Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 78742 July 14, 1989

ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC., JUANITO D. GOMEZ,

GERARDO B. ALARCIO, FELIPE A. GUICO, JR., BERNARDO M. ALMONTE, CANUTO RAMIR B.
CABRITO, ISIDRO T. GUICO, FELISA I. LLAMIDO, FAUSTO J. SALVA, REYNALDO G. ESTRADA,
FELISA C. BAUTISTA, ESMENIA J. CABE, TEODORO B. MADRIAGA, AUREA J. PRESTOSA,
EMERENCIANA J. ISLA, FELICISIMA C. ARRESTO, CONSUELO M. MORALES, BENJAMIN R.
SEGISMUNDO, CIRILA A. JOSE & NAPOLEON S. FERRER, petitioners,
vs.
HONORABLE SECRETARY OF AGRARIAN REFORM, respondent.

G.R. No. 79310 July 14, 1989

ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO FERRARIS, DENNIS JEREZA,

HERMINIGILDO GUSTILO, PAULINO D. TOLENTINO and PLANTERS' COMMITTEE, INC., Victorias
Mill District, Victorias, Negros Occidental, petitioners,
vs.
JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL AGRARIAN REFORM
COUNCIL, respondents.

G.R. No. 79744 July 14, 1989

INOCENTES PABICO, petitioner,

vs.
HON. PHILIP E. JUICO, SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM, HON.
JOKER ARROYO, EXECUTIVE SECRETARY OF THE OFFICE OF THE PRESIDENT, and Messrs.
SALVADOR TALENTO, JAIME ABOGADO, CONRADO AVANCENA and ROBERTO
TAAY, respondents.

G.R. No. 79777 July 14, 1989

NICOLAS S. MANAAY and AGUSTIN HERMANO, JR., petitioners,

vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian Reform, and LAND BANK OF THE
PHILIPPINES, respondents.

CRUZ, J.:

In ancient mythology, Antaeus was a terrible giant who blocked and challenged Hercules for his life on his way to
Mycenae after performing his eleventh labor. The two wrestled mightily and Hercules flung his adversary to the
ground thinking him dead, but Antaeus rose even stronger to resume their struggle. This happened several times to
Hercules' increasing amazement. Finally, as they continued grappling, it dawned on Hercules that Antaeus was the
son of Gaea and could never die as long as any part of his body was touching his Mother Earth. Thus forewarned,
Hercules then held Antaeus up in the air, beyond the reach of the sustaining soil, and crushed him to death.

Mother Earth. The sustaining soil. The giver of life, without whose invigorating touch even the powerful Antaeus
weakened and died.
The cases before us are not as fanciful as the foregoing tale. But they also tell of the elemental forces of life and
death, of men and women who, like Antaeus need the sustaining strength of the precious earth to stay alive.

"Land for the Landless" is a slogan that underscores the acute imbalance in the distribution of this precious resource
among our people. But it is more than a slogan. Through the brooding centuries, it has become a battle-cry
dramatizing the increasingly urgent demand of the dispossessed among us for a plot of earth as their place in the sun.

Recognizing this need, the Constitution in 1935 mandated the policy of social justice to "insure the well-being and
economic security of all the people," 1 especially the less privileged. In 1973, the new Constitution affirmed this
goal adding specifically that "the State shall regulate the acquisition, ownership, use, enjoyment and disposition of
private property and equitably diffuse property ownership and profits." 2 Significantly, there was also the specific
injunction to "formulate and implement an agrarian reform program aimed at emancipating the tenant from the
bondage of the soil." 3

The Constitution of 1987 was not to be outdone. Besides echoing these sentiments, it also adopted one whole and
separate Article XIII on Social Justice and Human Rights, containing grandiose but undoubtedly sincere provisions
for the uplift of the common people. These include a call in the following words for the adoption by the State of an
agrarian reform program:

SEC. 4. The State shall, by law, undertake an agrarian reform program founded on the right of
farmers and regular farmworkers, who are landless, to own directly or collectively the lands they
till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this end, the
State shall encourage and undertake the just distribution of all agricultural lands, subject to such
priorities and reasonable retention limits as the Congress may prescribe, taking into account
ecological, developmental, or equity considerations and subject to the payment of just
compensation. In determining retention limits, the State shall respect the right of small
landowners. The State shall further provide incentives for voluntary land-sharing.

Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land Reform Code, had already been enacted
by the Congress of the Philippines on August 8, 1963, in line with the above-stated principles. This was substantially
superseded almost a decade later by P.D. No. 27, which was promulgated on October 21, 1972, along with martial
law, to provide for the compulsory acquisition of private lands for distribution among tenant-farmers and to specify
maximum retention limits for landowners.

The people power revolution of 1986 did not change and indeed even energized the thrust for agrarian reform. Thus,
on July 17, 1987, President Corazon C. Aquino issued E.O. No. 228, declaring full land ownership in favor of the
beneficiaries of P.D. No. 27 and providing for the valuation of still unvalued lands covered by the decree as well as
the manner of their payment. This was followed on July 22, 1987 by Presidential Proclamation No. 131, instituting a
comprehensive agrarian reform program (CARP), and E.O. No. 229, providing the mechanics for its
implementation.

Subsequently, with its formal organization, the revived Congress of the Philippines took over legislative power from
the President and started its own deliberations, including extensive public hearings, on the improvement of the
interests of farmers. The result, after almost a year of spirited debate, was the enactment of R.A. No. 6657,
otherwise known as the Comprehensive Agrarian Reform Law of 1988, which President Aquino signed on June 10,
1988. This law, while considerably changing the earlier mentioned enactments, nevertheless gives them suppletory
effect insofar as they are not inconsistent with its provisions. 4

The above-captioned cases have been consolidated because they involve common legal questions, including serious
challenges to the constitutionality of the several measures mentioned above. They will be the subject of one
common discussion and resolution, The different antecedents of each case will require separate treatment, however,
and will first be explained hereunder.

G.R. No. 79777

Squarely raised in this petition is the constitutionality of P.D. No. 27, E.O. Nos. 228 and 229, and R.A. No. 6657.

The subjects of this petition are a 9-hectare riceland worked by four tenants and owned by petitioner Nicolas
Manaay and his wife and a 5-hectare riceland worked by four tenants and owned by petitioner Augustin Hermano,
Jr. The tenants were declared full owners of these lands by E.O. No. 228 as qualified farmers under P.D. No. 27.

The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on grounds inter alia of separation of
powers, due process, equal protection and the constitutional limitation that no private property shall be taken for
public use without just compensation.

They contend that President Aquino usurped legislative power when she promulgated E.O. No. 228. The said
measure is invalid also for violation of Article XIII, Section 4, of the Constitution, for failure to provide for retention
limits for small landowners. Moreover, it does not conform to Article VI, Section 25(4) and the other requisites of a
valid appropriation.

In connection with the determination of just compensation, the petitioners argue that the same may be made only by
a court of justice and not by the President of the Philippines. They invoke the recent cases of EPZA v.
Dulay 5 and Manotok v. National Food Authority. 6 Moreover, the just compensation contemplated by the Bill of
Rights is payable in money or in cash and not in the form of bonds or other things of value.

In considering the rentals as advance payment on the land, the executive order also deprives the petitioners of their
property rights as protected by due process. The equal protection clause is also violated because the order places the
burden of solving the agrarian problems on the owners only of agricultural lands. No similar obligation is imposed
on the owners of other properties.

The petitioners also maintain that in declaring the beneficiaries under P.D. No. 27 to be the owners of the lands
occupied by them, E.O. No. 228 ignored judicial prerogatives and so violated due process. Worse, the measure
would not solve the agrarian problem because even the small farmers are deprived of their lands and the retention
rights guaranteed by the Constitution.

In his Comment, the Solicitor General stresses that P.D. No. 27 has already been upheld in the earlier cases
of Chavez v. Zobel, 7 Gonzales v. Estrella, 8 and Association of Rice and Corn Producers of the Philippines, Inc. v.
The National Land Reform Council. 9 The determination of just compensation by the executive authorities
conformably to the formula prescribed under the questioned order is at best initial or preliminary only. It does not
foreclose judicial intervention whenever sought or warranted. At any rate, the challenge to the order is premature
because no valuation of their property has as yet been made by the Department of Agrarian Reform. The petitioners
are also not proper parties because the lands owned by them do not exceed the maximum retention limit of 7
hectares.

Replying, the petitioners insist they are proper parties because P.D. No. 27 does not provide for retention limits on
tenanted lands and that in any event their petition is a class suit brought in behalf of landowners with landholdings
below 24 hectares. They maintain that the determination of just compensation by the administrative authorities is a
final ascertainment. As for the cases invoked by the public respondent, the constitutionality of P.D. No. 27 was
merely assumed in Chavez, while what was decided in Gonzales was the validity of the imposition of martial law.

In the amended petition dated November 22, 1588, it is contended that P.D. No. 27, E.O. Nos. 228 and 229 (except
Sections 20 and 21) have been impliedly repealed by R.A. No. 6657. Nevertheless, this statute should itself also be
declared unconstitutional because it suffers from substantially the same infirmities as the earlier measures.

A petition for intervention was filed with leave of court on June 1, 1988 by Vicente Cruz, owner of a 1. 83- hectare
land, who complained that the DAR was insisting on the implementation of P.D. No. 27 and E.O. No. 228 despite a
compromise agreement he had reached with his tenant on the payment of rentals. In a subsequent motion dated April
10, 1989, he adopted the allegations in the basic amended petition that the above- mentioned enactments have been
impliedly repealed by R.A. No. 6657.
G.R. No. 79310

The petitioners herein are landowners and sugar planters in the Victorias Mill District, Victorias, Negros Occidental.
Co-petitioner Planters' Committee, Inc. is an organization composed of 1,400 planter-members. This petition seeks
to prohibit the implementation of Proc. No. 131 and E.O. No. 229.

The petitioners claim that the power to provide for a Comprehensive Agrarian Reform Program as decreed by the
Constitution belongs to Congress and not the President. Although they agree that the President could exercise
legislative power until the Congress was convened, she could do so only to enact emergency measures during the
transition period. At that, even assuming that the interim legislative power of the President was properly exercised,
Proc. No. 131 and E.O. No. 229 would still have to be annulled for violating the constitutional provisions on just
compensation, due process, and equal protection.

They also argue that under Section 2 of Proc. No. 131 which provides:

Agrarian Reform Fund.-There is hereby created a special fund, to be known as the Agrarian Reform Fund, an initial
amount of FIFTY BILLION PESOS (P50,000,000,000.00) to cover the estimated cost of the Comprehensive
Agrarian Reform Program from 1987 to 1992 which shall be sourced from the receipts of the sale of the assets of the
Asset Privatization Trust and Receipts of sale of ill-gotten wealth received through the Presidential Commission on
Good Government and such other sources as government may deem appropriate. The amounts collected and
accruing to this special fund shall be considered automatically appropriated for the purpose authorized in this
Proclamation the amount appropriated is in futuro, not in esse. The money needed to cover the cost of the
contemplated expropriation has yet to be raised and cannot be appropriated at this time.

Furthermore, they contend that taking must be simultaneous with payment of just compensation as it is traditionally
understood, i.e., with money and in full, but no such payment is contemplated in Section 5 of the E.O. No. 229. On
the contrary, Section 6, thereof provides that the Land Bank of the Philippines "shall compensate the landowner in
an amount to be established by the government, which shall be based on the owner's declaration of current fair
market value as provided in Section 4 hereof, but subject to certain controls to be defined and promulgated by the
Presidential Agrarian Reform Council." This compensation may not be paid fully in money but in any of several
modes that may consist of part cash and part bond, with interest, maturing periodically, or direct payment in cash or
bond as may be mutually agreed upon by the beneficiary and the landowner or as may be prescribed or approved by
the PARC.

The petitioners also argue that in the issuance of the two measures, no effort was made to make a careful study of
the sugar planters' situation. There is no tenancy problem in the sugar areas that can justify the application of the
CARP to them. To the extent that the sugar planters have been lumped in the same legislation with other farmers,
although they are a separate group with problems exclusively their own, their right to equal protection has been
violated.

A motion for intervention was filed on August 27,1987 by the National Federation of Sugarcane Planters (NASP)
which claims a membership of at least 20,000 individual sugar planters all over the country. On September 10, 1987,
another motion for intervention was filed, this time by Manuel Barcelona, et al., representing coconut and riceland
owners. Both motions were granted by the Court.

NASP alleges that President Aquino had no authority to fund the Agrarian Reform Program and that, in any event,
the appropriation is invalid because of uncertainty in the amount appropriated. Section 2 of Proc. No. 131 and
Sections 20 and 21 of E.O. No. 229 provide for an initial appropriation of fifty billion pesos and thus specifies the
minimum rather than the maximum authorized amount. This is not allowed. Furthermore, the stated initial amount
has not been certified to by the National Treasurer as actually available.

Two additional arguments are made by Barcelona, to wit, the failure to establish by clear and convincing evidence
the necessity for the exercise of the powers of eminent domain, and the violation of the fundamental right to own
property.
The petitioners also decry the penalty for non-registration of the lands, which is the expropriation of the said land for
an amount equal to the government assessor's valuation of the land for tax purposes. On the other hand, if the
landowner declares his own valuation he is unjustly required to immediately pay the corresponding taxes on the
land, in violation of the uniformity rule.

In his consolidated Comment, the Solicitor General first invokes the presumption of constitutionality in favor of
Proc. No. 131 and E.O. No. 229. He also justifies the necessity for the expropriation as explained in the "whereas"
clauses of the Proclamation and submits that, contrary to the petitioner's contention, a pilot project to determine the
feasibility of CARP and a general survey on the people's opinion thereon are not indispensable prerequisites to its
promulgation.

On the alleged violation of the equal protection clause, the sugar planters have failed to show that they belong to a
different class and should be differently treated. The Comment also suggests the possibility of Congress first
distributing public agricultural lands and scheduling the expropriation of private agricultural lands later. From this
viewpoint, the petition for prohibition would be premature.

The public respondent also points out that the constitutional prohibition is against the payment of public money
without the corresponding appropriation. There is no rule that only money already in existence can be the subject of
an appropriation law. Finally, the earmarking of fifty billion pesos as Agrarian Reform Fund, although denominated
as an initial amount, is actually the maximum sum appropriated. The word "initial" simply means that additional
amounts may be appropriated later when necessary.

On April 11, 1988, Prudencio Serrano, a coconut planter, filed a petition on his own behalf, assailing the
constitutionality of E.O. No. 229. In addition to the arguments already raised, Serrano contends that the measure is
unconstitutional because:

(1) Only public lands should be included in the CARP;

(2) E.O. No. 229 embraces more than one subject which is not expressed in the title;

(3) The power of the President to legislate was terminated on July 2, 1987; and

(4) The appropriation of a P50 billion special fund from the National Treasury did not originate
from the House of Representatives.

G.R. No. 79744

The petitioner alleges that the then Secretary of Department of Agrarian Reform, in violation of due process and the
requirement for just compensation, placed his landholding under the coverage of Operation Land Transfer.
Certificates of Land Transfer were subsequently issued to the private respondents, who then refused payment of
lease rentals to him.

On September 3, 1986, the petitioner protested the erroneous inclusion of his small landholding under Operation
Land transfer and asked for the recall and cancellation of the Certificates of Land Transfer in the name of the private
respondents. He claims that on December 24, 1986, his petition was denied without hearing. On February 17, 1987,
he filed a motion for reconsideration, which had not been acted upon when E.O. Nos. 228 and 229 were issued.
These orders rendered his motion moot and academic because they directly effected the transfer of his land to the
private respondents.

The petitioner now argues that:

(1) E.O. Nos. 228 and 229 were invalidly issued by the President of the Philippines.
 (2) The said executive orders are violative of the constitutional provision that no private property
shall be taken without due process or just compensation.

(3) The petitioner is denied the right of maximum retention provided for under the 1987
Constitution.

The petitioner contends that the issuance of E.0. Nos. 228 and 229 shortly before Congress convened is anomalous
and arbitrary, besides violating the doctrine of separation of powers. The legislative power granted to the President
under the Transitory Provisions refers only to emergency measures that may be promulgated in the proper exercise
of the police power.

The petitioner also invokes his rights not to be deprived of his property without due process of law and to the
retention of his small parcels of riceholding as guaranteed under Article XIII, Section 4 of the Constitution. He
likewise argues that, besides denying him just compensation for his land, the provisions of E.O. No. 228 declaring
that:

Lease rentals paid to the landowner by the farmer-beneficiary after October 21, 1972 shall be
considered as advance payment for the land.

is an unconstitutional taking of a vested property right. It is also his contention that the inclusion of even small
landowners in the program along with other landowners with lands consisting of seven hectares or more is
undemocratic.

In his Comment, the Solicitor General submits that the petition is premature because the motion for reconsideration
filed with the Minister of Agrarian Reform is still unresolved. As for the validity of the issuance of E.O. Nos. 228
and 229, he argues that they were enacted pursuant to Section 6, Article XVIII of the Transitory Provisions of the
1987 Constitution which reads:

The incumbent president shall continue to exercise legislative powers until the first Congress is convened.

On the issue of just compensation, his position is that when P.D. No. 27 was promulgated on October 21. 1972, the
tenant-farmer of agricultural land was deemed the owner of the land he was tilling. The leasehold rentals paid after
that date should therefore be considered amortization payments.

In his Reply to the public respondents, the petitioner maintains that the motion he filed was resolved on December
14, 1987. An appeal to the Office of the President would be useless with the promulgation of E.O. Nos. 228 and 229,
which in effect sanctioned the validity of the public respondent's acts.

G.R. No. 78742

The petitioners in this case invoke the right of retention granted by P.D. No. 27 to owners of rice and corn lands not
exceeding seven hectares as long as they are cultivating or intend to cultivate the same. Their respective lands do not
exceed the statutory limit but are occupied by tenants who are actually cultivating such lands.

According to P.D. No. 316, which was promulgated in implementation of P.D. No. 27:

No tenant-farmer in agricultural lands primarily devoted to rice and corn shall be ejected or
removed from his farmholding until such time as the respective rights of the tenant- farmers and
the landowner shall have been determined in accordance with the rules and regulations
implementing P.D. No. 27.
The petitioners claim they cannot eject their tenants and so are unable to enjoy their right of retention because the
Department of Agrarian Reform has so far not issued the implementing rules required under the above-quoted
decree. They therefore ask the Court for a writ of mandamus to compel the respondent to issue the said rules.

In his Comment, the public respondent argues that P.D. No. 27 has been amended by LOI 474 removing any right of
retention from persons who own other agricultural lands of more than 7 hectares in aggregate area or lands used for
residential, commercial, industrial or other purposes from which they derive adequate income for their family. And
even assuming that the petitioners do not fall under its terms, the regulations implementing P.D. No. 27 have already
been issued, to wit, the Memorandum dated July 10, 1975 (Interim Guidelines on Retention by Small Landowners,
with an accompanying Retention Guide Table), Memorandum Circular No. 11 dated April 21, 1978,
(Implementation Guidelines of LOI No. 474), Memorandum Circular No. 18-81 dated December 29,1981
(Clarificatory Guidelines on Coverage of P.D. No. 27 and Retention by Small Landowners), and DAR
Administrative Order No. 1, series of 1985 (Providing for a Cut-off Date for Landowners to Apply for Retention
and/or to Protest the Coverage of their Landholdings under Operation Land Transfer pursuant to P.D. No. 27). For
failure to file the corresponding applications for retention under these measures, the petitioners are now barred from
invoking this right.

The public respondent also stresses that the petitioners have prematurely initiated this case notwithstanding the
pendency of their appeal to the President of the Philippines. Moreover, the issuance of the implementing rules,
assuming this has not yet been done, involves the exercise of discretion which cannot be controlled through the writ
of mandamus. This is especially true if this function is entrusted, as in this case, to a separate department of the
government.

In their Reply, the petitioners insist that the above-cited measures are not applicable to them because they do not
own more than seven hectares of agricultural land. Moreover, assuming arguendo that the rules were intended to
cover them also, the said measures are nevertheless not in force because they have not been published as required by
law and the ruling of this Court in Tanada v. Tuvera.10 As for LOI 474, the same is ineffective for the additional
reason that a mere letter of instruction could not have repealed the presidential decree.

Although holding neither purse nor sword and so regarded as the weakest of the three departments of the
government, the judiciary is nonetheless vested with the power to annul the acts of either the legislative or the
executive or of both when not conformable to the fundamental law. This is the reason for what some quarters call
the doctrine of judicial supremacy. Even so, this power is not lightly assumed or readily exercised. The doctrine of
separation of powers imposes upon the courts a proper restraint, born of the nature of their functions and of their
respect for the other departments, in striking down the acts of the legislative and the executive as unconstitutional.
The policy, indeed, is a blend of courtesy and caution. To doubt is to sustain. The theory is that before the act was
done or the law was enacted, earnest studies were made by Congress or the President, or both, to insure that the
Constitution would not be breached.

In addition, the Constitution itself lays down stringent conditions for a declaration of unconstitutionality, requiring
therefor the concurrence of a majority of the members of the Supreme Court who took part in the deliberations and
voted on the issue during their session en banc.11 And as established by judge made doctrine, the Court will assume
jurisdiction over a constitutional question only if it is shown that the essential requisites of a judicial inquiry into
such a question are first satisfied. Thus, there must be an actual case or controversy involving a conflict of legal
rights susceptible of judicial determination, the constitutional question must have been opportunely raised by the
proper party, and the resolution of the question is unavoidably necessary to the decision of the case itself. 12

With particular regard to the requirement of proper party as applied in the cases before us, we hold that the same is
satisfied by the petitioners and intervenors because each of them has sustained or is in danger of sustaining an
immediate injury as a result of the acts or measures complained of. 13 And even if, strictly speaking, they are not
covered by the definition, it is still within the wide discretion of the Court to waive the requirement and so remove
the impediment to its addressing and resolving the serious constitutional questions raised.
In the first Emergency Powers Cases, 14 ordinary citizens and taxpayers were allowed to question the
constitutionality of several executive orders issued by President Quirino although they were invoking only an
indirect and general interest shared in common with the public. The Court dismissed the objection that they were not
proper parties and ruled that "the transcendental importance to the public of these cases demands that they be settled
promptly and definitely, brushing aside, if we must, technicalities of procedure." We have since then applied this
exception in many other cases. 15

The other above-mentioned requisites have also been met in the present petitions.

In must be stressed that despite the inhibitions pressing upon the Court when confronted with constitutional issues
like the ones now before it, it will not hesitate to declare a law or act invalid when it is convinced that this must be
done. In arriving at this conclusion, its only criterion will be the Constitution as God and its conscience give it the
light to probe its meaning and discover its purpose. Personal motives and political considerations are irrelevancies
that cannot influence its decision. Blandishment is as ineffectual as intimidation.

For all the awesome power of the Congress and the Executive, the Court will not hesitate to "make the hammer fall,
and heavily," to use Justice Laurel's pithy language, where the acts of these departments, or of any public official,
betray the people's will as expressed in the Constitution.

It need only be added, to borrow again the words of Justice Laurel, that —

... when the judiciary mediates to allocate constitutional boundaries, it does not assert any
superiority over the other departments; it does not in reality nullify or invalidate an act of the
Legislature, but only asserts the solemn and sacred obligation assigned to it by the Constitution to
determine conflicting claims of authority under the Constitution and to establish for the parties in
an actual controversy the rights which that instrument secures and guarantees to them. This is in
truth all that is involved in what is termed "judicial supremacy" which properly is the power of
judicial review under the Constitution. 16

The cases before us categorically raise constitutional questions that this Court must categorically resolve. And so we
shall.

II

We proceed first to the examination of the preliminary issues before resolving the more serious challenges to the
constitutionality of the several measures involved in these petitions.

The promulgation of P.D. No. 27 by President Marcos in the exercise of his powers under martial law has already
been sustained in Gonzales v. Estrella and we find no reason to modify or reverse it on that issue. As for the power
of President Aquino to promulgate Proc. No. 131 and E.O. Nos. 228 and 229, the same was authorized under
Section 6 of the Transitory Provisions of the 1987 Constitution, quoted above.

The said measures were issued by President Aquino before July 27, 1987, when the Congress of the Philippines was
formally convened and took over legislative power from her. They are not "midnight" enactments intended to pre-
empt the legislature because E.O. No. 228 was issued on July 17, 1987, and the other measures, i.e., Proc. No. 131
and E.O. No. 229, were both issued on July 22, 1987. Neither is it correct to say that these measures ceased to be
valid when she lost her legislative power for, like any statute, they continue to be in force unless modified or
repealed by subsequent law or declared invalid by the courts. A statute does not ipso facto become inoperative
simply because of the dissolution of the legislature that enacted it. By the same token, President Aquino's loss of
legislative power did not have the effect of invalidating all the measures enacted by her when and as long as she
possessed it.
Significantly, the Congress she is alleged to have undercut has not rejected but in fact substantially affirmed the
challenged measures and has specifically provided that they shall be suppletory to R.A. No. 6657 whenever not
inconsistent with its provisions. 17 Indeed, some portions of the said measures, like the creation of the P50 billion
fund in Section 2 of Proc. No. 131, and Sections 20 and 21 of E.O. No. 229, have been incorporated by reference in
the CARP Law. 18

That fund, as earlier noted, is itself being questioned on the ground that it does not conform to the requirements of a
valid appropriation as specified in the Constitution. Clearly, however, Proc. No. 131 is not an appropriation measure
even if it does provide for the creation of said fund, for that is not its principal purpose. An appropriation law is one
the primary and specific purpose of which is to authorize the release of public funds from the treasury. 19 The
creation of the fund is only incidental to the main objective of the proclamation, which is agrarian reform.

It should follow that the specific constitutional provisions invoked, to wit, Section 24 and Section 25(4) of Article
VI, are not applicable. With particular reference to Section 24, this obviously could not have been complied with for
the simple reason that the House of Representatives, which now has the exclusive power to initiate appropriation
measures, had not yet been convened when the proclamation was issued. The legislative power was then solely
vested in the President of the Philippines, who embodied, as it were, both houses of Congress.

The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229 should be invalidated because they do
not provide for retention limits as required by Article XIII, Section 4 of the Constitution is no longer tenable. R.A.
No. 6657 does provide for such limits now in Section 6 of the law, which in fact is one of its most controversial
provisions. This section declares:

Retention Limits. — Except as otherwise provided in this Act, no person may own or retain,
directly or indirectly, any public or private agricultural land, the size of which shall vary according
to factors governing a viable family-sized farm, such as commodity produced, terrain,
infrastructure, and soil fertility as determined by the Presidential Agrarian Reform Council
(PARC) created hereunder, but in no case shall retention by the landowner exceed five (5)
hectares. Three (3) hectares may be awarded to each child of the landowner, subject to the
following qualifications: (1) that he is at least fifteen (15) years of age; and (2) that he is actually
tilling the land or directly managing the farm; Provided, That landowners whose lands have been
covered by Presidential Decree No. 27 shall be allowed to keep the area originally retained by
them thereunder, further, That original homestead grantees or direct compulsory heirs who still
own the original homestead at the time of the approval of this Act shall retain the same areas as
long as they continue to cultivate said homestead.

The argument that E.O. No. 229 violates the constitutional requirement that a bill shall have only one subject, to be
expressed in its title, deserves only short attention. It is settled that the title of the bill does not have to be a catalogue
of its contents and will suffice if the matters embodied in the text are relevant to each other and may be inferred
from the title. 20

The Court wryly observes that during the past dictatorship, every presidential issuance, by whatever name it was
called, had the force and effect of law because it came from President Marcos. Such are the ways of despots. Hence,
it is futile to argue, as the petitioners do in G.R. No. 79744, that LOI 474 could not have repealed P.D. No. 27
because the former was only a letter of instruction. The important thing is that it was issued by President Marcos,
whose word was law during that time.

But for all their peremptoriness, these issuances from the President Marcos still had to comply with the requirement
for publication as this Court held in Tanada v. Tuvera. 21 Hence, unless published in the Official Gazette in
accordance with Article 2 of the Civil Code, they could not have any force and effect if they were among those
enactments successfully challenged in that case. LOI 474 was published, though, in the Official Gazette dated
November 29,1976.)
Finally, there is the contention of the public respondent in G.R. No. 78742 that the writ of mandamus cannot issue to
compel the performance of a discretionary act, especially by a specific department of the government. That is true as
a general proposition but is subject to one important qualification. Correctly and categorically stated, the rule is that
mandamus will lie to compel the discharge of the discretionary duty itself but not to control the discretion to be
exercised. In other words, mandamus can issue to require action only but not specific action.

Whenever a duty is imposed upon a public official and an unnecessary and unreasonable delay in
the exercise of such duty occurs, if it is a clear duty imposed by law, the courts will intervene by
the extraordinary legal remedy of mandamus to compel action. If the duty is purely ministerial, the
courts will require specific action. If the duty is purely discretionary, the courts by mandamus will
require action only. For example, if an inferior court, public official, or board should, for an
unreasonable length of time, fail to decide a particular question to the great detriment of all parties
concerned, or a court should refuse to take jurisdiction of a cause when the law clearly gave it
jurisdiction mandamus will issue, in the first case to require a decision, and in the second to
require that jurisdiction be taken of the cause. 22

And while it is true that as a rule the writ will not be proper as long as there is still a plain, speedy and adequate
remedy available from the administrative authorities, resort to the courts may still be permitted if the issue raised is a
question of law. 23

III

There are traditional distinctions between the police power and the power of eminent domain that logically preclude
the application of both powers at the same time on the same subject. In the case of City of Baguio v. NAWASA, 24 for
example, where a law required the transfer of all municipal waterworks systems to the NAWASA in exchange for its
assets of equivalent value, the Court held that the power being exercised was eminent domain because the property
involved was wholesome and intended for a public use. Property condemned under the police power is noxious or
intended for a noxious purpose, such as a building on the verge of collapse, which should be demolished for the
public safety, or obscene materials, which should be destroyed in the interest of public morals. The confiscation of
such property is not compensable, unlike the taking of property under the power of expropriation, which requires the
payment of just compensation to the owner.

In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice Holmes laid down the limits of the police power in a
famous aphorism: "The general rule at least is that while property may be regulated to a certain extent, if regulation
goes too far it will be recognized as a taking." The regulation that went "too far" was a law prohibiting mining which
might cause the subsidence of structures for human habitation constructed on the land surface. This was resisted by a
coal company which had earlier granted a deed to the land over its mine but reserved all mining rights thereunder,
with the grantee assuming all risks and waiving any damage claim. The Court held the law could not be sustained
without compensating the grantor. Justice Brandeis filed a lone dissent in which he argued that there was a valid
exercise of the police power. He said:

Every restriction upon the use of property imposed in the exercise of the police power deprives the
owner of some right theretofore enjoyed, and is, in that sense, an abridgment by the State of rights
in property without making compensation. But restriction imposed to protect the public health,
safety or morals from dangers threatened is not a taking. The restriction here in question is merely
the prohibition of a noxious use. The property so restricted remains in the possession of its owner.
The state does not appropriate it or make any use of it. The state merely prevents the owner from
making a use which interferes with paramount rights of the public. Whenever the use prohibited
ceases to be noxious — as it may because of further changes in local or social conditions — the
restriction will have to be removed and the owner will again be free to enjoy his property as
heretofore.

Recent trends, however, would indicate not a polarization but a mingling of the police power and the power of
eminent domain, with the latter being used as an implement of the former like the power of taxation. The
employment of the taxing power to achieve a police purpose has long been accepted. 26 As for the power of
expropriation, Prof. John J. Costonis of the University of Illinois College of Law (referring to the earlier case of
Euclid v. Ambler Realty Co., 272 US 365, which sustained a zoning law under the police power) makes the
following significant remarks:

Euclid, moreover, was decided in an era when judges located the Police and eminent domain
powers on different planets. Generally speaking, they viewed eminent domain as encompassing
public acquisition of private property for improvements that would be available for public use,"
literally construed. To the police power, on the other hand, they assigned the less intrusive task of
preventing harmful externalities a point reflected in the Euclid opinion's reliance on an analogy to
nuisance law to bolster its support of zoning. So long as suppression of a privately authored harm
bore a plausible relation to some legitimate "public purpose," the pertinent measure need have
afforded no compensation whatever. With the progressive growth of government's involvement in
land use, the distance between the two powers has contracted considerably. Today government
often employs eminent domain interchangeably with or as a useful complement to the police
power-- a trend expressly approved in the Supreme Court's 1954 decision in Berman v. Parker,
which broadened the reach of eminent domain's "public use" test to match that of the police
power's standard of "public purpose." 27

The Berman case sustained a redevelopment project and the improvement of blighted areas in the District of
Columbia as a proper exercise of the police power. On the role of eminent domain in the attainment of this purpose,
Justice Douglas declared:

If those who govern the District of Columbia decide that the Nation's Capital should be beautiful
as well as sanitary, there is nothing in the Fifth Amendment that stands in the way.

Once the object is within the authority of Congress, the right to realize it through the exercise of
eminent domain is clear.

For the power of eminent domain is merely the means to the end. 28

In Penn Central Transportation Co. v. New York City, 29 decided by a 6-3 vote in 1978, the U.S Supreme Court
sustained the respondent's Landmarks Preservation Law under which the owners of the Grand Central Terminal had
not been allowed to construct a multi-story office building over the Terminal, which had been designated a historic
landmark. Preservation of the landmark was held to be a valid objective of the police power. The problem, however,
was that the owners of the Terminal would be deprived of the right to use the airspace above it although other
landowners in the area could do so over their respective properties. While insisting that there was here no taking, the
Court nonetheless recognized certain compensatory rights accruing to Grand Central Terminal which it said would
"undoubtedly mitigate" the loss caused by the regulation. This "fair compensation," as he called it, was explained by
Prof. Costonis in this wise:

In return for retaining the Terminal site in its pristine landmark status, Penn Central was authorized to transfer to
neighboring properties the authorized but unused rights accruing to the site prior to the Terminal's designation as a
landmark — the rights which would have been exhausted by the 59-story building that the city refused to
countenance atop the Terminal. Prevailing bulk restrictions on neighboring sites were proportionately relaxed,
theoretically enabling Penn Central to recoup its losses at the Terminal site by constructing or selling to others the
right to construct larger, hence more profitable buildings on the transferee sites. 30

The cases before us present no knotty complication insofar as the question of compensable taking is concerned. To
the extent that the measures under challenge merely prescribe retention limits for landowners, there is an exercise of
the police power for the regulation of private property in accordance with the Constitution. But where, to carry out
such regulation, it becomes necessary to deprive such owners of whatever lands they may own in excess of the
maximum area allowed, there is definitely a taking under the power of eminent domain for which payment of just
compensation is imperative. The taking contemplated is not a mere limitation of the use of the land. What is required
is the surrender of the title to and the physical possession of the said excess and all beneficial rights accruing to the
owner in favor of the farmer-beneficiary. This is definitely an exercise not of the police power but of the power of
eminent domain.

Whether as an exercise of the police power or of the power of eminent domain, the several measures before us are
challenged as violative of the due process and equal protection clauses.

The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the ground that no retention limits are prescribed has
already been discussed and dismissed. It is noted that although they excited many bitter exchanges during the
deliberation of the CARP Law in Congress, the retention limits finally agreed upon are, curiously enough, not being
questioned in these petitions. We therefore do not discuss them here. The Court will come to the other claimed
violations of due process in connection with our examination of the adequacy of just compensation as required under
the power of expropriation.

The argument of the small farmers that they have been denied equal protection because of the absence of retention
limits has also become academic under Section 6 of R.A. No. 6657. Significantly, they too have not questioned the
area of such limits. There is also the complaint that they should not be made to share the burden of agrarian reform,
an objection also made by the sugar planters on the ground that they belong to a particular class with particular
interests of their own. However, no evidence has been submitted to the Court that the requisites of a valid
classification have been violated.

Classification has been defined as the grouping of persons or things similar to each other in certain particulars and
different from each other in these same particulars. 31 To be valid, it must conform to the following requirements: (1)
it must be based on substantial distinctions; (2) it must be germane to the purposes of the law; (3) it must not be
limited to existing conditions only; and (4) it must apply equally to all the members of the class. 32 The Court finds
that all these requisites have been met by the measures here challenged as arbitrary and discriminatory.

Equal protection simply means that all persons or things similarly situated must be treated alike both as to the rights
conferred and the liabilities imposed. 33 The petitioners have not shown that they belong to a different class and
entitled to a different treatment. The argument that not only landowners but also owners of other properties must be
made to share the burden of implementing land reform must be rejected. There is a substantial distinction between
these two classes of owners that is clearly visible except to those who will not see. There is no need to elaborate on
this matter. In any event, the Congress is allowed a wide leeway in providing for a valid classification. Its decision is
accorded recognition and respect by the courts of justice except only where its discretion is abused to the detriment
of the Bill of Rights.

It is worth remarking at this juncture that a statute may be sustained under the police power only if there is a
concurrence of the lawful subject and the lawful method. Put otherwise, the interests of the public generally as
distinguished from those of a particular class require the interference of the State and, no less important, the means
employed are reasonably necessary for the attainment of the purpose sought to be achieved and not unduly
oppressive upon individuals. 34 As the subject and purpose of agrarian reform have been laid down by the
Constitution itself, we may say that the first requirement has been satisfied. What remains to be examined is the
validity of the method employed to achieve the constitutional goal.

One of the basic principles of the democratic system is that where the rights of the individual are concerned, the end
does not justify the means. It is not enough that there be a valid objective; it is also necessary that the means
employed to pursue it be in keeping with the Constitution. Mere expediency will not excuse constitutional shortcuts.
There is no question that not even the strongest moral conviction or the most urgent public need, subject only to a
few notable exceptions, will excuse the bypassing of an individual's rights. It is no exaggeration to say that a, person
invoking a right guaranteed under Article III of the Constitution is a majority of one even as against the rest of the
nation who would deny him that right.
That right covers the person's life, his liberty and his property under Section 1 of Article III of the Constitution. With
regard to his property, the owner enjoys the added protection of Section 9, which reaffirms the familiar rule that
private property shall not be taken for public use without just compensation.

This brings us now to the power of eminent domain.

IV

Eminent domain is an inherent power of the State that enables it to forcibly acquire private lands
intended for public use upon payment of just compensation to the owner. Obviously, there is no
need to expropriate where the owner is willing to sell under terms also acceptable to the purchaser,
in which case an ordinary deed of sale may be agreed upon by the parties. 35 It is only where the
owner is unwilling to sell, or cannot accept the price or other conditions offered by the vendee,
that the power of eminent domain will come into play to assert the paramount authority of the
State over the interests of the property owner. Private rights must then yield to the irresistible
demands of the public interest on the time-honored justification, as in the case of the police power,
that the welfare of the people is the supreme law.

But for all its primacy and urgency, the power of expropriation is by no means absolute (as indeed no power is
absolute). The limitation is found in the constitutional injunction that "private property shall not be taken for public
use without just compensation" and in the abundant jurisprudence that has evolved from the interpretation of this
principle. Basically, the requirements for a proper exercise of the power are: (1) public use and (2) just
compensation.

Let us dispose first of the argument raised by the petitioners in G.R. No. 79310 that the State should first distribute
public agricultural lands in the pursuit of agrarian reform instead of immediately disturbing property rights by
forcibly acquiring private agricultural lands. Parenthetically, it is not correct to say that only public agricultural
lands may be covered by the CARP as the Constitution calls for "the just distribution of all agricultural lands." In
any event, the decision to redistribute private agricultural lands in the manner prescribed by the CARP was made by
the legislative and executive departments in the exercise of their discretion. We are not justified in reviewing that
discretion in the absence of a clear showing that it has been abused.

A becoming courtesy admonishes us to respect the decisions of the political departments when they decide what is
known as the political question. As explained by Chief Justice Concepcion in the case of Tañada v. Cuenco: 36

The term "political question" connotes what it means in ordinary parlance, namely, a question of
policy. It refers to "those questions which, under the Constitution, are to be decided by the people
in their sovereign capacity; or in regard to which full discretionary authority has been delegated to
the legislative or executive branch of the government." It is concerned with issues dependent upon
the wisdom, not legality, of a particular measure.

It is true that the concept of the political question has been constricted with the enlargement of judicial power, which
now includes the authority of the courts "to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government." 37 Even
so, this should not be construed as a license for us to reverse the other departments simply because their views may
not coincide with ours.

The legislature and the executive have been seen fit, in their wisdom, to include in the CARP the redistribution of
private landholdings (even as the distribution of public agricultural lands is first provided for, while also continuing
apace under the Public Land Act and other cognate laws). The Court sees no justification to interpose its authority,
which we may assert only if we believe that the political decision is not unwise, but illegal. We do not find it to be
so.

In U.S. v. Chandler-Dunbar Water Power Company,38 it was held:

 Congress having determined, as it did by the Act of March 3,1909 that the entire St. Mary's river
between the American bank and the international line, as well as all of the upland north of the
present ship canal, throughout its entire length, was "necessary for the purpose of navigation of
said waters, and the waters connected therewith," that determination is conclusive in
condemnation proceedings instituted by the United States under that Act, and there is no room for
judicial review of the judgment of Congress ... .

As earlier observed, the requirement for public use has already been settled for us by the Constitution itself No less
than the 1987 Charter calls for agrarian reform, which is the reason why private agricultural lands are to be taken
from their owners, subject to the prescribed maximum retention limits. The purposes specified in P.D. No. 27, Proc.
No. 131 and R.A. No. 6657 are only an elaboration of the constitutional injunction that the State adopt the necessary
measures "to encourage and undertake the just distribution of all agricultural lands to enable farmers who are
landless to own directly or collectively the lands they till." That public use, as pronounced by the fundamental law
itself, must be binding on us.

The second requirement, i.e., the payment of just compensation, needs a longer and more thoughtful examination.

Just compensation is defined as the full and fair equivalent of the property taken from its owner by the
expropriator. 39 It has been repeatedly stressed by this Court that the measure is not the taker's gain but the owner's
loss. 40 The word "just" is used to intensify the meaning of the word "compensation" to convey the idea that the
equivalent to be rendered for the property to be taken shall be real, substantial, full, ample. 41

It bears repeating that the measures challenged in these petitions contemplate more than a mere regulation of the use
of private lands under the police power. We deal here with an actual taking of private agricultural lands that has
dispossessed the owners of their property and deprived them of all its beneficial use and enjoyment, to entitle them
to the just compensation mandated by the Constitution.

As held in Republic of the Philippines v. Castellvi, 42 there is compensable taking when the following conditions
concur: (1) the expropriator must enter a private property; (2) the entry must be for more than a momentary period;
(3) the entry must be under warrant or color of legal authority; (4) the property must be devoted to public use or
otherwise informally appropriated or injuriously affected; and (5) the utilization of the property for public use must
be in such a way as to oust the owner and deprive him of beneficial enjoyment of the property. All these requisites
are envisioned in the measures before us.

Where the State itself is the expropriator, it is not necessary for it to make a deposit upon its taking possession of the
condemned property, as "the compensation is a public charge, the good faith of the public is pledged for its payment,
and all the resources of taxation may be employed in raising the amount." 43 Nevertheless, Section 16(e) of the
CARP Law provides that:

Upon receipt by the landowner of the corresponding payment or, in case of rejection or no
response from the landowner, upon the deposit with an accessible bank designated by the DAR of
the compensation in cash or in LBP bonds in accordance with this Act, the DAR shall take
immediate possession of the land and shall request the proper Register of Deeds to issue a
Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. The DAR shall
thereafter proceed with the redistribution of the land to the qualified beneficiaries.

Objection is raised, however, to the manner of fixing the just compensation, which it is claimed is entrusted to the
administrative authorities in violation of judicial prerogatives. Specific reference is made to Section 16(d), which
provides that in case of the rejection or disregard by the owner of the offer of the government to buy his land-

... the DAR shall conduct summary administrative proceedings to determine the compensation for
the land by requiring the landowner, the LBP and other interested parties to submit evidence as to
the just compensation for the land, within fifteen (15) days from the receipt of the notice. After the
 expiration of the above period, the matter is deemed submitted for decision. The DAR shall decide
the case within thirty (30) days after it is submitted for decision.

To be sure, the determination of just compensation is a function addressed to the courts of justice and may not be
usurped by any other branch or official of the government. EPZA v. Dulay 44 resolved a challenge to several decrees
promulgated by President Marcos providing that the just compensation for property under expropriation should be
either the assessment of the property by the government or the sworn valuation thereof by the owner, whichever was
lower. In declaring these decrees unconstitutional, the Court held through Mr. Justice Hugo E. Gutierrez, Jr.:

The method of ascertaining just compensation under the aforecited decrees constitutes
impermissible encroachment on judicial prerogatives. It tends to render this Court inutile in a
matter which under this Constitution is reserved to it for final determination.

Thus, although in an expropriation proceeding the court technically would still have the power to
determine the just compensation for the property, following the applicable decrees, its task would
be relegated to simply stating the lower value of the property as declared either by the owner or
the assessor. As a necessary consequence, it would be useless for the court to appoint
commissioners under Rule 67 of the Rules of Court. Moreover, the need to satisfy the due process
clause in the taking of private property is seemingly fulfilled since it cannot be said that a judicial
proceeding was not had before the actual taking. However, the strict application of the decrees
during the proceedings would be nothing short of a mere formality or charade as the court has only
to choose between the valuation of the owner and that of the assessor, and its choice is always
limited to the lower of the two. The court cannot exercise its discretion or independence in
determining what is just or fair. Even a grade school pupil could substitute for the judge insofar as
the determination of constitutional just compensation is concerned.

xxx

In the present petition, we are once again confronted with the same question of whether the courts
under P.D. No. 1533, which contains the same provision on just compensation as its predecessor
decrees, still have the power and authority to determine just compensation, independent of what is
stated by the decree and to this effect, to appoint commissioners for such purpose.

This time, we answer in the affirmative.

xxx

It is violative of due process to deny the owner the opportunity to prove that the valuation in the
tax documents is unfair or wrong. And it is repulsive to the basic concepts of justice and fairness
to allow the haphazard work of a minor bureaucrat or clerk to absolutely prevail over the judgment
of a court promulgated only after expert commissioners have actually viewed the property, after
evidence and arguments pro and con have been presented, and after all factors and considerations
essential to a fair and just determination have been judiciously evaluated.

A reading of the aforecited Section 16(d) will readily show that it does not suffer from the arbitrariness that rendered
the challenged decrees constitutionally objectionable. Although the proceedings are described as summary, the
landowner and other interested parties are nevertheless allowed an opportunity to submit evidence on the real value
of the property. But more importantly, the determination of the just compensation by the DAR is not by any means
final and conclusive upon the landowner or any other interested party, for Section 16(f) clearly provides:

Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction
for final determination of just compensation.
The determination made by the DAR is only preliminary unless accepted by all parties concerned. Otherwise, the
courts of justice will still have the right to review with finality the said determination in the exercise of what is
admittedly a judicial function.

The second and more serious objection to the provisions on just compensation is not as easily resolved.

This refers to Section 18 of the CARP Law providing in full as follows:

SEC. 18. Valuation and Mode of Compensation. — The LBP shall compensate the landowner in
such amount as may be agreed upon by the landowner and the DAR and the LBP, in accordance
with the criteria provided for in Sections 16 and 17, and other pertinent provisions hereof, or as
may be finally determined by the court, as the just compensation for the land.

The compensation shall be paid in one of the following modes, at the option of the landowner:

(1) Cash payment, under the following terms and conditions:

(a) For lands above fifty (50) hectares, insofar as the excess
hectarage is concerned — Twenty-five percent (25%) cash,
the balance to be paid in government financial instruments
negotiable at any time.

(b) For lands above twenty-four (24) hectares and up to fifty

(50) hectares — Thirty percent (30%) cash, the balance to be
paid in government financial instruments negotiable at any
time.

(c) For lands twenty-four (24) hectares and below — Thirty-

five percent (35%) cash, the balance to be paid in government
financial instruments negotiable at any time.

(2) Shares of stock in government-owned or controlled corporations, LBP preferred shares,

physical assets or other qualified investments in accordance with guidelines set by the PARC;

(3) Tax credits which can be used against any tax liability;

(4) LBP bonds, which shall have the following features:

(a) Market interest rates aligned with 91-day treasury bill

rates. Ten percent (10%) of the face value of the bonds shall
mature every year from the date of issuance until the tenth
(10th) year: Provided, That should the landowner choose to
forego the cash portion, whether in full or in part, he shall be
paid correspondingly in LBP bonds;

(b) Transferability and negotiability. Such LBP bonds may be

used by the landowner, his successors-in- interest or his
assigns, up to the amount of their face value, for any of the
following:

(i) Acquisition of land or other real properties of the

government, including assets under the Asset Privatization
Program and other assets foreclosed by government financial
 institutions in the same province or region where the lands for
which the bonds were paid are situated;

(ii) Acquisition of shares of stock of government-owned or

controlled corporations or shares of stock owned by the
government in private corporations;

(iii) Substitution for surety or bail bonds for the provisional

release of accused persons, or for performance bonds;

(iv) Security for loans with any government financial

institution, provided the proceeds of the loans shall be
invested in an economic enterprise, preferably in a small and
medium- scale industry, in the same province or region as the
land for which the bonds are paid;

(v) Payment for various taxes and fees to government:

Provided, That the use of these bonds for these purposes will
be limited to a certain percentage of the outstanding balance of
the financial instruments; Provided, further, That the PARC
shall determine the percentages mentioned above;

(vi) Payment for tuition fees of the immediate family of the

original bondholder in government universities, colleges, trade
schools, and other institutions;

(vii) Payment for fees of the immediate family of the original

bondholder in government hospitals; and

(viii) Such other uses as the PARC may from time to time
allow.

