G.R. No.

L-48926 December 14, 1987MANUEL SOSITO, petitioner,

vs.
AGUINALDO DEVELOPMENT CORPORATION, respondent

CRUZ, J.:

We gave due course to this petition and required the parties to file simultaneous memoranda on the sole
question of whether or not the petitioner is entitled to separation pay under the retrenchment program of
the private respondent.

The facts are as follows:

Petitioner Manuel Sosito was employed in 1964 by the private respondent, a logging company, and was in
charge of logging importation, with a monthly salary of P675.00, 1 when he went on indefinite leave with
the consent of the company on January 16, 1976. 2 On July 20, 1976, the private respondent, through its
president, announced a retrenchment program and offered separation pay to employees in the active
service as of June 30, 1976, who would tender their resignations not later than July 31, 1976. The
petitioner decided to accept this offer and so submitted his resignation on July 29, 1976, "to avail himself
of the gratuity benefits" promised. 3 However, his resignation was not acted upon and he was never given
the separation pay he expected. The petitioner complained to the Department of Labor, where he was
sustained by the labor arbiter. 4 The company was ordered to pay Sosito the sum of P 4,387.50,
representing his salary for six and a half months. On appeal to the National Labor Relations Commission,
this decision was reversed and it was held that the petitioner was not covered by the retrenchment
program. 5 The petitioner then came to us.

For a better understanding of this case, the memorandum of the private respondent on its retrenchment
program is reproduced in full as follows:

Memorandum To: ALL EMPLOYEES

Re: RETRENCHMENT PROGRAM

As you are all aware, the operations of wood-based industries in the Philippines for the
last two (2) years were adversely affected by the worldwide decline in the demand for and
prices of logs and wood products. Our company was no exception to this general decline
in the market, and has suffered tremendous losses. In 1975 alone, such losses amounted
to nearly P20,000,000.00.

The company has made a general review of its operations and has come to the unhappy
decision of the need to make adjustments in its manpower strength if it is to survive. This
is indeed an unfortunate and painful decision to make, but it leaves the company no
alternative but to reduce its tremendous and excessive overhead expense in order to
prevent an ultimate closure.

Although the law allows the Company, in a situation such as this, to drastically reduce it
manpower strength without any obligation to pay separation benefits, we recognize the
need to provide our employees some financial assistance while they are looking for other
jobs.
 The Company therefore is adopting a retrenchment program whereby employees who
are in the active service as of June 30, 1976 will be paid separation benefits in an amount
equivalent to the employee's one-half (1/2) month's basic salary multiplied by his/her
years of service with the Company. Employees interested in availing of the separation
benefits offered by the Company must manifest such intention by submitting written
letters of resignation to the Management not later than July 31, 1976. Those whose
resignations are accepted shall be informed accordingly and shall be paid their separation
benefits.

After July 31, 1976,

It is clear from the memorandum that the offer of separation pay was extended only to those who were in
the active service of the company as of June 30, 1976. It is equally clear that the petitioner was not eligible
for the promised gratuity as he was not actually working with the company as of the said date. Being on
indefinite leave, he was not in the active service of the private respondent although, if one were to be
technical, he was still in its employ. Even so, during the period of indefinite leave, he was not entitled to
receive any salary or to enjoy any other benefits available to those in the active service.

It seems to us that the petitioner wants to enjoy the best of two worlds at the expense of the private
respondent. He has insulated himself from the insecurities of the floundering firm but at the same time
would demand the benefits it offers. Being on indefinite leave from the company, he could seek and try
other employment and remain there if he should find it acceptable; but if not, he could go back to his
former work and argue that he still had the right to return as he was only on leave.

There is no claim that the petitioner was temporarily laid off or forced to go on leave; on the contrary, the
record shows that he voluntarily sought the indefinite leave which the private respondent granted. It is
strange that the company should agree to such an open-ended arrangement, which is obviously one-
sided. The company would not be free to replace the petitioner but the petitioner would have a right to
resume his work as and when he saw fit.

We note that under the law then in force the private respondent could have validly reduced its work force
because of its financial reverses without the obligation to grant separation pay. This was permitted under
the original Article 272(a), of the Labor Code, 7 which was in force at the time. To its credit, however, the
company voluntarily offered gratuities to those who would agree to be phased out pursuant to the terms
and conditions of its retrenchment program, in recognition of their loyalty and to tide them over their
own financial difficulties. The Court feels that such compassionate measure deserves commendation and
support but at the same time rules that it should be available only to those who are qualified therefore.
We hold that the petitioner is not one of them.

While the Constitution is committed to the policy of social justice and the protection of the working class,
it should not be supposed that every labor dispute will be automatically decided in favor of labor.
Management also has its own rights which, as such, are entitled to respect and enforcement in the
interest of simple fair play. Out of its concern for those with less privileges in life, this Court has inclined
more often than not toward the worker and upheld his cause in his conflicts with the employer. Such
favoritism, however, has not blinded us to the rule that justice is in every case for the deserving, to be
dispensed in the light of the established facts and the applicable law and doctrine.
WHEREFORE, the petition is DISMISSED and the challenged decision AFFIRMED, with costs against the
petitioner.

SO ORDERED.
G.R. No. L-47178 May 16, 1980

ESTRELLA B. ONDOY, petitioner, vs. VIRGILIO IGNACIO, Proprietor M/B LADY ESTRELLITA and/or
IMPERIAL FISHING ENTERPRISES and/or THE SECRETARY OF LABOR and/or THE COMPENSATION
APPEALS AND REVIEW STAFF, Department of Labor, respondents.
Fernardo R. Moreno for petitioner.
Feliciano Tumale for private respondents.
E. V. Espanol for public respondent.
FERNANDO, C.J.:têñ.£îhqwâ£

The undisputed facts argue strongly for the granting of the claim for compensation filed by petitioner, the
mother of one Jose Ondoy, who was drowned while in the employ of private respondent, Virgilio Ignacio.
Whatever be the cause for the failure to do so, it is admitted that there was no controversion. Such
omission, fatal in character, was sought to be minimized by the filing of a motion to dismissed based on
the alleged absence of an employment relationship. What cannot be ignored, however, is that
subsequently, in the hearing of such claim private respondent submitted affidavits executed by the chief
engineer and oiler of the fishing vessel that the deceased a fisherman, was in that ship, undeniably a
member of the working force, but after being invited by friends to a drinking spree, left the vessel, and
thereafter was found dead. The referee summarily ignored the affidavit of the chief-mate of respondent
employer to the effect "that sometime in October, 1968, while Jose Ondoy, my co-worker, was in the
actual performance of his work with said fishing enterprises, he was drowned and died on October 22,
1968. That the deceased died in line of Duty." 1 The hearing officer or referee dismissed the claim for lack
of merit. 2 A motion for reconsideration was duly filed, but in an order dated August 29, 1977, the then
Secretary of Labor, now Minister Blas F. Ople, denied such motion for reconsideration for lack of merit. 3
Hence this petition for review.

1. In La Mallorca v. Workmen's Compensation Commission, 4 this Court explicitly held that the failure to
controvert "is fatal to any defense that petitioner could interpose. So we have held in a host of decisions
in compliance with the clear and express language of the Workmen's Compensation Act. Any Assertion to
the contrary is doomed to futility. 5 The opinion noted thirty decisions starting from Bachrach Motor Co.
v. Workmen's Compensation Commission 6 to Northwest Orient Airlines, Inc. v. Workmen's Compensation
Commission. 7 Thereafter, in Regal Auto Works, Inc. v. Workmen's Compensation Commission, 8 such a
doctrine was reaffirmed. It was further noted that nine more decisions had been rendered by this Court
starting from Republic v. Workmen's Compensation Commission 9 to Abong v. Workmen's Compensation
Commission. 10 By the time respondent secretary of Labor denied the motion for reconsideration, a host
of decisions that speaks to the same effect had been promulgated. 11 It clearly, appears, therefore, that
the failure of the referee to grant the award ought to have been remedied and the motion for
reconsideration granted.

2. The deceased in this case met his death because of drowning. In Camotes Shipping Corporation v.
Otadoy, 12 there was not even any direct testimony that the deceased was drowned while in the
performance of his duty. All that could be alleged was that he "was lost at sea while in the employ of
petitioner. 13 Nonetheless, the award for compensation was sustained. Likewise, the ruling in Caltex (Phil.)
Inc. v. Villanueva 14 was cited with approval. Thus: "The fact that the employee was found missing while
on board the petitioner's vessel MV 'Caltex Mindanao' became known to the captain of the vessel on 10
October 1956 but it was only on 6 November 1956 when the petitioner transmitted to the respondent
Compensation WCC For in No. 3 stating that the employee was 'Lost at sea and presumed dead as of
October 10, 1956,' and that it was controverting the respondent's claim. 15 In the present case, there is
evidence of the fact of death due to drowning. That was not controverted. Under the circumstances, the
failure to grant the claim finds no justification in law.

3. It bears repeating that there is evidence, direct and categorical, to the effect that the deceased was
drowned while "in the actual performance of his work" with the shipping enterprise of private respondent.
Even without such evidence, the petitioner could have relied on the presumption of compensability under
the Act once it is shown that the death or disability arose in the course of employment, with the burden of
overthrowing it being cast on the person or entity resisting the claim. Time and time again this Court has
stressed such statutory provision. It suffices to mention cases decided from January to April of this year.
16 An appraisal of the counter-affidavits submitted by two employees of private respondent and
thereafter beholden to him to the effect that the deceased left the vessel for a drinking spree certainly
cannot meet the standard required to negate the force of the presumption of compensability.

4. Nor is an affirmance of the finding of the referee adverse to the claim warranted because of the
doctrine that the findings of facts of an administrative agency must be accorded due weight and
consideration. An excerpt from the recent case of Uy v. Workmen's Compensation Commission 17 finds
pertinence: "The claim merits scant consideration for this Court is authorized to inquire into the facts
when the conclusions are not supported by substantial or credible evidence. 18

5. This Court, in recognizing the right of petitioner to the award, merely adheres to the interpretation
uninterruptedly followed by this Court resolving all doubts in favor of the claimant. So it has been since
the first leading case of Francisco v. Conching 19 decided a year after the 1935 Constitution took effect.
What was said in Victorias Milling Co., Inc. v. Workmen's Compensation Commission 20 is not amiss:
"There is need, it seems, even at this late date, for [private respondent] and other employers to be
reminded of the high estate accorded the Workmen's Compensation Act in the constitutional scheme of
social justice and protection to labor. 21 Further: "No other judicial attitude may be expected in the face
of a clearly expressed legislative determination which antedated the constitutionally avowed concern for
social justice and protection to labor. It is easily understandable why the judiciary frowns on resort to
doctrines, which even if deceptively plausible, would result in frustrating such a national policy. 22 Lastly,
to quote from the opinion therein rendered: "To be more specific, the principle of social justice is in this
sphere strengthened and vitalized. A realistic view is that expressed in Agustin v. Workmen's
Compensation Commission: 'As between a laborer, usually poor and unlettered, and the employer, who
has resources to secure able legal advice, the law has reason to demand from the latter stricter
compliance. Social justice in these cases is not equality but protection.' 23

WHEREFORE, the petition for review is granted and petitioner Estrelita B. Ondoy is awarded the sum of,
P6,000.00 as compensation for the death of her son, Jose Ondoy; P300.00 for burial expenses; and
P600.00 as attorney's fees. This decision is immediately executory. Costs against private respondent
Virgilio Ignacio.
G.R. No. 120132 December 4, 1995

CRISANTA GALAY, ET AL., petitioners,

vs.
COURT OF APPEALS and VIRGINIA WONG, represented by her Administrator, ATTY. REYNALDO B.
HERNANDEZ, respondents.

FRANCISCO, J.:

In an effort to uplift the living conditions in the poorer sections of the communities in urban areas, the
legislature enacted Republic Act No. 7279 otherwise known as the "Urban Development and Housing Act
of 1992", envisioned to be the antidote to the pernicious problem of squatting in the metropolis.
Nevertheless, the courts continue to be swamped with cases arising from disputes in the proper
implementation of the aforementioned legislation, particularly on matters involving the eviction,
demolition and resettlement of squatters. The present suit is among such cases.

The instant petition for review on certiorari seeks to annul the decision of respondent Court of Appeals
dated September 20, 1994 in CA-G.R. SP No. 33761 entitled "Crisanta Galay, et al. vs. Judge Mariano I.
Bacalla and Virginia Wong, represented by her Administrator, Atty. Reynaldo B. Hernandez". Petitioners
claim that the assailed decision was based on an unauthorized compromise agreement to which they
never consented nor had any knowledge thereof.

Material hereto are the following antecedents:

Private respondent Virginia Wong, as represented by her Administrator and Attorney-in fact, Reynaldo B.
Hernandez filed an ejectment suit (Civil Case No. 38-5830) against herein petitioners, who were alleged to
have been illegally occupying private respondents' 405 square meter lot located in Quezon City which is
covered by Transfer Certificate of Title No. 51589 of the Registry of Deeds of Quezon City.

Although petitioners do not claim ownership over the subject premises, they however disputed private
respondents' claim of ownership and alleged that they have been in possession of the property in
question since 1972 by virtue of the tolerance and permission of the alleged real owner, Dr. Alejo Lopez.

On August 3, 1992, judgment was rendered by the Metropolitan Trial Court of Quezon City, Branch 38,
ordering the ejectment of the petitioners from the disputed premises. 1

Upon appeal to the Regional Trial Court of Quezon City, Branch 83, the decision of the Metropolitan Trial
Court was affirmed in toto.2

Still not satisfied, petitioners proceeded to the Court of Appeals and filed a petition for review, but the
petition was dismissed outright for failure to state the material dates to show that the petition was filed
on time and for not being accompanied by certified true copies of the disputed decision. 3

No further appeal was interposed by petitioner, hence, the judgment became final. This prompted private
respondent to file a Motion for Issuance of an Alias Writ of Execution which was granted by the
Metropolitan Trial Court in its order dated March 25, 1994,4 taking into account that the judgment has
already become final and executory.

In an attempt to prevent the execution of the judgment and their consequent eviction, petitioners filed a
complaint for Injunction with Preliminary Injunction and Temporary Restraining Order before the Regional
Trial Court at Quezon City, Branch 216,5 alleging that herein private respondent must first comply with the
mandatory requirements of Section 28(c) of R.A. 7279 regarding eviction and demolition by court order.

In its order dated April 5, 1994,6 the lower court denied the prayer for the issuance of a restraining order
as the act sought to be enjoined was pursuant to a lawful order of the court.

Thereafter, petitioners again sought recourse from the Court of Appeals via Petition for Certiorari with
Preliminary Injunction and Temporary Restraining Order, claiming that the latter order was tainted with
grave abuse of discretion for being arbitrary, unjust and oppressive, and reiterating that they cannot be
evicted unless there is compliance with Section 28(c) of R.A. 7279. 7

On April 28, 1994, respondent Court of Appeals gave due course to the petition and granted petitioners'
prayer for preliminary injunction, enjoining the ejection of petitioners until further orders from the court. 8

On July 18, 1994, counsel for private respondent filed a Motion To Lift And/Or Dissolve Preliminary
Injunction, contending among others that the Urban Poor Affairs Office [People's Bureau] has already
been notified, as mandated by RA 7279, and that more than 45 days had already lapsed since the notice
was made in April, 1994. Thus, private respondent has substantially complied with the requirements of RA
7279 and therefore the enforcement of the final judgment and ejectment of petitioners is in
order.9 Objecting to private respondent's motion, petitioners argued that RA 7279 requires not only the
45-day notice, but also the relocation of petitioners and the grant of financial assistance to them prior to
their relocation. Furthermore, petitioners maintain that there is no extreme urgency for petitioners'
eviction on account of private respondent's affluence. 10

The case was subsequently set for hearing and oral argument, after which, respondent court rendered the
assailed decision on September 20, 1994 ordering as follows:

WHEREFORE, pursuant to RA 7279, the People's Bureau is hereby ordered to relocate the
herein petitioners from subject lot of private respondent not later than October 30, 1994.
Should the relocation of petitioners be not finished on or before October 30, 1994, the
People's Bureau shall pay petitioners a daily allowance of P145.00 for every day of delay
of relocation but in no case shall such allowance last for more than sixty (60) days.

Petitioners are hereby ordered to vacate the premises in question not later than October
30, 1994, on which date the private respondent shall have the right to take over
possession thereof and, if necessary, to ask for a writ of execution for the implementation
of this disposition. No pronouncement as to costs.

SO ORDERED. 11

On October 25, 1994, a new counsel entered his appearance for petitioners and filed a motion to set aside
the aforequoted decision. 12 As initially mentioned, petitioners assert that the assailed decision was
rendered based on a compromise agreement to which they never gave their consent nor authorized their
former counsel to enter into, and for which reason said former counsel has withdrawn his appearance as
counsel of record.

Petitioners contend that the judgment of respondent Court of Appeals was indeed based on a
compromise agreement which is evident from the following portions of the decision:

xxx xxx xxx

When the case was called for hearing on September 14, 1994, as scheduled, both parties
were represented. Atty. Rogelio Directo stood up for the People's Bureau (Urban Poor
Affairs Office). And the parties, including the said representative of the People's Bureau,
agreed that petitioners herein are all qualified to avail of the protection and benefits under
RA 7279 and through counsel, manifested their willingness and readiness to be relocated in
accordance with said law. It was likewise agreed by all concerned that should petitioners
be not relocated within the period of 45 days, from September 15 to October 30, 1994,
the People's Bureau shall pay them an allowance of P145.00, equivalent to the minimum
wage, per day of delay of relocation, until their actual transfer to the relocation site to be
designated for them. It is understood, however, that the daily allowance for petitioners
shall be for a period not exceeding sixty (60) days, starting October 31, 1994. In other
words, should the delay of relocation of petitioners be for more than sixty (60) days, they
shall only be entitled to the daily allowance of P145.00 per day of delay of relocation for
not more than sixty (60) days.

It was likewise agreed that on October 31, 1994, whether petitioners shall have been
relocated or not, the private respondent shall then be entitled to the execution and
implementation of this judgment, and to cause the ejectment of petitioners from subject
property litigated upon. (Emphasis supplied).13

In its Resolution dated May 4, 1995, respondent Court of Appeals denied petitioners' Motion to Set Aside
Decision 14 and reiterated that the assailed decision dated September 20, 1994 was a decision based on
the merits and not upon a compromise agreement.

Hence, the instant petition.

Petitioners adamantly argue that the decision of respondent court dated September 20, 1994 was based
on an unauthorized compromise agreement, sans their knowledge, consent and authority. Additionally,
petitioners interpose the following issues: 1) whether there can be eviction and demolition without actual
relocation; 2) can the petitioners be considered as homeless and underprivileged?; and 3) whose duty is it
to relocate them?

A compromise is a bilateral act or transaction that is expressly acknowledged as a juridical agreement by

the Civil Code. It is defined in Article 2208 of the Code as "a contract whereby the parties by making
reciprocal concessions, avoid a litigation or put an end to one already commenced". 15 Thus, a judgment
upon a compromise is a judgment embodying a compromise agreement entered into by the parties in
which they make reciprocal concessions in order to terminate a litigation already instituted. 16

In the present suit, the assailed decision, far from being a judgment based on a compromise agreement, is
undoubtedly a decision rendered entirely on the merits. Contrary to petitioners' assertion, the dispositive
portion of the decision is very explicit in exclusively adverting to RA 7279 as the basis for the judgment.
Nowhere did it appear nor can it be inferred therefrom that respondent court's disposition took into
account any agreement or concessions made by the parties that is indicative of a judgment on a
compromise. A scrutiny of the assailed portions of the decision allegedly embodying the compromise
agreement revealed that the same are nothing but admissions made by the parties intended to clarify the
applicable provisions of RA 7279. In fact the said admissions are expressly laid out in Section 28(c) (8) of
RA 7279 and thus could not have been the subject of any compromise agreement as the same are already
provided in the law.

Further negating petitioners' contention are the following ratiocinations made by respondent court in
denying the Motion to Set Aside Decision, with which we are in complete accord:

After a careful study, We find movant's stance barren of merit. Our Decision promulgated
on September 20, 1994 in this case was not rendered as a Judgment by Compromise. It
resolved the petition on the merits, after the lawyers of the parties and the representative
of the Urban Poor Affairs Office agreed on the applicability of Rep. Act No. 7279 to
petitioner's situation. As a result of such development of the case, Our judgment granted
petitioners more than what they have came here for. All they prayed for was to hold in
abeyance execution of subject final and executory Decision of the Quezon Metropolitan
Trial Court, ordering their ejectment; until after the expiration of forty-five (45) days from
date of notice of their ejectment to the Urban Poor Affairs Office. But the judgment in
question has recognized not only petitioner's right not to be ejected sans the 45-day
notice to the Urban Poor Affairs Office, but also the right to a daily allowance of P145.00
for each day of delay or relocation, for a period of not more than sixty (60) days, should
there be a delay in their relocation, as mandated by law.17

Finally, in a desperate move to prolong the execution of the decision ordering their eviction, petitioners
invoke the principle of social justice and plead that as underprivileged and homeless citizen, their eviction
and demolition of their homes cannot be effected unless there is adequate relocation. Moreover,
petitioners maintain that private respondent is also duty bound to share in the task of relocating them.

