided,
however, That in case the area selected for retention by the
landowner is tenanted, the tenant shall have the option to choose
whether to remain therein or be a beneficiary in the same or
http://www.central.com.ph/sfsreader/session/0000016d6d0eb…003600fb002c009e/p/ASY075/?username=Guest&device=ipad 26/09/2019, 6I29 PM

Page 1 of 28
another agricultural land with similar or comparable features. In
case the tenant chooses to remain in the retained area, he shall
be considered a leaseholder and shall lose his right to be a
beneficiary under this Act. In case the tenant chooses to be a
beneficiary in another agricultural land, he loses his right as a
leaseholder to the land retained by the landowner. The tenant
must exercise this option within a period of one (1) year from the
time the landowner manifests his choice of the area for retention.
In all cases, the security of tenure of the farmers or farmworkers
on the land prior to the approval of this Act shall be respected.
Same; Same; Section 6 of Department of Agrarian Reform
Administrative Order (DAR AO) No. 02-03 provides for the
instances when a landowner is deemed to have waived his right
of retention.·To interpret Section 6 of RA No. 6657, DAR issued
Administrative Order No. 02, Series of 2003 (DAR AO 02-03).
Section 6 of DAR AO 02-03 provides for the instances when a
landowner is deemed to have waived his right of retention, to
wit: Section 6. Waiver of the Right of Retention.·The landowner
waives his right to retain by
303
VOL. 781, JANUARY 20, 2016 303

committing any of the following act or omission: 6.1 Failure

to manifest an intention to exercise his right to retain within
sixty (60) calendar days from receipt of notice of CARP coverage.
6.2 Failure to state such intention upon offer to sell or
application under the [Voluntary Land Transfer (VLT)]/[Direct
Payment Scheme (DPS)] scheme. 6.3 Execution of any document
stating that he expressly waives his right to retain. The MARO
and/or PARO and/or Regional Director shall attest to the due
execution of such document. 6.4 Execution of a Landowner
Tenant Production Agreement and FarmerÊs Undertaking (LTPA-
FU) or Application to Purchase and FarmerÊs Undertaking
(APFU) covering subject property. 6.5 Entering into a VLT/DPS
or [Voluntary Offer to Sell (VOS)] but failing to manifest an
intention to exercise his right to retain upon filing of the
application for VLT/DPS or VOS. 6.6 Execution and submission
of any document indicating that he is consenting to the CARP
coverage of his entire landholding. 6.7 Performing any act
constituting estoppel by laches which is the failure or neglect for
an unreasonable length of time to do that which he may have
done earlier by exercising due diligence, warranting a
presumption that he abandoned his right or declined to assert it.
Civil Law; Laches; Words and Phrases; Laches is defined as
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; it is negligence or omission to
assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has
abandoned it or declined to assert it.·Laches is defined as 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; it is negligence or omission to assert a
right within a reasonable time, warranting a presumption that
the party entitled to assert it either has abandoned it or declined

Page 2 of 28
to assert it. Where a party sleeps on his rights and allows laches
to set in, the same is fatal to his case.
Agrarian Reform; Sections 6 and 70 are clear in stating that
any sale and disposition of agricultural lands in violation of the
Republic Act (RA) No. 6657 shall be null and void.·Sections 6
and 70 are clear in stating that any sale and disposition of
agricultural lands in violation of the RA No. 6657 shall be null
and void. Under the facts of this case, the reasonable reading of
these three provi-
304

sions in relation to the constitutional right of retention

should be that the consequence of nullity pertains to the area/s
which were sold, or owned by the transferee, in excess of the 5-
hectare land ceiling. Thus, the CA was correct in declaring that
the land is CarriedoÊs retained area.
Statutes; Laws, as well as the issuances promulgated to
implement them, enjoy the presumption of validity.·Laws, as
well as the issuances promulgated to implement them, enjoy the
presumption of validity. However, administrative regulations
that alter or amend the statute or enlarge or impair its scope are
void, and courts not only may, but it is their obligation to strike
down such regulations. Thus, in this case, because Item no. 4 of
DAR AO 05-06 is patently null and void, the presumption of
validity cannot be accorded to it. The invalidity of this provision
constrains us to strike it down for being ultra vires.
Administrative Regulations; Administrative regulations
issued by a Department Head in conformity with law have the
force of law.·Administrative regulations must be in harmony
with the provisions of the law for administrative regulations
cannot extend the law or amend a legislative enactment.
Administrative issuances must not override, but must remain
consistent with the law they seek to apply and implement. They
are intended to carry out, not to supplant or modify the law.
Administrative or executive acts, orders and regulations shall be
valid only when they are not contrary to the laws or the
Constitution. Administrative regulations issued by a
Department Head in conformity with law have the force of law.
As he exercises the rule-making power by delegation of the
lawmaking body, it is a requisite that he should not transcend
the bounds demarcated by the statute for the exercise of that
power; otherwise, he would be improperly exercising legislative
power in his own right and not as a surrogate of the lawmaking
body.
PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
Bureau of Agrarian Legal Assistance for petitioners.
305

Page 3 of 28
VOL. 781, JANUARY 20, 2016 305
Atienza and Atienza Law Office for respondent.
JARDELEZA, J.:
This is a Petition for Review on Certiorari1 assailing the

Court of AppealsÊ Decision dated October 5, 20062 and
Resolution dated January 10, 20073 in C.A.-G.R. S.P. No.
88935. The Decision and Resolution reversed the Order
dated February 22, 20054 issued by the Department of
Agrarian Reform-Central Office (DAR-CO) in
Administrative Case No. A-9999-03-CV-008-03 which
directed that a 5.0001 hectare piece of agricultural land
(land) be placed under the Comprehensive Agrarian
Reform Program pursuant to Republic Act (RA) No. 6657
or the Comprehensive Agrarian Reform Law.
The Facts
The land originally formed part of the agricultural land

covered by Transfer Certificate of Title (TCT) No. 17680,5
which in turn, formed part of the total of 73.3157 hectares
of agricultural land owned by Roman De Jesus (Roman).6
On May 23, 1972, petitioner Pablo Mendoza (Mendoza)
became the tenant of the land by virtue of a Contrato King
Pamamuisan7 executed between him and Roman.
Pursuant to
_______________
1 Rollo, pp. 14-22.

2 CA Rollo, pp. 56-61.
3 Penned by Associate Justice Jose L. Sabio Jr., with Associate
Justices Regalado E. Maambong and Ramon M. Bato, Jr., concurring,
id., at pp. 164-179.
4 Penned by Associate Justice Jose L. Sabio Jr., with Associate
Justices Regalado E. Maambong and Ramon M. Bato, Jr., concurring,
id., at pp. 28-29.
5 Comprising a total of 12.1065 hectares. DAR-CO Records, pp. 537-
539.
6 CA Rollo, p. 57.
7 Id., at pp. 73-74.
306

the Contrato, Mendoza has been paying twenty-five (25)

piculs of sugar every crop year as lease rental to Roman. It
was later changed to Two Thousand Pesos (P2,000.00) per
crop year, the land being no longer devoted to sugarcane.8
On November 7, 1979, Roman died leaving the entire
73.3157 hectares to his surviving wife Alberta Constales
(Alberta), and their two sons Mario De Jesus (Mario) and
Antonio De Jesus (Antonio).9 On August 23, 1984, Antonio

Page 4 of 28
executed a Deed of Extrajudicial Succession with Waiver of
Right10 which made Alberta and Mario co-owners in equal
proportion of the agricultural land left by Roman.11
On June 26, 1986, Mario sold12 approximately 70.4788
hectares to respondent Romeo C. Carriedo (Carriedo),
covered by the following titles and tax declarations, to wit:
1. TCT No. 35055

2. (Tax Declaration) TD No. 48354
3. TCT No. 17681
4. TCT No. 56897
5. TCT No. 17680
The area sold to Carriedo included the land tenanted by

Mendoza (forming part of the area covered by TCT No.
17680). Mendoza alleged that the sale took place without
his knowledge and consent.
In June of 1990, Carriedo sold all of these landholdings
to the PeoplesÊ Livelihood Foundation, Inc. (PLFI)
represented by its president, Bernabe Buscayno.13 All the
lands, except that covered by TCT No. 17680, were
subjected to Voluntary
_______________
8 Rollo, p. 165.
9 Id., at p. 166.
10 Id.; DAR-CO Records (A-9999-03-CV-008-03), pp. 500-503.
11 Rollo, p. 166.
12 CA Rollo, pp. 75-78.
13 DAR-CO Records (A-9999-03-CV-008-03), pp. 493-495.
307
VOL. 781, JANUARY 20, 2016 307

Land Transfer/Direct Payment Scheme and were

awarded to agrarian reform beneficiaries in 1997.14
The parties to this case were involved in three cases
concerning the land, to wit:
The Ejectment Case

(DARAB Case No. 163-T-90/
C.A.-G.R. S.P. No. 44521/
G.R. No. 143416)
On October 1, 1990, Carriedo filed a Complaint for

Ejectment and Collection of Unpaid Rentals against
Mendoza before the Provincial Agrarian Reform
Adjudication Board (PARAD) of Tarlac docketed as DARAB
Case No. 163-T-90. He subsequently filed an Amended
Complaint on October 30, 1990.15
In a Decision dated June 4, 1992,16 the PARAD ruled
that Mendoza had knowledge of the sale, hence, he could
not deny the fact nor assail the validity of the conveyance.
Mendoza violated Section 2 of Presidential Decree (PD) No.
816,17 Sec-

Page 5 of 28
_______________
14 Id., at pp. 571-572; Rollo, p. 166.

15 CA Rollo, pp. 69-72.
16 Id., at pp. 62-75.
17 Providing That Tenant-farmers/Agricultural Lessees Shall Pay
the Leasehold Rentals When They Fall Due and Providing Penalties
Therefor (1975). Section 2 of PD No. 816 reads:
Section 2. That any agricultural lessee of a rice or corn land under
Presidential Decree No. 27 who deliberately refuses and/or continues to
refuse to pay the rentals or amortization payments when they fall due
for a period of two (2) years shall, upon hearing and final judgment,
forfeit the Certificate of Land Transfer issued in his favor, if his
farmholding is already covered by such Certificate of Land Transfer, and
his farmholding.
308

tion 50 of RA No. 119918 and Section 36 of RA No.

3844,19 and thus, the PARAD declared the leasehold
contract terminated, and ordered Mendoza to vacate the
premises.20
_______________
18 Agricultural Tenancy Act of the Philippines. Section 50 of RA No.

1199 reads:
Section 50. Causes for the Dispossession of a Tenant.·Any of the
following shall be a sufficient cause for the dispossession of a tenant
from his holdings:
(a) The bona fide intention of the landholder to cultivate the land
himself personally or through the employment of farm machinery and
implements: Provided, however, That should the landholder not
cultivate the land himself or should fail to employ mechanical farm
implements for a period of one year after the dispossession of the
tenant, it shall be presumed that he acted in bad faith and the land and
damages for any loss incurred by him because of said dispossession:
Provided, further, That the landholder shall, at least one year but not
more than two years prior to the date of his petition to dispossess the
tenant under this subsection, file notice with the court and shall inform
the tenant in wiring in a language or dialect known to the latter of his
intention to cultivate the land himself, either personally or through the
employment of mechanical implements, together with a certification of
the Secretary of Agriculture and Natural Resources that the land is
suited for mechanization: Provided, further, That the dispossessed
tenant and the members of his immediate household shall be preferred
in the employment of necessary laborers under the new setup.
(b) When the current tenant violates or fails to comply with any of
the terms and conditions of the contract or any of the provisions of this
Act: Provided, however, That this subsection shall not apply when the
tenant has substantially complied with the contract or with the
provisions of this Act.
(c) The tenantÊs failure to pay the agreed rental or to deliver the
landholderÊs share: Provided, however, That

Page 6 of 28
309
VOL. 781, JANUARY 20, 2016 309

_______________
this shall not apply when the tenantÊs failure is caused by a

fortuitous event or force majeure.
(d) When the tenant uses the land for a purpose other than that
specified by agreement of the parties.
(e) When a share-tenant fails to follow those proven farm practices
which will contribute towards the proper care of the land and increased
agricultural production.
(f) When the tenant through negligence permits serious injury to
the land which will impair its productive capacity.
(g) Conviction by a competent court of a tenant or any member of
his immediate family or farm household of a crime against the
landholder or a member of his immediate family.
19 Agricultural Land Reform Code. Section 36 of RA No. 3844 reads:
Section 36. Possession of Landholding; Exceptions.·Notwith-
standing any agreement as to the period or future surrender, of the
land, an agricultural lessee shall continue in the enjoyment and
possession of his landholding except when his dispossession has been
authorized by the Court in a judgment that is final and executory if
after due hearing it is shown that:
(1) The agricultural lessor-owner or a member of his immediate
family will personally cultivate the landholding or will convert the
landholding, if suitably located, into residential, factory, hospital or
school site or other useful nonagricultural purposes: Provided, That the
agricultural lessee shall be entitled to disturbance compensation
equivalent to five years rental on his landholding in addition to his
rights under Sections twenty-five and thirty-four, except when the land
owned and leased by the agricultural lessor, is not more than five
hectares, in which case instead of disturbance compensation the lessee
may be entitled to an advanced notice of at least one agricultural year
before ejectment proceedings are filed against him: Provided, further,
That should the landholder not cultivate the land himself for three
years or fail to substantially carry out such conversion within one year
after the dispossession of the tenant, it shall be presumed that he acted
in bad faith and the tenant shall
310

Mendoza filed an appeal with the Department of

Agrarian Reform Adjudication Board (DARAB). In a
Decision dated February 8, 1996,21 the DARAB affirmed
the PARAD Decision in toto. The DARAB ruled that
ownership of the land belongs to Carriedo. That the deed of
sale was unregistered did not affect CarriedoÊs title to the
land. By virtue of his ownership, Carriedo was subrogated
to the rights and obligation of the former landowner,
Roman.22

Page 7 of 28
_______________
have the right to demand possession of the land and recover damages
for any loss incurred by him because of said dispossessions.
(2) The agricultural lessee failed to substantially comply with any of
the terms and conditions of the contract or any of the provisions of this
Code unless his failure is caused by fortuitous event or force majeure;
(3) The agricultural lessee planted crops or used the landholding for
a purpose other than what had been previously agreed upon;
(4) The agricultural lessee failed to adopt proven farm practices as
determined under paragraph 3 of Section twenty-nine;
(5) The land or other substantial permanent improvement thereon
is substantially damaged or destroyed or has unreasonably deteriorated
through the fault or negligence of the agricultural lessee;
(6) The agricultural lessee does not pay the lease rental when it
falls due: Provided, That if the nonpayment of the rental shall be due to
crop failure to the extent of seventy-five per centum as a result of a
fortuitous event, the nonpayment shall not be a ground for
dispossession, although the obligation to pay the rental due that
particular crop is not thereby extinguished; or
(7) The lessee employed a sub-lessee on his landholding in violation
of the terms of paragraph 2 of Section twenty-seven.
20 Rollo, p. 75.
21 Id., at pp. 76-83.
22 Id., at pp. 79-80.
311
VOL. 781, JANUARY 20, 2016 311

Mendoza then filed a Petition for Review with the Court

of Appeals (CA). The case was docketed as C.A.-G.R. S.P.
No. 44521. In a Decision dated September 7, 1998,23 the
CA affirmed the DARAB decision in toto. The CA ruled
that MendozaÊs reliance on Section 6 of RA No. 6657 as
ground to nullify the sale between De Jesus and Carriedo
was misplaced, the section being limited to retention
limits. It reiterated that registration was not a condition
for the validity of the contract of sale between the
parties.24 MendozaÊs Motions for Reconsideration and New
Trial were subsequently denied.25
Mendoza thus filed a Petition for Review on Certiorari
with this Court, docketed as G.R. No. 143416. In a
Resolution dated August 9, 2000,26 this Court denied the
petition for failure to comply with the requirements under
Rule 45 of the Rules of Court. An Entry of Judgment was
issued on October 25, 2000.27 In effect, the Decision of the
CA was affirmed, and the following issues were settled
with finality:
1) Carriedo is the absolute owner of the five (5) hectare

land;
2) Mendoza had knowledge of the sale between Carriedo
and Mario De Jesus, hence he is bound by the sale; and
3) Due to his failure and refusal to pay the lease rentals,
the tenancy relationship between Carriedo and Mendoza
had been terminated.
Meanwhile, on October 5, 1999, the landholding covered

Page 8 of 28
by TCT No. 17680 with an area of 12.1065 hectares was
divided into sub-lots. 7.1065 hectares was transferred to
Bernabe
_______________
23 Id., at pp. 89-95.

24 Id., at pp. 92-93.
26 Rollo, pp. 96-97.
27 Id., at p. 98.
312

Buscayno, et al. through a Deed of Transfer28 under PD

No. 27.29 Eventually, TCT No. 17680 was partially
cancelled, and in lieu thereof, emancipation patents (EPs)
were issued to Bernabe, Rod and Juanito, all surnamed
Buscayno. These lots were identified as Lots C, D and E
covered by TCT Nos. 44384 to 44386 issued on September
10, 1999.30 Lots A and B, consisting of approximately
5.0001 hectares and which is the land being occupied by
Mendoza, were registered in the name of Carriedo and
covered by TCT No. 34428131 and TCT No. 344282.32
The Redemption Case (DARAB III-T-1476-97/ C.A.-G.R.