The contention of the petitioners in G.R. No. 79777 is that the above provision is unconstitutional insofar as it
requires the owners of the expropriated properties to accept just compensation therefor in less than money, which is
the only medium of payment allowed. In support of this contention, they cite jurisprudence holding that:

The fundamental rule in expropriation matters is that the owner of the property expropriated is
entitled to a just compensation, which should be neither more nor less, whenever it is possible to
make the assessment, than the money equivalent of said property. Just compensation has always
been understood to be the just and complete equivalent of the loss which the owner of the thing
expropriated has to suffer by reason of the expropriation . 45 (Emphasis supplied.)

In J.M. Tuazon Co. v. Land Tenure Administration, 46 this Court held:

It is well-settled that just compensation means the equivalent for the value of the property at the
time of its taking. Anything beyond that is more, and anything short of that is less, than just
compensation. It means a fair and full equivalent for the loss sustained, which is the measure of
the indemnity, not whatever gain would accrue to the expropriating entity. The market value of the
land taken is the just compensation to which the owner of condemned property is entitled, the
market value being that sum of money which a person desirous, but not compelled to buy, and an
owner, willing, but not compelled to sell, would agree on as a price to be given and received for
such property. (Emphasis supplied.)
In the United States, where much of our jurisprudence on the subject has been derived, the weight of authority is
also to the effect that just compensation for property expropriated is payable only in money and not otherwise. Thus
—

The medium of payment of compensation is ready money or cash. The condemnor cannot compel
the owner to accept anything but money, nor can the owner compel or require the condemnor to
pay him on any other basis than the value of the property in money at the time and in the manner
prescribed by the Constitution and the statutes. When the power of eminent domain is resorted to,
there must be a standard medium of payment, binding upon both parties, and the law has fixed that
standard as money in cash. 47 (Emphasis supplied.)

Part cash and deferred payments are not and cannot, in the nature of things, be regarded as a
reliable and constant standard of compensation. 48

"Just compensation" for property taken by condemnation means a fair equivalent in money, which
must be paid at least within a reasonable time after the taking, and it is not within the power of the
Legislature to substitute for such payment future obligations, bonds, or other valuable
advantage. 49 (Emphasis supplied.)

It cannot be denied from these cases that the traditional medium for the payment of just compensation is money and
no other. And so, conformably, has just compensation been paid in the past solely in that medium. However, we do
not deal here with the traditional excercise of the power of eminent domain. This is not an ordinary expropriation
where only a specific property of relatively limited area is sought to be taken by the State from its owner for a
specific and perhaps local purpose.

What we deal with here is a revolutionary kind of expropriation.

The expropriation before us affects all private agricultural lands whenever found and of whatever kind as long as
they are in excess of the maximum retention limits allowed their owners. This kind of expropriation is intended for
the benefit not only of a particular community or of a small segment of the population but of the entire Filipino
nation, from all levels of our society, from the impoverished farmer to the land-glutted owner. Its purpose does not
cover only the whole territory of this country but goes beyond in time to the foreseeable future, which it hopes to
secure and edify with the vision and the sacrifice of the present generation of Filipinos. Generations yet to come are
as involved in this program as we are today, although hopefully only as beneficiaries of a richer and more fulfilling
life we will guarantee to them tomorrow through our thoughtfulness today. And, finally, let it not be forgotten that it
is no less than the Constitution itself that has ordained this revolution in the farms, calling for "a just distribution"
among the farmers of lands that have heretofore been the prison of their dreams but can now become the key at least
to their deliverance.

Such a program will involve not mere millions of pesos. The cost will be tremendous. Considering the vast areas of
land subject to expropriation under the laws before us, we estimate that hundreds of billions of pesos will be needed,
far more indeed than the amount of P50 billion initially appropriated, which is already staggering as it is by our
present standards. Such amount is in fact not even fully available at this time.

We assume that the framers of the Constitution were aware of this difficulty when they called for agrarian reform as
a top priority project of the government. It is a part of this assumption that when they envisioned the expropriation
that would be needed, they also intended that the just compensation would have to be paid not in the orthodox way
but a less conventional if more practical method. There can be no doubt that they were aware of the financial
limitations of the government and had no illusions that there would be enough money to pay in cash and in full for
the lands they wanted to be distributed among the farmers. We may therefore assume that their intention was to
allow such manner of payment as is now provided for by the CARP Law, particularly the payment of the balance (if
the owner cannot be paid fully with money), or indeed of the entire amount of the just compensation, with other
things of value. We may also suppose that what they had in mind was a similar scheme of payment as that
prescribed in P.D. No. 27, which was the law in force at the time they deliberated on the new Charter and with
which they presumably agreed in principle.

The Court has not found in the records of the Constitutional Commission any categorical agreement among the
members regarding the meaning to be given the concept of just compensation as applied to the comprehensive
agrarian reform program being contemplated. There was the suggestion to "fine tune" the requirement to suit the
demands of the project even as it was also felt that they should "leave it to Congress" to determine how payment
should be made to the landowner and reimbursement required from the farmer-beneficiaries. Such innovations as
"progressive compensation" and "State-subsidized compensation" were also proposed. In the end, however, no
special definition of the just compensation for the lands to be expropriated was reached by the Commission. 50

On the other hand, there is nothing in the records either that militates against the assumptions we are making of the
general sentiments and intention of the members on the content and manner of the payment to be made to the
landowner in the light of the magnitude of the expenditure and the limitations of the expropriator.

With these assumptions, the Court hereby declares that the content and manner of the just compensation provided
for in the afore- quoted Section 18 of the CARP Law is not violative of the Constitution. We do not mind admitting
that a certain degree of pragmatism has influenced our decision on this issue, but after all this Court is not a
cloistered institution removed from the realities and demands of society or oblivious to the need for its enhancement.
The Court is as acutely anxious as the rest of our people to see the goal of agrarian reform achieved at last after the
frustrations and deprivations of our peasant masses during all these disappointing decades. We are aware that
invalidation of the said section will result in the nullification of the entire program, killing the farmer's hopes even as
they approach realization and resurrecting the spectre of discontent and dissent in the restless countryside. That is
not in our view the intention of the Constitution, and that is not what we shall decree today.

Accepting the theory that payment of the just compensation is not always required to be made fully in money, we
find further that the proportion of cash payment to the other things of value constituting the total payment, as
determined on the basis of the areas of the lands expropriated, is not unduly oppressive upon the landowner. It is
noted that the smaller the land, the bigger the payment in money, primarily because the small landowner will be
needing it more than the big landowners, who can afford a bigger balance in bonds and other things of value. No less
importantly, the government financial instruments making up the balance of the payment are "negotiable at any
time." The other modes, which are likewise available to the landowner at his option, are also not unreasonable
because payment is made in shares of stock, LBP bonds, other properties or assets, tax credits, and other things of
value equivalent to the amount of just compensation.

Admittedly, the compensation contemplated in the law will cause the landowners, big and small, not a little
inconvenience. As already remarked, this cannot be avoided. Nevertheless, it is devoutly hoped that these
countrymen of ours, conscious as we know they are of the need for their forebearance and even sacrifice, will not
begrudge us their indispensable share in the attainment of the ideal of agrarian reform. Otherwise, our pursuit of this
elusive goal will be like the quest for the Holy Grail.

The complaint against the effects of non-registration of the land under E.O. No. 229 does not seem to be viable any
more as it appears that Section 4 of the said Order has been superseded by Section 14 of the CARP Law. This
repeats the requisites of registration as embodied in the earlier measure but does not provide, as the latter did, that in
case of failure or refusal to register the land, the valuation thereof shall be that given by the provincial or city
assessor for tax purposes. On the contrary, the CARP Law says that the just compensation shall be ascertained on
the basis of the factors mentioned in its Section 17 and in the manner provided for in Section 16.

The last major challenge to CARP is that the landowner is divested of his property even before actual payment to
him in full of just compensation, in contravention of a well- accepted principle of eminent domain.

The recognized rule, indeed, is that title to the property expropriated shall pass from the owner to the expropriator
only upon full payment of the just compensation. Jurisprudence on this settled principle is consistent both here and
in other democratic jurisdictions. Thus:
Title to property which is the subject of condemnation proceedings does not vest the condemnor until the judgment
fixing just compensation is entered and paid, but the condemnor's title relates back to the date on which the petition
under the Eminent Domain Act, or the commissioner's report under the Local Improvement Act, is filed. 51

... although the right to appropriate and use land taken for a canal is complete at the time of entry, title to the
property taken remains in the owner until payment is actually made. 52 (Emphasis supplied.)

In Kennedy v. Indianapolis, 53 the US Supreme Court cited several cases holding that title to property does not pass
to the condemnor until just compensation had actually been made. In fact, the decisions appear to be uniformly to
this effect. As early as 1838, in Rubottom v. McLure, 54 it was held that "actual payment to the owner of the
condemned property was a condition precedent to the investment of the title to the property in the State" albeit "not
to the appropriation of it to public use." In Rexford v. Knight, 55 the Court of Appeals of New York said that the
construction upon the statutes was that the fee did not vest in the State until the payment of the compensation
although the authority to enter upon and appropriate the land was complete prior to the payment. Kennedy further
said that "both on principle and authority the rule is ... that the right to enter on and use the property is complete, as
soon as the property is actually appropriated under the authority of law for a public use, but that the title does not
pass from the owner without his consent, until just compensation has been made to him."

Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, 56 that:

If the laws which we have exhibited or cited in the preceding discussion are attentively examined
it will be apparent that the method of expropriation adopted in this jurisdiction is such as to afford
absolute reassurance that no piece of land can be finally and irrevocably taken from an unwilling
owner until compensation is paid ... . (Emphasis supplied.)

It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as October 21, 1972 and declared that
he shall "be deemed the owner" of a portion of land consisting of a family-sized farm except that "no title to the land
owned by him was to be actually issued to him unless and until he had become a full-fledged member of a duly
recognized farmers' cooperative." It was understood, however, that full payment of the just compensation also had to
be made first, conformably to the constitutional requirement.

When E.O. No. 228, categorically stated in its Section 1 that:

All qualified farmer-beneficiaries are now deemed full owners as of October 21, 1972 of the land
they acquired by virtue of Presidential Decree No. 27. (Emphasis supplied.)

it was obviously referring to lands already validly acquired under the said decree, after proof of full-fledged
membership in the farmers' cooperatives and full payment of just compensation. Hence, it was also perfectly proper
for the Order to also provide in its Section 2 that the "lease rentals paid to the landowner by the farmer- beneficiary
after October 21, 1972 (pending transfer of ownership after full payment of just compensation), shall be considered
as advance payment for the land."

The CARP Law, for its part, conditions the transfer of possession and ownership of the land to the government on
receipt by the landowner of the corresponding payment or the deposit by the DAR of the compensation in cash or
LBP bonds with an accessible bank. Until then, title also remains with the landowner. 57 No outright change of
ownership is contemplated either.

Hence, the argument that the assailed measures violate due process by arbitrarily transferring title before the land is
fully paid for must also be rejected.

It is worth stressing at this point that all rights acquired by the tenant-farmer under P.D. No. 27, as recognized under
E.O. No. 228, are retained by him even now under R.A. No. 6657. This should counter-balance the express
provision in Section 6 of the said law that "the landowners whose lands have been covered by Presidential Decree
No. 27 shall be allowed to keep the area originally retained by them thereunder, further, That original homestead
grantees or direct compulsory heirs who still own the original homestead at the time of the approval of this Act shall
retain the same areas as long as they continue to cultivate said homestead."

In connection with these retained rights, it does not appear in G.R. No. 78742 that the appeal filed by the petitioners
with the Office of the President has already been resolved. Although we have said that the doctrine of exhaustion of
administrative remedies need not preclude immediate resort to judicial action, there are factual issues that have yet
to be examined on the administrative level, especially the claim that the petitioners are not covered by LOI 474
because they do not own other agricultural lands than the subjects of their petition.

Obviously, the Court cannot resolve these issues. In any event, assuming that the petitioners have not yet exercised
their retention rights, if any, under P.D. No. 27, the Court holds that they are entitled to the new retention rights
provided for by R.A. No. 6657, which in fact are on the whole more liberal than those granted by the decree.

The CARP Law and the other enactments also involved in these cases have been the subject of bitter attack from
those who point to the shortcomings of these measures and ask that they be scrapped entirely. To be sure, these
enactments are less than perfect; indeed, they should be continuously re-examined and rehoned, that they may be
sharper instruments for the better protection of the farmer's rights. But we have to start somewhere. In the pursuit of
agrarian reform, we do not tread on familiar ground but grope on terrain fraught with pitfalls and expected
difficulties. This is inevitable. The CARP Law is not a tried and tested project. On the contrary, to use Justice
Holmes's words, "it is an experiment, as all life is an experiment," and so we learn as we venture forward, and, if
necessary, by our own mistakes. We cannot expect perfection although we should strive for it by all means.
Meantime, we struggle as best we can in freeing the farmer from the iron shackles that have unconscionably, and for
so long, fettered his soul to the soil.

By the decision we reach today, all major legal obstacles to the comprehensive agrarian reform program are
removed, to clear the way for the true freedom of the farmer. We may now glimpse the day he will be released not
only from want but also from the exploitation and disdain of the past and from his own feelings of inadequacy and
helplessness. At last his servitude will be ended forever. At last the farm on which he toils will be his farm. It will be
his portion of the Mother Earth that will give him not only the staff of life but also the joy of living. And where once
it bred for him only deep despair, now can he see in it the fruition of his hopes for a more fulfilling future. Now at
last can he banish from his small plot of earth his insecurities and dark resentments and "rebuild in it the music and
the dream."

WHEREFORE, the Court holds as follows:

1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229 are SUSTAINED
against all the constitutional objections raised in the herein petitions.

2. Title to all expropriated properties shall be transferred to the State only upon full payment of
compensation to their respective owners.

3. All rights previously acquired by the tenant- farmers under P.D. No. 27 are retained and
recognized.

4. Landowners who were unable to exercise their rights of retention under P.D. No. 27 shall enjoy
the retention rights granted by R.A. No. 6657 under the conditions therein prescribed. 5. Subject to
the above-mentioned rulings all the petitions are DISMISSED, without pronouncement as to costs.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 127876 December 17, 1999

ROXAS & CO., INC., petitioner,

vs.
THE HONORABLE COURT OF APPEALS, DEPARTMENT OF AGRARIAN REFORM, SECRETARY
OF AGRARIAN REFORM, DAR REGIONAL DIRECTOR FOR REGION IV, MUNICIPAL AGRARIAN
REFORM OFFICER OF NASUGBU, BATANGAS and DEPARTMENT OF AGRARIAN REFORM
ADJUDICATION BOARD, respondents.

PUNO, J.:

This case involves three (3) haciendas in Nasugbu, Batangas owned by petitioner and the validity of the acquisition
of these haciendas by the government under Republic Act No. 6657, the Comprehensive Agrarian Reform Law of
1988.

Petitioner Roxas & Co. is a domestic corporation and is the registered owner of three haciendas, namely, Haciendas
Palico, Banilad and Caylaway, all located in the Municipality of Nasugbu, Batangas. Hacienda Palico is 1,024
hectares in area and is registered under Transfer Certificate of Title (TCT) No. 985. This land is covered by Tax
Declaration Nos. 0465, 0466, 0468, 0470, 0234 and 0354. Hacienda Banilad is 1,050 hectares in area, registered
under TCT No. 924 and covered by Tax Declaration Nos. 0236, 0237 and 0390. Hacienda Caylaway is 867.4571
hectares in area and is registered under TCT Nos. T-44662, T-44663, T-44664 and T-44665.

The events of this case occurred during the incumbency of then President Corazon C. Aquino. In February 1986,
President Aquino issued Proclamation No. 3 promulgating a Provisional Constitution. As head of the provisional
government, the President exercised legislative power "until a legislature is elected and convened under a new
Constitution." 1 In the exercise of this legislative power, the President signed on July 22, 1987, Proclamation No.
131 instituting a Comprehensive Agrarian Reform Program and Executive Order No. 229 providing the mechanisms
necessary to initially implement the program.

On July 27, 1987, the Congress of the Philippines formally convened and took over legislative power from the
President. 2 This Congress passed Republic Act No. 6657, the Comprehensive Agrarian Reform Law (CARL) of
1988. The Act was signed by the President on June 10, 1988 and took effect on June 15, 1988.

Before the law's effectivity, on May 6, 1988, petitioner filed with respondent DAR a voluntary offer to sell Hacienda
Caylaway pursuant to the provisions of E.O. No. 229. Haciendas Palico and Banilad were later placed under
compulsory acquisition by respondent DAR in accordance with the CARL.

Hacienda Palico

On September 29, 1989, respondent DAR, through respondent Municipal Agrarian Reform Officer (MARO) of
Nasugbu, Batangas, sent a notice entitled "Invitation to Parties" to petitioner. The Invitation was addressed to "Jaime
Pimentel, Hda. Administrator, Hda. Palico." 3 Therein, the MARO invited petitioner to a conference on October 6,
1989 at the DAR office in Nasugbu to discuss the results of the DAR investigation of Hacienda Palico, which was
"scheduled for compulsory acquisition this year under the Comprehensive Agrarian Reform Program." 4

On October 25, 1989, the MARO completed three (3) Investigation Reports after investigation and ocular inspection
of the Hacienda. In the first Report, the MARO found that 270 hectares under Tax Declaration Nos. 465, 466, 468
and 470 were "flat to undulating (0-8% slope)" and actually occupied and cultivated by 34 tillers of sugarcane. 5 In
the second Report, the MARO identified as "flat to undulating" approximately 339 hectares under Tax Declaration
No. 0234 which also had several actual occupants and tillers of sugarcane; 6 while in the third Report, the MARO
found approximately 75 hectare under Tax Declaration No. 0354 as "flat to undulating" with 33 actual occupants
and tillers also of sugarcane. 7

On October 27, 1989, a "Summary Investigation Report" was submitted and signed jointly by the MARO,
representatives of the Barangay Agrarian Reform Committee (BARC) and Land Bank of the Philippines (LBP), and
by the Provincial Agrarian Reform Officer (PARO). The Report recommended that 333.0800 hectares of Hacienda
Palico be subject to compulsory acquisition at a value of P6,807,622.20. 8 The following day, October 28, 1989, two
(2) more Summary Investigation Reports were submitted by the same officers and representatives. They
recommended that 270.0876 hectares and 75.3800 hectares be placed under compulsory acquisition at a
compensation of P8,109,739.00 and P2,188,195.47, respectively. 9

On December 12, 1989, respondent DAR through then Department Secretary Miriam D. Santiago sent a "Notice of
Acquisition" to petitioner. The Notice was addressed as follows:

Roxas y Cia, Limited

Soriano Bldg., Plaza Cervantes

Manila, Metro Manila. 10

Petitioner was informed that 1,023.999 hectares of its land in Hacienda Palico were subject to immediate acquisition
and distribution by the government under the CARL; that based on the DAR's valuation criteria, the government was
offering compensation of P3.4 million for 333.0800 hectares; that whether this offer was to be accepted or rejected,
petitioner was to inform the Bureau of Land Acquisition and Distribution (BLAD) of the DAR; that in case of
petitioner's rejection or failure to reply within thirty days, respondent DAR shall conduct summary administrative
proceedings with notice to petitioner to determine just compensation for the land; that if petitioner accepts
respondent DAR's offer, or upon deposit of the compensation with an accessible bank if it rejects the same, the DAR
shall take immediate possession of the land. 11

Almost two years later, on September 26, 1991, the DAR Regional Director sent to the LBP Land Valuation
Manager three (3) separate Memoranda entitled "Request to Open Trust Account." Each Memoranda requested that
a trust account representing the valuation of three portions of Hacienda Palico be opened in favor of the petitioner in
view of the latter's rejection of its offered value. 12

Meanwhile in a letter dated May 4, 1993, petitioner applied with the DAR for conversion of Haciendas Palico and
Banilad from agricultural to non-agricultural lands under the provisions of the CARL. 13 On July 14, 1993, petitioner
sent a letter to the DAR Regional Director reiterating its request for conversion of the two haciendas. 14

Despite petitioner's application for conversion, respondent DAR proceeded with the acquisition of the two
Haciendas. The LBP trust accounts as compensation for Hacienda Palico were replaced by respondent DAR with
cash and LBP bonds. 15 On October 22, 1993, from the mother title of TCT No. 985 of the Hacienda, respondent
DAR registered Certificate of Land Ownership Award (CLOA) No. 6654. On October 30, 1993, CLOA's were
distributed to farmer beneficiaries. 16

Hacienda Banilad
On August 23, 1989, respondent DAR, through respondent MARO of Nasugbu, Batangas, sent a notice to petitioner
addressed as follows:

Mr. Jaime Pimentel

Hacienda Administrator

Hacienda Banilad

Nasugbu, Batangas 17

The MARO informed Pimentel that Hacienda Banilad was subject to compulsory acquisition under the
CARL; that should petitioner wish to avail of the other schemes such as Voluntary Offer to Sell or
Voluntary Land Transfer, respondent DAR was willing to provide assistance thereto. 18

On September 18, 1989, the MARO sent an "Invitation to Parties" again to Pimentel inviting the latter to attend a
conference on September 21, 1989 at the MARO Office in Nasugbu to discuss the results of the MARO's
investigation over Hacienda Banilad. 19

On September 21, 1989, the same day the conference was held, the MARO submitted two (2) Reports. In his first
Report, he found that approximately 709 hectares of land under Tax Declaration Nos. 0237 and 0236 were "flat to
undulating (0-8% slope)." On this area were discovered 162 actual occupants and tillers of sugarcane. 20 In the
second Report, it was found that approximately 235 hectares under Tax Declaration No. 0390 were "flat to
undulating," on which were 92 actual occupants and tillers of sugarcane. 21

The results of these Reports were discussed at the conference. Present in the conference were representatives of the
prospective farmer beneficiaries, the BARC, the LBP, and Jaime Pimentel on behalf of the landowner. 22 After the
meeting, on the same day, September 21, 1989, a Summary Investigation Report was submitted jointly by the
MARO, representatives of the BARC, LBP, and the PARO. They recommended that after ocular inspection of the
property, 234.6498 hectares under Tax Declaration No. 0390 be subject to compulsory acquisition and distribution
by CLOA. 23 The following day, September 22, 1989, a second Summary Investigation was submitted by the same
officers. They recommended that 737.2590 hectares under Tax Declaration Nos. 0236 and 0237 be likewise placed
under compulsory acquisition for distribution. 24

On December 12, 1989, respondent DAR, through the Department Secretary, sent to petitioner two (2) separate
"Notices of Acquisition" over Hacienda Banilad. These Notices were sent on the same day as the Notice of
Acquisition over Hacienda Palico. Unlike the Notice over Hacienda Palico, however, the Notices over Hacienda
Banilad were addressed to:

Roxas y Cia. Limited

7th Floor, Cacho-Gonzales Bldg. 101 Aguirre St., Leg.

Makati, Metro Manila. 25

Respondent DAR offered petitioner compensation of P15,108,995.52 for 729.4190 hectares and
P4,428,496.00 for 234.6498 hectares. 26

On September 26, 1991, the DAR Regional Director sent to the LBP Land Valuation Manager a "Request to Open
Trust Account" in petitioner's name as compensation for 234.6493 hectares of Hacienda Banilad. 27 A second
"Request to Open Trust Account" was sent on November 18, 1991 over 723.4130 hectares of said Hacienda. 28
On December 18, 1991, the LBP certified that the amounts of P4,428,496.40 and P21,234,468.78 in cash and LBP
bonds had been earmarked as compensation for petitioner's land in Hacienda Banilad. 29

On May 4, 1993, petitioner applied for conversion of both Haciendas Palico and Banilad.

Hacienda Caylaway

Hacienda Caylaway was voluntarily offered for sale to the government on May 6, 1988 before the effectivity of the
CARL. The Hacienda has a total area of 867.4571 hectares and is covered by four (4) titles — TCT Nos. T-44662,
T-44663, T-44664 and T-44665. On January 12, 1989, respondent DAR, through the Regional Director for Region
IV, sent to petitioner two (2) separate Resolutions accepting petitioner's voluntary offer to sell Hacienda Caylaway,
particularly TCT Nos. T-44664 and T-44663. 30 The Resolutions were addressed to:

Roxas & Company, Inc.

7th Flr. Cacho-Gonzales Bldg.

Aguirre, Legaspi Village

Makati, M. M 31

On September 4, 1990, the DAR Regional Director issued two separate Memoranda to the LBP Regional Manager
requesting for the valuation of the land under TCT Nos. T-44664 and T-44663. 32 On the same day, respondent
DAR, through the Regional Director, sent to petitioner a "Notice of Acquisition" over 241.6777 hectares under TCT
No. T-44664 and 533.8180 hectares under TCT No. T-44663. 33 Like the Resolutions of Acceptance, the Notice of
Acquisition was addressed to petitioner at its office in Makati, Metro Manila.

Nevertheless, on August 6, 1992, petitioner, through its President, Eduardo J. Roxas, sent a letter to the Secretary of
respondent DAR withdrawing its VOS of Hacienda Caylaway. The Sangguniang Bayan of Nasugbu, Batangas
allegedly authorized the reclassification of Hacienda Caylaway from agricultural to non-agricultural. As a result,
petitioner informed respondent DAR that it was applying for conversion of Hacienda Caylaway from agricultural to
other
uses. 34

In a letter dated September 28, 1992, respondent DAR Secretary informed petitioner that a reclassification of the
land would not exempt it from agrarian reform. Respondent Secretary also denied petitioner's withdrawal of the
VOS on the ground that withdrawal could only be based on specific grounds such as unsuitability of the soil for
agriculture, or if the slope of the land is over 18 degrees and that the land is undeveloped. 35

Despite the denial of the VOS withdrawal of Hacienda Caylaway, on May 11, 1993, petitioner filed its application
for conversion of both Haciendas Palico and Banilad. 36 On July 14, 1993, petitioner, through its President, Eduardo
Roxas, reiterated its request to withdraw the VOS over Hacienda Caylaway in light of the following:

1) Certification issued by Conrado I. Gonzales, Officer-in-Charge, Department of Agriculture,

Region 4, 4th Floor, ATI (BA) Bldg., Diliman, Quezon City dated March 1, 1993 stating that the
lands subject of referenced titles "are not feasible and economically sound for further agricultural
development.

2) Resolution No. 19 of the Sangguniang Bayan of Nasugbu, Batangas approving the Zoning
Ordinance reclassifying areas covered by the referenced titles to non-agricultural which was
enacted after extensive consultation with government agencies, including [the Department of
Agrarian Reform], and the requisite public hearings.
 3) Resolution No. 106 of the Sangguniang Panlalawigan of Batangas dated March 8, 1993
approving the Zoning Ordinance enacted by the Municipality of Nasugbu.

4) Letter dated December 15, 1992 issued by Reynaldo U. Garcia of the Municipal Planning &
Development, Coordinator and Deputized Zoning Administrator addressed to Mrs. Alicia P.
Logarta advising that the Municipality of Nasugbu, Batangas has no objection to the conversion of
the lands subject of referenced titles to non-agricultural. 37

On August 24, 1993 petitioner instituted Case No. N-0017-96-46 (BA) with respondent DAR Adjudication Board
(DARAB) praying for the cancellation of the CLOA's issued by respondent DAR in the name of several persons.
Petitioner alleged that the Municipality of Nasugbu, where the haciendas are located, had been declared a tourist
zone, that the land is not suitable for agricultural production, and that the Sangguniang Bayan of Nasugbu had
reclassified the land to non-agricultural.

In a Resolution dated October 14, 1993, respondent DARAB held that the case involved the prejudicial question of
whether the property was subject to agrarian reform, hence, this question should be submitted to the Office of the
Secretary of Agrarian Reform for determination. 38

On October 29, 1993, petitioner filed with the Court of Appeals CA-G.R. SP No. 32484. It questioned the
expropriation of its properties under the CARL and the denial of due process in the acquisition of its landholdings.

Meanwhile, the petition for conversion of the three haciendas was denied by the MARO on November 8, 1993.

Petitioner's petition was dismissed by the Court of Appeals on April 28, 1994. 39 Petitioner moved for
reconsideration but the motion was denied on January 17, 1997 by respondent court. 40

Hence, this recourse. Petitioner assigns the following errors:

A. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT

PETITIONER'S CAUSE OF ACTION IS PREMATURE FOR FAILURE TO EXHAUST
ADMINISTRATIVE REMEDIES IN VIEW OF THE PATENT ILLEGALITY OF THE
RESPONDENTS' ACTS, THE IRREPARABLE DAMAGE CAUSED BY SAID ILLEGAL
ACTS, AND THE ABSENCE OF A PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE
ORDINARY COURSE OF LAW — ALL OF WHICH ARE EXCEPTIONS TO THE SAID
DOCTRINE.

B. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT

PETITIONER'S LANDHOLDINGS ARE SUBJECT TO COVERAGE UNDER THE
COMPREHENSIVE AGRARIAN REFORM LAW, IN VIEW OF THE UNDISPUTED FACT
THAT PETITIONER'S LANDHOLDINGS HAVE BEEN CONVERTED TO NON-
AGRICULTURAL USES BY PRESIDENTIAL PROCLAMATION NO. 1520 WHICH
DECLARED THE MUNICIPALITY NASUGBU, BATANGAS AS A TOURIST ZONE, AND
THE ZONING ORDINANCE OF THE MUNICIPALITY OF NASUGBU RE-CLASSIFYING
CERTAIN PORTIONS OF PETITIONER'S LANDHOLDINGS AS NON-AGRICULTURAL,
BOTH OF WHICH PLACE SAID LANDHOLDINGS OUTSIDE THE SCOPE OF AGRARIAN
REFORM, OR AT THE VERY LEAST ENTITLE PETITIONER TO APPLY FOR
CONVERSION AS CONCEDED BY RESPONDENT DAR.

C. RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO

DECLARE THE PROCEEDINGS BEFORE RESPONDENT DAR VOID FOR FAILURE TO
OBSERVE DUE PROCESS, CONSIDERING THAT RESPONDENTS BLATANTLY
DISREGARDED THE PROCEDURE FOR THE ACQUISITION OF PRIVATE LANDS
UNDER R.A. 6657, MORE PARTICULARLY, IN FAILING TO GIVE DUE NOTICE TO THE
 PETITIONER AND TO PROPERLY IDENTIFY THE SPECIFIC AREAS SOUGHT TO BE
ACQUIRED.

D. RESPONDENT COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO

RECOGNIZE THAT PETITIONER WAS BRAZENLY AND ILLEGALLY DEPRIVED OF ITS
PROPERTY WITHOUT JUST COMPENSATION, CONSIDERING THAT PETITIONER WAS
NOT PAID JUST COMPENSATION BEFORE IT WAS UNCEREMONIOUSLY STRIPPED
OF ITS LANDHOLDINGS THROUGH THE ISSUANCE OF CLOA'S TO ALLEGED
FARMER BENEFICIARIES, IN VIOLATION OF R.A. 6657. 41

The assigned errors involve three (3) principal issues: (1) whether this Court can take cognizance of this petition
despite petitioner's failure to exhaust administrative remedies; (2) whether the acquisition proceedings over the three
haciendas were valid and in accordance with law; and (3) assuming the haciendas may be reclassified from
agricultural to non-agricultural, whether this court has the power to rule on this issue.

I. Exhaustion of Administrative Remedies.

In its first assigned error, petitioner claims that respondent Court of Appeals gravely erred in finding that petitioner
failed to exhaust administrative remedies. As a general rule, before a party may be allowed to invoke the jurisdiction
of the courts of justice, he is expected to have exhausted all means of administrative redress. This is not absolute,
however. There are instances when judicial action may be resorted to immediately. Among these exceptions are: (1)
when the question raised is purely legal; (2) when the administrative body is in estoppel; (3) when the act
complained of is patently illegal; (4) when there is urgent need for judicial intervention; (5) when the respondent
acted in disregard of due process; (6) when the respondent is a department secretary whose acts, as an alter ego of
the President, bear the implied or assumed approval of the latter; (7) when irreparable damage will be suffered; (8)
when there is no other plain, speedy and adequate remedy; (9) when strong public interest is involved; (10) when the
subject of the controversy is private land; and (11) in quo warranto proceedings. 42

Petitioner rightly sought immediate redress in the courts. There was a violation of its rights and to require it to
exhaust administrative remedies before the DAR itself was not a plain, speedy and adequate remedy.

Respondent DAR issued Certificates of Land Ownership Award (CLOA's) to farmer beneficiaries over portions of
petitioner's land without just compensation to petitioner. A Certificate of Land Ownership Award (CLOA) is
evidence of ownership of land by a beneficiary under R.A. 6657, the Comprehensive Agrarian Reform Law of
1988. 43 Before this may be awarded to a farmer beneficiary, the land must first be acquired by the State from the
landowner and ownership transferred to the former. The transfer of possession and ownership of the land to the
government are conditioned upon the receipt by the landowner of the corresponding payment or deposit by the DAR
of the compensation with an accessible bank. Until then, title remains with the landowner. 44 There was no receipt
by petitioner of any compensation for any of the lands acquired by the government.

The kind of compensation to be paid the landowner is also specific. The law provides that the deposit must be made
only in "cash" or "LBP bonds." 45 Respondent DAR's opening of trust account deposits in petitioner' s name with the
Land Bank of the Philippines does not constitute payment under the law. Trust account deposits are not cash or LBP
bonds. The replacement of the trust account with cash or LBP bonds did not ipso facto cure the lack of
compensation; for essentially, the determination of this compensation was marred by lack of due process. In fact, in
the entire acquisition proceedings, respondent DAR disregarded the basic requirements of administrative due
process. Under these circumstances, the issuance of the CLOA's to farmer beneficiaries necessitated immediate
judicial action on the part of the petitioner.

II. The Validity of the Acquisition Proceedings Over the Haciendas.

Petitioner's allegation of lack of due process goes into the validity of the acquisition proceedings themselves. Before
we rule on this matter, however, there is need to lay down the procedure in the acquisition of private lands under the
provisions of the law.
A. Modes of Acquisition of Land under R. A. 6657

Republic Act No. 6657, the Comprehensive Agrarian Reform Law of 1988 (CARL), provides for two (2) modes of
acquisition of private land: compulsory and voluntary. The procedure for the compulsory acquisition of private lands
is set forth in Section 16 of R.A. 6657, viz:

Sec. 16. Procedure for Acquisition of Private Lands. — For purposes of acquisition of private
lands, the following procedures shall be followed:

a). After having identified the land, the landowners and the beneficiaries, the
DAR shall send its notice to acquire the land to the owners thereof, by personal
delivery or registered mail, and post the same in a conspicuous place in the
municipal building and barangay hall of the place where the property is located.
Said notice shall contain the offer of the DAR to pay a corresponding value in
accordance with the valuation set forth in Sections 17, 18, and other pertinent
provisions hereof.

b) Within thirty (30) days from the date of receipt of written notice by personal
delivery or registered mail, the landowner, his administrator or representative
shall inform the DAR of his acceptance or rejection of the offer.

c) If the landowner accepts the offer of the DAR, the LBP shall pay the
landowner the purchase price of the land within thirty (30) days after he
executes and delivers a deed of transfer in favor of the Government and
surrenders the Certificate of Title and other muniments of title.

d) In case of rejection or failure to reply, the DAR shall conduct summary

administrative proceedings to determine the compensation for the land requiring
the landowner, the LBP and other interested parties to submit evidence as to the
just compensation for the land, within fifteen (15) days from receipt of the
notice. After the expiration of the above period, the matter is deemed submitted
for decision. The DAR shall decide the case within thirty (30) days after it is
submitted for decision.

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 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.

f) Any party who disagrees with the decision may bring the matter to the court
of proper jurisdiction for final determination of just compensation.

In the compulsory acquisition of private lands, the landholding, the landowners and the farmer beneficiaries must
first be identified. After identification, the DAR shall send a Notice of Acquisition to the landowner, by personal
delivery or registered mail, and post it in a conspicuous place in the municipal building and barangay hall of the
place where the property is located. Within thirty days from receipt of the Notice of Acquisition, the landowner, his
administrator or representative shall inform the DAR of his acceptance or rejection of the offer. If the landowner
accepts, he executes and delivers a deed of transfer in favor of the government and surrenders the certificate of title.
Within thirty days from the execution of the deed of transfer, the Land Bank of the Philippines (LBP) pays the
owner the purchase price. If the landowner rejects the DAR's offer or fails to make a reply, the DAR conducts
summary administrative proceedings to determine just compensation for the land. The landowner, the LBP
representative and other interested parties may submit evidence on just compensation within fifteen days from
notice. Within thirty days from submission, the DAR shall decide the case and inform the owner of its decision and
the amount of just compensation. Upon receipt by the owner of the corresponding payment, or, in case of rejection
or lack of response from the latter, the DAR shall deposit the compensation in cash or in LBP bonds with an
accessible bank. The DAR shall immediately take possession of the land and cause the issuance of a transfer
certificate of title in the name of the Republic of the Philippines. The land shall then be redistributed to the farmer
beneficiaries. Any party may question the decision of the DAR in the regular courts for final determination of just
compensation.

The DAR has made compulsory acquisition the priority mode of the land acquisition to hasten the implementation of
the Comprehensive Agrarian Reform Program (CARP). 46 Under Section 16 of the CARL, the first step in
compulsory acquisition is the identification of the land, the landowners and the beneficiaries. However, the law is
silent on how the identification process must be made. To fill in this gap, the DAR issued on July 26, 1989
Administrative Order No. 12, Series or 1989, which set the operating procedure in the identification of such lands.
The procedure is as follows:

II. OPERATING PROCEDURE

A. The Municipal Agrarian Reform Officer, with the assistance of the pertinent Barangay
Agrarian Reform Committee (BARC), shall:

1. Update the masterlist of all agricultural lands covered under the CARP in his
area of responsibility. The masterlist shall include such information as required
under the attached CARP Masterlist Form which shall include the name of the
landowner, landholding area, TCT/OCT number, and tax declaration number.

2. Prepare a Compulsory Acquisition Case Folder (CACF) for each title

(OCT/TCT) or landholding covered under Phase I and II of the CARP except
those for which the landowners have already filed applications to avail of other
modes of land acquisition. A case folder shall contain the following duly
accomplished forms:

a) CARP CA Form 1 — MARO Investigation Report

b) CARP CA Form 2 — Summary Investigation Report of

Findings and Evaluation

c) CARP CA Form 3 — Applicant's Information Sheet

d) CARP CA Form 4 — Beneficiaries Undertaking

e) CARP CA Form 5 — Transmittal Report to the PARO

The MARO/BARC shall certify that all information contained in the above-
mentioned forms have been examined and verified by him and that the same are
true and correct.

3. Send a Notice of Coverage and a letter of invitation to a conference/meeting

to the landowner covered by the Compulsory Case Acquisition
Folder. Invitations to the said conference/meeting shall also be sent to the
prospective farmer-beneficiaries, the BARC representative(s), the Land Bank of
the Philippines (LBP) representative, and other interested parties to discuss the
inputs to the valuation of the property. He shall discuss the MARO/BARC
investigation report and solicit the views, objection, agreements or suggestions
of the participants thereon. The landowner shall also be asked to indicate his
retention area. The minutes of the meeting shall be signed by all participants in
the conference and shall form an integral part of the CACF.

4. Submit all completed case folders to the Provincial Agrarian Reform Officer
(PARO).

B. The PARO shall:

1. Ensure that the individual case folders are forwarded to him by his MAROs.

2. Immediately upon receipt of a case folder, compute the valuation of the land
in accordance with A.O. No. 6, Series of 1988. 47 The valuation worksheet and
the related CACF valuation forms shall be duly certified correct by the PARO
and all the personnel who participated in the accomplishment of these forms.

3. In all cases, the PARO may validate the report of the MARO through ocular
inspection and verification of the property. This ocular inspection and
verification shall be mandatory when the computed value exceeds = 500,000 per
estate.

4. Upon determination of the valuation, forward the case folder, together with
the duly accomplished valuation forms and his recommendations, to the Central
Office. The LBP representative and the MARO concerned shall be furnished a
copy each of his report.

C. DAR Central Office, specifically through the Bureau of Land Acquisition and
Distribution (BLAD), shall:

1. Within three days from receipt of the case folder from the PARO, review,
evaluate and determine the final land valuation of the property covered by the
case folder. A summary review and evaluation report shall be prepared and duly
certified by the BLAD Director and the personnel directly participating in the
review and final valuation.

2. Prepare, for the signature of the Secretary or her duly authorized

representative, a Notice of Acquisition (CARP CA Form 8) for the subject
property. Serve the Notice to the landowner personally or through registered
mail within three days from its approval. The Notice shall include, among
others, the area subject of compulsory acquisition, and the amount of just
compensation offered by DAR.

3. Should the landowner accept the DAR's offered value, the BLAD shall
prepare and submit to the Secretary for approval the Order of Acquisition.
However, in case of rejection or non-reply, the DAR Adjudication Board
(DARAB) shall conduct a summary administrative hearing to determine just
compensation, in accordance with the procedures provided under Administrative
Order No. 13, Series of 1989. Immediately upon receipt of the DARAB's
decision on just compensation, the BLAD shall prepare and submit to the
Secretary for approval the required Order of Acquisition.
 4. Upon the landowner's receipt of payment, in case of acceptance, or upon
deposit of payment in the designated bank, in case of rejection or non-response,
the Secretary shall immediately direct the pertinent Register of Deeds to issue
the corresponding Transfer Certificate of Title (TCT) in the name of the
Republic of the Philippines. Once the property is transferred, the DAR, through
the PARO, shall take possession of the land for redistribution to qualified
beneficiaries.

Administrative Order No. 12, Series of 1989 requires that the Municipal Agrarian Reform Officer (MARO) keep an
updated master list of all agricultural lands under the CARP in his area of responsibility containing all the required
information. The MARO prepares a Compulsory Acquisition Case Folder (CACF) for each title covered by CARP.
The MARO then sends the landowner a "Notice of Coverage" and a "letter of invitation" to a "conference/meeting"
over the land covered by the CACF. He also sends invitations to the prospective farmer-beneficiaries the
representatives of the Barangay Agrarian Reform Committee (BARC), the Land Bank of the Philippines (LBP) and
other interested parties to discuss the inputs to the valuation of the property and solicit views, suggestions,
objections or agreements of the parties. At the meeting, the landowner is asked to indicate his retention area.

The MARO shall make a report of the case to the Provincial Agrarian Reform Officer (PARO) who shall complete
the valuation of the land. Ocular inspection and verification of the property by the PARO shall be mandatory when
the computed value of the estate exceeds P500,000.00. Upon determination of the valuation, the PARO shall
forward all papers together with his recommendation to the Central Office of the DAR. The DAR Central Office,
specifically, the Bureau of Land Acquisition and Distribution (BLAD), shall review, evaluate and determine the
final land valuation of the property. The BLAD shall prepare, on the signature of the Secretary or his duly
authorized representative, a Notice of Acquisition for the subject property. 48 From this point, the provisions of
Section 16 of R.A. 6657 then apply. 49

For a valid implementation of the CAR program, two notices are required: (1) the Notice of Coverage and letter of
invitation to a preliminary conference sent to the landowner, the representatives of the BARC, LBP, farmer
beneficiaries and other interested parties pursuant to DAR A.O. No. 12, Series of 1989; and (2) the Notice of
Acquisition sent to the landowner under Section 16 of the CARL.

The importance of the first notice, i.e., the Notice of Coverage and the letter of invitation to the conference, and its
actual conduct cannot be understated. They are steps designed to comply with the requirements of administrative
due process. The implementation of the CARL is an exercise of the State's police power and the power of eminent
domain. To the extent that the CARL prescribes retention limits to the landowners, there is an exercise of police
power for the regulation of private property in accordance with the Constitution. 50 But where, to carry out such
regulation, the owners are deprived of lands they own in excess of the maximum area allowed, there is also a taking
under the power of eminent domain. The taking contemplated is not a mere limitation of the use of the land. What is
required is the surrender of the title to and physical possession of the said excess and all beneficial rights accruing to
the owner in favor of the farmer beneficiary. 51 The Bill of Rights provides that "[n]o person shall be deprived of
life, liberty or property without due process of law." 52 The CARL was not intended to take away property without
due process of law. 53 The exercise of the power of eminent domain requires that due process be observed in the
taking of private property.

DAR A.O. No. 12, Series of 1989, from whence the Notice of Coverage first sprung, was amended in 1990 by DAR
A.O. No. 9, Series of 1990 and in 1993 by DAR A.O. No. 1, Series of 1993. The Notice of Coverage and letter of
invitation to the conference meeting were expanded and amplified in said amendments.

DAR A.O. No. 9, Series of 1990 entitled "Revised Rules Governing the Acquisition of Agricultural Lands Subject
of Voluntary Offer to Sell and Compulsory Acquisition Pursuant to R.A. 6657," requires that:

B. MARO
 1. Receives the duly accomplished CARP Form Nos. 1 & 1.1
including supporting documents.

2. Gathers basic ownership documents listed under 1.a or 1.b

above and prepares corresponding VOCF/CACF by
landowner/landholding.

3. Notifies/invites the landowner and representatives of the

LBP, DENR, BARC and prospective beneficiaries of the
schedule of ocular inspection of the property at least one week
in advance.

4. MARO/LAND BANK FIELD OFFICE/BARC

a) Identify the land and landowner, and

determine the suitability for agriculture and
productivity of the land and jointly prepare
Field Investigation Report (CARP Form No.
2), including the Land Use Map of the
property.

b) Interview applicants and assist them in

the preparation of the Application For
Potential CARP Beneficiary (CARP Form
No. 3).

c) Screen prospective farmer-beneficiaries

and for those found qualified, cause the
signing of the respective Application to
Purchase and Farmer's Undertaking (CARP
Form No. 4).

d) Complete the Field Investigation Report

based on the result of the ocular
inspection/investigation of the property and
documents submitted. See to it that Field
Investigation Report is duly accomplished
and signed by all concerned.

5. MARO

a) Assists the DENR Survey Party in the

conduct of a boundary/ subdivision survey
delineating areas covered by OLT, retention,
subject of VOS, CA (by phases, if possible),
infrastructures, etc., whichever is applicable.

b) Sends Notice of Coverage (CARP Form

No. 5) to landowner concerned or his duly
authorized representative inviting him for a
conference.
 c) Sends Invitation Letter (CARP Form No.
6) for a conference/public hearing to
prospective farmer-beneficiaries, landowner,
representatives of BARC, LBP, DENR, DA,
NGO's, farmers' organizations and other
interested parties to discuss the following
matters:

Result of Field
Investigation

Inputs to valuation

Issues raised

Comments/recommendati
ons by all parties
concerned.

d) Prepares Summary of Minutes of the

conference/public hearing to be guided by
CARP Form No. 7.

e) Forwards the completed VOCF/CACF to

the Provincial Agrarian Reform Office
(PARO) using CARP Form No. 8
(Transmittal Memo to PARO).

xxx xxx xxx

DAR A.O. No. 9, Series of 1990 lays down the rules on both Voluntary Offer to Sell (VOS) and Compulsory
Acquisition (CA) transactions involving lands enumerated under Section 7 of the CARL. 54 In both VOS and CA.
transactions, the MARO prepares the Voluntary Offer to Sell Case Folder (VOCF) and the Compulsory Acquisition
Case Folder (CACF), as the case may be, over a particular landholding. The MARO notifies the landowner as well
as representatives of the LBP, BARC and prospective beneficiaries of the date of the ocular inspection of the
property at least one week before the scheduled date and invites them to attend the same. The MARO, LBP or
BARC conducts the ocular inspection and investigation by identifying the land and landowner, determining the
suitability of the land for agriculture and productivity, interviewing and screening prospective farmer beneficiaries.
Based on its investigation, the MARO, LBP or BARC prepares the Field Investigation Report which shall be signed
by all parties concerned. In addition to the field investigation, a boundary or subdivision survey of the land may also
be conducted by a Survey Party of the Department of Environment and Natural Resources (DENR) to be assisted by
the MARO. 55 This survey shall delineate the areas covered by Operation Land Transfer (OLT), areas retained by the
landowner, areas with infrastructure, and the areas subject to VOS and CA. After the survey and field investigation,
the MARO sends a "Notice of Coverage" to the landowner or his duly authorized representative inviting him to a
conference or public hearing with the farmer beneficiaries, representatives of the BARC, LBP, DENR, Department
of Agriculture (DA), non-government organizations, farmer's organizations and other interested parties. At the
public hearing, the parties shall discuss the results of the field investigation, issues that may be raised in relation
thereto, inputs to the valuation of the subject landholding, and other comments and recommendations by all parties
concerned. The Minutes of the conference/public hearing shall form part of the VOCF or CACF which files shall be
forwarded by the MARO to the PARO. The PARO reviews, evaluates and validates the Field Investigation Report
and other documents in the VOCF/CACF. He then forwards the records to the RARO for another review.

DAR A.O. No. 9, Series of 1990 was amended by DAR A.O. No. 1, Series of 1993. DAR A.O. No. 1, Series of
1993 provided, among others, that:
IV. OPERATING PROCEDURES:

Steps Responsible Activity Forms/

Agency/Unit Document

(requirements)

A. Identification and

Documentation

xxx xxx xxx

5 DARMO Issue Notice of Coverage CARP

to LO by personal delivery Form No. 2

with proof of service, or

registered mail with return

card, informing him that his

property is now under CARP

coverage and for LO to select

his retention area, if he desires

to avail of his right of retention;

and at the same time invites him

to join the field investigation to

be conducted on his property

which should be scheduled at

least two weeks in advance of

said notice.

A copy of said Notice shall CARP

be posted for at least one Form No. 17

week on the bulletin board of

the municipal and barangay

halls where the property is

located. LGU office concerned

notifies DAR about compliance

with posting requirements thru

return indorsement on CARP

Form No. 17.

6 DARMO Send notice to the LBP, CARP

BARC, DENR representatives Form No. 3

and prospective ARBs of the schedule of the field investigation

to be conducted on the subject

property.