The contentions are without merit. It is beyond dispute that the ejectment suit against petitioners has
already been resolved with finality way back on February 16, 1994 when the petitioners' appeal was
dismissed outright by the Court of Appeals and they did not interpose any further appeal therefrom. The
subsequent proceedings merely sought to enforce the decision ordering their ejectment from the
disputed premises, which petitioners however, repeatedly tried to thwart by invoking non-compliance
with Section 28(c) of RA 7279. Thus, upon compliance by private respondent with the requirements of the
aforesaid law, particularly on the notice to the People's Bureau (Urban Poor Affairs Office) and the
expiration of 45 days from said notice, petitioners' right to remain in the subject lot ceased. Resultingly,
petitioners' eviction must now proceed in accordance with Section 28(c) (8), to wit:

. . . Provided, however, That in cases of eviction and demolition pursuant to a court order
involving underprivileged and homeless citizens, relocation shall be undertaken by the
local government unit concerned and the National Housing Authority with the assistance
of other government agencies within forty-five (45) days from service of notice of final
judgment by the court, after which period the said order shall be executed: Provided,
further, That should relocation not be possible within the said period, financial assistance
 in the amount equivalent to the prevailing minimum daily wage multiplied by sixty (60)
days shall be extended to the affected families by the local government unit concerned.

Anent petitioners' claim that private respondent must also share the responsibility of relocating
petitioners, the same is also without any basis. The aforecited provision is very explicit that the task of
relocating the homeless and the underprivileged shall be the responsibility of the local government unit
concerned and the National Housing Authority with the assistance of the other government agencies.
Although private individuals are not prohibited from taking part in the relocation, there is nothing in the
law either that compels them to undertake such task on a mandatory basis, otherwise, such obligation
should have been included in the provision, either expressly or impliedly. Thus, petitioners attempt to
further burden private respondent with their relocation is unwarranted.

Equally unpersuasive is petitioners' plea for social justice. In previous cases, this Court has emphasized
that "never is it justified to prefer 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." 18 In the same vein, it has been held that "the policy of social justice is not intended to
countenance wrongdoing simply because it is committed by the underprivileged. At best it may mitigate
the penalty but it certainly will not condone the offense. Compassion for the poor is an imperative of
every humane society but only when the recipient is not a rascal claiming an undeserved privilege." 19

Further militating against petitioners' appeal for compassion is the fact that only recently, President
Ramos himself, in the exercise of his veto power, vetoed a congress-approved measure 20 intended to
extend the moratorium on the demolition of squatter colonies throughout the country. The President's
action was intended to curtail the negative influences to general growth and development in urban areas
brought about by the problem of squatting and to prevent the legitimate landowners from being unduly
deprived of the immediate use of their properties.

In closing, we find it fitting to advert to the following pronouncements made in the case of Martires vs.
Court of Appeals 21 :

While we sympathize with the millions of our people who are unable to afford the basic
necessity of shelter, let alone the comforts of a decent home, this sympathy cannot
extend to squatting, which is a criminal offense. Social justice cannot condone the
violation of law nor does it consider that very wrong to be a justification for priority in the
enjoyment of a right. This is what the petitioner wants us to grant him. But we cannot
heed his unjust plea because the rule of law rings louder in our ears.

WHEREFORE, in view of the foregoing considerations, the instant petition is hereby DENIED for lack of
merit.

SO ORDERED.
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.
I

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.

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.

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 rigts 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.
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/recommendations 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).

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

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 desiresto
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

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.

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.

Separate Opinions

MELO, J., concurring and dissenting opinion;

I concur in the ponencia of Justice Ynares-Santiago, broad and exhaustive as it is in its treatment of the
issues. However, I would like to call attention to two or three points which I believe are deserving of
special emphasis.

The apparent incongruity or shortcoming in the petition is DAR's disregard of a law which settled the non-
agricultural nature of the property as early as 1975. Related to this are the inexplicable contradictions
between DAR's own official issuances and its challenged actuations in this particular case.

Presidential Proclamation No. 1520 has the force and effect of law unless repealed. This law declared
Nasugbu, Batangas as a tourist zone.
Considering the new and pioneering stage of the tourist industry in 1975, it can safely be assumed that
Proclamation 1520 was the result of empirical study and careful determination, not political or extraneous
pressures. It cannot be disregarded by DAR or any other department of Government.

In Province of Camarines Sur, et al. vs. Court of Appeals, et al. (222 SCRA 173, 182 [1993]), we ruled that
local governments need not obtain the approval of DAR to reclassify lands from agricultural to non-
agricultural use. In the present case, more than the exercise of that power, the local governments were
merely putting into effect a law when they enacted the zoning ordinances in question.

Any doubts as to the factual correctness of the zoning reclassifications are answered by the February 2,
1993 certification of the Department of Agriculture that the subject landed estates are not feasible and
economically viable for agriculture, based on the examination of their slope, terrain, depth, irrigability,
fertility, acidity, and erosion considerations.

I agree with the ponencia's rejection of respondent's argument that agriculture is not incompatible and
may be enforced in an area declared by law as a tourist zone. Agriculture may contribute to the scenic
views and variety of countryside profiles but the issue in this case is not the beauty of ricefields, cornfields,
or coconut groves. May land found to be non-agricultural and declared as a tourist zone by law, be
withheld from the owner's efforts to develop it as such? There are also plots of land within Clark Field and
other commercial-industrial zones capable of cultivation but this does not subject them to compulsory
land reform. It is the best use of the land for tourist purposes, free trade zones, export processing or the
function to which it is dedicated that is the determining factor. Any cultivation is temporary and voluntary.

The other point I wish to emphasize is DAR's failure to follow its own administrative orders and
regulations in this case.

The contradictions between DAR administrative orders and its actions in the present case may be
summarized:

1. DAR Administrative Order No. 6, Series of 1994, subscribes to Department of Justice Opinion No. 44,
Series of 1990 that lands classified as non-agricultural prior to June 15, 1988 when the CARP Law was
passed are exempt from its coverage. By what right can DAR now ignore its own Guidelines in this case of
land declared as forming a tourism zone since 1975?

2. DAR Order dated January 22, 1991 granted the conversion of the adjacent and contiguous property of
Group Developers and Financiers, Inc. (GDFI) into the Batulao Tourist Resort. Why should DAR have a
contradictory stance in the adjoining property of Roxas and Co., Inc. found to be similar in nature and
declared as such?

3. DAR Exemption Order, Case No. H-9999-050-97 dated May 17, 1999 only recently exempted 13.5
hectares of petitioner's property also found in Caylaway together, and similarly situated, with the bigger
parcel (Hacienda Caylaway) subject of this petition from CARL coverage. To that extent, it admits that its
earlier blanket objections are unfounded.

4. DAR Administrative Order No. 3, Series of 1996 identifies the land outside of CARP coverage as:
(a) Land found by DAR as no longer suitable for agriculture and which cannot be given appropriate
valuation by the Land Bank;

(b) Land where DAR has already issued a conversion order;

(c) Land determined as exempt under DOJ Opinions Nos. 44 and 181; or

(d) Land declared for non-agricultural use by Presidential Proclamation.

It is readily apparent that the land in this case falls under all the above categories except the second one.
DAR is acting contrary to its own rules and regulations.

I should add that DAR has affirmed in a Rejoinder (August 20, 1999) the issuance and effectivity of the
above administrative orders.

DAR Administrative Order No. 3, Series of 1996, Paragraph 2 of Part II, Part III and Part IV outlines the
procedure for reconveyance of land where CLOAs have been improperly issued. The procedure is
administrative, detailed, simple, and speedy. Reconveyance is implemented by DAR which treats the
procedure as "enshrined . . . in Section 50 of Republic Act No. 6657" (Respondent's Rejoinder).
Administrative Order No. 3, Series of 1996 shows there are no impediments to administrative or judicial
cancellations of CLOA's improperly issued over exempt property. Petitioner further submits, and this
respondent does not refute, that 25 CLOAs covering 3,338 hectares of land owned by the Manila
Southcoast Development Corporation also found in Nasugbu, Batangas, have been cancelled on similar
grounds as those in the case at bar.

The CLOAs in the instant case were issued over land declared as non-agricultural by a presidential
proclamation and confirmed as such by actions of the Department of Agriculture and the local
government units concerned. The CLOAs were issued over adjoining lands similarly situated and of like
nature as those declared by DAR as exempt from CARP coverage. The CLOAs were surprisingly issued
over property which were the subject of pending cases still undecided by DAR. There should be no
question over the CLOAs having been improperly issued, for which reason, their cancellation is warranted.

YNARES-SANTIAGO, J., concurring and dissenting opinion;

I concur in the basic premises of the majority opinion. However, I dissent in its final conclusions and the
dispositive portion.

With all due respect, the majority opinion centers on procedure but unfortunately ignores the substantive
merits which this procedure should unavoidably sustain.

The assailed decision of the Court of Appeals had only one basic reason for its denial of the petition, i.e.,
the application of the doctrine of non-exhaustion of administrative remedies. This Court's majority
ponencia correctly reverses the Court of Appeals on this issue. The ponencia now states that the issuance
of CLOA's to farmer beneficiaries deprived petitioner Roxas & Co. of its property without just
compensation. It rules that the acts of the Department of Agrarian Reform are patently illegal. It concludes
that petitioner's rights were violated, and thus to require it to exhaust administrative remedies before DAR
was not a plain, speedy, and adequate remedy. Correctly, petitioner sought immediate redress from the
Court of Appeals to this Court.
However, I respectfully dissent from the judgment which remands the case to the DAR. If the acts of DAR
are patently illegal and the rights of Roxas & Co. violated, the wrong decisions of DAR should be reversed
and set aside. It follows that the fruits of the wrongful acts, in this case the illegally issued CLOAs, must be
declared null and void.

Petitioner Roxas & Co. Inc. is the registered owner of three (3) haciendas located in Nasugbu, Batangas,
namely: Hacienda Palico comprising of an area of 1,024 hectares more or less, covered by Transfer
Certificate of Title No. 985 (Petition, Annex "G"; Rollo, p. 203); Hacienda Banilad comprising an area of
1,050 hectares and covered by TCT No. 924 (Petition, Annex "I"; Rollo, p. 205); and Hacienda Caylaway
comprising an area of 867.4571 hectares and covered by TCT Nos. T-44655 (Petition, Annex "O"; Rollo, p.
216), T-44662 (Petition, Annex "P"; Rollo, p. 217), T-44663 (Petition, Annex "Q"; Rollo, p. 210) and T-44664
(Petition, Annex "R"; Rollo, p. 221).

Sometime in 1992 and 1993, petitioner filed applications for conversion with DAR. Instead of either
denying or approving the applications, DAR ignored and sat on them for seven (7) years. In the meantime
and in acts of deceptive lip-service, DAR excluded some small and scattered lots in Palico and Caylaway
from CARP coverage. The majority of the properties were parceled out to alleged farmer-beneficiaries,
one at a time, even as petitioner's applications were pending and unacted upon.

The majority ponencia cites Section 16 of Republic Act No. 6657 on the procedure for acquisition of
private lands

The ponencia cites the detailed procedures found in DAR Administrative Order No. 12, Series of 1989 for
the identification of the land to be acquired. DAR did not follow its own prescribed procedures. There was
no valid issuance of a Notice of Coverage and a Notice of Acquisition.

The procedure on the evaluation and determination of land valuation, the duties of the Municipal
Agrarian Reform Officer (MARO), the Barangay Agrarian Reform Committee (BARC), Provincial Agrarian
Reform Officer (PARO) and the Bureau of Land Acquisition and Distribution (BLAD), the documentation
and reports on the step-by-step process, the screening of prospective Agrarian Reform Beneficiaries
(ARBs), the land survey and segregation survey plan, and other mandatory procedures were not followed.
The landowner was not properly informed of anything going on.

Equally important, there was no payment of just compensation. I agree with the ponencia that due
process was not observed in the taking of petitioner's properties. Since the DAR did not validly acquire
ownership over the lands, there was no acquired property to validly convey to any beneficiary. The CLOAs
were null and void from the start.

Petitioner states that the notices of acquisition were sent by respondents by ordinary mail only, thereby
disregarding the procedural requirement that notices be served personally or by registered mail. This is
not disputed by respondents, but they allege that petitioner changed its address without notifying the
DAR. Notably, the procedure prescribed speaks of only two modes of service of notices of acquisition —
personal service and service by registered mail. The non-inclusion of other modes of service can only
mean that the legislature intentionally omitted them. In other words, service of a notice of acquisition
other than personally or by registered mail is not valid. Casus omissus pro omisso habendus est. The
reason is obvious. Personal service and service by registered mail are methods that ensure the receipt by
the addressee, whereas service by ordinary mail affords no reliable proof of receipt.

Since it governs the extraordinary method of expropriating private property, the CARL should be strictly
construed. Consequently, faithful compliance with its provisions, especially those which relate to the
procedure for acquisition of expropriated lands, should be observed. Therefore, the service by respondent
DAR of the notices of acquisition to petitioner by ordinary mail, not being in conformity with the mandate
of R.A. 6657, is invalid and ineffective.

With more reason, the compulsory acquisition of portions of Hacienda Palico, for which no notices of
acquisition were issued by the DAR, should be declared invalid.

The entire ponencia, save for the last six (6) pages, deals with the mandatory procedures promulgated by
law and DAR and how they have not been complied with. There can be no debate over the procedures
and their violation. However, I respectfully dissent in the conclusions reached in the last six pages. Inspite
of all the violations, the deprivation of petitioner's rights, the non-payment of just compensation, and the
consequent nullity of the CLOAs, the Court is remanding the case to the DAR for it to act on the
petitioner's pending applications for conversion which have been unacted upon for seven (7) years.

Petitioner had applications for conversion pending with DAR. Instead of deciding them one way or the
other, DAR sat on the applications for seven (7) years. At that same time it rendered the applications
inutile by distributing CLOAs to alleged tenants. This action is even worse than a denial of the applications
because DAR had effectively denied the application against the applicant without rendering a formal
decision. This kind of action preempted any other kind of decision except denial. Formal denial was even
unnecessary. In the case of Hacienda Palico, the application was in fact denied on November 8, 1993.

There are indisputable and established factors which call for a more definite and clearer judgment.

The basic issue in this case is whether or not the disputed property is agricultural in nature and covered
by CARP. That petitioner's lands are non-agricultural in character is clearly shown by the evidence
presented by petitioner, all of which were not disputed by respondents. The disputed property is
definitely not subject to CARP.

The nature of the land as non-agricultural has been resolved by the agencies with primary jurisdiction and
competence to decide the issue, namely — (1) a Presidential Proclamation in 1975; (2) Certifications from
the Department of Agriculture; (3) a Zoning Ordinance of the Municipality of Nasugbu, approved by the
Province of Batangas; and (4) by clear inference and admissions, Administrative Orders and Guidelines
promulgated by DAR itself.

The records show that on November 20, 1975 even before the enactment of the CARP law, the
Municipality of Nasugbu, Batangas was declared a "tourist zone" in the exercise of lawmaking power by
then President Ferdinand E. Marcos under Proclamation No. 1520 (Rollo, pp. 122-123). This Presidential
Proclamation is indubitably part of the law of the land.

On 20 March 1992 the Sangguniang Bayan of Nasugbu promulgated its Resolution No. 19, a zonification
ordinance (Rollo, pp. 124-200), pursuant to its powers under Republic Act No. 7160, i.e., the Local
Government Code of 1991. The municipal ordinance was approved by the Sangguniang Panlalawigan of
Batangas (Rollo, p. 201). Under this enactment, portions of the petitioner's properties within the
municipality were re-zonified as intended and appropriate for non-agricultural uses. These two issuances,
together with Proclamation 1520, should be sufficient to determine the nature of the land as non-
agricultural. But there is more.

The records also contain a certification dated March 1, 1993 from the Director of Region IV of the
Department of Agriculture that the disputed lands are no longer economically feasible and sound for
agricultural purposes (Rollo, p. 213).

DAR itself impliedly accepted and determined that the municipality of Nasugbu is non-agricultural when it
affirmed the force and effect of Presidential Proclamation 1520. In an Order dated January 22, 1991, DAR
granted the conversion of the adjoining and contiguous landholdings owned by Group Developer and
Financiers, Inc. in Nasugbu pursuant to the Presidential Proclamation. The property alongside the
disputed properties is now known as "Batulao Resort Complex". As will be shown later, the conversion of
various other properties in Nasugbu has been ordered by DAR, including a property disputed in this
petition, Hacienda Caylaway.

Inspite of all the above, the Court of Appeals concluded that the lands comprising petitioner's haciendas
are agricultural, citing, among other things, petitioner's acts of voluntarily offering Hacienda Caylaway for
sale and applying for conversion its lands from agricultural to non-agricultural.

Respondents, on the other hand, did not only ignore the administrative and executive decisions. It also
contended that the subject land should be deemed agricultural because it is neither residential,
commercial, industrial or timber. The character of a parcel of land, however, is not determined merely by a
process of elimination. The actual use which the land is capable of should be the primordial factor.

RA 6657 explicitly limits its coverage thus:

The Comprehensive Agrarian Reform Law of 1998 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 a agriculture regardless of the agricultural products raised
or that can be raised thereon." (RA 6657, Sec. 4; emphasis provided)
In Luz Farms v. Secretary of the Department of Agrarian Reform and Natalia Realty, Inc. v. Department of
Agrarian Reform, this Court had occasion to rule that agricultural lands are only those which are arable
and suitable.

It is at once noticeable that the common factor that classifies land use as agricultural, whether it be public
or private land, is its suitability for agriculture. In this connection, RA 6657 defines "agriculture" 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. (RA 6657, sec. 3[b])

In the case at bar, petitioner has presented certifications issued by the Department of Agriculture to the
effect that Haciendas Palico, Banilad and Caylaway are not feasible and economically viable for
agricultural development due to marginal productivity of the soil, based on an examination of their slope,
terrain, depth, irrigability, fertility, acidity, and erosion factors (Petition, Annex "L", Rollo, p. 213; Annex "U",
Rollo, p. 228). This finding should be accorded respect considering that it came from competent authority,
said Department being the agency possessed with the necessary expertise to determine suitability of
lands to agriculture. The DAR Order dated January 22, 1991 issued by respondent itself stated that the
adjacent land now known as the Batulao Resort Complex is hilly, mountainous, and with long and narrow
ridges and deep gorges. No permanent sites are planted. Cultivation is by kaingin method. This confirms
the findings of the Department of Agriculture.

Parenthetically, the foregoing finding of the Department of Agriculture also explains the validity of the
reclassification of petitioner's lands by the Sangguniang Bayan of Nasugbu, Batangas, pursuant to Section
20 of the Local Government Code of 1991. It shows that the condition imposed by respondent Secretary
of Agrarian Reform on petitioner for withdrawing its voluntary offer to sell Hacienda Caylaway, i.e., that
the soil be unsuitable for agriculture, has been adequately met. In fact, the DAR in its Order in Case No. A-
9999-050-97, involving a piece of land also owned by petitioner and likewise located in Caylaway,
exempted it from the coverage of CARL (Order dated May 17, 1999; Annex "D" of Petitioner's
Manifestation), on these grounds.

Furthermore, and perhaps more importantly, the subject lands are within an area declared in 1975 by
Presidential Proclamation No. 1520 to be part of a tourist zone. This determination was made when the
tourism prospects of the area were still for the future. The studies which led to the land classification were
relatively freer from pressures and, therefore, more objective and open-minded. Respondent, however,
contends that agriculture is not incompatible with the lands' being part of a tourist zone since
"agricultural production, by itself, is a natural asset and, if properly set, can command tremendous
aesthetic value in the form of scenic views and variety of countryside profiles." (Comment, Rollo, 579).

The contention is untenable. Tourist attractions are not limited to scenic landscapes and lush greeneries.
Verily, tourism is enhanced by structures and facilities such as hotels, resorts, rest houses, sports clubs and
golf courses, all of which bind the land and render it unavailable for cultivation. As aptly described by
petitioner:
The development of resorts, golf courses, and commercial centers is inconsistent with agricultural
development. True, there can be limited agricultural production within the context of tourism
development. However, such small scale farming activities will be dictated by, and subordinate to the
needs or tourism development. In fact, agricultural use of land within Nasugbu may cease entirely if
deemed necessary by the Department of Tourism (Reply, Rollo, p. 400).