S.P. No. 88936)
On July 21, 1997, Mendoza filed a Petition for

Redemption33 with the PARAD. In an Order dated January
15, 2001,34 the PARAD dismissed his petition on the
grounds of litis pendentia and lack of the required
certification against forum shopping. It dismissed the
petition so that the pending appeal of DARAB Case No.
163-T-90 (the ejectment case discussed above) with the CA
can run its full course, since its outcome partakes of a
prejudicial question determinative of the tenability of
MendozaÊs right to redeem the land under tenancy.35
_______________

29 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 (1972).
31 Id., at p. 511.
32 Id., at p. 510.
33 Rollo, pp. 84-87.
34 Id., at pp. 99-104.
35 Id., at p. 101.
313

Page 9 of 28
VOL. 781, JANUARY 20, 2016 313
Mendoza appealed to the DARAB which reversed the

PARAD Order in a Decision dated November 12, 2003.36
The DARAB granted Mendoza redemption rights over the
land. It ruled that at the time Carriedo filed his complaint
for ejectment on October 1, 1990, he was no longer the
owner of the land, having sold the land to PLFI in June of
1990. Hence, the cause of action pertains to PLFI and not
to him.37 It also ruled that Mendoza was not notified of the
sale of the land to Carriedo and of the latterÊs subsequent
sale of it to PLFI. The absence of the mandatory
requirement of notice did not stop the running of the 180-
day period within which Mendoza could exercise his right
of redemption.38 CarriedoÊs Motion for Reconsideration was
subsequently denied.39
Carriedo filed a Petition for Review with the CA. In a
Decision dated December 29, 2006,40 the CA reversed the
DARAB Decision. It ruled that CarriedoÊs ownership of the
land had been conclusively established and even affirmed
by this Court. Mendoza was not able to substantiate his
claim that Carriedo was no longer the owner of the land at
the time the latter filed his complaint for ejectment. It held
that the DARAB erred when it ruled that Mendoza was not
guilty of forum shopping.41 Mendoza did not appeal the
decision of the CA.
The Coverage Case

(ADM Case No. A-9999-03-CV-008-
03/C.A.-G.R. S.P. No. 88935)
_______________
36 Id., at pp. 105-116.

37 Id., at pp. 112-113.
38 Id., at pp. 113-114.
39 Id., at p. 121.
40 Penned by Associate Justice Aurora Santiago-Lagman, with
Associate Justices Juan Q. Enriquez, Jr. and Normandie B. Pizarro,
concurring, id., at pp. 118-127.
41 Id., at pp. 123-126.
314

On February 26, 2002, Mendoza, his daughter Corazon

Mendoza (Corazon) and Orlando Gomez (Orlando) filed a
Petition for Coverage42 of the land under RA No. 6657.
They claimed that they had been in physical and material
possession of the land as tenants since 1956, and made the
land productive.43 They prayed (1) that an order be issued
placing the land under Comprehensive Agrarian Reform
Program (CARP); and (2) that the DAR, the Provincial
Agrarian Reform Officer (PARO) and the Municipal
Agrarian Reform Officer (MARO) of Tarlac City be ordered

Page 10 of 28
to proceed with the acquisition and distribution of the land
in their favor.44 The petition was granted by the Regional
Director (RD) in an Order dated October 2, 2002,45 the
dispositive portion of which reads:
WHEREFORE, foregoing premises considered,

the petition for coverage under CARP filed by
Pablo Mendoza, et al[.], is given due course.
Accordingly, the MARO and PARO are hereby
directed to place within the ambit of RA 6657 the
landholding registered in the name of Romeo
Carriedo covered and embraced by TCT Nos.
334281 and 334282, with an aggregate area of
45,000 and 5,001 square meters, respectively, and
to distribute the same to qualified farmer-
beneficiaries.
SO ORDERED.46
On October 23, 2002, Carriedo filed a Protest with

Motion to Reconsider the Order dated October 2, 2002 and
to Lift Coverage47 on the ground that he was denied his
constitutional right to due process. He alleged that he was
not notified
_______________
42 CA Rollo, pp. 127-130.

43 Id., at p. 128.
44 Id., at p. 130.
45 Id., at pp. 48-51.
46 Id., at p. 50.
47 Id., at pp. 150-170.
315
VOL. 781, JANUARY 20, 2016 315

of the filing of the Petition for Coverage, and became

aware of the same only upon receipt of the challenged
Order.
On October 24, 2002, Carriedo received a copy of a
Notice of Coverage dated October 21, 200248 from MARO
Maximo E. Santiago informing him that the land had been
placed under the coverage of the CARP.49 On December 16,
2002, the RD denied CarriedoÊs protest in an Order dated
December 5, 2002.50 Carriedo filed an appeal to the DAR-
CO.
In an Order dated February 22, 2005,51 the DAR-CO,
through Secretary Rene C. Villa, affirmed the Order of the
RD granting coverage. The DAR-CO ruled that Carriedo
was no longer allowed to retain the land due to his
violation of the provisions of RA No. 6657. His act of
disposing his agricultural landholdings was tantamount to
the exercise of his retention right, or an act amounting to a
valid waiver of such right in accordance with applicable
laws and jurisprudence.52 However, it did not rule whether
Mendoza was qualified to be a farmer-beneficiary of the
land. The dispositive portion of the Order reads:

Page 11 of 28
WHEREFORE, premises considered, the
instant appeal is hereby DISMISSED for lack of
merit. Consequently, the Order dated 2 October
2002 of the Regional Director of DAR III, is hereby
AFFIRMED.
SO ORDERED.53
Carriedo filed a Petition for Review54 with the CA

assailing the DAR-CO Order. The appeal was docketed as
C.A.-G.R. S.P. No. 88935. In a Decision dated October 5,
2006, the CA
_______________
48 Id., at p. 171.
49 Id., at p. 26.
50 Id., at pp. 27, 52-54.
51 Id., at pp. 56-61.
52 Id., at pp. 59-60.
53 Id., at p. 61.
54 Id., at pp. 11-47.
316

reversed the DAR-CO, and declared the land as

CarriedoÊs retained area. The CA ruled that the right of
retention is a constitutionally-guaranteed right, subject to
certain qualifications specified by the legislature.55 It
serves to mitigate the effects of compulsory land
acquisition by balancing the rights of the landowner and
the tenant by implementing the doctrine that social justice
was not meant to perpetrate an injustice against the
landowner.56 It held that Carriedo did not commit any of
the acts which would constitute waiver of his retention
rights found under Section 6 of DAR Administrative Order
No. 02, S. 2003.57 The dispositive portion of the Decision
reads:
WHEREFORE, premises considered and

pursuant to applicable law and jurisprudence on
the matter, the present Petition is hereby
GRANTED. Accordingly, the assailed Order of the
Department of Agrarian Reform-Central Office,
Elliptical Road, Diliman, Quezon City (dated
February 22, 2005) is hereby REVERSED and
SET ASIDE and a new one entered ·
DECLARING the subject landholding as the
PetitionerÊs retained area. No pronouncements as
to costs.
SO ORDERED.58
Hence, this petition.

Petitioners maintain that the CA committed a reversible
error in declaring the land as CarriedoÊs retained area.59
They claim that Paragraph 4, Section 6 of RA No. 6657

Page 12 of 28
prohibits any sale, disposition, lease, management contract
or transfer of possession of private lands upon effectivity of
the
_______________
55 Rollo, pp. 170-171.

56 Id., at p. 171.
57 Id., at pp. 173-175; 2003 Rules and Procedure Governing
Landowner Retention Rights
58 Id., at pp. 177-176.
59 Id., at p. 17.
317
VOL. 781, JANUARY 20, 2016 317

law.60 Thus, Regional Director Renato Herrera correctly

observed that CarriedoÊs act of disposing his agricultural
property would be tantamount to his exercise of retention
under the law. By violating the law, Carriedo could no
longer retain what was left of his property. „To rule
otherwise would be a roundabout way of rewarding a
landowner who has violated the explicit provisions of the
Comprehensive Agrarian Reform Law.‰61
They also assert that Carriedo waived his right to retain
for failure or neglect for an unreasonable length of time to
do that which he may have done earlier by exercising due
diligence, warranting a presumption that he abandoned
his right or declined to assert it.62 Petitioners claim that
Carriedo has not filed an Application for Retention over
the subject land over a considerable passage of time since
the same was acquired for distribution to qualified farmer
beneficiaries.63
Lastly, they argue that Certificates of Land Ownership
Awards (CLOAs) already generated in favor of his co-
petitioners Corazon Mendoza and Rolando Gomez cannot
be set aside. CLOAs under RA No. 6657 are enrolled in the
Torrens system of registration which makes them
indefeasible as certificates of title issued in registration
proceedings.64
The Issue
The sole issue for our consideration is whether Carriedo

has the right to retain the land.
Our Ruling
We rule in the affirmative. Carriedo did not waive his

right of retention over the land.
_______________
60 Id., at p. 18.
61 Id.
62 Id., at pp. 19-20.
63 Id., at p. 20.

Page 13 of 28
64 Id., at p. 21.
318

The 1987 Constitution expressly recognizes landowner

retention rights under Article XIII, Section 4, to wit:
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 right of small landowners. The State
shall further provide incentives for voluntary land-
sharing. (Emphasis supplied)
RA No. 6657 implements this directive, thus:
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-
size 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.
xxx
The right to choose the area to be retained,
which shall be compact or contiguous, shall pertain
to the landowner: Provided, however, That in case
the area selected for retention by the landowner is
tenanted, the tenant shall have the option to
choose whether to remain therein or be a
beneficiary in the same or another agricultural
land with similar or comparable features. In case
the tenant chooses to remain in the retained area,
he shall be considered a leaseholder and shall lose
his
319
VOL. 781, JANUARY 20, 2016 319

Page 14 of 28
right to be a beneficiary under this Act. In case the

tenant chooses to be a beneficiary in another agricultural
land, he loses his right as a leaseholder to the land
retained by the landowner. The tenant must exercise this
option within a period of one (1) year from the time the
landowner manifests his choice of the area for retention. In
all cases, the security of tenure of the farmers or
farmworkers on the land prior to the approval of this Act
shall be respected. x x x (Emphasis supplied)
In Danan v. Court of Appeals,65 we explained the
rationale for the grant of the right of retention under
agrarian reform laws such as RA No. 6657 and its
predecessor PD No. 27, to wit:
The right of retention is a constitutionally

guaranteed right, which is subject to qualification
by the legislature. It serves to mitigate the effects
of compulsory land acquisition by balancing the
rights of the landowner and the tenant and by
implementing the doctrine that social justice was
not meant to perpetrate an injustice against the
landowner. A retained area, as its name denotes, is
land which is not supposed to anymore leave the
landownerÊs dominion, thus sparing the
government from the inconvenience of taking land
only to return it to the landowner afterwards,
which would be a pointless process. For as long as
the area to be retained is compact or contiguous
and does not exceed the retention ceiling of five (5)
hectares, a landownerÊs choice of the area to be
retained must prevail. x x x66
To interpret Section 6 of RA No. 6657, DAR issued

Administrative Order No. 02, Series of 2003 (DAR AO 02-
03). Section 6 of DAR AO 02-03 provides for the instances
when a
_______________
65 G.R. No. 132759, October 25, 2005, 474 SCRA 113.

66 Id., at p. 128, citing Daez v. Court of Appeals, G.R. No. 133507,
February 17, 2000, 325 SCRA 856.
320

landowner is deemed to have waived his right of

retention, to wit:
Section 6. Waiver of the Right of Retention.·

The landowner waives his right to retain by
committing any of the following act or omission:
6.1 Failure to manifest an intention to exercise
his right to retain within sixty (60) calendar days

Page 15 of 28
from receipt of notice of CARP coverage.
6.2 Failure to state such intention upon offer to
sell or application under the [Voluntary Land
Transfer (VLT)]/[Direct Payment Scheme (DPS)]
scheme.
6.3 Execution of any document stating that he
expressly waives his right to retain. The MARO
and/or PARO and/or Regional Director shall attest
to the due execution of such document.
6.4 Execution of a Landowner Tenant
Production Agreement and FarmerÊs Undertaking
(LTPA-FU) or Application to Purchase and
FarmerÊs Undertaking (APFU) covering subject
property.
6.5 Entering into a VLT/DPS or [Voluntary Offer
to Sell (VOS)] but failing to manifest an intention
to exercise his right to retain upon filing of the
application for VLT/DPS or VOS.
6.6 Execution and submission of any document
indicating that he is consenting to the CARP
coverage of his entire landholding.
6.7 Performing any act constituting estoppel by
laches which is the failure or neglect for an
unreasonable length of time to do that which he
may have done earlier by exercising due diligence,
warranting a presumption that he abandoned his
right or declined to assert it.
Petitioners cannot rely on the RDÊs Order dated October

2, 2002 which granted MendozaÊs petition for coverage on
the
321
VOL. 781, JANUARY 20, 2016 321

ground that Carriedo violated paragraph 4, Section 667

of RA No. 6657 for disposing of his agricultural land,
consequently losing his right of retention. At the time
when the Order was rendered, up to the time when it was
affirmed by the DAR-CO in its Order dated February 22,
2005, the applicable law is Section 6 of DAR 02-03. Section
6 clearly shows that the disposition of agricultural land is
not an act constituting waiver of the right of retention.
Thus, as correctly held by the CA, Carriedo „[n]ever
committed any of the acts or omissions above stated (DAR
AO 02-03). Not even the sale made by the herein petitioner
in favor of PLFI can be considered as a waiver of his right
of retention. Likewise, the Records of the present case is
bereft of any showing that the herein petitioner expressly
waived (in writing) his right of retention as required under
subsection 6.3, Section 6, DAR Administrative Order No.
02-S. 2003.‰68
Petitioners claim that CarriedoÊs alleged failure to
exercise his right of retention after a long period of time
constituted a waiver of his retention rights, as envisioned
in Item 6.7 of DAR AO 02-03.
We disagree.
Laches is defined as the failure or neglect for an

Page 16 of 28
unreasonable and unexplained length of time, to do that
which by exer-
_______________
67 Paragraph 4, Section 6 of RA No. 6657 provides:

Upon the effectivity of this Act, any sale, disposition, lease,
management, contract or transfer of possession of private lands
executed by the original landowner in violation of the Act shall be null
and void: Provided, however, That those executed prior to this Act shall
be valid only when registered with the Register of Deeds within a period
of three (3) months after the effectivity of this Act. Thereafter, all
Registers of Deeds shall inform the Department of Agrarian Reform
(DAR) within thirty (30) days of any transaction involving agricultural
lands in excess of five (5) hectares.
68 Rollo, p. 140.
322

cising due diligence could or should have been done

earlier; it is negligence or omission to assert a right within
a reasonable time, warranting a presumption that the
party entitled to assert it either has abandoned it or
declined to assert it.69 Where a party sleeps on his rights
and allows laches to set in, the same is fatal to his case.70
Section 4 of DAR AO 02-03 provides:
Section 4. Period to Exercise Right of

Retention under RA 6657.·
4.1 The landowner may exercise his right of
retention at any time before receipt of notice of
coverage.
4.2 Under the Compulsory Acquisition (CA)
scheme, the landowner shall exercise his right of
retention within sixty (60) days from receipt of
notice of coverage.
4.3 Under the Voluntary Offer to Sell (VOS) and
the Voluntary Land Transfer (VLT)/Direct Payment
Scheme (DPS), the landowner shall exercise his
right of retention simultaneously at the time of
offer for sale or transfer.
The foregoing rules give Carriedo any time before

receipt of the notice of coverage to exercise his right of
retention, or if under compulsory acquisition (as in this
case), within sixty (60) days from receipt of the notice of
coverage. The validity of the notice of coverage is the very
subject of the controversy before this court. Thus, the
period within which Carriedo should exercise his right of
retention cannot commence until final resolution of this
case.
Even assuming that the period within which Carriedo
could exercise his right of retention has commenced,
Carriedo
_______________

Page 17 of 28
69 Olizon v. Court of Appeals, G.R. No. 107075, September 1, 1994,
236 SCRA 148, 157-158.
70 Periquet, Jr. v. Intermediate Appellate Court, G.R. No. 69996,
December 5, 1994, 238 SCRA 697.
323
VOL. 781, JANUARY 20, 2016 323

cannot be said to have neglected to assert his right of

retention over the land. The records show that per Legal
Report dated December 13, 199971 prepared by Legal
Officer Ariel Reyes, Carriedo filed an application for
retention which was even contested by Pablo MendozaÊs
son, Fernando.72 Though Carriedo subsequently withdrew
his application, his act of filing an application for retention
belies the allegation that he abandoned his right of
retention or declined to assert it.
In their Memorandum73 however, petitioners, for the
first time, invoke estoppel, citing DAR Administrative
Order No. 05, Series of 200674 (DAR AO 05-06) to support
their argument that Carriedo waived his right of
retention.75 DAR AO 05-06 provides for the rules and
regulations governing the acquisition and distribution of
agricultural lands subject of conveyances under Sections 6,
7076 and 73(a)77 of RA No. 6657.
_______________
71 DARAB Records (A-9999-03-CV-008-03), pp. 445-448.