7 DARMO With the participation of CARP

BARC the LO, representatives of Form No. 4

LBP the LBP, BARC, DENR Land Use

DENR and prospective ARBs, Map

Local Office conducts the investigation on

subject property to identify

the landholding, determines

its suitability and productivity;

and jointly prepares the Field

Investigation Report (FIR)

and Land Use Map. However,

the field investigation shall

proceed even if the LO, the

representatives of the DENR and

prospective ARBs are not available

provided, they were given due

notice of the time and date of

investigation to be conducted.

Similarly, if the LBP representative

is not available or could not come

on the scheduled date, the field

investigation shall also be conducted,

after which the duly accomplished

Part I of CARP Form No. 4 shall

be forwarded to the LBP

representative for validation. If he agrees

to the ocular inspection report of DAR,

he signs the FIR (Part I) and

accomplishes Part II thereof.

In the event that there is a

difference or variance between

the findings of the DAR and the

LBP as to the propriety of

covering the land under CARP,

whether in whole or in part, on

the issue of suitability to agriculture,

degree of development or slope,

and on issues affecting idle lands,

the conflict shall be resolved by

a composite team of DAR, LBP,

DENR and DA which shall jointly

conduct further investigation

thereon. The team shall submit its

report of findings which shall be

binding to both DAR and LBP,

pursuant to Joint Memorandum

Circular of the DAR, LBP, DENR

and DA dated 27 January 1992.

8 DARMO Screen prospective ARBs

BARC and causes the signing of CARP

the Application of Purchase Form No. 5

and Farmer's Undertaking

(APFU).

9 DARMO Furnishes a copy of the CARP

duly accomplished FIR to Form No. 4

the landowner by personal

delivery with proof of

service or registered mail

will return card and posts

a copy thereof for at least

one week on the bulletin

board of the municipal

and barangay halls where

the property is located.

LGU office concerned CARP

notifies DAR about Form No. 17

compliance with posting

requirement thru return

endorsement on CARP

Form No. 17.

B. Land Survey

10 DARMO Conducts perimeter or Perimeter

And/or segregation survey or

DENR delineating areas covered Segregation

Local Office by OLT, "uncarpable Survey Plan

areas such as 18% slope

and above, unproductive/

unsuitable to agriculture,

retention, infrastructure.

In case of segregation or

subdivision survey, the

plan shall be approved

by DENR-LMS.

C. Review and Completion

of Documents

11. DARMO Forward VOCF/CACF CARP

to DARPO. Form No. 6

xxx xxx xxx.

DAR A.O. No. 1, Series of 1993, modified the identification process and increased the number of government
agencies involved in the identification and delineation of the land subject to acquisition. 56 This time, the Notice of
Coverage is sent to the landowner before the conduct of the field investigation and the sending must comply with
specific requirements. Representatives of the DAR Municipal Office (DARMO) must send the Notice of Coverage
to the landowner by "personal delivery with proof of service, or by registered mail with return card," informing him
that his property is under CARP coverage and that if he desires to avail of his right of retention, he may choose
which area he shall retain. The Notice of Coverage shall also invite the landowner to attend the field investigation to
be scheduled at least two weeks from notice. The field investigation is for the purpose of identifying the landholding
and determining its suitability for agriculture and its productivity. A copy of the Notice of Coverage shall be posted
for at least one week on the bulletin board of the municipal and barangay halls where the property is located. The
date of the field investigation shall also be sent by the DAR Municipal Office to representatives of the LBP, BARC,
DENR and prospective farmer beneficiaries. The field investigation shall be conducted on the date set with the
participation of the landowner and the various representatives. If the landowner and other representatives are absent,
the field investigation shall proceed, provided they were duly notified thereof. Should there be a variance between
the findings of the DAR and the LBP as to whether the land be placed under agrarian reform, the land's suitability to
agriculture, the degree or development of the slope, etc., the conflict shall be resolved by a composite team of the
DAR, LBP, DENR and DA which shall jointly conduct further investigation. The team's findings shall be binding on
both DAR and LBP. After the field investigation, the DAR Municipal Office shall prepare the Field Investigation
Report and Land Use Map, a copy of which shall be furnished the landowner "by personal delivery with proof of
service or registered mail with return card." Another copy of the Report and Map shall likewise be posted for at least
one week in the municipal or barangay halls where the property is located.

Clearly then, the notice requirements under the CARL are not confined to the Notice of Acquisition set forth in
Section 16 of the law. They also include the Notice of Coverage first laid down in DAR A.O. No. 12, Series of 1989
and subsequently amended in DAR A.O. No. 9, Series of 1990 and DAR A.O. No. 1, Series of 1993. This Notice of
Coverage does not merely notify the landowner that his property shall be placed under CARP and that he is entitled
to exercise his retention right; it also notifies him, pursuant to DAR A.O. No. 9, Series of 1990, that a public
hearing, shall be conducted where he and representatives of the concerned sectors of society may attend to discuss
the results of the field investigation, the land valuation and other pertinent matters. Under DAR A.O. No. 1, Series
of 1993, the Notice of Coverage also informs the landowner that a field investigation of his landholding shall be
conducted where he and the other representatives may be present.

B. The Compulsory Acquisition of Haciendas Palico and Banilad

In the case at bar, respondent DAR claims that it, through MARO Leopoldo C. Lejano, sent a letter of invitation
entitled "Invitation to Parties" dated September 29, 1989 to petitioner corporation, through Jaime Pimentel, the
administrator of Hacienda Palico. 57 The invitation was received on the same day it was sent as indicated by a
signature and the date received at the bottom left corner of said invitation. With regard to Hacienda Banilad,
respondent DAR claims that Jaime Pimentel, administrator also of Hacienda Banilad, was notified and sent an
invitation to the conference. Pimentel actually attended the conference on September 21, 1989 and signed the
Minutes of the meeting on behalf of petitioner corporation. 58 The Minutes was also signed by the representatives of
the BARC, the LBP and farmer beneficiaries. 59 No letter of invitation was sent or conference meeting held with
respect to Hacienda Caylaway because it was subject to a Voluntary Offer to Sell to respondent DAR. 60

When respondent DAR, through the Municipal Agrarian Reform Officer (MARO), sent to the various parties the
Notice of Coverage and invitation to the conference, DAR A.O. No. 12, Series of 1989 was already in effect more
than a month earlier. The Operating Procedure in DAR Administrative Order No. 12 does not specify how notices or
letters of invitation shall be sent to the landowner, the representatives of the BARC, the LBP, the farmer
beneficiaries and other interested parties. The procedure in the sending of these notices is important to comply with
the requisites of due process especially when the owner, as in this case, is a juridical entity. Petitioner is a domestic
corporation, 61 and therefore, has a personality separate and distinct from its shareholders, officers and employees.

The Notice of Acquisition in Section 16 of the CARL is required to be sent to the landowner by "personal delivery
or registered mail." Whether the landowner be a natural or juridical person to whose address the Notice may be sent
by personal delivery or registered mail, the law does not distinguish. The DAR Administrative Orders also do not
distinguish. In the proceedings before the DAR, the distinction between natural and juridical persons in the sending
of notices may be found in the Revised Rules of Procedure of the DAR Adjudication Board (DARAB). Service of
pleadings before the DARAB is governed by Section 6, Rule V of the DARAB Revised Rules of Procedure. Notices
and pleadings are served on private domestic corporations or partnerships in the following manner:

Sec. 6. Service upon Private Domestic Corporation or Partnership. — If the defendant is a

corporation organized under the laws of the Philippines or a partnership duly registered, service
may be made on the president, manager, secretary, cashier, agent, or any of its directors or
partners.

Similarly, the Revised Rules of Court of the Philippines, in Section 13, Rule 14 provides:

Sec. 13. Service upon private domestic corporation or partnership. — If the defendant is a
corporation organized under the laws of the Philippines or a partnership duly registered, service
may be made on the president, manager, secretary, cashier, agent, or any of its directors.

Summonses, pleadings and notices in cases against a private domestic corporation before the DARAB and the
regular courts are served on the president, manager, secretary, cashier, agent or any of its directors. These persons
are those through whom the private domestic corporation or partnership is capable of action. 62

Jaime Pimentel is not the president, manager, secretary, cashier or director of petitioner corporation. Is he, as
administrator of the two Haciendas, considered an agent of the corporation?

The purpose of all rules for service of process on a corporation is to make it reasonably certain that the corporation
will receive prompt and proper notice in an action against it. 63 Service must be made on a representative so
integrated with the corporation as to make it a priori supposable that he will realize his responsibilities and know
what he should do with any legal papers served on him, 64 and bring home to the corporation notice of the filing of
the action. 65 Petitioner's evidence does not show the official duties of Jaime Pimentel as administrator of petitioner's
haciendas. The evidence does not indicate whether Pimentel's duties is so integrated with the corporation that he
would immediately realize his responsibilities and know what he should do with any legal papers served on him. At
the time the notices were sent and the preliminary conference conducted, petitioner's principal place of business was
listed in respondent DAR's records as "Soriano Bldg., Plaza Cervantes, Manila," 66 and "7th Flr. Cacho-Gonzales
Bldg., 101 Aguirre St., Makati, Metro Manila." 67 Pimentel did not hold office at the principal place of business of
petitioner. Neither did he exercise his functions in Plaza Cervantes, Manila nor in Cacho-Gonzales Bldg., Makati,
Metro Manila. He performed his official functions and actually resided in the haciendas in Nasugbu, Batangas, a
place over two hundred kilometers away from Metro Manila.

Curiously, respondent DAR had information of the address of petitioner's principal place of business. The Notices of
Acquisition over Haciendas Palico and Banilad were addressed to petitioner at its offices in Manila and Makati.
These Notices were sent barely three to four months after Pimentel was notified of the preliminary
conference. 68 Why respondent DAR chose to notify Pimentel instead of the officers of the corporation was not
explained by the said respondent.

Nevertheless, assuming that Pimentel was an agent of petitioner corporation, and the notices and letters of invitation
were validly served on petitioner through him, there is no showing that Pimentel himself was duly authorized to
attend the conference meeting with the MARO, BARC and LBP representatives and farmer beneficiaries for
purposes of compulsory acquisition of petitioner's landholdings. Even respondent DAR's evidence does not indicate
this authority. On the contrary, petitioner claims that it had no knowledge of the letter-invitation, hence, could not
have given Pimentel the authority to bind it to whatever matters were discussed or agreed upon by the parties at the
preliminary conference or public hearing. Notably, one year after Pimentel was informed of the preliminary
conference, DAR A.O. No. 9, Series of 1990 was issued and this required that the Notice of Coverage must be sent
"to the landowner concerned or his duly authorized representative." 69
Assuming further that petitioner was duly notified of the CARP coverage of its haciendas, the areas found actually
subject to CARP were not properly identified before they were taken over by respondent DAR. Respondents insist
that the lands were identified because they are all registered property and the technical description in their respective
titles specifies their metes and bounds. Respondents admit at the same time, however, that not all areas in the
haciendas were placed under the comprehensive agrarian reform program invariably by reason of elevation or
character or use of the land. 70

The acquisition of the landholdings did not cover the entire expanse of the two haciendas, but only portions thereof.
Hacienda Palico has an area of 1,024 hectares and only 688.7576 hectares were targetted for acquisition. Hacienda
Banilad has an area of 1,050 hectares but only 964.0688 hectares were subject to CARP. The haciendas are not
entirely agricultural lands. In fact, the various tax declarations over the haciendas describe the landholdings as
"sugarland," and "forest, sugarland, pasture land, horticulture and woodland." 71

Under Section 16 of the CARL, the sending of the Notice of Acquisition specifically requires that the land subject to
land reform be first identified. The two haciendas in the instant case cover vast tracts of land. Before Notices of
Acquisition were sent to petitioner, however, the exact areas of the landholdings were not properly segregated and
delineated. Upon receipt of this notice, therefore, petitioner corporation had no idea which portions of its estate
were subject to compulsory acquisition, which portions it could rightfully retain, whether these retained portions
were compact or contiguous, and which portions were excluded from CARP coverage. Even respondent DAR's
evidence does not show that petitioner, through its duly authorized representative, was notified of any ocular
inspection and investigation that was to be conducted by respondent DAR. Neither is there proof that petitioner was
given the opportunity to at least choose and identify its retention area in those portions to be acquired compulsorily.
The right of retention and how this right is exercised, is guaranteed in Section 6 of the CARL, viz:

Sec. 6. Retention Limits. — . . . .

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 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.

Under the law, a landowner may retain not more than five hectares out of the total area of his agricultural land
subject to CARP. The right to choose the area to be retained, which shall be compact or contiguous, pertains to the
landowner. If the area chosen for retention is tenanted, the tenant shall have the option to choose whether to remain
on the portion or be a beneficiary in the same or another agricultural land with similar or comparable features.

C. The Voluntary Acquisition of Hacienda Caylaway

Petitioner was also left in the dark with respect to Hacienda Caylaway, which was the subject of a Voluntary Offer
to Sell (VOS). The VOS in the instant case was made on May 6, 1988, 72 before the effectivity of R.A. 6657 on June
15, 1988. VOS transactions were first governed by DAR Administrative Order No. 19, series of 1989, 73 and under
this order, all VOS filed before June 15, 1988 shall be heard and processed in accordance with the procedure
provided for in Executive Order No. 229, thus:

III. All VOS transactions which are now pending before the DAR and for which no payment has
been made shall be subject to the notice and hearing requirements provided in Administrative
Order No. 12, Series of 1989, dated 26 July 1989, Section II, Subsection A, paragraph 3.
 All VOS filed before 15 June 1988, the date of effectivity of the CARL, shall be heard and
processed in accordance with the procedure provided for in Executive Order No. 229.

xxx xxx xxx.

Sec. 9 of E.O. 229 provides:

Sec. 9. Voluntary Offer to Sell. — The government shall purchase all agricultural lands it deems
productive and suitable to farmer cultivation voluntarily offered for sale to it at a valuation
determined in accordance with Section 6. Such transaction shall be exempt from the payment of
capital gains tax and other taxes and fees.

Executive Order 229 does not contain the procedure for the identification of private land as set forth in DAR A.O.
No. 12, Series of 1989. Section 5 of E.O. 229 merely reiterates the procedure of acquisition in Section 16, R.A.
6657. In other words, the E.O. is silent as to the procedure for the identification of the land, the notice of coverage
and the preliminary conference with the landowner, representatives of the BARC, the LBP and farmer beneficiaries.
Does this mean that these requirements may be dispensed with regard to VOS filed before June 15, 1988? The
answer is no.

First of all, the same E.O. 229, like Section 16 of the CARL, requires that the land, landowner and beneficiaries of
the land subject to agrarian reform be identified before the notice of acquisition should be issued. 74 Hacienda
Caylaway was voluntarily offered for sale in 1989. The Hacienda has a total area of 867.4571 hectares and is
covered by four (4) titles. In two separate Resolutions both dated January 12, 1989, respondent DAR, through the
Regional Director, formally accepted the VOS over the two of these four
titles. 75 The land covered by two titles has an area of 855.5257 hectares, but only 648.8544 hectares thereof fell
within the coverage of R.A. 6657. 76 Petitioner claims it does not know where these portions are located.

Respondent DAR, on the other hand, avers that surveys on the land covered by the four titles were conducted in
1989, and that petitioner, as landowner, was not denied participation therein, The results of the survey and the land
valuation summary report, however, do not indicate whether notices to attend the same were actually sent to and
received by petitioner or its duly authorized representative. 77 To reiterate, Executive Order No. 229 does not lay
down the operating procedure, much less the notice requirements, before the VOS is accepted by respondent DAR.
Notice to the landowner, however, cannot be dispensed with. It is part of administrative due process and is an
essential requisite to enable the landowner himself to exercise, at the very least, his right of retention guaranteed
under the CARL.

III. The Conversion of the three Haciendas.

It is petitioner's claim that the three haciendas are not subject to agrarian reform because they have been declared for
tourism, not agricultural
purposes. 78 In 1975, then President Marcos issued Proclamation No. 1520 declaring the municipality of Nasugbu,
Batangas a tourist zone. Lands in Nasugbu, including the subject haciendas, were allegedly reclassified as non-
agricultural 13 years before the effectivity of R. A. No. 6657. 79 In 1993, the Regional Director for Region IV of the
Department of Agriculture certified that the haciendas are not feasible and sound for agricultural development. 80 On
March 20, 1992, pursuant to Proclamation No. 1520, the Sangguniang Bayan of Nasugbu, Batangas adopted
Resolution No. 19 reclassifying certain areas of Nasugbu as non-agricultural. 81 This Resolution approved Municipal
Ordinance No. 19, Series of 1992, the Revised Zoning Ordinance of Nasugbu 82 which zoning ordinance was based
on a Land Use Plan for Planning Areas for New Development allegedly prepared by the University of the
Philippines. 83 Resolution No. 19 of the Sangguniang Bayan was approved by the Sangguniang Panlalawigan of
Batangas on March 8, 1993. 84

Petitioner claims that proclamation No. 1520 was also upheld by respondent DAR in 1991 when it approved
conversion of 1,827 hectares in Nasugbu into a tourist area known as the Batulao Resort Complex, and 13.52
hectares in Barangay Caylaway as within the potential tourist belt. 85 Petitioner present evidence before us that these
areas are adjacent to the haciendas subject of this petition, hence, the haciendas should likewise be converted.
Petitioner urges this Court to take cognizance of the conversion proceedings and rule accordingly. 6

We do not agree. Respondent DAR's failure to observe due process in the acquisition of petitioner's landholdings
does not ipso facto give this Court the power to adjudicate over petitioner's application for conversion of its
haciendas from agricultural to non-agricultural. The agency charged with the mandate of approving or
disapproving applications for conversion is the DAR.

At the time petitioner filed its application for conversion, the Rules of Procedure governing the processing and
approval of applications for land use conversion was the DAR A.O. No. 2, Series of 1990. Under this A.O., the
application for conversion is filed with the MARO where the property is located. The MARO reviews the
application and its supporting documents and conducts field investigation and ocular inspection of the property. The
findings of the MARO are subject to review and evaluation by the Provincial Agrarian Reform Officer (PARO). The
PARO may conduct further field investigation and submit a supplemental report together with his recommendation
to the Regional Agrarian Reform Officer (RARO) who shall review the same. For lands less than five hectares, the
RARO shall approve or disapprove applications for conversion. For lands exceeding five hectares, the RARO shall
evaluate the PARO Report and forward the records and his report to the Undersecretary for Legal Affairs.
Applications over areas exceeding fifty hectares are approved or disapproved by the Secretary of Agrarian Reform.

The DAR's mandate over applications for conversion was first laid down in Section 4 (j) and Section 5 (l) of
Executive Order No. 129-A, Series of 1987 and reiterated in the CARL and Memorandum Circular No. 54, Series of
1993 of the Office of the President. The DAR's jurisdiction over applications for conversion is provided as follows:

A. The Department of Agrarian Reform (DAR) is mandated to "approve or

disapprove applications for conversion, restructuring or readjustment of
agricultural lands into non-agricultural uses," pursuant to Section 4 (j) of
Executive Order No. 129-A, Series of 1987.

B. Sec. 5 (l) of E.O. 129-A, Series of 1987, vests in the DAR, exclusive
authority to approve or disapprove applications for conversion of agricultural
lands for residential, commercial, industrial and other land uses.

C. Sec. 65 of R.A. No. 6657, otherwise known as the Comprehensive Agrarian

Reform Law of 1988, likewise empowers the DAR to authorize under certain
conditions, the conversion of agricultural lands.

D. Sec. 4 of Memorandum Circular No. 54, Series of 1993 of the Office of the
President, provides that "action on applications for land use conversion on
individual landholdings shall remain as the responsibility of the DAR, which
shall utilize as its primary reference, documents on the comprehensive land use
plans and accompanying ordinances passed upon and approved by the local
government units concerned, together with the National Land Use Policy,
pursuant to R.A. No. 6657 and E.O. No. 129-A. 87

Applications for conversion were initially governed by DAR A.O. No. 1, Series of 1990 entitled "Revised Rules and
Regulations Governing Conversion of Private Agricultural Lands and Non-Agricultural Uses," and DAR A.O. No.
2, Series of 1990 entitled "Rules of Procedure Governing the Processing and Approval of Applications for Land Use
Conversion." These A.O.'s and other implementing guidelines, including Presidential issuances and national policies
related to land use conversion have been consolidated in DAR A.O. No. 07, Series of 1997. Under this recent
issuance, the guiding principle in land use conversion is:

to preserve prime agricultural lands for food production while, at the same time, recognizing the
need of the other sectors of society (housing, industry and commerce) for land, when coinciding
 with the objectives of the Comprehensive Agrarian Reform Law to promote social justice,
industrialization and the optimum use of land as a national resource for public welfare. 88

"Land Use" refers to the manner of utilization of land, including its allocation, development and management. "Land
Use Conversion" refers to the act or process of changing the current use of a piece of agricultural land into some
other use as approved by the DAR. 89 The conversion of agricultural land to uses other than agricultural requires
field investigation and conferences with the occupants of the land. They involve factual findings and highly
technical matters within the special training and expertise of the DAR. DAR A.O. No. 7, Series of 1997 lays down
with specificity how the DAR must go about its task. This time, the field investigation is not conducted by the
MARO but by a special task force, known as the Center for Land Use Policy Planning and Implementation
(CLUPPI-DAR Central Office). The procedure is that once an application for conversion is filed, the CLUPPI
prepares the Notice of Posting. The MARO only posts the notice and thereafter issues a certificate to the fact of
posting. The CLUPPI conducts the field investigation and dialogues with the applicants and the farmer beneficiaries
to ascertain the information necessary for the processing of the application. The Chairman of the CLUPPI
deliberates on the merits of the investigation report and recommends the appropriate action. This recommendation is
transmitted to the Regional Director, thru the Undersecretary, or Secretary of Agrarian Reform. Applications
involving more than fifty hectares are approved or disapproved by the Secretary. The procedure does not end with
the Secretary, however. The Order provides that the decision of the Secretary may be appealed to the Office of the
President or the Court of Appeals, as the case may be, viz:

Appeal from the decision of the Undersecretary shall be made to the Secretary, and from the
Secretary to the Office of the President or the Court of Appeals as the case may be. The mode of
appeal/motion for reconsideration, and the appeal fee, from Undersecretary to the Office of the
Secretary shall be the same as that of the Regional Director to the Office of the Secretary. 90

Indeed, the doctrine of primary jurisdiction does not warrant a court to arrogate unto itself authority to resolve a
controversy the jurisdiction over which is initially lodged with an administrative body of special
competence. 91 Respondent DAR is in a better position to resolve petitioner's application for conversion, being
primarily the agency possessing the necessary expertise on the matter. The power to determine whether Haciendas
Palico, Banilad and Caylaway are non-agricultural, hence, exempt from the coverage of the CARL lies with the
DAR, not with this Court.

Finally, we stress that the failure of respondent DAR to comply with the requisites of due process in the acquisition
proceedings does not give this Court the power to nullify the CLOA's already issued to the farmer beneficiaries. To
assume the power is to short-circuit the administrative process, which has yet to run its regular course. Respondent
DAR must be given the chance to correct its procedural lapses in the acquisition proceedings. In Hacienda Palico
alone, CLOA's were issued to 177 farmer beneficiaries in 1993. 92 Since then until the present, these farmers have
been cultivating their lands. 93 It goes against the basic precepts of justice, fairness and equity to deprive these
people, through no fault of their own, of the land they till. Anyhow, the farmer beneficiaries hold the property in
trust for the rightful owner of the land.

IN VIEW WHEREOF, the petition is granted in part and the acquisition proceedings over the three haciendas are
nullified for respondent DAR's failure to observe due process therein. In accordance with the guidelines set forth in
this decision and the applicable administrative procedure, the case is hereby remanded to respondent DAR for
proper acquisition proceedings and determination of petitioner's application for conversion.

SO ORDERED.

SECOND DIVISION

G.R. No. 133507 February 17, 2000

EUDOSIA DAEZ AND/OR HER HEIRS, REP. BY ADRIANO D. DAEZ, petitioners,

vs.
THE HON. COURT OF APPEALS MACARIO SORIENTES, APOLONIO MEDIANA, ROGELIO
MACATULAD and MANUEL UMALI, respondents.

DE LEON, JR., J.:

Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals2 dated January 28, 1998
which denied the application of petitioner heirs of Eudosia Daez for the retention of a 4.1685-hectare riceland
pursuant to Republic Act (R.A.) No. 6657, otherwise known as the Comprehensive Agrarian Reform Law 3, thereby
reversing the Decision4 of then Executive Secretary Ruben D. Torres and the Order 5 of then Deputy Executive
Secretary Renato C. Corona, both of which had earlier set aside the Resolution6 and Order7 of then Department of
Agrarian Reform (DAR) Secretary Ernesto D. Garilao denying exemption of the same riceland from coverage under
Presidential Decree (P.D.) No. 27.

The pertinent facts are:

Eudosia Daez, now deceased, was the owner of a 4.1685-hectare riceland in Barangay Lawa, Meycauayan, Bulacan
which was being cultivated by respondents Macario Soriente, Rogelio Macatulad, Apolonio Mediana and Manuel
Umali under a system of share-tenancy. The said land was subjected to the Operation Land Transfer (OLT) Program
under Presidential Decree (P.D.) No. 278 as amended by Letter of Instruction (LOI) No. 474 9. Thus, the then
Ministry of Agrarian Reform acquired the subject land and issued Certificates of Land Transfer (CLT) on December
9, 1980 to private respondents as beneficiaries.

However, on May 31, 1981, private respondents signed an affidavit, allegedly under duress, stating that they are not
share tenants but hired laborers10. Armed with such document, Eudosia Daez applied for the exemption of said
riceland from coverage of P.D. No. 27 due to non-tenancy as well as for the cancellation of the CLTs issued to
private respondents.1âwphi1.nêt

In their Affidavit dated October 2, 1983, Eudosia Daez and her husband, Lope, declared ownership over 41.8064
hectares of agricultural lands located in Meycauayan, Bulacan and fourteen (14) hectares of riceland, sixteen (16)
hectares of forestland, ten (10) hectares of "batuhan" and 1.8064 hectares of residential lands11 in Penaranda, Nueva
Ecija. Included in their 41.8064-hectare landholding in Bulacan, was the subject 4,1685-hectare riceland in
Meycauayan.

On July 27, 1987, DAR Undersecretary Jose C. Medina issued an Order denying Eudosia Daez's application for
exemption upon finding that her subject land is covered under LOI No. 474, petitioner being owner of the aforesaid
agricultural lands exceeding seven (7) hectares12.

On June 29, 1989, Eudosia Daez wrote a letter to DAR Secretary Benjamin T. Leong requesting for reconsideration
of Undersecretary Medina's order. But on January 16, 1992 13 Secretary Leong affirmed the assailed order upon
finding private respondents to be bonafide tenants of the subject land. Secretary Leong disregarded private
respondents' May 31, 1981 affidavit for having been executed under duress because he found that Eudosia's son,
Adriano, who was then the incumbent Vice-Mayor of Meycauayan, pressured private respondents into signing the
same.

Undaunted, Eudosia Daez brought her case on February 20, 1992 to the Court of Appeals via a petition
for certiorari. The Court of Appeals, however, sustained the order of Secretary Leong in a decision dated April 29,
1992. Eudosia pursued her petition before this court but we denied it in a minute resolution dated September 18,
1992. We also denied her motion for reconsideration on November 9, 1992.

Meantime, on August 6 and 12, 1992, the DAR issued Emancipation Patents (EPs) to private respondents.
Thereafter, the Register of Deeds of Bulacan issued the corresponding Transfer Certificates of Title (TCTs).
Exemption of the 4.1685 riceland from coverage by P.D. No. 27 having been finally denied her, Eudosia Daez next
filed an application for retention of the same riceland, this time under R.A. No. 6657.

In an order dated March 22, 1994, DAR Region III OIC-Director Eugenio B. Bernardo allowed Eudosia Daez to
retain the subject riceland but he denied the application of her eight (8) children to retain three (3) hectares each for
their failure to prove actual tillage of the land or direct management thereof as required by law14. Aggrieved, they
appealed to the DAR.

On August 26, 1994, then DAR Secretary Ernesto D. Garilao, set aside the order of Regional Director Bernardo in a
Resolution,15 the decretal portion of which reads, viz.:

WHEREFORE, premises considered, this Resolution is hereby issued setting aside with FINALITY the
Order dated March 22, 1994 of the Regional Director of DAR Region III.

The records of this case is remanded to the Regional Office for immediate implementation of the Order
dated January 16, 1992 of this office as affirmed by the Court of Appeals and the Supreme Court.

SO ORDERED.

Eudosia Daez filed a Motion for Reconsideration but it was denied on January 19, 1995 16.

She appealed Secretary Garilao's decision to the Office of the President which ruled in her favor. The dispositive
portion of the Decision17 of then Executive Secretary reads:

WHEREFORE, the resolution and order appealed from are hereby SET ASIDE and judgment is rendered
authorizing the retention by Eudosia Daez or her heirs of the 4.1685-hectare landholding subject thereof.

SO ORDERED.18

Aggrieved, private respondents sought from the Court of Appeals, a review of the decision of the Office of the
President.

On January 28, 1999, the said Decision of the Office of the President was reversed. The Court of Appeals ordered,
thus:

WHEREFORE, the assailed decision of July 5, 1996 and Order dated October 23, 1996 of the public
respondents are REVERSED AND SET ASIDE, and the Resolution and Order of DAR Secretary Ernesto
D. Garilao respectively dated August 26, 1994 and January 19, 1995 are REINSTATED.

SO ORDERED.

Hence, this petition which assigns the following errors:

I. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT DISTINCTION BETWEEN
EXEMPTION FROM AGRARIAN REFORM COVERAGE AND THE RIGHT OF RETENTION OF
LANDOWNERS IS ONLY A MATTER OF SEMANTICS THAT AN ADVERSE DECISION IN THE FORMER
WILL FORECLOSE FURTHER ACTION TO ENFORCE THE LATTER CONSIDERING THAT THEY
CONSTITUTE SEPARATE AND DISTINCT CAUSES OF ACTION AND, THEREFORE, ENFORCEABLE
SEPARATELY AND IN SEQUEL.

II. THE HONORABLE COURT OF APPEALS ERRED WHEN IT APPLIED THE PRINCIPLE OF RES
JUDICATA DESPITE THE FACT THAT THE PREVIOUS CASE CITED (EXEMPTION FROM COVERAGE
DUE TO NON-TENANCY) AND THE PRESENT CASE (RETENTION RIGHT) ARE OF DIFFERENT
CAUSES OF ACTION.

III. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED/OPINED THAT THERE WAS A
CUT-OFF DATE (AUGUST 27, 1985) FOR LANDOWNERS TO APPLY FOR EXEMPTION OR RETENTION
UNDER PD 27 AND THOSE WHO FAILED TO FILE THEIR APPLICATIONS/PETITIONS ARE DEEMED TO
HAVE WAIVED THEIR RIGHTS.

IV. THE HONORABLE COURT OF APPEALS ERRED IN DECLARING THAT PETITIONERS

(RESPONDENTS THEREIN) ARE GUILTY OF ESTOPPEL.

V. THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT THE LAND SUBJECT OF
THIS CASE IS NO LONGER OWNED BY PETITIONERS SINCE PRIVATE RESPONDENTS HAVE
ALREADY BEEN ISSUED NOT ONLY THEIR RESPECTIVE CERTIFICATES OF LAND TRANSFER BUT
ALSO THEIR INDIVIDUAL CERTIFICATES OF TITLE OVER THE DISPUTED AREA.19

We grant the petition.

First. Exemption and retention in agrarian reform are two (2) distinct concepts.

P.D. No. 27, which implemented the Operation Land Transfer (OLT) Program, covers tenanted rice or corn lands.
The requisites for coverage under the OLT program are the following: (1) the land must be devoted to rice or corn
crops; and (2) there must be a system of share-crop or lease-tenancy obtaining therein. If either requisite is absent, a
landowner may apply for exemption. If either of these requisites is absent, the land is not covered under OLT.
Hence, a landowner need not apply for retention where his ownership over the entire landholding is intact and
undisturbed.

P.D. No. 27 grants each tenant of covered lands a five (5)-hectare lot, or in case the land is irrigated, a three (3)-
hectare lot constituting a family size farm. However, said law allows a covered landowner to retain not more than
seven (7) hectares of his land if his aggregate landholding does not exceed twenty-four (24) hectares. Otherwise, his
entire landholding is covered without him being entitled to any retention right 20.

Consequently, a landowner may keep his entire covered landholding if its aggregate size does not exceed the
retention limit of seven (7) hectares. In effect, his land will not be covered at all by the OLT program although all
requisites for coverage are present. LOI No. 474 clarified the effective coverage of OLT to include tenanted rice or
corn lands of seven (7) hectares or less, if the landowner owns other agricultural lands of more than seven (7)
hectares. The term "other agricultural lands" refers to lands other than tenanted rice or corn lands from which the
landowner derives adequate income to support his family.

Thus, on one hand, exemption from coverage of OLT lies if: (1) the land is not devoted to rice or corn crops even if
it is tenanted; or (2) the land is untenanted even though it is devoted to rice or corn crops.

On the other hand, the requisites for the exercise by the landowner of his right of retention are the following: (1) the
land must be devoted to rice or corn crops; (2) there must be a system of share-crop or lease-tenancy obtaining
therein; and (3) the size of the landholding must not exceed twenty-four (24) hectares, or it could be more than
twenty-four (24) hectares provided that at least seven (7) hectares thereof are covered lands and more than seven (7)
hectares of it consist of "other agricultural lands".

Clearly, then, the requisites for the grant of an application for exemption from coverage of OLT and those for the
grant of an application for the exercise of a landowner's right of retention, are different.

Hence, it is incorrect to posit that an application for exemption and an application for retention are one and the same
thing. Being distinct remedies, finality of judgment in one does not preclude the subsequent institution of the other.
There was, thus, no procedural impediment to the application filed by Eudosia Daez for the retention of the subject
4.1865-hectare riceland, even after her appeal for exemption of the same land was denied in a decision that became
final and executory.

Second. Petitioner heirs of Eudosia Daez may exercise their right of retention over the subject 4.1685 riceland.

The right of retention is a constitutionally guaranteed right, which is subject to qualification by the legislature 21. 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 22.
A retained area, as its name denotes, is land which is not supposed to anymore leave the landowner's 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.

In the landmark case of Association of Small Landowners in the Phil., Inc. v. Secretary of Agrarian Reform23, we
held that landowners who have not yet exercised their retention rights under P.D. No. 27 are entitled to the new
retention rights under R.A. No. 665724. We disregarded the August 27, 1985 deadline imposed by DAR
Administrative Order No. 1, series of 1985 on landowners covered by OLT. However, if a landowner filed his
application for retention after August 27, 1985 but he had previously filed the sworn statements required by LOI
Nos. 41, 45 and 52, he is still entitled to the retention limit of seven (7) hectares under P.D. No. 27 25. Otherwise, he
is only entitled to retain five (5) hectares under R.A. No. 6657.

Sec. 6 of R.A. No. 6657, which provides, viz.:

Sec. 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, such as commodity produced, terrain, infrastructure, and soil fertility as
determined by the Presidential Agrarian Reform Council (PARC) created hereunder, but in no case shall
retention by the landowner exceed five (5) hectares. Three (3) hectares may be awarded to each child of the
landowner, subject to the following qualifications: (1) that he is at least fifteen (15) years of age; and (2)
that he is actually tilling the land or directly managing the farm; Provided, That landowners whose land
have been covered by Presidential Decree No. 27 shall be allowed to keep the area originally retained by
them thereunder, further, That original homestead grantees or direct compulsory heirs who still own the
original homestead at the time of the approval of this Act shall retain the same areas as long as they
continue to cultivate said homestead.

The 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 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 lease-
holder 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.

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 this 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
Register of Deeds shall inform the DAR within thirty (3) days of any transaction involving agricultural
lands in excess of five (5) hectares26.
defines the nature and incidents of a landowner's right of retention. For as long as the area to be retained is compact
or contiguous and it does not exceed the retention ceiling of five (5) hectares, a landowner's choice of the area to be
retained, must prevail. Moreover, Administrative Order No. 4, series of 1991, 27 which supplies the details for the
exercise of a landowner's retention rights, likewise recognizes no limit to the prerogative of the landowner, although
he is persuaded to retain other lands instead to avoid dislocation of farmers.

Without doubt, this right of retention may be exercised over tenanted land despite even the issuance of Certificate of
Land Transfer (CLT) to farmer-beneficiaries.28 What must be protected, however, is the right of the tenants to opt to
either stay on the land chosen to be retained by the landowner or be a beneficiary in another agricultural land with
similar or comparable features.29

Finally. Land awards made pursuant to the government's agrarian reform program are subject to the exercise by a
landowner, who is so qualified, of his right of retention.

Under P.D. No. 27, beneficiaries are issued 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, result in the issuance of the corresponding transfer certificates of title (TCT) in favor of the
beneficiaries mentioned therein30.

Under R.A. No. 6657, the procedure has been simplified 31. Only Certificates of Land Ownership Award (CLOAs)
are issued, in lieu of EPs, after compliance with all prerequisites. Thereafter, 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 Administrative Order No. 2, series of 1994 32, an EP or CLOA may be cancelled if the land
covered is later found to be part of the landowner's retained area.

A certificate of title accumulates in one document a comprehensive statement of the status of the fee held by the
owner of a parcel of land.33 As such, it is a mere evidence of ownership and it does not constitute the title to the land
itself. It cannot confer title where no title has been acquired by any of the means provided by law34.

Thus, we had, in the past, sustained the nullification of a certificate of title issued pursuant to a homestead patent
because the land covered was not part of the public domain and as a result, the government had no authority to issue
such patent in the first place35. Fraud in the issuance of the patent, is also a ground for impugning the validity of a
certificate of title36. In other words, the invalidity of the patent or title is sufficient basis for nullifying the certificate
of title since the latter is merely an evidence of the former.

In the instant case, the CLTs of private respondents over the subject 4.1685-hectare riceland were issued without
Eudosia Daez having been accorded her right of choice as to what to retain among her landholdings. The transfer
certificates of title thus issued on the basis of those CLTs cannot operate to defeat the right of the heirs of deceased
Eudosia Daez to retain the said 4.1685 hectares of riceland.

WHEREFORE, the instant petition is hereby GRANTED. The Decision of the Court of Appeals, dated January 28,
1998, is REVERSED and SET ASIDE and the Decision of the Office of the President, dated July 5, 1996, is hereby
REINSTATED. In the implementation of said decision, however, the Department of Agrarian Reform is hereby
ORDERED to fully accord to private respondents their rights under Section 6 of R.A. No. 6657.1âwphi1.nêt

No costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 171972 June 8, 2011

LUCIA RODRIGUEZ AND PRUDENCIA RODRIGUEZ, Petitioners,

vs.
TERESITA V. SALVADOR, Respondent.

DECISION

DEL CASTILLO, J.:

Agricultural tenancy is not presumed but must be proven by the person alleging it.

This Petition for Certiorari1 under Rule 65 of the Rules of Court assails the August 24, 2005 Decision 2 and the
February 20, 2006 Resolution3 of the Court of Appeals (CA) in CA G.R. SP No. 86599. However, per
Resolution4 of this Court dated August 30, 2006, the instant petition shall be treated as a Petition for Review on
Certiorari under Rule 45 of the same Rules.

Factual Antecedents

On May 22, 2003, respondent Teresita V. Salvador filed a Complaint for Unlawful Detainer,5 docketed as Civil Case
No. 330, against petitioners Lucia (Lucia) and Prudencia Rodriguez, mother and daughter, respectively before the
Municipal Trial Court (MTC) of Dalaguete, Cebu.6 Respondent alleged that she is the absolute owner of a parcel of
land covered by Original Certificate of Title (OCT) No. P-271407 issued by virtue of Free Patent No. (VII-5) 2646
in the name of the Heirs of Cristino Salvador represented by Teresita Salvador;8 that petitioners acquired possession
of the subject land by mere tolerance of her predecessors-in-interest;9 and that despite several verbal and written
demands made by her, petitioners refused to vacate the subject land. 10

In their Answer,11 petitioners interposed the defense of agricultural tenancy. Lucia claimed that she and her deceased
husband, Serapio, entered the subject land with the consent and permission of respondent’s predecessors-in-interest,
siblings Cristino and Sana Salvador, under the agreement that Lucia and Serapio would devote the property to
agricultural production and share the produce with the Salvador siblings.12 Since there is a tenancy relationship
between the parties, petitioners argued that it is the Department of Agrarian Reform Adjudication Board (DARAB)
which has jurisdiction over the case and not the MTC.13

On July 10, 2003, the preliminary conference was terminated and the parties were ordered to submit their respective
position papers together with the affidavits of their witnesses and other evidence to support their respective claims. 14

Ruling of the Municipal Trial Court

On September 10, 2003, the MTC promulgated a Decision 15 finding the existence of an agricultural tenancy
relationship between the parties, and thereby, dismissing the complaint for lack of jurisdiction. Pertinent portions of
the Decision read:

Based on the facts presented, it is established that defendant Lucia Rodriguez and her husband Serapio Rodriguez
were instituted as agricultural tenants on the lot in question by the original owner who was the predecessor-in-
interest of herein plaintiff Teresita Salvador. The consent given by [the]original owner to constitute [defendants] as
agricultural tenants of subject landholdings binds plaintiff who as successor-in-interest of the original owner
Cristino Salvador steps into the latter’s shoes acquiring not only his rights but also his obligations towards the herein
defendants. In the instant case, the consent to tenurial arrangement between the parties is inferred from the fact that
the plaintiff and her successors-in-interest had received their share of the harvests of the property in dispute from the
defendants.

Moreover, dispossession of agricultural tenants can only be ordered by the Court for causes expressly provided
under Sec. 36 of R.A. 3844. However, this Court has no jurisdiction over detainer case involving agricultural tenants
as ejectment and dispossession of said tenants is within the primary and exclusive jurisdiction of the Department of
Agrarian Reform and Agricultural Board (DARAB). ([S]ee Sec. 1(1.4) DARAB 2003 Rules of Procedure[.])

WHEREFORE, in view of the foregoing, the instant complaint is hereby ordered DISMISSED for lack of
jurisdiction.

SO ORDERED.16

Aggrieved, respondent filed an appeal, docketed as Civil Case No. AV-1237, with the Regional Trial Court (RTC)
of Argao, Cebu, Branch 26.17

Ruling of the Regional Trial Court

On January 12, 2004, the RTC rendered a Decision18 remanding the case to

the MTC for preliminary hearing to determine whether tenancy relationship exists between the parties.

Petitioners moved for reconsideration19 arguing that the purpose of a preliminary hearing was served by the parties’
submission of their respective position papers and other supporting evidence.

On June 23, 2004, the RTC granted the reconsideration and affirmed the MTC Decision dated September 10, 2003.
The fallo of the new Decision20 reads:

WHEREFORE, the motion for reconsideration is GRANTED. The Decision dated September 10, 2003 of the
Municipal Trial Court of Dalaguete, Cebu, is hereby AFFIRMED.

IT IS SO DECIDED.21

Respondent sought reconsideration22 but it was denied by the RTC in an Order23 dated August 18, 2004.

Thus, respondent filed a Petition for Review24 with the CA, docketed as CA G.R. SP No. 86599.

Ruling of the Court of Appeals

On August 24, 2005, the CA rendered judgment in favor of respondent. It ruled that no tenancy relationship exists
between the parties because petitioners failed to prove that respondent or her predecessors-in-interest consented to
the tenancy relationship.25 The CA likewise gave no probative value to the affidavits

of petitioners’ witnesses as it found their statements insufficient to establish petitioners’ status as agricultural
tenants.26 If at all, the affidavits merely showed that petitioners occupied the subject land with the consent of the
original owners.27 And since petitioners are occupying the subject land by mere tolerance, they are bound by an
implied promise to vacate the same upon demand by the respondent. 28 Failing to do so, petitioners are liable to pay
damages.29 Thus, the CA disposed of the case in this manner:
WHEREFORE, in view of all the foregoing premises, judgment is hereby rendered by us SETTING ASIDE, as we
hereby set aside, the decision rendered by the RTC of Argao, Cebu on June 23, 2004 in Civil Case No. AV-1237 and
ORDERING the remand of this case to the MTC of Dalaguete, Cebu for the purpose of determining the amount of
actual damages suffered by the [respondent] by reason of the [petitioners’] refusal and failure to turn over to
[respondent] the possession and enjoyment of the land and, then, to make such award of damages to the
[respondent].

SO ORDERED.30

Issues

Hence, this petition raising the following issues:

I.

WHETHER X X X THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN RULING THAT PETITIONERS-
DEFENDANTS ARE NOT TENANTS OF THE SUBJECT LAND.

II.

WHETHER X X X SUCH RULING OF THE COURT OF APPEALS HAS FACTUAL AND LEGAL BASIS AND
IS SUPPORTED WITH SUBSTANTIAL EVIDENCE.31

Petitioners’ Arguments

Petitioners contend that under Section 532 of Republic Act No. 3844, otherwise known as the Agricultural Land
Reform Code, tenancy may be constituted by agreement of the parties either orally or in writing, expressly or
impliedly.33 In this case, there was an implied consent to constitute a tenancy relationship as respondent and her
predecessors-in-interest allowed petitioners to cultivate the land and share the harvest with the landowners for more
than 40 years.34

Petitioners further argue that the CA erred in disregarding the affidavits executed by their witnesses as these are
sufficient to prove the existence of a tenancy relationship.35 Petitioners claim that their witnesses had personal
knowledge of the cultivation and the sharing of harvest.36

Respondent’s Arguments

Respondent, on the other hand, maintains that petitioners are not agricultural tenants because mere cultivation of an
agricultural land does not make the tiller an agricultural tenant.37 Respondent insists that her predecessors-in-interest
merely tolerated petitioners’ occupation of the subject land. 38

Our Ruling

The petition lacks merit.

Agricultural tenancy relationship does not exist in the instant case.

Agricultural tenancy exists when all the following requisites are present: 1) the parties are the landowner and the
tenant or agricultural lessee; 2) the subject matter of the relationship is an agricultural land; 3) there is consent
between the parties to the relationship; 4) the purpose of the relationship is to bring about agricultural production; 5)
there is personal cultivation on the part of the tenant or agricultural lessee; and 6) the harvest is shared between
landowner and tenant or agricultural lessee.39

In this case, to prove that an agricultural tenancy relationship exists between the parties, petitioners submitted as
evidence the affidavits of petitioner Lucia and their neighbors. In her affidavit, 40 petitioner Lucia declared that she
and her late husband occupied the subject land with the consent and permission of the original owners and that their
agreement was that she and her late husband would cultivate the subject land, devote it to agricultural production,
share the harvest with the landowners on a 50-50 basis, and at the same time watch over the land. Witness Alejandro
Arias attested in his affidavit41 that petitioner Lucia and her husband, Serapio, have been cultivating the subject land
since 1960; that after the demise of Serapio, petitioner Lucia and her children continued to cultivate the subject land;
and that when respondent’s predecessors-in-interest were still alive, he would often see them and respondent get
some of the harvest. The affidavit42 of witness Conseso Muñoz stated, in essence, that petitioner Lucia has been in
peaceful possession and cultivation of the subject property since 1960 and that the harvest was divided into two
parts, ½ for the landowner and ½ for petitioner Lucia.

The statements in the affidavits presented by the petitioners are not sufficient to prove the existence of an
agricultural tenancy.

As correctly found by the CA, the element of consent is lacking. 43 Except for the self-serving affidavit of Lucia, no
other evidence was submitted to show that respondent’s predecessors-in-interest consented to a tenancy relationship
with petitioners. Self-serving statements, however, will not suffice to prove consent of the landowner; independent
evidence is necessary.44

Aside from consent, petitioners also failed to prove sharing of harvest.1avvphil The affidavits of petitioners’
neighbors declaring that respondent and her predecessors-in-interest received their share in the harvest are not
sufficient. Petitioners should have presented receipts or any other evidence to show that there was sharing of
harvest45 and that there was an agreed system of sharing between them and the landowners.46

As we have often said, mere occupation or cultivation of an agricultural land will not ipso facto make the tiller an
agricultural tenant.47 It is incumbent upon a person who claims to be an agricultural tenant to prove by substantial
evidence all the requisites of agricultural tenancy.48

In the instant case, petitioners failed to prove consent and sharing of harvest between the parties. Consequently, their
defense of agricultural tenancy must fail. The MTC has jurisdiction over the instant case. No error can therefore be
attributed to the CA in reversing and setting aside the dismissal of respondent’s complaint for lack of jurisdiction.
Accordingly, the remand of the case to the MTC for the determination of the amount of damages due respondent is
proper.

Respondent is entitled to the fair rental value or the reasonable compensation for the use and occupation of the
subject land.

We must, however, clarify that "the only damage that can be recovered [by respondent] is the fair rental value or the
reasonable compensation for the use and occupation of the leased property. The reason for this is that [in forcible
entry or unlawful detainer cases], the only issue raised in ejectment cases is that of rightful possession; hence, the
damages which could be recovered are those which the [respondent] could have sustained as a mere possessor, or
those caused by the loss of the use and occupation of the property, and not the damages which [she] may have
suffered but which have no direct relation to [her] loss of material possession." 49

WHEREFORE, the petition is DENIED. The assailed August 24, 2005 Decision and the February 20, 2006
Resolution of the Court of Appeals in CA G.R. SP No. 86599 are AFFIRMED. This case is ordered REMANDED
to the Municipal Trial Court of Dalaguete, Cebu, to determine the amount of damages suffered by respondent by
reason of the refusal and failure of petitioners to turn over the possession of the subject land, with utmost dispatch
consistent with the above disquisition. SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 78517 February 27, 1989

GABINO ALITA, JESUS JULIAN, JR., JESUS JULIAN, SR., PEDRO RICALDE, VICENTE RICALDE
and ROLANDO SALAMAR, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, ENRIQUE M. REYES, PAZ M. REYES and FE M.
REYES, respondents.