The lands subject hereof, therefore, are non-agricultural. Hence, the voluntary offer to sell Hacienda
Caylaway should not be deemed an admission that the land is agricultural. Rather, the offer was made by
petitioner in good faith, believing at the time that the land could still be developed for agricultural
production. Notably, the offer to sell was made as early as May 6, 1988, before the soil thereon was found
by the Department of Agriculture to be unsuitable for agricultural development (the Certifications were
issued on 2 February 1993 and 1 March 1993). Petitioner's withdrawal of its voluntary offer to sell,
therefore, was not borne out of a whimsical or capricious change of heart. Quite simply, the land turned
out to be outside of the coverage of the CARL, which by express provision of RA 6657, Section 4, affects
only public and private agricultural lands. As earlier stated, only on May 17, 1999, DAR Secretary Horacio
Morales, Jr. approved the application for a lot in Caylaway, also owned by petitioner, and confirmed the
seven (7) documentary evidences proving the Caylaway area to be non-agricultural (DAR Order dated 17
May 1999, in Case No. A-9999-050-97, Annex "D" Manifestation).

The DAR itself has issued administrative circulars governing lands which are outside of CARP and may not
be subjected to land reform. Administrative Order No. 3, Series of 1996 declares in its policy statement
what landholdings are outside the coverage of CARP. The AO is explicit in providing that such non-
covered properties shall be reconveyed to the original transferors or owners.

These non-covered lands are:

a. Land, or portions thereof, found to be no longer suitable for agriculture and, therefore, could not be
given appropriate valuation by the Land Bank of the Philippines (LBP);

b. Those were a Conversion Order has already been issued by the DAR allowing the use of the
landholding other than for agricultural purposes in accordance with Section 65 of R.A. No. 6657 and
Administrative Order No. 12, Series of 1994;

c. Property determined to be exempted from CARP coverage pursuant to Department of Justice Opinion
Nos. 44 and 181; or

d. Where a Presidential Proclamation has been issued declaring the subject property for certain uses other
than agricultural. (Annex "F", Manifestation dated July 23, 1999)

The properties subject of this Petition are covered by the first, third, and fourth categories of the
Administrative Order. The DAR has disregarded its own issuances which implement the law.

To make the picture clearer, I would like to summarize the law, regulations, ordinances, and official acts
which show beyond question that the disputed property is non-agricultural, namely:
(a) The Law. Proclamation 1520 dated November 20, 1975 is part of the law of the land. It declares the
area in and around Nasugbu, Batangas, as a Tourist Zone. It has not been repealed, and has in fact been
used by DAR to justify conversion of other contiguous and nearby properties of other parties.

(b) Ordinances of Local Governments. Zoning ordinance of the Sangguniang Bayan of Nasugbu, affirmed
by the Sangguniang Panlalawigan of Batangas, expressly defines the property as tourist, not agricultural.
The power to classify its territory is given by law to the local governments.

(c) Certification of the Department of Agriculture that the property is not suitable and viable for
agriculture. The factual nature of the land, its marginal productivity and non-economic feasibility for
cultivation, are described in detail.

(d) Acts of DAR itself which approved conversion of contiguous or adjacent land into the Batulao Resorts
Complex. DAR described at length the non-agricultural nature of Batulao and of portion of the disputed
property, particularly Hacienda Caylaway.

(e) DAR Circulars and Regulations. DAR Administrative Order No. 6, Series of 1994 subscribes to the
Department of Justice opinion that the lands classified as non-agricultural before the CARP Law, June 15,
1988, are exempt from CARP. DAR Order dated January 22, 1991 led to the Batulao Tourist Area. DAR
Order in Case No. H-9999-050-97, May 17, 1999, exempted 13.5 hectares of Caylaway, similarly situated
and of the same nature as Batulao, from coverage. DAR Administrative Order No. 3, Series of 1996, if
followed, would clearly exclude subject property from coverage.

As earlier shown, DAR has, in this case, violated its own circulars, rules and regulations.

In addition to the DAR circulars and orders which DAR itself has not observed, the petitioner has
submitted a municipal map of Nasugbu, Batangas (Annex "E", Manifestation dated July 23, 1999). The
geographical location of Palico, Banilad, and Caylaway in relation to the GDFI property, now Batulao
Tourist Resort, shows that the properties subject of this case are equally, if not more so, appropriate for
conversion as the GDFI resort.

Petitioner's application for the conversion of its lands from agricultural to non-agricultural was meant to
stop the DAR from proceeding with the compulsory acquisition of the lands and to seek a clear and
authoritative declaration that said lands are outside of the coverage of the CARL and can not be subjected
to agrarian reform.

Petitioner assails respondent's refusal to convert its lands to non-agricultural use and to recognize
Presidential Proclamation No. 1520, stating that respondent DAR has not been consistent in its treatment
of applications of this nature. It points out that in the other case involving adjoining lands in Nasugbu,
Batangas, respondent DAR ordered the conversion of the lands upon application of Group Developers
and Financiers, Inc. Respondent DAR, in that case, issued an Order dated January 22, 1991 denying the
motion for reconsideration filed by the farmers thereon and finding that:

In fine, on November 27, 1975, or before the movants filed their instant motion for reconsideration, then
President Ferdinand E. Marcos issued Proclamation No. 1520, declaring the municipalities of Maragondon
and Ternate in the province of Cavite and the municipality of Nasugbu in the province of Batangas as
tourist zone. Precisely, the landholdings in question are included in such proclamation. Up to now, this
office is not aware that said issuance has been repealed or amended (Petition, Annex "W"; Rollo, p. 238).
The DAR Orders submitted by petitioner, and admitted by DAR in its Rejoinder (Rejoinder of DAR dated
August 20, 1999), show that DAR has been inconsistent to the extent of being arbitrary.

Apart from the DAR Orders approving the conversion of the adjoining property now called Batulao Resort
Complex and the DAR Order declaring parcels of the Caylaway property as not covered by CARL, a major
Administrative Order of DAR may also be mentioned.

The Department of Justice in DOJ Opinion No. 44 dated March 16, 1990 (Annex "A" of Petitioner's
Manifestation) stated that DAR was given authority to approve land conversions only after June 15, 1988
when RA 6657, the CARP Law, became effective. Following the DOJ Opinion, DAR issued its AO No. 06,
Series of 1994 providing for the Guidelines on Exemption Orders (Annex "B", Id.). The DAR Guidelines
state that lands already classified as non-agricultural before the enactment of CARL are exempt from its
coverage. Significantly, the disputed properties in this case were classified as tourist zone by no less than
a Presidential Proclamation as early as 1975, long before 1988.

The above, petitioner maintains, constitute unequal protection of the laws. Indeed, the Constitution
guarantees that "(n)o person shall be deprived of life, liberty or property without due process of law, nor
shall any person be denied the equal protection of the laws" (Constitution, Art. III, Sec. 1). Respondent
DAR, therefore, has no alternative but to abide by the declaration in Presidential Proclamation 1520, just
as it did in the case of Group Developers and Financiers, Inc., and to treat petitioners' properties in the
same way it did the lands of Group Developers, i.e., as part of a tourist zone not suitable for agriculture.

On the issue of non-payment of just compensation which results in a taking of property in violation of the
Constitution, petitioner argues that the opening of a trust account in its favor did not operate as payment
of the compensation within the meaning of Section 16 (e) of RA 6657. In Land Bank of the Philippines v.
Court of Appeals (249 SCRA 149, at 157 [1995]), this Court struck down as null and void DAR
Administrative Circular No. 9, Series of 1990, which provides for the opening of trust accounts in lieu of
the deposit in cash or in bonds contemplated in Section 16 (e) of RA 6657.

It is very explicit therefrom (Section 16 [e]) that the deposit must be made only in "cash" or in "LBP
bonds." Nowhere does it appear nor can it be inferred that the deposit can be made in any other form. If
it were the intention to include a "trust account" among the valid modes of deposit, that should have
been made express, or at least, qualifying words ought to have appeared from which it can be fairly
deduced that a "trust account" is allowed. In sum, there is no ambiguity in Section 16(e) of RA 6657 to
warrant an expanded construction of the term "deposit."

In the present suit, the DAR clearly overstepped the limits of its powers to enact rules and regulations
when it issued Administrative Circular No. 9. There is no basis in allowing the opening of a trust account in
behalf of the landowner as compensation for his property because, as heretofore discussed, section 16(e)
of RA 6657 is very specific that the deposit must be made only in "cash" or in "LBP bonds." In the same
vein, petitioners cannot invoke LRA Circular Nos. 29, 29-A and 54 because these implementing regulations
cannot outweigh the clear provision of the law. Respondent court therefore did not commit any error in
striking down Administrative Circular No. 9 for being null and void.
There being no valid payment of just compensation, title to petitioner's landholdings cannot be validly
transferred to the Government. A close scrutiny of the procedure laid down in Section 16 of RA 6657
shows the clear legislative intent that there must first be payment of the fair value of the land subject to
agrarian reform, either directly to the affected landowner or by deposit of cash or LBP bonds in the DAR-
designated bank, before the DAR can take possession of the land and request the register of deeds to
issue a transfer certificate of title in the name of the Republic of the Philippines. This is only proper
inasmuch as title to private property can only be acquired by the government after payment of just
compensation In Association of Small Landowners in the Philippines v. Secretary of Agrarian Reform (175
SCRA 343, 391 [1989]), this Court held:

The CARP Law, for its part, conditions the transfer of possession and ownership of the land to the
government on receipt of 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. No outright change of ownership is contemplated either.

Necessarily, the issuance of the CLOAs by respondent DAR on October 30, 1993 and their distribution to
farmer-beneficiaries were illegal inasmuch as no valid payment of compensation for the lands was as yet
effected. By law, Certificates of Land Ownership Award are issued only to the beneficiaries after the DAR
takes actual possession of the land (RA 6657, Sec. 24), which in turn should only be after the receipt by the
landowner of payment or, in case of rejection or no response from the landowner, after the deposit of the
compensation for the land in cash or in LBP bonds (RA 6657, Sec. 16[e]).

Respondents argue that the Land Bank ruling should not be made to apply to the compulsory acquisition
of petitioner's landholdings in 1993, because it occurred prior to the promulgation of the said decision
(October 6, 1995). This is untenable. Laws may be given retroactive effect on constitutional considerations,
where the prospective application would result in a violation of a constitutional right. In the case at bar,
the expropriation of petitioner's lands was effected without a valid payment of just compensation, thus
violating the Constitutional mandate that "(p)rivate property shall not be taken for public use without just
compensation" (Constitution, Art. III, Sec. 9). Hence, to deprive petitioner of the benefit of the Land Bank
ruling on the mere expedient that it came later than the actual expropriation would be repugnant to
petitioner's fundamental rights.

The controlling last two (2) pages of the ponencia state:

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.
Since then until the present, these farmers have been cultivating their lands. 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.

I disagree with the view that this Court cannot nullify illegally issued CLOA's but must ask the DAR to first
reverse and correct itself.
Given the established facts, there was no valid transfer of petitioner's title to the Government. This being
so, there was also no valid title to transfer to third persons; no basis for the issuance of CLOAs.

Equally important, CLOAs do not have the nature of Torrens Title. Administrative cancellation of title is
sufficient to invalidate them.

The Court of Appeals said so in its Resolution in this case. It stated:

Contrary to the petitioner's argument that issuance of CLOAs to the beneficiaries prior to the deposit of
the offered price constitutes violation of due process, it must be stressed that the mere issuance of the
CLOAs does not vest in the farmer/grantee ownership of the land described therein.

At most the certificate merely evidences the government's recognition of the grantee as the party
qualified to avail of the statutory mechanisms for the acquisition of ownership of the land. Thus failure on
the part of the farmer/grantee to comply with his obligations is a ground for forfeiture of his certificate of
transfer. Moreover, where there is a finding that the property is indeed not covered by CARP, then
reversion to the landowner shall consequently be made, despite issuance of CLOAs to the beneficiaries.
(Resolution dated January 17, 1997, p. 6)

DAR Administrative Order 03, Series of 1996 (issued on August 8, 1996; Annex "F" of Petitioner's
Manifestation) outlines the procedure for the reconveyance to landowners of properties found to be
outside the coverage of CARP. DAR itself acknowledges that they can administratively cancel CLOAs if
found to be erroneous. From the detailed provisions of the Administrative Order, it is apparent that there
are no impediments to the administrative cancellation of CLOAs improperly issued over exempt
properties. The procedure is followed all over the country. The DAR Order spells out that CLOAs are not
Torrens Titles. More so if they affect land which is not covered by the law under which they were issued. In
its Rejoinder, respondent DAR states:

3.2. And, finally, on the authority of DAR/DARAB to cancel erroneously issued Emancipation Patents (EPs)
or Certificate of Landownership Awards (CLOAs), same is enshrined, it is respectfully submitted, in Section
50 of Republic Act No. 6657.

In its Supplemental Manifestation, petitioner points out, and this has not been disputed by respondents,
that DAR has also administratively cancelled twenty five (25) CLOAs covering Nasugbu properties owned
by the Manila Southcoast Development Corporation near subject Roxas landholdings. These lands were
found not suitable for agricultural purposes because of soil and topographical characteristics similar to
those of the disputed properties in this case.

The former DAR Secretary, Benjamin T. Leong, issued DAR Order dated January 22, 1991 approving the
development of property adjacent and contiguous to the subject properties of this case into the Batulao
Tourist Resort. Petitioner points out that Secretary Leong, in this Order, has decided that the land —

1. Is, as contended by the petitioner GDFI "hilly, mountainous, and characterized by poor soil condition
and nomadic method of cultivation, hence not suitable to agriculture."
2. Has as contiguous properties two haciendas of Roxas y Cia and found by Agrarian Reform Team Leader
Benito Viray to be "generally rolling, hilly and mountainous and strudded (sic) with long and narrow
ridges and deep gorges. Ravines are steep grade ending in low dry creeks."

3. Is found in an. area where "it is quite difficult to provide statistics on rice and corn yields because there
are no permanent sites planted. Cultivation is by Kaingin Method."

4. Is contiguous to Roxas Properties in the same area where "the people entered the property
surreptitiously and were difficult to stop because of the wide area of the two haciendas and that the
principal crop of the area is sugar . . .." (emphasis supplied).

I agree with petitioner that under DAR AO No. 03, Series of 1996, and unlike lands covered by Torrens
Titles, the properties falling under improperly issued CLOAs are cancelled by mere administrative
procedure which the Supreme Court can declare in cases properly and adversarially submitted for its
decision. If CLOAs can under the DAR's own order be cancelled administratively, with more reason can the
courts, especially the Supreme Court, do so when the matter is clearly in issue.

With due respect, there is no factual basis for the allegation in the motion for intervention that farmers
have been cultivating the disputed property.

The property has been officially certified as not fit for agriculture based on slope, terrain, depth,
irrigability, fertility, acidity, and erosion. DAR, in its Order dated January 22, 1991, stated that "it is quite
difficult to provide statistics on rice and corn yields (in the adjacent property) because there are no
permanent sites planted. Cultivation is by kaingin method." Any allegations of cultivation, feasible and
viable, are therefore falsehoods.

The DAR Order on the adjacent and contiguous GDFI property states that "(T)he people entered the
property surreptitiously and were difficult to stop . . .."

The observations of Court of Appeals Justices Verzola and Magtolis in this regard, found in their
dissenting opinion (Rollo, p. 116), are relevant:

2.9 The enhanced value of land in Nasugbu, Batangas, has attracted unscrupulous individuals who distort
the spirit of the Agrarian Reform Program in order to turn out quick profits. Petitioner has submitted
copies of CLOAs that have been issued to persons other than those who were identified in the
Emancipation Patent Survey Profile as legitimate Agrarian Reform beneficiaries for particular portions of
petitioner's lands. These persons to whom the CLOAs were awarded, according to petitioner, are not and
have never been workers in petitioner's lands. Petitioners say they are not even from Batangas but come
all the way from Tarlac. DAR itself is not unaware of the mischief in the implementation of the CARL in
some areas of the country, including Nasugbu. In fact, DAR published a "WARNING TO THE PUBLIC"
which appeared in the Philippine Daily Inquirer of April 15, 1994 regarding this malpractice.

2.10 Agrarian Reform does not mean taking the agricultural property of one and giving it to another and
for the latter to unduly benefit therefrom by subsequently "converting" the same property into non-
agricultural purposes.
2.11 The law should not be interpreted to grant power to the State, thru the DAR, to choose who should
benefit from multi-million peso deals involving lands awarded to supposed agrarian reform beneficiaries
who then apply for conversion, and thereafter sell the lands as non-agricultural land.

Respondents, in trying to make light of this problem, merely emphasize that CLOAs are not titles. They
state that "rampant selling of rights", should this occur, could be remedied by the cancellation or recall by
DAR.

In the recent case of "Hon. Carlos O. Fortich, et. al. vs. Hon. Renato C. Corona, et. al." (G.R. No. 131457,
April 24, 1998), this Court found the CLOAs given to the respondent farmers to be improperly issued and
declared them invalid. Herein petitioner Roxas and Co., Inc. has presented a stronger case than petitioners
in the aforementioned case. The procedural problems especially the need for referral to the Court of
Appeals are not present. The instant petition questions the Court of Appeals decision which acted on the
administrative decisions. The disputed properties in the present case have been declared non-agricultural
not so much because of local government action but by Presidential Proclamation. They were found to be
non-agricultural by the Department of Agriculture, and through unmistakable implication, by DAR itself.
The zonification by the municipal government, approved by the provincial government, is not the only
basis.

On a final note, it may not be amiss to stress that laws which have for their object the preservation and
maintenance of social justice are not only meant to favor the poor and underprivileged. They apply with
equal force to those who, notwithstanding their more comfortable position in life, are equally deserving of
protection from the courts. Social justice is not a license to trample on the rights of the rich in the guise of
defending the poor, where no act of injustice or abuse is being committed against them. As we held in
Land Bank (supra.):

It has been declared that the duty of the court to protect the weak and the underprivileged should not be
carried out to such an extent as to deny justice to the landowner whenever truth and justice happen to be
on his side. As eloquently stated by Justice Isagani Cruz:

. . . 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, we are called upon to tilt the
balance in favor of the poor simply because they are poor, to whom the Constitution fittingly extends its
sympathy and compassion. But never is it justified to prefer the poor simply because they are poor, or to
eject 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.

IN THE LIGHT OF THE FOREGOING, I vote to grant the petition for certiorari; and to declare Haciendas
Palico, Banilad and Caylaway, all situated in Nasugbu, Batangas, to be non-agricultural and outside the
scope of Republic Act No. 6657. I further vote to declare the Certificates of Land Ownership Award issued
by respondent Department of Agrarian Reform null and void and to enjoin respondents from proceeding
with the compulsory acquisition of the lands within the subject properties. I finally vote to DENY the
motion for intervention.
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.

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.
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.

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.
G.R. No. 182332 February 23, 2011

MILESTONE FARMS, INC., Petitioner,

vs.
OFFICE OF THE PRESIDENT, Respondent.

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 199328 (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 Report42 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 Resolution46 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 5047 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:

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.
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.

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.

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 20062 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.

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 Director5 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.
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.

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
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.
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
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.
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 Order7 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.
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.
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.
G.R. No. 149548 December 14, 2010

ROXAS & COMPANY, INC., Petitioner,

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

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

G.R. No. 167505

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

KATIPUNAN NG MGA MAGBUBUKID SA HACIENDA ROXAS, INC. (KAMAHARI), ET AL., Petitioners,

vs.
SECRETARY OF THE DEPT. OF AGRARIAN REFORM, ROXAS & Co., INC., Respondents.

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

G.R. No. 167543

DEPARTMENT OF LAND REFORM, FORMERLY DEPARTMENT OF AGRARIAN REFORM (DAR),

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

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

G.R. No. 167845

ROXAS & CO., INC., Petitioner,

vs.
DAMBA-NFSW, Respondent.

x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 169163

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

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

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

G.R. No. 179650

DAMBA-NFSW, Petitioner,

vs.

ROXAS & CO., INC., Respondent.

RESOLUTION

CARPIO MORALES, J.:

This resolves the Motion for Reconsideration filed on January 13, 2010 by Roxas & Co., Inc. (Roxas & Co.)
and the Motion for Partial Reconsideration filed on January 29, 2010 by Damayan ng Manggagawang
Bukid sa Asyenda Roxas-National Federation of Sugar Workers (DAMBA-NFSW) and Katipunan ng mga
Magbubukid sa Hacienda Roxas, Inc. (KAMAHARI), et al., which both assail the Court’s December 4, 2009
Decision in these consolidated cases.

After the above-mentioned Motions were filed, Roxas & Co. filed on April 26, 2010 a Motion to Hold in
Abeyance the Resolution of its earlier Motion for Reconsideration.

Roxas & Co. moves for reconsideration on the following grounds:

I. …CLOA 6654, INSOFAR AS IT COVERS THE 3 PARCELS OF LAND WITH AN AGGREGATE AREA OF
103.1436 HECTARES, SHOULD BE CANCELLED IN VIEW OF THE FINAL AND EXECUTORY 02 APRIL 1996
COURT OF APPEALS DECISION EXEMPTING THE SAID PROPERTIES FROM THE COVERAGE OF THE
COMPREHENSIVE AGRARIAN REFORM LAW (CARL).