72 Id., at p. 448.
73 Rollo, pp. 237-251.
74 Guidelines on the Acquisition and Distribution of Agricultural
lands Subject of Conveyance Under Sections 6, 70 and 73(a) of RA No.
6657.
75 Rollo, pp. 241-245.
76 Section 70 of RA No. 6657 reads:
Section 70. Disposition of Private Agricultural Lands.·The sale or
disposition of agricultural lands retained by a landowner as a
consequence of Section 6 hereof shall be valid as long as the total
landholdings that shall be owned by the transferee thereof inclusive of
the land to be acquired shall not exceed the landholding ceilings
provided for in this Act. Any sale or disposition of agricultural lands
after the effectivity of this Act found to be contrary to the provisions
hereof shall be null and void. Transferees of agricultural lands shall
furnish the appropriate Register of Deeds and the [Barangay Agrarian
Reform Committee (BARC)] an affidavit attesting that his total
landholdings as a result of the said acquisition do not exceed the
landholding ceiling. The Register of Deeds shall not register the transfer
of any agricultural land without the submis-
324

Page 18 of 28
Petitioners particularly cite Item no. 4 of the Statement

of Policies of DAR AO 05-06, to wit:
II. Statement of Policies
4. Where the transfer/sale involves more than the

five (5) hectares retention area, the transfer is
considered violative of Sec. 6 of R.A. No. 6657.
In case of multiple or series of transfers/sales, the

first five (5) hectares sold/conveyed without DAR
clearance and the corresponding titles issued by
the Register of Deeds (ROD) in the name of the
transferee shall, under the principle of
estoppel, be considered valid and shall be
treated as the transferor/sÊ retained area but
in no case shall the transferee exceed the five-
hectare landholding ceiling pursuant to Sections 6,
70 and 73(a) of R.A. No. 6657. Insofar as the excess
area is concerned, the same shall likewise be
covered considering that the transferor has no
right of disposition since CARP coverage has been
vested as of 15 June 1988. Any landholding still
registered in the name of the landowner after
earlier dispositions totaling an aggregate of five (5)
hectares can no longer be part of his retention area
and therefore shall be covered under CARP.
(Emphasis supplied)
Citing this provision, petitioners argue that Carriedo

lost his right of retention over the land because he had
already
_______________
sion of this sworn statement together with proof of service of a copy

thereof to the BARC.
77 Section 73(a) of RA No. 6657 reads:
Section 73. Prohibited Acts and Omissions.·The following are
prohibited:
(a) The ownership or possession, for the purpose of circumventing
the provisions of this Act, of agricultural lands in excess of the total
retention limits or award ceilings by any person, natural or juridical,
except those under collective ownership by farmer-beneficiaries;
xxx
325
VOL. 781, JANUARY 20, 2016 325

sold or disposed, after the effectivity of RA No. 6657,

more than fifty (50) hectares of land in favor of another.78
In his Memorandum,79 Carriedo maintains that
petitioners cannot invoke any administrative regulation to
defeat his right of retention. He argues that
„administrative regulation must be in harmony with the

Page 19 of 28
provisions of law otherwise the latter prevails.‰80
We cannot sustain petitionersÊ argument. Their reliance
on DAR AO 05-06 is misplaced. As will be seen below,
nowhere in the relevant provisions of RA No. 6657 does it
indicate that a multiple or series of transfers/sales of land
would result in the loss of retention rights. Neither do they
provide that the multiple or series of transfers or sales
amounts to the waiver of such right.
The relevant portion of Section 6 of RA No. 6657
referred to in Item no. 4 of DAR AO 05-06 provides:
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-
size farm, such as the 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. x x x
Upon the effectivity of this Act, any sale,
disposition, lease, management, contract or
transfer of possession of private lands
executed by the original landowner in
violation of the Act shall be null and void:
Provided, however, That those executed prior to
this Act shall be valid only when registered with
the
_______________
78 Rollo, p. 245.
79 Id., at pp. 214-236.
80 Id., at p. 227, citing Philippine Petroleum Corp. v. Municipality of
Pililla, Rizal, G.R. No. 90776, June 3, 1991, 198 SCRA 82.
326

Register of Deeds within a period of three (3)

months after the effectivity of this Act. Thereafter,
all Registers of Deeds shall inform the Department
of Agrarian Reform (DAR) within thirty (30) days
of any transaction involving agricultural lands in
excess of five (5) hectares. (Emphasis supplied)
Section 70 of RA No. 6657, also referred to in Item no. 4

of DAR AO 05-06 partly provides:
The sale or disposition of agricultural lands

retained by a landowner as a consequence of
Section 6 hereof shall be valid as long as the total
landholdings that shall be owned by the transferee
thereof inclusive of the land to be acquired shall
not exceed the landholding ceilings provided for in

Page 20 of 28
this Act. Any sale or disposition of
agricultural lands after the effectivity of this
Act found to be contrary to the provisions
hereof shall be null and void. x x x (Emphasis
supplied.)
Finally, Section 73(a) of RA No. 6657 as referred to in

Item No. 4 of DAR AO 05-06 provides,
Section 73. Prohibited Acts and Omissions.·

The following are prohibited:
(a) The ownership or possession, for the
purpose of circumventing the provisions of
this Act, of agricultural lands in excess of
the total retention limits or award ceilings
by any person, natural or juridical, except
those under collective ownership by
farmer-beneficiaries; x x x
Sections 6 and 70 are clear in stating that any sale and

disposition of agricultural lands in violation of the RA No.
6657 shall be null and void. Under the facts of this case,
the reasonable reading of these three provisions in relation
to the constitutional right of retention should be that the
consequence of nullity pertains to the area/s which were
sold, or
327
VOL. 781, JANUARY 20, 2016 327

owned by the transferee, in excess of the 5-hectare land

ceiling. Thus, the CA was correct in declaring that the land
is CarriedoÊs retained area.81
Item no. 4 of DAR AO 05-06 attempts to defeat the
above reading by providing that, under the principle of
estoppel, the sale of the first five hectares is valid. But, it
hastens to add that the first five hectares sold corresponds
to the transferor/sÊ retained area. Thus, since the sale of
the first five hectares is valid, therefore, the landowner
loses the five hectares because it happens to be, at the
same time, the retained area limit. In reality, Item No. 4 of
DAR AO 05-06 operates as a forfeiture provision in the
guise of estoppel. It punishes the landowner who sells in
excess of five hectares. Forfeitures, however, partake of a
criminal penalty.82
_______________
81 Rollo, pp. 142-143.

82 See Cabal v. Kapunan, Jr., No. L-19052, December 29, 1962, 6
SCRA 1059, 1064:
Such forfeiture has been held, however, to partake the nature of a
penalty.
„In a strict signification, a forfeiture is a divestiture of property
without compensation, in consequence of a default or an offense, and the
term is used in such a sense in this article. A forfeiture, as thus defined,
is imposed by way of punishment, not by the mere convention of the
parties, but by the lawmaking power, to insure a prescribed course of

Page 21 of 28
conduct. It is a method deemed necessary by the legislature to restrain
the commission of an offense and to aid in the prevention of such an
offense. The effect of such a forfeiture is to transfer the title to the
specific thing from the owner to the sovereign power. (23 Am. Jur. 599)
In BlackÊs Law Dictionary, a ÂforfeitureÊ is defined to the Âthe incurring
of a liability to pay a definite sum of money as the consequence of
violating the provisions of some statute or refusal to comply with some
requirement of law.Ê It may be
328

In Perez v. LPG Refillers Association of the Philippines,

Inc.,83 this Court said that for an administrative regulation
to have the force of a penal law, (1) the violation of the
administrative regulation must be made a crime by the
delegating statute itself; and (2) the penalty for such
violation must be provided by the statute itself.84
Sections 6, 70 and 73(a) of RA No. 6657 clearly do not
provide that a sale or disposition of land in excess of 5
hectares results in a forfeiture of the five-hectare retention
area. Item no. 4 of DAR AO 05-06 imposes a penalty where
none was provided by law.
As this Court also held in People v. Maceren,85 to wit:
The reason is that the Fisheries law does not

expressly prohibit electro fishing. As electro fishing
is not banned under the law, the Secretary of
Agriculture and Natural Resources and the
Natural Resources and the Commissioner of
Fisheries are powerless to penalize it. In other
words, Administrative Order Nos. 84 and 84-1, in
penalizing electro fishing, are devoid of any legal
basis.
Had the lawmaking body intended to punish
electro fishing, a penal provision to that effect
could have been easily embodied in the old
Fisheries Law.86
The repugnancy between the law and Item no. 4 of DAR

AO 05-06 is apparent by a simple comparison of their
texts. The conflict undermines the statutorily-guaranteed
right of the landowner to choose the land he shall retain,
and DAR AO 05-06, in effect, amends RA No. 6657.
_______________
said to be a penalty imposed for misconduct or breach of duty.‰ (Com.

v. French, 114 S.W. 255)
83 G.R. No. 159149, June 26, 2006, 492 SCRA 638.
84 Id., at p. 649.
85 No. L-32166, October 18, 1977, 79 SCRA 450.
86 Id., at p. 456.

Page 22 of 28
329
VOL. 781, JANUARY 20, 2016 329

In Romulo, Mabanta, Buenaventura, Sayoc & De Los

Angeles (RMBSA) v. Home Development Mutual Fund
(HDMF),87 this Court was confronted with the issue of the
validity of the amendments to the rules and regulations
implementing PD No. 1752.88 In that case, PD No. 1752 (as
amended by RA No. 7742) exempted RMBSA from the Pag-
Ibig Fund coverage for the period January 1 to December
31, 1995. In September 1995, however, the HDMF Board of
Trustees issued a board resolution amending and
modifying the rules and regulations implementing RA No.
7742. As amended, the rules now required that for a
company to be entitled to a waiver or suspension of fund
coverage, it must have a plan providing for both
provident/retirement and housing benefits superior to
those provided in the Pag-Ibig Fund. In ruling against the
amendment and modification of the rules, this Court held
that ·
In the present case, when the Board of Trustees

of the HDMF required in Section 1, Rule VII of the
1995 Amendments to the Rules and Regulations
Implementing R.A. No. 7742 that employers should
have both provident/retirement and housing
benefits for all its employees in order to qualify for
exemption from the Fund, it effectively amended
Section 19 of P.D. No. 1752. And when the Board
subsequently abolished that exemption through
the 1996 Amendments, it repealed Section 19 of
P.D. No. 1752. Such amendment and subsequent
repeal of Section 19 are both invalid, as they are
not within the delegated power of the Board. The
HDMF cannot, in the exercise of its rule-making
power, issue a regulation not consistent with the
law it seeks to apply. Indeed, administrative
issuances must not override, supplant or modify
the law, but must remain consistent with the law
they
_______________
87 G.R. No. 131082, June 19, 2000, 333 SCRA 777.

88 Amending the Act Creating the Home Development Mutual Fund
(1980).
330

intend to carry out. Only Congress can repeal or

amend the law.89 (Citations omitted; underscoring
supplied)

Page 23 of 28
Laws, as well as the issuances promulgated to
implement them, enjoy the presumption of validity.90
However, administrative regulations that alter or amend
the statute or enlarge or impair its scope are void, and
courts not only may, but it is their obligation to strike
down such regulations.91 Thus, in this case, because Item
no. 4 of DAR AO 05-06 is patently null and void, the
presumption of validity cannot be accorded to it. The
invalidity of this provision constrains us to strike it down
for being ultra vires.
In Conte v. Commission on Audit,92 the sole issue of
whether the Commission on Audit (COA) acted in grave
abuse of discretion when it disallowed in audit therein
petitionersÊ claim of financial assistance under Social
Security System (SSS) Resolution No. 56 was presented
before this Court. The COA disallowed the claims because
the financial assistance under the challenged resolution is
similar to a separate retirement plan which results in the
increase of benefits beyond what is allowed under existing
laws. This Court, sitting En Banc, upheld the findings of
the COA, and invalidated SSS Resolution No. 56 for being
ultra vires, to wit:
_______________
89 Supra note 87 at p. 786.

90 Dasmariñas Water District v. Monterey Foods Corporation, G.R.
No. 175550, September 17, 2008, 565 SCRA 624 citing Tan v. Bausch &
Lomb, Inc., G.R. No. 148420, December 15, 2005, 478 SCRA 115, 123-
124, citing Walter E. Olsen & Co. v. Aldanese and Trinidad, 43 Phil. 259
(1922) and San Miguel Brewery, Inc. v. Magno, No. L-21879, September
29, 1967, 21 SCRA 292.
91 California Assn. of Psychology Providers v. Rank, 51 Cal 3d 1, 270
Cal Rptr 796, 793 P2 2 (1980), citing Dyna-med, Inc. v. Fair
Employment & Housing Com., 43 Cal.3d 1379, 1388-1389 (1987) and
Hittle v. Santa Barbara County Employees Retirement Assn., 39 Cal.3d
374, 387 (1985).
92 G.R. No. 116422, November 4, 1996, 264 SCRA 19.
331
VOL. 781, JANUARY 20, 2016 331

x x x Said Sec. 28(b) as amended by RA 4968 in

no uncertain terms bars the creation of any
insurance or retirement plan · other than the
GSIS · for government officers and employees, in
order to prevent the undue and [iniquitous]
proliferation of such plans. It is beyond cavil that
Res. 56 contravenes the said provision of law and is
therefore invalid, void and of no effect. x x x
We are not unmindful of the laudable purposes
for promulgating Res. 56, and the positive results
it must have had x x x. But it is simply beyond
dispute that the SSS had no authority to maintain
and implement such retirement plan, particularly
in the face of the statutory prohibition. The SSS

Page 24 of 28
cannot, in the guise of rule-making, legislate or
amend laws or worse, render them nugatory.
It is doctrinal that in case of conflict between a
statute and an administrative order, the former
must prevail. A rule or regulation must conform to
and be consistent with the provisions of the
enabling statute in order for such rule or
regulation to be valid. The rule-making power of a
public administrative body is a delegated
legislative power, which it may not use either to
abridge the authority given it by the Congress or
the Constitution or to enlarge its power beyond the
scope intended. x x x Though well-settled is the
rule that retirement laws are liberally interpreted
in favor of the retiree, nevertheless, there is really
nothing to interpret in either RA 4968 or Res. 56,
and correspondingly, the absence of any doubt
as to the ultra vires nature and illegality of
the disputed resolution constrains us to rule
against petitioners.93 (Citations omitted;
emphasis and underscoring supplied)
Administrative regulations must be in harmony with

the provisions of the law for administrative regulations
cannot extend the law or amend a legislative enactment.94
Adminis-
_______________
93 Id., at pp. 30-31.

94 Land Bank of the Philippines v. Court of Appeals, G.R. Nos.
118712 & 118745, October 6, 1995, 249 SCRA 149.
332

trative issuances must not override, but must remain

consistent with the law they seek to apply and implement.
They are intended to carry out, not to supplant or modify
the law.95 Administrative or executive acts, orders and
regulations shall be valid only when they are not contrary
to the laws or the Constitution.96 Administrative
regulations issued by a Department Head in conformity
with law have the force of law.97 As he exercises the rule-
making power by delegation of the lawmaking body, it is a
requisite that he should not transcend the bounds
demarcated by the statute for the exercise of that power;
otherwise, he would be improperly exercising legislative
power in his own right and not as a surrogate of the
lawmaking body.98
If the implementing rules and regulations are issued in
excess of the rule-making authority of the administrative
agency, they are without binding effect upon the courts. At
best, the same may be treated as administrative
interpretations of the law and as such, they may be set
aside by the Supreme Court in the final determination of
what the law means.99

Page 25 of 28
While this Court is mindful of the DARÊs commitment to
the implementation of agrarian reform, it must be
conceded that departmental zeal may not be permitted to
outrun the authority conferred by statute.100 Neither the
high dignity of the office nor the righteousness of the
motive then is an ac-
_______________
95 Commissioner of Internal Revenue v. Court of Appeals, G.R. No.

108358, January 20, 1995, 240 SCRA 368.
96 Civil Code of the Philippines, Article 7.
97 Valerio v. Secretary of Agriculture and Natural Resources, No. L-
18587, April 23, 1963, 7 SCRA 719.
98 People v. Maceren, supra note 85 at p. 459.
99 Cebu Institute of Technology v. Ople, No. L-58870, December 18,
1987, 156 SCRA 629, 658.
100 Radio Communications of the Philippines, Inc. v. Santiago, Nos.
L-29236 & L-29247, August 21, 1974, 58 SCRA 493, 498.
333
VOL. 781, JANUARY 20, 2016 333

ceptable substitute; otherwise the rule of law becomes a

myth.101
As a necessary consequence of the invalidity of Item no.
4 of DAR AO 05-06 for being ultra vires, we hold that
Carriedo did not waive his right to retain the land, nor can
he be considered to be in estoppel.
Finally, petitioners cannot argue that the CLOAs
allegedly granted in favor of his co-petitioners Corazon and
Orlando cannot be set aside. They claim that CLOAs under
RA No. 6657 are enrolled in the Torrens system of
registration which makes them indefeasible as certificates
of title issued in registration proceedings.102 Even as these
allegedly issued CLOAs are not in the records, we hold
that CLOAs are not equivalent to a Torrens certificate of
title, and thus are not indefeasible.
CLOAs and EPs are similar in nature to a Certificate of
Land Transfer (CLT) in ordinary land registration
proceedings. CLTs, and in turn the CLOAs and EPs, are
issued merely as preparatory steps for the eventual
issuance of a certificate of title. They do not possess the
indefeasibility of certificates of title. Justice Oswald D.
Agcaoili, in Property Registration Decree and Related Laws
(Land Titles and Deeds),103 notes, to wit:
Under PD No. 27, beneficiaries are issued

certificates of land transfers (CLTs) to entitle them
to possess lands. Thereafter, they are issued
emancipation patents (EPs) after compliance with
all necessary conditions. Such EPs, upon their
presentation to the Register of Deeds, shall be the
basis for the issuance of the corresponding transfer
certificates of title (TCTs) in favor of the
corresponding beneficiaries.

Page 26 of 28
_______________
101 Villegas v. Subido, No. L-26534, November 28, 1969, 30 SCRA

498, 511.
102 Rollo, p. 21.
103 2011 ed., p. 758.
334

Under RA No. 6657, the procedure has been

simplified. Only certificates of land ownership
award (CLOAs) are issued, in lieu of EPs, after
compliance with all prerequisites. Upon
presentation of the CLOAs to the Register of
Deeds, TCTs are issued to the designated
beneficiaries. CLTs are no longer issued.
The issuance of EPs or CLOAs to beneficiaries
does not absolutely bar the landowner from
retaining the area covered thereby. Under AO No.
2, Series of 1994, an EP or CLOA may be cancelled
if the land covered is later found to be part of the
landownerÊs retained area. (Citations omitted;
underscoring supplied)
The issue, however, involving the issuance, recall or

cancellation of EPs or CLOAs, is lodged with the DAR,104
which has the primary jurisdiction over the matter.105
WHEREFORE, premises considered, the Petition is
hereby DENIED for lack of merit. The assailed Decision of
the Court of Appeals dated October 5, 2006 is
AFFIRMED. Item no. 4 of DAR Administrative Order No.
05, Series of 2006 is hereby declared INVALID, VOID
and OF NO EFFECT for being ultra vires.
SO ORDERED.
Velasco, Jr. (Chairperson), Peralta, Perez** and Reyes,

JJ., concur.
Petition denied, judgment affirmed.
Notes.·Section 6 of Republic Act (R.A.) No. 6657

specifically governs retention limits. (Heirs of Teresita
Montoya vs. National Housing Authority, 719 SCRA 453
[2014])
_______________
104 Aninao v. Asturias Chemical Industries, Inc., G.R. No. 160420,

July 28, 2005, 464 SCRA 526.
105 Bagongahasa v. Romualdez, G.R. No. 179844, March 23, 2011,
646 SCRA 338.
** Designated as regular member of the Third Division per Special
Order No. 2311 dated January 14, 2016.