Bureau of Agrarian Legal Assistance for petitioners.

Leonardo N. Zulueta for Enrique Reyes, et al. Adolfo S. Azcuna for private respondents.

PARAS, J.:

Before us is a petition seeking the reversal of the decision rendered by the respondent Court of Appeals**on March
3, 1987 affirming the judgment of the court a quo dated April 29, 1986, the dispositive portion of the trial court's
decision reading as follows;

WHEREFORE, the decision rendered by this Court on November 5, 1982 is hereby reconsidered
and a new judgment is hereby rendered:

1. Declaring that Presidential Decree No. 27 is inapplicable to lands obtained thru the homestead
law,

2. Declaring that the four registered co-owners will cultivate and operate the farmholding
themselves as owners thereof; and

3. Ejecting from the land the so-called tenants, namely; Gabino Alita, Jesus Julian, Sr., Jesus
Julian, Jr., Pedro Ricalde, Vicente Ricalde and Rolando Salamar, as the owners would want to
cultivate the farmholding themselves.

No pronouncement as to costs.

SO ORDERED. (p. 31, Rollo)

The facts are undisputed. The subject matter of the case consists of two (2) parcels of land, acquired by private
respondents' predecessors-in-interest through homestead patent under the provisions of Commonwealth Act No.
141. Said lands are situated at Guilinan, Tungawan, Zamboanga del Sur.

Private respondents herein are desirous of personally cultivating these lands, but petitioners refuse to vacate, relying
on the provisions of P.D. 27 and P.D. 316 and appurtenant regulations issued by the then Ministry of Agrarian
Reform (DAR for short), now Department of Agrarian Reform (MAR for short).
On June 18, 1981, private respondents (then plaintiffs), instituted a complaint against Hon. Conrado Estrella as then
Minister of Agrarian Reform, P.D. Macarambon as Regional Director of MAR Region IX, and herein petitioners
(then defendants) for the declaration of P.D. 27 and all other Decrees, Letters of Instructions and General Orders
issued in connection therewith as inapplicable to homestead lands.

Defendants filed their answer with special and affirmative defenses of July 8, 1981.

Subsequently, on July 19, 1982, plaintiffs filed an urgent motion to enjoin the defendants from declaring the lands in
litigation under Operation Land Transfer and from being issued land transfer certificates to which the defendants
filed their opposition dated August 4, 1982.

On November 5, 1982, the then Court of Agrarian Relations 16th Regional District, Branch IV, Pagadian City (now
Regional Trial Court, 9th Judicial Region, Branch XVIII) rendered its decision dismissing the said complaint and
the motion to enjoin the defendants was denied.

On January 4, 1983, plaintiffs moved to reconsider the Order of dismissal, to which defendants filed their opposition
on January 10, 1983.

Thus, on April 29, 1986, the Regional Trial Court issued the aforequoted decision prompting defendants to move for
a reconsideration but the same was denied in its Order dated June 6, 1986.

On appeal to the respondent Court of Appeals, the same was sustained in its judgment rendered on March 3, 1987,
thus:

WHEREFORE, finding no reversible error thereof, the decision appealed from is hereby
AFFIRMED.

SO ORDERED. (p. 34, Rollo)

Hence, the present petition for review on certiorari.

The pivotal issue is whether or not lands obtained through homestead patent are covered by the Agrarian Reform
under P.D. 27.

The question certainly calls for a negative answer.

We agree with the petitioners in saying that P.D. 27 decreeing the emancipation of tenants from the bondage of the
soil and transferring to them ownership of the land they till is a sweeping social legislation, a remedial measure
promulgated pursuant to the social justice precepts of the Constitution. However, such contention cannot be invoked
to defeat the very purpose of the enactment of the Public Land Act or Commonwealth Act No. 141. Thus,

The Homestead Act has been enacted for the welfare and protection of the poor. The law gives a
needy citizen a piece of land where he may build a modest house for himself and family and plant
what is necessary for subsistence and for the satisfaction of life's other needs. The right of the
citizens to their homes and to the things necessary for their subsistence is as vital as the right to
life itself. They have a right to live with a certain degree of comfort as become human beings, and
the State which looks after the welfare of the people's happiness is under a duty to safeguard the
satisfaction of this vital right. (Patricio v. Bayog, 112 SCRA 45)

In this regard, the Philippine Constitution likewise respects the superiority of the homesteaders' rights over the rights
of the tenants guaranteed by the Agrarian Reform statute. In point is Section 6 of Article XIII of the 1987 Philippine
Constitution which provides:
 Section 6. The State shall apply the principles of agrarian reform or stewardship, whenever
applicable in accordance with law, in the disposition or utilization of other natural resources,
including lands of public domain under lease or concession suitable to agriculture, subject to prior
rights, homestead rights of small settlers, and the rights of indigenous communities to their
ancestral lands.

Additionally, it is worthy of note that the newly promulgated Comprehensive Agrarian Reform Law of 1988 or
Republic Act No. 6657 likewise contains a proviso supporting the inapplicability of P.D. 27 to lands covered by
homestead patents like those of the property in question, reading,

Section 6. Retention Limits. ...

... Provided further, That original homestead grantees or their direct compulsory heirs who still
own the original homestead at the time of the approval of this Act shall retain the same areas as
long as they continue to cultivate said homestead.'

WHEREFORE, premises considered, the decision of the respondent Court of Appeals sustaining the decision of the
Regional Trial Court is hereby AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 103302 August 12, 1993

NATALIA REALTY, INC., AND ESTATE DEVELOPERS AND INVESTORS CORP., petitioners,
vs.
DEPARTMENT OF AGRARIAN REFORM, SEC. BENJAMIN T. LEONG and DIR. WILFREDO LEANO,
DAR REGION IV, respondents.

Lino M. Patajo for petitioners.

The Solicitor General for respondents.

BELLOSILLO, J.:

Are lands already classified for residential, commercial or industrial use, as approved by the Housing and Land Use
Regulatory Board and its precursor agencies1 prior to 15 June 1988,2 covered by R.A. 6657, otherwise known as the
Comprehensive Agrarian Reform Law of 1988? This is the pivotal issue in this petition for certiorari assailing the
Notice of Coverage3 of the Department of Agrarian Reform over parcels of land already reserved as townsite areas
before the enactment of the law.

Petitioner Natalia Realty, Inc. (NATALIA, for brevity) is the owner of three (3) contiguous parcels of land located
in Banaba, Antipolo, Rizal, with areas of 120.9793 hectares, 1.3205 hectares and 2.7080 hectares, or a total of
125.0078 hectares, and embraced in Transfer Certificate of Title No. 31527 of the Register of Deeds of the Province
of Rizal.

On 18 April 1979, Presidential Proclamation No. 1637 set aside 20,312 hectares of land located in the Municipalities
of Antipolo, San Mateo and Montalban as townsite areas to absorb the population overspill in the metropolis which
were designated as the Lungsod Silangan Townsite. The NATALIA properties are situated within the areas
proclaimed as townsite reservation.

Since private landowners were allowed to develop their properties into low-cost housing subdivisions within the
reservation, petitioner Estate Developers and Investors Corporation (EDIC, for brevity), as developer of NATALIA
properties, applied for and was granted preliminary approval and locational clearances by the Human Settlements
Regulatory Commission. The necessary permit for Phase I of the subdivision project, which consisted of 13.2371
hectares, was issued sometime in 1982;4 for Phase II, with an area of 80,000 hectares, on 13 October 1983; 5 and for
Phase III, which consisted of the remaining 31.7707 hectares, on 25 April 1986.6 Petitioner were likewise issued
development permits7 after complying with the requirements. Thus the NATALIA properties later became the
Antipolo Hills Subdivision.

On 15 June 1988, R.A. 6657, otherwise known as the "Comprehensive Agrarian Reform Law of 1988" (CARL, for
brevity), went into effect. Conformably therewith, respondent Department of Agrarian Reform (DAR, for brevity),
through its Municipal Agrarian Reform Officer, issued on 22 November 1990 a Notice of Coverage on the
undeveloped portions of the Antipolo Hills Subdivision which consisted of roughly 90.3307 hectares. NATALIA
immediately registered its objection to the notice of Coverage.
EDIC also protested to respondent Director Wilfredo Leano of the DAR Region IV Office and twice wrote him
requesting the cancellation of the Notice of Coverage.

On 17 January 1991, members of the Samahan ng Magsasaka sa Bundok Antipolo, Inc. (SAMBA, for the brevity),
filed a complaint against NATALIA and EDIC before the DAR Regional Adjudicator to restrain petitioners from
developing areas under cultivation by SAMBA members.8 The Regional Adjudicator temporarily restrained
petitioners from proceeding with the development of the subdivision. Petitioners then moved to dismiss the
complaint; it was denied. Instead, the Regional Adjudicator issued on 5 March 1991 a Writ of Preliminary
Injunction.

Petitioners NATALIA and EDIC elevated their cause to the DAR Adjudication Board (DARAB); however, on 16
December 1991 the DARAB merely remanded the case to the Regional Adjudicator for further proceedings. 9

In the interim, NATALIA wrote respondent Secretary of Agrarian Reform reiterating its request to set aside the
Notice of Coverage. Neither respondent Secretary nor respondent Director took action on the protest-letters, thus
compelling petitioners to institute this proceeding more than a year thereafter.

NATALIA and EDIC both impute grave abuse of discretion to respondent DAR for including undedeveloped
portions of the Antipolo Hills Subdivision within the coverage of the CARL. They argue that NATALIA properties
already ceased to be agricultural lands when they were included in the areas reserved by presidential fiat for the
townsite reservation.

Public respondents through the Office of the Solicitor General dispute this contention. They maintain that the
permits granted petitioners were not valid and binding because they did not comply with the implementing
Standards, Rules and Regulations of P.D. 957, otherwise known as "The Subdivision and Condominium Buyers
Protective Decree," in that no application for conversion of the NATALIA lands from agricultural residential was
ever filed with the DAR. In other words, there was no valid conversion. Moreover, public respondents allege that the
instant petition was prematurely filed because the case instituted by SAMBA against petitioners before the DAR
Regional Adjudicator has not yet terminated. Respondents conclude, as a consequence, that petitioners failed to fully
exhaust administrative remedies available to them before coming to court.

The petition is impressed with merit. A cursory reading of the Preliminary Approval and Locational Clearances as
well as the Development Permits granted petitioners for Phases I, II and III of the Antipolo Hills Subdivision reveals
that contrary to the claim of public respondents, petitioners NATALIA and EDIC did in fact comply with all the
requirements of law.

Petitioners first secured favorable recommendations from the Lungsod Silangan Development Corporation, the
agency tasked to oversee the implementation of the development of the townsite reservation, before applying for the
necessary permits from the Human Settlements Regulatory
Commission. 10 And, in all permits granted to petitioners, the Commission
stated invariably therein that the applications were in "conformance" 11 or "conformity" 12 or "conforming" 13 with
the implementing Standards, Rules and Regulations of P.D. 957. Hence, the argument of public respondents that not
all of the requirements were complied with cannot be sustained.

As a matter of fact, there was even no need for petitioners to secure a clearance or prior approval from DAR. The
NATALIA properties were within the areas set aside for the Lungsod Silangan Reservation. Since Presidential
Proclamation No. 1637 created the townsite reservation for the purpose of providing additional housing to the
burgeoning population of Metro Manila, it in effect converted for residential use what were erstwhile agricultural
lands provided all requisites were met. And, in the case at bar, there was compliance with all relevant rules and
requirements. Even in their applications for the development of the Antipolo Hills Subdivision, the predecessor
agency of HLURB noted that petitioners NATALIA and EDIC complied with all the requirements prescribed by
P.D. 957.
The implementing Standards, Rules and Regulations of P.D. 957 applied to all subdivisions and condominiums in
general. On the other hand, Presidential Proclamation No. 1637 referred only to the Lungsod Silangan Reservation,
which makes it a special law. It is a basic tenet in statutory construction that between a general law and a special
law, the latter prevails. 14

Interestingly, the Office of the Solicitor General does not contest the conversion of portions of the Antipolo Hills
Subdivision which have already been developed. 15 Of course, this is contrary to its earlier position that there was no
valid conversion. The applications for the developed and undeveloped portions of subject subdivision were similarly
situated. Consequently, both did not need prior DAR approval.

We now determine whether such lands are covered by the CARL. Section 4 of R.A. 6657 provides that the CARL
shall "cover, regardless of tenurial arrangement and commodity produced, all public and private agricultural lands."
As to what constitutes "agricultural land," it is referred to as "land devoted to agricultural activity as defined in this
Act and not classified as mineral, forest, residential, commercial or industrial land." 16 The deliberations of the
Constitutional Commission confirm this limitation. "Agricultural lands" are only those lands which are "arable and
suitable agricultural lands" and "do not include commercial, industrial and residential lands." 17

Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills Subdivision cannot in any
language be considered as "agricultural lands." These lots were intended for residential use. They ceased to be
agricultural lands upon approval of their inclusion in the Lungsod Silangan Reservation. Even today, the areas in
question continued to be developed as a low-cost housing subdivision, albeit at a snail's pace. This can readily be
gleaned from the fact that SAMBA members even instituted an action to restrain petitioners from continuing with
such development. The enormity of the resources needed for developing a subdivision may have delayed its
completion but this does not detract from the fact that these lands are still residential lands and outside the ambit of
the CARL.

Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These include lands previously
converted to non-agricultural uses prior to the effectivity of CARL by government agencies other than respondent
DAR. In its Revised Rules and Regulations Governing Conversion of Private Agricultural Lands to Non-
Agricultural Uses, 18 DAR itself defined "agricultural land" thus —

. . . Agricultural lands refers to those devoted to agricultural activity as defined in R.A. 6657 and
not classified as mineral or forest by the Department of Environment and Natural Resources
(DENR) and its predecessor agencies, and not classified in town plans and zoning ordinances as
approved by the Housing and Land Use Regulatory Board (HLURB) and its preceding competent
authorities prior to 15 June 1988 for residential, commercial or industrial use.

Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is bound by such conversion. It
was therefore error to include the undeveloped portions of the Antipolo Hills Subdivision within the coverage of
CARL.

Be that as it may, the Secretary of Justice, responding to a query by the Secretary of Agrarian Reform, noted in an
Opinion 19 that lands covered by Presidential Proclamation No. 1637, inter alia, of which the NATALIA lands are
part, having been reserved for townsite purposes "to be developed as human settlements by the proper land and
housing agency," are "not deemed 'agricultural lands' within the meaning and intent of Section 3 (c) of R.A. No.
6657. " Not being deemed "agricultural lands," they are outside the coverage of CARL.

Anent the argument that there was failure to exhaust administrative remedies in the instant petition, suffice it to say
that the issues raised in the case filed by SAMBA members differ from those of petitioners. The former involve
possession; the latter, the propriety of including under the operation of CARL lands already converted for residential
use prior to its effectivity.
Besides, petitioners were not supposed to wait until public respondents acted on their letter-protests, this after sitting
it out for almost a year. Given the official indifference, which under the circumstances could have continued forever,
petitioners had to act to assert and protect their interests. 20

In fine, we rule for petitioners and hold that public respondents gravely abused their discretion in issuing the assailed
Notice of Coverage of 22 November 1990 by of lands over which they no longer have jurisdiction.

WHEREFORE, the petition for Certiorari is GRANTED. The Notice of Coverage of 22 November 1990 by virtue of
which undeveloped portions of the Antipolo Hills Subdivision were placed under CARL coverage is hereby SET
ASIDE.

SO ORDERED.
 EN BANC
[G.R. No. 86889 : December 4, 1990.]
192 SCRA 51
LUZ FARMS, Petitioner, vs. THE HONORABLE SECRETARY OF THE DEPARTMENT OF AGRARIAN
REFORM, Respondent.

DECISION

PARAS, J.:

This is a petition for prohibition with prayer for restraining order and/or preliminary and permanent injunction against
the Honorable Secretary of the Department of Agrarian Reform for acting without jurisdiction in enforcing the assailed
provisions of R.A. No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988 and in
promulgating the Guidelines and Procedure Implementing Production and Profit Sharing under R.A. No. 6657, insofar
as the same apply to herein petitioner, and further from performing an act in violation of the constitutional rights of
the petitioner.
As gathered from the records, the factual background of this case, is as follows:
On June 10, 1988, the President of the Philippines approved R.A. No. 6657, which includes the raising of livestock,
poultry and swine in its coverage (Rollo, p. 80).
On January 2, 1989, the Secretary of Agrarian Reform promulgated the Guidelines and Procedures Implementing
Production and Profit Sharing as embodied in Sections 13 and 32 of R.A. No. 6657 (Rollo, p. 80).
On January 9, 1989, the Secretary of Agrarian Reform promulgated its Rules and Regulations implementing Section
11 of R.A. No. 6657 (Commercial Farms). (Rollo, p. 81).
Luz Farms, petitioner in this case, is a corporation engaged in the livestock and poultry business and together with
others in the same business allegedly stands to be adversely affected by the enforcement of Section 3(b), Section 11,
Section 13, Section 16(d) and 17 and Section 32 of R.A. No. 6657 otherwise known as Comprehensive Agrarian
Reform Law and of the Guidelines and Procedures Implementing Production and Profit Sharing under R.A. No. 6657
promulgated on January 2, 1989 and the Rules and Regulations Implementing Section 11 thereof as promulgated by
the DAR on January 9, 1989 (Rollo, pp. 2-36).: rd
Hence, this petition praying that aforesaid laws, guidelines and rules be declared unconstitutional. Meanwhile, it is
also prayed that a writ of preliminary injunction or restraining order be issued enjoining public respondents from
enforcing the same, insofar as they are made to apply to Luz Farms and other livestock and poultry raisers.
This Court in its Resolution dated July 4, 1939 resolved to deny, among others, Luz Farms' prayer for the issuance of
a preliminary injunction in its Manifestation dated May 26, and 31, 1989. (Rollo, p. 98).
Later, however, this Court in its Resolution dated August 24, 1989 resolved to grant said Motion for Reconsideration
regarding the injunctive relief, after the filing and approval by this Court of an injunction bond in the amount of
P100,000.00. This Court also gave due course to the petition and required the parties to file their respective memoranda
(Rollo, p. 119).
The petitioner filed its Memorandum on September 6, 1989 (Rollo, pp. 131-168).
On December 22, 1989, the Solicitor General adopted his Comment to the petition as his Memorandum (Rollo, pp.
186-187).
Luz Farms questions the following provisions of R.A. 6657, insofar as they are made to apply to it:
(a) Section 3(b) which includes the "raising of livestock (and poultry)" in the definition of "Agricultural,
Agricultural Enterprise or Agricultural Activity."
 (b) Section 11 which defines "commercial farms" as "private agricultural lands devoted to commercial,
livestock, poultry and swine raising . . ."
(c) Section 13 which calls upon petitioner to execute a production-sharing plan.
(d) Section 16(d) and 17 which vest on the Department of Agrarian Reform the authority to summarily
determine the just compensation to be paid for lands covered by the Comprehensive Agrarian Reform Law.
(e) Section 32 which spells out the production-sharing plan mentioned in Section 13 —
". . . (W)hereby three percent (3%) of the gross sales from the production of such lands are distributed within
sixty (60) days of the end of the fiscal year as compensation to regular and other farmworkers in such lands
over and above the compensation they currently receive: Provided, That these individuals or entities realize
gross sales in excess of five million pesos per annum unless the DAR, upon proper application, determine a
lower ceiling.
In the event that the individual or entity realizes a profit, an additional ten (10%) of the net profit after tax
shall be distributed to said regular and other farmworkers within ninety (90) days of the end of the fiscal year
. . ."
The main issue in this petition is the constitutionality of Sections 3(b), 11, 13 and 32 of R.A. No. 6657 (the
Comprehensive Agrarian Reform Law of 1988), insofar as the said law includes the raising of livestock, poultry and
swine in its coverage as well as the Implementing Rules and Guidelines promulgated in accordance therewith.:-cralaw
The constitutional provision under consideration reads as follows:
ARTICLE XIII
x x x
AGRARIAN AND NATURAL RESOURCES REFORM
Section 4. The State shall, by law, undertake an agrarian reform program founded on the right of farmers and
regular farmworkers, who are landless, to own directly or collectively the lands they till or, in the case of
other farmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage and
undertake the just distribution of all agricultural lands, subject to such priorities and reasonable retention
limits as the Congress may prescribe, taking into account ecological, developmental, or equity considerations,
and subject to the payment of just compensation. In determining retention limits, the State shall respect the
rights of small landowners. The State shall further provide incentives for voluntary land-sharing.
x x x"
Luz Farms contended that it does not seek the nullification of R.A. 6657 in its entirety. In fact, it
acknowledges the correctness of the decision of this Court in the case of the Association of Small Landowners
in the Philippines, Inc. vs. Secretary of Agrarian Reform (G.R. 78742, 14 July 1989) affirming the
constitutionality of the Comprehensive Agrarian Reform Law. It, however, argued that Congress in enacting
the said law has transcended the mandate of the Constitution, in including land devoted to the raising of
livestock, poultry and swine in its coverage (Rollo, p. 131). Livestock or poultry raising is not similar to crop
or tree farming. Land is not the primary resource in this undertaking and represents no more than five percent
(5%) of the total investment of commercial livestock and poultry raisers. Indeed, there are many owners of
residential lands all over the country who use available space in their residence for commercial livestock and
raising purposes, under "contract-growing arrangements," whereby processing corporations and other
commercial livestock and poultry raisers (Rollo, p. 10). Lands support the buildings and other amenities
attendant to the raising of animals and birds. The use of land is incidental to but not the principal factor or
consideration in productivity in this industry. Including backyard raisers, about 80% of those in commercial
livestock and poultry production occupy five hectares or less. The remaining 20% are mostly corporate farms
(Rollo, p. 11).
On the other hand, the public respondent argued that livestock and poultry raising is embraced in the term "agriculture"
and the inclusion of such enterprise under Section 3(b) of R.A. 6657 is proper. He cited that Webster's International
Dictionary, Second Edition (1954), defines the following words:
 "Agriculture — the art or science of cultivating the ground and raising and harvesting crops, often, including
also, feeding, breeding and management of livestock, tillage, husbandry, farming.
It includes farming, horticulture, forestry, dairying, sugarmaking . . .
Livestock — domestic animals used or raised on a farm, especially for profit.
Farm — a plot or tract of land devoted to the raising of domestic or other animals." (Rollo, pp. 82-83).
The petition is impressed with merit.
The question raised is one of constitutional construction. The primary task in constitutional construction is to ascertain
and thereafter assure the realization of the purpose of the framers in the adoption of the Constitution (J.M. Tuazon &
Co. vs. Land Tenure Administration, 31 SCRA 413 [1970]).: rd
Ascertainment of the meaning of the provision of Constitution begins with the language of the document itself. The
words used in the Constitution are to be given their ordinary meaning except where technical terms are employed in
which case the significance thus attached to them prevails (J.M. Tuazon & Co. vs. Land Tenure Administration, 31
SCRA 413 [1970]).
It is generally held that, in construing constitutional provisions which are ambiguous or of doubtful meaning, the
courts may consider the debates in the constitutional convention as throwing light on the intent of the framers of the
Constitution. It is true that the intent of the convention is not controlling by itself, but as its proceeding was preliminary
to the adoption by the people of the Constitution the understanding of the convention as to what was meant by the
terms of the constitutional provision which was the subject of the deliberation, goes a long way toward explaining the
understanding of the people when they ratified it (Aquino, Jr. v. Enrile, 59 SCRA 183 [1974]).
The transcripts of the deliberations of the Constitutional Commission of 1986 on the meaning of the word
"agricultural," clearly show that it was never the intention of the framers of the Constitution to include livestock and
poultry industry in the coverage of the constitutionally-mandated agrarian reform program of the Government.
The Committee adopted the definition of "agricultural land" as defined under Section 166 of R.A. 3844, as laud
devoted to any growth, including but not limited to crop lands, saltbeds, fishponds, idle and abandoned land (Record,
CONCOM, August 7, 1986, Vol. III, p. 11).
The intention of the Committee is to limit the application of the word "agriculture." Commissioner Jamir proposed to
insert the word "ARABLE" to distinguish this kind of agricultural land from such lands as commercial and industrial
lands and residential properties because all of them fall under the general classification of the word "agricultural".
This proposal, however, was not considered because the Committee contemplated that agricultural lands are limited
to arable and suitable agricultural lands and therefore, do not include commercial, industrial and residential lands
(Record, CONCOM, August 7, 1986, Vol. III, p. 30).
In the interpellation, then Commissioner Regalado (now a Supreme Court Justice), posed several questions, among
others, quoted as follows:
x x x
"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).
x x x
The questions were answered and explained in the statement of then Commissioner Tadeo, quoted as follows:
x x x
 "Sa pangalawang katanungan ng Ginoo ay medyo hindi kami nagkaunawaan. Ipinaaalam ko kay
Commissioner Regalado na hindi namin inilagay ang agricultural worker sa kadahilanang kasama rito ang
piggery, poultry at livestock workers. Ang inilagay namin dito ay farm worker kaya hindi kasama ang
piggery, poultry at livestock workers (Record, CONCOM, August 2, 1986, Vol. II, p. 621).
It is evident from the foregoing discussion that Section II of R.A. 6657 which includes "private agricultural lands
devoted to commercial livestock, poultry and swine raising" in the definition of "commercial farms" is invalid, to the
extent that the aforecited agro-industrial activities are made to be covered by the agrarian reform program of the State.
There is simply no reason to include livestock and poultry lands in the coverage of agrarian reform. (Rollo, p. 21).
Hence, there is merit in Luz Farms' argument that the requirement in Sections 13 and 32 of R.A. 6657 directing
"corporate farms" which include livestock and poultry raisers to execute and implement "production-sharing plans"
(pending final redistribution of their landholdings) whereby they are called upon to distribute from three percent (3%)
of their gross sales and ten percent (10%) of their net profits to their workers as additional compensation is
unreasonable for being confiscatory, and therefore violative of due process (Rollo, p. 21).:-cralaw
It has been established that this Court will assume jurisdiction over a constitutional question only if it is shown that
the essential requisites of a judicial inquiry into such a question are first satisfied. Thus, there must be an actual case
or controversy involving a conflict of legal rights susceptible of judicial determination, the constitutional question
must have been opportunely raised by the proper party, and the resolution of the question is unavoidably necessary to
the decision of the case itself (Association of Small Landowners of the Philippines, Inc. v. Secretary of Agrarian
Reform, G.R. 78742; Acuna v. Arroyo, G.R. 79310; Pabico v. Juico, G.R. 79744; Manaay v. Juico, G.R. 79777, 14
July 1989, 175 SCRA 343).
However, despite the inhibitions pressing upon the Court when confronted with constitutional issues, it will not
hesitate to declare a law or act invalid when it is convinced that this must be done. In arriving at this conclusion, its
only criterion will be the Constitution and God as its conscience gives it in the light to probe its meaning and discover
its purpose. Personal motives and political considerations are irrelevancies that cannot influence its decisions.
Blandishment is as ineffectual as intimidation, for all the awesome power of the Congress and Executive, the Court
will not hesitate "to make the hammer fall heavily," where the acts of these departments, or of any official, betray the
people's will as expressed in the Constitution (Association of Small Landowners of the Philippines, Inc. v. Secretary
of Agrarian Reform, G.R. 78742; Acuna v. Arroyo, G.R. 79310; Pabico v. Juico, G.R. 79744; Manaay v. Juico, G.R.
79777, 14 July 1989).
Thus, where the legislature or the executive acts beyond the scope of its constitutional powers, it becomes the duty of
the judiciary to declare what the other branches of the government had assumed to do, as void. This is the essence of
judicial power conferred by the Constitution "(I)n one Supreme Court and in such lower courts as may be established
by law" (Art. VIII, Section 1 of the 1935 Constitution; Article X, Section I of the 1973 Constitution and which was
adopted as part of the Freedom Constitution, and Article VIII, Section 1 of the 1987 Constitution) and which power
this Court has exercised in many instances (Demetria v. Alba, 148 SCRA 208 [1987]).
PREMISES CONSIDERED, the instant petition is hereby GRANTED. Sections 3(b), 11, 13 and 32 of R.A. No. 6657
insofar as the inclusion of the raising of livestock, poultry and swine in its coverage as well as the Implementing Rules
and Guidelines promulgated in accordance therewith, are hereby DECLARED null and void for being unconstitutional
and the writ of preliminary injunction issued is hereby MADE permanent.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT

EN BANC

G.R. No. 162070 October 19, 2005

DEPARTMENT OF AGRARIAN REFORM, represented by SECRETARY JOSE MARI B. PONCE

(OIC), Petitioner
vs.
DELIA T. SUTTON, ELLA T. SUTTON-SOLIMAN and HARRY T. SUTTON, Respondents.

DECISION

PUNO, J.:

This is a petition for review filed by the Department of Agrarian Reform (DAR) of the Decision and Resolution of
the Court of Appeals, dated September 19, 2003 and February 4, 2004, respectively, which declared DAR
Administrative Order (A.O.) No. 9, series of 1993, null and void for being violative of the Constitution.

The case at bar involves a land in Aroroy, Masbate, inherited by respondents which has been devoted exclusively to
cow and calf breeding. On October 26, 1987, pursuant to the then existing agrarian reform program of the
government, respondents made a voluntary offer to sell (VOS) 1 their landholdings to petitioner DAR to avail of
certain incentives under the law.

On June 10, 1988, a new agrarian law, Republic Act (R.A.) No. 6657, also known as the Comprehensive Agrarian
Reform Law (CARL) of 1988, took effect. It included in its coverage farms used for raising livestock, poultry and
swine.

On December 4, 1990, in an en banc decision in the case of Luz Farms v. Secretary of DAR,2 this Court ruled that
lands devoted to livestock and poultry-raising are not included in the definition of agricultural land. Hence, we
declared as unconstitutional certain provisions of the CARL insofar as they included livestock farms in the coverage
of agrarian reform.

In view of the Luz Farms ruling, respondents filed with petitioner DAR a formal request to withdraw their VOS as
their landholding was devoted exclusively to cattle-raising and thus exempted from the coverage of the CARL. 3

On December 21, 1992, the Municipal Agrarian Reform Officer of Aroroy, Masbate, inspected respondents’ land
and found that it was devoted solely to cattle-raising and breeding. He recommended to the DAR Secretary that it be
exempted from the coverage of the CARL.

On April 27, 1993, respondents reiterated to petitioner DAR the withdrawal of their VOS and requested the return of
the supporting papers they submitted in connection therewith. 4 Petitioner ignored their request.

On December 27, 1993, DAR issued A.O. No. 9, series of 1993,5 which provided that only portions of private
agricultural lands used for the raising of livestock, poultry and swine as of June 15, 1988 shall be excluded from the
coverage of the CARL. In determining the area of land to be excluded, the A.O. fixed the following retention
limits, viz: 1:1 animal-land ratio (i.e., 1 hectare of land per 1 head of animal shall be retained by the landowner), and
a ratio of 1.7815 hectares for livestock infrastructure for every 21 heads of cattle shall likewise be excluded from the
operations of the CARL.

On February 4, 1994, respondents wrote the DAR Secretary and advised him to consider as final and irrevocable the
withdrawal of their VOS as, under the Luz Farms doctrine, their entire landholding is exempted from the CARL. 6
On September 14, 1995, then DAR Secretary Ernesto D. Garilao issued an Order 7 partially granting the application
of respondents for exemption from the coverage of CARL. Applying the retention limits outlined in the DAR A.O.
No. 9, petitioner exempted 1,209 hectares of respondents’ land for grazing purposes, and a maximum of 102.5635
hectares for infrastructure. Petitioner ordered the rest of respondents’ landholding to be segregated and placed under
Compulsory Acquisition.

Respondents moved for reconsideration. They contend that their entire landholding should be exempted as it is
devoted exclusively to cattle-raising. Their motion was denied.8 They filed a notice of appeal9 with the Office of the
President assailing: (1) the reasonableness and validity of DAR A.O. No. 9, s. 1993, which provided for a ratio
between land and livestock in determining the land area qualified for exclusion from the CARL, and (2) the
constitutionality of DAR A.O. No. 9, s. 1993, in view of the Luz Farms case which declared cattle-raising lands
excluded from the coverage of agrarian reform.

On October 9, 2001, the Office of the President affirmed the impugned Order of petitioner DAR.10 It ruled that DAR
A.O. No. 9, s. 1993, does not run counter to the Luz Farms case as the A.O. provided the guidelines to determine
whether a certain parcel of land is being used for cattle-raising. However, the issue on the constitutionality of the
assailed A.O. was left for the determination of the courts as the sole arbiters of such issue.

On appeal, the Court of Appeals ruled in favor of the respondents. It declared DAR A.O. No. 9, s. 1993, void for
being contrary to the intent of the 1987 Constitutional Commission to exclude livestock farms from the land reform
program of the government. The dispositive portion reads:

WHEREFORE, premises considered, DAR Administrative Order No. 09, Series of 1993 is
hereby DECLARED null and void. The assailed order of the Office of the President dated 09 October 2001 in so far
as it affirmed the Department of Agrarian Reform’s ruling that petitioners’ landholding is covered by the agrarian
reform program of the government is REVERSED and SET ASIDE.

SO ORDERED.11

Hence, this petition.

The main issue in the case at bar is the constitutionality of DAR A.O. No. 9, series of 1993, which prescribes a
maximum retention limit for owners of lands devoted to livestock raising.

Invoking its rule-making power under Section 49 of the CARL, petitioner submits that it issued DAR A.O. No. 9 to
limit the area of livestock farm that may be retained by a landowner pursuant to its mandate to place all public and
private agricultural lands under the coverage of agrarian reform. Petitioner also contends that the A.O. seeks to
remedy reports that some unscrupulous landowners have converted their agricultural farms to livestock farms in
order to evade their coverage in the agrarian reform program.

Petitioner’s arguments fail to impress.

Administrative agencies are endowed with powers legislative in nature, i.e., the power to make rules and regulations.
They have been granted by Congress with the authority to issue rules to regulate the implementation of a law
entrusted to them. Delegated rule-making has become a practical necessity in modern governance due to the
increasing complexity and variety of public functions. However, while administrative rules and regulations have the
force and effect of law, they are not immune from judicial review. 12 They may be properly challenged before the
courts to ensure that they do not violate the Constitution and no grave abuse of administrative discretion is
committed by the administrative body concerned.

The fundamental rule in administrative law is that, to be valid, administrative rules and regulations must be
issued by authority of a law and must not contravene the provisions of the Constitution. 13 The rule-making
power of an administrative agency may not be used to abridge the authority given to it by Congress or by the
Constitution. Nor can it be used to enlarge the power of the administrative agency beyond the scope
intended. Constitutional and statutory provisions control with respect to what rules and regulations may be
promulgated by administrative agencies and the scope of their regulations. 14

In the case at bar, we find that the impugned A.O. is invalid as it contravenes the Constitution. The A.O. sought to
regulate livestock farms by including them in the coverage of agrarian reform and prescribing a maximum retention
limit for their ownership. However, the deliberations of the 1987 Constitutional Commission show a clear intent
to exclude, inter alia, all lands exclusively devoted to livestock, swine and poultry- raising. The Court clarified
in the Luz Farms case that livestock, swine and poultry-raising are industrial activities and do not fall within the
definition of "agriculture" or "agricultural activity." The raising of livestock, swine and poultry is different from
crop or tree farming. It is an industrial, not an agricultural, activity. A great portion of the investment in this
enterprise is in the form of industrial fixed assets, such as: animal housing structures and facilities, drainage,
waterers and blowers, feedmill with grinders, mixers, conveyors, exhausts and generators, extensive warehousing
facilities for feeds and other supplies, anti-pollution equipment like bio-gas and digester plants augmented by
lagoons and concrete ponds, deepwells, elevated water tanks, pumphouses, sprayers, and other technological
appurtenances.15

Clearly, petitioner DAR has no power to regulate livestock farms which have been exempted by the
Constitution from the coverage of agrarian reform. It has exceeded its power in issuing the assailed A.O.

The subsequent case of Natalia Realty, Inc. v. DAR16 reiterated our ruling in the Luz Farms case. In Natalia
Realty, the Court held that industrial, commercial and residential lands are not covered by the CARL. 17 We stressed
anew that while Section 4 of R.A. No. 6657 provides that the CARL shall cover all public and private
agricultural lands, the term "agricultural land" does not include lands classified as mineral, forest,
residential, commercial or industrial. Thus, in Natalia Realty, even portions of the Antipolo Hills Subdivision,
which are arable yet still undeveloped, could not be considered as agricultural lands subject to agrarian reform as
these lots were already classified as residential lands.

A similar logical deduction should be followed in the case at bar. Lands devoted to raising of livestock, poultry and
swine have been classified as industrial, not agricultural, lands and thus exempt from agrarian reform. Petitioner
DAR argues that, in issuing the impugned A.O., it was seeking to address the reports it has received that some
unscrupulous landowners have been converting their agricultural lands to livestock farms to avoid their coverage by
the agrarian reform. Again, we find neither merit nor logic in this contention. The undesirable scenario which
petitioner seeks to prevent with the issuance of the A.O. clearly does not apply in this case. Respondents’
family acquired their landholdings as early as 1948. They have long been in the business of breeding cattle in
Masbate which is popularly known as the cattle-breeding capital of the Philippines.18 Petitioner DAR does not
dispute this fact. Indeed, there is no evidence on record that respondents have just recently engaged in or converted
to the business of breeding cattle after the enactment of the CARL that may lead one to suspect that respondents
intended to evade its coverage. It must be stressed that what the CARL prohibits is the conversion of agricultural
lands for non-agricultural purposes after the effectivity of the CARL. There has been no change of business
interest in the case of respondents.

Moreover, it is a fundamental rule of statutory construction that the reenactment of a statute by Congress without
substantial change is an implied legislative approval and adoption of the previous law. On the other hand, by making
a new law, Congress seeks to supersede an earlier one.19 In the case at bar, after the passage of the 1988 CARL,
Congress enacted R.A. No. 788120 which amended certain provisions of the CARL. Specifically, the new law
changed the definition of the terms "agricultural activity" and "commercial farming" by dropping from its
coverage lands that are devoted to commercial livestock, poultry and swine-raising.21 With this significant
modification, Congress clearly sought to align the provisions of our agrarian laws with the intent of the 1987
Constitutional Commission to exclude livestock farms from the coverage of agrarian reform.

In sum, it is doctrinal that rules of administrative bodies must be in harmony with the provisions of the Constitution.
They cannot amend or extend the Constitution. To be valid, they must conform to and be consistent with the
Constitution. In case of conflict between an administrative order and the provisions of the Constitution, the latter
prevails.22 The assailed A.O. of petitioner DAR was properly stricken down as unconstitutional as it enlarges the
coverage of agrarian reform beyond the scope intended by the 1987 Constitution.

IN VIEW WHEREOF, the petition is DISMISSED. The assailed Decision and Resolution of the Court of Appeals,
dated September 19, 2003 and February 4, 2004, respectively, are AFFIRMED. No pronouncement as to costs.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 182332 February 23, 2011

MILESTONE FARMS, INC., Petitioner,

vs.
OFFICE OF THE PRESIDENT, Respondent.

DECISION

NACHURA, J.:

Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Civil Procedure, seeking the
reversal of the Court of Appeals (CA) Amended Decision2 dated October 4, 2006 and its Resolution3 dated March
27, 2008.

The Facts

Petitioner Milestone Farms, Inc. (petitioner) was incorporated with the Securities and Exchange Commission on
January 8, 1960.4 Among its pertinent secondary purposes are: (1) to engage in the raising of cattle, pigs, and other
livestock; to acquire lands by purchase or lease, which may be needed for this purpose; and to sell and otherwise
dispose of said cattle, pigs, and other livestock and their produce when advisable and beneficial to the corporation;
(2) to breed, raise, and sell poultry; to purchase or acquire and sell, or otherwise dispose of the supplies, stocks,
equipment, accessories, appurtenances, products, and by-products of said business; and (3) to import cattle, pigs, and
other livestock, and animal food necessary for the raising of said cattle, pigs, and other livestock as may be
authorized by law.5

On June 10, 1988, a new agrarian reform law, Republic Act (R.A.) No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law (CARL), took effect, which included the raising of livestock, poultry, and
swine in its coverage. However, on December 4, 1990, this Court, sitting en banc, ruled in Luz Farms v. Secretary of
the Department of Agrarian Reform6 that agricultural lands devoted to livestock, poultry, and/or swine raising are
excluded from the Comprehensive Agrarian Reform Program (CARP).

Thus, in May 1993, petitioner applied for the exemption/exclusion of its 316.0422-hectare property, covered by
Transfer Certificate of Title Nos. (T-410434) M-15750, (T-486101) M-7307, (T-486102) M-7308, (T-274129) M-
15751, (T-486103) M-7309, (T-486104) M-7310, (T-332694) M-15755, (T-486105) M-7311, (T-486106) M-7312,
M-8791, (T-486107) M-7313, (T-486108) M-7314, M-8796, (T-486109) M-7315, (T-486110) M-9508, and M-
6013, and located in Pinugay, Baras, Rizal, from the coverage of the CARL, pursuant to the aforementioned ruling
of this Court in Luz Farms.
Meanwhile, on December 27, 1993, the Department of Agrarian Reform (DAR) issued Administrative Order No. 9,
Series of 1993 (DAR A.O. No. 9), setting forth rules and regulations to govern the exclusion of agricultural lands
used for livestock, poultry, and swine raising from CARP coverage. Thus, on January 10, 1994, petitioner re-
documented its application pursuant to DAR A.O. No. 9. 7

Acting on the said application, the DAR’s Land Use Conversion and Exemption Committee (LUCEC) of Region IV
conducted an ocular inspection on petitioner’s property and arrived at the following findings:

[T]he actual land utilization for livestock, swine and poultry is 258.8422 hectares; the area which served as
infrastructure is 42.0000 hectares; ten (10) hectares are planted to corn and the remaining five (5) hectares are
devoted to fish culture; that the livestock population are 371 heads of cow, 20 heads of horses, 5,678 heads of swine
and 788 heads of cocks; that the area being applied for exclusion is far below the required or ideal area which is 563
hectares for the total livestock population; that the approximate area not directly used for livestock purposes with an
area of 15 hectares, more or less, is likewise far below the allowable 10% variance; and, though not directly used for
livestock purposes, the ten (10) hectares planted to sweet corn and the five (5) hectares devoted to fishpond could be
considered supportive to livestock production.

The LUCEC, thus, recommended the exemption of petitioner’s 316.0422-hectare property from the coverage of
CARP. Adopting the LUCEC’s findings and recommendation, DAR Regional Director Percival Dalugdug (Director
Dalugdug) issued an Order dated June 27, 1994, exempting petitioner’s 316.0422-hectare property from CARP.8

The Southern Pinugay Farmers Multi-Purpose Cooperative, Inc. (Pinugay Farmers), represented by Timiano
Balajadia, Sr. (Balajadia), moved for the reconsideration of the said Order, but the same was denied by Director
Dalugdug in his Order dated November 24, 1994. 9 Subsequently, the Pinugay Farmers filed a letter-appeal with the
DAR Secretary.

Correlatively, on June 4, 1994, petitioner filed a complaint for Forcible Entry against Balajadia and company before
the Municipal Circuit Trial Court (MCTC) of Teresa-Baras, Rizal, docketed as Civil Case No. 781-T.10 The MCTC
ruled in favor of petitioner, but the decision was later reversed by the Regional Trial Court, Branch 80, of Tanay,
Rizal. Ultimately, the case reached the CA, which, in its Decision11 dated October 8, 1999, reinstated the MCTC’s
ruling, ordering Balajadia and all defendants therein to vacate portions of the property covered by TCT Nos. M-
6013, M-8796, and M-8791. In its Resolution12 dated July 31, 2000, the CA held that the defendants therein failed to
timely file a motion for reconsideration, given the fact that their counsel of record received its October 8, 1999
Decision; hence, the same became final and executory.

In the meantime, R.A. No. 6657 was amended by R.A. No. 7881, 13 which was approved on February 20, 1995.
Private agricultural lands devoted to livestock, poultry, and swine raising were excluded from the coverage of the
CARL. On October 22, 1996, the fact-finding team formed by the DAR Undersecretary for Field Operations and
Support Services conducted an actual headcount of the livestock population on the property. The headcount showed
that there were 448 heads of cattle and more than 5,000 heads of swine.

The DAR Secretary’s Ruling

On January 21, 1997, then DAR Secretary Ernesto D. Garilao (Secretary Garilao) issued an Order exempting from
CARP only 240.9776 hectares of the 316.0422 hectares previously exempted by Director Dalugdug, and declaring
75.0646 hectares of the property to be covered by CARP. 14

Secretary Garilao opined that, for private agricultural lands to be excluded from CARP, they must already be
devoted to livestock, poultry, and swine raising as of June 15, 1988, when the CARL took effect. He found that the
Certificates of Ownership of Large Cattle submitted by petitioner showed that only 86 heads of cattle were
registered in the name of petitioner’s president, Misael Vera, Jr., prior to June 15, 1988; 133 were subsequently
bought in 1990, while 204 were registered from 1992 to 1995. Secretary Garilao gave more weight to the certificates
rather than to the headcount because "the same explicitly provide for the number of cattle owned by petitioner as of
June 15, 1988."
Applying the animal-land ratio (1 hectare for grazing for every head of cattle/carabao/horse) and the infrastructure-
animal ratio (1.7815 hectares for 21 heads of cattle/carabao/horse, and 0.5126 hectare for 21 heads of hogs) under
DAR A.O. No. 9, Secretary Garilao exempted 240.9776 hectares of the property, as follows:

1. 86 hectares for the 86 heads of cattle existing as of 15 June 1988;

2. 8 hectares for infrastructure following the ratio of 1.7815 hectares for every 21 heads of cattle;

3. 8 hectares for the 8 horses;

4. 0.3809 square meters of infrastructure for the 8 horses; [and]

5. 138.5967 hectares for the 5,678 heads of swine. 15

Petitioner filed a Motion for Reconsideration,16 submitting therewith copies of Certificates of Transfer of Large
Cattle and additional Certificates of Ownership of Large Cattle issued to petitioner prior to June 15, 1988, as
additional proof that it had met the required animal-land ratio. Petitioner also submitted a copy of a Disbursement
Voucher dated December 17, 1986, showing the purchase of 100 heads of cattle by the Bureau of Animal Industry
from petitioner, as further proof that it had been actively operating a livestock farm even before June 15, 1988.
However, in his Order dated April 15, 1997, Secretary Garilao denied petitioner’s Motion for Reconsideration. 17

Aggrieved, petitioner filed its Memorandum on Appeal18 before the Office of the President (OP).

The OP’s Ruling

On February 4, 2000, the OP rendered a decision19 reinstating Director Dalugdug’s Order dated June 27, 1994 and
declared the entire 316.0422-hectare property exempt from the coverage of CARP.

However, on separate motions for reconsideration of the aforesaid decision filed by farmer-groups Samahang Anak-
Pawis ng Lagundi (SAPLAG) and Pinugay Farmers, and the Bureau of Agrarian Legal Assistance of DAR, the OP
issued a resolution20 dated September 16, 2002, setting aside its previous decision. The dispositive portion of the OP
resolution reads:

WHEREFORE, the Decision subject of the instant separate motions for reconsideration is hereby SET ASIDE and a
new one entered REINSTATING the Order dated 21 January 1997 of then DAR Secretary Ernesto D. Garilao, as
reiterated in another Order of 15 April 1997, without prejudice to the outcome of the continuing review and
verification proceedings that DAR, thru the appropriate Municipal Agrarian Reform Officer, may undertake
pursuant to Rule III (D) of DAR Administrative Order No. 09, series of 1993.

SO ORDERED.21

The OP held that, when it comes to proof of ownership, the reference is the Certificate of Ownership of Large
Cattle. Certificates of cattle ownership, which are readily available – being issued by the appropriate government
office – ought to match the number of heads of cattle counted as existing during the actual headcount. The presence
of large cattle on the land, without sufficient proof of ownership thereof, only proves such presence.

Taking note of Secretary Garilao’s observations, the OP also held that, before an ocular investigation is conducted
on the property, the landowners are notified in advance; hence, mere reliance on the physical headcount is dangerous
because there is a possibility that the landowners would increase the number of their cattle for headcount purposes
only. The OP observed that there was a big variance between the actual headcount of 448 heads of cattle and only 86
certificates of ownership of large cattle.

Consequently, petitioner sought recourse from the CA.22

 The Proceedings Before the CA and Its Rulings

On April 29, 2005, the CA found that, based on the documentary evidence presented, the property subject of the
application for exclusion had more than satisfied the animal-land and infrastructure-animal ratios under DAR A.O.
No. 9. The CA also found that petitioner applied for exclusion long before the effectivity of DAR A.O. No. 9, thus,
negating the claim that petitioner merely converted the property for livestock, poultry, and swine raising in order to
exclude it from CARP coverage. Petitioner was held to have actually engaged in the said business on the property
even before June 15, 1988. The CA disposed of the case in this wise:

WHEREFORE, the instant petition is hereby GRANTED. The assailed Resolution of the Office of the President
dated September 16, 2002 is hereby SET ASIDE, and its Decision dated February 4, 2000 declaring the entire
316.0422 hectares exempt from the coverage of the Comprehensive Agrarian Reform Program is hereby
REINSTATED without prejudice to the outcome of the continuing review and verification proceedings which the
Department of Agrarian Reform, through the proper Municipal Agrarian Reform Officer, may undertake pursuant to
Policy Statement (D) of DAR Administrative Order No. 9, Series of 1993.