II. …CLOA 6654, INSOFAR AS IT COVERS THE REMAINING 410 HECTARES, SHOULD BE CANCELLED
PURSUANT TO SECTION IV (B) (10) OF DAR MEMORANDUM ORDER NO. 2, SERIES OF 1994.

III. …WITH THE CARP-EXEMPTION OF THE 9 PARCELS OF LAND WITH AN AGGREGATE AREA OF 45.9771
HECTARES, ROXAS’ LIABILITY TO PAY DISTURBANCE COMPENSATION IS LIMITED TO ITS AGRICULTURAL
LESSEES AND NOT TO ALL FARMER-BENEFICIARIES FOUND IN THE SUBJECT PROPERTIES PURSUANT TO
REPUBLIC ACT NO. 3844, AS AMENDED, AND THE RULING IN BACALING VS. MUYA.
IV. …THE ADDITIONAL CERTIFICATIONS WERE SUBMITTED TO PROVE THAT THE 51.5472-HECTARE
PROPERTIES ARE CARP-EXEMPT, AND COROLLARILY, ADDRESS THE GROUNDS USED BY THEN DAR
SECRETARY IN DENYING ROXAS’ INITIAL EXEMPTION APPLICATION. THE ALLEGED INCONSISTENCIES
ARE EITHER IMMATERIAL OR CAN BE READILY EXPLAINED.

V. …BASED ON THE EVIDENCE SUBMITTED BY ROXAS, THE 51.5472-HECTARE PROPERTIES SUBJECT OF

…G.R. NO. 179650 ARE CARP-EXEMPT. HENCE, THE PREMATURE INSTALLATION BY THE DAR OF SEVERAL
FARMER-BENEFICIARIES IN THE PROPERTIES IS ILLEGAL.

VI. …THE ROXAS LANDHOLDINGS SHOULD BE DECLARED EXEMPT FROM THE COVERAGE OF CARP.

A. APPLYING DAR V. FRANCO…, THE ROXAS LANDHOLDINGS SHOOULD BE DECLARED CARP-EXEMPT IN

VIEW OF THE PTA ENACTMENT DELINEATING SPECIFIC TOURISM AREAS.

B. CONSISTENT WITH THE DAR EXEMPTION ORDER CITED IN THE FRANCO CASE AND THE SUBMISSION
OF THE OFFICE OF THE SOLICITOR GENERAL…, THE ROXAS LANDHOLDINGS, WHICH ARE (A) LOCATED
WITHIN THE PTA-IDENTIFIED TOURISM PRIORITY AREAS AND (B) INCLUDED IN THE NASUGBU TOURISM
DEVELOPMENT PLAN, SHOULD BE DECLARED CARP-EXEMPT.

C. WITH THE PTA ENACTMENT, THE ROXAS LANDHOLDINGS ARE CARP-EXEMPT FOLLOWING THE
COURT’S PRONOUNCEMENT THAT "THE ONLY TIME [THE NATALIA AND ALLARDE CASES] MAY FIND
APPLICATION IS WHEN THE PTA ACTUALLY IDENTIFIES WELL-DEFINED GEOGRAPHIC AREAS WITHIN THE
ZONE WITH POTENTIAL TOURISM VALUE." 1

On the other hand, DAMBA-NFSW and KAMAHARI, et al. move for partial reconsideration of the assailed
Decision on the following grounds:

I. THE [COURT] COMMITTED A REVERSIBLE ERROR IN RULING TO EXEMPT FROM CARP COVERAGE THE
SUBJECT NINE (9) LOTS WITH ALLEGED AREA OF 45.9771 HECTARES OF HACIENDA PALICO BASED ON
NASUGBU MUNICIPAL ZONING ORDINANCE NO. 4, SERIES OF 1982, NOTWITHSTANDING THE FACT
THAT

A. ROXAS [& CO.] MISERABLY FAILED TO SHOW PROOF THAT THE SUBJECT ZONING ORDINANCE
UNDER ZONE A. VII THEREOF, SPECIFICALLY DELINEATE THE SAID LOTS TO HAVE BEEN RE-CLASSIFIED
TO NON-AGRICULTURAL USE;

B. ROXAS [& CO.] HAS MERE FALSE CERTIFICATIONS ISSUED BY THE HLURB AND MPDC OF NASUGBU
WHICH DO NOT FIND SUPPORT IN THE REFERRED MUNICIPAL ZONING ORDINANCE;

C. ROXAS [& CO.] FAILED TO SUBMIT IN EVIDENCE THE COMPREHENSIVE LAND USE PLAN OF NASUGBU,
BATANGAS PROVING SUCH RECLASSIFICATION TO NON-AGRICULTURAL USE OF SUBJECT LOTS PRIOR
TO THE ENACTMENT OF R.A. 6657 ON JUNE 15, 1988; AND

D. ROXAS [& CO.] MISERABLY FAILED TO IDENTIFY SUBJECT LOTS BOTH IN AREAS COVERED AND
LOCATIONS.
II. GRANTING ARGUENDO THAT THE SUBJECT NASUGBU MUNICIPAL ZONING ORDINANCE NO. 4, SERIES
OF 1982 IS A VALID BASIS FOR EXEMPTION FROM CARP COVERAGE OF SUBJECT PARCELS OF LAND,
AND FURTHER GRANTING ARGUENDO THAT ROXAS WAS ABLE TO PROVE THAT THE SUBJECT LOTS ARE
WITHIN THE PU[R]PORTED URBAN CORE ZONE…, STILL THE [COURT] COMMITTED A REVERSIBLE ERROR
IN UPHOLDING THE COURT OF APPEALS AND THE DAR SECRETARY’[S] ORDER OF CARP EXEMPTION
WITHOUT OBSERVING THE RIGHT OF THE FARMER-BENEFICIARIES TO PROCEDURAL DUE PROCESS.

Preliminarily, the Court denies Roxas & Co.’s Motion to Hold in Abeyance the Resolution of its earlier
Motion for Reconsideration for lack of merit. Roxas & Co. asks the Court to hold its judgment on its
motion for reconsideration pending the outcome of its application with the Tourism Infrastructure and
Enterprise Zone Authority (TIEZA) for the designation of "fourteen ‘geographic areas’ of the Roxas
Properties as [tourism enterprise zones], pursuant to …the Tourism Act."

It bears stressing that Roxas & Co.’s pending application with TIEZA is totally immaterial to the resolution
of the present petitions which delve mainly on the issue of whether the subject lands are exempt from
Comprehensive Agrarian Reform Program (CARP) coverage.

While the Court acknowledged the passage of the Tourism Act as another vehicle for potential tourism
areas to be exempted from CARP coverage, that did not in any way pronounce as meritorious Roxas &
Co.’s subsequent application with the TIEZA to declare its properties as tourism enterprise zones. That is
for the TIEZA, not this Court, to determine. Whatever decision the TIEZA renders in Roxas & Co.’s
application does not in any way affect the merits of these consolidated cases.

Roxas & Co. cannot have it both ways. It must either zealously argue its legal position if it believes it to be
meritorious or altogether abandon it if it has reservations. Its Motion to Hold in Abeyance the Resolution
of its earlier Motion for Reconsideration effectively coaxes the Court to wait for the outcome of its TIEZA
application and ultimately delay the final resolution of these consolidated cases.

On Roxas & Co.’s Motion for Reconsideration, no substantial arguments were raised to warrant a
reconsideration of the Decision. The Motion contains merely an amplification of the main arguments and
factual matters already submitted to and pronounced without merit by the Court in its Decision. In the
Court’s considered view, nothing more is left to be discussed, clarified or done in these cases since all the
main issues raised have been passed upon and definitely resolved.

Roxas & Co. raises the fringe issue that DAR Memorandum Circular No. 7 (Series of 2004) has no force
and effect since the said DAR Memorandum Circular was not published and filed with the Office of the
National Administrative Register.

The contention fails. It should be stressed that there is no need for the publication and filing of the said
DAR Memorandum Circular with the ONAR as it is merely an administrative interpretation.2

Interpretative rule x x x x is promulgated by the administrative agency to interpret, clarify or explain

statutory regulations under which the administrative body operates. The purpose or objective of an
interpretative rule is merely to construe the statute being administered. It purports to do no more than
interpret the statute. Simply, the rules tries to say what the statute means. Generally, it refers to no single
person or party in particular but concerns all those belonging to the same class which may be covered by
the said interpretative rule. It need not be published and neither is a hearing required since it is issued by
the administrative body as an incident of its power to enforce the law and is intended merely to clarify
statutory provisions for proper observance by the people. x x x x.3 (Emphasis and underscoring
supplied)1awphil

Roxas & Co. goes on to contend that its liability to pay disturbance compensation is limited to its
agricultural lessees only and not to farmer-beneficiaries, citing Republic Act No. 3844 (RA 3844), as
amended, and Bacaling v. Muya.4

Roxas & Co. is merely nitpicking on the issue. Since the DAR had initially issued CLOAs to the farmer-
beneficiaries of the nine parcels of land in Hacienda Palico, the assailed Decision merely reiterated the
original designation of the affected individuals as farmer-beneficiaries who should be entitled to
disturbance compensation before the cancellation of their respective CLOAs is effected. This is in
pursuance of the directive of DAR Administrative Order No. 6 (Series of 1994) which mandates the
payment of disturbance compensation before Roxas & Co.’s application for exemption may be completely
granted.

As for the Motion for Partial Reconsideration of DAMBA-NFSW and KAMAHARI, et al., the same likewise
fails as it only rehashes earlier arguments which have been adequately passed upon by the Court.
Notably, the main arguments raised by the Motion are evidentiary in nature that have been resolved by
the DAR Secretary, whose decision on factual controversies deserve utmost respect, if not finality.

Finally, the Court reiterates the explanation of the DAR Secretary why CLOA holders need not be informed
of the pending application for exemption, to wit:

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.

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.1avvphi1
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).5

WHEREFORE, the Motion for Reconsideration filed by Roxas & Co., Inc. and the Motion for Partial
Reconsideration filed by DAMBA-NFSW and KAMAHARI are DENIED for lack of merit.

No further pleadings shall be entertained. Let entry of judgment be made in due course.

SO ORDERED
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 19943 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.
64719 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.

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.

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.

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.
G.R. No. 118712 October 6, 1995

LAND BANK OF THE PHILIPPINES, petitioner,

vs.
COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL
MANAGEMENT & DEVELOPMENT CORP., respondents.

G.R. No. 118745 October 6, 1995

DEPARTMENT OF AGRARIAN REFORM, represented by the Secretary of Agrarian Reform,

petitioner,
vs.
COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL
MANAGEMENT & DEVELOPMENT CORP., ET AL., respondents.

FRANCISCO, R., J.:

It has been declared that the duty of the court to protect the weak and the underprivileged should not be
carried out to such an extent as deny justice to the landowner whenever truth and justice happen to be on
his side.1 As eloquently stated by Justice Isagani Cruz:

. . . 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, we are 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 prefer 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.2

In this agrarian dispute, it is once more imperative that the aforestated principles be applied in its
resolution.

Separate petitions for review were filed by petitioners Department of Agrarian Reform (DAR) (G.R. No.
118745) and Land Bank of the Philippines (G.R. No. 118712) following the adverse ruling by the Court of
Appeals in CA-G.R. SP No. 33465. However, upon motion filed by private respondents, the petitions were
ordered consolidated.3

Petitioners assail the decision of the Court of Appeals promulgated on October 20, 1994, which granted
private respondents' Petition for Certiorari and Mandamus and ruled as follows:

WHEREFORE, premises considered, the Petition for Certiorari and Mandamus is hereby GRANTED:

a) DAR Administrative Order No. 9, Series of 1990 is declared null and void insofar as it provides for the
opening of trust accounts in lieu of deposits in cash or bonds;

b) Respondent Landbank is ordered to immediately deposit — not merely "earmark", "reserve" or "deposit
in trust" — with an accessible bank designated by respondent DAR in the names of the following
petitioners the following amounts in cash and in government financial instruments — within the
parameters of Sec. 18 (1) of RA 6657:
P 1,455,207.31 Pedro L. Yap

P 135,482.12 Heirs of Emiliano Santiago

P 15,914,127.77 AMADCOR;

c) The DAR-designated bank is ordered to allow the petitioners to withdraw the above-deposited
amounts without prejudice to the final determination of just compensation by the proper authorities; and

d) Respondent DAR is ordered to 1) immediately conduct summary administrative proceedings to

determine the just compensation for the lands of the petitioners giving the petitioners 15 days from
notice within which to submit evidence and to 2) decide the cases within 30 days after they are submitted
for decision.4

Likewise, petitioners seek the reversal of the Resolution dated January 18, 1995,5 denying their motion for
reconsideration.

Private respondents are landowners whose landholdings were acquired by the DAR and subjected to
transfer schemes to qualified beneficiaries under the Comprehensive Agrarian Reform Law (CARL,
Republic Act No. 6657).

Aggrieved by the alleged lapses of the DAR and the Landbank with respect to the valuation and payment
of compensation for their land pursuant to the provisions of RA 6657, private respondents filed with this
Court a Petition for Certiorari and Mandamus with prayer for preliminary mandatory injunction. Private
respondents questioned the validity of DAR Administrative Order No. 6, Series of 19926 and DAR
Administrative Order No. 9, Series of 1990,7 and sought to compel the DAR to expedite the pending
summary administrative proceedings to finally determine the just compensation of their properties, and
the Landbank to deposit in cash and bonds the amounts respectively "earmarked", "reserved" and
"deposited in trust accounts" for private respondents, and to allow them to withdraw the same.

Through a Resolution of the Second Division dated February 9, 1994, this Court referred the petition to
respondent Court of Appeals for proper determination and disposition.

As found by respondent court , the following are undisputed:

Petitioner Pedro Yap alleges that "(o)n 4 September 1992 the transfer certificates of title (TCTs) of
petitioner Yap were totally cancelled by the Registrar of Deeds of Leyte and were transferred in the names
of farmer beneficiaries collectively, based on the request of the DAR together with a certification of the
Landbank that the sum of P735,337.77 and P719,869.54 have been earmarked for Landowner Pedro L. Yap
for the parcels of lands covered by TCT Nos. 6282 and 6283, respectively, and issued in lieu thereof TC-
563 and TC-562, respectively, in the names of listed beneficiaries (ANNEXES "C" & "D") without notice to
petitioner Yap and without complying with the requirement of Section 16 (e) of RA 6657 to deposit the
compensation in cash and Landbank bonds in an accessible bank. (Rollo, p. 6).
The above allegations are not disputed by any of the respondents.

Petitioner Heirs of Emiliano Santiago allege that the heirs of Emiliano F. Santiago are the owners of a
parcel of land located at Laur, NUEVA ECIJA with an area of 18.5615 hectares covered by TCT No. NT-
60359 of the registry of Deeds of Nueva Ecija, registered in the name of the late Emiliano F. Santiago; that
in November and December 1990, without notice to the petitioners, the Landbank required and the
beneficiaries executed Actual tillers Deed of Undertaking (ANNEX "B") to pay rentals to the LandBank for
the use of their farmlots equivalent to at least 25% of the net harvest; that on 24 October 1991 the DAR
Regional Director issued an order directing the Landbank to pay the landowner directly or through the
establishment of a trust fund in the amount of P135,482.12, that on 24 February 1992, the Landbank
reserved in trust P135,482.12 in the name of Emiliano F. Santiago. (ANNEX "E"; Rollo,

p. 7); that the beneficiaries stopped paying rentals to the landowners after they signed the Actual Tiller's
Deed of Undertaking committing themselves to pay rentals to the LandBank (Rollo, p. 133).

The above allegations are not disputed by the respondents except that respondent Landbank claims 1)
that it was respondent DAR, not Landbank which required the execution of Actual Tillers Deed of
Undertaking (ATDU, for brevity); and 2) that respondent Landbank, although armed with the ATDU, did
not collect any amount as rental from the substituting beneficiaries (Rollo, p. 99).

Petitioner Agricultural Management and Development Corporation (AMADCOR, for brevity) alleges —
with respect to its properties located in San Francisco, Quezon — that the properties of AMADCOR in San
Francisco, Quezon consist of a parcel of land covered by TCT No. 34314 with an area of 209.9215 hectares
and another parcel covered by TCT No. 10832 with an area of 163.6189 hectares; that a summary
administrative proceeding to determine compensation of the property covered by TCT No. 34314 was
conducted by the DARAB in Quezon City without notice to the landowner; that a decision was rendered
on 24 November 1992 (ANNEX "F") fixing the compensation for the parcel of land covered by TCT No.
34314 with an area of 209.9215 hectares at P2,768,326.34 and ordering the Landbank to pay or establish a
trust account for said amount in the name of AMADCOR; and that the trust account in the amount of
P2,768,326.34 fixed in the decision was established by adding P1,986,489.73 to the first trust account
established on 19 December 1991 (ANNEX "G"). With respect to petitioner AMADCOR's property in
Tabaco, Albay, it is alleged that the property of AMADCOR in Tabaco, Albay is covered by TCT No. T-2466
of the Register of Deeds of Albay with an area of 1,629.4578 hectares'; that emancipation patents were
issued covering an area of 701.8999 hectares which were registered on 15 February 1988 but no action
was taken thereafter by the DAR to fix the compensation for said land; that on 21 April 1993, a trust
account in the name of AMADCOR was established in the amount of P12,247,217.83', three notices of
acquisition having been previously rejected by AMADCOR. (Rollo, pp. 8-9)

The above allegations are not disputed by the respondents except that respondent Landbank claims that
petitioner failed to participate in the DARAB proceedings (land valuation case) despite due notice to it
(Rollo, p. 100).8

Private respondents argued that Administrative Order No. 9, Series of 1990 was issued without jurisdiction
and with grave abuse of discretion because it permits the opening of trust accounts by the Landbank, in
lieu of depositing in cash or bonds in an accessible bank designated by the DAR, the compensation for
the land before it is taken and the titles are cancelled as provided under Section 16(e) of RA 6657.9 Private
respondents also assail the fact that the DAR and the Landbank merely "earmarked", "deposited in trust"
or "reserved" the compensation in their names as landowners despite the clear mandate that before
taking possession of the property, the compensation must be deposited in cash or in bonds. 10

Petitioner DAR, however, maintained that Administrative Order No. 9 is a valid exercise of its rule-making
power pursuant to Section 49 of RA 6657.11 Moreover, the DAR maintained that the issuance of the
"Certificate of Deposit" by the Landbank was a substantial compliance with Section 16(e) of RA 6657 and
the ruling in the case of Association of Small Landowners in the Philippines, Inc., et al. vs. Hon. Secretary
of Agrarian Reform, G.R. No. 78742, July 14, 1989 (175 SCRA 343).12

For its part, petitioner Landbank declared that the issuance of the Certificates of Deposits was in
consonance with Circular Nos. 29, 29-A and 54 of the Land Registration Authority where the words
"reserved/deposited" were also used.13

On October 20, 1994, the respondent court rendered the assailed decision in favor of private
respondents.14 Petitioners filed a motion for reconsideration but respondent court denied the same.15

Hence, the instant petitions.

On March 20, 1995, private respondents filed a motion to dismiss the petition in G.R. No. 118745 alleging
that the appeal has no merit and is merely intended to delay the finality of the appealed decision.16 The
Court, however, denied the motion and instead required the respondents to file their comments.17

Petitioners submit that respondent court erred in (1) declaring as null and void DAR Administrative Order
No. 9, Series of 1990, insofar as it provides for the opening of trust accounts in lieu of deposit in cash or in
bonds, and (2) in holding that private respondents are entitled as a matter of right to the immediate and
provisional release of the amounts deposited in trust pending the final resolution of the cases it has filed
for just compensation.

Anent the first assignment of error, petitioners maintain that the word "deposit" as used in Section 16(e)
of RA 6657 referred merely to the act of depositing and in no way excluded the opening of a trust
account as a form of deposit. Thus, in opting for the opening of a trust account as the acceptable form of
deposit through Administrative Circular No. 9, petitioner DAR did not commit any grave abuse of
discretion since it merely exercised its power to promulgate rules and regulations in implementing the
declared policies of RA 6657.

The contention is untenable. Section 16(e) of RA 6657 provides as follows:

Sec. 16. Procedure for Acquisition of Private Lands —

(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. . . . (emphasis supplied)
It is very explicit therefrom that the deposit must be made only in "cash" or in "LBP bonds". Nowhere does
it appear nor can it be inferred that the deposit can be made in any other form. If it were the intention to
include a "trust account" among the valid modes of deposit, that should have been made express, or at
least, qualifying words ought to have appeared from which it can be fairly deduced that a "trust account"
is allowed. In sum, there is no ambiguity in Section 16(e) of RA 6657 to warrant an expanded construction
of the term "deposit".