Page 27 of 28
335
VOL. 781, JANUARY 20, 2016 335

The right of retention is a constitutionally guaranteed

right, which is subject to qualification by the legislature;
Landowners who have not yet exercised their retention
rights under Presidential Decree (P.D.) No. 27 are entitled
to the new retention rights under Republic Act (RA) No.
6657. Section 6 of the latter law defines the nature and
incidents of the landownerÊs right to retention. (Delfino, Sr.
vs. Anasao, 734 SCRA 672 [2014])
··o0o··

Page 28 of 28
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Advanced Decisions October 2018
Case Title:
REFORM, QUEZON CITY & PABLO l\epublic of tbe Jbilippine~
MENDOZA vs. ROMEO C. CARRIEDO ~upreme QCourt
More... ;i!Manila
cm:~Tff~D 'fRUE COPY
Search Result w1o~c-c-'!"'i'V~ r.> i y i ~) f, "' j \ ::· .i ·.: r ~~ 0 r c 0 u r t
Th ~·nJ Di v i s i o n
NOV 1 4 2018
SPECIAL THIRD DIVISION
REFORM, QUEZON CITY &
PABLO MENDOZA,
Petitioners,
-versus-
ROMEO C. CARRIEDO,
Respondent.
G.R. No. 176549
Present:
PERALTA, J., Chairperson,
LEONEN,
JARDELEZA,
REYES, JR., and
REYES, JR.,* JJ.
Promulgated:
October 10, 2018
x-------- ----- -----------------------------~----- ------- -~~---- -- -x
RESOLUTION
JARDELEZA, J.:
We resolve the motion for reconsideration 1 filed by the
Department of Agrarian Reform (DAR) of the Decision2
dated January
20, 2016.
At the onset, we note that the DAR was not given the
opportunity
to participate in the proceedings before the Court of
Appeals and before
this Court, until it filed its motion for reconsideration of
this Court's
Decision. In its motion for reconsideration, the DAR
contends that the
agency had been denied due process when it was not
afforded the
opportunity to refute the allegations against the validity
of DAR
Administrative Order No. 5, Series of 20063 (AO 05-06)
before the
Court of Appeals and before this Court. 4 It argues that
the basic
requirement of due process has not been accorded to the
agency because
it was not even notified of the petition filed before the
Court of Appeals;
nor did the Court of Appeals notify the DAR of the
proceedings and its
http://www.central.com.ph/sfsreader/session/0000016d6d0ef…03600fb002c009e/p/AUH375/?username=Guest&device=ipad 26/09/2019, 6I31 PM

Page 1 of 12
• On official leave.
1 Dated March 22, 2016. Rollo, pp. 297-330.
2 781 SCRA 301.
3 Guidelines ornhe quisition and Distribution of
Agricultural Lands Subject of Conveyance
Under Section 6, 70 nd 73(a) of R.A. No. 6657.
4 Rollo, p. 323.
Resolution 2 G.R. N<L>. 176549
Decision. 5 The DAR, therefore, insists that the Decision
dated January
20, 2016 be reconsidered by this Court especially so that
the issues
involve the enforcement and validity of its regulations.6
We agree with the DAR. Being the government agency
legally
mandated to implement the Comprehensive Agrarian
Reform Law of
19887 (CARL) and the primary agency vested with the
expertise on the
technicalities of the CARL,8 the DAR's position on the
issues raised
before us deserves cogent consideration. In fact, the
CARL specifically
empowers the DAR to issue rules and regulations,
whether substantive
or procedural, to carry out the objects and purposes of
the law.9
Administrative rules and regulations ordinarily deserve
to be given
weight and respect by the courts in view of the rule-
making authority
given to those who formulate them and their specific
expertise in their
respective fields. 10 In this case, it cannot be denied
that the DAR
possesses the special knowledge and acquired expertise
on the
implementation of the agrarian refonn program. To pay
no heed to its
position on the issues raised before us ignores the basic
precepts of due
process. Therefore, under these circumstances, we are
impelled to
revisit our Decision, this time taking into account the
arguments and
position of the DAR.
To reiterate, the core issue before us is whether Romeo
C.
Carriedo' s (Carriedo) previous sale of his landholdings
to Peoples'
Livelihood Foundation, Inc. (PLFI) can be treated as the
exercise of his
retention rights, such that he cannot lawfully claim the
subject
landholding as his retained area anymore. 11 The issue
necessarily
touches on the validity of Item No. 4 of AO 05-06 and
the relevant
provisions of the CARL. Further, the issue of whether
Certificates of
Land Ownership Awards (CLOAs) possess the
indefeasibility accorded
to a Torrens certificate of title is likewise raised before

Page 2 of 12
this Court.
We will discuss the issues in seriatim.
5 Id. at 324.
6 Id. at 333-334.
7 Republic Act No. 6657.
8 See Rom v. Roxas & Company, Inc., G.R. No. 169331,
September 5, 2011, 656 SCRA 691, 707,
citing Roxas & Co., Inc. v. Court of Appeals, G.R. No.
127876, December 17, 1999, 321 SCRA
106, 153-154, 164; San Miguel Properties, Inc. v. Perez,
G.R. No. 166836, September 4, 2013,
705 SCRA 38, 59-60; and Alfonso v. Land Bank of the
Philippines, G.R. Nos. 181912 & 183347,
November 29, 2016, 811SCRA27, 122.
9 Republic Act No. 6657, Sec. 49. Rules and Regulations.
-The PARC and the DAR shall have
the power to issue rules and regulations, whether
substantive or procedural, to carry out the objects
and purposes of this Act. Said rules shall take effect ten
(10) days after publication in two (2)
national newspapers of general circulation.
10 Chamber of Real Estate and Builders' Associations,
Inc. v. Romulo, G.R. No. 160756, March 9,
2010, 614 SCRA 605, 639-640.
17
./
11 Department of Agrarian Reform, Quezon City v.
Carriedo, supra note 2 at 306, 316-3 ~
Resolution 3 G.R. No. 176549
On the validity of Item No. 4, AO 05-06
The Decision adjudged Item No. 4 of AO 05-06 as ultra
vires for
providing terms which appear to expand or modify some
provisions of
the CARL. 12 The DAR argues that this ruling sets back
the
Comprehensive Agrarian Reform Program by upsetting
its established
substantive and procedural components. Particularly,
the DAR
contends that the nullification of Item No. 4 of AO 05-06
disregarded
the long-standing procedure where the DAR treats a
sale (without its
clearance) as valid based on the doctrine of estoppel,
and that the sold
portion is treated as the landowner's retained area. 13
Applying Item No. 4 of AO 05-06 to the facts of this
case, the
DAR submits that the subject landholding cannot be
considered as the
retained area of Carriedo anymore because he has
already exercised his
right of retention when he previously sold his
landholdings without
DAR clearance. 14 The DAR specifies that sometime in
June 1990,
Carriedo unilaterally sold to PLFI his agricultural
landholdings with
approximately 58.3723 hectares. The DAR, therefore,
argues that
Carriedo's act of disposing his landholdings is

Page 3 of 12
tantamount to the
exercise of his right of retention under the law. 15
Item No. 4 of AO 05-06, provides:
II. STATEMENT OF POLICIES
xx xx
4. Where the transfer/sale involves more than the
five (5) hectare retention area, the transfer is
considered violative of Sec. 6 ofR.A. No. 6657.
In case of multiple or series of transfers/ sales, the
first five (5) hectares sold/conveyed without DAR
clearance and the corresponding titles issued by the
Register of Deeds (ROD) in the name of the
transferee shall, under the principle of estoppel, be
considered valid and shall be treated as the
transferor/s' retained area but in no case shall the
transferee exceed the five-hectare landholding
ceiling pursuant to Sections 6, 70 and 73(a) of R.A.
No. 6657. Insofar as the excess area is concerned, the
same shall likewise be covered considering that the
transferor has no right of disposition since CARP
coverage has been vested as of 15 June 1988. Any
landholding still registered in the name of the
landowner after earlier dispositions totaling an
Carriedo, supra note 2 at 328-330.
13 Rollo, pp. 297-298.
14 Id. at 304.
" Id. at 307-308,
aggregate of five (5) hectares can no longer be part
of his retention area and therefore shall be covered
under CARP.
The DAR's argument has merit.
The Constitution mandates for an agrarian reform
program, thus:
ARTICLE XIII
xx xx
Agrarian and Natural Resources Reform
'
Sec. 4. The State shall, by law, undertake an
agrarian reform :program founded on the right of
farmers and reg~lar farmworkers, who are landless,
to own directly ~r collectively the lands they till or,
in the case of otJier farmworkers, to receive a just
share of the fruit~ thereof. To this end, the State shall
encourage and undertake the just distribution of all
agricultural la~ds, 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 rete~tion limits, the State shall respect
the right of small1landowners. The State shall further
provide incentives for voluntary land-sharing.
(Emphasis suppli'ed.)
To give life to the foregoing Constitutional provision, the
CARL
provides, among others:
Sec. 2. Declaration of Principles and Policies. - It
is the policy of the State to pursue a Comprehensive
Agrarian Reform Program (CARP). The welfare of
the landless farmers and farmworkers will receive
the highest consideration to promote social justice

Page 4 of 12
and to move the nation toward sound rural
development and industrialization, and the
establishment of owner cultivatorship of economicsize
farms as the basis of Philippine agriculture.
To this end, a more equitable distribution and
ownership of land, with due regard to the rights of
landowners to just compensation and to the
ecological needs of the nation, shall be undertaken to
provide fanners and farmworkers with the
opportunity to enhance their dignity and improve the
quality of their lives through greater productivity of
agricultural lands. (Emphasis supplied.) xxxx{
· Resolution 5 G.R. No. 1 76549
Both the Constitution and CARL underscore the
underlying
principle of the agrarian reform program, that is, to
endeavor a more
equitable and just distribution of agricultural lands
taking into account,
among others, equiry considerations. We find merit in
the DAR's
contention that the objective of AO 05-06 is equitable16-
that in order
to ensure the effective implementation of the CARL,
previous sales of
landholding (without DAR clearance) should be treated
as the exercise
of retention rights of the landowner, as embodied in
Item No. 4 of the
said administrative order. 17
The equity in this policy of AO 05-06 is apparent and
easily
discernible. By selling his landholdings, it is reasonably
presumed that
the landowner already received an amount (as purchase
price)
commensurate to the just compensation conformable
with the
constitutional and statutory requirement. At this point,
equity dictates
that he cannot claim anymore, either in the guise of his
retention area
or otherwise, that which he already received in the
previous sale of his
land.
In Delfino, Sr. v. Anasao,18 the issue of whether the
inclusion of
the two-hectare portion sold by Delfino to SM Prime
Holdings, Inc.
(without DAR clearance) resulted in the diminution of
his retention
rights was raised before this Court. In that case, Delfino
was adjudged
by the DAR to be entitled to five hectares of retention
area, to be taken
out from the tenanted area that he owns. Subsequently,
however, and
without prior clearance from the DAR, Delfino sold two
hectares of
land to SM Prime Holdings, Inc. This supervening event
prompted the
DAR Secretary to clarify his previous Order (albeit the
same having

Page 5 of 12
already attained finality) andfound it fair and equitable
to include the
two-hectare portion sold to SM Prime Holdings, Inc. as
part of
Delfino 's retention area. Consequently, Delfino is now
entitled only to
the balance of three hectares. Upon motion for
reconsideration by
Delfino, the DAR Secretary explained that the
clarification was made
in order not to circumvent the five-hectare limitation as
said landowner
"cannot [be allowed to] simultaneously enjoy xx x the
proceeds of the
[sale] and at the same time exercise the right of retention
under
CARP. "19 This Court upheld the clarification issued by
the DAR
Secretary insofar as in holding that Delfino had
partially exercised his
right of retention when he sold two hectares to SM
Prime Holdings, Inc.
after his application for retention was granted by the
DAR.20 We do not
see any reason why the same principle cannot be
applied in this case.
16 Id. at 309.
17 Id. at 310-311.
18 G.R. No. 197?4Se6 ,e mber 10, 2014, 734 SCRA 672.
19 Id. at 677-683.
20 Id. at 688-689
In relation to this, we also take note of the submissions
of the
DAR pertaining to the "immense danger to the
implementation of
CARP" that it perceives to arise as a consequence of our
Decision.
Particularly, DAR posits that the Decision "will provide
landowners
unbridled freedom to dispose any or all of their
agricultural properties
without DAR clearance and still at a moment's notice
decide which of
those lands he wishes to retain, to the prejudice not only
of the tenants
and/or farmer beneficiaries but of the entire CARP as
well."21 It further
posits that to allow Carriedo to claim the subject
landholdings as his
retained area "will in effect put on hold the
implementation of [the]
CARP to wait for the landowner, despite selling majority
of his
agricultural landholdings, and despite receiving
compensation for the
same, to still be able to choose the retention area."22
The DAR, therefore, maintains that AO 05-06 is the
regulation
adopted by the agency precisely in order to prevent
these perceived
dangers in the implementation of the CARL. The policy

Page 6 of 12
behind AO 05-
06 should deter any attempt to circumvent the
provisions of the CARL
which may arise under a factual milieu similar in this
case.
We also agree with the DAR on this point.
AO 05-06 is in consonance with the Stewardship
Doctrine, which
has been held to be the property concept in Section 6,23
Article II of the
1973 Constitution. Under this concept, private property
is supposed to
be held by the individual only as a trustee for the people
in general, who
are its real owners. As a mere steward, the individual
must exercise his
rights to the property not for his own exclusive and
selfish benefit but
for the good of the entire community or nation.24
Property use must not
only be for the benefit of the owner but of society as
well. The State, in
the promotion of social justice, may regulate the
acquisition,
ownership, use, enjoyment, and disposition of private
property, and
equitably diffuse property ownership and profits.25 It
has been held that
Presidential Decree No. 27, one of the precursors of the
CARL,
embodies this policy and concept.26
21 Rollo, p. 308. Emphasis supplied.
22 Id. at 308-309.
23 Sec. 6. The State shall promote social justice to
ensure the dignity, welfare, and security of all
the people. Towards this end, the State shall regulate
the acquisition, ownership, use, enjoyment,
and disposition of private property, and equitably
diffuse property ownership and profits.
24 Mataas na lupa Tenants Assoc., Inc. v. Dimayuga,
G.R. No. L-32049, June 25, 1984, 130 SCRA
30, 42-43.
25 Almeda v. Court of Appeals, G.R. No. L-43800, July
29, 1977, 78 SCRA 194, 199.
26 See Almeda v. Court of Appeals, supra, where this
Court held that:
It is to be noted that under the new Constitution,
property ownership is impressed
with social function. Property use must not only be for
the benefit of the owner but of
society as well. The State, in the promotion of social
justice, may "regulate the
acquisition, ownership, use, enjoyment and disposition
of private property, and
equitably diffuse property ... ownership and profits."
One governmental policy of
recent date projects the emancipation of tenants from
the bondage of the soil and the
transfer to them of the ownership of the land they till.
This is Presidential Decree a~~/
27 ofOctobe< 21, 1972, ordaining that all tenant farmers
"of private agricultural 1:1'

Page 7 of 12
. Resolution 7 G.R. No. 176549
This interpretation is consistent with the objective of
the agrarian
reform program, which is, of course, land distribution to
the landless
farmers and farmworkers.27 The objective is carried out
by Item No. 4
of AO 05-06 as it provides for the consequences in
situations where a
landowner had sold portions of his/her land with an
area more than the
statutory limitation of five hectares. In this scenario,
Item No. 4 of AO
05-06 treats the sale of the first five hectares as the
exercise of the
landowner's retention rights. The reason is that,
effectively, the
landowner has already chosen, and in fact has already
disposed of, and
has been duly compensated for, the area he is entitled to
retain under
the law.
Further, Item No. 4 of AO 05-06 is consistent with
Section 7028
of the CARL as the former likewise treats the sale of the
first five
hectares (in case of multiple/series of transactions) as
valid, such that
the same already constitutes the retained area of the
landowner. This
legal consequence arising from the previous sale of land
therefore
eliminates the prejudice, in terms of equitable land
distribution, that
may befall the landless farmers and farmworkers.
We note that records also bear that the previous sale of
Carriedo' s landholdings was made in violation of the
law, being made
without the clearance of the DAR.29 To rule that
Carriedo is still entitled
to retain the subject landholding will, in effect, reward
the violation,
which this Court cannot allow. We emphasize that the
right of retention
serves to mitigate the effects of compulsory land
acquisition by
devoted to rice and corn under a system of sharecrop or
lease-tenancy, whether
classified as landed estates or not" shall be deemed
"owner of a portion constituting
family-size farm of five (5) hectares if not irrigated and
three (3) hectares if irrigated."
(Citations and italics omitted.)
27 CONSTITUTION, Article XIII, Sec. 4; See also
Republic Act No. 6657, Sec. 2., which states:
Sec. 2. Declaration of Principles and Policies. - It is the
policy of the State to pursue
a Comprehensive Agrarian Reform Program (CARP).
The welfare of the landless
farmers and farmworkers will receive the highest
consideration to promote social
justice and to move the nation toward sound rural
development and industrialization,