SO ORDERED.23

Meanwhile, six months earlier, or on November 4, 2004, without the knowledge of the CA – as the parties did not
inform the appellate court – then DAR Secretary Rene C. Villa (Secretary Villa) issued DAR Conversion Order No.
CON-0410-001624 (Conversion Order), granting petitioner’s application to convert portions of the 316.0422-hectare
property from agricultural to residential and golf courses use. The portions converted – with a total area of 153.3049
hectares – were covered by TCT Nos. M-15755 (T-332694), M-15751 (T-274129), and M-15750 (T-410434). With
this Conversion Order, the area of the property subject of the controversy was effectively reduced to 162.7373
hectares.

On the CA’s decision of April 29, 2005, Motions for Reconsideration were filed by farmer-groups, namely: the
farmers represented by Miguel Espinas25 (Espinas group), the Pinugay Farmers,26 and the SAPLAG.27 The farmer-
groups all claimed that the CA should have accorded respect to the factual findings of the OP. Moreover, the farmer-
groups unanimously intimated that petitioner already converted and developed a portion of the property into a
leisure-residential-commercial estate known as the Palo Alto Leisure and Sports Complex (Palo Alto).

Subsequently, in a Supplement to the Motion for Reconsideration on Newly Secured Evidence pursuant to DAR
Administrative Order No. 9, Series of 1993 28 (Supplement) dated June 15, 2005, the Espinas group submitted the
following as evidence:

1) Conversion Order29 dated November 4, 2004, issued by Secretary Villa, converting portions of the
property from agricultural to residential and golf courses use, with a total area of 153.3049 hectares; thus,
the Espinas group prayed that the remaining 162.7373 hectares (subject property) be covered by the CARP;

2) Letter30 dated June 7, 2005 of both incoming Municipal Agrarian Reform Officer (MARO) Bismark M.
Elma (MARO Elma) and outgoing MARO Cesar C. Celi (MARO Celi) of Baras, Rizal, addressed to
Provincial Agrarian Reform Officer (PARO) II of Rizal, Felixberto Q. Kagahastian, (MARO Report),
informing the latter, among others, that Palo Alto was already under development and the lots therein were
being offered for sale; that there were actual tillers on the subject property; that there were agricultural
improvements thereon, including an irrigation system and road projects funded by the Government; that
there was no existing livestock farm on the subject property; and that the same was not in the possession
and/or control of petitioner; and

3) Certification31 dated June 8, 2005, issued by both MARO Elma and MARO Celi, manifesting that the
subject property was in the possession and cultivation of actual occupants and tillers, and that, upon
inspection, petitioner maintained no livestock farm thereon.
Four months later, the Espinas group and the DAR filed their respective Manifestations. 32 In its Manifestation dated
November 29, 2005, the DAR confirmed that the subject property was no longer devoted to cattle raising. Hence, in
its Resolution33 dated December 21, 2005, the CA directed petitioner to file its comment on the Supplement and the
aforementioned Manifestations. Employing the services of a new counsel, petitioner filed a Motion to Admit
Rejoinder,34 and prayed that the MARO Report be disregarded and expunged from the records for lack of factual
and legal basis.

With the CA now made aware of these developments, particularly Secretary Villa’s Conversion Order of November
4, 2004, the appellate court had to acknowledge that the property subject of the controversy would now be limited to
the remaining 162.7373 hectares. In the same token, the Espinas group prayed that this remaining area be covered by
the CARP.35

On October 4, 2006, the CA amended its earlier Decision. It held that its April 29, 2005 Decision was theoretically
not final because DAR A.O. No. 9 required the MARO to make a continuing review and verification of the subject
property. While the CA was cognizant of our ruling in Department of Agrarian Reform v. Sutton, 36 wherein we
declared DAR A.O. No. 9 as unconstitutional, it still resolved to lift the exemption of the subject property from the
CARP, not on the basis of DAR A.O. No. 9, but on the strength of evidence such as the MARO Report and
Certification, and the Katunayan37 issued by the Punong Barangay, Alfredo Ruba (Chairman Ruba), of Pinugay,
Baras, Rizal, showing that the subject property was no longer operated as a livestock farm. Moreover, the CA held
that the lease agreements,38 which petitioner submitted to prove that it was compelled to lease a ranch as temporary
shelter for its cattle, only reinforced the DAR’s finding that there was indeed no existing livestock farm on the
subject property. While petitioner claimed that it was merely forced to do so to prevent further slaughtering of its
cattle allegedly committed by the occupants, the CA found the claim unsubstantiated. Furthermore, the CA opined
that petitioner should have asserted its rights when the irrigation and road projects were introduced by the
Government within its property. Finally, the CA accorded the findings of MARO Elma and MARO Celi the
presumption of regularity in the performance of official functions in the absence of evidence proving misconduct
and/or dishonesty when they inspected the subject property and rendered their report. Thus, the CA disposed:

WHEREFORE, this Court’s Decision dated April 29, 2005 is hereby amended in that the exemption of the subject
landholding from the coverage of the Comprehensive Agrarian Reform Program is hereby lifted, and the 162.7373
hectare-agricultural portion thereof is hereby declared covered by the Comprehensive Agrarian Reform Program.

SO ORDERED.39

Unperturbed, petitioner filed a Motion for Reconsideration.40 On January 8, 2007, MARO Elma, in compliance with
the Memorandum of DAR Regional Director Dominador B. Andres, tendered another Report41 reiterating that, upon
inspection of the subject property, together with petitioner’s counsel-turned witness, Atty. Grace Eloisa J. Que (Atty.
Que), PARO Danilo M. Obarse, Chairman Ruba, and several occupants thereof, he, among others, found no
livestock farm within the subject property. About 43 heads of cattle were shown, but MARO Elma observed that the
same were inside an area adjacent to Palo Alto. Subsequently, upon Atty. Que’s request for reinvestigation,
designated personnel of the DAR Provincial and Regional Offices (Investigating Team) conducted another ocular
inspection on the subject property on February 20, 2007. The Investigating Team, in its Report 42 dated February 21,
2007, found that, per testimony of petitioner’s caretaker, Rogelio Ludivices (Roger), 43 petitioner has 43 heads of
cattle taken care of by the following individuals: i) Josefino Custodio (Josefino) – 18 heads; ii) Andy Amahit – 15
heads; and iii) Bert Pangan – 2 heads; that these individuals pastured the herd of cattle outside the subject property,
while Roger took care of 8 heads of cattle inside the Palo Alto area; that 21 heads of cattle owned by petitioner were
seen in the area adjacent to Palo Alto; that Josefino confirmed to the Investigating Team that he takes care of 18
heads of cattle owned by petitioner; that the said Investigating Team saw 9 heads of cattle in the Palo Alto area, 2 of
which bore "MFI" marks; and that the 9 heads of cattle appear to have matched the Certificates of Ownership of
Large Cattle submitted by petitioner.

Because of the contentious factual issues and the conflicting averments of the parties, the CA set the case for hearing
and reception of evidence on April 24, 2007.44 Thereafter, as narrated by the CA, the following events transpired:
On May 17, 2007, [petitioner] presented the Judicial Affidavits of its witnesses, namely, [petitioner’s] counsel,
[Atty. Que], and the alleged caretaker of [petitioner’s] farm, [Roger], who were both cross-examined by counsel for
farmers-movants and SAPLAG. [Petitioner] and SAPLAG then marked their documentary exhibits.

On May 24, 2007, [petitioner’s] security guard and third witness, Rodolfo G. Febrada, submitted his Judicial
Affidavit and was cross-examined by counsel for fa[r]mers-movants and SAPLAG. Farmers-movants also marked
their documentary exhibits.

Thereafter, the parties submitted their respective Formal Offers of Evidence. Farmers-movants and SAPLAG filed
their objections to [petitioner’s] Formal Offer of Evidence. Later, [petitioner] and farmers-movants filed their
respective Memoranda.

In December 2007, this Court issued a Resolution on the parties’ offer of evidence and considered [petitioner’s]
Motion for Reconsideration submitted for resolution. 45

Finally, petitioner’s motion for reconsideration was denied by the CA in its Resolution 46 dated March 27, 2008. The
CA discarded petitioner’s reliance on Sutton. It ratiocinated that the MARO Reports and the DAR’s Manifestation
could not be disregarded simply because DAR A.O. No. 9 was declared unconstitutional. The Sutton ruling was
premised on the fact that the Sutton property continued to operate as a livestock farm. The CA also reasoned that, in
Sutton, this Court did not remove from the DAR the power to implement the CARP, pursuant to the latter’s
authority to oversee the implementation of agrarian reform laws under Section 50 47 of the CARL. Moreover, the CA
found:

Petitioner-appellant claimed that they had 43 heads of cattle which are being cared for and pastured by 4 individuals.
To prove its ownership of the said cattle, petitioner-appellant offered in evidence 43 Certificates of Ownership of
Large Cattle. Significantly, however, the said Certificates were all dated and issued on November 24, 2006, nearly 2
months after this Court rendered its Amended Decision lifting the exemption of the 162-hectare portion of the
subject landholding. The acquisition of such cattle after the lifting of the exemption clearly reveals that petitioner-
appellant was no longer operating a livestock farm, and suggests an effort to create a semblance of livestock-raising
for the purpose of its Motion for Reconsideration.48

On petitioner’s assertion that between MARO Elma’s Report dated January 8, 2007 and the Investigating Team’s
Report, the latter should be given credence, the CA held that there were no material inconsistencies between the two
reports because both showed that the 43 heads of cattle were found outside the subject property.

Hence, this Petition assigning the following errors:

I.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT HELD THAT LANDS
DEVOTED TO LIVESTOCK FARMING WITHIN THE MEANING OF LUZ FARMS AND SUTTON,
AND WHICH ARE THEREBY EXEMPT FROM CARL COVERAGE, ARE NEVERTHELESS
SUBJECT TO DAR’S CONTINUING VERIFICATION AS TO USE, AND, ON THE BASIS OF SUCH
VERIFICATION, MAY BE ORDERED REVERTED TO AGRICULTURAL CLASSIFICATION AND
COMPULSORY ACQUISITION[;]

II.

GRANTING THAT THE EXEMPT LANDS AFORESAID MAY BE SO REVERTED TO

AGRICULTURAL CLASSIFICATION, STILL THE PROCEEDINGS FOR SUCH PURPOSE
BELONGS TO THE EXCLUSIVE ORIGINAL JURISDICTION OF THE DAR, BEFORE WHICH THE
CONTENDING PARTIES MAY VENTILATE FACTUAL ISSUES, AND AVAIL THEMSELVES OF
USUAL REVIEW PROCESSES, AND NOT TO THE COURT OF APPEALS EXERCISING
 APPELLATE JURISDICTION OVER ISSUES COMPLETELY UNRELATED TO REVERSION [;
AND]

III.

IN ANY CASE, THE COURT OF APPEALS GRAVELY ERRED AND COMMITTED GRAVE ABUSE
OF DISCRETION WHEN IT HELD THAT THE PROPERTY IN DISPUTE IS NO LONGER BEING
USED FOR LIVESTOCK FARMING.49

Petitioner asseverates that lands devoted to livestock farming as of June 15, 1988 are classified as industrial lands,
hence, outside the ambit of the CARP; that Luz Farms, Sutton, and R.A. No. 7881 clearly excluded such lands on
constitutional grounds; that petitioner’s lands were actually devoted to livestock even before the enactment of the
CARL; that livestock farms are exempt from the CARL, not by reason of any act of the DAR, but because of their
nature as industrial lands; that petitioner’s property was admittedly devoted to livestock farming as of June 1988 and
the only issue before was whether or not petitioner’s pieces of evidence comply with the ratios provided under DAR
A.O. No. 9; and that DAR A.O. No. 9 having been declared as unconstitutional, DAR had no more legal basis to
conduct a continuing review and verification proceedings over livestock farms. Petitioner argues that, in cases where
reversion of properties to agricultural use is proper, only the DAR has the exclusive original jurisdiction to hear and
decide the same; hence, the CA, in this case, committed serious errors when it ordered the reversion of the property
and when it considered pieces of evidence not existing as of June 15, 1988, despite its lack of jurisdiction; that the
CA should have remanded the case to the DAR due to conflicting factual claims; that the CA cannot ventilate
allegations of fact that were introduced for the first time on appeal as a supplement to a motion for reconsideration
of its first decision, use the same to deviate from the issues pending review, and, on the basis thereof, declare
exempt lands reverted to agricultural use and compulsorily covered by the CARP; that the "newly discovered [pieces
of] evidence" were not introduced in the proceedings before the DAR, hence, it was erroneous for the CA to
consider them; and that piecemeal presentation of evidence is not in accord with orderly justice. Finally, petitioner
submits that, in any case, the CA gravely erred and committed grave abuse of discretion when it held that the subject
property was no longer used for livestock farming as shown by the Report of the Investigating Team. Petitioner
relies on the 1997 LUCEC and DAR findings that the subject property was devoted to livestock farming, and on the
1999 CA Decision which held that the occupants of the property were squatters, bereft of any authority to stay and
possess the property.50

On one hand, the farmer-groups, represented by the Espinas group, contend that they have been planting rice and
fruit-bearing trees on the subject property, and helped the National Irrigation Administration in setting up an
irrigation system therein in 1997, with a produce of 1,500 to 1,600 sacks of palay each year; that petitioner came to
court with unclean hands because, while it sought the exemption and exclusion of the entire property, unknown to
the CA, petitioner surreptitiously filed for conversion of the property now known as Palo Alto, which was actually
granted by the DAR Secretary; that petitioner’s bad faith is more apparent since, despite the conversion of the
153.3049-hectare portion of the property, it still seeks to exempt the entire property in this case; and that the fact that
petitioner applied for conversion is an admission that indeed the property is agricultural. The farmer-groups also
contend that petitioner’s reliance on Luz Farms and Sutton is unavailing because in these cases there was actually no
cessation of the business of raising cattle; that what is being exempted is the activity of raising cattle and not the
property itself; that exemptions due to cattle raising are not permanent; that the declaration of DAR A.O. No. 9 as
unconstitutional does not at all diminish the mandated duty of the DAR, as the lead agency of the Government, to
implement the CARL; that the DAR, vested with the power to identify lands subject to CARP, logically also has the
power to identify lands which are excluded and/or exempted therefrom; that to disregard DAR’s authority on the
matter would open the floodgates to abuse and fraud by unscrupulous landowners; that the factual finding of the CA
that the subject property is no longer a livestock farm may not be disturbed on appeal, as enunciated by this Court;
that DAR conducted a review and monitoring of the subject property by virtue of its powers under the CARL; and
that the CA has sufficient discretion to admit evidence in order that it could arrive at a fair, just, and equitable ruling
in this case.51

On the other hand, respondent OP, through the Office of the Solicitor General (OSG), claims that the CA correctly
held that the subject property is not exempt from the coverage of the CARP, as substantial pieces of evidence show
that the said property is not exclusively devoted to livestock, swine, and/or poultry raising; that the issues presented
by petitioner are factual in nature and not proper in this case; that under Rule 43 of the 1997 Rules of Civil
Procedure, questions of fact may be raised by the parties and resolved by the CA; that due to the divergence in the
factual findings of the DAR and the OP, the CA was duty bound to review and ascertain which of the said findings
are duly supported by substantial evidence; that the subject property was subject to continuing review and
verification proceedings due to the then prevailing DAR A.O. No. 9; that there is no question that the power to
determine if a property is subject to CARP coverage lies with the DAR Secretary; that pursuant to such power, the
MARO rendered the assailed reports and certification, and the DAR itself manifested before the CA that the subject
property is no longer devoted to livestock farming; and that, while it is true that this Court’s ruling in Luz Farms
declared that agricultural lands devoted to livestock, poultry, and/or swine raising are excluded from the CARP, the
said ruling is not without any qualification.52

In its Reply53 to the farmer-groups’ and to the OSG’s comment, petitioner counters that the farmer-groups have no
legal basis to their claims as they admitted that they entered the subject property without the consent of petitioner;
that the rice plots actually found in the subject property, which were subsequently taken over by squatters, were, in
fact, planted by petitioner in compliance with the directive of then President Ferdinand Marcos for the employer to
provide rice to its employees; that when a land is declared exempt from the CARP on the ground that it is not
agricultural as of the time the CARL took effect, the use and disposition of that land is entirely and forever beyond
DAR’s jurisdiction; and that, inasmuch as the subject property was not agricultural from the very beginning, DAR
has no power to regulate the same. Petitioner also asserts that the CA cannot uncharacteristically assume the role of
trier of facts and resolve factual questions not previously adjudicated by the lower tribunals; that MARO Elma
rendered the assailed MARO reports with bias against petitioner, and the same were contradicted by the
Investigating Team’s Report, which confirmed that the subject property is still devoted to livestock farming; and that
there has been no change in petitioner’s business interest as an entity engaged in livestock farming since its
inception in 1960, though there was admittedly a decline in the scale of its operations due to the illegal acts of the
squatter-occupants.

Our Ruling

The Petition is bereft of merit.

Let it be stressed that when the CA provided in its first Decision that continuing review and verification may be
conducted by the DAR pursuant to DAR A.O. No. 9, the latter was not yet declared unconstitutional by this Court.
The first CA Decision was promulgated on April 29, 2005, while this Court struck down as unconstitutional DAR
A.O. No. 9, by way of Sutton, on October 19, 2005. Likewise, let it be emphasized that the Espinas group filed the
Supplement and submitted the assailed MARO reports and certification on June 15, 2005, which proved to be
adverse to petitioner’s case. Thus, it could not be said that the CA erred or gravely abused its discretion in respecting
the mandate of DAR A.O. No. 9, which was then subsisting and in full force and effect.

While it is true that an issue which was neither alleged in the complaint nor raised during the trial cannot be raised
for the first time on appeal as it would be offensive to the basic rules of fair play, justice, and due process, 54 the
same is not without exception,55 such as this case. The CA, under Section 3,56 Rule 43 of the Rules of Civil
Procedure, can, in the interest of justice, entertain and resolve factual issues. After all, technical and procedural rules
are intended to help secure, and not suppress, substantial justice. A deviation from a rigid enforcement of the rules
may thus be allowed to attain the prime objective of dispensing justice, for dispensation of justice is the core reason
for the existence of courts.57 Moreover, petitioner cannot validly claim that it was deprived of due process because
the CA afforded it all the opportunity to be heard. 58 The CA even directed petitioner to file its comment on the
Supplement, and to prove and establish its claim that the subject property was excluded from the coverage of the
CARP. Petitioner actively participated in the proceedings before the CA by submitting pleadings and pieces of
documentary evidence, such as the Investigating Team’s Report and judicial affidavits. The CA also went further by
setting the case for hearing. In all these proceedings, all the parties’ rights to due process were amply protected and
recognized.

With the procedural issue disposed of, we find that petitioner’s arguments fail to persuade. Its invocation of Sutton
is unavailing. In Sutton, we held:
In the case at bar, we find that the impugned A.O. is invalid as it contravenes the Constitution. The A.O. sought to
regulate livestock farms by including them in the coverage of agrarian reform and prescribing a maximum retention
limit for their ownership. However, the deliberations of the 1987 Constitutional Commission show a clear intent to
exclude, inter alia, all lands exclusively devoted to livestock, swine and poultry-raising. The Court clarified in
the Luz Farms case that livestock, swine and poultry-raising are industrial activities and do not fall within the
definition of "agriculture" or "agricultural activity." The raising of livestock, swine and poultry is different from
crop or tree farming. It is an industrial, not an agricultural, activity. A great portion of the investment in this
enterprise is in the form of industrial fixed assets, such as: animal housing structures and facilities, drainage,
waterers and blowers, feedmill with grinders, mixers, conveyors, exhausts and generators, extensive warehousing
facilities for feeds and other supplies, anti-pollution equipment like bio-gas and digester plants augmented by
lagoons and concrete ponds, deepwells, elevated water tanks, pumphouses, sprayers, and other technological
appurtenances.

Clearly, petitioner DAR has no power to regulate livestock farms which have been exempted by the Constitution
from the coverage of agrarian reform. It has exceeded its power in issuing the assailed A.O. 59

Indeed, as pointed out by the CA, the instant case does not rest on facts parallel to those of Sutton because, in
Sutton, the subject property remained a livestock farm. We even highlighted therein the fact that "there has been no
change of business interest in the case of respondents."60 Similarly, in Department of Agrarian Reform v. Uy, 61 we
excluded a parcel of land from CARP coverage due to the factual findings of the MARO, which were confirmed by
the DAR, that the property was entirely devoted to livestock farming. However, in A.Z. Arnaiz Realty, Inc.,
represented by Carmen Z. Arnaiz v. Office of the President; Department of Agrarian Reform; Regional Director,
DAR Region V, Legaspi City; Provincial Agrarian Reform Officer, DAR Provincial Office, Masbate, Masbate; and
Municipal Agrarian Reform Officer, DAR Municipal Office, Masbate, Masbate, 62 we denied a similar petition for
exemption and/or exclusion, by according respect to the CA’s factual findings and its reliance on the findings of the
DAR and the OP that

the subject parcels of land were not directly, actually, and exclusively used for pasture. 63

Petitioner’s admission that, since 2001, it leased another ranch for its own livestock is fatal to its cause.64 While
petitioner advances a defense that it leased this ranch because the occupants of the subject property harmed its cattle,
like the CA, we find it surprising that not even a single police and/or barangay report was filed by petitioner to
amplify its indignation over these alleged illegal acts. Moreover, we accord respect to the CA’s keen observation
that the assailed MARO reports and the Investigating Team’s Report do not actually contradict one another, finding
that the 43 cows, while owned by petitioner, were actually pastured outside the subject property.

Finally, it is established that issues of Exclusion and/or Exemption are characterized as Agrarian Law
Implementation (ALI) cases which are well within the DAR Secretary’s competence and jurisdiction. 65 Section 3,
Rule II of the 2003 Department of Agrarian Reform Adjudication Board Rules of Procedure provides:

Section 3. Agrarian Law Implementation Cases.

The Adjudicator or the Board shall have no jurisdiction over matters involving the administrative implementation of
RA No. 6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL) of 1988 and other agrarian
laws as enunciated by pertinent rules and administrative orders, which shall be under the exclusive prerogative of
and cognizable by the Office of the Secretary of the DAR in accordance with his issuances, to wit:

xxxx

3.8 Exclusion from CARP coverage of agricultural land used for livestock, swine, and poultry raising.

Thus, we cannot, without going against the law, arbitrarily strip the DAR Secretary of his legal mandate to exercise
jurisdiction and authority over all ALI cases. To succumb to petitioner’s contention that "when a land is declared
exempt from the CARP on the ground that it is not agricultural as of the time the CARL took effect, the use and
disposition of that land is entirely and forever beyond DAR’s jurisdiction" is dangerous, suggestive of self-
regulation. Precisely, it is the DAR Secretary who is vested with such jurisdiction and authority to exempt and/or
exclude a property from CARP coverage based on the factual circumstances of each case and in accordance with
law and applicable jurisprudence. In addition, albeit parenthetically, Secretary Villa had already granted the
conversion into residential and golf courses use of nearly one-half of the entire area originally claimed as exempt
from CARP coverage because it was allegedly devoted to livestock production.lawphil1

In sum, we find no reversible error in the assailed Amended Decision and Resolution of the CA which would
warrant the modification, much less the reversal, thereof.

WHEREFORE, the Petition is DENIED and the Court of Appeals Amended Decision dated October 4, 2006 and
Resolution dated March 27, 2008 are AFFIRMED. No costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 100091 October 22, 1992

CENTRAL MINDANAO UNIVERSITY REPRESENTED ITS PRESIDENT DR. LEONARDO A.

CHUA, petitioner,
vs.
THE DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD, THE COURT OF APPEALS
and ALVIN OBRIQUE, REPRESENTING BUKIDNON FREE FARMERS AGRICULTURAL LABORERS
ORGANIZATION (BUFFALO), respondents.

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 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, 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 1960's, 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 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 the name of the petitioner under OCT Nos. 160,
161 and 162. 1

In the course of the cadastral hearing of the school's 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 3,080 hectares.

In the early 1960's, 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 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 participant's 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 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 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 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 socio-economic and technical training in actual field project implementation and augment the
income of the faculty and the staff.

Under the terms of a 3-party Memorandum of Agreement 2 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 participant's 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 member of their family to establish any house or live within 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 participants.

Under the terms of a contract called Addendum To Existing Memorandum of Agreement Concerning Participation
To the CMU-Income Enhancement Program, 3 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 participant's 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.

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
DARAB's 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 participant's 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 participants' 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 Physics Instructor at CMU holding a very responsible position 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 CMU's 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 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 CMU's 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 one whom he believes holds title to the land, is a
squatter. 4 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.

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 is directly used without
any intervening agency or person", 5 and "there is no definite and concrete showing that the use of said lands are
essentially indispensable for educational purposes". 6 The reliance by the respondents Board and Appellate Tribunal
on the technical or literal definition from Moreno's Philippine Law Dictionary and Black's 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 devoted to or suitable for agriculture.
No reclassification of forest of 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 ad 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, reforestration, 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 research 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. (Emphasis 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 and 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
Mid-West. 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 earnings from miscellaneous sources. 7 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 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 and exploit its 3080-hectare land reservation as follows: 8

No. of Hectares Percentage

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 reservation 308 10

f. Fruit and Trees Crops 154 5

g. Agricultural
Experimental stations 123.20 4

3,080.00 100%

The first land use plan of the CARP 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 Sariling Sikap Project"
(CMU-KSSP). The objectives 9 of this program were:
 1. Provide researches 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
lowland rice project for the party of the Second Part for a period of one calendar year subject to
discretionary 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 adjunct to the CMU's 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 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:

(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. (Emphasis supplied).

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 CMU's 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 DARAB's lack of jurisdiction and has questioned the respondent's 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 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 Board under the office of the Secretary. . . . The Board shall
assume the powers and functions with respect to adjudication of agrarian reform cases under
Executive Order 229 and this Executive Order . . .

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. 6658 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. . . .

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 stewardship or otherwise over lands devoted to
agriculture. 10

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. w do not believe that the quasi-judicial function of the
DARAB carries with it greater authority than ordinary 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
segregation 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 was asked by the complainants who were not entitled to
the relief prayed 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 socio-
economic 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, 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
 FIRST DIVISION

G.R. No. 158228 March 23, 2004

DEPARTMENT OF AGRARIAN REFORM, as represented by its Secretary, ROBERTO M.

PAGDANGANAN, petitioner,
vs.
DEPARTMENT OF EDUCATION, CULTURE AND SPORTS (DECS), respondent.

DECISION

YNARES-SANTIAGO, J.:

This petition for review on certiorari seeks to set aside the decision1 of the Court of Appeals dated October 29, 2002
in CA-G.R. SP No. 64378, which reversed the August 30, 2000 decision of the Secretary of Agrarian Reform, as
well as the Resolution dated May 7, 2003, which denied petitioner’s motion for reconsideration.

In controversy are Lot No. 2509 and Lot No. 817-D consisting of an aggregate area of 189.2462 hectares located at
Hacienda Fe, Escalante, Negros Occidental and Brgy. Gen. Luna, Sagay, Negros Occidental, respectively. On
October 21, 1921, these lands were donated by the late Esteban Jalandoni to respondent DECS (formerly Bureau of
Education).2 Consequently, titles thereto were transferred in the name of respondent DECS under Transfer
Certificate of Title No. 167175.3

On July 15, 1985, respondent DECS leased the lands to Anglo Agricultural Corporation for 10 agricultural crop
years, commencing from crop year 1984-1985 to crop year 1993-1994. The contract of lease was subsequently
renewed for another 10 agricultural crop years, commencing from crop year 1995-1996 to crop year 2004-2005.4

On June 10, 1993, Eugenio Alpar and several others, claiming to be permanent and regular farm workers of the
subject lands, filed a petition for Compulsory Agrarian Reform Program (CARP) coverage with the Municipal
Agrarian Reform Office (MARO) of Escalante.5

After investigation, MARO Jacinto R. Piñosa, sent a "Notice of Coverage" to respondent DECS, stating that the
subject lands are now covered by CARP and inviting its representatives for a conference with the farmer
beneficiaries.6 Then, MARO Piñosa submitted his report to OIC-PARO Stephen M. Leonidas, who recommended to
the DAR Regional Director the approval of the coverage of the landholdings.

On August 7, 1998, DAR Regional Director Dominador B. Andres approved the recommendation, the dispositive
portion of which reads:

WHEREFORE, all the foregoing premises considered, the petition is granted. Order is hereby issued:

1. Placing under CARP coverage Lot 2509 with an area of 111.4791 hectares situated at Had. Fe,
Escalante, Negros Occidental and Lot 817-D with an area of 77.7671 hectares situated at Brgy. Gen. Luna,
Sagay, Negros Occidental;

2. Affirming the notice of coverage sent by the DAR Provincial Office, Negros Occidental dated November
23, 1994;

3. Directing the Provincial Agrarian Reform Office of Negros Occidental and the Municipal Agrarian
Reform Officers of Sagay and Escalante to facilitate the acquisition of the subject landholdings and the
distribution of the same qualified beneficiaries.

SO ORDERED.7
Respondent DECS appealed the case to the Secretary of Agrarian Reform which affirmed the Order of the Regional
Director. 8

Aggrieved, respondent DECS filed a petition for certiorari with the Court of Appeals, which set aside the decision
of the Secretary of Agrarian Reform.9

Hence, the instant petition for review.

The pivotal issue to be resolved in this case is whether or not the subject properties are exempt from the coverage of
Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1998 (CARL).

The general policy under CARL is to cover as much lands suitable for agriculture as possible.10 Section 4 of R.A.
No. 6657 sets out the coverage of CARP. It states that the program 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 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.

Section 3(c) thereof defines "agricultural land," as "land devoted to agricultural activity as defined in this Act and
not classified as mineral, forest, residential, commercial or industrial land." The term "agriculture" or "agricultural
activity" is also defined by the same law as follows:

Agriculture, Agricultural Enterprises or Agricultural Activity means the cultivation of the soil, planting of crops,
growing of fruit trees, raising of livestock, poultry or fish, including the harvesting of such farm products, and other
farm activities, and practices performed by a farmer in conjunction with such farming operations done by persons
whether natural or juridical.11

The records of the case show that the subject properties were formerly private agricultural lands owned by the late
Esteban Jalandoni, and were donated to respondent DECS. From that time until they were leased to Anglo
Agricultural Corporation, the lands continued to be agricultural primarily planted to sugarcane, albeit part of the
public domain being owned by an agency of the government. 12 Moreover, there is no legislative or presidential act,
before and after the enactment of R.A. No. 6657, classifying the said lands as mineral, forest, residential,
commercial or industrial land. Indubitably, the subject lands fall under the classification of lands of the public
domain devoted to or suitable for agriculture.

Respondent DECS sought exemption from CARP coverage on the ground that all the income derived from its
contract of lease with Anglo Agricultural Corporation were actually, directly and exclusively used for educational
purposes, such as for the repairs and renovations of schools in the nearby locality.
Petitioner DAR, on the other hand, argued that the lands subject hereof are not exempt from the CARP coverage
because the same are not actually, directly and exclusively used as school sites or campuses, as they are in fact
leased to Anglo Agricultural Corporation. Further, to be exempt from the coverage, it is the land per se, not the
income derived therefrom, that must be actually, directly and exclusively used for educational purposes.

We agree with the petitioner.

Section 10 of R.A. No. 6657 enumerates the types of lands which are exempted from the coverage of CARP as well
as the purposes of their exemption, viz:

xxxxxxxxx

c) Lands actually, directly and exclusively used and found to be necessary for national defense, school sites and
campuses, including experimental farm stations operated by public or private schools for educational purposes, … ,
shall be exempt from the coverage of this Act.13

xxxxxxxxx

Clearly, a reading of the paragraph shows that, in order to be exempt from the coverage: 1) the land must be
"actually, directly, and exclusively used and found to be necessary;" and 2) the purpose is "for school sites and
campuses, including experimental farm stations operated by public or private schools for educational purposes."

The importance of the phrase "actually, directly, and exclusively used and found to be necessary" cannot be
understated, as what respondent DECS would want us to do by not taking the words in their literal and technical
definitions. The words of the law are clear and unambiguous. Thus, the "plain meaning rule" or verba legis in
statutory construction is applicable in this case. Where the words of a statute are clear, plain and free from
ambiguity, it must be given its literal meaning and applied without attempted interpretation. 14

We are not unaware of our ruling in the case of Central Mindanao University v. Department of Agrarian Reform
Adjudication Board,15 wherein we declared the land subject thereof exempt from CARP coverage. However,
respondent DECS’ reliance thereon is misplaced because the factual circumstances are different in the case at bar.

Firstly, in the CMU case, the land involved was not alienable and disposable land of the public domain because it
was reserved by the late President Carlos P. Garcia under Proclamation No. 476 for the use of Mindanao
Agricultural College (now CMU).16 In this case, however, the lands fall under the category of alienable and
disposable lands of the public domain suitable for agriculture.

Secondly, in the CMU case, the land was actually, directly and exclusively used and found to be necessary for school
sites and campuses. Although a portion of it was being used by the Philippine Packing Corporation (now Del Monte
Phils., Inc.) under a "Management and Development Agreement", the undertaking was that the land shall be used by
the Philippine Packing Corporation as part of the CMU research program, with direct participation of faculty and
students. Moreover, the land was part of the land utilization program developed by the CMU for its "Kilusang
Sariling Sikap Project" (CMU-KSSP), a multi-disciplinary applied research extension and productivity
program.17 Hence, the retention of the land was found to be necessary for the present and future educational needs of
the CMU. On the other hand, the lands in this case were not actually and exclusively utilized as school sites and
campuses, as they were leased to Anglo Agricultural Corporation, not for educational purposes but for the
furtherance of its business. Also, as conceded by respondent DECS, it was the income from the contract of lease and
not the subject lands that was directly used for the repairs and renovations of the schools in the locality.

Anent the issue of whether the farmers are qualified beneficiaries of CARP, we disagree with the Court of Appeals’
finding that they were not.
At the outset, it should be pointed out that the identification of actual and potential beneficiaries under CARP is
vested in the Secretary of Agrarian Reform pursuant to Section 15, R.A. No. 6657, which states:

SECTION 15. Registration of Beneficiaries. — The DAR in coordination with the Barangay Agrarian Reform
Committee (BARC) as organized in this Act, shall register all agricultural lessees, tenants and farmworkers who are
qualified to be beneficiaries of the CARP. These potential beneficiaries with the assistance of the BARC and the
DAR shall provide the following data:

(a) names and members of their immediate farm household;

(b) owners or administrators of the lands they work on and the length of tenurial relationship;

(c) location and area of the land they work;

(d) crops planted; and

(e) their share in the harvest or amount of rental paid or wages received.

A copy of the registry or list of all potential CARP beneficiaries in the barangay shall be posted in the barangay hall,
school or other public buildings in the barangay where it shall be open to inspection by the public at all reasonable
hours.

In the case at bar, the BARC certified that herein farmers were potential CARP beneficiaries of the subject
properties.18 Further, on November 23, 1994, the Secretary of Agrarian Reform through the Municipal Agrarian
Reform Office (MARO) issued a Notice of Coverage placing the subject properties under CARP. Since the
identification and selection of CARP beneficiaries are matters involving strictly the administrative implementation
of the CARP,19 it behooves the courts to exercise great caution in substituting its own determination of the issue,
unless there is grave abuse of discretion committed by the administrative agency. In this case, there was none.

The Comprehensive Agrarian Reform Program (CARP) is the bastion of social justice of poor landless farmers, the
mechanism designed to redistribute to the underprivileged the natural right to toil the earth, and to liberate them
from oppressive tenancy. To those who seek its benefit, it is the means towards a viable livelihood and, ultimately, a
decent life. The objective of the State is no less certain: "landless farmers and farmworkers will receive the highest
consideration to promote social justice and to move the nation toward sound rural development and
industrialization."20

WHEREFORE, in view of the foregoing, the petition is GRANTED. The decision of the Court of Appeals dated
October 29, 2002, in CA-G.R. SP No. 64378 is REVERSED and SET ASIDE. The decision dated August 30, 2000
of the Secretary of Agrarian Reform placing the subject lands under CARP coverage, is REINSTATED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 149548 December 4, 2009

ROXAS & COMPANY, INC., Petitioner,

vs.
DAMBA-NFSW and the DEPARTMENT OF AGRARIAN REFORM,* Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 167505 December 4, 2009

DAMAYAN NG MGA MANGGAGAWANG BUKID SA ASYENDA ROXAS-NATIONAL FEDERATION

OF SUGAR WORKERS (DAMBA-NFSW) Petitioner,
vs.
SECRETARY OF THE DEPT. OF AGRARIAN REFORM, ROXAS & Co., INC. AND/OR ATTY.
MARIANO AMPIL, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 167540 December 4, 2009

KATIPUNAN NG MGA MAGBUBUKID SA HACIENDA ROXAS, INC. (KAMAHARI), rep. by its

President CARLITO CAISIP, and DAMAYAN NG MANGGAGAWANG BUKID SA ASYENDA ROXAS-
NATIONAL FEDERATION OF SUGAR WORKERS (DAMBA-NFSW), represnted by LAURO
MARTIN, Petitioners,
vs.
SECRETARY OF THE DEPT. OF AGRARIAN REFORM, ROXAS & Co., INC., Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 167543 December 4, 2009

DEPARTMENT OF LAND REFORM, FORMERLY DEPARTMENT OF AGRARIAN REFORM

(DAR), Petitioner,
vs.
ROXAS & CO, INC., Respondent.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 167845 December 4, 2009

ROXAS & CO., INC., Petitioner,

vs.
DAMBA-NFSW, Respondent.

x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 169163 December 4, 2009

DAMBA-NFSW REPRESENTED BY LAURO V. MARTIN, Petitioner,

vs.
ROXAS & CO., INC., Respondent.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 179650 December 4, 2009

DAMBA-NFSW, Petitioner,
vs.
ROXAS & CO., INC., Respondent.

DECISION

CARPIO MORALES, J.

The main subject of the seven consolidated petitions is the application of petitioner Roxas & Co., Inc. (Roxas & Co.)
for conversion from agricultural to non-agricultural use of its three haciendas located in Nasugbu, Batangas
containing a total area of almost 3,000 hectares. The facts are not new, the Court having earlier resolved intimately-
related issues dealing with these haciendas. Thus, in the 1999 case of Roxas & Co., Inc. v. Court of Appeals,1 the
Court presented the facts as follows:

. . . Roxas & Co. is a domestic corporation and is the registered owner of three haciendas, namely, Haciendas
Palico, Banilad and Caylaway, all located in the Municipality of Nasugbu, Batangas. Hacienda Palico is 1,024
hectares in area and is registered under Transfer Certificate of Title (TCT) No. 985. This land is covered by Tax
Declaration Nos. 0465, 0466, 0468, 0470, 0234 and 0354. Hacienda Banilad is 1,050 hectares in area, registered
under TCT No. 924 and covered by Tax Declaration Nos. 0236, 0237 and 0390. Hacienda Caylaway is 867.4571
hectares in area and is registered under TCT Nos. T-44662, T-44663, T-44664 and T-44665.

xxxx

On July 27, 1987, the Congress of the Philippines formally convened and took over legislative power from the
President. This Congress passed Republic Act No. 6657, the Comprehensive Agrarian Reform Law (CARL) of
1988. The Act was signed by the President on June 10, 1988 and took effect on June 15, 1988.

Before the law’s effectivity, on May 6, 1988, [Roxas & Co.] filed with respondent DAR a voluntary offer to sell
[VOS] Hacienda Caylaway pursuant to the provisions of E.O. No. 229. Haciendas Palico and Banilad were later
placed under compulsory acquisition by … DAR in accordance with the CARL.

xxxx

Nevertheless, on August 6, 1992, [Roxas & Co.], through its President, Eduardo J. Roxas, sent a letter to the
Secretary of …DAR withdrawing its VOS of Hacienda Caylaway. The Sangguniang Bayan of Nasugbu,
Batangas allegedly authorized the reclassification of Hacienda Caylaway from agricultural to non-
agricultural. As a result, petitioner informed respondent DAR that it was applying for conversion of Hacienda
Caylaway from agricultural to other uses.

x x x x2 (emphasis and underscoring supplied)

The petitions in G.R. Nos. 167540 and 167543 nub on the interpretation of Presidential Proclamation (PP) 1520
which was issued on November 28, 1975 by then President Ferdinand Marcos. The PP reads:
 DECLARING THE MUNICIPALITIES OF MARAGONDON AND TERNATE IN CAVITE PROVINCE AND
THE MUNICIPALITY OF NASUGBU IN BATANGAS AS A TOURIST ZONE, AND FOR OTHER PURPOSES

WHEREAS, certain areas in the sector comprising the Municipalities of Maragondon and Ternate in Cavite
Province and Nasugbu in Batangas have potential tourism value after being developed into resort complexes for
the foreign and domestic market; and

WHEREAS, it is necessary to conduct the necessary studies and to segregate specific geographic areas for
concentrated efforts of both the government and private sectors in developing their tourism potential;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in
me by the Constitution, do hereby declare the area comprising the Municipalities of Maragondon and Ternate in
Cavite Province and Nasugbu in Batangas Province as a tourist zone under the administration and control of the
Philippine Tourism Authority (PTA) pursuant to Section 5 (D) of P.D. 564.

The PTA shall identify well-defined geographic areas within the zone with potential tourism value, wherein
optimum use of natural assets and attractions, as well as existing facilities and concentration of efforts and limited
resources of both government and private sector may be affected and realized in order to generate foreign exchange
as well as other tourist receipts.

Any duly established military reservation existing within the zone shall be excluded from this proclamation.

All proclamation, decrees or executive orders inconsistent herewith are hereby revoked or modified accordingly.
(emphasis and underscoring supplied).

The incidents which spawned the filing of the petitions in G.R. Nos. 149548, 167505, 167845, 169163 and 179650
are stated in the dissenting opinion of Justice Minita Chico-Nazario, the original draft of which was made the basis
of the Court’s deliberations.

Essentially, Roxas & Co. filed its application for conversion of its three haciendas from argricultural to non-
agricultural on the assumption that the issuance of PP 1520 which declared Nasugbu, Batangas as a tourism zone,
reclassified them to non-agricultural uses. Its pending application notwithstanding, the Department of Agrarian
Reform (DAR) issued Certificates of Land Ownership Award (CLOAs) to the farmer-beneficiaries in the
three haciendas including CLOA No. 6654 which was issued on October 15, 1993 covering 513.983 hectares, the
subject of G.R. No. 167505.

The application for conversion of Roxas & Co. was the subject of the above-stated Roxas & Co., Inc. v. Court of
Appeals which the Court remanded to the DAR for the observance of proper acquisition proceedings. As reflected in
the above-quoted statement of facts in said case, during the pendency before the DAR of its application for
conversion following its remand to the DAR or on May 16, 2000, Roxas & Co. filed with the DAR an application
for exemption from the coverage of the Comprehensive Agrarian Reform Program (CARP) of 1988 on the basis of
PP 1520 and of DAR Administrative Order (AO) No. 6, Series of 1994 3 which states that all lands already classified
as commercial, industrial, or residential before the effectivity of CARP no longer need conversion clearance from
the DAR.

It bears mentioning at this juncture that on April 18, 1982, the Sangguniang Bayan of Nasugbu enacted Municipal
Zoning Ordinance No. 4 (Nasugbu MZO No. 4) which was approved on May 4, 1983 by the Human Settlements
Regulation Commission, now the Housing and Land Use Regulatory Board (HLURB).

The records show that Sangguniang Bayan and Association of Barangay Captains of Nasugbu filed before this Court
petitions for intervention which were, however, denied by Resolution of June 5, 2006 for lack of standing. 4
After the seven present petitions were consolidated and referred to the Court en banc, 5 oral arguments were
conducted on July 7, 2009.

The core issues are:

1. Whether PP 1520 reclassified in 1975 all lands in the Maragondon-Ternate-Nasugbu tourism zone to
non-agricultural use to exempt Roxas & Co.’s three haciendas in Nasugbu from CARP coverage;

2. Whether Nasugbu MSO No. 4, Series of 1982 exempted certain lots in Hacienda Palico from CARP
coverage; and

3. Whether the partial and complete cancellations by the DAR of CLOA No. 6654 subject of G.R. No.
167505 is valid.

The Court shall discuss the issues in seriatim.

I. PP 1520 DID NOT AUTOMATICALLY CONVERT THE AGRICULTURAL LANDS IN THE THREE
MUNICIPALITIES INCLUDING NASUGBU TO NON-AGRICULTURAL LANDS.

Roxas & Co. contends that PP 1520 declared the three municipalities as each constituting a tourism zone,
reclassified all lands therein to tourism and, therefore, converted their use to non-agricultural purposes.

To determine the chief intent of PP 1520, reference to the "whereas clauses" is in order. By and large, a reference to
the congressional deliberation records would provide guidance in dissecting the intent of legislation. But since PP
1520 emanated from the legislative powers of then President Marcos during martial rule, reference to the whereas
clauses cannot be dispensed with.6

The perambulatory clauses of PP 1520 identified only "certain areas in the sector comprising the [three
Municipalities that] have potential tourism value" and mandated the conduct of "necessary studies" and the
segregation of "specific geographic areas" to achieve its purpose. Which is why the PP directed the Philippine
Tourism Authority (PTA) to identify what those potential tourism areas are. If all the lands in those tourism zones
were to be wholly converted to non-agricultural use, there would have been no need for the PP to direct the PTA to
identify what those "specific geographic areas" are.

The Court had in fact passed upon a similar matter before. Thus in DAR v. Franco,7 it pronounced:

Thus, the DAR Regional Office VII, in coordination with the Philippine Tourism Authority, has to determine
precisely which areas are for tourism development and excluded from the Operation Land Transfer and the
Comprehensive Agrarian Reform Program. And suffice it to state here that the Court has repeatedly ruled that lands
already classified as non-agricultural before the enactment of RA 6657 on 15 June 1988 do not need any conversion
clearance.8 (emphasis and underscoring supplied).

While the above pronouncement in Franco is an obiter, it should not be ignored in the resolution of the present
petitions since it reflects a more rational and just interpretation of PP 1520. There is no prohibition in embracing the
rationale of an obiter dictum in settling controversies, or in considering related proclamations establishing tourism
zones.

In the above-cited case of Roxas & Co. v. CA,9 the Court made it clear that the "power to determine whether
Haciendas Palico, Banilad and Caylaway are non-agricultural, hence, exempt from the coverage of the
[Comprehensive Agrarian Reform Law] lies with the [Department of Agrarian Reform], not with this Court."10 The
DAR, an administrative body of special competence, denied, by Order of October 22, 2001, the application for
CARP exemption of Roxas & Co., it finding that PP 1520 did not automatically reclassify all the lands in the
affected municipalities from their original uses. It appears that the PTA had not yet, at that time, identified the
"specific geographic areas" for tourism development and had no pending tourism development projects in the areas.
Further, report from the Center for Land Use Policy Planning and Implementation (CLUPPI) indicated that the areas
were planted with sugar cane and other crops.11

Relatedly, the DAR, by Memorandum Circular No. 7, Series of 2004, 12 came up with clarificatory guidelines and
therein decreed that

A. x x x x.

B. Proclamations declaring general areas such as whole provinces, municipalities, barangays, islands or peninsulas
as tourist zones that merely:

(1) recognize certain still unidentified areas within the covered provinces, municipalities, barangays,
islands, or peninsulas to be with potential tourism value and charge the Philippine Tourism Authority with
the task to identify/delineate specific geographic areas within the zone with potential tourism value and to
coordinate said areas’ development; or

(2) recognize the potential value of identified spots located within the general area declared as tourist zone
(i.e. x x x x) and direct the Philippine Tourism Authority to coordinate said areas’ development;

could not be regarded as effecting an automatic reclassification of the entirety of the land area declared as tourist
zone. This is so because "reclassification of lands" denotes their allocation into some specific use and "providing for
the manner of their utilization and disposition (Sec. 20, Local Government Code) or the "act of specifying how
agricultural lands shall be utilized for non-agricultural uses such as residential, industrial, or commercial, as
embodied in the land use plan." (Joint HLURB, DAR, DA, DILG Memo. Circular Prescribing Guidelines for MC
54, S. 1995, Sec.2)

A proclamation that merely recognizes the potential tourism value of certain areas within the general area declared
as tourist zone clearly does not allocate, reserve, or intend the entirety of the land area of the zone for non-
agricultural purposes. Neither does said proclamation direct that otherwise CARPable lands within the zone shall
already be used for purposes other than agricultural.

Moreover, to view these kinds of proclamation as a reclassification for non-agricultural purposes of entire provinces,
municipalities, barangays, islands, or peninsulas would be unreasonable as it amounts to an automatic and sweeping
exemption from CARP in the name of tourism development. The same would also undermine the land use
reclassification powers vested in local government units in conjunction with pertinent agencies of government.

C. There being no reclassification, it is clear that said proclamations/issuances, assuming [these] took effect before
June 15, 1988, could not supply a basis for exemption of the entirety of the lands embraced therein from CARP
coverage x x x x.

D. x x x x. (underscoring in the original; emphasis and italics supplied)

The DAR’s reading into these general proclamations of tourism zones deserves utmost consideration, more
especially in the present petitions which involve vast tracts of agricultural land. To reiterate, PP 1520 merely
recognized the "potential tourism value" of certain areas within the general area declared as tourism zones. It did not
reclassify the areas to non-agricultural use.