The conclusive effect of administrative construction is not absolute. Action of an administrative agency
may be disturbed or set aside by the judicial department if there is an error of law, a grave abuse of power
or lack of jurisdiction or grave abuse of discretion clearly conflicting with either the letter or the spirit of a
legislative enactment.18 In this regard, it must be stressed that the function of promulgating rules and
regulations may be legitimately exercised only for the purpose of carrying the provisions of the law into
effect. The power of administrative agencies is thus confined to implementing the law or putting it into
effect. Corollary to this is that administrative regulations cannot extend the law and amend a legislative
enactment,19 for settled is the rule that administrative regulations must be in harmony with the provisions
of the law. And in case there is a discrepancy between the basic law and an implementing rule or
regulation, it is the former that prevails.20

In the present suit, the DAR clearly overstepped the limits of its power to enact rules and regulations
when it issued Administrative Circular No. 9. There is no basis in allowing the opening of a trust account in
behalf of the landowner as compensation for his property because, as heretofore discussed, Section 16(e)
of RA 6657 is very specific that the deposit must be made only in "cash" or in "LBP bonds". In the same
vein, petitioners cannot invoke LRA Circular Nos. 29, 29-A and 54 because these implementing regulations
cannot outweigh the clear provision of the law. Respondent court therefore did not commit any error in
striking down Administrative Circular No. 9 for being null and void.

Proceeding to the crucial issue of whether or not private respondents are entitled to withdraw the
amounts deposited in trust in their behalf pending the final resolution of the cases involving the final
valuation of their properties, petitioners assert the negative.

The contention is premised on the alleged distinction between the deposit of compensation under
Section 16(e) of RA 6657 and payment of final compensation as provided under Section 1821 of the same
law. According to petitioners, the right of the landowner to withdraw the amount deposited in his behalf
pertains only to the final valuation as agreed upon by the landowner, the DAR and the LBP or that
adjudged by the court. It has no reference to amount deposited in the trust account pursuant to Section
16(e) in case of rejection by the landowner because the latter amount is only provisional and intended
merely to secure possession of the property pending final valuation. To further bolster the contention
petitioners cite the following pronouncements in the case of "Association of Small Landowners in the Phil.
Inc. vs. Secretary of Agrarian Reform".22

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 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. 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.

Notably, however, the aforecited case was used by respondent court in discarding petitioners' assertion as
it found that:

. . . despite the "revolutionary" character of the expropriation envisioned under RA 6657 which led the
Supreme Court, in the case of Association of Small Landowners in the Phil. Inc. vs. Secretary of Agrarian
Reform (175 SCRA 343), to conclude that "payments of the just compensation is not always required to be
made fully in money" — even as the Supreme Court admits in the same case "that the traditional medium
for the payment of just compensation is money and no other" — the Supreme Court in said case did not
abandon the "recognized rule . . . that title to the property expropriated shall pass from the owner to the
expropriator only upon full payment of the just compensation." 23 (Emphasis supplied)

We agree with the observations of respondent court. The ruling in the "Association" case merely
recognized the extraordinary nature of the expropriation to be undertaken under RA 6657 thereby
allowing a deviation from the traditional mode of payment of compensation and recognized payment
other than in cash. It did not, however, dispense with the settled rule that there must be full payment of
just compensation before the title to the expropriated property is transferred.

The attempt to make a distinction between the deposit of compensation under Section 16(e) of RA 6657
and determination of just compensation under Section 18 is unacceptable. To withhold the right of the
landowners to appropriate the amounts already deposited in their behalf as compensation for their
properties simply because they rejected the DAR's valuation, and notwithstanding that they have already
been deprived of the possession and use of such properties, is an oppressive exercise of eminent domain.
The irresistible expropriation of private respondents' properties was painful enough for them. But
petitioner DAR rubbed it in all the more by withholding that which rightfully belongs to private
respondents in exchange for the taking, under an authority (the "Association" case) that is, however,
misplaced. This is misery twice bestowed on private respondents, which the Court must rectify.

Hence, we find it unnecessary to distinguish between provisional compensation under Section 16(e) and
final compensation under Section 18 for purposes of exercising the landowners' right to appropriate the
same. The immediate effect in both situations is the same, the landowner is deprived of the use and
possession of his property for which he should be fairly and immediately compensated. Fittingly, we
reiterate the cardinal rule that:

. . . within the context of the State's inherent power of eminent domain, just compensation means not only
the correct determination of the amount to be paid to the owner of the land but also the payment of the
land within a reasonable time from its taking. Without prompt payment, compensation cannot be
considered "just" for the property owner is made to suffer the consequence of being immediately
deprived of his land while being made to wait for a decade or more before actually receiving the amount
necessary to cope with his loss. 24 (Emphasis supplied)
The promulgation of the "Association" decision endeavored to remove all legal obstacles in the
implementation of the Comprehensive Agrarian Reform Program and clear the way for the true freedom
of the farmer.25 But despite this, cases involving its implementation continue to multiply and clog the
courts' dockets. Nevertheless, we are still optimistic that the goal of totally emancipating the farmers from
their bondage will be attained in due time. It must be stressed, however, that in the pursuit of this
objective, 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.26

WHEREFORE, the foregoing premises considered, the petition is hereby DENIED for lack of merit and the
appealed decision is AFFIRMED in toto.

SO ORDERED.
G.R. No. 127198 May 16, 2005

LAND BANK OF THE PHILIPPINES, petitioner,

vs.
HON. ELI G. C. NATIVIDAD, Presiding Judge of the Regional Trial Court, Branch 48, San Fernando,
Pampanga, and JOSE R. CAGUIAT represented by Attorneys-in-fact JOSE T. BARTOLOME and
VICTORIO MANGALINDAN, respondents.

TINGA, J.:

This is a Petition for Review1 dated December 6, 1996 assailing the Decision2 of the Regional Trial
Court3 dated July 5, 1996 which ordered the Department of Agrarian Reform (DAR) and petitioner Land
Bank of the Philippines (Land Bank) to pay private respondents the amount of P30.00 per square meter as
just compensation for the State’s acquisition of private respondents’ properties under the land reform
program.

The facts follow.

On May 14, 1993, private respondents filed a petition before the trial court for the determination of just
compensation for their agricultural lands situated in Arayat, Pampanga, which were acquired by the
government pursuant to Presidential Decree No. 27 (PD 27). The petition named as respondents the DAR
and Land Bank. With leave of court, the petition was amended to implead as co-respondents the
registered tenants of the land.

After trial, the court rendered the assailed Decision the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of petitioners and against respondents,

ordering respondents, particularly, respondents Department of Agrarian Reform and the Land
Bank of the Philippines, to pay these lands owned by petitioners and which are the subject of
acquisition by the State under its land reform program, the amount of THIRTY PESOS (P30.00) per
square meter, as the just compensation due for payment for same lands of petitioners located at
San Vicente (or Camba), Arayat, Pampanga.

Respondent Department of Agrarian Reform is also ordered to pay petitioners the amount of
FIFTY THOUSAND PESOS (P50,000.00) as Attorney’s Fee, and to pay the cost of suit.

SO ORDERED.4

DAR and Land Bank filed separate motions for reconsideration which were denied by the trial court in
its Order5 dated July 30, 1996 for being pro forma as the same did not contain a notice of hearing. Thus,
the prescriptive period for filing an appeal was not tolled. Land Bank consequently failed to file a timely
appeal and the assailed Decision became final and executory.

Land Bank then filed a Petition for Relief from Order Dated 30 July 1996,6 citing excusable negligence as its
ground for relief. Attached to the petition for relief were two affidavits of merit claiming that the failure to
include in the motion for reconsideration a notice of hearing was due to accident and/or mistake.7 The
affidavit of Land Bank’s counsel of record notably states that "he simply scanned and signed the Motion
for Reconsideration for Agrarian Case No. 2005, Regional Trial Court of Pampanga, Branch 48, not
knowing, or unmindful that it had no notice of hearing" 8 due to his heavy workload.

The trial court, in its Order9 of November 18, 1996, denied the petition for relief because Land Bank lost a
remedy in law due to its own negligence.

In the instant petition for review, Land Bank argues that the failure of its counsel to include a notice of
hearing due to pressure of work constitutes excusable negligence and does not make the motion for
reconsideration pro forma considering its allegedly meritorious defenses. Hence, the denial of its petition
for relief from judgment was erroneous.

According to Land Bank, private respondents should have sought the reconsideration of the DAR’s
valuation of their properties. Private respondents thus failed to exhaust administrative remedies when
they filed a petition for the determination of just compensation directly with the trial court. Land Bank
also insists that the trial court erred in declaring that PD 27 and Executive Order No. 228 (EO 228) are
mere guidelines in the determination of just compensation, and in relying on private respondents’
evidence of the valuation of the properties at the time of possession in 1993 and not on Land Bank’s
evidence of the value thereof as of the time of acquisition in 1972.

Private respondents filed a Comment10 dated February 22, 1997, averring that Land Bank’s failure to
include a notice of hearing in its motion for reconsideration due merely to counsel’s heavy workload,
which resulted in the motion being declared pro forma, does not constitute excusable negligence,
especially in light of the admission of Land Bank’s counsel that he has been a lawyer since 1973 and has
"mastered the intricate art and technique of pleading."

Land Bank filed a Reply11 dated March 12, 1997 insisting that equity considerations demand that it be
heard on substantive issues raised in its motion for reconsideration.

The Court gave due course to the petition and required the parties to submit their respective
memoranda.12 Both parties complied.13

The petition is unmeritorious.

At issue is whether counsel’s failure to include a notice of hearing constitutes excusable negligence
entitling Land Bank to a relief from judgment.

Section 1, Rule 38 of the 1997 Rules of Civil Procedure provides:

Sec. 1. Petition for relief from judgment, order, or other proceedings.—When a judgment or final
order is entered, or any other proceeding is thereafter taken against a party in any court through
fraud, accident, mistake, or excusable negligence, he may file a petition in such court and in the
same case praying that the judgment, order or proceeding be set aside.

As can clearly be gleaned from the foregoing provision, the remedy of relief from judgment can only be
resorted to on grounds of fraud, accident, mistake or excusable negligence. Negligence to be excusable
must be one which ordinary diligence and prudence could not have guarded against.14
Measured against this standard, the reason profferred by Land Bank’s counsel, i.e., that his heavy
workload prevented him from ensuring that the motion for reconsideration included a notice of hearing,
was by no means excusable.

Indeed, counsel’s admission that "he simply scanned and signed the Motion for Reconsideration for
Agrarian Case No. 2005, Regional Trial Court of Pampanga, Branch 48, not knowing, or unmindful that it
had no notice of hearing" speaks volumes of his arrant negligence, and cannot in any manner be deemed
to constitute excusable negligence.

The failure to attach a notice of hearing would have been less odious if committed by a greenhorn but not
by a lawyer who claims to have "mastered the intricate art and technique of pleading." 15

Indeed, a motion that does not contain the requisite notice of hearing is nothing but a mere scrap of
paper. The clerk of court does not even have the duty to accept it, much less to bring it to the attention of
the presiding judge.16 The trial court therefore correctly considered the motion for reconsideration pro
forma. Thus, it cannot be faulted for denying Land Bank’s motion for reconsideration and petition for
relief from judgment.

It should be emphasized at this point that procedural rules are designed to facilitate the adjudication of
cases. Courts and litigants alike are enjoined to abide strictly by the rules. While in certain instances, we
allow a relaxation in the application of the rules, we never intend to forge a weapon for erring litigants to
violate the rules with impunity. The liberal interpretation and application of rules apply only in proper
cases of demonstrable merit and under justifiable causes and circumstances. While it is true that litigation
is not a game of technicalities, it is equally true that every case must be prosecuted in accordance with the
prescribed procedure to ensure an orderly and speedy administration of justice. Party litigants and their
counsel are well advised to abide by, rather than flaunt, procedural rules for these rules illumine the path
of the law and rationalize the pursuit of justice.17

Aside from ruling on this procedural issue, the Court shall also resolve the other issues presented by Land
Bank, specifically as regards private respondents’ alleged failure to exhaust administrative remedies and
the question of just compensation.

Land Bank avers that private respondents should have sought the reconsideration of the DAR’s valuation
instead of filing a petition to fix just compensation with the trial court.

The records reveal that Land Bank’s contention is not entirely true. In fact, private respondents did write a
letter18 to the DAR Secretary objecting to the land valuation summary submitted by the Municipal
Agrarian Reform Office and requesting a conference for the purpose of fixing just compensation. The
letter, however, was left unanswered prompting private respondents to file a petition directly with the trial
court.

At any rate, in Philippine Veterans Bank v. Court of Appeals,19 we declared that there is nothing
contradictory between the DAR’s primary jurisdiction to determine and adjudicate agrarian reform matters
and exclusive original jurisdiction over all matters involving the implementation of agrarian reform, which
includes the determination of questions of just compensation, and the original and exclusive jurisdiction
of regional trial courts over all petitions for the determination of just compensation. The first refers to
administrative proceedings, while the second refers to judicial proceedings.
In accordance with settled principles of administrative law, primary jurisdiction is vested in the DAR to
determine in a preliminary manner the just compensation for the lands taken under the agrarian reform
program, but such determination is subject to challenge before the courts. The resolution of just
compensation cases for the taking of lands under agrarian reform is, after all, essentially a judicial
function.20

Thus, the trial did not err in taking cognizance of the case as the determination of just compensation is a
function addressed to the courts of justice.

Land Bank’s contention that the property was acquired for purposes of agrarian reform on October 21,
1972, the time of the effectivity of PD 27, ergo just compensation should be based on the value of the
property as of that time and not at the time of possession in 1993, is likewise erroneous. In Office of the
President, Malacañang, Manila v. Court of Appeals,21 we ruled that the seizure of the landholding did not
take place on the date of effectivity of PD 27 but would take effect on the payment of just compensation.

Under the factual circumstances of this case, the agrarian reform process is still incomplete as the just
compensation to be paid private respondents has yet to be settled. Considering the passage of Republic
Act No. 6657 (RA 6657)22 before the completion of this process, the just compensation should be
determined and the process concluded under the said law. Indeed, RA 6657 is the applicable law, with PD
27 and EO 228 having only suppletory effect, conformably with our ruling in Paris v. Alfeche.23

Section 17 of RA 6657 which is particularly relevant, providing as it does the guideposts for the
determination of just compensation, reads as follows:

Sec. 17. Determination of Just Compensation.—In determining just compensation, the cost of
acquisition of the land, the current value of like properties, its nature, actual use and income, the
sworn valuation by the owner, the tax declarations, and the assessment made by government
assessors shall be considered. The social and economic benefits contributed by the farmers and
the farm-workers and by the Government to the property as well as the non-payment of taxes or
loans secured from any government financing institution on the said land shall be considered as
additional factors to determine its valuation.

It would certainly be inequitable to determine just compensation based on the guideline provided by PD
27 and EO 228 considering the DAR’s failure to determine the just compensation for a considerable length
of time. That just compensation should be determined in accordance with RA 6657, and not PD 27 or EO
228, is especially imperative considering that just compensation should be the full and fair equivalent of
the property taken from its owner by the expropriator, the equivalent being real, substantial, full and
ample.24

In this case, the trial court arrived at the just compensation due private respondents for their property,
taking into account its nature as irrigated land, location along the highway, market value, assessor’s value
and the volume and value of its produce. This Court is convinced that the trial court correctly determined
the amount of just compensation due private respondents in accordance with, and guided by, RA 6657
and existing jurisprudence.

WHEREFORE, the petition is DENIED. Costs against petitioner.

SO ORDERED.
G.R. No. 188376 December 14, 2011

LAND BANK OF THE PHILIPPINES, Petitioner, vs. FEDERICO SUNTAY, as represented by his
Assignee, JOSEFINA LUBRICA, Respondent.

BERSAMIN, J.:

In Land Bank v. Suntay,1 the Court has declared that the original and exclusive jurisdiction to determine
just compensation under Republic Act No. 6657 (Comprehensive Agrarian Reform Law, or CARL) pertains
to the Regional Trial Court (RTC) as a Special Agrarian Court; that any effort to transfer such jurisdiction to
the adjudicators of the Department of Agrarian Reform Adjudication Board (DARAB) and to convert the
original jurisdiction of the RTC into appellate jurisdiction is void for being contrary to the CARL; and that
what DARAB adjudicators are empowered to do is only to determine in a preliminary manner the
reasonable compensation to be paid to the landowners, leaving to the courts the ultimate power to
decide this question.

Bearing this pronouncement in mind, we grant the petition for review on certiorari and reverse the
decision promulgated on June 5, 2009 by the Court of Appeals (CA) in CA-G.R. SP No. 106104 entitled
Land Bank of the Philippines v. Hon. Conchita C. Miñas, Regional Agrarian Adjudicaor of Region IV, and
Federico Suntay, as represented by his Assignee, Josefina Lubrica, dismissing the petition for certiorari of
Land Bank of the Philippines (Land Bank) on the ground of its being moot and academic.

ANTECEDENTS

Respondent Federico Suntay (Suntay) owned land situated in Sta. Lucia, Sablayan, Occidental Mindoro
with a total area of 3,682.0285 hectares. In 1972, the Department of Agrarian Reform (DAR) expropriated
948.1911 hectares of Suntay’s land pursuant to Presidential Decree No. 27.2 Petitioner Land Bank and
DAR fixed the value of the expropriated portion at ₱4,497.50/hectare, for a total valuation of
₱4,251,141.68.3 Rejecting the valuation, however, Suntay filed a petition for determination of just
compensation in the Office of the Regional Agrarian Reform Adjudicator (RARAD) of Region IV, DARAB,
docketed as DARAB Case No. V-0405-0001-00; his petition was assigned to RARAD Conchita Miñas
(RARAD Miñas).4

On January 24, 2001, after summary administrative proceeding in DARAB Case No. V-0405-0001-00,
RARAD Miñas rendered a decision fixing the total just compensation for the expropriated portion at
₱157,541,951.30. Land Bank moved for a reconsideration, but RARAD Miñas denied its motion on March
14, 2001. It received the denial on March 26, 2001.5

On April 20, 2001, Land Bank brought a petition for the judicial determination of just compensation in the
RTC (Branch 46) in San Jose, Occidental Mindoro as a Special Agrarian Court, impleading Suntay and
RARAD Miñas. The petition, docketed as Agrarian Case No. R-1241, essentially prayed that the total just
compensation for the expropriated portion be fixed at only ₱4,251,141.67.6

G.R. No. 159145

DARAB v. Lubrica
On May 22, 2001, despite the pendency of Agrarian Case No. R-1241 in the RTC, RARAD Miñas issued an
order in DARAB Case No. V-0405-0001-00, declaring that her decision of January 24, 2001 had become
final and executory. Land Bank contested the order through a motion for reconsideration, but RARAD
Miñas denied the motion for reconsideration on July 10, 2001.

On July 18, 2001, RARAD Miñas issued a writ of execution directing the Regional Sheriff of DARAB Region
IV to implement the decision of January 24, 2001.7

On September 12, 2001, Land Bank filed in DARAB a petition for certiorari (with prayer for the issuance of
temporary restraining order (TRO)/preliminary injunction), docketed as DSCA No. 0252, seeking to nullify
the following issuances of RARAD Miñas, to wit:

(a) The decision of January 24, 2001 directing Land Bank to pay Suntay just compensation of
₱147,541,951.30;

(b) The order dated May 22, 2001 declaring the decision of January 24, 2001 as final and executory;

(c) The order dated July 10, 2001 denying Land Bank’s motion for reconsideration; and

(d) The writ of execution dated July 18, 2001 directing the sheriff to enforce the decision of January 24,
2001.

On September 12, 2001, DARAB enjoined RARAD Miñas from proceeding with the implementation of the
decision of January 24, 2001, and directed the parties to attend the hearing to determine the propriety of
issuing a preliminary or permanent injunction.8

On September 20, 2001, Josefina Lubrica (Lubrica), the assignee of Suntay, filed a petition for prohibition
in the CA (CA-G.R. SP No. 66710) to prevent DARAB from proceeding in DSCA No. 0252 by mainly
contending that the CARL did not grant to DARAB jurisdiction over special civil actions for certiorari. On
the same day, the CA granted the prayer for TRO.

On October 3, 2001, DARAB issued a writ of preliminary injunction enjoining RARAD Miñas from
implementing the January 24, 2001 decision and the orders incidental to said decision.9

DARAB submitted its own comment to the CA, arguing that it had issued the writ of injunction under its
power of supervision over its subordinates, like the PARADs and the RARADs.