Page 8 of 12
and the establishment of owner cultivatorship of
economic-size farms as the basis of
Philippine agriculture.
xx xx
The objective is enlivened by the provisions on Chapter
VII of the CARL which is entitled "Land
Redistribution," to wit: Section 22 (Qualified
Beneficiaries); Section 23 (Distribution Limit);
Section 24 (Award to Beneficiaries); Section 25 (Award
Ceilings for Beneficiaries); and Section
26 (Payment by Beneficiaries).
28 Sec.70. Disposition of Private Agricultural Lands. -
The sale or disposition of agricultural
lands retained by a landowner as a consequence of
Section 6 hereof shall be valid as long as the
total landholdings that shall be owned by the transferee
thereof inclusive of the land to be acquired
shall not exceed the landholding ceiling provided for in
this Act. x xx
29 Republic Act No. 6657, Sec. 6. Retention Limits. - xx
x
xx xx
Upon the effectivity of this Act, any sale, disposition,
lease, management, contract or transfer of
possession of private lands executed by the original
landowner in violation of the Act shall be null
and void: Provided, however, That those executed prior
to this Act shall be valid only when
registered with the Register of Deeds within a period of
three (3) months after the effectivity of
this Act. There(:tfter, all Registers of Deeds shall inform
the Depmtment of Agrarian Reform
(DAR) wi~-ihirty (30) days of any transaction involving
agricultural lands in excess of five (5)
hectares.f
balancing the rights of the landowner and the tenant,
and by
implementing the doctrine that social justice was not
meant to
perpetrate an injustice against the landowner.30 In this
case, however,
Carriedo claims his right over the subject landholding
not because he
was "deprived" of a portion of his land as a consequence
of compulsory
land coverage, but precisely because he already
previously sold his
landholdings, so that the subject landholding is the only
p01iion left for
him.
Although constitutionally guaranteed, the exercise of a
landowner's right of retention should not be done
without due regard to
other considerations which may affect the
implementation of the
agrarian reform program. This is especially true when
such exercise
pays no heed to the intent of the law, or worse, when
such exercise
amounts to its circumvention.
In view of the foregoing, we hold that Item No. 4 of AO
05-06 is

Page 9 of 12
valid. Indeed, the issue in this case is more than the
mere claim of an
individual to his retained area, but had been, at the
onset, an issue of the
implementation of the CARL in line with the mandate
and objective as
set forth in the Constitution.
On Certificate of Land Ownership Award
The Decision also adjudged that CLOAs are not
equivalent to a
Torrens certificate of title, and thus are not
indefeasible.31 The DAR
disagrees and submits that this ruling relegated
Emancipation Patents
and CLOAs to the status of a Certificate of Land
Transfer, which is
merely part of the preparatory steps for the eventual
issuance of a
certificate of title.32
We agree with the DAR. A Certificate of Land
Ownership
Award or CLOA is a document evidencing ownership of
the land
granted or awarded to the beneficiary by the DAR, and
contains the
restrictions and conditions provided for in the CARL
and other
applicable laws. 33
Section 24 of the CARL, as amended,34 reads:
30 Danan v. Court of Appeals, G.R. No. 132759, October
25, 2005, 474 SCRA 113, 128.
Carriedo, supra note 2 at 333.
32 Rollo, pp. 297-298.
33 Lebrudo v. Loyola, G.R. No. 181370, March 9, 2011,
645 SCRA 156, 161. See also Roxas &
Co., Inc. v. Court of Appeals, G.R. No. 127876, December
17, 1999, 321 SCRA 106.
34 Republic Act No. 9700, An Act Strengthening the
Comprehensive Agrarian Reform Program
(CARP), Extending the Acquisition and Distribution of
All Agricultural Lands, Instituting
Necessary Reforms, Amending for the Purpose Certain
Provisions of Republic Act No. 6657,
Otherwise Known as the ~~Tensive Agrarian Reform
Law of 1988, as Amended, and
Appcopdating Funds Theref 0
Reso'lution 9 G.R. No. 176549
Sec. 24. Award to Beneficiaries. - The rights and
responsibilities of the beneficiaries shall commence
from their receipt of a duly registered emancipation
patent or certificate of land ownership award and
their actual physical possession of the awarded land.
Such award shall be completed in not more than one
hundred eighty (180) days from the date of
registration of the title in the name of the Republic of
the Philippines: Provided, That the emancipation
patents, the certificates of land ownership award,
and other titles issued under any agrarian reform
program shall be indefeasible and imprescriptible
after one (1) year from its registration with the
Office of the Registry of Deeds, subject to the

Page 10 of 12
conditions, limitations and qualifications of this Act,
the prope11y registration decree, and other pertinent
laws. The emancipation patents or the certificates
of land ownership award being titles brought
under the operation of the torrens system, are
conferred with the same indefeasibility and
security afforded to all titles under the said
system, as provided for by Presidential Decree
No. 1529, as amended by Republic Act No. 6732.
(Emphasis supplied.)
xx xx
Further, in Estribillo v. Department of Agrarian
Reform,35 we
held that:
The rule in this jurisdiction, regarding public
land patents and the character of the certificate
of title that may be issued by virtue thereof, is
that where land is granted by the government to
a private individual, the corresponding patent
therefor is recorded, and the certificate of title
is issued to the grantee; thereafter, the land is
automatically brought within the operation of
the Land Registration Act, the title issued to the
grantee becoming entitled to all the safeguards
provided in Section 3 8 of the said Act. In other
words, upon expiration of one year from its
issuance, the certificate of title shall become
irrevocable and indefeasible like a certificate
issued in a registration proceeding. (Emphasis
and italics omitted.)
The EPs themselves, like the Certificates of Land
Ownership Award (CLOAs) in Republic Act No.
6657 (the Comprehensive Agrarian Reform Law of
1988), are enrolled in the Torrens system of
registration. The Property Registration Decree in fact
devotes Chapter IX on the subject of EPs. Indeed,
" G.R. No. 159674, June 30, 2006, 494 SCRA 21
I
such EPs and CLOAs are, in themselves, entitled to
be as indefeasible as certificates of title issued in
registration proceedings.36 (Citation omitted.)
We, however, note that the issue involving the issuance,
recall,
or cancellation ofCLOAs is lodged with the DAR,37
which has primary
jurisdiction over the matter. 38
WHEREFORE, premises considered, the motion for
reconsideration filed by the Department of Agrarian
Reform is hereby
GRANTED, and the Decision dated January 20, 2016 is
REVERSED
and SET ASIDE. Item No. 4 of DAR Administrative
Order No. 05,
Series of 2006 is hereby declared VALID.
SO ORDERED.
WE CONCUR:
Associate Justice
Associate Justice
4
t!/U
ANDRE REYES, JR.
Assa te Justice

Page 11 of 12
(On Official Leave)
JOSE C. REYES, JR.
Associate Justice
36 Id. at 237-238, citing Lahora v. Dayanghirang, Jr.,
G.R. No. L-28565, January 30, 1971, 37
SCRA 346, 350.
37 See Aninao v. Asturias Chemical Industries, Inc.,
G.R. No. 160420, July 28, 2005, 464 SCRA
526, 542-543.
38 See Bagongahasa v. Romua/dez, G.R. No. I 79844,
March 23, 201 I, 646 SCRA 338, 350-351.
, Resolution 11 G.R. No. 176549
ATTESTATION
I attest that the conclusions in the above Resolution had
been
reached in consultation before the case was assigned to
the writer of the
opinion of the Court's~·
~
.PERALTA
Chairperson, Special Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution,
and the
Division Chairperson's attestation, it is hereby certified
that the
conclusions in the above Resolution had been reached in
consultation
before the case was assigned to the writer of the opinion
of the Court's
Division.
CERTJFIED l'RUE COP\"
q~ ~
WILl" · Joo v. i,A'g.j)r ANDivis'
n Clerk of Cout•t
TJ1frd Division
~OY l 4 2D1B
Senior Associate Justice

Page 12 of 12
Close Reader
Case Title:
LAND BANK OF THE PHILIPPINES,
petitioner, vs. SPOUSES ANTONIO
and CARMEN AVANCEÑA,
respondents.
More...
G.R. No. 190520. May 30, 2016.*

Search Result
LAND BANK OF THE PHILIPPINES, petitioner, vs.
SPOUSES ANTONIO and CARMEN AVANCEÑA,
respondents.
Expropriation Proceedings; Just Compensation; Petitioner

should pay interest for the delay in the payment of just
compensation. However, such payment of interest should be
computed up to the full payment of just compensation.·There
was delay in the payment of just compensation which entitles
the respondents-spouses to the payment of interest from the time
the property was transferred in the name of the government in
December 1991 up to the time peti-
_______________
* THIRD DIVISION.
320

Land Bank of the Philippines vs. Avanceña
tioner deposited the valuation in the account of the

respondents-spouses in July 1996. We agree with the CA that
petitioner should pay interest for the delay in the payment of
just compensation. However, such payment of interest should be
computed up to the full payment of just compensation.
Same; Same; When property is taken, full compensation of its
value must immediately be paid to achieve a fair exchange for the
property and the potential income lost.·The certificate of title to
respondents-spousesÊ land was canceled and a new certificate
was issued in the governmentÊs name in December 1991 without
giving the former just compensation for such taking. We have
allowed the grant of interest in expropriation cases where there
is delay in the payment of just compensation. We recognize that
the ownerÊs loss is not only his property but also its income-
generating potential. Thus, when property is taken, full
compensation of its value must immediately be paid to achieve a
fair exchange for the property and the potential income lost. The
rationale for imposing the interest is to compensate the
landowners for the income they would have made had they been
http://www.central.com.ph/sfsreader/session/0000016d6d130…003600fb002c009e/p/ATK016/?username=Guest&device=ipad 26/09/2019, 6G33 PM

Page 1 of 15
properly compensated for their properties at the time of the
taking.
Same; Same; Without prompt payment, compensation cannot
be considered „just‰ inasmuch as the property owner is made to
suffer the consequences of being immediately deprived of his land
while being made to wait for a decade or more before actually
receiving the amount necessary to cope with his loss.·The CA did
not err in imposing interest on the just compensation which will
be determined after the remand of the case to the SAC. The
interest should be computed from December 1991 up to the full
payment of just compensation and not only up to the time
petitioner deposited the valuation in 1996 as the CA ruled. The
concept of just compensation embraces not only the correct
determination of the amount to be paid to the owners of the land,
but also payment within a reasonable time from its taking.
Without prompt payment, compensation cannot be considered
„just‰ inasmuch as the property owner is made to suffer the
consequences of being immediately deprived of his land while
being made to wait for a decade or more before actually receiving
the amount necessary to cope with his loss.
321
VOL. 791, MAY 30, 2016 321

Same; Same; The just compensation due respondents-spouses

shall earn legal interest at the rate of twelve percent (12%) per
annum computed from the time of taking in December 1991 until
June 30, 2013. And from July 1, 2013 until full payment, the
interest will be at the new legal rate of six percent (6%) per
annum, in accordance with the revisions governing the rate of
interest established by Bangko Sentral ng Pilipinas-Monetary
Board (BSP-MB) Circular No. 799, Series of 2013.·The award of
interest is imposed in the nature of damages for delay in
payment which, in effect, makes the obligation on the part of the
government one of forbearance to ensure prompt payment of the
value of the land and limit the opportunity loss of the owner. The
just compensation due respondents-spouses shall earn legal
interest at the rate of 12% per annum computed from the time of
taking in December 1991 until June 30, 2013. And from July 1,
2013 until full payment, the interest will be at the new legal rate
of 6% per annum, in accordance with the revisions governing the
rate of interest established by Bangko Sentral ng Pilipinas-
Monetary Board Circular No. 799, Series of 2013. The amount
which petitioner had already paid respondents-spouses by virtue
of the RTCÊs Order granting the issuance of the Writ of
Execution dated October 2, 2000 shall be deducted from the
amount of the just compensation which will be awarded after the
remand of this case.
Same; Same; Execution Pending Appeal; Assuming arguendo
that the amount paid by virtue of the execution pending appeal
would be more than the recomputed amount of the just
compensation, any excess amount should be returned to petitioner
as provided under Section 5, Rule 39 of the Rules of Court.·
Assuming arguendo that the amount paid by virtue of the
execution pending appeal would be more than the recomputed
amount of the just compensation, any excess amount should be

Page 2 of 15
returned to petitioner as provided under Section 5, Rule 39 of the
Rules of Court, to wit: Section 5. Effect of reversal of executed
judgment.·Where the executed judgment is reversed totally or
partially, or annulled, on appeal or otherwise, the trial court
may, on motion, issue such orders of restitution or reparation of
damages as equity and justice may warrant under the
circumstances.
322

PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
LBP Legal Services Group for LBP.
Sobrevinas, Hayudini, Navarro & San Juan for
respondents.
PERALTA, J.:
Before us is a petition for review on certiorari filed by

petitioner Land Bank of the Philippines seeking to annul
and set aside the Decision1 dated August 11, 2008 of the
Court of Appeals (CA) issued in C.A.-G.R. CV No. 00067
directing it to pay twelve percent (12%) interest per annum
for the delay in the payment of just compensation. Also
assailed is the CAÊs Resolution2 dated December 1, 2009
denying reconsideration thereof.
Respondents-spouses Antonio and Carmen Avanceña
were the registered owners of a parcel of agricultural land
situated at Sanghan, Cabadbaran, Agusan del Norte
covered by Transfer Certificate of Title No. RT-2937
containing an area of 205.0074 hectares. In 1988,
respondents-spouses voluntarily offered to sell their land
to the government under the Comprehensive Agrarian
Reform Program (CARP), which consisted of 160.2532
hectares of the land. In 1991, petitioner Land Bank of the
Philippines initially valued the subject lot at P1,877,516.09
based on the guidelines prescribed in DAR
_______________
1 Penned by Associate Justice Jane Aurora C. Lantion, with

Associate Justices Edgardo A. Camello and Edgardo T. Lloren,
concurring; Rollo, pp. 41-61.
2 Penned by Associate Justice Edgardo A. Camello, with Associate
Justices Edgardo T. Lloren and Leoncia R. Dimagiba, concurring; id., at
pp. 62-64.
323
VOL. 791, MAY 30, 2016 323


Page 3 of 15
Administrative Order No. 17, Series of 1989. Upon
recomputation in 1994 and based on DAR AO No. 6, Series
of 1992, as amended, by DAR AO No. 11, Series of 1994,
the land was revalued at P3,337,672.78 but respondents
rejected the valuation. Petitioner deposited the difference
in the cash portion between the revalued amount and the
initial valuation of P1,877,516.09 in trust for the
respondents on July 24, 1996. The parties brought the
matter of valuation to the Department of Agrarian Reform
Adjudication Board (DARAB), Caraga Regional Office,
which affirmed petitionerÊs second valuation.
Respondents-spouses filed with the Regional Trial
Court, acting as a Special Agrarian Court (SAC), a
complaint for determination of just compensation, docketed
as Civil Case No. 4507. They prayed for a valuation of no
less than P200,000.00 per hectare for the subject lot or in
the alternative, to appoint Commissioners to determine the
just compensation; and that they be allowed to withdraw
the valuation amount that petitioner had deposited for
them including the earned interest, pending the courtÊs
final valuation. Petitioner filed its Answer alleging that
the valuation was computed based on the factors
enumerated in Section 17 of Republic Act No. (R.A.) 6657,
the Comprehensive Agrarian Reform Law.
While the complaint was pending, petitioner made a
reevaluation of the property using the valuation prescribed
by DAR AO No. 5, Series of 1998 which yielded the amount
of P9,057,180.32.
On March 29, 2000, the SAC issued its Decision,3 the
dispositive portion of which reads:
WHEREFORE, premises considered, judgment

is hereby rendered directing the defendants Land
Bank of the Philippines (LBP) and the Department
of Agrarian Reform (DAR) to pay plaintiffs the
following:
_______________
3 Per Judge Galdino B. Jardin, Sr.; id., at pp. 240-254.
324

1. The sum of Twenty Million Four Hundred

Seventy-Five Thousand, Seven Hundred Seventy-
Five Pesos (P20,475,775) for the 160.253 hectares
[of] land with its improvements with six (6%)
percent legal interest thereon, less the provisional
deposits from April 1991 until actually paid;
2 The sum of One Hundred Thousand Pesos
(P100,000), as AttorneysÊ fees;
3. The sum of One Hundred Thousand Pesos
(P100,000), litigation expenses;
4. All other claims and counterclaims are
dismissed for lack of merit.
SO ORDERED.4

Page 4 of 15
PetitionerÊs motion for reconsideration was denied,
hence it appealed the decision with the CA. In the
meantime, respondents-spouses moved for the execution of
the RTC decision pending appeal5 which was granted in a
Resolution6 dated October 2, 2000; thus, the writ of
execution was issued and implemented.
On August 11, 2008, the CA issued the assailed decision,
the decretal portion of which reads:
WHEREFORE, in view of all the foregoing, the

instant appeal is hereby GRANTED and the
assailed March 29, 2006 decision of the Regional
Trial Court (RTC), 10th Judicial Region, Branch 5,
Butuan City, in Civil Case No. 4507, is hereby SET
ASIDE. Consequently, this case is remanded to the
court a quo for the recomputation of just
compensation. In determining the valuation of the
subject property, the factors provided under
Section 17 of R.A. 6657 shall be considered in
accord with the formula prescribed in DAR
Administrative Order No. 5, Series of 1998.
Moreover, the just compen-
_______________
4 Id., at pp. 253-254.