Apart from PP 1520, there are similarly worded proclamations declaring the whole of Ilocos Norte and Bataan
Provinces, Camiguin, Puerto Prinsesa, Siquijor, Panglao Island, parts of Cebu City and Municipalities of Argao and
Dalaguete in Cebu Province as tourism zones.13
Indubitably, these proclamations, particularly those pertaining to the Provinces of Ilocos Norte and Bataan, did not
intend to reclassify all agricultural lands into non-agricultural lands in one fell swoop. The Court takes notice of how
the agrarian reform program was—and still is—implemented in these provinces since there are lands that do not
have any tourism potential and are more appropriate for agricultural utilization.

Relatedly, a reference to the Special Economic Zone Act of 1995 14 provides a parallel orientation on the issue.
Under said Act, several towns and cities encompassing the whole Philippines were readily identified as economic
zones.15 To uphold Roxas & Co.’s reading of PP 1520 would see a total reclassification of practically all the
agricultural lands in the country to non-agricultural use. Propitiously, the legislature had the foresight to include a
bailout provision in Section 31 of said Act for land conversion.16 The same cannot be said of PP 1520, despite the
existence of Presidential Decree (PD) No. 27 or the Tenant Emancipation Decree, 17 which is the precursor of the
CARP.

Interestingly, then President Marcos also issued on September 26, 1972 PD No. 2 which declared the entire
Philippines as land reform area.18 Such declaration did not intend to reclassify all lands in the entire country to
agricultural lands. President Marcos, about a month later or on October 21, 1972, issued PD 27 which decreed that
all private agricultural lands primarily devoted to rice and corn were deemed awarded to their tenant-farmers.

Given these martial law-era decrees and considering the socio-political backdrop at the time PP 1520 was issued in
1975, it is inconceivable that PP 1520, as well as other similarly worded proclamations which are completely silent
on the aspect of reclassification of the lands in those tourism zones, would nullify the gains already then achieved by
PD 27.

Even so, Roxas & Co. turns to Natalia Realty v. DAR and NHA v. Allarde to support its position. These cases are
not even closely similar to the petitions in G.R. Nos. 167540 and 167543. The only time that these cases may find
application to said petitions is when the PTA actually identifies "well-defined geographic areas within the zone with
potential tourism value."

In remotely tying these two immediately-cited cases that involve specific and defined townsite reservations for the
housing program of the National Housing Authority to the present petitions, Roxas & Co. cites Letter of Instructions
No. 352 issued on December 22, 1975 which states that the survey and technical description of the tourism zones
shall be considered an integral part of PP 1520. There were, however, at the time no surveys and technical
delineations yet of the intended tourism areas.

On hindsight, Natalia and Allarde find application in the petitions in G.R. Nos. 179650 & 167505, which petitions
are anchored on the extenuating effects of Nasugbu MZO No. 4, but not in the petitions in G.R. Nos. 167540 &
167543 bearing on PP 1520, as will later be discussed.

Of significance also in the present petitions is the issuance on August 3, 2007 of Executive Order No. 647 19 by
President Arroyo which proclaimed the areas in the Nasugbu Tourism Development Plan as Special Tourism Zone.
Pursuant to said Executive Order, the PTA completed its validation of 21 out of 42 barangays as tourism priority
areas, hence, it is only after such completion that these identified lands may be subjected to reclassification
proceedings.

It bears emphasis that a mere reclassification of an agricultural land does not automatically allow a landowner to
change its use since there is still that process of conversion before one is permitted to use it for other purposes.20

The recent passage of the Tourism Act of 200921 also impacts on the present petitions since Section 32 thereof states
that:

Sec. 32. x x x x. - Any other area specifically defined as a tourism area, zone or spot under any special or general
law, decree or presidential issuance shall, as far as practicable, be organized into a TEZ under the provisions of
this Act. x x x x. (italics and emphasis supplied)
Furthermore, it is only under this same Act that it is explicitly declared that lands identified as part of a tourism zone
shall qualify for exemption from CARP coverage.22

The dissenting opinion ignores the supervening issuances mentioned above during the pendency of the present
petitions because they came after the effectivity of the CARP on June 15, 1988. It labors on the supposition that PP
1520 had already reclassified the lands encompassing the tourism zones; and that those subsequent issuances, even if
applied in the present cases, cannot be applied retroactively.

Relevantly, while it may be argued that a remand to the DAR would be proper in light of the recent formulation of a
tourism development plan, which was validated by the PTA, that would put the cases within the ambit of PP 1520,
the Court sees otherwise. Roxas & Co. can only look to the provisions of the Tourism Act, and not to PP 1520, for
possible exemption.

II. ROXAS & CO.’S APPLICATION IN DAR Administrative Case No. A-9999-142-97 FOR CARP
EXEMPTION IN HACIENDA PALICO SUBJECT OF G.R. NO. 179650 CANNOT BE GRANTED IN
VIEW OF DISCREPANCIES IN THE LOCATION AND IDENTITY OF THE SUBJECT PARCELS OF
LAND.

Since PP 1520 did not automatically convert Haciendas Caylaway, Banilad and Palico into non-agricultural estates,
can Roxas & Co. invoke in the alternative Nasugbu MZO No. 4, which reclassified in 1982 the haciendas to non-
agricultural use to exclude six parcels of land in Hacienda Palico from CARP coverage?

By Roxas & Co.’s contention, the affected six parcels of land which are the subject of DAR Administrative Case
No. A-9999-142-97 and nine parcels of land which are the subject of DAR Administrative Case No. A-9999-008-98
involved in G.R. No. 167505, all in Hacienda Palico, have been reclassified to non-agricultural uses via Nasugbu
MZO No. 4 which was approved by the forerunner of HLURB.

Roxas & Co.’s contention fails.

To be sure, the Court had on several occasions decreed that a local government unit has the power to classify and
convert land from agricultural to non-agricultural prior to the effectivity of the CARL. 23 In Agrarian Reform
Beneficiaries Association v. Nicolas,24 it reiterated that

. . . the facts obtaining in this case are similar to those in Natalia Realty. Both subject lands form part of an area
designated for non-agricultural purposes. Both were classified as non-agricultural lands prior to June 15, 1988, the
date of effectivity of CARL.

xxxx

In the case under review, the subject parcels of lands were reclassified within an urban zone as per approved Official
Comprehensive Zoning Map of the City of Davao. The reclassification was embodied in City Ordinance No. 363,
Series of 1982. As such, the subject parcels of land are considered "non-agricultural" and may be utilized for
residential, commercial, and industrial purposes. The reclassification was later approved by the
HLURB.25 (emphasis, italics and underscoring supplied)

The DAR Secretary26 denied the application for exemption of Roxas & Co., however, in this wise:

Initially, CLUPPI-2 based [its] evaluation on the lot nos. as appearing in CLOA No. 6654. However, for purposes of
clarity and to ensure that the area applied for exemption is indeed part of TCT No. T-60034, CLUPPI-2 sought to
clarify with [Roxas & Co.] the origin of TCT No. T-60034. In a letter dated May 28, 1998, [Roxas & Co.] explains
that portions of TCT No. T-985, the mother title, …was subdivided into 125 lots pursuant to PD 27. A total of
947.8417 was retained by the landowners and was subsequently registered under TCT No. 49946. [[Roxas & Co.]
further explains that TCT No. 49946 was further subdivided into several lots (Lot 125-A to Lot 125-P) with Lot No.
125-N registered under TCT No. 60034. [A] review of the titles, however, shows that the origin of T-49946 is T-
783 and not T-985. On the other hand, the origin of T-60034 is listed as 59946, and not T-49946. The
discrepancies were attributed by [Roxas & Co.] to typographical errors which were "acknowledged and
initialled" [sic] by the ROD. Per verification…, the discrepancies . . . cannot be ascertained.27 (emphasis and
underscoring supplied)

In denying Roxas & Co.’s motion for reconsideration, the DAR Secretary held:

The landholdings covered by the aforesaid titles do not correspond to the Certification dated February 11,
1998 of the [HLURB] , the Certification dated September 12, 1996 issued by the Municipal Planning and
Development Coordinator, and the Certifications dated July 31, 1997 and May 27, 1997 issued by the
National Irrigation Authority. The certifications were issued for Lot Nos. 21, 24, 28, 31, 32 and 34. Thus, it was
not even possible to issue exemption clearance over the lots covered by TCT Nos. 60019 to 60023.

Furthermore, we also note the discrepancies between the certifications issued by the HLURB and the Municipal
Planning Development Coordinator as to the area of the specific lots.28 (emphasis and underscoring supplied)

In affirming the DAR Secretary’s denial of Roxas & Co.’s application for exemption, the Court of Appeals, in CA-
G.R. SP No. 63146 subject of G.R. No. 179650, observed:

In the instant case, a perusal of the documents before us shows that there is no indication that the said TCTs refer to
the same properties applied for exemption by [Roxas & Co.] It is true that the certifications …refer, among others,
to DAR Lot Nos. 21, 24, 28, 31, 32 and 34…But these certifications contain nothing to show that these lots are the
same as Lots 125-A, 125-B, 125-C, 125-D and 125-E covered by TCT Nos. 60019, 60020, 60021, 60022 and 60023,
respetively. While [Roxas & Co.] claims that DAR Lot Nos. 21, 24 and 31 correspond to the aforementioned TCTs
submitted to the DAR no evidence was presented to substantiate such allegation.

Moreover, [Roxas & Co.] failed to submit TCT 634 which it claims covers DAR Lot Nos. 28, 32 and 24.(TSN,
April 24, 2001, pp. 43-44)

xxxx

[Roxas & Co.] also claims that subject properties are located at Barangay Cogunan and Lumbangan and that these
properties are part of the zone classified as Industrial under Municipal Ordinance No. 4, Series of 1982 of the
Municipality of Nasugbu, Batangas. ….a scrutiny of the said Ordinance shows that only Barangays Talangan
and Lumbangan of the said municipality were classified as Industrial Zones…Barangay Cogunan was not
included. x x x x. In fact, the TCTs submitted by [Roxas & Co.] show that the properties covered by said titles are
all located at Barrio Lumbangan.29 (emphasis and underscoring supplied)

Its foregoing findings notwithstanding, the appellate court still allowed Roxas & Co. to adduce additional evidence
to support its application for exemption under Nasugbu MZO No. 4.

Meanwhile, Roxas & Co. appealed the appellate court’s decision in CA-G.R. No. SP No. 63146 affirming the DAR
Secretary’s denial of its application for CARP exemption in Hacienda Palico (now the subject of G.R. No. 149548).

When Roxas & Co. sought the re-opening of the proceedings in DAR Administrative Case No. A-9999-142-97
(subject of G.R. No. 179650), and offered additional evidence in support of its application for CARP exemption, the
DAR Secretary, this time, granted its application for the six lots including Lot No. 36 since the additional documents
offered by Roxas & Co. mentioned the said lot.

In granting the application, the DAR Secretary30 examined anew the evidence submitted by Roxas & Co. which
consisted mainly of certifications from various local and national government agencies. 31 Petitioner in G.R. Nos.
167505, 167540, 169163 and 179650, Damayan Ng Mga Manggagawang Bukid Sa Asyenda Roxas-National
Federation of Sugar Workers (DAMBA-NFSW), the organization of the farmer-beneficiaries, moved to have the
grant of the application reconsidered but the same was denied by the DAR by Order of December 12, 2003, hence, it
filed a petition for certiorari before the Court of Appeals, docketed as CA-G.R. SP No. 82225, on grounds of forum-
shopping and grave abuse of discretion. The appellate court, by Decision of October 31, 2006, ruled that DAMBA-
NFSW availed of the wrong mode of appeal. At all events, it dismissed its petition as it upheld the DAR Secretary’s
ruling that Roxas & Co. did not commit forum-shopping, hence, the petition of DAMBA-NGSW in G.R. No.
179650.

While ordinarily findings of facts of quasi-judicial agencies are generally accorded great weight and even finality by
the Court if supported by substantial evidence in recognition of their expertise on the specific matters under their
consideration,32 this legal precept cannot be made to apply in G.R. No. 179650.

Even as the existence and validity of Nasugbu MZO No. 4 had already been established, there remains in dispute
the issue of whether the parcels of land involved in DAR Administrative Case No. A-9999-142-97 subject of G.R.
No. 179650 are actually within the said zoning ordinance.

The Court finds that the DAR Secretary indeed committed grave abuse of discretion when he ignored the glaring
inconsistencies in the certifications submitted early on by Roxas & Co. in support of its application vis-à-vis the
certifications it later submitted when the DAR Secretary reopened DAR Administrative Case No. A-9999-142-97.

Notably, then DAR Secretary Horacio Morales, on one hand, observed that the "landholdings covered by the
aforesaid titles do not correspond to the Certification dated February 11, 1998 of the [HLURB], the Certification
dated September 12, 1996 issued by the Municipal Planning and Development Coordinator, and the Certifications
dated July 31, 1997 and May 27, 1997 issued by the National Irrigation Authority." On the other hand, then
Secretary Hernani Braganza relied on a different set of certifications which were issued later or on September 19,
1996.

In this regard, the Court finds in order the observation of DAMBA-NFSW that Roxas & Co. should have submitted
the comprehensive land use plan and pointed therein the exact locations of the properties to prove that indeed they
are within the area of coverage of Nasugbu MZO No. 4.

The petitions in G.R. Nos. 179650 & 149548 must be distinguished from Junio v. Garilao33 wherein the
certifications submitted in support of the application for exemption of the therein subject lot were mainly considered
on the presumption of regularity in their issuance, there being no doubt on the location and identity of the subject
lot.34 In G.R. No. 179650, there exist uncertainties on the location and identities of the properties being applied for
exemption.

G.R. No. 179650 & G.R. No. 149548 must accordingly be denied for lack of merit.

III. ROXAS & CO.’S APPLICATION FOR CARP EXEMPTION IN DAR Administrative Case No. A-9999-
008-98 FOR THE NINE PARCELS OF LAND IN HACIENDA PALICO SUBJECT OF G.R. NO.
167505 SHOULD BE GRANTED.

The Court, however, takes a different stance with respect to Roxas & Co.’s application for CARP exemption in
DAR Administrative Case No. A-9999-008-98 over nine parcels of land identified as Lot Nos. 20, 13, 37, 19-B, 45,
47, 49, 48-1 and 48-2 which are portions of TCT No. 985 covering 45.9771 hectares in Hacienda Palico, subject of
G.R. No. 167505.

In its application, Roxas & Co. submitted the following documents:

1. Letter-application dated 29 September 1997 signed by Elino SJ. Napigkit, for and on behalf of Roxas &
Company, Inc., seeking exemption from CARP coverage of subject landholdings;
 2. Secretary’s Certificate dated September 2002 executed by Mariano M. Ampil III, Corporate Secretary of
Roxas & Company, Inc., indicating a Board Resolution authorizing him to represent the corporation in its
application for exemption with the DAR. The same Board Resolution revoked the authorization previously
granted to the Sierra Management & Resources Corporation;

3. Photocopy of TCT No. 985 and its corresponding Tax Declaration No. 0401;

4. Location and vicinity maps of subject landholdings;

5. Certification dated 10 July 1997 issued by Reynaldo Garcia, Municipal Planning and Development
Coordinator (MPDC) and Zoning Administrator of Nasugbu, Batangas, stating that the subject
parcels of land are within the Urban Core Zone as specified in Zone A. VII of Municipal Zoning
Ordinance No. 4, Series of 1982, approved by the Human Settlements Regulatory Commission (HSRC),
now the Housing and Land Use Regulatory Board (HLURB), under Resolution No. 123, Series of 1983,
dated 4 May 1983;

6. Two (2) Certifications both dated 31 August 1998, issued by Alfredo Tan II, Director, HLURB,
Region IV, stating that the subject parcels of land appear to be within the Residential cluster Area as
specified in Zone VII of Municipal Zoning Ordinance No. 4, Series of 1982, approved under HSRC
Resolution No. 123, Series of 1983, dated 4 May 1983; 35

x x x x (emphasis and underscoring supplied)

By Order of November 6, 2002, the DAR Secretary granted the application for exemption but issued the following
conditions:

1. The farmer-occupants within subject parcels of land shall be maintained in their peaceful possession and
cultivation of their respective areas of tillage until a final determination has been made on the amount of
disturbance compensation due and entitlement of such farmer-occupants thereto by the PARAD of
Batangas;

2. No development shall be undertaken within the subject parcels of land until the appropriate disturbance
compensation has been paid to the farmer-occupants who are determined by the PARAD to be entitled
thereto. Proof of payment of disturbance compensation shall be submitted to this Office within ten (10)
days from such payment; and

3. The cancellation of the CLOA issued to the farmer-beneficiaries shall be subject of a separate proceeding
before the PARAD of Batangas.36

DAMBA-NSFW moved for reconsideration but the DAR Secretary denied the same and explained further why
CLOA holders need not be informed of the pending application for exemption in this wise:

As regards the first ground raised by [DAMBA-NSFW], it should be remembered that an application for CARP-
exemption pursuant to DOJ Opinion No. 44, series of 1990, as implemented by DAR Administrative Order No. 6,
series of 1994, is non-adversarial or non-litigious in nature. Hence, applicant is correct in saying that nowhere in the
rules is it required that occupants of a landholding should be notified of an initiated or pending exemption
application.

xxxx

With regard [to] the allegation that oppositors-movants are already CLOA holders of subject propert[ies] and
deserve to be notified, as owners, of the initiated questioned exemption application, is of no moment. The Supreme
Court in the case of Roxas [&] Co., Inc. v. Court of Appeals, 321 SCRA 106, held:
"We stress that the failure of respondent DAR to comply with the requisites of due process in the acquisition
proceedings does not give this Court the power to nullify the CLOA’s already issued to the farmer beneficiaries. x x
x x. Anyhow, the farmer[-]beneficiaries hold the property in trust for the rightful owner of the land."

Since subject landholding has been validly determined to be CARP-exempt, therefore, the previous issuance of the
CLOA of oppositors-movants is erroneous. Hence, similar to the situation of the above-quoted Supreme Court
Decision, oppositors-movants only hold the property in trust for the rightful owners of the land and are not the
owners of subject landholding who should be notified of the exemption application of applicant Roxas & Company,
Incorporated.

Finally, this Office finds no substantial basis to reverse the assailed Orders since there is substantial compliance by
the applicant with the requirements for the issuance of exemption clearance under DAR AO 6 (1994). 37

On DAMBA-NSFW’s petition for certiorari, the Court of Appeals, noting that the petition was belatedly filed,
sustained, by Decision of December 20, 1994 and Resolution of May 7, 2007, 38 the DAR Secretary’s finding that
Roxas & Co. had substantially complied with the prerequisites of DAR AO 6, Series of 1994. Hence, DAMBA-
NFSW’s petition in G.R. No. 167505.

The Court finds no reversible error in the Court of Appeals’ assailed issuances, the orders of the DAR Secretary
which it sustained being amply supported by evidence.

IV. THE CLOAs ISSUED BY THE DAR in ADMINISTRATIVE CASE NO. A-9999-008-98 SUBJECT OF
G.R. No. 179650 TO THE FARMER-BENEFICIARIES INVOLVING THE NINE PARCELS OF LAND IN
HACIENDA PALICO MUST BE CANCELLED.

Turning now to the validity of the issuance of CLOAs in Hacienda Palico vis-à-vis the present dispositions: It bears
recalling that in DAR Administrative Case Nos. A-9999-008-98 and A-9999-142-97 (G.R. No. 179650), the Court
ruled for Roxas & Co.’s grant of exemption in DAR Administrative Case No. A-9999-008-98 but denied the grant
of exemption in DAR Administrative Case No. A-9999-142-97 for reasons already discussed. It follows that the
CLOAs issued to the farmer-beneficiaries in DAR Administrative Case No. A-9999-008-98 must be cancelled.

But first, the Court digresses. The assertion of DAMBA-NSFW that the petitions for partial and complete
cancellations of the CLOAs subject of DARAB Case Nos. R-401-003-2001 to R-401-005-2001 and No. 401-239-
2001 violated the earlier order in Roxas v. Court of Appeals does not lie. Nowhere did the Court therein pronounce
that the CLOAs issued "cannot and should not be cancelled," what was involved therein being the legality of the
acquisition proceedings. The Court merely reiterated that it is the DAR which has primary jurisdiction to rule on the
validity of CLOAs. Thus it held:

. . . [t]he failure of respondent DAR to comply with the requisites of due process in the acquisition proceedings does
not give this Court the power to nullify the [CLOAs] already issued to the farmer-beneficiaries. To assume the
power is to short-circuit the administrative process, which has yet to run its regular course. Respondent DAR must
be given the chance to correct its procedural lapses in the acquisition proceedings. x x x x. Anyhow, the farmer
beneficiaries hold the property in trust for the rightful owner of the land. 39

On the procedural question raised by Roxas & Co. on the appellate court’s relaxation of the rules by giving due
course to DAMBA-NFSW’s appeal in CA G.R. SP No. 72198, the subject of G.R. No. 167845:

Indeed, the perfection of an appeal within the statutory period is jurisdictional and failure to do so renders the
assailed decision final and executory.40 A relaxation of the rules may, however, for meritorious reasons, be allowed
in the interest of justice.41 The Court finds that in giving due course to DAMBA-NSFW’s appeal, the appellate court
committed no reversible error. Consider its ratiocination:
x x x x. To deny [DAMBA-NSFW]’s appeal with the PARAD will not only affect their right over the parcel of land
subject of this petition with an area of 103.1436 hectares, but also that of the whole area covered by CLOA No.
6654 since the PARAD rendered a Joint Resolution of the Motion for Reconsideration filed by the [DAMBA-
NSFW] with regard to [Roxas & Co.]’s application for partial and total cancellation of the CLOA in DARAB Cases
No. R-401-003-2001 to R-401-005-2001 and No. 401-239-2001. There is a pressing need for an extensive
discussion of the issues as raised by both parties as the matter of canceling CLOA No. 6654 is of utmost importance,
involving as it does the probable displacement of hundreds of farmer-beneficiaries and their families. x x x x
(underscoring supplied)

Unlike courts of justice, the DARAB, as a quasi-judicial body, is not bound to strictly observe rules of procedure
and evidence. To strictly enforce rules on appeals in this case would render to naught the Court’s dispositions on the
other issues in these consolidated petitions.

In the main, there is no logical recourse except to cancel the CLOAs issued for the nine parcels of land identified as
Lot Nos. 20, 13, 37, 19-B, 45, 47, 49, 48-1 and 48-2 which are portions of TCT No. 985 covering 45.9771 hectares
in Hacienda Palico (or those covered by DAR Administrative Case No. A-9999-008-98). As for the rest of the
CLOAs, they should be respected since Roxas & Co., as shown in the discussion in G.R. Nos. 167540, 167543 and
167505, failed to prove that the other lots in Hacienda Palico and the other two haciendas, aside from the above-
mentioned nine lots, are CARP-exempt.

Conformably, Republic Act No. 3844 (R.A. No. 3844), as amended,42 mandates that disturbance compensation be
given to tenants of parcels of land upon finding that "(t)he landholding is declared by the department head upon
recommendation of the National Planning Commission to be suited for residential, commercial, industrial or some
other urban purposes."43 In addition, DAR AO No. 6, Series of 1994 directs the payment of disturbance
compensation before the application for exemption may be completely granted.

Roxas & Co. is thus mandated to first satisfy the disturbance compensation of affected farmer-beneficiaries in the
areas covered by the nine parcels of lands in DAR AO No. A-9999-008-98 before the CLOAs covering them can be
cancelled. And it is enjoined to strictly follow the instructions of R.A. No. 3844.

Finally then, and in view of the Court’s dispositions in G.R. Nos. 179650 and 167505, the May 27, 2001 Decision of
the Provincial Agrarian Reform Adjudicator (PARAD)44 in DARAB Case No. 401-239-2001 ordering the total
cancellation of CLOA No. 6654, subject of G.R. No. 169163, is SET ASIDE except with respect to the CLOAs
issued for Lot Nos. 20, 13, 37, 19-B, 45, 47, 49, 48-1 and 48-2 which are portions of TCT No. 985 covering 45.9771
hectares in Hacienda Palico (or those covered by DAR Administrative Case No. A-9999-008-98). It goes without
saying that the motion for reconsideration of DAMBA-NFSW is granted to thus vacate the Court’s October 19, 2005
Resolution dismissing DAMBA-NFSW’s petition for review of the appellate court’s Decision in CA-G.R. SP No.
75952;45

WHEREFORE,

1) In G.R. No. 167540, the Court REVERSES and SETS ASIDE the November 24, 2003 Decision46 and
March 18, 2005 Resolution of the Court of Appeals in CA-G.R. SP No. 72131 which declared that
Presidential Proclamation No. 1520 reclassified the lands in the municipalities of Nasugbu in Batangas and
Maragondon and Ternate in Cavite to non-agricultural use;

2) The Court accordingly GRANTS the Motion for Reconsideration of the Department of Agrarian Reform
in G.R. No. 167543 and REVERSES and SETS ASIDE its Resolution of June 20, 2005;

3) In G.R. No. 149548, the Court DENIES the petition for review of Roxas & Co. for lack of merit;

4) In G.R. No. 179650, the Court GRANTS the petition for review of DAMBA-NSFW
and REVERSES and SETS ASIDE the October 31, 2006 Decision and August 16, 2007 Resolution of the
Court of Appeals in CA-G.R. SP No. 82225;
 5) In G.R. No. 167505, the Court DENIES the petition for review of DAMBA-NSFW and AFFIRMS the
December 20, 2004 Decision and March 7, 2005 Resolution of the Court of Appeals in CA-G.R. SP No.
82226;

6) In G.R. No. 167845, the Court DENIES Roxas & Co.’s petition for review for lack of merit
and AFFIRMS the September 10, 2004 Decision and April 14, 2005 Resolution of the Court of Appeals;

7) In G.R. No. 169163, the Court SETS ASIDE the Decisions of the Provincial Agrarian Reform
Adjudicator in DARAB Case No. 401-239-2001 ordering the cancellation of CLOA No. 6654 and DARAB
Cases Nos. R-401-003-2001 to No. R-401-005-2001 granting the partial cancellation of CLOA No. 6654.
The CLOAs issued for Lots No. 21 No. 24, No. 26, No. 31, No. 32 and No. 34 or those covered by DAR
Administrative Case No. A-9999-142-97) remain; and

8) Roxas & Co. is ORDERED to pay the disturbance compensation of affected farmer-beneficiaries in the
areas covered by the nine parcels of lands in DAR Administrative Case No. A-9999-008-98 before the
CLOAs therein can be cancelled, and is ENJOINED to strictly follow the mandate of R.A. No. 3844.

No pronouncement as to costs.

SO ORDERED.
 FIRST DIVISION

[G.R. No. 131481, March 16 : 2011]

BUKLOD NANG MAGBUBUKID SA LUPAING RAMOS, INC., PETITIONER, VS. E. M. RAMOS AND
SONS, INC., RESPONDENT.

[G.R. No. 131624]

DEPARTMENT OF AGRARIAN REFORM, PETITIONER, VS. E. M. RAMOS AND SONS, INC.,

RESPONDENT.

DECISION

LEONARDO-DE CASTRO, J.:

Before the Court are consolidated Petitions for Review on Certiorari, under Rule 45 of the 1997 Rules of Civil
Procedure, filed by the Buklod ng Maqbubukid Sa Lupaing Ramos, Inc. (Buklod) and the Department of Agrarian
Regorm (DAR), assailing the Decision[1] dated March 26, 1997 and the Resolution[2] dated November 24, 1997 of
the Court of Appeals in CA G.R. SP No. 40950.

The Court of Appeals declared the parcels of land owned by E.M. Ramos and Sons, Inc. (EMRASON), located in
Barangay Langkaan, Dasmariñas, Cavite (subject property), exempt from the coverage of the Comprehensive
Agrarian Reform Program (CARP), thus, nullifying and setting aside the Decision [3] dated February 7, 1996 and
Resolution[4] dated May 14, 1996 of the Office of hte President (OP) in O.P. Case No. 5461.

Quoted hereunder are the facts of the case as found by the Court of Appeals:

At the core of the controversy are several parcels of unirrigated land (303.38545 hectares) which from part of a
larger expanse with an area of 372 hectares situated at Barangay Langkaan, Dasmariñas, Cavite. Originally owned
by the MAnila Golf and Country Club, he property was aquired by the [herein repondent EMRASON] in 1965 for
the purpose of developing the same into a residential subdivision known as "Traveller's Life Homes".

Sometime in 1971, the Municipal Council of Dasmariñas, Cavite, acting pursuant to Republic Act (R.A.) No.
2264, otherwise known as the "Loval Autonomy Act", enacteed Municipal Ordinance No. 1, hereinafter referred to
as Ordinance No. 1, enitled "An Ordinance Providing Subdivision Regulation and Providing Penalties for Violation
Thereof."

In May, 1972, [respondent] E.M. Ramos and Sons, Inc., applied for an authority to convert and development its
aforementioned 372-hectare property into a residential subdivision, ataching to the apllication detailed development
plans and development proposals from Bancom Development Corporation and San Miguel Corporation. Acting
thereon the Municipal Council of Dasmariñas, Cavite passed on July 9, 1972 Municipal Ordinance No. 29-A
(Ordinance "No. 29-A, for brevity), approving [EMRASON's] application. Ordinance No. 29-A pertinently reads:

"Resolved, as it is hereby resolved, to approve the application for subdivision containing an area of Three Hundred
Seventy-Two (372) Hectares situated in Barrios Bocal and Langkaan, named as Traveller's Life Homes.

Resolved that the Municipal Ordinance regarding subdivision regulations existing in this municipality shall be
strictly followed by the subdivision ".

Subsequently, [EMRASON] paid the fees, dues and licenses needed to proceed with property development.

It appears, however, that the actual implementation of the subdivision project suffered delay owing to the confluence
of events. Among these was the fact that the property in question was then mortgaged to, and the titles thereto were
in the possession of, the Overseas Bank of Manila, which during the period material was under liquidation.
On June 15. 1988, Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law or CARL,
took effect, ushering in a new process of land classification, acquisition and distribution.

On September 23, 1988, the Municipal Mayor of Dasmariñas, Cavite addressed a letter to [EMRASON], stating in
part, as follows:

"In reply to your letter of June 2, 1988, we wish to clarify that the Municipality of Dasmariñas, Cavite, has
approved the development of your property situated in Barrios Bukal and Langkaan, Dasmariñas, Cavite, with a
total area of 3 72 hectares, more or less, into residential, industrial, commercial and golf course project.

This conversion conforms with the approved Development Plan of the Municipality of Dasmariñas Cavite ".

Then came the Aquino government's plan to convert the tenanted neighboring property of the National Development
Company (NDC) into an industrial estate to be managed through a joint venture scheme by NDC and the Marubeni
Corporation. Part of the overall conversion package called for providing the tenant-farmers, opting to remain at the
NDC property, with three (3) hectares each. However, the size of the NDC property turned out to be insufficient for
both the demands of the proposed industrial project as well as the government's commitment to the tenant-farmers.
To address this commitment, the Department of Agrarian Reform (DAR) was thus tasked with acquiring additional
lands from the nearby areas. The DAR earmarked for this purpose the subject property of [EMRASON].

On August 29, 1990, then OAR Secretary Benjamin Leong sent out the first of four batches of notices of acquisition,
each of which drew protest from [EMRASON]. All told, these notices covered 303.38545 hectares of land situated
at Barangay Langkaan, Dasmariñas, Cavite owned by [EMRASON].

In the meantime, [EMRASON] filed with the Department of Agrarian Reform Adjudication Board (DARAB),
Region IV, Pasig, Metro Manila, separate petitions to nullify the first three sets of the above notices. Collectively
docketed as DARAB Case No. IV-Ca-0084-92, these petitions were subsequently referred to the Office of the
Regional Director, Region IV, which had jurisdiction thereon. In his referral action, the Provincial Agrarian
Adjudicator directed the DAR Region IV, through its Operations Division, to conduct a hearing and/or investigation
lo determine whether or not the subject property is covered by the Comprehensive Agrarian Reform Program
(CARP) and, if not, to cancel the notices of acquisition.

Forthwith, the DAR regional office conducted an on-site inspection of the subject property.

In the course of the hearing, during which [EMRASON] offered Exhibits :'A" to "UU-2" as documentary evidence,
[EMRASON] received another set of notices of acquisition. As lo be expected, [EMRASON] again protested.

On August 28, 1992, the Legal Division of DAR, Region IV, through Hearing Officer Victor Baguilat, rendered a
decision declaring as null and void all the notices of acquisitions, observing that the property covered thereby is,
pursuant to Department of Justice (DOJ) Opinion No. 44, series of 1990, exempt from CARP. The dispositive
portion of the decision reads, as follows;

''WHEREFORE, in the light of the foregoing x x x, considering that the notices of acquisition dated August 29, 1990
relative to the 39 hectares partly covered by Transfer Certificate of Title No. T-19298; notices of acquisition all
dated April 3, 1991 relative to the 131.41975 hectares partly covered by Transfer Certificates of Title Nos. x x x;
notices of acquisition all dated August 28, 1991 relative lo the 56.9201 hectares covered by Transfer Certificates of
Title Nos. x x x; and notices of acquisition all dated May 15, 1992 relative to the 76.0456 covered by Transfer
Certificates of Title Nos. xx, all located at Barangay Langkaan, Dasmariñas, Cavite and owned by petitioner EM
RAMOS and SONS, INC. are null and void on the ground that the subject properties are exempted from CARP
coverage pursuant to DOJ Opinion No. 44, Series of 1990, therefore, the aforesaid notices of acquisition be
cancelled and revoked. "

The DOJ Opinion adverted to, rendered by then Justice Secretary Franklin Drilon, clarified that lands already
converted to non-agricultural uses before June 15, 1988 were no longer covered by CARP.

On September 3, 1992, the Region IV DAR Regional Director motu propio elevated the case to the Office of the
Agrarian Reform Secretary, it being his view that Hearing Officer Baguilat's decision ran contrary to the
department's official position "to pursue the coverage of the same properties and its eventual distribution to
qualified beneficiaries particularly the Langkaan farmers in fulfillment of the commitment of the government to
deliver to them the balance of thirty-nine hectares x x x".

On January 6, 1993, the herein respondent DAR Secretary Ernesto Garilao [(DAR Secretary Garilao)] issued an
order, the decretal portion of which partly reads:

"WHEREFORE, in the interest of law and justice, an order is hereby rendered:

1. Affirming the Notices of Acquisition dated August 29, 1990, April 3, 1991, August 28, 1991 and May 15, 1992
covering 303.38545 hectares of the property owned by the E.M. RAMOS & SONS, INC, located at Barangay
Langkaan, Dasmarinas, Cavite x x x;

xxxx

3. Directing the OAR field officials concerned to pursue (he coverage under RA 6657 of the properties of
E.M. Ramos & Sons, Inc. for which subject Notices of Acquisition had been issued.

SO ORDERED".

Its motion for reconsideration of the aforesaid order having been denied by the [DAR Secretary Garilao] in his
subsequent order of January 6, 1993, [EMRASON] appealed to the Office of the President where the recourse was
docketed as O.P. Case No. 5461.

On February 7, 1996, the Office of the President, through herein respondent Deputy Executive Secretary Renato C.
Corona [(Deputy Executive Secretary Corona)], rendered the herein assailed decision x x x, dismissing
[EMRASON's] appeal on the strength of the following observation:

"To recapitulate, this Office holds that [EMRASON's] property has remained AGRICULTURAL in classification
and therefore falls within the coverage of the CARP, on the basis of the following:br>

1. [EMRASON] failed to comply with the mandatory requirements and conditions of

Municipal Ordinance Nos. 1 and 29-A, specifically, among others, the need for approval
of the National Planning Commission through the Highway District Engineer, and the
Bureau of Lands before final submission to the Municipal Council and Municipal Mayor;

2. [EMRASON] failed to comply with Administrative Order No. 152, dated December 16,
1968, and

3. The certification of the Human Settlements Regulatory Commission

(HSRC) in 1981 and the Housing and Land Use Regulatory Board (HLRB) in 1992 that
the property of [EMRASON] is agricultural".

Undaunted, [EMRASON] interposed a motion for reconsideration, followed later by another motion whereunder it
invited attention to legal doctrines involving land conversion recently enunciated by no less than the Office of the
President itself.

On May 14, 1996, the [Deputy Executive Secretary Corona] came out with his second challenged issuance denying
[EMRASON's] aforementioned motion for reconsideration x x x. [5]

From the denial of its Motion for Reconsideration by the OP, EMRASON filed a Petition for Review with the Court
of Appeals, which was docketed as CA-G.R. SP No. 40950.
On July 3, 1996, the Court of Appeals issued a Temporary Restraining Order (TRO), [6] which enjoined then DAR
Secretary Ernesto Garilao and Deputy Executive Secretary Renato C. Corona from implementing the OP Decision
of February 7, 1996 and Resolution of May 14, 1996 until further orders from the court. On September 17, 1996, the
appellate court issued a Resolution[8] granting the prayer of EMRASON for the issuance of a writ of preliminary
injunction. The writ of preliminary injunction[9] was actually issued on September 30, 1996 after EMRASON
posted the required bond of P500,000,00.

The DAR Secretary filed a Motion for Reconsideration of the Resolution dated September 17, 1996 of the Court of
Appeals, with the prayer that the writ of preliminary injunction already issued be lifted, recalled and/or dissolved.

At this juncture, the DAR had already prepared Certificates of Land Ownership Award (CLOAs) to distribute the
subject property to farmer-beneficiaries. However, the writ of preliminary injunction issued by the Court of Appeals
enjoined the release of the CLOAs. Buklod, on behalf of the alleged 300 farmer-beneficiaries of the subject
property, filed a Manifestation and Omnibus Motion, wherein it moved that it be allowed to intervene as an
indispensable party in CA-G.R. SP No. 40950; that the writ of preliminary injunction be immediately dissolved,
having been issued in violation of Section 55 of the CARL; and that the Petition for Review of EMRASON be
dismissed since the appropriate remedy should have been a petition for certiorari before the Supreme Court.

On March 26, 1997, the Court of Appeals promulgated its assailed Decision.

The Court of Appeals allowed the intervention of Buklod because -the latter's participation was "not being in any
way prejudicial to the interest of the original parties, nor will such intervention change the factual legal complexion
of the case." The appellate court, however, affirmed the propriety of the remedy availed by EMRASON given that
under Section 5 of Supreme Court Revised Administrative Circular No. 1-95 dated May 16, 1995, appeals from
judgments or final orders of the OP or the DAR under the CARL shall be taken to the Court of Appeals, through a
verified petition for review; and that under Section 3 of the same Administrative Circular, such a petition for review
may raise questions of facts, law, or mixed questions of facts and law.

Ultimately, the Court of Appeals ruled in favor of EMRASON because the subject property was already
converted/classified as residential by the Municipality of Dasmariñas prior to the effectivity of the CARL. The
appellate court reasoned:

For one, whether or not the Municipality of Dasmariñas, Cavite had in place in the early seventies a general
subdivision plan is to us of no moment. The absence of such general plan at that time cannot be taken, for the nonce,
against the [herein respondent EMRASON]. To our mind, the more weighty consideration is the accomplished fact
that the municipality, conformably with its statutory-conferred local autonomy, had passed a subdivision measure,
I.e., Ordinance No. 1, and had approved in line thereto, through the medium of Ordinance No. 29-A, [EMRASON's]
application for subdivision, or with like effect approved the conversion/classification of the lands in dispute as
residential. Significantly, the Municipal Mayor of Dasmariñas, Cavite, in his letter of September 23, 1988 to
[EMRASON], clarified that such conversion conforms with the approved development plan of the municipality.

For another, the requirement prescribed by the cited Section 16[a] of Ordinance No. 1 relates to the approval in the
first instance by the National Planning Commission of the final plat of the scheme of the subdivision, not the
conversion from agricultural to residential itself. As [EMRASON] aptly puts it:

"x x x the final plat or final plan, map or chart of the subdivision is not a condition sine qua non for the conversion x
x x as the conversion was already done by the Municipal Council of Dasmariñas, Cavite. Municipal Ordinance
NO. 29-A merely required that the final plat, or final plan x x x of the subdivision be done in conformity with
Municipal Ordinance No. 1, the same to be followed by (he subdivision itself. [EMRASON] therefore did not have to
undertake the immediate actual development of the subject parcel of lands as the same had already been converted
and declared residential by law. x x x " (Petition, pp. 17 and 18).

[EMRASON's] pose has the merit of logic. As may be noted, Ordinance No. 29-A contained two (2) resolutory
portions, each interrelated to, but nonetheless independent of, the other. The first resolution, reading -
"Resolved, as it is hereby resolved, to approve the application for subdivision containing an area of Three Hundred
Seventy-Two (372) Hectares situated in Barrios Bocal and Langkaan, named as Travellers Life Homes "

approved the application for subdivision or the conversion of the 372-hectare area into residential, while the second,
reading -

"Resolved that the Municipal Ordinance regarding subdivision regulations existing in this municipality shall be
strictly followed by the subdivision "

provides that the subdivision owner/developer shall follow subdivision regulations, it will be noted further that the
second resolution already referred to the [EMRASON's] property as "'subdivision", suggesting that the Municipal
Council already considered as of that moment [EMRASON's] area to be for residential use.

Another requirement which [EMRASON] allegedly failed to comply with is found in Administrative Order (A.O.)
No. 152, series of 1968, which pertinently provides -

"1. All Municipal Boards or City Councils, and all Municipal Councils in cities and municipalities in which a
subdivision ordinance is in force, shall submit three copies of every proposed subdivision plan for which approval is
sought together with the subdivision ordinance, to the National Planning Commission for comment and
recommendation ".

This Court is at a loss to understand how [EMRASON] could be expected to heed a directive addressed to local
government legislative bodies. From a perusal of the title of A.O. No. 152, it is at once obvious from whom it exacts
compliance with its command, thus: "REQUIRING THE MUNICIPAL BOARDS OR CITY COUNCILS AND
MUNICIPAL COUNCILS TO SUBMIT PROPOSED ORDINANCES AND SUBDIVISION PLANS TO THE
NATIONAL PLANNING COMMISSION FOR COMMENT AND RECOMMENDATION, BEFORE TAKING
ACTION ON THE SAME, AND TO FORWARD A COPY OF THEIR APPROVED SUBDIVISION
ORDINANCES TO THE SAID COMMISSION".

To be sure, [EMRASON] cannot be made to bear the consequences for the non-compliance, if this be the case, by
the Municipal Council of Dasmarinas, Cavite with what A.O. 152 required. A converse proposition would be
antithetical to the sporting idea of fair play.[11]

As for the other requirements which EMRASON purportedly failed to comply with, the Court of Appeals held that
these became obligatory only after the subject property was already converted to non-agricultural, to wit:

Foregoing considered, this Court holds that everything needed to validly effect the conversion of the disputed area to
residential had been accomplished. The only conceivable step yet to be taken relates to the obtention of a conversion
order from the DAR, or its predecessor, the Ministry of Agrarian Reform (MAR.) under its rather intricate procedure
established under Memorandum Circular No. 11-79. But then, this omission can hardly prejudice the [herein
respondent EMRASON] for the DAR7MAR guidelines were promulgated only in 1979, at which time the
conversion of [EMRASON's] property was already a fait accompli.

Like the conversion procedure set up under Memorandum Circular No. 11-79, the revised methodology under the
CARL cannot also be made to apply retroactively to lands duly converted/classified as residential under the aegis of
the Local Autonomy Act. For, as a rule, a statute is not intended to affect transactions which occurred before it
becomes operational (Tolentino, COMMENTARIES AND JURISPRUDENCE ON THE CIVIL CODE, Vol. I,
1983 ed.; p. 23). And as the landmark case of Natalia Realty, Inc. vs. Department of Agrarian Reform, 225 SCRA
278, teaches:

"Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These include lands previously
converted to non-agricultural uses prior to the effectively of CARL by government agencies other than respondent
DAR x x x.

xxxx
Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is hound by such conversion. It
was therefore error to include the underdeveloped portions x x x within the coverage of CARL".

It may be so, as the assailed decision stated, that in Natalia the lands therein involved received a locational clearance
from the Housing and Land Use Regulatory Board (HLRB, formerly the Human Settlement Regulatory Commission
[HSRC], as residential or commercial, a factor [EMRASON] cannot assert in its favor. This dissimilarity, however,
hardly provides a compelling justification not to apply the lessons of Natalia. This is because the property involved
in this case, unlike that in Natalia, underwent classification/conversion before the creation on May 13, 1976 of the
HSRC, then known as the Human Settlements Regulatory Commission (P.D. No. 933). Furthermore, what is
recognized as the HSRC's authority to classify and to approve subdivisions and comprehensive land use
development plans of local governments devolved on that agency only upon its reorganization on February 7, 1981,
with the issuance of Executive Order No. 648 known as the Charter of the Human Settlements Regulatory
Commission. Section 5 of the same executive order invested the HSRC with the above classifying and approving
authority. In fine, the property of [EMRASON] went into the process of conversion at the time when the
intervention thereon of the HSRC, which was even then non-existent, was unnecessary. Shortly before the creation
of the HSRC, it would appear that to provincial, city, or municipal councils/boards, as the case may be, belong the
prerogative, albeit perhaps not exclusive, to classify private lands within their respective territorial jurisdiction and
approve their conversion from agricultural to residential or other non-agricultural uses. To paraphrase the holding
in Patalinghug vs. Court of Appeals, 229 SCRA 554, once a local government has, pursuant to its police power,
reclassified an area as residential, that determination ought to prevail and must be respected. [12]

The Court of Appeals further observed that the subject property has never been devoted to any agricultural activity
and is, in fact, more suitable for non-agricultural purposes, thus:

It is worthy to note that the CARL defines "agricultural lands" as "lands devqtedto agricultural activity x x x and not
classified as mineral, forest, residential, commercial or industrial lands" (Sec. 3[c]). Guided by this definition, it is
clear that [herein respondent EMRASON's] area does not fall under the category of agricultural lands. For, let alone
the reality that the property is not devoted to some agricultural activity, being in fact unirrigated, and, as implied in
the decision of the DAR Hearing Officer Victor Baguilat, without duly instituted tenants, the same had been
effectively classified as residential. The bare circumstance of its not being actually developed as subdivision or that
it is underdeveloped would not alter the conclusion. For, according to Natalia, what actually determines the
applicability of the CARL to a given piece of land is its previous classification and not its current use or stages of
development as non-agricultural property.

As a pragmatic consideration, the disputed area, in terms of its location in relation to existing commercial/industrial
sites and its major economic use, is more suitable for purposes other than agriculture. In this connection, this Court
notes that the property is situated at the heart of the CALABARZON, and, as Annex "C" of the petition
demonstrates, lies adjacent to huge industrial/commercial complexes. The San Miguel-Monterey meat plant, the
NDC-Marubeni complex and the Reynolds Aluminum plant may be mentioned. For sure, the Sangguniang
Panlalawigan of Cavite, obviously cognizant of the economic potential of certain areas in the Municipality of
Dasmariñas has, by Resolution No. 105, series of 1988. declared defined tracts of lands in the Municipality of
Dasmariñas as "industrial-residential-institutional mix."[13]

As a last point, the Court of Appeals justified its issuance of a writ of preliminary injunction enjoining the
implementation of the OP Decision dated February 7, 1996 and Resolution dated May 14, 1996, viz:

As a final consideration, we will address the [herein petitioners] OAR Secretary's and Buklod's joint concern
regarding the propriety of the preliminary injunction issued in this case. They alleged that the issuance is violative of
Section 55 of the CARL which reads:

"SEC. 55. No Restraining Order or Preliminary

Injunction. - No Court in the Philippines shall have jurisdiction to issue any restraining order or writ of preliminary
injunction against the PARC or any of its duly authorized or designated agencies in any case, dispute, controversy
arising from, necessary to, or in connection with the application, implementation, enforcement, or interpretation of
this Act and other pertinent laws on agrarian reform". (Underscoring added.)
As will be noted, the aforequoted section specifically mentions the Presidential Agrarian Reform Council (PARC) of
which the DAR Secretary is the Vice Chairman, or any of its duly designated agencies as protected from an
injunctive action of any court. These agencies include the PARC Executive Committee, the PARC Secretariat,
which the DAR Secretary heads, and. on the local level, the different Agrarian Reform Action Committees (Sees. 41
to 45, R.A. No. 6657).

From the records, there is no indication that the [petitioner] Agrarian Reform Secretary acted vis-a-vis the present
controversy for, or as an agency of, the PARC. Hence, he cannot rightfully invoke Section 55 of the CARL and avail
himself of the protective mantle afforded by that provision. The PARC, it bears to stress, is a policy-formulating
and coordinating body (Sec. 18. E.O. 229, July 22, 1987) without express adjudicatory mandate, unlike the DAR
Secretary who, as department head, is "vested with primary jurisdiction to determine and adjudicate agrarian
reform matters and shall have exclusive jurisdiction over all matters involving the implementation of agrarian
reform" (Sec. 50. R.A. 6657). Thus, it is easy lo accept the proposition that the [petitioner] Agrarian Reform
Secretary issued his challenged orders in the exercise of his quasi-judicial power as department head.[14]

In the end, the Court of Appeals decreed:

WHEREFORE, the instant petition for review is hereby GRANTED. Accordingly, the challenged decision dated
February 7, 1996 and the resolution of May 14, 1996 of the Office of the President in O.P. Case No. 5461 are
hereby NULLIFIED, VACATED and SET ASIDE, and the notices of acquisition issued by the Department of
Agrarian Reform covering the 372-hectare property of the [herein respondent EMRASON] at Barangay Langkaan,
Dasmariñas, Cavite declared VOID.

The writ of preliminary injunction issued by this Court on September 30, 1996 is hereby made permanent.[15]

Buklod and DAR. filed their respective Motions for Reconsideration of the foregoing Decision but both Motions
were denied by the Court of Appeals in a Resolution dated November 24, 1997.

Aggrieved, Buklod and DAR filed the instant Petitions, which were consolidated by this Court in a
Resolution[16] dated August 19, 1998.