Land Bank also submitted its own comment, citing the prematurity of the petition for prohibition.10

On August 22, 2002, the CA promulgated its decision in CA-G.R. SP No. 66710, holding that DARAB, being
a mere formal party, had no personality to file a comment vis-à-vis the petition for prohibition; and that
DARAB had no jurisdiction to take cognizance of DSCA No. 1252, considering that its exercise of
jurisdiction over a special civil action for certiorari had no constitutional or statutory basis. Accordingly,
the CA granted the petition for prohibition and perpetually enjoined DARAB from proceeding in DSCA
No. 1252, which the CA ordered dismissed.11
Thence, DARAB appealed the adverse CA decision to this Court via petition for review on certiorari,
docketed as G.R. No. 159145 entitled Department of Agrarian Reform Adjudication Board of the
Department of Agrarian Reform, Represented by DAR Secretary Roberto M. Pagdanganan v. Josefina S.
Lubrica, in her capacity as Assignee of the rights and interest of Federico Suntay (DARAB v. Lubrica),
insisting that the CA erred in declaring that DARAB had no personality to file a comment; in holding that
DARAB had no jurisdiction over DSCA No. 0252; and in nullifying the writ of preliminary injunction issued
by DARAB in DSCA No. 0252 for having been issued in violation of the CA’s TRO.

On April 29, 2005, the Court promulgated its decision in DARAB v. Lubrica (G.R. No. 159145),12 denying
the petition for review. The Court opined that DARAB’s limited jurisdiction as a quasi-judicial body did not
include the authority to take cognizance of petitions for certiorari, in the absence of an express grant in
R.A. No. 6657, Executive Order (E.O.) No. 229, and E.O. No. 129-A.

G.R. No. 157903

Land Bank v. Suntay

In the meanwhile, in Agrarian Case No. R-1241, Suntay filed a motion to dismiss, claiming that Land Bank’s
petition for judicial determination of just compensation had been filed beyond the 15-day reglementary
period prescribed in Section 11, Rule XIII of the New Rules of Procedure of DARAB; and that, by virtue of
such tardiness, RARAD Miñas’ decision had become final and executory.13

The RTC granted Suntay’s motion to dismiss on August 6, 2001 on that ground.

Land Bank sought reconsideration, maintaining that its petition for judicial determination of just
compensation was a separate action that did not emanate from the case in the RARAD.

Nonetheless, the RTC denied Land Bank’s motion for reconsideration on August 31, 2001.14

On September 10, 2001, Land Bank filed a notice of appeal in Agrarian Case No. R-1241, but the RTC
denied due course to the notice of appeal on January 18, 2002, pointing out that the proper mode of
appeal was by petition for review pursuant to Section 60 of the CARL.

The RTC denied Land Bank’s motion for reconsideration on March 8, 2002.15

Thereupon, Land Bank assailed in the CA the RTC’s orders dated January 18, 2002 and March 8, 2002 via a
special civil action certiorari (CA-G.R. SP No. 70015), alleging that the RTC thereby committed grave abuse
of discretion amounting to lack or excess of jurisdiction in denying due course to its notice of appeal; and
contending that decisions or final orders of the RTCs, acting as Special Agrarian Courts, were not
appealable to the CA through a petition for review but through a notice of appeal.

On July 19, 2002, the CA promulgated its decision in CA-G.R. SP No. 70015, granting Land Bank’s petition
for certiorari; nullifying the RTC’s orders dated January 18, 2002 and March 8, 2002; allowing due course
to Land Bank’s notice of appeal; and permanently enjoining the RTC from enforcing the nullified orders,
and the RARAD from enforcing the writ of execution issued in DARAB Case No. V-0405-0001-00.16
Thereafter, upon Suntay’s motion for reconsideration, the CA reversed itself through the amended
decision dated February 5, 2003,17 and dismissed Land Bank’s petition for certiorari, thuswise:

WHEREFORE, premises considered, the present Motion for Reconsideration is hereby GRANTED.
Consequently, the present petition is hereby DISMISSED.

The injunction issued by this Court enjoining (a) respondent Executive Judge from enforcing his Orders
dated January 18, 2002 and March 8, 2002 in Agrarian Case No. R-1241; and (b) respondent Regional
Agrarian Reform Adjudicator Conchita S. Miñas from enforcing the Writ of Execution dated July 18, 2001
issued in DARAB Case No. V-0405-0001-00, are hereby REVOKED and SET ASIDE.

SO ORDERED.

On April 10, 2003, the CA denied the Land Bank’s motion for reconsideration.18

On May 6, 2003, Land Bank appealed to the Court, docketed as G.R. No. 157903, entitled Land Bank of the
Philippines v. Federico Suntay, Represented by his Assignee, Josefina Lubrica (Land Bank v. Suntay).19

On October 12, 2005, the Court issued a TRO upon Land Bank’s urgent motion to stop the
implementation of RARAD Miñas’ decision dated January 24, 2001 pending the final resolution of G.R. No.
157903.20

On October 11, 2007, this Court promulgated its decision in Land Bank v. Suntay (G.R. No. 157903),21 viz:

The crucial issue for our resolution is whether the RTC erred in dismissing the Land Bank’s petition for the
determination of just compensation.

It is clear that the RTC treated the petition for the determination of just compensation as an appeal from
the RARAD Decision in DARAB Case No. V-0405-0001-00. In dismissing the petition for being filed out of
time, the RTC relied on Section 11, Rule XIII of the DARAB New Rules of Procedure which provides:

Section 11. Land Valuation and Preliminary Determination and Payment of Just Compensation. – The
decision of the Adjudicator on land valuation and preliminary determination and payment of just
compensation shall not be appealable to the Board [Department of Agrarian Reform Adjudication Board
(DARAB)] but shall be brought directly to the Regional Trial Courts designated as Special Agrarian Courts
within fifteen (15) days from receipt of the notice thereof. Any party shall be entitled to only one motion
for reconsideration.

The RTC erred in dismissing the Land Bank’s petition. It bears stressing that the petition is not an appeal
from the RARAD final Decision but an original action for the determination of the just compensation for
respondent’s expropriated property, over which the RTC has original and exclusive jurisdiction. This is
clear from Section 57 of R.A. No. 6657 which provides:

Section 57. Special Jurisdiction. – The Special Agrarian Courts [the designated Regional Trial Courts] shall
have original and exclusive jurisdiction over all petitions for the determination of just compensation to
landowners, and the prosecution of all criminal offenses under this Act. The Rules of Court shall apply to
all proceedings before the Special Agrarian Courts, unless modified by this Act.
The Special Agrarian Courts shall decide all appropriate cases under their special jurisdiction within thirty
(30) days from submission of the case for decision. (Underscoring supplied)

Parenthetically, the above provision is not in conflict with Section 50 of the same R.A. No. 6657 which
states:

Section 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) x x x.

In Republic of the Philippines v. Court of Appeals, we held that Section 50 must be construed in harmony
with Section 57 by considering cases involving the determination of just compensation and criminal cases
for violations of R.A. No. 6657 as excepted from the plenitude of power conferred upon the DAR. Indeed,
there is a reason for this distinction. The DAR is an administrative agency which cannot be granted
jurisdiction over cases of eminent domain (such as taking of land under R.A. No. 6657) and over criminal
cases. Thus, in Land Bank of the Philippines v. Celada, Export Processing Zone Authority v. Dulay and
Sumulong v. Guerrero, we held that the valuation of property in eminent domain is essentially a judicial
function which cannot be vested in administrative agencies. Also, in Scoty’s Department Store, et al. v.
Micaller, we struck down a law granting the then Court of Industrial Relations jurisdiction to try criminal
cases for violations of the Industrial Peace Act.

The procedure for the determination of just compensation cases under R.A. No. 6657, as summarized in
Landbank of the Philippines v. Banal, is that initially, the Land Bank is charged with the responsibility of
determining the value of lands placed under land reform and the compensation to be paid for their taking
under the voluntary offer to sell or compulsory acquisition arrangement. The DAR, relying on the Land
Bank’s determination of the land valuation and compensation, then makes an offer through a notice sent
to the landowner. If the landowner accepts the offer, the Land Bank shall pay him the purchase price of
the land after he executes and delivers a deed of transfer and surrenders the certificate of title in favor of
the government. In case the landowner rejects the offer or fails to reply thereto, the DAR adjudicator
conducts summary administrative proceedings to determine the compensation for the land by requiring
the landowner, the Land Bank and other interested parties to submit evidence as to the just compensation
for the land. A party who disagrees with the Decision of the DAR adjudicator may bring the matter to the
RTC designated as a Special Agrarian Court for the determination of just compensation. In determining
just compensation, the RTC is required to consider several factors enumerated in Section 17 of R.A. No.
6657. These factors have been translated into a basic formula in DAR Administrative Order (A.O.) No. 6,
Series of 1992, as amended by DAR A.O. No. 11, Series of 1994, issued pursuant to the DAR’s rule-making
power to carry out the object and purposes of R.A. No. 6657.

Obviously, these factors involve factual matters which can be established only during a hearing wherein
the contending parties present their respective evidence. In fact, to underscore the intricate nature of
determining the valuation of the land, Section 58 of the same law even authorizes the Special Agrarian
Courts to appoint commissioners for such purpose.
In the instant case, the Land Bank properly instituted its petition for the determination of just
compensation before the RTC in accordance with R.A. No. 6657. The RTC erred in dismissing the petition.
To repeat, Section 57 of R.A. No. 6657 is explicit in vesting the RTC, acting as a Special Agrarian Court,
"original and exclusive jurisdiction over all petitions for the determination of just compensation to
landowners." As we held in Republic of the Philippines v. Court of Appeals:

xxx. It would subvert this "original and exclusive" jurisdiction of the RTC for the DAR to vest original
jurisdiction in compensation cases in administrative officials and make the RTC an appellate court for the
review of administrative decisions.

Consequently, although the new rules [Section 11, Rule XIII of the DARAB New Rules of Procedure] speak
of directly appealing the decision of adjudicators to the RTCs sitting as Special Agrarian Courts, it is clear
from Section 57 that the original and exclusive jurisdiction to determine such cases is in the RTCs. Any
effort to transfer such jurisdiction to the adjudicators and to convert the original jurisdiction of the RTCs
into appellate jurisdiction would be contrary to Section 57 and therefore would be void. What
adjudicators are empowered to do is only to determine in a preliminary manner the reasonable
compensation to be paid to landowners, leaving to the courts the ultimate power to decide this question.
(Underscoring supplied)

WHEREFORE, we GRANT the instant Petition for Review on Certiorari. The assailed Amended Decision
dated February 5, 2003 and Resolution dated April 10, 2003 of the Court of Appeals in CA-G.R. SP No.
70015 are REVERSED. The Orders dated January 18, 2002 and March 8, 2002 issued by the RTC in Agrarian
Case No. R-1241 are NULLIFIED. The RTC is ORDERED to conduct further proceedings to determine the
just compensation of respondent’s expropriated property in accordance with the guidelines set by this
Court in Landbank of the Philippines v. Banal.

No pronouncement as to costs.

SO ORDERED.22

Suntay sought reconsideration, invoking the pronouncement in DARAB v. Lubrica (G.R. No. 159145) to the
effect that "the RARAD Decision had already attained finality in accordance with the above-quoted rule,
notwithstanding Land Bank’s recourse to the special agrarian court."23

On January 30, 2008, however, the Court denied Suntay’s motion for reconsideration.24 Accordingly, the
decision in Land Bank v. Suntay became final and executory.

Second Execution in

DARAB Case No. V-0405-0001-00

On September 14, 2005, notwithstanding the pendency of Land Bank v. Suntay (G.R. No. 157903) in this
Court, RARAD Miñas granted Suntay’s ex parte motion for the issuance of an alias writ of execution by
citing the pronouncement in DARAB v. Lubrica (G.R. No. 159145) to the effect that her decision dated
January 24, 2001 had attained finality in accordance with DARAB’s rules of procedure.25
Acting pursuant to the alias writ of execution, the DARAB sheriffs issued and served the following notices
on the dates indicated herein, to wit:

(a) A notice of demand to Land Bank on September 15, 2005;26

(b) A notice of levy to Land Bank on September 21, 2005;27

(c) A notice of levy to Bank of the Philippine Islands28 and to Hongkong Shanghai Bank Corporation both
on September 28, 2005;29 and

(d) An order to deliver "so much of the funds" in its custody "sufficient to satisfy the final judgment" to
Land Bank on October 5, 2005.30

The moves of the sheriffs compelled Land Bank to file an urgent verified motion for the issuance of a TRO
or writ of preliminary injunction in Land Bank v. Suntay (G.R. No. 157903).

On October 12, 2005, acting on Land Bank’s urgent motion, the Court resolved in Land Bank v. Suntay
(G.R. No. 157903), viz:

(a) to issue a TEMPORARY RESTRAINING ORDER prayed for, effective immediately, enjoining and
restraining Hon. Conchita C. Miñas or the Regional Agrarian Reform Adjudicator (RARAD) concerned, from
issuing an alias writ of execution implementing the RARAD decision dated January 24, 2000, until further
orders from this court; and

(b) to require the petitioner to POST a CASH BOND or a SURETY BOND from a reputable bonding
company of indubitable solvency in the amount of FIVE HUNDRED THOUSAND PESOS (₱500,000.00),
within five (5) days from notice, otherwise, the temporary restraining order herein issued shall
AUTOMATICALLY be lifted. Unless and until the Court directs otherwise, the bond shall be effective from
its approval by the Court until this case is finally decided, resolved or terminated. 31

On October 24, 2005, the Court directed the parties in Land Bank v. Suntay (G.R. No. 157903) to maintain
the status quo ante,32 thus:

G.R. No. 157903 xxx - Acting on the petitioner’s very urgent manifestation and omnibus motion dated
October 21, 2005, the Court Resolves to DIRECT the parties to maintain the STATUS QUO prior to the
issuance of the Alias Writ of Execution dated September 14, 2005. All actions done in compliance or in
connection with the said Writ issued by Hon. Conchita C. Miñas, Regional Agrarian Reform Adjudicator
(RARAD), are hereby DEEMED QUASHED, and therefore, of no force and effect.

On the same day of October 24, 2005, however, the sheriffs held a public auction of Land Bank’s levied
shares of stock in the Philippine Long Distance Telephone Company (PLDT) and Manila Electric Company
(MERALCO) at the Office of the DARAB Regional Clerk in Mandaluyong City. In that public auction,
Lubrica, the lone bidder, was declared the highest bidder.33
On October 25, 2005, the same sheriffs resumed the public auction of Land Bank’s remaining PLDT shares
of stock and First Gen Corporation bonds. Lubrica was again declared the highest bidder.34 The sheriffs
then issued two certificates of sale in favor of Lubrica.

On October 25, 2005, RARAD Miñas reversed herself and quashed all acts done pursuant to the writ of
execution,35 viz:

This refers to the Resolution of the Third Division of the Supreme Court dated October 24, 2005 in G.R.
No. 157903 (Land Bank of the Philippines vs. Federico Suntay, Represented by His Assignee, Josefina
Lubrica) directing the parties to maintain the STATUS QUO prior to the issuance of the Alias Writ of
Execution dated September 14, 2005; and that all actions done in compliance or in connection with said
Writ issued by Hon. Conchita C. Miñas, Regional Agrarian Reform Adjudicator (RARAD) are hereby
DEEMED QUASHED, and therefore, of no force and effect.

The Sheriffs and all parties in this case are ordered to strictly comply with this Order immediately.

SO ORDERED.

As earlier stated, on October 11, 2007, the Court resolved Land Bank v. Suntay (G.R. No. 157903) in favor
of Land Bank.36

This Case (G.R. No. 188376)

On October 29, 2008, Suntay presented to RARAD Miñas in DARAB Case No. V-0405-0001-00 his urgent
ex parte manifestation and motion to resume interrupted execution,37 citing Land Bank v. Martinez (G.R.
No. 169008, July 31, 2008, 560 SCRA 776).

Immediately, on October 30, 2008, RARAD Miñas granted Suntay’s urgent ex parte manifestation and
motion, and ordered the DARAB sheriffs to resume their implementation of the alias writ of execution
issued in DARAB Case No. V-0405-0001-00, stating:

The basis of the motion, the case of Land Bank vs. Raymunda Martinez (supra) indubitably clarified that
"the adjudicator’s decision on land valuation attained finality after the lapse of the 15-day period citing
the case of Department of Agrarian Reform Adjudication Board vs. Lubrica in GR No. 159145 promulgated
on April 29, 2005. Movant in this case therefore is correct that the Decision in the Land Bank case of the
Philippines vs. Raymunda Martinez resolved the conflict by rendering a Decision upholding the rulings of
the Second Division of the Supreme Court in GR No. 159145 entitled Department of Agrarian Reform
Adjudication Board (DARAB) of the Department of Agrarian Reform (DAR) represented by DAR Secretary,
Roberto M. Pagdanganan vs.

Josefina Lubrica in her capacity as Assignee of rights and interest of Federico Suntay and striking down as
erroneous the rulings of the Third Division in GR No. 157903 entitled Land Bank of the Philippines vs.
Federico Suntay, et. al.
The ruling in the case of Land Bank of the Philippines vs. Raymunda Martinez which upheld the Decision
in Lubrica having attained finality, the Status Quo Order issued by the Third Division in GR No. 157903 is
now rendered ineffective.

WHEREFORE, premises considered, the instant motion is hereby GRANTED.

Sheriffs Maximo Elejerio and Juanita Baylon are hereby ordered to resume the interrupted execution of
the Alias Writ issued in this case on September 14, 2005.

SO ORDERED.38

The DARAB sheriffs forthwith served a demand to comply dated October 30, 2008 on the Philippine
Depository and Trust Corporation (PDTC) and Securities Transfer Services, Inc. (STSI).39

By letter dated October 31, 2008, PDTC notified Land Bank about its being served with the demand to
comply and about its action thereon, including an implied request for Land Bank to "uplift" the
securities.40

Also on October 31, 2008, PDTC filed a manifestation and compliance in the office of the RARAD, Region
IV, stating that it had already "issued a written notice" to Land Bank "to uplift the assets involved" and that
"it ha(d) caused the subject assets to be outside the disposition" of Land Bank.41

In response, Land Bank wrote back on November 3, 2008 to request PDTC to disregard the DARAB
sheriffs’ demand to comply.42

PDTC responded to Land Bank that it was not in the position to determine the legality of the demand to
comply, and that it was taking the necessary legal action.43

On November 10, 2008, PDTC sent a supplemental letter to Land Bank reiterating its previous letter.44

Given the foregoing, Land Bank commenced on November 12, 2008 a special civil action for certiorari in
the CA (CA-G.R. SP No. 106104), alleging that RARAD Miñas had "committed grave abuse of discretion
amounting to lack or in excess of jurisdiction in rendering ex parte the assailed Order dated October 30,
2008 as it varies, modifies or alters the Supreme Court Decision dated October 11, 2007, which had
become final and executory;" and that the DARAB sheriffs had "committed grave abuse of discretion
amounting to lack or excess of jurisdiction in issuing to, and serving on, the Philippine Depository and
Trust Corporation, a copy of the Demand to Comply dated October 30, 2008 notwithstanding the
unquestioned finality of the Supreme Court’s decision dated October 11, 2007."45

Suntay submitted a comment and opposed the issuance of a TRO.46

On November 28, 2008, before the CA could act on Land Bank’s application for TRO, MERALCO cancelled
Land Bank’s 42,002,750 shares of stock and issued new stock certificates in the name of Lubrica.
MERALCO recorded the transfer of ownership of the affected stocks in its stock and transfer book. All such
acts of MERALCO were done in compliance with the demand to comply by the DARAB sheriffs pursuant to
the certificate of sheriff’s sale dated October 24, 2005 and the certificate authorizing registration dated
November 20, 2008 (respecting Land Bank’s MERALCO shares) issued in favor of Lubrica.47
Without yet being aware of the transfers, the CA issued a TRO on December 4, 2008 to prevent the
implementation of RARAD Miñas’ order dated October 30, 2008.48 Land Bank then sought the approval
of its bond for that purpose.49

On December 4, 2008, MERALCO communicated to the CA its cancellation of Land Bank’s certificates of
MERALCO stocks on November 28, 2008 and its issuance of new stock certificates in the name of
Lubrica.50

Learning of the cancellation of its stock certificates and the transfer of its MERALCO shares in the name of
Lubrica, Land Bank filed on December 12, 2008 its very urgent manifestation and omnibus motion,
praying that the CA’s TRO issued on December 4, 2008 be made to cover any and all acts done pursuant
to the assailed order dated October 30, 2008 and the demand to comply dated October 30, 2008. Land
Bank further prayed that the cancellation of its certificates of MERALCO shares be invalidated and the
transfer of the shares in favor of Lubrica be quashed, and that the parties be directed to maintain the
status quo ante.51

On December 17, 2008, Land Bank presented a very urgent motion to resolve and supplemental motion,
seeking to expand the scope of the TRO earlier issued; to restrain the Philippine Stock Exchange (PSE)
from allowing the trading of its (Land Bank) entire MERALCO shares, and the Corporate Secretary of
MERALCO from recording or registering the transfer of ownership of Land Bank’s MERALCO shares to
other parties in MERALCO’s stock and transfer book; to invalidate the cancellation of the certificates of
MERALCO shares and to quash the transfer in favor of Lubrica and all subsequent transfers to other
parties; to direct the parties and all concerned persons and entities to maintain the status quo; and to
declare all acts done pursuant to the assailed order and the demand to comply null and void and of no
force and effect.52

On December 24, 2008, the CA denied Land Bank’s very urgent motion to resolve and supplemental
motion.53

In the meantime, DAR administratively charged and preventively suspended RARAD Miñas for issuing the
October 30, 2008 order, and replaced her with RARAD Marivic Casabar (RARAD Casabar) in RARAD Region
IV.54

On December 15, 2008, RARAD Casabar recalled RARAD Miñas order dated October 30, 2008.55

On December 17, 2008, RARAD Casabar directed:

(a) MERALCO to cancel the stock certificates issued to Lubrica and to any of her transferees or assignees,
and to restore the ownership of the shares to Land Bank and to record the restoration in MERALCO’s
stock and transfer book; and

(b) PSE, PDTC, STSI, the Philippine Dealing System Holdings Corporation and Subsidiaries (PDS Group),
and any stockbroker, dealer, or agent of MERALCO shares to stop trading or dealing on the shares.56
On June 5, 2009, the CA promulgated a resolution in CA-G.R. SP No. 106104, dismissing Land Bank’s
petition for certiorari for being moot and academic,57 citing the recall by RARAD Casabar of RARAD
Miñas’s order of October 30, 2008.