5 Id., at pp. 255-259.
6 Id., at pp. 260-262.
325
VOL. 791, MAY 30, 2016 325

sation due the [S]pouses Avanceña should bear

12% interest per annum from the time title to the
property was transferred in the name of the
government up to the time that LBP deposited the
amount of its valuation for the subject land under
the account of the appellees. The basis of the 12%
interest would be the just compensation that would
be determined by the court a quo after remand of
the instant case.
SO ORDERED.7
Petitioner filed a motion for partial reconsideration

arguing that the CA erred in awarding interest at the rate
of 12% p.a. reckoned from the time title to property was
transferred in the name of the government to the time
petitioner deposited the valuation in July 1996. It argued
that upon receipt of the DAR order of deposit, it
immediately deposited the cash portion of the initial
valuation of P1,877,516.09 on October 17, 1991, thus it
never incurred delay as the title to the subject lot was
transferred in the name of the government only in
December 1991.
On December 1, 2009, the CA issued its resolution
denying the motion for reconsideration. It found that

Page 5 of 15
nowhere in the records showed that petitioner made a
deposit of P1,877,516.09 on October 17, 1991.
Dissatisfied, petitioner is now before us alleging that:
THE HONORABLE COURT OF APPEALS

COMMITTED A SERIOUS ERROR OF LAW IN
AWARDING INTEREST AT THE RATE OF 12%
PER ANNUM FROM THE TIME TITLE TO THE
PROPERTY WAS TRANSFERRED IN THE NAME
OF THE GOVERNMENT IN 1991 UP TO THE
TIME LBP ALLEGEDLY DEPOSITED THE
VALUATION IN 1996.8
_______________
7 Id., at p. 61.
8 Id., at pp. 24-25.
326

Petitioner claims that it deposited cash and bonds for

the initial valuation of P1,877,516.09 on October 17, 1991.
It attached in this petition a Certification9 dated October
22, 1991 which stated that the cash and bonds due the
respondents-spouses have been earmarked by petitioner
for respondents-spouses on October 17, 1991. It argues
that such deposit was the basis for the DAR to take
possession of the property and caused the issuance of the
title in the name of the government in December 1991,
pursuant to Section 16(e) of R.A. 6657, thus, it did not
incur any delay in depositing the amounts due the
respondents-spouses which can validly justify the payment
of interest.
Petitioner cites the case of Apo Fruits Corporation, et al.
v. CA10 saying that we have categorically declared therein
that payment of interest for delay cannot be applied where
there is prompt and valid payment of just compensation as
initially determined, as subsequently determined after
revaluation, and even if the amount was later on increased
pursuant to the courtÊs judgment.
Petitioner further contends that despite the pendency of
the case with the CA, the RTC issued a Writ of Execution
dated March 9, 2000 directing petitioner to pay the RTCÊs
valuation of P20,475,775.00 plus legal interest thereon at
the rate of 6% per annum from April 1991 until fully paid;
that since such valuation was, however, set aside by the
CA in its assailed decision, there is now a huge possibility
that the recomputed value will be much lower than
P20,475,775.00; that the advance payment it made
amounting to P23,416,772.55 may have exceeded the value
of the subject land so that there is a need for respondents-
spouses to return the difference between its valuation of
P9,057,182.30 and the advance payment.
We are not persuaded.

Page 6 of 15
_______________
9 Id., at p. 184.
10 565 Phil. 418, 443; 541 SCRA 117, 141 (2007).
327
VOL. 791, MAY 30, 2016 327

The CA found that the title to respondents-spousesÊ land

was canceled and a new title was issued in the name of the
Republic of the Philippines in December 1991, but there
was no showing that petitioner had made payments prior
to the taking of the land.
Thus, there was delay in the payment of just
compensation which entitles the respondents-spouses to
the payment of interest from the time the property was
transferred in the name of the government in December
1991 up to the time petitioner deposited the valuation in
the account of the respondents-spouses in July 1996. We
agree with the CA that petitioner should pay interest for
the delay in the payment of just compensation. However,
such payment of interest should be computed up to the full
payment of just compensation.
Petitioner argues that it had made a deposit on October
17, 1991, i.e., prior to the cancellation of the title of the
respondents-spouses, and submitted with us a
Certification dated October 22, 1991 issued by the
petitionerÊs Bonds Servicing Department stating that it
had earmarked the sum of P1,877,516.09 in cash and in
LBP bonds as compensation for the parcel of lands covered
by RT-2937 in the name of respondents-spouses on October
17, 1991 pursuant to R.A. 6657 through voluntary offer.
However, such certification was not among those that the
petitioner offered as evidence during the trial.11 More
importantly, We had rejected the practice of earmarking
funds and opening trust accounts for purposes of effecting
payment, hence, the law12 requires payment of just
_______________
11 Rollo, pp. 263-264.

12 Section 16(e) of R.A. 6657 provides as follows:
Sec. 16. Procedure for Acquisition of Private Lands.·
xxxx
(e) Upon receipt by the landowner of the corresponding payment or,
in case of rejection or no response from the landowner, upon the deposit
with an accessible hank designated by the DAR of the compensation in
cash
328


Page 7 of 15
compensation in cash or Land Bank of the Philippines
(LBP) bonds, not by trust account.13
The certificate of title to respondents-spousesÊ land was
canceled and a new certificate was issued in the
governmentÊs name in December 1991 without giving the
former just compensation for such taking. We have allowed
the grant of interest in expropriation cases where there is
delay in the payment of just compensation.14 We recognize
that the ownerÊs loss is not only his property but also its
income-generating potential.15 Thus, when property is
taken, full compensation of its value must immediately be
paid to achieve a fair exchange for the property and the
potential income lost.16 The rationale for imposing the
interest is to compensate the landowners for the income
they would have made had they been properly
compensated for their properties at the time of the
taking.17
In Republic v. CA,18 we held:
or in LBP bonds in accordance with this Act, the DAR
shall take immediate possession of the land and shall
request the proper Register of Deeds to issue a Transfer
Certificate of Title (TCT) in the name of the Republic of the
Philippines. x x x.
_______________
13 Heirs of Francisco R. Tantoco, Sr. v. Court of Appeals, 523 Phil.

257, 278; 489 SCRA 590, 609-610 (2006), citing Sta. Rosa Realty
Development Corporation v. Court of Appeals, 419 Phil. 457, 475; 367
SCRA 175, 192 (2001); Land Bank of the Philippines v. Court of Appeals,
319 Phil. 246, 258; 249 SCRA 149, 160 (1995).
14 Land Bank of the Philippines v. Heirs of Jesus Alsua, G.R. No.
211351, February 4, 2015, 750 SCRA 121; Land Bank of the Philippines
v. Santiago, Jr., 696 Phil. 142, 162; 682 SCRA 264, 282 (2012).
15 Secretary of the Department of Public Works and Highways v.
Tecson, G.R. No. 179334, April 21, 2015, 756 SCRA 389.
16 Id.
17 Land Bank of the Philippines v. Obias, 684 Phil. 296, 304; 668
SCRA 265, 274 (2012).
18 433 Phil. 106; 383 SCRA 611 (2002).
329
VOL. 791, MAY 30, 2016 329

The constitutional limitation of „just

compensation‰ is considered to be the sum
equivalent to the market value of the property,
broadly described to be the price fixed by the seller
in open market in the usual and ordinary course of
legal action and competition or the fair value of the
property as between one who receives, and one who
desires to sell it, fixed at the time of the actual
taking by the government. Thus, if property is
taken for public use before compensation is
deposited with the court having jurisdiction over
the case, the final compensation must include
interests on its just value to be computed from the

Page 8 of 15
time the property is taken to the time when
compensation is actually paid or deposited with the
court. In fine, between the taking of the property
and the actual payment, legal interests accrue in
order to place the owner in a position as good as
(but not better than) the position he was in before
the taking occurred.
The Bulacan trial court, in its 1979 decision,
was correct in imposing interests on the zonal
value of the property to be computed from the time
petitioner instituted condemnation proceedings
and „took‰ the property in September 1969. This
allowance of interest on the amount found to be the
value of the property as of the time of the taking
computed, being an effective forbearance, at 12%
per annum should help eliminate the issue of the
constant fluctuation and inflation of the value of
the currency over time. Article 1250 of the Civil
Code, providing that, in case of extraordinary
inflation or deflation, the value of the currency at
the time of the establishment of the obligation
shall be the basis for the payment when no
agreement to the contrary is stipulated, has strict
application only to contractual obligations. In other
words, a contractual agreement is needed for the
effects of extraordinary inflation to be taken into
account to alter the value of the currency.19
Thus, the CA did not err in imposing interest on the just

compensation which will be determined after the remand
of
_______________
19 Id., at pp. 122-123; pp. 622-623.
330

the case to the SAC. The interest should be computed

from December 1991 up to the full payment of just
compensation and not only up to the time petitioner
deposited the valuation in 1996 as the CA ruled. The
concept of just compensation embraces not only the correct
determination of the amount to be paid to the owners of
the land, but also payment within a reasonable time from
its taking.20 Without prompt payment, compensation
cannot be considered „just‰ inasmuch as the property
owner is made to suffer the consequences of being
immediately deprived of his land while being made to wait
for a decade or more before actually receiving the amount
necessary to cope with his loss.21
The award of interest is imposed in the nature of
damages for delay in payment which, in effect, makes the
obligation on the part of the government one of forbearance
to ensure prompt payment of the value of the land and
limit the opportunity loss of the owner.22 The just

Page 9 of 15
compensation due respondents-spouses shall earn legal
interest at the rate of 12% per annum computed from the
time of taking in December 1991 until June 30, 2013.23
And from July 1, 2013 until full payment, the interest will
be at the new legal rate of 6% per annum, in accordance
with the revisions governing the rate of interest
established by Bangko Sentral ng Pilipinas-Monetary
_______________
20 Land Bank of the Philippines v. Soriano, 634 Phil. 426, 435; 620
SCRA 347, 356 (2010).
21 Id.
22 Republic v. Soriano, G.R. No. 211666, February 25, 2015, 752
SCRA 71; Land Bank of the Philippines v. Rivera, G.R. No. 182431,
February 27, 2013, 692 SCRA 148, 153, citing Land Bank of the
Philippines v. Celada, 515 Phil. 467, 484; 479 SCRA 495, 512 (2006),
citing Land Bank of the Philippines v. Wycoco, 464 Phil. 83, 100; 419
SCRA 67, 80 (2004), further citing Reyes v. National Housing Authority,
443 Phil. 603, 616; 395 SCRA 494, 506 (2003).
23 Land Bank of the Philippines v. Lajom, G.R. No. 184982, August
20, 2014, 733 SCRA 511, 524.
331
VOL. 791, MAY 30, 2016 331

Board Circular No. 799,24 Series of 2013.25 The amount

which petitioner had already paid respondents-spouses by
virtue of the RTCÊs Order granting the issuance of the Writ
of Execution dated October 2, 2000 shall be deducted from
the amount of the just compensation which will be
awarded after the remand of this case.
PetitionerÊs reliance on our Third DivisionÊs December
19, 2007 Resolution in the case of Apo Fruits Corporation
v. CA26 wherein we declared that the payment of interest
for the delay of payment cannot be applied where there is
prompt and valid payment of just compensation as initially
determined, even if the amount of just compensation was
later on increased pursuant to the CourtÊs judgment, is
misplaced. We found then that as Land Bank had
deposited pertinent amounts in favor of the landowners
within fourteen months after the latter filed their
complaint for determination of just compensation with the
SAC, there was no unreasonable delay in the payment of
just compensation which entitled the landowners to the
payment of 12% interest per annum on the unpaid just
compensation.
However, such resolution was subsequently reversed
and set aside in our En Banc Resolution dated October 12,
2010 where we granted the landownersÊ motion for
reconsideration. We ordered the Land Bank to pay the
landowners an interest at the rate of 12% per annum on
the unpaid balance of the just compensation, computed
from the date the Government took the properties on
December 9, 1996, until the respondent Land Bank fully
paid the balance of the principal amount on May 9, 2008.

Page 10 of 15
We ruled that notwithstanding that the Land Bank had
immediately paid the remaining unpaid balance of the just
compensation as finally determined by the court,
_______________
24 Entitled „Rate of Interest in the Absence of Stipulation‰ (June 21,

2013).
25 See Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013,
703 SCRA 439, 455.
26 Apo Fruits Corporation v. Court of Appeals, supra note 10.
332

however, 12 long years had passed before the

landowners were fully paid. Thus, the landowners were
entitled to legal interest from the time of the taking of the
property until the actual payment in order to place the
owner in a position as good as, but not better than, the
position he was in before the taking occurred.27 The
imposition of such interest was to compensate the
landowners for the income they would have made had they
been properly compensated for their properties at the time
of the taking.28 Thus, we held:
Let it be remembered that shorn of its eminent

domain and social justice aspects, what the
agrarian land reform program involves is the
purchase by the government, through the LBP, of
agricultural lands for sale and distribution to
farmers. As a purchase, it involves an exchange of
values the landholdings in exchange for the LBPÊs
payment. In determining the just compensation for
this exchange, however, the measure to be borne in
mind is not the takerÊs gain but the ownerÊs loss
since what is involved is the takeover of private
property under the States coercive power. As
mentioned above, in the value-for-value exchange
in an eminent domain situation, the State must
ensure that the individual whose property is taken
is not shortchanged and must hence carry the
burden of showing that the just compensation
requirement of the Bill of Rights is satisfied.
The ownerÊs loss, of course, is not only his
property but also its income-generating potential.
Thus, when property is taken, full compensation of
its value must immediately be paid to achieve a
fair exchange for the property and the potential
income lost. The just compensation is made
available to the property owner so that he may
derive income from this compensation, in the same
manner that he would have derived income from
his expropriated property. If full compensation is
not paid for property taken, then the State must
make up for the

Page 11 of 15
_______________
27 Republic v. Court of Appeals, supra note 18.

28 Supra note 17.
333
VOL. 791, MAY 30, 2016 333

shortfall in the earning potential immediately lost due

to the taking, and the absence of replacement property
from which income can be derived; interest on the unpaid
compensation becomes due as compliance with the
constitutional mandate on eminent domain and as a basic
measure of fairness.29
As in the Apo case, respondents-spouses voluntarily

offered to sell their land pursuant to the governmentÊs land
reform program, however, the valuation made by the LBP
on the land was rejected by the former for being
undervalued. Respondents-spouses had to resort to the
filing of the case with the RTC, sitting as SAC, for the
determination of just compensation of their land. It has
already been 25 years but respondents-spouses have not
received the full amount of the just compensation due
them, and further delay can be expected with the remand
of the case to the SAC for the recomputation of the just
compensation. Thus, the long delay entitles them to the
payment of interest to compensate for the loss of income
due to the taking.30
PetitionerÊs claim for reimbursement of the amount it
had already paid to respondents-spouses by virtue of the
writ of execution pending appeal then issued by the SAC is
not meritorious. The recomputed amount of just
compensation due the respondents-spouses shall only be
determined after the remand of the case to the SAC. It
would only be that time which would establish whether the
payment made to them was more than the just
compensation that they are entitled to.
There is also no basis for petitioner to claim that
respondents-spouses are merely entitled to provisionally
receive its valuation of P9,057,182.30 pending the final
determination of the just compensation. Notably, the CAÊs
decision rejected petitionerÊs valuation as well, thus:
_______________
29 Apo Fruits Corporation v. Land Bank of the Philippines, 647 Phil.

251, 273; 632 SCRA 727, 746-747 (2010).
30 Id.
334


Page 12 of 15
It has been stated in a number of cases that in
computing the just compensation for expropriation
proceedings, it is the value of the land at the time
of the taking which should be taken into
consideration. This being so, then in determining
the value of the land for the payment of just
compensation, the time of taking should be the
basis.
In the case at bar, the court a quo failed to
consider the value and the character of the land at
the time it was taken by the government in 1991.
Instead, the former assessed the market value of
the idle portion of the subject lot as a rice land. Yet,
per LBPÊs Field Investigation Report (FIR)
prepared in 1990, the subject lot was not yet
devoted to rice or corn at that time, although its
idle portion was classified as suitable for said
crops. Also, in computing the value of the land, the
court a quo considered the landÊs appreciation
value from the time of taking in 1991 up to the
filing of the case in 1997 and of appelleeÊs potential
profit from the landÊs suitability to rice and corn,
which We find to be contrary to the settled
criterion in determining just compensation. Hence
erroneous.
The foregoing pronouncements do not, however,
mean that We favor LBPÊs valuation of
P9,057,10.32 for the subject lot. The same is found
to be non-reflective of just compensation because
the Tax Declaration used by LBP in fixing the
market value of the land in its initial valuation for
the year 1986, as indicated in the FIR.
Additionally, no evidence was adduced to show that
LBP used the correct tax declaration (TD), which
should be the 1991 TD, in fixing the market value
in its latest computation of the landÊs valuation.
Notably, LBPÊs initial valuation of the land in
1991 was P1,877,516.09 and became P3,337,672.78
after recomputation in 1994, pursuant to DAR AO
No. 11, Series of 1994. During the pendency of the
case in court, DAR AO No. 5, Series of 1998 was
issued; hence, LBP accordingly recomputed its
valuation and came up with the amount of
P9,057,180.32 (the amount of P8,955,269.16
335
VOL. 791, MAY 30, 2016 335

constitutes the value of the land while

P101,913.14 was the value of the legal easement).
Albeit LBP claims to have faithfully observed
and applied the prescribed formula in DAR AO No.
5, Series of 1998, in its recomputation of the landÊs
valuation, it adduced no evidence, like the official
computation sheets, to show that the latest
valuation of the land was indeed arrived at using
the prescribed formula and that the correct

Page 13 of 15
documents indicating the factors enumerated in
Section 17 of RA 6657 were actually considered.
Hence, We cannot accept LBPÊs latest valuation as
well.
Consequently, We deem it proper to remand this
case to the court a quo for a recomputation of the
just compensation. x x x31
Therefore, until the SAC had finally determined the just

compensation due the respondents-spouses upon remand of
the case, it could not be said that the payment made by
virtue of the writ of execution pending appeal had
exceeded the value of the subject property.
Moreover, assuming arguendo that the amount paid by
virtue of the execution pending appeal would be more than
the recomputed amount of the just compensation, any
excess amount should be returned to petitioner as provided
under Section 5, Rule 39 of the Rules of Court, to wit:
Section 5. Effect of reversal of executed

judgment.·Where the executed judgment is
reversed totally or partially, or annulled, on appeal
or otherwise, the trial court may, on motion, issue
such orders of restitution or reparation of damages
as equity and justice may warrant under the
circumstances.
WHEREFORE, the dispositive portion of the Decision

dated August 11, 2008 of the Court of Appeals in C.A-G.R.
CV No. 00067 is hereby modified and shall now read as
follows:
_______________
31 Rollo, pp. 57-58.
336

WHEREFORE, in view of all the foregoing, the

instant appeal is hereby GRANTED and the
assailed March 29, 2006 decision of the Regional
Trial Court (RTC), 10th Judicial Region, Branch 5,
Butuan City, in Civil Case No. 4507, is hereby SET
ASIDE. Consequently, this case is remanded to the
court a quo for the recomputation of just
compensation. The interest on the recomputed just
compensation should be computed from December
1991 up to the payment of the full amount of just
compensation less whatever amounts received by
the respondents-spouses.
SO ORDERED.
Velasco, Jr. (Chairperson), Perez and Reyes, JJ.,

concur.
Jardeleza, J., On Leave.