In G.R. No. 131481, Buklod raises the following arguments:

1] THE MUNICIPAL ORDINANCE INVOKED BY [EMRASON] AS CONVERSION OF THE PROPERTY IN

QUESTION ENACTED ON JULY 9, 1972 BY THE MUNICIPAL COUNCIL OF DASMARIÑAS, CAVITE IS
IMPOTENT BECAUSE THE MUNICIPAL ORDINANCE IMPOSED CONDITIONS WHICH [EMRASON]
NEVER COMPLIED. NO COMPLIANCE NO CONVERSION.

2] AT THE TIME THE ALLEGED ORDINANCE WAS ENACTED, A LAND REFORM LAW WAS ALREADY
IN EFFECT GRANTING SECURITY OF TENURE TO THE FARMERS SO THAT A LANDOWNER CANNOT
ARBITRARILY CONVERT AN AGRICULTURAL LAND INTO A DIFFERENT CLASSIFICATION
WITHOUT COMPLYING WITH LEGAL REQUIREMENTS (R.A. 3844).

3] A MERE MUNICIPAL ORDINANCE CANNOT NEGATE LAND REFORM RIGHTS GRANTED TO THE
FARMERS BY LEGISLATIVE ENACTMENT UNDER R.A. 3844 AND SUBSEQUENT LAWS. LAND
REFORM LAW BEING A SOCIAL LEGISLATION IS PARAMOUNT.

4] LAND REFORM IS A CONSTITUTIONAL MANDATE FOR THE BENEFIT OF THE LANDLESS

FARMERS SO THAT THE LAND REFORM LAW SHOULD BE CONSTRUED AND APPLIED IN ORDER TO
ATTAIN THE LEGISLATIVE INTENT OF RELIEVING THE FARMERS FROM THEIR POVERTY AND
BONDAGE. THE COURT OF APPEALS IGNORED THIS CONSTITUTIONAL MANDATE TO FAVOR THE
LANDLORD [EMRASON].

5] THE COURT OF APPEALS ISSUED A RESTRAINING ORDER/INJUNCTION AGAINST THE CLEAR

PROHIBITION IN THE CARL (SEC. 55 RA 6657) AND SO FAR DEPARTED FROM THE USUAL COURSE
OF BY REFUSING TO GRANT THE PETITIONER FARMERS A HEARING INSPITE OF THE PROCEDURE
PRESCRIBED BY RA 7902 (SEC. ]).[17]

In G.R. No. 131624, the DAR ascribes the following errors on the part of the Court of Appeals:

I.

THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT THE MUNICIPALITY OF
DASMARIÑAS, CAVITE, WAS AUTHORIZED, UNDER THE LOCAL AUTONOMY ACT, TO CLASSIFY
AND/OR RECLASSIFY LANDS CONSIDERING THAT WHAT WAS CONFERRED THEREUNDER WAS
ONLY ZONING AUTHORITY, THUS, RENDER THE EXERCISE THEREOF BY THE MUNICIPAL
COUNCIL OF DASMARIÑAS, CAVITE, ULTRA VIRES;

II.

EVEN ASSUMING, IN GRATIA ARGUMENTI, THAT THE AUTHORITY TO CLASSIFY AND RECLASSIFY
LANDS IS POSSESSED BY MUNICIPAL CORPORATIONS, STILL THE HONORABLE COURT OF
APPEALS ERRED WHEN IT CONSIDERED THE ALLEGED PASSAGE OF ORDINANCE NO. 29-A OF THE
MUNICIPAL COUNCIL OF DASMARIÑAS, CAVITE, AS A VALID MEASURE RECLASSIFYING SUBJECT
AGRICULTURAL LAND TO NON-AGRICULTURAL USE CONSIDERING THAT THE SAID APPROVAL
OF THE SUBDIVISION, PER LETTER OF THE MUNICIPAL MAYOR, FAILED TO COMPLY WITH
EXISTING RULES AND REGULATIONS ON THE MATTER AND, THEREFORE, NONCOMPLYING AND
INEFFECTUAL; AND

III.

THE HONORABLE COURT OF APPEALS ERRED WHEN IT APPLIED THE RULING OF THE
HONORABLE COURT IN THE NATALIA REALTY CASE DUE TO SUBSTANTIAL DISSIMILARITY IN
FACTUAL SETTING AND MILIEU.[18]

At the crux of the present controversy is the question of whether the subject property could be placed under the
CARP.

DAR asserts that the subject property could be compulsorily acquired by the State from EMRASON and distributed
to qualified farmer-beneficiaries under the CARP since it was still agricultural land when the CARL became
effective on June 15, 1988. Ordinance Nos. 1 and 29-A, approved by the Municipality of Dasmariñas on July 13,
1971 and July 9, 1972, respectively, did not reclassify the subject property from agricultural to non-agricultural. The
power to reclassify lands is an inherent power of the National Legislature under Section 9 of Commonwealth Act
No. 141, otherwise known as the Public Land Act, as amended, which, absent a specific delegation, could not be
exercised by any local government unit (LGU). The Local Autonomy Act of 1959 - in effect when the Municipality
of Dasmariñas approved Ordinance Nos. 1 and 29-A - merely delegated to cities and municipalities zoning
authority, to be understood as the regulation of the uses of property in accordance with the existing character of the
land and structures. It was only Section 20 of Republic Act No. 7160, otherwise known as the Local Government
Code of 1991, which extended to cities and municipalities limited authority to reclassity agricultural lands.

DAR also argues that even conceding that cities and municipalities were already authorized in 1972 to issue an
ordinance reclassifying lands from agricultural to non-agricultural, Ordinance No. 29-A of the Municipality of
Dasmariñas was not valid since it failed to comply with Section 3 of the Local Autonomy Act of 1959, Section
16(a) of Ordinance No. 1 of the Municipality of Dasmarinas, and Administrative Order No. 152 dated December 16,
1968, which all required review and approval of such an ordinance by the National Planning Commission (NPC).
Subsequent developments further necessitated review and approval of Ordinance No. 29-A by the Human
Settlements Regulatory Commission (HSRC), which later became the Housing and Land Use Regulatory Board
(HLURB).

DAR further avers that the reliance by the Court of Appeals -on Natalia Realty, Inc. v. Department of Agrarian
Reform[19] (Natalia Realty case) is misplaced because the lands involved therein were converted from agricultural to
residential use by Presidential Proclamation No. 1637, issued pursuant to the authority delegated to the President
under Section 71, et seq., of the Public Land Act.[20]

Buklod adopts the foregoing arguments of DAR. In addition, it submits that prior to Ordinance Nos. 1 and 29-A,
there were already laws implementing agrarian reform, particularly: (1) Republic Act No. 3844, otherwise known as
the Agricultural Land Reform Code, in effect since August 8, 1963, and subsequently amended by Republic Act No.
6389 on September 1.0, 1971, after which it became known as the Code of Agrarian Reforms; and (2) Presidential
Decree No. 27, otherwise known as the Tenants Emancipation Decree, which took effect on November 19, 1972.
Agricultural land could not be converted for the purpose of evading land reform for there were already laws granting
farmer-tenants security of tenure, protection from ejectment without just cause, and vested rights to the land they
work on.

Buklod contends that EMRASON failed to comply with Section 36 of the Code of Agrarian Reforms, which
provided that the conversion of land should be implemented within one year, otherwise, the conversion is deemed in
bad faith. Given the failure of EMRASON to comply with many other requirements for a valid conversion, the
subject property has remained agricultural. Simply put, no compliance means no conversion. In fact, Buklod points
out, the subject property is still declared as "agricultural" for real estate tax purposes. Consequently, EMRASON is
now estopped from insisting that the subject property is actually "residential."

Furthermore, Buklod posits that land reform is a constitutional mandate which should be given paramount
consideration. Pursuant to said constitutional mandate, the Legislature enacted the CARL. It is a basic legal principle
that a legislative statute prevails over a mere municipal ordinance.

Finally, Buklod questions the issuance by the Court of Appeals of a writ of preliminary injunction enjoining the
distribution of the subject property to the farmer-beneficiaries in violation of Section 55 of the CARL; as well as the
refusal of the appellate court to hold a hearing despite Section 1 of Republic Act No. 7902, [21] prescribing the
procedure for reception of evidence before the Court of Appeals. At such a hearing, Buklod intended to present
evidence that the subject property is actually agricultural and that Buklod members have been working on said
property for decades, qualifying them as farmer-beneficiaries.

EMRASON, on the other hand, echoes the ruling of the Court of Appeals that the subject property is exempt from
CARP because it had already been reclassified as residential with the approval of Ordinance No. 29-A by the
Municipality of Dasmariñas on July 9, 1972. EMRASON cites Ortigas & Co., Ltd. Partnership v. Feati Bank and
Trust Co.[22] (Ortigas case) where this Court ruled that a municipal council is empowered to adopt zoning and
subdivision ordinances or regulations under Section 3 of the Local Autonomy Act of 1959.

Still relying on the Ortigas case, EMRASON avows that the Municipality of Dasmariñas, taking into account the
conditions prevailing in the area, could validly zone and reclassify the subject property in the exercise of its police
power in order to safeguard the health, safety, peace, good order, and general welfare of the people in the locality.
EMRASON describes the whole area surrounding the subject property as residential subdivisions (i.e., Don
Gregorio, Metro Gate, Vine Village, and Cityland Greenbreeze 1 and 2 Subdivisions) and industrial estates (i.e.,
Reynolds Aluminum Philippines, Inc. factory; NDC-Marubeni industrial complex, San Miguel Corporation-
Monterey cattle and piggery farm and slaughterhouse), traversed by national highways (i.e., Emilio Aguinaldo
National Highway, Trece Martirez, Puerto Azul Road, and Governor's Drive). EMRASON mentions that on March
25, 1988, the Sangguniang Panlalawigan of the Province of Cavite passed Resolution No. 105 which declared the
area where subject property is located as "industrial-residential-institutional mix."

EMRASON further maintains that Ordinance No. 29-A of the Municipality of Dasmariñas is valid. Ordinance No.
29-A is complete in itself, and there is no more need to comply with the alleged requisites which DAR and Buklod
are insisting upon. EMRASON quotes from Patalinghug v. Court of Appeals[23] (Patalinghug case) that "once a
local government has reclassified an area as commercial, that determination for zoning purposes must prevail."

EMRASON points out that Ordinance No. 29-A, reclassifying the subject property, was approved by the
Municipality of Dasmariñas on July 9, 1972. Executive Order No. 648, otherwise known as the Charter of the
Human Settlements Regulatory Commission (HSRC Charter) - which conferred upon the HSRC the power and duty
to review, evaluate, and approve or disapprove comprehensive land use and development plans and zoning
ordinances of LGUs - was issued only on February 7, 1981. The exercise by HSRC of such power could not be
applied retroactively to this case without impairing vested rights of EMRASON. EMRASON disputes as well the
absolute necessity of submitting Ordinance No. 29-A to the NPC for approval. Based on the language of Section 3
of the Local Autonomy Act of 1959, which used the word "may," review by the NPC of the local planning and
zoning ordinances was merely permissive. EMRASON additionally posits that Ordinance No. 1 of the Municipality
of Dasmariñas simply required approval by the NPC of the final plat or plan, map, or chart of the subdivision, and
not of the rcclassification and/or conversion by the Municipality of the subject property from agricultural to
residential. As for Administrative Order No. 152 dated December 16, 1968, it was directed to and should have been
complied with by the city and municipal boards and councils. Thus, EMRASON should not be made to suffer for the
non-compliance by the Municipal Council of Dasmarinas with said administrative order.

EMRASON likewise reasons that since the subject property was already reclassified as residential with the mere
approval of Ordinance No. 29-A by the Municipality of Dasmarinas, then EMRASON did not have to immediately
undertake actual development of the subject property. Reclassification and/or conversion of a parcel of land are
different from the implementation of the conversion.

EMRASOK is resolute in its stance that the Court of Appeals correctly applied the Natalia Realty case to the present
case since both have similar facts; the only difference being that the former involves a presidential fiat while the
latter concerns a legislative fiat.

EMRASON denies that the Buklod members are farmer-tenants of the subject property. The subject property has no
farmer-tenants because, as the Court of Appeals observed, the property is unirrigated and not devoted to any
agricultural activity. The subject property was placed under the CARP only to accommodate the farmer-tenants of
the NDC property who were displaced by the NDC-Marubeni Industrial Project. Moreover, the Buklod members are
still undergoing a screening process before the DAR-Region IV, and are yet to be declared as qualified farmer-
beneficiaries of the subject property. Hence, Buklod members tailed to establish they already have vested right over
the subject property.

EMRASON urges the Court not to consider issues belatedly raised by Buklod, It may be recalled that Buklod
intervened in CA-G.R. SP No. 40950 just before the Court of Appeals rendered judgment in said case. When the
appellate court promulgated its Decision on March 26, 1997 favoring EMRASON, Buklod filed a Motion for
Reconsideration of said judgment, to which EMRASON, in turn, filed a Comment and Opposition. In its Reply to
the aforementioned Comment and Opposition of EMRASON, Buklod raised new factual matters, specifically, that:
(1) EMRASON has not even subdivided the title to the subject property 27 years after its purported
reclassification/conversion; (2) EMRASON never obtained a development permit nor mayor's permit to operate a
business in Dasmarinas; and (3) the farmer-tenants represented by Buklod have continuously cultivated the subject
property. There was no cogent or valid reason for the Court oi' Appeals to allow Buklod to present evidence to
substantiate the foregoing allegations. The DAR Region IV Hearing Officer already conducted extensive hearings
during which the farmers were duly represented. Likewise, Buklod raises for the first time in its Petition before this
Court the argument that the Tenants Emancipation Decree prescribes a procedure for conversion which EMRASON
failed to comply with.

Lastly, EMRASON defends the issuance by the Court of Appeals of a writ of preliminary injunction in CA-G.R. SP
No. 40950. Section 55 of the CARL is inapplicable to the case at bar because said provision only prohibits the
issuance by a court of a TRO or writ of preliminary injunction "against the PARC or any ol^ its duly authorized or
designated agencies." As the Court of Appeals declared, the PARC is a policy-formulating and coordinating body.
There is no indication whatsoever that the DAR Secretary was acting herein as an agent of the PARC. The DAR
Secretary issued the orders of acquisition for the subject property in the exercise of his quasi-judicial powers as
department head.

The Court, after consideration of the issues and arguments in the Petitions at bar, affirms the Court of Appeals and
rules in favor of EMRASON.

CARP coverage limited to agricultural land

Section 4, Chapter II of the CARL, as amended,24 particularly defines the coverage of the CARP, to wit:
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: Provided, That
landholdings of landowners with a total area of five (5) hectares and below shall not be covered for acquisition and
distribution to qualified beneficiaries.

More specifically, the following lands are covered by the CARP:

(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 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.

A comprehensive inventory system in consonance with the national land use plan shall be instituted by the
Department of Agrarian Reform (DAR), in accordance with the Local Government Code, for the purpose of
properly identifying and classifying farmlands within one (1) year from effectivity of this /Vet. without prejudice to
the implementation of the land acquisition and distribution." (Emphases supplied.)

Section 3(c), Chapter I of the CARL further narrows down the definition of agricultural land that is subject to
CARP to "land devoted to agricultural activity as defined in this Act and not classified as mineral, forest, residential,
commercial or industrial land."

The CARL took effect on June 15, 1988. To be exempt from the CARP, the subject property should have already
been reclassified as residential prior to said date.

The Local Autonomy Act of 1959

The Local Autonomy Act of 1959, precursor of the Local Government Code of 1991, provided;

SEC. 3. Additional powers of provincial boards, municipal boards or city councils and municipal and regularly
organized municipal district councils. - x x x

xxxx

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

Pursuant to the foregoing provision, the Municipal Council of Dasmariñas approved Ordinance No. 1 on July 13,
1971, which laid down the general subdivision regulations for the municipality; and Resolution No. 29-A on July 9,
1972, which approved the application for subdivision of the subject property.

The Court observes that the OP, the Court of Appeals, and even the parties themselves referred to Resolution No.
29-A as an ordinance. Although it may not be its official designation, calling Resolution No. 29-A as Ordinance No.
29-A is not completely inaccurate. In the Ortigas & Co. case, the Court found it immaterial that the then Municipal
Council of Mandaluyong declared certain lots as part of the commercial and industrial zone through a resolution,
rather than an ordinance, because:

Section 3 of R.A. No. 2264, otherwise known as the Local Autonomy Act, empowers a Municipal Council "to adopt
zoning and subdivision ordinances or regulations" for the municipality. Clearly, the law docs not restrict the
exercise of the power through an ordinance. Therefore, granting that Resolution No. 27 is not an ordinance, it
certainly is a regulatory measure within the intendment or ambit of the word "regulation" under the provision.
As a matter oi' fact the same section declares that the power exists "(A)ny provision of law to the contrary
notwithstanding x x x."[25] (Emphases supplied.)

Zoning and reclassification

Section 3(c), Chapter I of the CARL provides that a parcel oi^ land reclassified for non-agricultural uses prior
to June 15, 1988 shall no longer be considered agricultural land subject to CARP. The Court is now faced with the
question of whether Resolution No. 29-A of the Municipality of Dasmariñas dated July 9, 1972, which approved
the subdivision of the subject property for residential purposes, had also reclassified the same from agricultural to
residential.

Zoning classification is an exercise by the local government of police power, not the power of eminent domain. A
zoning ordinance is defined as a local city or municipal legislation which logically arranges, prescribes, defines, and
apportions a given political subdivision into specific land uses as present and future projection of needs. [26]

The Court gave a more extensive explanation of zoning in Pampanga Bus Company, Inc. v. Municipality of
Tarlac,[27] thus:

The appellant argues that Ordinance No. 1 is a zoning ordinance which the Municipal Council is authorized to
adopt. McQuillin in his treaties on Municipal Corporations (Volume 8, 3rd ed.) says:

Zoning is governmental regulation of the uses of land and buildings according to districts or zones. It is
comprehensive where it is governed by a single plan for the entire municipality and prevails throughout the
municipality in accordance with that plan. It is partial or limited where it is applicable only to a certain part of the
municipality or to certain uses. Fire limits, height districts and building regulations are forms of partial or limited
zoning or use regulation that are antecedents of modern comprehensive zoning, (pp. 11-12.)

The term "zoning," ordinarily used with the connotation of comprehensive or general zoning, refers to governmental
regulation of the uses of land and buildings according to districts or zones. This regulation must and does utilize
classification of uses within districts as well as classification of districts, inasmuch as it manifestly is impossible to
deal specifically with each of the innumerable uses made of land and buildings. Accordingly, (zoning has been
defined as the confining of certain classes of buildings and uses to certain localities, areas, districts or zones.) It has
been stated that zoning is the regulation by districts of building development and uses of property, and that the term
"zoning" is not only capable of this definition but has acquired a technical and artificial meaning in accordance
therewith. (Zoning is the separation of the municipality into districts and the regulation of buildings and structures
within the districts so created, in accordance with their construction, and nature and extent of their use. It is a
dedication of districts delimited to particular uses designed to subserve the general welfare.) Numerous other
definitions of zoning more or less in accordance with these have been given in the cases, (pp. 27-28.)[28]

According to Section 1(b) of Ordinance No. 1, "[s]ubdivision means the division of a tract or parcel of land into two
or more lots, sites or other divisions for the purpose, whether immediate or future, o[f| a sale or building
development. It includes resubdivision, and when appropriate to the context, relates to the process of subdividing as
to the land of territory subdivided." Subdivision ordinances or regulations such as Resolution No. 29-A, in relation
to Ordinance No. 1, constitute partial or limited zoning, for they are applicable to a specific property in the city or
municipality to be devoted for a certain use.

Section 9 of the Public Land Act - cited by the DAR and Buklod as the purported delegation by the National
Legislature of the power to reclassify - is immaterial to the instant cases. Said provision reads:
SEC. 9. For the purpose of their administration and disposition, the lands of the public domain alienable or open to
disposition shall be classified, according to the use or purposes to which such lands are destined, as follows:

(a) Agricultural;

(b) Residential, commercial, industrial, or for similar productive purposes;

(c) Educational, charitable, or other similar purposes; and

(d) Reservations for townsites and for public and quasi-public uses.

The President, upon recommendation by the Secretary of Agriculture and Natural Resources, shall from time to time
make the classifications provided for in this section, and may, at any time and in a similar manner, transfer lands
from one class to another. (Emphasis supplied.)

The power delegated to the President under the aforequoted provision of the Public Land Act is limited to the
classification of lands of the public domain that are alienable or open to disposition. It finds no application in
the present cases for the simple reason that the subject property involved herein is no longer part of the public
domain. The subject property is already privately owned and accordingly covered by certificates of title.

The concept that concerns this Court in the instant cases is the reclassification of agricultural lands. In Alarcon v.
Court of Appeals,[29] the Court had the occasion to define and distinguish reclassification from conversion as
follows:

Conversion is the act of changing the current use of a piece of agricultural land into some other use as approved by
the Department of Agrarian Reform. Reclassification, on the other hand, is the act of specifying how agricultural
lands shall be utilized for non-agricultural uses such as residential, industrial, commercial, as embodied in the land
use plan, subject to the requirements and procedure for land use conversion, x x x. (Italics supplied.)

Reclassification also includes the reversion of non-agricultural lands to agricultural use.[31]

Under the present Local Government Code, it is clear that the authority to reclassify agricultural lands primarily
resides in the sanggunian of the city or municipality. Said provision reads in full:

Sec. 20. Reclassification of Lands. - (a) A city or municipality may, through an ordinance passed by the
sanggunian after conducting public hearing for the purpose, authorize the reclassification of agricultural
lands and provide for the manner of their utilization or disposition in the following cases: (X) when the land ceases
to be economically feasible and sound for agricultural purposes as determined by the Department of Agriculture or
(2) where the land shall have substantially greater economic value for residential, commercial, or industrial
purposes, as determined by the sanggunian concerned: Provided, That such reclassification shall be limited to the
following percentage of the total agricultural land area at the time of the passage of the ordinance:

(1) For highly urbanized and independent component cities, fifteen percent (15%);

(2) For component cities and first to the third class municipalities, ten percent (10%); and

(3) For fourth to sixth class municipalities, five percent (5%): Provided, further, That agricultural
lands distributed to agrarian reform beneficiaries pursuant to Republic Act Numbered Sixty-six hundred fifty-
seven (R.A. No. 6657), otherwise known as "The Comprehensive Agrarian Reform Law", shall not be affected by
the said reclassification and the conversion of such lands into other purposes shall be governed by Section 65 of said
Act.

(b) The President may, when public interest so requires and upon recommendation of the National Economic and
Development Authority, authorize a city or municipality to reclassify lands in excess of the limits set in the next
preceding paragraph.
(c) The local government units shall, in conformity with existing laws, continue to prepare their respective
comprehensive land use plans enacted through zoning ordinances which shall be the primary and dominant
bases for the future use of land resources: Provided, That the requirements for food production, human settlements,
and industrial expansion shall be taken into consideration in the preparation of such plans.

(d) When approval by a national agency is required for reclassification, such approval shall not be unreasonably
withheld. Failure to act on a proper and complete application for reclassification within three (3) months from
receipt of the same shall be deemed as approval thereof.

(e) Nothing in this Section shall be construed as repealing, amending, or modifying in any manner the provisions
of R.A. No. 6657. (Emphases supplied.)

Prior to the Local Government Code of 1991, the Local Autonomy Act of 1959 was silent on the authority to
reclassify agricultural lands. What the earlier statute expressly granted to city and municipal boards and councils,
under Section 3 thereof, was the power to adopt zoning and subdivision ordinances and regulations.

DAR and Buklod insist that zoning is merely the regulation of land use based on the existing character of the
property and the structures thereon; and that zoning is a lesser power compared to reclassification so that the
delegation of the former to the local government should not be deemed to include the latter.

Such arguments are easily refuted by reference to the definitions of zoning and reclassification earlier presented
herein, which support a more extensive concept of zoning than that which DAR and BUKLOD assert.

By virtue of a zoning ordinance, the local legislature may arrange, prescribe, define, and apportion the land within
its political jurisdiction into specific uses based not only on the present, but also on the future projection of needs.
To limit zoning to the existing character of the property and the structures thereon would completely negate the
power of the local legislature to plan land use in its city or municipality. Under such circumstance, zoning would
involve no planning at all, only the rubber-stamping by the local legislature of the current use of the land.

Moreover, according to the definition of reclassification, the specified non-agricultural use of the land must be
embodied in a land use plan, and the land use plan is enacted through a zoning ordinance. Thus, zoning and
planning ordinances take precedence over reclassification. The reclassification of land use is dependent on the
zoning and land use plan, not the other way around.

It may, therefore, be reasonably presumed that when city and municipal boards and councils approved an ordinance
delineating an area or district in their cities or municipalities as residential, commercial, or industrial zone, pursuant
to the power granted to them under Section 3 of the Local Autonomy Act of 1959, they were, at the same time,
reclassifying any agricultural lands within the zone for non-agri cultural use; hence, ensuring the implementation of
and compliance with their zoning ordinances. The logic and practicality behind such a presumption is more evident
when considering the approval by local legislative bodies of subdivision ordinances and regulations. The approval
by city and municipal boards and councils of an application for subdivision through an ordinance should already be
understood to include approval of the reclassification of the land, covered by said application, from agricultural to
the intended non-agricultural use. Otherwise, the approval of the subdivision application would serve no practical
effect; for as long as the property covered by the application remains classified as agricultural, it could not be
subdivided and developed for non-agricultural use.

A liberal interpretation of the zoning power of city and municipal boards and councils, as to include the power to
accordingly reclassify the lands within the zones, would be in accord with the avowed legislative intent behind the
Local Autonomy Act of 1959, which was to increase the autonomy of local governments. Section 12 of the Local
Autonomy Act of 1959 itself laid down rules for interpretation of the said statute:

SEC. 12. Rules for the interpretation of the Local Autonomy Act. -

1. Implied power of a province, a city or municipality shall be liberally construed in its favor. Any fair and
reasonable doubt as to the existence of the power should be interpreted in favor of the local government and it shall
be presumed to exist.
2. The general welfare clause shall be liberally interpreted in case of doubt so as to give more power to local
governments in promoting the economic condition, social welfare and material progress of the people in the
community.

3. Vested rights existing at the time of the promulgation of this law arising out of a contract between a province,
city or municipality on one hand and a third party on the other, should be governed by the original terms and
provisions of the same, and in no case would this act infringe existing rights.

Moreover, the regulation by local legislatures of land use in their respective territorial jurisdiction through zoning
and reclassification is an exercise of police power. In Binay v. Domingo,32] the Court recognized that police power
need not always be expressly delegated, it may also be inferred:

The police power is a governmental function, an inherent attribute of sovereignty, which was born with civilized
government. It is founded largely on the maxims, "Sic utere tuo et alienum non laedas" and "Salus populi est
suprema lex" Its fundamental purpose is securing the general welfare, comfort and convenience of the people.

Police power is inherent in the state but not in municipal corporations (Balacuit v. CFI of Agusan del Norte, 163
SCRA 182). Before a municipal corporation may exercise such power, there must be a valid delegation of such
power by the legislature which is the repository of the inherent powers of the State. A valid delegation of police
power may arise from express delegation, or be inferred from the mere fact of the creation of the municipal
corporation; and as a general rule, municipal corporations may exercise police powers within the fair intent
and purpose of their creation which are reasonably proper to give effect to the powers expressly granted, and
statutes conferring powers on public corporations have been construed as empowering them to do the things
essential to the enjoyment of life and desirable for the safety of the people. (62 C.J.S., p. 277). The so-called
inferred police powers of such corporations are as much delegated powers as arc those conferred in express terms,
the inference of their delegation growing out of the fact of the creation of the municipal corporation and the
additional fact that the corporation can only fully accomplish the objects of its creation by exercising such powers.
(Crawfordsville vs. Braden, 28 N.E. 849). Furthermore, municipal corporations, as governmental agencies, must
have such measures of the power as are necessary to enable them to perform their governmental functions.
The power is a continuing one, founded on public necessity. (62 C.J.S. p. 273) Thus, not only does the State
effectuate its purposes through the exercise of the police power but the municipality does also. (U.S. v. Salaveria, 39
Phil. 102).

Municipal governments exercise this power under the general welfare clause: pursuant thereto they are clothed
with authority to "enact such ordinances and issue such regulations as may be necessary to carry out and discharge
the responsibilities conferred upon it by law, and such as shall be necessary and proper to provide for the health,
safety, comfort and convenience, maintain peace and order, improve public morals, promote the prosperity and
general welfare of the municipality and the inhabitants thereof, and insure the protection of property therein."
(Sections 91, 149, 177 and 208, BP 337). And under Section 7 of BP 337, "every local government unit shall
exercise the powers expressly granted, those necessarily implied therefrom, as well as powers necessary and proper
for governance such as to promote health and safety, enhance prosperity, improve morals, and maintain peace and
order in the local government unit, and preserve the comfort and convenience of the inhabitants therein."

Police power is the power to prescribe regulations to promote the health, morals, peace, education, good order or
safety and general welfare of the people. It is the most essential, insistent, and illimitable of powers. In a sense it is
the greatest and most powerful attribute of the government. It is elastic and must be responsive to various social
conditions. (Sangalang, el al. vs. IAC, 176 SCRA 719). On it depends the security of social order, the life and health
of the citizen, the comfort of an existence in a thickly populated community, the enjoyment of private and social life,
and the beneficial use of property, and it has been said to be the very foundation on which our social system rests.
(16 C.J.S., p. 896) However, it is not confined within narrow circumstances of precedents resting on past conditions;
it must follow the legal progress of a democratic way of life. (Sangalang, el al. vs. IAC, supra).

xxxx

In the case of Sangalang vs. IAC, supra, We ruled that police power is not capable of an exact definition but has
been, purposely, veiled in general terms to underscore its all-comprehensiveness. Its scope, over-expanding to meet
the exigencies of the times, even to anticipate the future where it could be done, provides enough room for an
efficient and flexible response to conditions and circumstances thus assuring the greatest benefits.

The police power of a municipal corporation is broad, and has been said to be commensurate with, but not to exceed,
the duty to provide for the real needs of the people in their health, safely, comfort, and convenience as consistently
as may be with private rights. It extends to all the great public needs, and, in a broad sense includes all legislation
and almost every function of the municipal government. It covers a wide scope of subjects, and, while it is
especially occupied with whatever affects the peace, security, health, morals, and general welfare of the community,
it is not limited thereto, but is broadened to deal with conditions which exists so as to bring out of them the greatest
welfare of the people by promoting public convenience or general prosperity, and to everything worthwhile for the
preservation of comfort of the inhabitants of the corporation (62 C.J.S. Sec. 128). Thus, it is deemed inadvisable to
attempt to frame any definition which shall absolutely indicate the limits of police power. [33] (Emphases supplied.)

Based on the preceding discussion, it cannot be said that the power to reclassify agricultural land was first delegated
to the city and municipal legislative bodies under Section 26 of the Local Government Code of 1991. Said provision
only articulates a power of local legislatures, which, previously, had only been implied or inferred.

Compliance with other requirements or conditions

Resolution No. 29-A is a valid ordinance, which, upon its approval on July 9, 1972, immediately effected the zoning
and reclassifying of the subject property for residential use. It need not comply with any of the requirements or
conditions which DAR and Buklod are insisting upon.

DAR and Buklod aver that Resolution No. 29-A was not reviewed and approved by the NPC, in violation of the line
in Section 3 of the Local Autonomy Act of 1959, stating that "[c]ities and municipalities may, however, consult the
National Planning Commission on matters pertaining to planning and zoning." Consideration must be given,
however, to the use of the word "may" in the said sentence. Where the provision reads "may," this word shows that
it is not mandatory but discretionary. It is an auxiliary verb indicating liberty, opportunity, permission and
possibility.[34] The use of the word "may" in a statute denotes that it is directory in nature and generally permissive
only. The "plain meaning rule" or verba legis in statutory construction is thus applicable in this case. Where the
words of a statute are clear, plain, and free from ambiguity, it must be given its literal meaning and applied without
attempted interpretation.[35] Since consultation with the NPC was merely discretionary, then there were only two
mandatory requirements for a valid zoning or subdivision ordinance or regulation under Section 3 of the Local
Autonomy Act of 1959, namely, that (1) the ordinance or regulation be adopted by the city or municipal board or
council; and (2) it be approved by the city or municipal mayor, both of which were complied with byl Resolution
No. 29-A.

Section 16(a) of Ordinance No. 1 of the Municipality of Dasmariñas likewise mentions the NPC, to wit:

a. Final plat of subdivision - As essential requirements before a subdivision is accepted for verification by the
Bureau of Lands, the final plat of the scheme of the subdivision must comply with the provision of this
ordinance. Application for plat approval shall be submitted to the Municipal Mayor and shall be forwarded to
the National Planning Commission thru the Highway District Engineer for comment and/or
recommendations, before action is taken by the Municipal Council. The final approval of the plat shall be made
by the Municipal Mayor upon recommendation of the Municipal Council by means of a resolution. (Emphasis
supplied.)

The aforementioned provision of Ordinance No. 1 refers to the final plat of the subdivision. The term plat includes
"plat, plan, plot or replot."[36] It must be distinguished from the application for subdivision.

The Court concurs with the analysis of the Court of Appeals that Resolution No. 29-A actually contains two
resolutions. The first reads:
Resolved, As it is hereby Resolved to approve the application for subdivision containing an area of Three Hundred
Seventy-Two Hectares (372) situated in barrio Bocal and Langkaan, named as Travellers Life
Homes.[37] (Efriphasis supplied.)

It is manifest, even from just a plain reading of said resolution, that the application for subdivision covering the
subject property was categorically and unconditionally approved by the Municipality of Dasmarinas. As a
consequence of such approval, the subject property is immediately deemed zoned and reclassified as residential.

Meanwhile, the second resolution in Resolution No. 29-A states:

Resolved, that this municipal ordinance regarding subdivision regulations existing in this municipality shall be
strictly followed by the subdivision.[38] (Emphases supplied.)

Significantly, this second resolution already refers to a "subdivision," supporting the immediately executory nature
of the First resolution. The municipal ordinance which the subdivision must follow is Ordinance No. 1, the general
subdivision regulations of the Municipality of Dasmarinas. Most provisions of Ordinance No. 1 laid down the
minimum standards for the streets, roadways, sidewalks, intersections, lots and blocks, and other improvements in
the subdivision, with which the final plat must comply or conform. Irrefragably, the review of the final plat of the
subdivision calls for a certain level of technical expertise; hence, the directive to the Municipal Mayor to refer the
final plat to the NPC, through the Highway District Engineer, for comments and recommendation, before the same
is approved by the Municipal Council, then the Mayor.

In relation to the preceding paragraph, Administrative Order No. 152 dated December 16, 1968 required city and
municipal boards and councils to submit proposed subdivision ordinances and plans or forward approved
subdivision ordinances to the NPC. The OP imposed such a requirement because "it has come to the attention of
[the] Office that the minimum standards of such ordinances regarding design, servicing and streets, and open spaces
for parks and other recreational purposes are not being complied with[.]" [39] Review by the NPC of the proposed
subdivision plan was for the purpose of determining "if it conforms with the subdivision ordinance." [40]

It is apparent that Section 16(a) of Ordinance No. 1 and Administrative Ordinance No. 152 contained the same
directive: that the final plat of the subdivision be reviewed by the NPC to determine its conformity with the
minimum standards set in the subdivision ordinance of the municipality. A closer scrutiny will reveal that Section
16(a) of Ordinance No. 1 and Administrative Order No. 152 related to the duties and responsibilities of local
government and NPC officials as regards the final plat of the subdivision. There is no evidence to establish that the
concerned public officers herein did not follow the review process for the final plat as provided in Section 16(a) of
Ordinance No. 1 and Administrative Order No. 152 before approving the same. Under Section 3(m), Rule 131 of the
Rules of Court, there is a presumption that official duty has been regularly performed. Thus, in the absence of
evidence to the contrary, there is a presumption that public officers performed their official duties regularly and
legally and in compliance with applicable laws, in good faith, and in the exercise of sound judgment. [41] And - just
as the Court of Appeals observed - even if it is established that the accountable public officials failed to comply with
their duties and responsibilities under Section 16(a) of Ordinance No. 1 and Administrative Order No. 152, it would
be contrary to the fundamental precepts of fair play to make EMRASON bear the consequences of such non-
compliance.

Although the two resolutions in Resolution No. 29-A may be related to the same subdivision, they are independent
and separate. Non-compliance with the second resolution may result in the delay or discontinuance of subdivision
development, or even the imposition of the. penalties[42] provided in Ordinance No. 1, but not the annulment or
reversal of the first resolution and its consequences.

The Court again agrees with the Court of Appeals that Resolution No. 29-A need not be subjected to review and
approval by the HSRC/HLURB. Resolution No. 29-A was approved by the Municipality of Dasmarinas on July 9,
1972, at which time, there was even no HSRC/HLURB to speak of.

The earliest predecessor of the HSRC, the Task Force on Human Settlements, was created through Executive Order
No. 419 more than a year later on September 19, 1973. And even then, the Task Force had no power to review and
approve zoning and subdivision ordinances and regulations.
It was only on August 9, 1978, with the issuance of Letter of Instructions No. 729, that local governments were
required to submit their existing land use plans, zoning ordinances, enforcement systems, and procedures to the
Ministry of Human Settlements for review and ratification.

The HSRC was eventually established on February 7, 1981. Section 5(b) of the HSRC Charter43 contained the
explicit mandate for the HSRC to:

b. Review, evaluate and approve or disapprove comprehensive land use development plans and zoning
ordinances of local government; and the zoning component of civil works and infrastructure projects of national,
regional and local governments; subdivisions, condominiums or estate development projects including industrial
estates, of both the public and private sectors and urban renewal plans, programs and projects: Provided, that the
land use Development Plans and Zoning Ordinances of Local Governments herein subject to review, evaluation and
approval of the commission shall respect the classification of public lands for forest purposes as certified by the
Ministry of Natural Resources: Provided, further, that the classification of specific alienable and disposable lands by
the Bureau of Lands shall be in accordance with the relevant zoning ordinance of: Local government where it exists;
and provided, finally, that in cities and municipalities where there are as yet no zoning ordinances, the Bureau of
Lands may dispose of specific alienable and disposable lands in accordance with its own classification scheme
subject to the condition that the classification of these lands may be subsequently change by the local governments
in accordance with their particular zoning ordinances which may be promulgated later. (Emphases supplied.)

Neither the Ministry of Human Settlements nor the HSRC, however, could have exercised its power of review
retroactively absent an express provision to that effect in Letter of Instructions No. 729 or the HSRC Charter,
respectively. A sound cannon of statutory construction is that a statute operates prospectively only and never
retroactively, unless the legislative intent to the contrary is made manifest either by the express terms oi' the statute
or by necessary implication. Article 4 of the Civil Code provides that: "Laws shall have no retroactive effect, unless
the contrary is provided." Hence, in order that a law may have retroactive effect, it is necessary that an express
provision to this effect be made in the law, otherwise nothing should be understood which is not embodied in the
law. Furthermore, it must be borne in mind that a law is a rule established to guide our actions without no binding
effect until it is enacted, wherefore, it has no application to past times but only to future time, and that is why it is
said that the law looks to the future only and has no retroactive effect unless the legislator may have formally given
that effect to some legal provisions.[44]

Subsequent zoning ordinances

Still by the authority vested upon it by Section 3 of the Local Autonomy Act, the Sangguniang Bayan of
Dasmariñas subsequently enacted a Comprehensive Zoning Ordinance, ratified by the HLURB under Board
Resolution No. 42-A-3 dated February 11, 1981 (1981 Comprehensive Zoning Ordinance of Dasmarinas). Upon
the request of the DAR, Engr. Alfredo Gil M. Tan, HLURB Regional Technical Coordinator, issued a
certification[45] dated September 10, 1992 stating that per the 1981 Comprehensive Zoning Ordinance of
Dasmarinas, the subject property was within the agricultural zone. Does this mean that the subject property
reverted from residential to agricultural classification?

The Court answers in the negative. While the subject property may be physically located within an agricultural zone
under the 1981 Comprehensive Zoning Ordinance of Dasmarinas, said property retained its residential classification.

According to Section 17, the Repealing Clause, of the 1981 Comprehensive Zoning Ordinance of Dasmarinas: "AH
other ordinances, rules or regulations in conflict with the provision of this Ordinance are hereby repealed: Provided,
that rights that have vested before the cffectivity of this Ordinance shall not be impaired."

In Ayog v. Cusi, Jr.,[46] the Court expounded on vested right and its protection:

That vested right has to be respected. It could not be abrogated by the new Constitution. Section 2, Article XIII of
the 1935 Constitution allows private corporations to purchase public agricultural lands not exceeding one thousand
and twenty-four hectares. Petitioners' prohibition action is barred by the doctrine of vested rights in constitutional
law.
"All right is vested when the right to enjoyment has become the property of some particular person or persons as a
present interest" (16 C.J.S. 1173). It is "the privilege to enjoy property legally vested, to enforce contracts, and enjoy
the rights of property conferred by the existing law" (12 C.J.S. 955, Note 46, No. 6) or "some right or interest in
property which has become fixed and established and is no longer open to doubt or controversy" (Downs vs. Blount,
170 Fed. 15, 20, cited in Balboa vs. Farrales, 51 Phil. 498, 502).

The due process clause prohibits the annihilation of vested rights. "A state may not impair vested rights by
legislative enactment, by the enactment or by the subsequent repeal of a municipal ordinance, or by a change
in the constitution of the State, except in a legitimate exercise of the police power" (16 C.J.S. 1177-78).

It has been observed that, generally, the term "vested right" expresses the concept of present fixed interest, which in
right reason and natural justice should be protected against arbitrary State action, or an innately just and imperative
right which an enlightened free society, sensitive to inherent and irrefragable individual rights, cannot deny (16
C.J.S. 1174, Note 71, No. 5, citing Pennsylvania Greyhound Lines, Inc. vs. Rosenthal, 192 Atl. 2nd 587).47
(Emphasis supplied.)

It is true that protection of vested rights is not absolute and must yield to the exercise of police power:

A law enacted in the exercise of police power to regulate or govern certain activities or transactions could be given
retroactive effect and may reasonably impair vested rights or contracts. Police power legislation is applicable not
only to future contracts, but equally to Ihose already in existence. Non-impairment of contracts or vested rights
clauses will have to yield to the superior and legitimate exercise by the State of police power to promote the health,
morals, peace, education, good order, safety, and general welfare of the people, x x x. [48]

Nonetheless, the Sangguniang Bayan of Dasmariñas in this case, in its exercise of police power through the
enactment of the 1981 Comprehensive Zoning Ordinance, itself abided by the general rule and included in the very
same ordinance an express commitment to honor rights that had already vested under previous ordinances, rules, and
regulations. EMRASON acquired the vested right to use and develop the subject property as a residential
subdivision on July 9, 1972 with the approval of Resolution No. 29-A by the Municipality of Dasmarinas. Such
right cannot be impaired by the subsequent enactment of the 1981 Comprehensive Zoning Ordinance of Dasmarinas,
in which the subject property was included in an agricultural zone. Hence, the Municipal Mayor of Dasmariflas had
been continuously and consistently recognizing the subject property as a residential subdivision. [49]

Incidentally, EMRASON mentions Resolution No. 105, Defining and Declaring the Boundaries of Industrial and
Residential Land Use Plan in the Municipalities of Imus and Parts of Dasmariflas, Carmona, Gen. Mariano Alvarez,
Gen. Trias, Silang, Tanza, Naic, Rosario, and Trece Martires City, Province o[ Cavite, approved by the Sangguniang
Panlalawigan of Cavite on March 25, 1988. The Sangguniang Panlalawigan determined that "the lands extending
from the said designated industrial areas would have greater economic value for residential and institutional uses,
and would serve the interest and welfare for the greatest good of the greatest number of people."50 Resolution No.
105, approved by the HLURB in 1990, partly reads:

Tracts of land in the Municipality of Carmona from the People's Technology Complex to parts of the Municipality
of Silang, parts of the Municipalities of Dasmariñas, General Trias, Trece Martires City, Municipalities of Tanza
and Naic forming the strip of land traversed by the Puerto Azul Road extending two kilometers more or less from
each side of the road which are hereby declared as industrial-residential-institutional mix. (Emphases supplied.)

There is no question that the subject property is located within the afore-described area. And even though
Resolution No. 105 has no direct bearing on the classification of the subject property prior to the CARL - it taking
effect only in 1990 after being approved by the HLURB - it is a confirmation that at present, the subject property
and its surrounding areas are deemed by the Province of Cavite better suited and prioritized for industrial and
residential development, than agricultural purposes.

CARP exemption

The Court reiterates that since July 9, 1972, upon approval of Resolution No. 29-A by the Municipality of
Dasmarinas, the subject property had been reclassified from agricultural to residential. The tax declarations covering
the subject property, classifying the same as agricultural, cannot prevail over Resolution No. 29-A. The following
pronouncements of the Court in the Patalinghug case are of particular relevance herein:

The reversal by the Court of Appeals of the trial court's decision was based on Tepoot's building being declared for
taxation purposes as residential. It is our considered view, however, that a tax declaration is not conclusive of (he
nature of the property for zoning purposes. A property may have been declared by its owner as residential for
real estate taxation purposes but it may well be within a commercial zone. A discrepancy may thus exist in the
determination of the nature of property for real estate taxation purposes vis-a-vis the determination of a property for
zoning purposes.

xxxx

The trial court's determination that Mr. Tepoot's building is commercial and, therefore, Sec. 8 is inapplicable, is
strengthened by the fact that the Sangguniang Panlungsod has declared the questioned area as commercial or C-2.
Consequently, even if Tepoot's building was declared for taxation purposes as residential, once a local government
has reclassified an area as commercial, that determination for zoning purposes must prevail. While the
commercial character of the questioned vicinity has been declared thru the ordinance, private respondents have
failed to present convincing arguments to substantiate their claim that Cabaguio Avenue, where the funeral parlor
was constructed, was still a residential zone. Unquestionably, the operation of a funeral parlor constitutes a
"commercial purpose," as gleaned from Ordinance No. 363. [52] (Emphases supplied.)

Since the subject property had been reclassified as residential land by virtue of Resolution No. 29-A dated July 9,
1972, it is no longer agricultural land by the time the CARL took effect on June 15, 1988 and is, therefore, exempt
from the CARP.

This is not the first time that the Court made such a ruling.

In the Natalia Realty case, Presidential Proclamation No. 1637 dated April 18, 1979 set aside land in the
Municipalities of Antipolo, San Mateo, and Montalban, Province of Rizal, as townsite areas. The properties owned
by Natalia Realty, Inc. (Natalia properties) were situated within the areas proclaimed as townsite reservation. The
developer of the Natalia properties was granted the necessary clearances and permits by the PJSRC for the
development of a subdivision in the area. Thus, the Natalia properties later became the Antipolo Hills
Subdivision. Following the effectivity of the CARL on June 15, 1988, the DAR placed the undeveloped portions of
the Antipolo Hills Subdivision under the CARP. For having done so, the Court found that the DAR committed grave
abuse of discretion, thus:

Section 4 of R.A. 6657 provides that the CARL shall "cover, regardless of tenurial arrangement and commodity
produced, all public and private agricultural lands." As to what constitutes "agricultural land," it is referred to as
"land devoted to agricultural activity as defined in this Act and not classified as mineral, forest, residential,
commercial or industrial land." The deliberations of the Constitutional Commission confirm this limitation.
"Agricultural lands" arc only those lands which are "arable and suitable agricultural lands" and "do not include
commercial, industrial and residential lands."

Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills Subdivision cannot in any
language be considered as "agricultural lands." These lots were intended for residential use. They ceased to be
agricultural lands upon approval of their inclusion in the Lungsod Silangan Reservation. Even today, the areas
in question continue to be developed as a low-cost housing subdivision, albeit at a snail's pace, x x x The enormity
of the resources needed for developing a subdivision may have delayed its completion but this does not
detract from the fact that these lands are still residential lands and outside the ambit of the CARL.

Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These include lands previously
converted to non-agricultural uses prior to the eifectivity of CARL by government agencies other than respondent
OAR. In its Revised Rules and Regulations Governing Conversion of Private Agricultural Lands to Non-
Agricultural Uses, DAR itself defined ''agricultural land" thus -
"x x x Agricultural land refers to those devoted to agricultural activity as defined in R.A. 6657 and not classified as
mineral or forest by the Department of Environment and Natural Resources (DENR) and its predecessor agencies,
and not classified in town plans and zoning ordinances as approved by the Housing and Land Use Regulatory Board
(BLURB) and its preceding competent authorities prior to 15 June 1988 for residential, commercial or industrial
use."

Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is bound by such conversion. It
was therefore error to include the undeveloped portions of the Antipolo Hills Subdivision within the coverage of
CARL.

Be that as it may, the Secretary of Justice, responding to a query by the Secretary of Agrarian Reform, noted in an
Opinion that lands covered by Presidential Proclamation No. 1637, inter alia, of which the NATALIA lands are
part, having been reserved for townsite purposes "to be developed as human settlements by the proper land and
housing agency," are "not deemed 'agricultural lands' within the meaning and intent of Section 3 (c) of R.A. No.
6657." Not being deemed "agricultural lands," they are outside the coverage of CARL.[53] (Emphases supplied.)

That the land in the Natalia Realty case was reclassified as residential by a presidential proclamation, while the
subject property herein was reclassified as residential by a local ordinance, will not preclude the application of the
ruling of this Court in the former to the latter. The operative fact that places a parcel of land beyond the ambit of the
CARL is its valid reclassification from agricultural to non-agricultural prior to the effectivity of the CARL on June
15, 1988, not by how or whose authority it was reclassified.