On June 23, 2009, Land Bank, through the Office of the Government Corporate Attorney, filed in this Court
a motion for extension of time to file petition for review on certiorari, seeking additional time of 30 days
within which to file its petition for review on certiorari.58

On July 24, 2009, before the Court could take any action on its motion for extension of time to file
petition for review, Land Bank moved to withdraw the motion, allegedly because the CA still retained
jurisdiction over CA-G.R. SP No. 106104 due to Lubrica’s having meanwhile filed the following motions
and papers in CA-G.R. SP No. 106104, namely:

(a) Motion for reconsideration or for clarificatory ruling dated June 23, 2009, a copy of which Land Bank
received on July 2, 2009;

(b)Additional arguments in support of the motion for reconsideration and for clarificatory ruling dated
July 1, 2009, a copy of which Land Bank received on July 8, 2009;

(c) Motion for leave of court to file the attached manifestation dated July 8, 2009, a copy of which Land
Bank received on July 13, 2009;

(d) Manifestation dated July 8, 2009, a copy of which Land Bank received on July 13, 2009; and

(e) Motion to direct RARAD Casabar to explain why she had issued her orders of December 15, 2008 and
December 17, 2008, a copy of which Land Bank received on July 20, 2009.59

On July 31, 2009, Land Bank filed a very urgent ex parte motion for execution dated July 30, 2009 in
DARAB, seeking the execution of RARAD Casabar’s orders of December 15, 2008 and December 17,
2008.60

On August 7, 2009, Land Bank filed in this Court: (a) a motion to withdraw its motion to withdraw motion
for extension of time to file petition for review on certiorari; and (b) a motion for leave to file and to
admit61 the attached petition for review on certiorari.62

On September 9, 2009, the Court denied Land Bank’s motion to withdraw its motion to withdraw motion
for extension of time to file petition for review on certiorari, but granted Land Bank’s motion for leave to
file and to admit the attached petition for review on certiorari. The Court required Lubrica to comment on
the petition for review, and Land Bank to comply with A.M. No. 07-6-5-SC dated July 10, 2007.63

On September 30, 2009, the CA denied Lubrica’s motion to direct RARAD Casabar to explain why she had
issued her orders of December 15, 2008 and December 17, 2008, among others.64

On October 14, 2009, Lubrica filed a motion for leave to file motion to dismiss,65 stating that Land Bank’s
petition for certiorari had been filed out of time and that the assailed order of RARAD Miñas had been
affirmed by the final judgment in DARAB v. Lubrica (G.R. No. 159145), and had been supported by the
ruling in Land Bank v. Martinez, G.R. No. 169008, July 31, 2008, 560 SCRA 776.1avvphil
On May 5, 2010, Land Bank filed an urgent verified motion for the issuance of a TRO or writ of preliminary
injunction, seeking thereby to enjoin MERALCO, its Corporate Secretary, and its Assistant Corporate
Secretary, pending the proceedings and until the resolution of the case, from releasing on May 11, 2010
and thereafter the cash dividends pertaining to the disputed shares in favor of Lubrica or any person
acting on her behalf.66

Lubrica opposed Land Bank’s motion.67

Todate, the Court has taken no action on Land Bank’s urgent verified motion.

ISSUES

Land Bank contends that:

The Court of Appeals acted not in accord with law and with the applicable jurisprudence when it
dismissed the petition a quo on purely technical grounds.

A.

Contrary to the findings of the Court of Appeals, DARAB v. Lubrica is not the law of the case insofar as the
issue on the proper procedure to follow in the determination of the just compensation is concerned.

B.

The issue before the Court of Appeals, whether the order dated 30 October 2008 was issued with grave
abuse of discretion, has not been rendered moot and academic with the subsequent issuance of the order
dated December 15, 2008.

C.

The Court of Appeals erred when in gave its implicit imprimatur to the irregular procedure for execution,
which the RARAD and the DARAB sheriffs adopted, in gross violation of Republic Act No. 6657 and the
DARAB Rules of Procedure.68

On the other hand, Lubrica proposes as issue:

Is the January 24, 2001 Decision of RARAD Conchita Miñas final and executory?69

As we see it, then, the Court has to resolve the following, to wit:

1. Whether or not RARAD Casabar’s orders dated December 15, 2008 and December 18, 2008 rendered
Land Bank’s petition for certiorari moot and academic;
2. Whether or not RARAD Miñas’ order dated October 30, 2008 was valid; and

3. Whether or not the manner of execution of RARAD Miñas’ order dated October 30, 2008 was lawful.

RULING

The appeal has merit.

I.

Whether or not RARAD Casabar’s orders

dated December 15, 2008 and December 18, 2008

rendered Land Bank’s petition for certiorari moot and academic

The CA rationalized its dismissal of Land Bank’s petition for certiorari in the following manner:

It must be stressed that this Court is dismissing the instant petition not because it has lost jurisdiction
over the case but because the case has already become moot and academic. In other words, this Court is
dismissing the case out of practicality because proceeding with the merit of the case would only be an
exercise in futility. This is because whichever way this Court would later decide the case would only be
rendered immaterial and ineffectual by the foregoing new Orders of the RARAD. To elaborate, a denial of
the instant petition would mean that We are sustaining the Miñas’ Order dated October 30, 2008 which,
as matters stand right now, had been superseded by the two new orders of the RARAD. Will sustaining
RARAD Miñas’ Order have the effect of nullifying the two new orders of RARAD Casabar? The answer is
still in the negative. On the other hand, the ultimate result of granting this petition would be that the two
new Orders would still govern, which is already the prevailing situation at this point. Indeed, the dismissal
of the case on this ground is in itself an exercise by the Court of its jurisdiction over the case.70

We cannot uphold the CA.

To the extent that it nullified and recalled RARAD Miñas’ October 30, 2008 order, RARAD Casabar’s
December 15, 2008 order seemingly mooted Land Bank’s petition for certiorari (whereby Land Bank
contended that RARAD Miñas, through her order dated October 30, 2008, could not disregard or
invalidate the decision promulgated on October 11, 2007 in G.R. No. 157903, and that the monies, funds,
shares of stocks, and accounts of Land Bank, which did not form part of the Agrarian Reform Fund (ARF),
could not be levied upon, garnished, or transferred to Lubrica in satisfaction of RARAD Miñas’ January 24,
2000 decision).71

At first glance, indeed, RARAD Casabar’s December 15, 2008 order seemingly rendered the reliefs prayed
for by the petition for certiorari unnecessary and moot. An issue is said to become moot and academic
when it ceases to present a justiciable controversy, so that a declaration on the issue would be of no
practical use or value.72
However, the application of the moot-and-academic principle is subject to several exceptions already
recognized in this jurisdiction. In David v. Macapagal-Arroyo,73 the Court has declared that the moot-
and-academic principle is not a magical formula that automatically dissuades courts from resolving cases,
because they will decide cases, otherwise moot and academic, if they find that:

(a) There is a grave violation of the Constitution;

(b) The situation is of exceptional character, and paramount public interest is involved;

(a) The constitutional issue raised requires formulation of controlling principles to guide the Bench, the
Bar, and the public; or

(b) A case is capable of repetition yet evading review.

In addition, in Province of North Cotabato v. Government of the Republic of the Philippines Peace Panel
on Ancestral Domain (GRP),74 the Court has come to consider a voluntary cessation by the defendant or
the doer of the activity complained of as another exception to the moot-and-academic principle, the
explanation for the exception being that:

xxx once a suit is filed and the doer voluntarily ceases the challenged conduct, it does not automatically
deprive the tribunal of power to hear and determine the case and does not render the case moot
especially when the plaintiff seeks damages or prays for injunctive relief against the possible recurrence of
the violation.

The exception of voluntary cessation of the activity without assuring the non-recurrence of the violation
squarely covers this case. Hence, the CA’s dismissal of CA-G.R. SP No. 106104 on the ground of mootness
must be undone.

Yet another reason why the Court should still resolve derives from the fact that the supervening RARAD
Casabar’s recall order did not at all resolve and terminate the controversy between the parties. The CA
itself conceded that Lubrica could still assail the validity of RARAD Casabar’s recall order.75 That
possibility underscores the need to definitely resolve the controversy between the parties to avoid further
delay. As herein shown, this appeal is the third time that the intervention of the Court has been invoked
regarding the controversy, the earlier ones being DARAB v. Lubrica (G.R. No. 159145) and Land Bank v.
Suntay (G.R. No. 157903). The need to put an end to the controversy thus becomes all the more pressing
and practical.

We further discern that the parties have heretofore acted to advance their respective interests and claims
against each other by relying on seemingly conflicting pronouncements made in DARAB v. Lubrica (G.R.
No. 159145) and Land Bank v. Suntay (G.R. No. 157903). Their reliance has unavoidably spawned and will
continue to spawn confusion about their rights and can occasion more delays in the settlement of their
claims.

The Court does not surely desire confusion and delay to intervene in any litigation, because the Court only
aims to ensure to litigants a just, speedy, and inexpensive administration of justice. Thus, the Court feels
bound to undo the CA’s deeming Land Bank’s petition for certiorari mooted by RARAD Casabar’s recall
order. Verily, RARAD Miñas’ assailed order, until and unless its legality is declared and settled by final
judgment, may yet be revived, and the judicial dispute between the parties herein may then still resurrect
itself.

II.

Whether or not RARAD Miñas’ order

dated October 30, 2008 was valid

The controversy is traceable to the October 30, 2005 Order of RARAD Miñas directing the DARAB sheriffs
to resume the implementation of the alias writ of execution she had issued in DARAB Case No. V-0405-
0001-00. She predicated her order on the following pronouncement made in Land Bank v. Martinez,76 viz:

To resolve the conflict in the rulings of the Court, we now declare herein, for the guidance of the bench
and the bar, that the better rule is that stated in Philippine Veterans Bank, reiterated in Lubrica and in the
August 14, 2007 Decision in this case. Thus, while a petition for the fixing of just compensation with the
SAC is not an appeal from the agrarian reform adjudicator’s decision but an original action, the same has
to be filed within the 15-day period stated in the DARAB Rules; otherwise, the adjudicator’s decision will
attain finality. This rule is not only in accord with law and settled jurisprudence but also with the principles
of justice and equity. Verily, a belated petition before the SAC, e.g., one filed a month, or a year, or even a
decade after the land valuation of the DAR adjudicator, must not leave the dispossessed landowner in a
state of uncertainty as to the true value of his property.77

Land Bank contends, however, that Land Bank v. Martinez did not vary, alter, or disregard the judgment in
Land Bank v. Suntay (G.R. No. 157903).

Lubrica counters that instead of Land Bank v. Suntay (G.R. No. 157903) being applicable, it was DARAB v.
Lubrica (G.R. No. 159145) that had become immutable and unalterable.

Lubrica is grossly mistaken.

Through the resolution promulgated on January 30, 2008 in Land Bank v. Suntay (G.R. No. 157903), the
Court denied with finality Suntay’s motion for reconsideration filed against the October 11, 2007 decision.
The decrees in Land Bank v. Suntay (G.R. No. 157903) were to nullify the order dated January 18, 2002
(denying due course to Land Bank’s notice of appeal of the dismissal of its petition for determination of
just compensation upon Suntay’s motion to dismiss) and the order dated March 8, 2002 (denying Land
Bank’s motion for reconsideration), both issued by the RTC in Agrarian Case No. R-1241; and to order the
RTC to "conduct further proceedings to determine the just compensation of (Suntay)’s expropriated
property in accordance with the guidelines set by this Court in Landbank of the Philippines v. Banal."

In effect, Land Bank v. Suntay (G.R. No. 157903) set aside the decision of RARAD Miñas dated January 24,
2000 fixing the just compensation. The finality of the judgment in Land Bank v. Suntay (G.R. No. 157903)
meant that the decrees thereof could no longer be altered, modified, or reversed even by the Court en
banc. Nothing is more settled in law than that a judgment, once it attains finality, becomes immutable and
unalterable, and can no longer be modified in any respect, even if the modification is meant to correct
what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification
is attempted to be made by the court rendering it or by the highest court of the land.78 This rule rests on
the principle that all litigation must come to an end, however unjust the result of error may appear;
otherwise, litigation will become even more intolerable than the wrong or injustice it is designed to
correct.79

Resultantly, Lubrica cannot invoke the pronouncement in Land Bank v. Martinez in order to bar the
conclusive effects of the judicial result reached in Land Bank v. Suntay (G.R. No. 157903).

II.a.

Land Bank v. Suntay (G.R. No. 157903)

is now the law of the case

We underscore that Land Bank v. Suntay (G.R. No. 157903) was the appropriate case for the determination
of the issue of the finality of the assailed RARAD Decision by virtue of its originating from Land Bank’s
filing on April 20, 2001 of its petition for judicial determination of just compensation against Suntay and
RARAD Miñas in the RTC sitting as a Special Agrarian Court. Therein, Suntay filed a motion to dismiss
mainly on the ground that the petition had been filed beyond the 15-day reglementary period as required
by Section 11, Rule XIII of the Rules of Procedure of DARAB. After the RTC granted the motion to dismiss,
Land Bank appealed to the CA, which sustained the dismissal. As a result, Land Bank came to the Court
(G.R. No. 157903), and the Court then defined the decisive issue to be: "whether the RTC erred in
dismissing the Land Bank’s petition for the determination of just compensation."80

The Court ruled in favor of Land Bank. For both Land Bank and Suntay (including his assignee Lubrica), the
holding in Land Bank v. Suntay (G.R. No. 157903) became the law of the case that now controlled the
course of subsequent proceedings in the RTC as a Special Agrarian Court. In Cucueco v. Court of
Appeals,81 the Court defined law of the case as "the opinion delivered on a former appeal." Law of the
case is a term applied to an established rule that when an appellate court passes on a question and
remands the case to the lower court for further proceedings, the question there settled becomes the law
of the case upon subsequent appeal. It means that whatever is once irrevocably established as the
controlling legal rule or decision between the same parties in the same case continues to be the law of
the case, whether correct on general principles or not, so long as the facts on which such decision was
predicated continue to be the facts of the case before the court.82 With the pronouncement in G.R. No.
157903 having undeniably become the law of the case between the parties, we cannot pass upon and rule
again on the same legal issue between the same parties.

II.b.

Land Bank v. Martinez is neither

applicable nor binding on the parties herein

Suntay’s reliance on Land Bank v. Martinez (G.R. No. 169008, July 31, 2008, 560 SCRA 776) is unavailing for
the simple reason that the pronouncement was absolutely unrelated to the present controversy.

Land Bank v. Martinez concerned a different set of facts, a different set of parties, and a different subject
matter; it was extraneous to the present matter, or to DARAB v. Lubrica (G.R. No. 159145) and Land Bank
v. Suntay (G.R. No. 157903). Land Bank and Suntay (and his assignee Josefina Lubrica) were not parties in
Land Bank v. Martinez, rendering the pronouncement inapplicable to them now.
At best, Land Bank v. Martinez may only guide the resolution of similar controversies, but only
prospectively. We note that Land Bank v. Suntay (G.R. No. 157903) was promulgated in October 11, 2007,
while Land Bank v. Martinez was promulgated on July 31, 2008. The rule followed in this jurisdiction is that
a judicial interpretation that varies from or reverses another is applied prospectively and should not apply
to parties who relied on the old doctrine and acted in good faith. To hold otherwise is to deprive the law
of its quality of fairness and justice, for, then, there is no recognition of what had transpired prior to such
adjudication.83

Accordingly, if posterior changes in doctrines of the Court cannot retroactively be applied to nullify a prior
final ruling in the same proceeding where the prior adjudication was had,84 we have stronger reasons to
hold that such changes could not apply to a different proceeding with a different set of parties and facts.

Suntay is also incorrect to insinuate that a modification or reversal of a final and executory decision
rendered by a division of the Court would be valid only if done by the Court en banc.85 Such insinuation
runs afoul of the well settled doctrine of immutability of judgments. Moreover, although Article VIII,
Section 4 (1) of the Constitution gives the Court the discretion to sit either en banc or in divisions of three,
five, or seven Members,86 the divisions are not considered separate and distinct courts. Nor is a hierarchy
of courts thereby established within the Supreme Court, which remains a unit notwithstanding that it also
works in divisions. The actions taken and the decisions rendered by any of the divisions are those of the
Court itself, considering that the divisions are not considered separate and distinct courts but as divisions
of one and the same court.87 Lastly, the only thing that the Constitution allows the banc to do in this
regard is to reverse a doctrine or principle of law laid down by the Court en banc or in division.88

II.c

Pronouncement in DARAB v. Lubrica

(G.R. No. 159145) was a mere obiter dictum

In Department of Agrarian Reform Adjudication Board (DARAB) v. Lubrica (G.R. No. 159145), the DARAB
assigned as erroneous in its petition the following rulings of the CA: (a) that DARAB, being a formal party,
should not have filed a comment to the petition, for, instead, the comment should have been filed by co-
respondent Land Bank as the financial intermediary of CARP; (b) that DARAB had no jurisdiction over
DSCA 0252, a special civil action for certiorari; and (c) that the writ of preliminary injunction DARAB had
issued in DSCA 0252 was null and void for having been in violation of the TRO of the CA.89

It is evident that the only issues considered and resolved in DARAB v. Lubrica (G.R. No. 159145) were: (a)
the personality of DARAB to participate and file comment; (b) the jurisdiction of DARAB over petitions for
certiorari; and (c) the validity of the preliminary injunction it issued. It is equally evident that at no time in
DARAB v. Lubrica (G.R. No. 159145) did the finality of RARAD Miñas’ decision become the issue, precisely
because the finality of RARAD Miñas’ decision had been put in issue instead in Land Bank v. Suntay (G.R.
No. 157903), a suit filed ahead of DARAB v. Lubrica (G.R. No. 159145). In short, the question about the
finality of RARAD Miñas’ decision was itself the lis mota in Land Bank v. Suntay (G.R. No. 157903).
In view of the foregoing, Suntay’s invocation of the pronouncement in DARAB v. Lubrica (G.R. No.
159145), to the effect that RARAD Miñas’ decision had attained finality upon the failure of Land Bank to
appeal within the 15-day reglementary period, was unfounded and ineffectual because the
pronouncement was a mere obiter dictum.

An obiter dictum has been defined as an opinion expressed by a court upon some question of law that is
not necessary in the determination of the case before the court. It is a remark made, or opinion expressed,
by a judge, in his decision upon a cause by the way, that is, incidentally or collaterally, and not directly
upon the question before him, or upon a point not necessarily involved in the determination of the cause,
or introduced by way of illustration, or analogy or argument.90 It does not embody the resolution or
determination of the court, and is made without argument, or full consideration of the point.91 It lacks
the force of an adjudication, being a mere expression of an opinion with no binding force for purposes of
res judicata.92

II.d.

Suntay was estopped from denying

being aware of existence of the judgment

in Land Bank v. Suntay (G.R. No. 157903)

Suntay cannot deny or evade the adverse effect and conclusiveness of the adverse decision in Land Bank
v. Suntay (G.R. No. 157903). He was aware of it due to his having actively participated therein. In the RTC,
he had filed the motion to dismiss against Land Bank’s petition for determination of just compensation. In
the CA, he filed a motion for reconsideration against the adverse decision of the CA, which ultimately
favored him by reconsidering the adverse decision. In this Court, he actively defended the CA’s self-
reversal, including filing an omnibus motion for partial reconsideration/clarification after the Court
rendered its decision dated October 11, 2007. In view of his active participation in various stages, he
cannot now turn his back on the judgment in Land Bank v. Suntay (G.R. No. 157903) simply because it was
adverse to him in order to invoke instead the "favorable" ruling in DARAB v. Lubrica (G.R. No. 159145).

III.