Page 14 of 15
Judgment modified.
Notes.·Taking of private property without just

compensation is a violation of a personÊs property right.
(Republic vs. Ortigas and Company Limited Partnership,
717 SCRA 601 [2014])
Although the taking of properties for agrarian reform
purposes is a revolutionary kind of expropriation, it should
not be carried out at the undue expense of landowners who
are also entitled to protection under the Constitution and
agrarian reform laws. (Land Bank of the Philippines vs.
Lajom, 733 SCRA 511 [2014])
··o0o··

Page 15 of 15
Close Reader
Case Title:
CENTRAL MINDANAO UNIVERSITY
REPRESENTED BY ITS PRESIDENT
DR. LEONARDO A. CHUA, petitioner, 86 SUPREME COURT REPORTS ANNOTATED
vs. THE DEPARTMENT OF AGRARIAN
Central Mindanao University vs. Department of Agrarian
REFORM ADJUDICATION BOARD, Reform Adjudication Board
THE COURT OF APPEALS AND ALVIN
OBRIQUE, REPRESENTING *
G.R. No. 100091.October 22, 1992.
BUKIDNON FREE FARMERS
AGRICULTURAL LABORERS
ORGANIZATION (BUFFALO), CENTRAL MINDANAO UNIVERSITY REPRESENTED
BY ITS PRESIDENT DR. LEONARDO A. CHUA,
respondents.
petitioner, vs. THE DEPARTMENT OF AGRARIAN
REFORM ADJUDICATION BOARD, THE COURT OF
More...
APPEALS AND ALVIN OBRIQUE, REPRESENTING
BUKIDNON FREE FARMERS AGRICULTURAL
Search Result LABORERS ORGANIZATION (BUFFALO), respondents.
Agrarian Reform Law; Court agrees with the DARABÊs

finding that Obrique et. al, are not tenants.–·We agree with the
DARABÊs finding that Obrique, et. al. are not tenants. Under the
terms of the written agreement signed by Obrique, et. al.,
pursuant to the livelihood program called „Kilusang Sariling
Sikap Program‰, it was expressly stipulated that no landlord-
tenant relationship existed between the CMU and the faculty
and staff (participants in the project). The CMU did not receive
any share from the harvest/fruits of the land tilled by the
participants. What the CMU collected was a nominal service fee
and land use participantÊs fee in consideration of all the kinds of
assistance given to the participants by the CMU.
Same; Same; Under Section 73 of R.A. 6657, persons guilty of
committing prohibited acts of forcible entry or illegal detainer do
not qualify as beneficiaries and may not avail themselves of the
rights and benefits of agrarian reform.–·A person entering upon
lands of another, not claiming in good faith the right to do so by
virtue of any title of his own, or by virtue of some agreement
with the owner or with one whom he believes holds title to the
land, is a squatter. Squatters cannot enter the land of another
surreptitiously or by stealth, and under the umbrella of the
CARP, claim rights to said property as landless peasants. Under
Section 73 of R.A. 6657, persons guilty of committing prohibited
acts of forcible entry or illegal detainer do not qualify as
beneficiaries and may not avail themselves of the rights and
benefits of agrarian reform. Any such person who knowingly and
wilfully violates the above provision of the Act shall be punished
with imprisonment or fine at the discretion of the Court.
______________
* EN BANC.
87
http://www.central.com.ph/sfsreader/session/0000016d6d133…03600fb002c009e/p/APV980/?username=Guest&device=ipad 26/09/2019, 6H33 PM

Page 1 of 15
VOL. 215, OCTOBER 22, 1992 87

Reform Adjudication Board
Same; Same; Same; Private respondents, not being tenants

nor proven to be landless peasants, cannot qualify as beneficiaries
under the CARP.–·In view of the above, the private
respondents, not being tenants nor proven to be landless
peasants, cannot qualify as beneficiaries under the CARP.
Same; Same; Same; Under Section 4 and Section 10 of R.A.
6657 it is crystal clear that the jurisdiction of the DARAB is
limited only to matters involving the implementation of the
CARP.––Under Section 4 and Section 10 of R.A. 6657, it is
crystal clear that the jurisdiction of the DARAB is limited only to
matters involving the implementation of the CARP. More
specifically, it is restricted to agrarian cases and controversies
involving lands falling within the coverage of the aforementioned
program. It does not include those which are actually, directly
and exclusively used and found to be necessary for, among such
purposes, school sites and campuses for setting up experimental
farm stations, research and pilot production centers, etc.
Same; Same; Same; DARAB has no power to try, head and
adjudicate the case pending before it involving a portion of the
CMUÊs titled school site.–·Consequently, the DARAB has no
power to try, hear and adjudicate the case pending before it
involving a portion of the CMUÊs titled school site, as the portion
of the CMU land reservation ordered segregated is actually,
directly and exclusively used and found by the school to be
necessary for its purposes. The CMU has constantly raised the
issue of the DARABÊs lack of jurisdiction and has questioned the
respondentÊs authority to hear, try and adjudicate the case at
bar.
Same; Same; Same; Same; Section 50 of R.A. 6657 confers on
the DAR quasi-judicial powers.–·Section 50 of R.A. 6657 confers
on the DAR quasi-judicial powers as follows: The DAR is hereby
vested with primary jurisdiction to determine and adjudicate
agrarian reform matters and shall have original jurisdiction over
all matters involving the implementation of agrarian reform x x
x.
Same; Same; Same; Same; Same; There is no doubt that the
DARAB has jurisdiction to try and decide any agrarian dispute
in the implementation of the CARP; Definition of agrarian
dispute.–·Section 17 of Executive Order No. 129-A is merely a
repetition of Section 50, R.A. 6657. There is no doubt that the
DARAB has jurisdiction to try and decide any agrarian dispute
in the implementation of the CARP.
88

An agrarian dispute is defined by the same law as any

controversy relating to tenurial rights whether leasehold,
tenancy stewardship or otherwise over lands devoted to
agriculture.

Page 2 of 15
PETITION for review on certiorari of the decision of the
Court of Appeals. Marigomen, J.

Abundio L. Okit for petitioner.
Cabanlas, Resma & Cabanlas Law Office for
respondent Obrique, et al.
CAMPOS, JR., J.:
This is a Petition for Review on Certiorari under Rule 65 of

the Rules of Court to nullify the proceedings and decision
of the Department of Agrarian Reform Adjudication Board
(DARAB for brevity) **
dated September 4, 1989 and to set
aside the decision of the Court of Appeals dated August
20, 1990, affirming the decision of the DARAB which
ordered the segregation of 400 hectares of suitable,
compact and contiguous portions of the Central Mindanao
University (CMU for brevity) land and their inclusion in
the Comprehensive Agrarian Reform Program (CARP for
brevity) for distribution to qualified beneficiaries, on the
ground of lack of jurisdiction.
This case originated in a complaint filed by
complainants calling themselves as the Bukidnon Free
Farmers and Agricultural Laborers Organization
(BUFFALO for brevity) under the leadership of Alvin
Obrique and Luis Hermoso against the CMU, before the
Department of Agrarian Reform for Declaration of Status
as Tenants, under the CARP.
From the records, the following facts are evident. The
petitioner, the CMU, is an agricultural educational
institution owned and run by the state located in the town
of Musuan, Bukidnon province. It started as a farm school
at Marilang,
_______________
**Justice Alfredo Marigomen, ponente; Justices Josue N. Bellosillo
and Filemon H. Mendoza, concurring.
89
VOL. 215, OCTOBER 22, 1992 89

Bukidnon, in early 1910, in response to the public demand

for an agricultural school in Mindanao. It expanded into
the Bukidnon National Agricultural High School and was
transferred to its new site in Managok near Malaybalay,
the provincial capital of Bukidnon.
In the early 1960Ês it was converted into a college with
campus at Musuan, until it became what is now known as
the CMU, but still primarily an agricultural university.
From its beginning, the school was the answer to the
crying need for training people in order to develop the
agricultural potential of the island of Mindanao. Those
who planned and established the school had a vision as to
the future development of that part of the Philippines. On
January 16, 1958 the President of the Republic of the
Philippines, the late Carlos P. Garcia, „upon the
recommendation of the Secretary of Agriculture and

Page 3 of 15
Natural Resources, and pursuant to the provisions of
Section 53, of Commonwealth Act No. 141, as amended‰,
issued Proclamation No. 476, withdrawing from sale or
settlement and reserving for the Mindanao Agricultural
College, a site which would be the future campus of what is
now the CMU. A total land area comprising 3,080 hectares
was surveyed and registered and titled in the1
name of the
petitioner under OCT Nos. 160, 161 and 162.
In the course of the cadastral hearing of the schoolÊs
petition for registration of the aforementioned grant of
agricultural land, several tribes belonging to cultural
communities, opposed the petition claiming ownership of
certain ancestral lands forming part of the tribal
reservations. Some of the claims were granted so that what
was titled to the present petitioner school was reduced
from 3,401 hectares to 3,000 hectares.
In the early 1960Ês the student population of the school
was less than 3,000. By 1988, the student population had
expanded to some 13,000 students, so that the school
community has an academic population (student, faculty
and non-academic staff) of almost 15,000. To cope with the
increase in its enrollment, it has expanded and improved
its educational facilities partly
_______________
1Exhibits 1, 1-A and 1-B.
90

from government appropriation and partly by self-help

measures.
True to the concept of a land grant college, the school
embarked on self-help measures to carry out its
educational objectives, train its students, and maintain
various activities which the government appropriation
could not adequately support or sustain. In 1984, the CMU
approved Resolution No. 160, adopting a livelihood
program called „Kilusang Sariling Sikap Program‰ under
which the land resources of the University were leased to
its faculty and employees. This arrangement was covered
by a written contract. Under this program, the faculty and
staff combine themselves to groups of five members each,
and the CMU provided technical know-how, practical
training and all kinds of assistance, to enable each group
to cultivate 4 to 5 hectares of land for the lowland rice
project. Each group pays the CMU a service fee and also a
land use participantÊs fee. The contract prohibits
participants and their hired workers to establish houses or
live in the project area and to use the cultivated land as a
collateral for any kind of loan. It was expressly stipulated
that no landlord-tenant relationship existed between the
CMU and the faculty and/or employees. This particular
program was conceived as a multi-disciplinary applied
research extension and productivity program to utilize
available land, train people in modern agricultural
technology and at the same time give the faculty and staff
opportunities within the confines of the CMU reservation

Page 4 of 15
to earn additional income to augment their salaries. The
location of the CMU at Musuan, Bukidnon, which is quite
a distance from the nearest town, was the proper setting
for the adoption of such a program. Among the participants
in this program were Alvin Obrique, Felix Guinanao,
Joven Caballero, Nestor Pulao, Danilo Vasquez, Aronio
Pelayo and other complainants. Obrique was a Physics
Instructor at the CMU while the others were employees in
the lowland rice project. The other complainants who were
not members of the faculty or non-academic staff of the
CMU, were hired workers or laborers of the participants in
this program. When petitioner Dr. Leonardo Chua became
President of the CMU in July 1986, he discontinued the
agri-business project for the production of rice, corn and
sugar cane known as Agri-Business Management
91
VOL.215, OCTOBER22, 1992 91

and Training Project, due to losses incurred while carrying

on the said project. Some CMU personnel, among whom
were the complainants, were laid-off when this project was
discontinued. As assistant Director of this agri-business
project, Obrique was found guilty of mishandling the CMU
funds and was separated from service by virtue of
Executive Order No. 17, the re-organization law of the
CMU.
Sometime in 1986, under Dr. Chua as President, the
CMU launched a self-help project called CMU-Income
Enhancement Program (CMU-IEP) to develop unutilized
land resources, mobilize and promote the spirit of self-
reliance, provide socioeconomic and technical training in
actual field project implementation and augment the
income of the faculty and the staff.
Under 2the terms of a 3-party Memorandum of
Agreement among the CMU, the CMU-Integrated
Development Foundation (CMU-IDF) and groups or
„seldas‰ of 5 CMU employees, the CMU would provide the
use of 4 to 5 hectares of land to a selda for one (1) calendar
year. The CMU-IDF would provide researchers and
specialists to assist in the preparation of project proposals
and to monitor and analyze project implementation. The
selda in turn would pay to the CMU P100 as service fee
and P1,000 per hectare as participantÊs land rental fee. In
addition, 400 kilograms of the produce per year would be
turned over or donated to the CMU-IDF. The participants
agreed not to allow their hired laborers or members of
their family to establish any house or live within the
vicinity of the project area and not to use the allocated lot
as collateral for a loan. It was expressly provided that no
tenant-landlord relationship would exist as a result of the
Agreement.
Initially, participation in the CMU-IEP was extended
only to workers and staff members who were still employed
with the CMU and was not made available to former
workers or employees. In the middle of 1987, to cushion
the impact of the discontinuance of the rice, corn and sugar
cane project on the lives of its former workers, the CMU
allowed them to participate in the CMU-IEP as special

Page 5 of 15
participants.
_______________
2 Exhibit „U‰.
92

Under the terms of a contract called Addendum To

Existing Memorandum of Agreement Concerning
Participation
3
To The CMU-Income Enhancement
Program, a former employee would be grouped with an
existing selda of his choice and provided one (1) hectare for
a lowland rice project for one (1) calendar year. He would
pay the land rental participantÊs fee of P1,000.00 per
hectare but on a charge-to-crop basis. He would also be
subject to the same prohibitions as those imposed on the
CMU employees. It was also expressly provided that no
tenant-landlord relationship would exist as a result of the
Agreement.
The one-year contracts expired on June 30, 1988. Some
contracts were renewed. Those whose contracts were not
renewed were served with notices to vacate.
The non-renewal of the contracts, the discontinuance of
the rice, corn and sugar cane project, the loss of jobs due to
termination or separation from the service and the alleged
harassment by school authorities, all contributed to, and
precipitated the filing of, the complaint.
On the basis of the above facts, the DARAB found that
the private respondents were not tenants and cannot
therefore be beneficiaries under the CARP. At the same
time, the DARAB ordered the segregation of 400 hectares
of suitable, compact and contiguous portions of the CMU
land and their inclusion in the CARP for distribution to
qualified beneficiaries.
The petitioner CMU, in seeking a review of the
decisions of the respondents DARAB and the Court of
Appeals, raised the following issues:
1.) Whether or not the DARAB has jurisdiction to hear

and decide Case No. 005 for Declaration of Status
of Tenants and coverage of land under the CARP.
2.) Whether or not respondent Court of Appeals
committed serious errors and grave abuse of
discretion amounting to lack of jurisdiction in
dismissing the Petition for Review on Certiorari
and affirming the decision of DARAB.
________________
3 Exhibit „V‰.
93
VOL.215, OCTOBER22, 1992 93


Page 6 of 15
In their complaint, docketed as DAR Case No. 5, filed with
the DARAB, complainants Obrique, et. al. claimed that
they are tenants of the CMU and/or landless peasants
claiming/occupying a part or portion of the CMU situated
at Sinalayan, Valencia, Bukidnon and Musuan, Bukidnon,
consisting of about 1,200 hectares. We agree with the
DARABÊs finding that Obrique, et. al. are not tenants.
Under the terms of the written agreement signed by
Obrique, et. al., pursuant to the livelihood program called
„Kilusang Sariling Sikap Program‰, it was expressly
stipulated that no landlord-tenant relationship existed
between the CMU and the faculty and staff (participants in
the project). The CMU did not receive any share from the
harvest/fruits of the land tilled by the participants. What
the CMU collected was a nominal service fee and land use
participantÊs fee in consideration of all the kinds of
assistance given to the participants by the CMU. Again,
the agreement signed by the participants under the CMU-
IEP clearly stipulated that no landlord-tenant relationship
existed, and that the participants are not share croppers
nor lessees, and the CMU did not share in the produce of
the participantsÊ labor.
In the same paragraph of their complaint, complainants
claim that they are landless peasants. This allegation
requires proof and should not be accepted as factually true.
Obrique is not a landless peasant. The facts showed he was
a Physics Instructor at CMU holding a very responsible
position and was separated from the service on account of
certain irregularities he committed while Assistant
Director of the Agri-Business Project of cultivating lowland
rice. Others may, at the moment, own no land in Bukidnon
but they may not necessarily be so destitute in their places
of origin. No proof whatsoever appears in the record to
show that they are landless peasants.
The evidence on record establish without doubt that the
complainants were originally authorized or given
permission to occupy certain areas of the CMU property for
a definite purpose·to carry out certain university projects
as part of the CMUÊs program of activities pursuant to its
avowed purpose of giving training and instruction in
agricultural and other related technologies, using the land
and other resources of the institution as a laboratory for
these projects. Their entry into
94

the land of the CMU was with the permission and written
consent of the owner, the CMU, for a limited period and for
a specific purpose. After the expiration of their privilege to
occupy and cultivate the land of the CMU, their continued
stay was unauthorized and their settlement on the CMUÊs
land was without legal authority. A person entering upon
lands of another, not claiming in good faith the right to do
so by virtue of any title of his own, or by virtue of some
agreement with the owner or with one4 whom he believes
holds title to the land, is a squatter. Squatters cannot
enter the land of another surreptitiously or by stealth, and