In Pasong Bayabas Farmers Association, Inc. v. Court of Appeals [54] (Pasong Bayabas case), the Court made the
following findings:

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

Noticeably, there were several government agencies which reclassified and converted the property from agricultural
to non-agricultural in the Pasong Bayabas case. The CARL though does not specify which specific government
agency should have done the reclassification. To be exempt from CARP, all that is needed is one valid
reclassification of the land from agricultural to non-agricultural by a duly authorized government agency before June
15, 1988, when the CARL took effect. All similar actions as regards the land subsequently rendered by other
government agencies shall merely serve as confirmation of the reclassification. The Court actually recognized in
the Pasong Bayabas case the power of the local government to convert or reclassify lands through a zoning
ordinance:

Section 3 of Rep. Act No. 2264, amending the Local Government Code, specifically empowers municipal
and/or city councils to adopt zoning and subdivision ordinances or regulations in consultation with the
National Planning Commission. A zoning ordinance prescribes, defines, and apportions a given political
subdivision into specific land uses as present and future projection of needs. The power of the local government to
convert or reclassify lands to residential lands to non-agricultural lands rcclassificd is not subject to the
approval of the Department of Agrarian Reform. Section 65 of Rep. Act No. 6657 relied upon by the petitioner
applies only to applications by the landlord or the beneficiary for the conversion of lands previously placed under
the agrarian reform law after the lapse of five years from its award. It docs not apply to agricultural lands already
converted as residential lands prior to the passage of Rep. Act No. 6657. [56] (Emphases supplied.)

At the very beginning of Junto v. Garilao,[57] the Court already declared that:

Lands already classified and identified as commercial, industrial or residential before June 15, 1988 - the date of
effectivity of the Comprehensive Agrarian Reform Law (CARL) - are outside the coverage of this law. Therefore,
they no longer need any conversion clearance from the Department of Agrarian Reform (DAR). [58]

The Court then proceeded to uphold the authority of the City Council of Bacolod to reclassify as residential a parcel
of land through Resolution No. 5153-A, series of 1976. The reclassification was later affirmed by the HSRC.
Resultantly, the Court sustained the DAR Order dated September 13, 1994, exempting the same parcel of land from
CARP Coverage.

The writ of preliminary injunction

Any objection of Buklod against the issuance by the Court of Appeals of a writ of preliminary injunction, enjoining
then DAR Secretary Garilao and Deputy Executive Secretary Corona from implementing the OP Decision of
February 7, 1996 and Resolution of May 14, 1996 during the pendency of CA-G.R. SP No. 40950, had been
rendered moot and academic when the appellate court already promulgated its Decision in said case on March 26,
1997 which made the injunction permanent. As the Court held in Kho v. Court of Appeals[59]:

We cannot likewise overlook the decision of the trial court in the case for final injunction and damages. The
dispositive portion of said decision held that the petitioner does not have trademark rights on the name and container
of the beauty cream product. The said decision on the merits of the trial court rendered the issuance of the writ of a
preliminary injunction moot and academic notwithstanding the fact that the same has been appealed in the Court of
Appeals. This is supported by our ruling in La Vista Association, Inc. v. Court of Appeals, to wit:

Considering that preliminary injunction is a provisional remedy which may be granted at any time after the
commencement of the action and before judgment when it is established that the plaintiff is entitled to the relief
demanded and only when his complaint shows facts entitling such reliefs xxx and it appearing that the trial court
had already granted the issuance of a final injunction in favor of petitioner in its decision rendered after trial on the
merits xxx the Court resolved to Dismiss the instant petition having been rendered moot and academic. An
injunction issued by the trial court after it has already made a clear pronouncement as to the plaintiffs right thereto,
that is, after the same issue has been decided on the merits, the trial court having appreciated the evidence
presented, is proper, notwithstanding the fact that the decision rendered is not yet final xxx. Being an ancillary
remedy, the proceedings for preliminary injunction cannot stand separately or proceed independently of the decision
rendered on the merit of the main case for injunction. The merit of the main case having been already determined in
favor of the applicant, the preliminary determination of its non-existence ceases to have any force and effect, (italics
supplied)

La Vista categorically pronounced that the issuance of a final injunction renders any question on the preliminary
injunctive order moot and academic despite the fact that the decision granting a final injunction is pending appeal.
Conversely, a decision denying the applicant-plaintiffs right to a final injunction, although appealed, renders moot
and academic any objection to the prior dissolution of a writ of preliminary injunction. [60]

Issues belatedly raised

Buklod sought to intervene in CA-G.R. SP No. 40950, then pending before the Court of Appeals, by filing a
Manifestation and Omnibus Motion in which it argued only two points: (1) the writ of preliminary injunction be
immediately dissolved for having been issued in violation of Section 55 of the CARL; and (2) that the Petition for
Review of EMRASON be dismissed for being the wrong remedy.

It was only after the Court of Appeals rendered its Decision dated March 26, 1997 unfavorable to both DAR and
Buklod did Buklod raise in its Motion for Reconsideration several other issues, both factual and legal, [61] directly
assailing the exemption of the subject property from the CARP. The Court of Appeals refused to consider said
issues because they were raised by Buklod for the first time in its Motion for Reconsideration.

Buklod persistently raises the same issues before this Court, and the Court, once more, refuses to take cognizance of
the same.

As a rule, no issue may be raised on appeal unless it has been brought before the lower tribunal for its consideration.
Higher courts are precluded from entertaining matters neither alleged in the pleadings nor raised during the
proceedings below, but ventilated for the first time only in a motion for reconsideration or on appeal. [62] The issues
were first raised only in the Motion for Reconsideration of the Decision of the Court of Appeals, thus, it is as if they
were never duly raised in that court at all. "Hence, this Court cannot now, for the first time on appeal, entertain these
issues, for to do so would plainly violate the basic rule of fair play, justice and due process. The Court reiterates and
emphasizes the well-settled rule that an issue raised for the first time on appeal and not raised timely in the
proceedings in the lower court is barred by estoppel.[63]

Indeed, there are exceptions to the aforecited rule that no question may be raised for the first time on appeal. Though
not raised below, the issue of lack of jurisdiction over the subject matter may be considered by the reviewing court,
as it may be raised at any stage. The said court may also consider an issue not properly raised during trial when there
is plain error. Likewise, it may entertain such arguments when there are jurisprudential developments affecting the
issues, or when the issues raised present a matter of public policy. [64] Buklod, however, did not allege, much less
argue, that its case falls under any of these exceptions.

Nonetheless, even when duly considered by this Court, the issues belatedly raised by Buklod are without merit.

Contrary to the contention of Buklod, there is no necessity to carry out the conversion of the subject property to a
subdivision within one year, at the risk of said property reverting to agricultural classification.

Section 36(1) of the Agricultural Land Reform Code, in effect since August 8, 1963, provided:

SEC. 36. Possession of Landholding; Exceptions.— Notwithstanding 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 non-
agricultural 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 have the right to demand
possession of the land and recover damages for any loss incurred by him because of said dispossessions; xxx.
(Emphasis supplied.)

On September 10, 1971, the Agricultural Land Reform Code was amended and it came to be known as the Code of
Agrarian Reforms. After its amendment, Section 36(1) stated:

(1) The landholding is declared by the department head upon recommendation of the National Planning Commission
to be suited for residential, commercial, industrial or some other urban purposes: Provided, That the agricultural
lessee shall be entitled to disturbance compensation equivalent to five times the average of the gross harvests on his
landholding during the last five preceding calendar years.

At the time Resolution No. 29-A was enacted by the Municipality of Dasmarinas on July 9, 1972, the Code of
Agrarian Reforms was already in effect. The amended Section 36(3) thereof no longer contained the one-year time
frame within which conversion should be carried out.

More importantly, Section 36(1) of the Code o[ Agrarian Reforms would apply only if the land in question was
subject of an agricultural leasehold, a fact that was not established in the proceedings below. It may do well for the
Buklod members to remember that they filed their present Petition to seek award of ownership over portions of the
subject property as qualified farmer-beneficiaries under the CARP; and not payment of disturbance compensation as
agricultural lessees under the Code of Agrarian Reforms. The insistence by Buklod on the requisites under Section
36(1) of the Agricultural Land Reform Code/Code of Agrarian Reforms only serves to muddle the issues rather than
support its cause.

Buklod likewise invokes the vested rights of its members under the Agricultural Land Reform Code/Code of
Agrarian Reforms and the Tenants Emancipation Decree, which preceded the CARP. Yet, for the Buklod

members to be entitled to any of the rights and benefits under the said laws, it is incumbent upon them to prove first
that they qualify as agricultural lessees or farm workers of the subject property, as defined in Section 166(2) [65] and
(15)[66]of the Code of Agrarian Reforms; and/or they are tenant-farmers of private agricultural lands primarily
devoted to rice and corn, under a system of share-crop or lease tenancy, and are members of a duly recognized
farmer's cooperative, as required by the Tenants Emancipation Decree. None of these determinative facts were
established by Buklod.

Buklod counters that it precisely moved for a hearing before the Court of Appeals so that it could present evidence
to prove such facts, but the appellate court erroneously denied its motion.

The Court finds that the Court of Appeals did not err on this matter.

In the recent case of Office of the Ombudsman v. Sison,[67] the Court expounded on the rules on intervention:

It is fundamental that the allowance or disallowance of a Motion 10 Intervene is addressed to the sound discretion of
the court. The permissive tenor of the rules shows the intention lo give to the court the full measure of discretion in
permitting or disallowing the intervention, thus:

SECTION 1. Who may intervene, - A person who has a Icga) interest in the mailer in litigation, or in the success of
either of the parties, or an interest against both, or is so situated as to be adversely affected by a distribution or other
disposition of property in the custody of the court or of an officer thereof may, with leave of court, be allowed to
intervene in the action. The court shall consider whether or not the intervention will unduly delay or prejudice the
adjudication of the rights of the original parties, and whether or not the intcrvenor's rights may be fully protected in
a separate proceeding.

SECTION 2. Time to intervene. - The motion to intervene may be filed al any time before rendition of judgment
by the trial court. A copy of the pleading-in-intervention shall be attached to the motion and served on the original
parties. (Emphasis supplied.)

Simply, intervention is a procedure by which third persons, not originally parties to the suit but claiming an interest
in the subject matter, come into the case in order to protect their right or interpose their claim. Its main purpose is to
settle in one action and by a single judgment all conflicting claims of, or the whole controversy among, the persons
involved.

To warrant intervention under Rule 19 of the Rules of Court, two requisites must concur: (1) the movant has a legal
interest in the matter in litigation; and (2) intervention must not unduly delay or prejudice the adjudication of the
rights of the parties, nor should the claim of the intervenor be capable of being properly decided in a separate
proceeding. The interest,' which entitles one to intervene, must involve the matter in litigation and of such direct and
immediate character that the intervenor will either gain or lose by the direct legal operation and effect of the
judgment.[68]

To apply the rules strictly, the motion of Buklod to intervene was filed too late. According to Section 2, Rule 19 of
the Rules of Civil Procedure, "a motion to intervene may be filed at any time before rendition of judgment by the
trial court." Judgment was already rendered in DARAB Case No. IV-Ca-0084-92 (the petition of EMRASON to
nullify the notices of acquisition over the subject property), not only by the DAR Hearing Officer, who originally
heard the case, but also the DAR Secretary, and then the OP, on appeal.

Buklod only sought to intervene when the case was already before the Court of Appeals. The appellate court, in the
exercise of its discretion, still allowed the intervention of Buklod in CA-G.R. SP No. 40950 only because it was "not
being in any way prejudicial to the interest of the original parties, nor will such intervention change the factual
legal complexion of the case."[69] The intervention of Buklod challenged only the remedy availed by EMRASON
and the propriety of the preliminary injunction issued by the Court of Appeals, which were directly and adequately
addressed by the appellate court in its Decision dated March 26, 1997.

The factual matters raised by Buklod in its Motion for Reconsideration of the March 26, 1997 Decision of the Court
of Appeals, and which it sought to prove by evidence, inevitably changes "the factual legal complexion of the
case." The allegations of Buklod that its members are tenant-farmers of the subject property who acquired vested
rights under previous agrarian reform laws, go against the findings of the DAR Region IV Hearing Officer, adopted
by the DAR Secretary, the OP, and Court of Appeals, that the subject property was being acquired under the CARP
for distribution to the tenant-farmers of the neighboring NDC property, after a determination that the latter property
was insufficient for the needs of both the NDC-Marubeni industrial estate and the tenant-farmers.

Furthermore, these new claims of Buklod are beyond the appellate jurisdiction of the Court of Appeals, being within
the primary jurisdiction of the DAR. As Section 50 of the CARL, as amended, reads:

SEC. 50. Quasi-Judicial Powers of the DAR. - The DAR is hereby vested with primary jurisdiction to determine and
adjudicate agrarian reform matters and shall have exclusive original jurisdiction over all matters involving the
implementation of agrarian reform, except those falling under the exclusive jurisdiction of the Department of
Agriculture (DA) and the Department of Environment and Natural Resources (DENR).

In fact, records reveal that Buklod already sought remedy from the DARAB. DARAB Case No. IV-CA-0261,
entitled Buklod nang Magbubukid sa Lupaing Ramos, rep. by Edgardo Mendoza, et at. v. E.M. Ramos and Sons,
Inc., et al., was pending at about the same time as DARAB Case No. lV-Ca-0084-92, the petition of EMRASON for
nullification of the notices of acquisition covering the subject property. These two cases were initially consolidated
before the DARAB Region IV. The DARAB Region IV eventually dismissed DARAB Case No. IV-Ca-0084-92
and referred the same to the DAR Region IV Office, which had jurisdiction over the case. Records failed to reveal
the outcome of DARAB Case No. IV-CA-0261,

On a final note, this Court has stressed more than once that social justice - or any justice for that matter - is for the
deserving, whether he be a millionaire in his mansion or a pauper in his hovel. It is true that, in case of reasonable
doubt, the Court is called upon to tilt the balance in favor of the poor to whom the Constitution fittingly extends its
sympathy and compassion. But never is it justified to give preference to the poor simply because they are poor, or to
reject the rich simply because they are rich, for justice must always be served for poor and rich alike, according to
the mandate of the law.[70] Vigilance over the rights of the landowners is equally important because social justice
cannot be invoked to trample on the rights of property owners, who under our Constitution and laws are also entitled
to protection.[71]

WHEREFORE, the Petitions for Review filed by the Buklod Nang Magbubukid Sa Lupaing Ramos, Inc. in G.R.
No. 131481 and the Department of Agrarian Reform in G.R. No. 131624 are hereby DENIED. The Decision dated
March 26, 1997 and the Resolution dated November 24, 1997 of the Court of Appeals in CA-G.R. SP No. 40950 are
hereby AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 178895 January 10, 2011

REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF AGRARIAN REFORM,

through the HON. SECRETARY NASSER C. PANGANDAMAN, Petitioner,
vs.
SALVADOR N. LOPEZ AGRI-BUSINESS CORP., represented by SALVADOR N. LOPEZ, JR., President
and General Manager, Respondent.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 179071

SALVADOR N. LOPEZ AGRI-BUSINESS CORP., represented by SALVADOR N. LOPEZ, JR., President

and General Manager, Petitioner,
vs.
DEPARTMENT OF AGRARIAN REFORM, through the Honorable Secretary, Respondent.

DECISION

SERENO, J.:

Before us are two Rule 45 Petitions1 filed separately by the Department of Agrarian Reform (DAR), through the
Office of the Solicitor General, and by the Salvador N. Lopez Agri-Business Corp. (SNLABC). Each Petition
partially assails the Court of Appeals Decision dated 30 June 2006 2 with respect to the application for exemption of
four parcels of land - located in Mati, Davao Oriental and owned by SNLABC - from Republic Act No. 6657,
otherwise known as the Comprehensive Agrarian Reform Law (CARL).

There is little dispute as to the facts of the case, as succinctly discussed by the Court of Appeals and adopted herein
by the Court, to wit:

Subject of this petition are four (4) parcels of land with an aggregate area of 160.1161 hectares registered in the
name of Salvador N. Lopez Agri-Business Corporation. Said parcels of land are hereinafter described as follows:

1avvphi1
Title No. Area Location

TCT No. T-12635 (Lot 1454-A & 1296) 49.5706 has. Bo. Limot, Mati, Davao Oriental

TCT No. T-12637 (Lot 1298) 42.6822 has. Bo. Don Enrique Lopez, Mati, Dvo. Or.

TCT No. T-12639 (Lot 1293-B) 67.8633 has. Bo. Don Enrique Lopez, Mati, Dvo. Or.

On August 2, 1991, Municipal Agrarian Reform Officer (MARO) Socorro C. Salga issued a Notice of Coverage to
petitioner with regards (sic) to the aforementioned landholdings which were subsequently placed under Compulsory
Acquisition pursuant to R.A. 6657 (Comprehensive Agrarian Reform Law).
On December 10, 1992, petitioner filed with the Provincial Agrarian Reform Office (PARO), Davao Oriental, an
Application for Exemption of the lots covered by TCT No. T-12637 and T-12639 from CARP coverage. It alleged
that pursuant to the case of Luz Farms v. DAR Secretary said parcels of land are exempted from coverage as the said
parcels of land with a total area of 110.5455 hectares are used for grazing and habitat of petitioner’s 105 heads of
cattle, 5 carabaos, 11 horses, 9 heads of goats and 18 heads of swine, prior to the effectivity of the Comprehensive
Agrarian Reform Law (CARL).

On December 13, 1992 and March 1, 1993, the MARO conducted an onsite investigation on the two parcels of land
confirming the presence of the livestock as enumerated. The Investigation Report dated March 9, 1993 stated:

That there are at least 2[5] to 30 heads of cows that farrow every year and if the trend of farrowing persist (sic), then
the cattle shall become overcrowded and will result to scarcity of grasses for the cattle to graze;

That during the week cycle, the herds are being moved to the different adjacent lots owned by the corporation. It
even reached Lot 1454-A and Lot 1296. Thereafter, the herds are returned to their respective night chute corrals
which are constructed under Lot 1293-B and Lot 1298.

xxx

That the age of coconut trees planted in the area are already 40 to 50 years and have been affected by the recent
drought that hit the locality.

That the presence of livestocks (sic) have already existed in the area prior to the Supreme Court decision on LUZ
FARMS vs. Secretary of Agrarian Reform. We were surprised however, why the management of the corporation did
not apply for Commercial Farm Deferment (CFD) before, when the two years reglamentary (sic) period which the
landowner was given the chance to file their application pursuant to R.A. 6657, implementing Administrative Order
No. 16, Series of 1989;

However, with regards to what venture comes (sic) first, coconut or livestocks (sic), majority of the farmworkers
including the overseer affirmed that the coconut trees and livestocks (sic) were (sic) simultaneously and all of these
were inherited by his (applicant) parent. In addition, the financial statement showed 80% of its annual income is
derived from the livestocks (sic) and only 20% from the coconut industry.

Cognitive thereto, we are favorably recommending for the exemption from the coverage of CARP based on LUZ
FARMS as enunciated by the Supreme Court the herein Lot No. 1293-B Psd-65835 under TCT No. T-12639 except
Lot No. 1298, Cad. 286 of TCT No. T-12637 which is already covered under the Compulsory Acquisition (CA)
Scheme and had already been valued by the Land Valuation Office, Land Bank of the Philippines.

On June 24, 1993, TCT No. T-12635 covering Lots 1454-A & 1296 was cancelled and a new one issued in the name
of the Republic of the Philippines under RP T-16356. On February 7, 1994, petitioner through its President,
Salvador N. Lopez, Jr., executed a letter-affidavit addressed to the respondent-Secretary requesting for the exclusion
from CARP coverage of Lots 1454-A and 1296 on the ground that they needed the additional area for its livestock
business. On March 28, 1995, petitioner filed before the DAR Regional Director of Davao City an application for
the exemption from CARP coverage of Lots 1454-A and 1296 stating that it has been operating grazing lands even
prior to June 15, 1988 and that the said two (2) lots form an integral part of its grazing land.

The DAR Regional Director, after inspecting the properties, issued an Order dated March 5, 1997 denying the
application for exemption of Lots 1454-A and 1296 on the ground that it was not clearly shown that the same were
actually, directly and exclusively used for livestock raising since in its application, petitioner itself admitted that it
needs the lots for additional grazing area. The application for exemption, however of the other two (2) parcels of
land was approved.
On its partial motion for reconsideration, petitioner argued that Lots 1454-A & 1296 were taken beyond the
operation of the CARP pursuant to its reclassification to a Pollutive Industrial District (Heavy Industry) per
Resolution No. 39 of the Sangguniang Bayan of Mati, Davao Oriental, enacted on April 7, 1992. The DAR Regional
Director denied the Motion through an Order dated September 4, 1997, ratiocinating that the reclassification does
not affect agricultural lands already issued a Notice of Coverage as provided in Memorandum Circular No. 54-93:
Prescribing the Guidelines Governing Section 20 of R.A. 7160.

Undaunted, petitioner appealed the Regional Director’s Orders to respondent DAR. On June 10, 1998, the latter
issued its assailed Order affirming the Regional Director’s ruling on Lots 1454-A & 1296 and further declared Lots
1298 and 1293-B as covered by the CARP. Respondent ruled in this wise considering the documentary evidence
presented by petitioner such as the Business Permit to engage in livestock, the certification of ownership of large
cattle and the Corporate Income Tax Returns, which were issued during the effectivity of the Agrarian Reform Law
thereby debunking petitioner’s claim that it has been engaged in livestock farming since the 1960s. Respondent
further ruled that the incorporation by the Lopez family on February 12, 1988 or four (4) months before the
effectivity of R.A. 6657 was an attempt to evade the noble purposes of the said law.

On October 17, 2002, petitioner’s Motion for Reconsideration was denied by respondent prompting the former to
file the instant petition.3

In the assailed Decision dated 30 June 2006,4 the Court of Appeals partially granted the SNLABC Petition and
excluded the two (2) parcels of land (Transfer Certificate of Title [TCT] Nos. T-12637 and T-12639) located in
Barrio Don Enrique Lopez (the "Lopez lands") from coverage of the CARL.
However, it upheld the Decisions of the Regional Director 5 and the DAR6 Secretary denying the application for
exemption with respect to Lots 1454-A and 1296 (previously under TCT No. T-12635) in Barrio Limot (the "Limot
lands"). These lots were already covered by a new title under the name of the Republic of the Philippines (RP T-
16356).

The DAR and SNLABC separately sought a partial reconsideration of the assailed Decision of the Court of Appeals,
but their motions for reconsideration were subsequently denied in the Court of Appeals Resolution dated 08 June
2007.7

The DAR and SNLABC elevated the matter to this Court by filing separate Rule 45 Petitions (docketed as G.R. No.
1788958 and 179071,9 respectively), which were subsequently ordered consolidated by the Court.

The main issue for resolution by the Court is whether the Lopez and Limot lands of SNLABC can be considered
grazing lands for its livestock business and are thus exempted from the coverage of the CARL under the Court’s
ruling in Luz Farms v. DAR.10 The DAR questions the disposition of the Court of Appeals, insofar as the latter
allowed the exemption of the Lopez lands, while SNLABC assails the inclusion of the Limot lands within the
coverage of the CARL.

The Court finds no reversible error in the Decision of the Court of Appeals and dismisses the Petitions of DAR and
SNLABC.

Preliminarily, in a petition for review on certiorari filed under Rule 45, the issues that can be raised are, as a general
rule, limited to questions of law.11 However, as pointed out by both the DAR and SNLABC, there are several
recognized exceptions wherein the Court has found it appropriate to re-examine the evidence presented.12 In this
case, the factual findings of the DAR Regional Director, the DAR Secretary and the CA are contrary to one another
with respect to the following issue: whether the Lopez lands were actually, directly and exclusively used for
SNLABC’s livestock business; and whether there was intent to evade coverage from the Comprehensive Agrarian
Reform Program (CARP) based on the documentary evidence. On the other hand, SNLABC argues that these
authorities misapprehended and overlooked certain relevant and undisputed facts as regards the inclusion of the
Limot lands under the CARL. These circumstances fall within the recognized exceptions and, thus, the Court is
persuaded to review the facts and evidence on record in the disposition of these present Petitions.
The Lopez lands of SNLABC are actually and directly being used for livestock and are thus exempted from the
coverage of the CARL.

Briefly stated, the DAR questions the object or autoptic evidence relied upon by the DAR Regional Director in
concluding that the Lopez lands were actually, directly and exclusively being used for SNLABC’s livestock
business prior to the enactment of the CARL.

In Luz Farms v. Secretary of the Department of Agrarian Reform, 13 the Court declared unconstitutional the CARL
provisions14 that included lands devoted to livestock under the coverage of the CARP. The transcripts of the
deliberations of the Constitutional Commission of 1986 on the meaning of the word "agricultural" showed that it
was never the intention of the framers of the Constitution to include the livestock and poultry industry in the
coverage of the constitutionally mandated agrarian reform program of the government. 15 Thus, lands devoted to the
raising of livestock, poultry and swine have been classified as industrial, not agricultural, and thus exempt from
agrarian reform.16

Under the rules then prevailing, it was the Municipal Agrarian Reform Officer (MARO) who was primarily
responsible for investigating the legal status, type and areas of the land sought to be excluded;17 and for ascertaining
whether the area subject of the application for exemption had been devoted to livestock-raising as of 15 June
1988.18 The MARO’s authority to investigate has subsequently been replicated in the current DAR guidelines
regarding lands that are actually, directly and exclusively used for livestock raising.19 As the primary official in
charge of investigating the land sought to be exempted as livestock land, the MARO’s findings on the use and nature
of the land, if supported by substantial evidence on record, are to be accorded greater weight, if not finality.

Verily, factual findings of administrative officials and agencies that have acquired expertise in the performance of
their official duties and the exercise of their primary jurisdiction are generally accorded not only respect but, at
times, even finality if such findings are supported by substantial evidence. 20 The Court generally accords great
respect, if not finality, to factual findings of administrative agencies because of their special knowledge and
expertise over matters falling under their jurisdiction.21

In the instant case, the MARO in its ocular inspection22 found on the Lopez lands several heads of cattle, carabaos,
horses, goats and pigs, some of which were covered by several certificates of ownership. There were likewise
structures on the Lopez lands used for its livestock business, structures consisting of two chutes where the livestock
were kept during nighttime. The existence of the cattle prior to the enactment of the CARL was positively affirmed
by the farm workers and the overseer who were interviewed by the MARO. Considering these factual findings and
the fact that the lands were in fact being used for SNLABC’s livestock business even prior to 15 June 1988, the
DAR Regional Director ordered the exemption of the Lopez lands from CARP coverage. The Court gives great
probative value to the actual, on-site investigation made by the MARO as affirmed by the DAR Regional Director.
The Court finds that the Lopez lands were in fact actually, directly and exclusively being used as industrial lands for
livestock-raising.

Simply because the on-site investigation was belatedly conducted three or four years after the effectivity of the
CARL does not perforce make it unworthy of belief or unfit to be offered as substantial evidence in this case.
Contrary to DAR’s claims, the lack of information as regards the initial breeders and the specific date when the
cattle were first introduced in the MARO’s Report does not conclusively demonstrate that there was no livestock-
raising on the Lopez lands prior to the CARL. Although information as to these facts are significant, their non-
appearance in the reports does not leave the MARO without any other means to ascertain the duration of livestock-
raising on the Lopez lands, such as interviews with farm workers, the presence of livestock infrastructure, and
evidence of sales of cattle – all of which should have formed part of the MARO’s Investigation Report.

Hence, the Court looks with favor on the expertise of the MARO in determining whether livestock-raising on the
Lopez lands has only been recently conducted or has been a going concern for several years already. Absent any
clear showing of grave abuse of discretion or bias, the findings of the MARO - as affirmed by the DAR Regional
Director - are to be accorded great probative value, owing to the presumption of regularity in the performance of his
official duties.23
The DAR, however, insisted in its Petition24 on giving greater weight to the inconsistencies appearing in the
documentary evidence presented, and noted by the DAR Secretary, in order to defeat SNLABC’s claim of
exemption over the Lopez lands. The Court is not so persuaded.

In the Petition, the DAR argued that that the tax declarations covering the Lopez lands characterized them as
agricultural lands and, thus, detracted from the claim that they were used for livestock purposes. The Court has since
held that "there is no law or jurisprudence that holds that the land classification embodied in the tax declarations is
conclusive and final nor would proscribe any further inquiry"; hence, "tax declarations are clearly not the sole basis
of the classification of a land."25 Applying the foregoing principles, the tax declarations of the Lopez lands as
agricultural lands are not conclusive or final, so as to prevent their exclusion from CARP coverage as lands devoted
to livestock-raising. Indeed, the MARO’s on-site inspection and actual investigation showing that the Lopez lands
were being used for livestock-grazing are more convincing in the determination of the nature of those lands.lavvphil

Neither can the DAR in the instant case assail the timing of the incorporation of SNLABC and the latter’s operation
shortly before the enactment of the CARL. That persons employ tactics to precipitously convert their lands from
agricultural use to industrial livestock is not unheard of; they even exploit the creation of a new corporate vehicle to
operate the livestock business to substantiate the deceitful conversion in the hopes of evading CARP coverage.
Exemption from CARP, however, is directly a function of the land’s usage, and not of the identity of the entity
operating it. Otherwise stated, lands actually, directly and exclusively used for livestock are exempt from CARP
coverage, regardless of the change of owner.26 In the instant case, whether SNLABC was incorporated prior to the
CARL is immaterial, since the Lopez lands were already being used for livestock-grazing purposes prior to the
enactment of the CARL, as found by the MARO. Although the managing entity had been changed, the business
interest of raising livestock on the Lopez lands still remained without any indication that it was initiated after the
effectivity of the CARL.

As stated by SNLABC, the Lopez lands were the legacy of Don Salvador Lopez, Sr. The ownership of these lands
was passed from Don Salvador Lopez, Sr., to Salvador N. Lopez, Jr., and subsequently to the latter’s children before
being registered under the name of SNLABC. Significantly, SNLABC was incorporated by the same members of
the Lopez family, which had previously owned the lands and managed the livestock business.27 In all these past
years, despite the change in ownership, the Lopez lands have been used for purposes of grazing and pasturing cattle,
horses, carabaos and goats. Simply put, SNLABC was chosen as the entity to take over the reins of the livestock
business of the Lopez family. Absent any other compelling evidence, the inopportune timing of the incorporation of
the SNLABC prior to the enactment of the CARL was not by itself a categorical manifestation of an intent to avoid
CARP coverage.

Furthermore, the presence of coconut trees, although an indicia that the lands may be agricultural, must be placed
within the context of how they figure in the actual, direct and exclusive use of the subject lands. The DAR failed to
demonstrate that the Lopez lands were actually and primarily agricultural lands planted with coconut trees. This is in
fact contradicted by the findings of its own official, the MARO. Indeed, the DAR did not adduce any proof to show
that the coconut trees on the Lopez lands were used for agricultural business, as required by the Court in DAR v.
Uy,28 wherein we ruled thus:

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

On the assumption that five thousand five hundred forty-eight (5,548) coconut trees were existing on the Lopez land
(TCT No. T-12637), the DAR did not refute the findings of the MARO that these coconut trees were merely
incidental. Given the number of livestock heads of SNLABC, it is not surprising that the areas planted with coconut
trees on the Lopez lands where forage grass grew were being used as grazing areas for the livestock. It was never
sufficiently adduced that SNLABC was primarily engaged in agricultural business on the Lopez lands, specifically,
coconut-harvesting. Indeed, the substantial quantity of SNLABC’s livestock amounting to a little over one hundred
forty (140) livestock heads, if measured against the combined 110.5455 hectares of land and applying the DAR-
formulated ratio, leads to no other conclusion than that the Lopez lands were exclusively devoted to livestock
farming.29

In any case, the inconsistencies appearing in the documentation presented (albeit sufficiently explained) pale in
comparison to the positive assertion made by the MARO in its on-site, actual investigation - that the Lopez lands
were being used actually, directly and exclusively for its livestock-raising business. The Court affirms the findings
of the DAR Regional Director and the Court of Appeals that the Lopez lands were actually, directly and exclusively
being used for SNLABC’s livestock business and, thus, are exempt from CARP coverage.

The Limot lands of SNLABC are not actually and directly being used for livestock and should thus be covered by
the CARL.

In contrast, the Limot lands were found to be agricultural lands devoted to coconut trees and rubber and are thus not
subject to exemption from CARP coverage.

In the Report dated 06 April 1994, the team that conducted the inspection found that the entire Limot lands were
devoted to coconuts (41.5706 hectares) and rubber (8.000 hectares) and recommended the denial of the application
for exemption.30 Verily, the Limot lands were actually, directly and exclusively used for agricultural activities, a fact
that necessarily makes them subject to the CARP. These findings of the inspection team were given credence by the
DAR Regional Director who denied the application, and were even subsequently affirmed by the DAR Secretary
and the Court of Appeals.

SNLABC argues that the Court of Appeals misapprehended the factual circumstances and overlooked certain
relevant facts, which deserve a second look. SNLABC’s arguments fail to convince the Court to reverse the rulings
of the Court of Appeals.

In the 07 February 1994 Letter-Affidavit addressed to the DAR Secretary, SNLABC requested the exemption of the
Limot lands on the ground that the corporation needed the additional area for its livestock business. As pointed out
by the DAR Regional Director, this Letter-Affidavit is a clear indication that the Limot lands were not directly,
actually and exclusively used for livestock raising. SNLABC casually dismisses the clear import of their Letter-
Affidavit as a "poor choice of words." Unfortunately, the semantics of the declarations of SNLABC in its
application for exemption are corroborated by the other attendant factual circumstances and indicate its treatment of
the subject properties as non-livestock.

Verily, the MARO itself, in the Investigation Report cited by no less than SNLABC, found that the livestock were
only moved to the Limot lands sporadically and were not permanently designated there. The DAR Secretary even
described SNLABC’s use of the area as a "seasonal extension of the applicant’s ‘grazing lands’ during the summer."
Therefore, the Limot lands cannot be claimed to have been actually, directly and exclusively used for SNLABC’s
livestock business, especially since these were only intermittently and secondarily used as grazing areas. The said
lands are more suitable -- and are in fact actually, directly and exclusively being used -- for agricultural purposes.

SNLABC’s treatment of the land for non-livestock purposes is highlighted by its undue delay in filing the
application for exemption of the Limot lands. SNLABC filed the application only on 07 February 1994, or three
years after the Notice of Coverage was issued; two years after it filed the first application for the Lopez lands; and a
year after the titles to the Limot lands were transferred to the Republic. The SNLABC slept on its rights and delayed
asking for exemption of the Limot lands. The lands were undoubtedly being used for agricultural purposes, not for
its livestock business; thus, these lands are subject to CARP coverage. Had SNLABC indeed utilized the Limot
lands in conjunction with the livestock business it was conducting on the adjacent Lopez lands, there was nothing
that would have prevented it from simultaneously applying for a total exemption of all the lands necessary for its
livestock.

The defense of SNLABC that it wanted to "save" first the Lopez lands where the corrals and chutes were located,
before acting to save the other properties does not help its cause. The piecemeal application for exemption of
SNLABC speaks of the value or importance of the Lopez lands, compared with the Limot lands, with respect to its
livestock business. If the Lopez and the Limot lands were equally significant to its operations and were actually
being used for its livestock business, it would have been more reasonable for it to apply for exemption for the entire
lands. Indeed, the belated filing of the application for exemption was a mere afterthought on the part of SNLABC,
which wanted to increase the area of its landholdings to be exempted from CARP on the ground that these were
being used for its livestock business.

In any case, SNLABC admits that the title to the Limot lands has already been transferred to the Republic and
subsequently awarded to SNLABC’s farm workers.31 This fact only demonstrates that the land is indeed being used
for agricultural activities and not for livestock grazing.

The confluence of these factual circumstances leads to the logical conclusion that the Limot lands were not being
used for livestock grazing and, thus, do not qualify for exemption from CARP coverage. SNLABC’s belated filing
of the application for exemption of the Limot lands was a ruse to increase its retention of its landholdings and an
attempt to "save" these from compulsory acquisition.

WHEREFORE, the Petitions of the Department of Agrarian Reform and the Salvador N. Lopez Agri-Business Corp.
are DISMISSED, and the rulings of the Court of Appeals and the DAR Regional Director are hereby AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 103125 May 17, 1993

PROVINCE OF CAMARINES SUR, represented by GOV. LUIS R. VILLAFUERTE and HON. BENJAMIN
V. PANGA as Presiding Judge of RTC Branch 33 at Pili, Camarines Sur, petitioners,
vs.
THE COURT OF APPEALS (THIRD DIVISION), ERNESTO SAN JOAQUIN and EFREN SAN
JOAQUIN, respondents.

The Provincial Attorney for petitioners.

Reynaldo L. Herrera for Ernesto San Joaquin.

QUIASON, J.:

In this appeal by certiorari from the decision of the Court of Appeals in AC-G.R. SP No. 20551 entitled "Ernesto N.
San Joaquin, et al., v. Hon. Benjamin V. Panga, et al.," this Court is asked to decide whether the expropriation of
agricultural lands by local government units is subject, to the prior approval of the Secretary of the Agrarian
Reform, as the implementator of the agrarian reform program.

On December 22, 1988, the Sangguniang Panlalawigan of the Province of Camarines Sur passed Resolution No.
129, Series of 1988, authorizing the Provincial Governor to purchase or expropriate property contiguous to the
provincial capitol site, in order to establish a pilot farm for non-food and non-traditional agricultural crops and a
housing project for provincial government employees.

The "WHEREAS" clause o:f the Resolution states:

WHEREAS, the province of Camarines Sur has adopted a five-year Comprehensive Development
plan, some of the vital components of which includes the establishment of model and pilot farm
for non-food and non-traditional agricultural crops, soil testing and tissue culture laboratory
centers, 15 small scale technology soap making, small scale products of plaster of paris, marine
biological and sea farming research center,and other progressive feasibility concepts objective of
which is to provide the necessary scientific and technology know-how to farmers and fishermen in
Camarines Sur and to establish a housing project for provincial government employees;

WHEREAS, the province would need additional land to be acquired either by purchase or
expropriation to implement the above program component;

WHEREAS, there are contiguous/adjacent properties to be (sic) present Provincial Capitol Site
ideally suitable to establish the same pilot development center;

WHEREFORE . . . .
Pursuant to the Resolution, the Province of Camarines Sur, through its Governor, Hon. Luis R.Villafuerte, filed two
separate cases for expropriation against Ernesto N. San Joaquin and Efren N. San Joaquin, docketed as Special Civil
Action Nos. P-17-89 and P-19-89 of the Regional Trial Court, Pili, Camarines Sur, presided by the Hon. Benjamin
V. Panga.

Forthwith, the Province of Camarines Sur filed a motion for the issuance of writ of possession. The San Joaquins
failed to appear at the hearing of the motion.

The San Joaquins moved to dismiss the complaints on the ground of inadequacy of the price offered for their
property. In an order dated December 6, 1989, the trial court denied the motion to dismiss and authorized the
Province of Camarines Sur to take possession of the property upon the deposit with the Clerk of Court of the amount
of P5,714.00, the amount provisionally fixed by the trial court to answer for damages that private respondents may
suffer in the event that the expropriation cases do not prosper. The trial court issued a writ of possession in an order
dated January18, 1990.

The San Joaquins filed a motion for relief from the order, authorizing the Province of Camarines Sur to take
possession of their property and a motion to admit an amended motion to dismiss. Both motions were denied in the
order dated February 1990.

In their petition before the Court of Appeals, the San Joaquins asked: (a) that Resolution No. 129, Series of 1988 of
the Sangguniang Panlalawigan be declared null and void; (b) that the complaints for expropriation be dismissed; and
(c) that the order dated December 6, 1989 (i) denying the motion to dismiss and (ii) allowing the Province of
Camarines Sur to take possession of the property subject of the expropriation and the order dated February 26, 1990,
denying the motion to admit the amended motion to dismiss, be set aside. They also asked that an order be issued to
restrain the trial court from enforcing the writ of possession, and thereafter to issue a writ of injunction.

In its answer to the petition, the Province of Camarines Sur claimed that it has the authority to initiate the
expropriation proceedings under Sections 4 and 7 of Local Government Code (B.P. Blg. 337) and that the
expropriations are for a public purpose.

Asked by the Court of Appeals to give his Comment to the petition, the Solicitor General stated that under Section 9
of the Local Government Code (B.P. Blg. 337), there was no need for the approval by the Office of the President of
the exercise by the Sangguniang Panlalawigan of the right of eminent domain. However, the Solicitor General
expressed the view that the Province of Camarines Sur must first secure the approval of the Department of Agrarian
Reform of the plan to expropriate the lands of petitioners for use as a housing project.

The Court of Appeals set aside the order of the trial court, allowing the Province of Camarines Sur to take
possession of private respondents' lands and the order denying the admission of the amended motion to dismiss. It
also ordered the trial court to suspend the expropriation proceedings until after the Province of Camarines Sur shall
have submitted the requisite approval of the Department of Agrarian Reform to convert the classification of the
property of the private respondents from agricultural to non-agricultural land.

Hence this petition.

It must be noted that in the Court of Appeals, the San Joaquins asked for: (i) the dismissal of the complaints for
expropriation on the ground of the inadequacy of the compensation offered for the property and (ii) the nullification
of Resolution No. 129, Series of 1988 of the Sangguniang Panlalawigan of the Province of Camarines Sur.

The Court of Appeals did not rule on the validity of the questioned resolution; neither did it dismiss the complaints.
However, when the Court of Appeals ordered the suspension of the proceedings until the Province of Camarines Sur
shall have obtained the authority of the Department of Agrarian Reform to change the classification of the lands
sought to be expropriated from agricultural to non-agricultural use, it assumed that the resolution is valid and that
the expropriation is for a public purpose or public use.
Modernly, there has been a shift from the literal to a broader interpretation of "public purpose" or "public use" for
which the power of eminent domain may be exercised. The old concept was that the condemned property must
actually be used by the general public (e.g. roads, bridges, public plazas, etc.) before the taking thereof could satisfy
the constitutional requirement of "public use". Under the new concept, "public use" means public advantage,
convenience or benefit, which tends to contribute to the general welfare and the prosperity of the whole community,
like a resort complex for tourists or housing project (Heirs of Juancho Ardano v. Reyes, 125 SCRA 220 [1983];
Sumulong v. Guerrero, 154 SC.RA 461 [1987]).

The expropriation of the property authorized by the questioned resolution is for a public purpose. The establishment
of a pilot development center would inure to the direct benefit and advantage of the people of the Province of
Camarines Sur. Once operational, the center would make available to the community invaluable information and
technology on agriculture, fishery and the cottage industry. Ultimately, the livelihood of the farmers, fishermen and
craftsmen would be enhanced. The housing project also satisfies the public purpose requirement of the Constitution.
As held in Sumulong v. Guerrero, 154 SCRA 461, "Housing is a basic human need. Shortage in housing is a matter
of state concern since it directly and significantly affects public health, safety, the environment and in sum the
general welfare."

It is the submission of the Province of Camarines Sur that its exercise of the power of eminent domain cannot be
restricted by the provisions of the Comprehensive Agrarian Reform Law (R.A. No. 6657), particularly Section 65
thereof, which requires the approval of the Department of Agrarian Reform before a parcel of land can be
reclassified from an agricultural to a non-agricultural land.

The Court of Appeals, following the recommendation of the Solicitor General, held that the Province of Camarines
Sur must comply with the provision of Section 65 of the Comprehensive Agrarian Reform Law and must first secure
the approval of the Department of Agrarian Reform of the plan to expropriate the lands of the San Joaquins.

In Heirs of Juancho Ardana v. Reyes, 125 SCRA 220, petitioners raised the issue of whether the Philippine Tourism
Authority can expropriate lands covered by the "Operation Land Transfer" for use of a tourist resort complex. There
was a finding that of the 282 hectares sought to be expropriated, only an area of 8,970 square meters or less than one
hectare was affected by the land reform program and covered by emancipation patents issued by the Ministry of
Agrarian Reform. While the Court said that there was "no need under the facts of this petition to rule on whether the
public purpose is superior or inferior to another purpose or engage in a balancing of competing public interest," it
upheld the expropriation after noting that petitioners had failed to overcome the showing that the taking of 8,970
square meters formed part of the resort complex. A fair and reasonable reading of the decision is that this Court
viewed the power of expropriation as superior to the power to distribute lands under the land reform program.

The Solicitor General denigrated the power to expropriate by the Province of Camarines Sur by stressing the fact
that local government units exercise such power only by delegation. (Comment, pp. 14-15; Rollo, pp. 128-129)

It is true that local government units have no inherent power of eminent domain and can exercise it only when
expressly authorized by the legislature (City of Cincinnati v. Vester, 28l US 439, 74 L.ed. 950, 50 SCt. 360). It is
also true that in delegating the power to expropriate, the legislature may retain certain control or impose certain
restraints on the exercise thereof by the local governments (Joslin Mfg. Co. v. Providence, 262 US 668 67 L. ed.
1167, 43 S Ct. 684). While such delegated power may be a limited authority, it is complete within its limits.
Moreover, the limitations on the exercise of the delegated power must be clearly expressed, either in the law
conferring the power or in other legislations.

Resolution No. 129, Series of 1988, was promulgated pursuant to Section 9 of B.P. Blg. 337, the Local Government
Code, which provides:

A local government unit may, through its head and acting pursuant to a resolution of its
sanggunian exercise the right of eminent domain and institute condemnation proceedings for
public use or purpose.
Section 9 of B.P. Blg. 337 does not intimate in the least that local government, units must first secure the approval of
the Department of Land Reform for the conversion of lands from agricultural to non-agricultural use, before they
can institute the necessary expropriation proceedings. Likewise, there is no provision in the Comprehensive
Agrarian Reform Law which expressly subjects the expropriation of agricultural lands by local government units to
the control of the Department of Agrarian Reform. The closest provision of law that the Court of Appeals could cite
to justify the intervention of the Department of Agrarian Reform in expropriation matters is Section 65 of the
Comprehensive Agrarian Reform Law, which reads:

Sec. 65. Conversion of Lands. — After the lapse of five (5) years from its award, when the land
ceases to be economically feasible and sound for, agricultural purposes, or the locality has become
urbanized and the land will have a greater economic value for residential, commercial or industrial
purposes, the DAR, upon application of the beneficiary or the landowner, with due notice to the
affected parties, and subject to existing laws, may authorize the reclassification or conversion of
the land and its disposition: Provided, That the beneficiary shall have fully paid his obligation.

The opening, adverbial phrase of the provision sends signals that it applies to lands previously placed under the
agrarian reform program as it speaks of "the lapse of five (5) years from its award."

The rules on conversion of agricultural lands found in Section 4 (k) and 5 (1) of Executive Order No. 129-A, Series
of 1987, cannot be the source of the authority of the Department of Agrarian Reform to determine the suitability of a
parcel of agricultural land for the purpose to which it would be devoted by the expropriating authority. While those
rules vest on the Department of Agrarian Reform the exclusive authority to approve or disapprove conversions of
agricultural lands for residential, commercial or industrial uses, such authority is limited to the applications for
reclassification submitted by the land owners or tenant beneficiaries.

Statutes conferring the power of eminent domain to political subdivisions cannot be broadened or constricted by
implication (Schulman v. People, 10 N.Y. 2d. 249, 176 N.E. 2d. 817, 219 NYS 2d. 241).

To sustain the Court of Appeals would mean that the local government units can no longer expropriate agricultural
lands needed for the construction of roads, bridges, schools, hospitals, etc, without first applying for conversion of
the use of the lands with the Department of Agrarian Reform, because all of these projects would naturally involve a
change in the land use. In effect, it would then be the Department of Agrarian Reform to scrutinize whether the
expropriation is for a public purpose or public use.

Ordinarily, it is the legislative branch of the local government unit that shall determine whether the use of the
property sought to be expropriated shall be public, the same being an expression of legislative policy. The courts
defer to such legislative determination and will intervene only when a particular undertaking has no real or
substantial relation to the public use (United States Ex Rel Tennessee Valley Authority v. Welch, 327 US 546, 90 L.
ed. 843, 66 S Ct 715; State ex rel Twin City Bldg. and Invest. Co. v. Houghton, 144 Minn. 1, 174 NW 885, 8 ALR
585).

There is also an ancient rule that restrictive statutes, no matter how broad their terms are, do not embrace the
sovereign unless the sovereign is specially mentioned as subject thereto (Alliance of Government Workers v.
Minister of Labor and Employment, 124 SCRA 1 [1983]). The Republic of the Philippines, as sovereign, or its
political subdivisions, as holders of delegated sovereign powers, cannot be bound by provisions of law couched in
general term.

The fears of private respondents that they will be paid on the basis of the valuation declared in the tax declarations
of their property, are unfounded. This Court has declared as unconstitutional the Presidential Decrees fixing the just
compensation in expropriation cases to be the value given to the condemned property either by the owners or the
assessor, whichever was lower ([Export Processing Zone Authority v. Dulay, 149 SCRA 305 [1987]). As held
in Municipality of Talisay v. Ramirez, 183 SCRA 528 [1990], the rules for determining just compensation are those
laid down in Rule 67 of the Rules of Court, which allow private respondents to submit evidence on what they
consider shall be the just compensation for their property.
WHEREFORE, the petition is GRANTED and the questioned decision of the Court of Appeals is set aside insofar as
it (a) nullifies the trial court's order allowing the Province of Camarines Sur to take possession of private
respondents' property; (b) orders the trial court to suspend the expropriation proceedings; and (c) requires the
Province of Camarines Sur to obtain the approval of the Department of Agrarian Reform to convert or reclassify
private respondents' property from agricultural to non-agricultural use.

The decision of the Court of Appeals is AFFIRMED insofar as it sets aside the order of the trial court, denying the
amended motion to dismiss of the private respondents.

SO ORDERED.