Page 7 of 15
under the umbrella of the CARP, claim rights to said
property as landless peasants. Under Section 73 of R.A.
6657, persons guilty of committing prohibited acts of
forcible entry or illegal detainer do not qualify as
beneficiaries and may not avail themselves of the rights
and benefits of agrarian reform. Any such person who
knowingly and wilfully violates the above provision of the
Act shall be punished with imprisonment or fine at the
discretion of the Court.
In view of the above, the private respondents, not being
tenants nor proven to be landless peasants, cannot qualify
as beneficiaries under the CARP.
The questioned decision of the Adjudication Board,
affirmed in toto by the Court of Appeals, segregating 400
hectares from the CMU land is primarily based on the
alleged fact that the land subject hereof is „not directly,
actually and exclusively used for school sites, because the
same was leased to Philippine Packing Corporation (now
Del Monte Philippines)‰.
In support of this view, the Board held that the
„respondent University failed to show that it is using
actually, really, truly and in fact, the questioned area to the
exclusion of others, nor did it show that the same is5
directly used without any intervening agency or person‰,
and „there is no definite and concrete showing that the use
of said lands
6
are essentially indispensable for educational
purposes‰. The reliance by the respondents
________________
4 Mayor and Council of City of Forsyth, et. al. vs. Hooks, 184 S.E. 724
(1936).
5 Rollo, p. 84.
6 Rollo,Ibid.
95
VOL.215, OCTOBER22, 1992 95

Board and Appellate Tribunal on the technical or literal

definition from MorenoÊs Philippine Law Dictionary and
BlackÊs Law Dictionary, may give the ordinary reader a
classroom meaning of the phrase „is actually directly and
exclusively‰, but in so doing they missed the true meaning
of Section 10, R.A. 6657, as to what lands are exempted or
excluded from the coverage of the CARP.
The pertinent provisions of R.A. 6657, otherwise known
as the Comprehensive Agrarian Reform Law of 1988, are
as follows:
Sec.4.SCOPE·The Comprehensive Agrarian Reform Law of

1988 shall cover, regardless of tenurial arrangement and
commodity produced, all public and private agricultural lands as
provided in Proclamation No. 131 and Executive Order No. 229
including other lands of the public domain suitable for
agriculture.
More specifically, the following lands are covered by the
Comprehensive Agrarian Reform Program:
(a) All alienable and disposable lands of the public domain

Page 8 of 15
devoted to or suitable for agriculture. No reclassification
of forest or mineral lands to agricultural lands shall be
undertaken after the approval of this Act until Congress,
taking into account ecological, developmental and equity
considerations, shall have determined by law, the specific
limits of the public domain;
(b) All lands of the public domain in excess of the specific
limits as determined by Congress in the preceding
paragraph;
(c) All other lands owned by the Government devoted to or
suitable for agriculture; and
(d) All private lands devoted to or suitable for agriculture
regardless of the agricultural products raised or that can
be raised thereon.
Sec.10.EXEMPTIONS AND EXCLUSIONS.·Lands actually,

directly and exclusively used and found to be necessary for
parks, wildlife, forest reserves, reforestation, fish sanctuaries
and breeding grounds, watersheds and mangroves, national
defense, school sites and campuses including experimental farm
stations operated by public or private schools for educational
purposes, seeds and seedlings research and pilot production
centers, church sites and convents appurtenant thereto, mosque
sites and Islamic centers appurtenant thereto, communal burial
grounds and cemeteries, penal colonies and penal farms actually
worked by the inmates, government and private re-
96

search and quarantine centers and all lands with eighteen

percent (18%) slope and over, except those already developed
shall be exempt from the coverage of this Act. (Italics supplied).
The construction given by the DARAB to Section 10

restricts the land area of the CMU to its present needs or
to a land area presently, actively exploited and utilized by
the university in carrying out its present educational
program with its present student population and academic
facility·overlooking the very significant factor of growth
of the university in the years to come. By the nature of the
CMU, which is a school established to promote agriculture
and industry, the need for a vast tract of agricultural land
for future programs of expansion is obvious. At the outset,
the CMU was conceived in the same manner as land grant
colleges in America, a type of educational institution which
blazed the trail for the development of vast tracts of
unexplored and undeveloped agricultural lands in the
MidWest. What we now know as Michigan State
University, Penn State University and Illinois State
University, started as small land grant colleges, with
meager funding to support their ever increasing
educational programs. They were given extensive tracts of
agricultural and forest lands to be developed to support
their numerous expanding activities in the fields of
agricultural technology and scientific research. Funds for
the support of the educational programs of land grant
colleges came from government appropriation, tuition and
other student fees, private endowments and gifts, and

Page 9 of 15
7
earnings from miscellaneous sources. It was in this same
spirit that President Garcia issued Proclamation No. 476,
withdrawing from sale or settlement and reserving for the
Mindanao Agricultural College (forerunner of the CMU) a
land reservation of 3,080 hectares as its future campus. It
was set up in Bukidnon, in the hinterlands of Mindanao, in
order that it can have enough resources and wide open
spaces to grow as an agricultural educational institution,
to develop and train future farmers of Mindanao and help
________________
7 Taken from U.S. DHEW Bulletin, „Status of Land Grant Colleges
and Universities‰, LEBA.
97
VOL.215, OCTOBER22, 1992 97

Central Mindanao University vs. Department of
Agrarian
attract settlers to that part of the country.

In line with its avowed purpose as an agricultural and
technical school, the University adopted a land utilization
program to develop 8and exploit its 3,080-hectare land
reservation as follows:
No. of Percentage
Hectares
a.Livestock and Pasture 1,016.40 33
b.Upland Crops 616 20
c.Campus and Residential sites 462 15
d.Irrigated rice 400.40 13
e.Watershed and forest 308 10
reservation
f.Fruit and Tree Crops 154 5
g.Agricultural Experimental 123.20 4__
stations
3,080.00 100%
The first land use plan of the CMU was prepared in 1975
and since then it has undergone several revisions in line
with changing economic conditions, national economic
policies and financial limitations and availability of
resources. The CMU, through Resolution No. 160 S. 1984,
pursuant to its development plan, adopted a multi-
disciplinary applied research extension and productivity
program called the „Kilusang 9
Sariling Sikap Project‰
(CMU-KSSP). The objectives of this program were:
1. Provide researchers who shall assist in (a)

preparation of proposal; (b) monitor project
implementation; and (c) collect and analyze all data
and information relevant to the processes and
results of project implementation;
2. Provide the use of land within the University
reservation for the purpose of establishing a

Page 10 of 15
lowland rice project for the party of the Second Part
for a period of one calendar year subject to
discretionary
________________
8 Annex C of Exhibit W.
9 Rollo, pp. 206-207.
98

renewal by the Party of the First Part;

3. Provide practical training to the Party of the
Second Part on the management and operation of
their lowland project upon request of Party of the
Second Part; and
4. Provide technical assistance in the form of relevant
livelihood project specialists who shall extend
expertise on scientific methods of crop production
upon request by Party of the Second Part.
In return for the technical assistance extended by the

CMU, the participants in a project pay a nominal amount
as service fee. The self-reliance program was an adjunct to
the CMUÊs lowland rice project.
The portion of the CMU land leased to the Philippine
Packing Corporation (now Del Monte Phils., Inc.) was
leased long before the CARP was passed. The agreement
with the Philippine Packing Corporation was not a lease
but a Management and Development Agreement, a joint
undertaking where use by the Philippine Packing
Corporation of the land was part of the CMU research
program, with the direct participation of faculty and
students. Said contracts with the Philippine Packing
Corporation and others of a similar nature (like MM-
Agraplex) were made prior to the enactment of R.A. 6657
and were directly connected to the purpose and objectives
of the CMU as an educational institution. As soon as the
objectives of the agreement for the joint use of the CMU
land were achieved as of June 1988, the CMU adopted a
blue print for the exclusive use and utilization of said
areas to carry out its own research and agricultural
experiments.
As to the determination of when and what lands are
found to be necessary for use by the CMU, the school is in
the best position to resolve and answer the question and
pass upon the problem of its needs in relation to its avowed
objectives for which the land was given to it by the State.
Neither the DARAB nor the Court of Appeals has the right
to substitute its judgment or discretion on this matter,
unless the evidentiary facts are so manifest as to show that
the CMU has no real need for the land.
It is our opinion that the 400 hectares ordered
segregated by the DARAB and affirmed by the Court of
Appeals in its Decision dated August 20, 1990, is not
covered by the CARP because:

Page 11 of 15
99
VOL.215, OCTOBER22, 1992 99

(1) It is not alienable and disposable land of the public

domain;
(2) The CMU land reservation is not in excess of
specific limits as determined by Congress;
(3) It is private land registered and titled in the name
of its lawful owner, the CMU;
(4) It is exempt from coverage under Section 10 of R.A.
6657 because the lands are actually, directly and
exclusively used and found to be necessary for
school site and campus, including experimental
farm stations for educational purposes, and for
establishing seed and seedling research and pilot
production centers. (Italics).
Under Section 4 and Section 10 of R.A. 6657, it is crystal

clear that the jurisdiction of the DARAB is limited only to
matters involving the implementation of the CARP. More
specifically, it is restricted to agrarian cases and
controversies involving lands falling within the coverage of
the aforementioned program. It does not include those
which are actually, directly and exclusively used and found
to be necessary for, among such purposes, school sites and
campuses for setting up experimental farm stations,
research and pilot production centers, etc.
Consequently, the DARAB has no power to try, hear and
adjudicate the case pending before it involving a portion of
the CMUÊs titled school site, as the portion of the CMU
land reservation ordered segregated is actually, directly
and exclusively used and found by the school to be
necessary for its purposes. The CMU has constantly raised
the issue of the DARABÊs lack of jurisdiction and has
questioned the respondentÊs authority to hear, try and
adjudicate the case at bar. Despite the law and the
evidence on record tending to establish that the fact that
the DARAB had no jurisdiction, it made the adjudication
now subject of review.
Whether the DARAB has the authority to order the
segregation of a portion of a private property titled in the
name of its lawful owner, even if the claimant is not
entitled as a beneficiary, is an issue we feel we must
resolve. The quasi-judicial powers of the DARAB are
provided in Executive Order No. 129-A, quoted hereunder
in so far as pertinent to the issue at bar:
Sec.13·AGRARIAN REFORM ADJUDICATION BOARD·

There is hereby created an Agrarian Reform Adjudication
100

Board under the Office of the Secretary. x x x. The Board shall

Page 12 of 15
assume the powers and functions with respect to adjudication of
agrarian reform cases under Executive Order 229 and this
Executive Order xxx.
Sec.17·QUASI JUDICIAL POWERS OF THE DAR.·The
DAR is hereby vested with quasi-judicial powers to determine
and adjudicate agrarian reform matters and shall have exclusive
original jurisdiction over all matters including implementation of
Agrarian Reform.
Section 50 of R.A. 6657 confers on the DAR quasi-judicial

powers as follows:
The DAR is hereby vested with primary jurisdiction to determine

and adjudicate agrarian reform matters and shall have original
jurisdiction over all matters involving the implementation of
agrarian reform x x x.
Section 17 of Executive Order No. 129-A is merely a

repetition of Section 50, R.A. 6657. There is no doubt that
the DARAB has jurisdiction to try and decide any agrarian
dispute in the implementation of the CARP. An agrarian
dispute is defined by the same law as any controversy
relating to tenurial rights whether leasehold, tenancy
stewardship10 or otherwise over lands devoted to
agriculture.
In the case at bar, the DARAB found that the
complainants are not share tenants or lease holders of the
CMU, yet it ordered the „segregation of a suitable compact
and contiguous area of Four Hundred Hectares, more or
less‰, from the CMU land reservation, and directed the
DAR Regional Director to implement its order of
segregation. Having found that the complainants in this
agrarian dispute for Declaration of Tenancy Status are not
entitled to claim as beneficiaries of the CARP because they
are not share tenants or leaseholders, its order for the
segregation of 400 hectares of the CMU land was without
legal authority. We do not believe that the quasi-judicial
function of the DARAB carries with it greater authority
than ordi-
_______________
10 Section 3, R.A. 6657.
101
VOL.215, OCTOBER22, 1992 101

nary courts to make an award beyond what was demanded

by the complainants/petitioners, even in an agrarian
dispute. Where the quasi-judicial body finds that the
complainants/petitioners are not entitled to the rights they
are demanding, it is an erroneous interpretation of
authority for that quasi-judicial body to order private
property to be awarded to future beneficiaries. The order
segregating 400 hectares of the CMU land was issued on a
finding that the complainants are not entitled as
beneficiaries, and on an erroneous assumption that the
CMU land which is excluded or exempted under the law is
subject to the coverage of the CARP. Going beyond what

Page 13 of 15
was asked by the complainants who were not entitled to
the relief prayed for, constitutes a grave abuse of discretion
because it implies such capricious and whimsical exercise
of judgment as is equivalent to lack of jurisdiction.
The education of the youth and agrarian reform are
admittedly among the highest priorities in the government
socioeconomic programs. In this case, neither need give
way to the other. Certainly, there must still be vast tracts
of agricultural land in Mindanao outside the CMU land
reservation which can be made available to landless
peasants, assuming the claimants here, or some of them,
can qualify as CARP beneficiaries. To our mind, the taking
of the CMU land which had been segregated for
educational purposes for distribution to yet uncertain
beneficiaries is a gross misinterpretation of the authority
and jurisdiction granted by law to the DARAB.
The decision in this case is of far-reaching significance
as far as it concerns state colleges and universities whose
resources and research facilities may be gradually eroded
by misconstruing the exemptions from the CARP. These
state colleges and universities are the main vehicles for
our scientific and technological advancement in the field of
agriculture, so vital to the existence, growth and
development of this country.
It is the opinion of this Court, in the light of the
foregoing analysis and for the reasons indicated, that the
evidence is sufficient to sustain a finding of grave abuse of
discretion by respondents Court of Appeals and DAR
Adjudication Board. We hereby declare the decision of the
DARAB dated September 4, 1989 and the decision of the
Court of Appeals dated August 20,
102

Rosales vs. Court of Appeals
1990, affirming the decision of the quasi-judicial body, as

null and void and hereby order that they be set aside, with
costs against the private respondents.
SO ORDERED.
Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin,

Griño-Aquino, Medialdea, Regalado, Davide, Jr., Romero,
Nocon and Melo, JJ., concur.
Narvasa (C.J.), On official leave.
Bellosillo, J., No part. I took part in the
deliberation below.
Decision set aside.
Note.·The Department of Agrarian Reform has

original and exclusive jurisdiction over agrarian disputes
except on the aspects of (A) just compensation and (B)
Criminal jurisdiction over which regular courts have
jurisdiction (Vda. de Tagub vs. Court of Appeals, 191 SCRA
885).
··o0o··

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SUPREME COURT REPORTS ANNOTATED VOLUME 794

Search Result G.R. No. 209384. June 27, 2016.*

URBANO F. ESTRELLA, petitioner, vs. PRISCILLA P.

Agrarian Reform; Social Justice; The State adopts a policy of

VOL. 794, JUNE 27, 2016 591

transferee or other successor-in-interest of the original lessor.

http://www.central.com.ph/sfsreader/session/0000016d65eac…003600fb002c009e/p/ATM241/?username=Guest&device=ipad 25/09/2019, 9I12 AM

592 SUPREME COURT REPORTS ANNOTATED

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VOL. 794, JUNE 27, 2016 593

Nevertheless, while we endeavor to protect the rights of

PETITION for review on certiorari of a resolution of the

This petition for review on certiorari seeks to reverse

Lope Cristobal (Cristobal) was the owner of a twenty-

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594 SUPREME COURT REPORTS ANNOTATED

On September 22, 1997, Cristobal sold the subject

4 Id., at pp. 45 and 69.

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VOL. 794, JUNE 27, 2016 595

Cristobal assured her that there would be no problems

596 SUPREME COURT REPORTS ANNOTATED

On October 17, 2011, Estrella filed a petition for

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VOL. 794, JUNE 27, 2016 597

On May 30, 2013, the CA denied EstrellaÊs motions for

The PartiesÊ Arguments

Estrella argues that an agricultural tenantÊs right of

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We find no merit in the petition.

23 Id., at pp. 6 and 33.

598 SUPREME COURT REPORTS ANNOTATED

activity are always subject to the duty of the State to

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VOL. 794, JUNE 27, 2016 599

agricultural leasehold subsists, notwithstanding the

Sec. 12. LesseeÊs Right of Redemption.·In case

In Padasas v. Court of Appeals,36 we held that a lesseeÊs

33 Sec. 11, Agricultural Land Reform Code, as amended.

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of the sale. This ruling was subsequently affirmed in

Sec. 12. LesseeÊs right of Redemption.·In case

In Mallari v. Court of Appeals,39 we held that the

37 204 Phil. 109, 116; 118 SCRA 477, 483 (1982).

VOL. 794, JUNE 27, 2016 601

ten notice of the sale. We affirmed this ruling in

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40 Springsun Management Systems Corporation v. Camerino, 489

602 SUPREME COURT REPORTS ANNOTATED

However, despite the timely filing of the redemption

x x x the right of legal redemption must be

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46 138 Phil. 721; 28 SCRA 665 (1969).

VOL. 794, JUNE 27, 2016 603

After the amendment of Section 12 of the Code, a

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48 Mallari v. Court of Appeals, supra note 39 at p. 524; p. 509.

604 SUPREME COURT REPORTS ANNOTATED

Nevertheless, Estrella could still have consigned

x x x Only by such means can the buyer

Unfortunately, even after the lapse of the 240 days (the

52 Almeda v. Court of Appeals, supra note 50 at pp. 355-356; pp. 199-

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