Whether or not the manner of execution of

RARAD Miñas’ order dated October 30, 2008 was lawful

The writs of execution issued by RARAD Miñas and the manner of their enforcement by the DARAB
sheriffs did not accord with the applicable law and the rules of DARAB; hence, they were invalid and
ineffectual.

III.a.

Order of October 30, 2008 to resume execution

was invalid because there was nothing to resume

In Land Bank v. Suntay (G.R. No. 157903), the Court directed the parties on October 24, 2005 to maintain
the status quo prior to the issuance of the alias writ of execution, holding that all actions done in
compliance or in connection with the alias writ of execution were "DEEMED QUASHED, and therefore, of
no force and effect."93

On October 25, 2005, RARAD Miñas herself quashed the acts done pursuant to her writ of execution,
declaring that "all actions done in compliance or in connection with the xxx Writ" issued by her "are
DEEMED QUASHED, and therefore, of no force and effect."94

As a result, the following acts done in compliance with or pursuant to the writ of execution issued ex parte
by RARAD Miñas on September 14, 2005 were expressly quashed and rendered of no force and effect, to
wit

1. The DARAB sheriffs’ issuance on September 15, 2005 of (a) the notice of demand against Land Bank; (b)
the notice of levy on September 21, 2005 to Land Bank; (c) the notice of levy on September 28, 20005 to
Bank of the Philippine Islands and to Hongkong Shanghai Bank Corporation; and (d) an order to deliver
on October 5, 2005, addressed to Land Bank, "so much of the funds" in its custody "sufficient to satisfy the
final judgment;"

2. The holding by the DARAB sheriffs of the public auction sale on October 24, 2005 involving the levied
PLDT and MERALCO shares of stock of Land Bank at the Office of the Regional Clerk of DARAB in
Mandaluyong City, wherein Lubrica was the highest bidder;

3. The resumption on October 25, 2005 by the DARAB sheriffs of the public auction sale of some of Land
Bank’s remaining PLDT shares and First Gen Corp. bonds, wherein Lubrica was also declared the highest
bidder; and

4. The issuance on October 25, 2005 by the DARAB sheriffs of two certificates of sale in favor of Lubrica as
the highest bidder.

In view of the foregoing, the order issued on October 30, 2008 by RARAD Miñas directing the DARAB
sheriffs to "resume the interrupted executions of the Alias Writ issued xxx on September 14, 2005"95 was
not legally effective and valid because there was no longer any existing valid prior acts or proceedings to
resume enforcement or execution of.

Consequently, the following acts done by virtue of RARAD Miñas’ October 30, 2008 order to resume the
implementation of the September 15, 2005 writ of execution were bereft of factual and legal bases, to wit:

1. The DARAB sheriffs’ service on PDTC and STSI of a demand to comply dated October 30, 2008;

2. Letter of PDTC dated October 31, 2008 informing Land Bank of the demand to comply and the action it
had taken, and requesting Land Bank to "uplift" the securities;
3. PDTC’s manifestation and compliance dated October 31, 2008 filed in the office of the RARAD, Region
IV, stating, among others, that PDTC had already "issued a written notice" to Land Bank "to uplift the
assets involved" and that PDTC "has caused the subject assets to be outside the disposition" of Land Bank;
and

4. MERALCO’s cancellation on November 28, 2008 of Land Bank’s 42,002,750 shares, its issuance of new
stock certificates in the name of Lubrica, and its subsequent recording of the transfer of ownership of the
stocks in the company’s stock and transfer book.

III.b.

Levy of Land Bank’s MERALCO

shares was void and ineffectual

A further cause that invalidated the execution effected against Land Bank’s MERALCO shares derived from
the statutory and reglementary provisions governing the payment of any award for just compensation. At
the outset, we hold that Land Bank’s liability under the CARP was to be satisfied only from the ARF.

The ARF was first envisioned in Proclamation No. 131 issued on July 22, 1987 by President Aquino to
institute the Government’s centerpiece Comprehensive Agrarian Reform Program, to wit:

Section 2. 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 (₱50,000,000,000.00) 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 receipts 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.

Executive Order No. 229 implemented the creation of the ARF, viz:

Section 20. Agrarian Reform Fund. - As provided in Proclamation No. 131 dated July 22, 1987, a special
fund is created, known as The Agrarian Reform Fund, an initial amount of FIFTY BILLION PESOS (₱50
billion) to cover the estimated cost of the CARP from 1987 to 1992 which shall be sourced from the
receipts of the sale of the assets of the Asset Privatization Trust (APT) and receipts of the sale of ill-gotten
wealth recovered through the Presidential Commission on Good Government and such other sources as
government may deem appropriate. The amount collected and accruing to this special fund shall be
considered automatically appropriated for the purpose authorized in this Order.

In enacting the CARL, Congress adopted and expanded the ARF, providing in its Section 63, as follows:

Section 63. Funding Source.- The initial amount needed to implement this Act for the period of ten (10)
years upon approval hereof shall be funded from the Agrarian Reform Fund created under Sections 20
and 21 of Executive Order No. 229. Additional amounts are hereby authorized to be appropriated as and
when needed to augment the Agrarian Reform Fund in order to fully implement the provisions of this Act.
Sources of funding or appropriations shall include the following:

(a) Proceeds of the sales of the Assets Privatization Trust;

(b) All receipts from assets recovered and from sale of ill-gotten wealth recovered through the
Presidential Commission on Good Government;

(c) Proceeds of the disposition of the properties of the Government in foreign countries;

(d) Portion of amounts accruing to the Philippines from all sources or official foreign aid grants and
concessional financing from all countries, to be used for the specific purposes of financing production
credits, infrastructures, and other support services required by this Act;

(e) Other government funds not otherwise appropriated.

All funds appropriated to implement the provisions of this Act shall be considered continuing
appropriations during the period of its implementation. (emphases supplied)

Subsequently, Republic Act No. 9700 amended the CARL in order to strengthen and extend the CARP. It is
notable that Section 21 of Republic Act No. 9700 expressly provided that "all just compensation payments
to landowners, including execution of judgments therefore, shall only be sourced from the Agrarian
Reform Fund;" and that "just compensation payments that cannot be covered within the approved annual
budget of the program shall be chargeable against the debt service program of the national government,
or any unprogrammed item in the General Appropriations Act."

The enactments of the Legislature decreed that the money to be paid to the landowner as just
compensation for the taking of his land is to be taken only from the ARF. As such, the liability is not the
personal liability of Land Bank, but its liability only as the administrator of the ARF. In fact, Section 10, Rule
19 of the 2003 DARAB Rules of Procedure, reiterates that the satisfaction of a judgment for just
compensation by writ of execution should be from the ARF in the custody of Land Bank, to wit:

Section 10. Execution of judgments for Just Compensation which have become Final and Executory. – The
Sheriff shall enforce a writ of execution of a final judgment for compensation by demanding for the
payment of the amount stated in the writ of execution in cash and bonds against the Agrarian Reform
Fund in the custody of LBP [Land Bank of the Philippines] in accordance with RA 6657 xxx. (Emphases
supplied)

Consequently, the immediate and indiscriminate levy by the DARAB sheriffs of Land Bank’s MERALCO
shares, without first determining whether or not such assets formed part of the ARF, disregarded Land
Bank’s proprietary rights in its own funds and properties.

The prior determination of whether the asset of Land Bank sought to be levied to respond to a judgment
liability under the CARP in favor of the landowner was demanded by its being a banking institution
created by law,96 possessed with universal or expanded commercial banking powers97 by virtue of
Presidential Decree No. 251.98 As a regular bank, Land Bank is
under the supervision and regulation of the Bangko Sentral ng Pilipinas.99 Being the official depository of
Government funds, Land Bank is also invested with duties and responsibilities related to the
implementation of the CARP, mainly as the administrator of the ARF.100 Given its discrete functions and
capacities under the laws, Land Bank’s assets and properties must necessarily come under segregation,
namely: (a) those arising from its proprietary functions as a regular banking or financial institution; and (b)
those arising from its being the administrator of the ARF. Indeed, Executive Order No. 267 has required
Land Bank to segregate accounts,101 to wit: (a) corporate funds, which are derived from its banking
operations and are essentially moneys held in trust for its depositors as a financial banking institution; and
(b) ARF, which comprise funds and assets expressly earmarked for or appropriated under the CARL to pay
final awards of just compensation under the CARP.102

Suntay argues that the MERALCO shares of Land Bank were part of the ARF, submitting photocopied
documents showing Land Bank to be one of the top stockholders of MERALCO under Land Bank’s
account number 1100052533.103

Land Bank disputes Suntay’s argument, positing that its levied MERALCO shares, particularly those
covered by Stock Certificate No. 87265, Stock Certificate No. 664638, Stock Certificate No. 0707447 and
Stock Certificate No. 0707448 that were cancelled and transferred in favor of Lubrica, did not form part of
the ARF. It explains that there are three different accounts relative to its MERALCO shares, to wit: (a) Trust
Account No. 03-141, which was the subject of a Custodianship Agreement it had with the Asset
Privatization Trust (APT); (b) Account titled "FAO PCGG ITF MFI", which was the subject of a Custodial
Safekeeping Agreement between Land Bank and the Three-Man Board for the MERALCO Privatization
(c/o PCGG); and (c) LBP Proprietary Account with PCD Nominee Corporation involving Stock Certificate
No. 87265, Stock Certificate No. 664638, Stock Certificate No. 0707447 and Stock Certificate No. 0707448.
It insists that the LBP Proprietary Account was not part of the ARF, and that its shares covered by Stock
Certificate No. 87265, Stock Certificate No. 664638, Stock Certificate No. 0707447, and Stock Certificate
No. 0707448 had been acquired or obtained in the exercise of its proprietary function as a universal
bank.104

Land Bank presented copies of the Custodianship Agreement with the APT, the Custodial Safekeeping
Agreement with the Three-Man Board for the MERALCO Privatization (c/o PCGG), and the joint affidavit of
Land Bank’s officers.

In light of the clarifications by Land Bank, the Court concludes that the procedure of execution adopted
by the DARAB sheriffs thoroughly disregarded the existence of Land Bank’s proprietary account separate
and distinct from the ARF. The procedure thereby contravened the various pertinent laws and rules earlier
adverted to and which the DARAB sheriffs were presumed to be much aware of, denying to the DARAB
sheriffs any presumption in the regularity of their performance of their duties.

Also significant is that Section 20 of Executive Order No. 229 has mandated that the ARF "shall be sourced
from the receipts of the sale of the assets of the APT and receipts of the sale of ill-gotten wealth
recovered through the PCGG and such other sources as government may deem appropriate;" and that
Section 63 of the CARL has authorized that additional amounts be appropriated as and when needed to
augment the ARF.
It should not be difficult to see the marked distinction between proceeds or receipts, on one hand, and
asset or wealth derived from such proceeds or receipts, on the other hand. The term proceeds refers to
"the amount proceeding or accruing from some possession or transaction,"105 and is synonymous to
product, income, yield, receipts, or returns.106 Clearly, therefore, the ARF was sourced from the money or
cash realized either from the sale of or as income from the assets or properties held by the APT or the
PCGG. The levied MERALCO shares were neither proceeds nor receipts. Thus, the DARAB sheriffs had no
authority to indiscriminately levy such shares because they were clearly not part of the ARF.

Moreover, the DARAB sheriffs did not strictly comply with the rule in force at the time of their execution
of the writ of execution and the alias writ of execution, which was Section 10, Rule 19 of the 2003 DARAB
Rules of Procedure, viz:

Section 10. Execution of judgments for Just Compensation Which Have Become Final and Executory. – The
Sheriff shall enforce a writ of execution of a final judgment for compensation by demanding for the
payment of the amount stated in the writ of execution in cash and bonds against the Agrarian Reform
Fund in the custody of LBP [Land Bank of the Philippines] in accordance with RA 6657, and the LBP shall
pay the same in accordance with the final judgment and the writ of execution within five (5) days from the
time the landowner accordingly executes and submits to the LBP the corresponding deed/s of transfer in
favor of the government and surrenders the muniments of title to the property in accordance with Section
15 (c) of RA 6657. (Emphasis supplied)

As the rule reveals, a condition was imposed before Land Bank could be made to pay the landowner by
the sheriff. The condition was for Suntay as the landowner to first submit to Land Bank the corresponding
deed of transfer in favor of the Government and to surrender the muniments of the title to his affected
property. Yet, by immediately and directly levying on the shares of stocks of Land Bank and forthwith
selling them at a public auction to satisfy the amounts stated in the assailed writs without first requiring
Suntay to comply with the condition, the DARAB sheriffs unmitigatedly violated the 2003 DARAB Rules of
Procedure.

Relevantly, Section 18 of the CARL, which Section 10 of the 2003 DARAB Rules of Procedure implements,
has expressly listed the modes by which the landowner may choose to be paid his just compensation, thus

Section 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 LBP or as may be finally determined
by the court as 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 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 Assets
Privatization Program and other assets foreclosed by government financial institution 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 or 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 the 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 instrument:
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.

In case of extraordinary inflation, the PARC shall take appropriate measures to protect the economy.
(Emphases supplied)
We note that the DARAB sheriffs’ method of execution did not adhere to any of the legally-authorized
modes, to the extreme detriment of Land Bank.

Still, Suntay proposes that the resort to levying on the MERALCO shares of Land Bank was necessary,
considering that it was Land Bank alone that had the control of the ARF.

The proposition is not only incorrect but also dangerous.

To start with, Land Bank could not simply shirk from or evade discharging its obligations under the CARP
because the law mandated Land Bank with a positive duty.107 The performance of its ministerial duty to
fully pay a landowner the just compensation could subject its officials responsible for the non-
performance to punishment for contempt of court.

And, secondly, tolerating the irregular execution carried out by the DARAB sheriffs would be dangerous to
the viability of Land Bank as a regular banking institution as well as the administrator of the ARF. The total
claim of Suntay under the assailed RARAD decision was only ₱157.5 million, but the worth of Land Bank’s
53,557,257 MERALCO shares, 912,230 PLDT shares and First Gen Corporation bonds auctioned off by the
DARAB sheriffs at ₱1.00 /share for the total of only ₱53,557,257.00 was probably about ₱841 million. If
that probable worth was true, the levy and execution were patently unconscionable and definitely worked
against the interest of the Government represented by Land Bank.

Further, Suntay complains of the delay in the payment of just compensation due to him.

The Court finds that Suntay has only himself to blame. As early as in 2005 Land Bank v. Suntay (G.R. No.
157903) already opened the way for the RTC to determine the just compensation in Agrarian Case No. R-
1241. Had he ensured the speedy disposition of Agrarian Case No. R-1241 in the RTC, he would not now
be complaining.

IV.

Land Bank is entitled to all

dividends pertaining to the

invalidly levied shares of MERALCO

As earlier mentioned, Land Bank filed on May 5, 2010 an urgent verified motion for the issuance of a TRO
or writ of preliminary injunction to enjoin MERALCO, its Corporate Secretary, and its Assistant Corporate
Secretary, pending the proceedings and until the resolution of the case, from releasing the cash dividends
pertaining to the disputed shares in favor of Lubrica or any person acting on her behalf.

Although the Court did not resolve the motion, it is time to look into the matter in light of the foregoing
conclusions.
The Court has to declare as a necessary consequence of the foregoing conclusions that Land Bank
remained fully entitled to all the cash and other dividends accruing to the MERALCO shares levied and
sold by the DARAB sheriffs pursuant to the orders issued on September 14, 2005 and October 30, 2008 by
RARAD Miñas, as if no levy and sale of them were made. In this connection, the Court affirms and
reiterates the order issued on October 25, 2005 by RARAD Miñas (deeming to be quashed and of no force
and effect "all actions done in compliance or in connection with" the writ of execution issued by her),108
and the order issued on December 17, 2008 by RARAD Casabar directing:

(c) MERALCO to cancel the stock certificates issued to Lubrica and to any of her transferees or assignees,
and to restore the ownership of the shares to Land Bank and to record the restoration in MERALCO’s
stock and transfer book; and

(d) PSE, PDTC, STSI, the Philippine Dealing System Holdings Corporation and Subsidiaries (PDS Group),
and any stockbroker, dealer, or agent of MERALCO shares to stop trading or dealing on the shares.109

WHEREFORE, we GRANT the petition for review on certiorari, and REVERSE the Decision promulgated
June 5, 2009 in CA-G.R. SP No. 106104.

ACCORDINGLY, the Court:

(a) DIRECTS the Regional Trial Court, Branch 46, in San Jose, Occidental Mindoro to continue the
proceedings for the determination of the just compensation of Federico Suntay’s expropriated property in
Agrarian Case No. R-1241;

(b) QUASHES and NULLIFIES the orders issued in DARAB Case No. V-0405-0001-00 on September 14,
2005 (granting Suntay’s ex parte motion for the issuance of an alias writ of execution) and October 30,
2008 by RARAD Conchita C. Miñas (directing the DARAB sheriffs "to resume the interrupted execution of
the Alias Writ in this case on September 14, 2005"), and all acts performed pursuant thereto;

(c) AFFIRMS and REITERATES the order issued on October 25, 2005 by RARAD Miñas (deeming to be
quashed and of no force and effect "all actions done in compliance or in connection with" the writ of
execution issued by her), and the order issued on December 17, 2008 by RARAD Marivic Casabar
(directing MERALCO to cancel the stock certificates issued to Josefina Lubrica and to any of her
transferees or assignees, and to restore the ownership of the shares to Land Bank and to record the
restoration in MERALCO’s stock and transfer book; and the Philippine Stock Exchange, Philippine
Depository and Trust Corporation, Securities Transfer Services, Inc., and the Philippine Dealing System
Holdings Corporation and Subsidiaries (PDS Group), and any stockbroker, dealer, or agent of MERALCO
shares to stop trading or dealing on the shares);

(d) DECLARES Land Bank fully entitled to all the dividends accruing to its levied MERALCO shares of stocks
as if no levy on execution and auction were made involving such shares of stocks;

(e) COMMANDS the Integrated Bar of the Philippines to investigate the actuations of Atty. Conchita C.
Miñas in DARAB Case No. V-0405-0001-00, and to determine if she was administratively liable as a
member of the Philippine Bar; and
(f) ORDERS the Department of Agrarian Reform Adjudication Board to conduct a thorough investigation
of the sheriffs who participated in the irregularities noted in this Decision, and to proceed against them if
warranted.

Costs against the respondent.

SO ORDERED.
G.R. No. 77365 April 7, 1992
RITA CALEON, petitioner,
vs
AGUS DEVELOPMENT CORPORATION and COURT OF APPEALS, respondents.
BIDIN, J.:

This is a petition for review on certiorari seeking the reversal of the January 28, 1987 decision of the Court
of Appeals in CA-G.R. SP No. 10990 entitled "Rita Caleon V. Hon. Samilo Barlongay, et al." dismissing the
petition for review of the decision of the Regional Trial Court of Manila, Branch 34, which affirmed the
decision of the Metropolitan Trial Court of Manila, Branch XII, ejecting the petitioner.

The undisputed facts of the case are as follows:

Private respondent Agus Development Corporation is the owner of a parcel of land denominated as Lot
39, Block 28, situated at 1611-1619 Lealtad, Sampaloc, Manila, which it leased to petitioner Rita Caleon for
a monthly rental of P180.00. Petitioner constructed on the lot leased a 4-door apartment building.

Without the consent of the private respondent, the petitioner sub-leased two of the four doors of the
apartment to Rolando Guevarra and Felicisima Estrada for a monthly rental of P350.00 each. Upon
learning of the sub-lease, private respondent through counsel demanded in writing that the petitioner
vacate the leased premises (Rollo, Annex "A", p. 20).

For failure of petitioner to comply with the demand, private respondent filed a complaint for ejectment
(Civil Case No. 048908) with the Metropolitan Trial Court of Manila, Branch XII against the petitioner citing
as ground therefor the provisions of Batas Pambansa Blg. 25, Section 5, which is the unauthorized sub-
leasing of part of the leased premises to third persons without securing the consent of the lessor within
the required sixty (60)-day period from the promulgation of the new law (B.P. 25). (Rollo, Petition, p. 8).

After trial, the court a quo rendered its decision ordering petitioner and all persons claiming possession
under her (a) to vacate the premises alluded to in the complaint; (b) to remove whatever improvement
she introduced on the property; (c) to pay private respondent the amount of P2,000.00 as attorney's fees;
and (d) to pay the costs (Rollo, Annex "A", p. 19).

Petitioner appealed the decision to the Regional Trial Court and on November 24, 1980, presiding judge
of the RTC, the Hon. Samilo Barlongay, affirmed in toto the decision of the Metropolitan Trial Court (Rollo,
Annex "A", p. 19).

The decision of the Regional Trial Court was appealed to the Court of Appeals for review. The respondent
Court of Appeals rendered its decision dated January 28, 1987, the dispositive portion of which reads as
follows:

PREMISES CONSIDERED, the petition not being prima facie meritorious, the same is outright dismissed.

SO ORDERED. (Rollo, Annex "A", p. 21)

Hence, the petition for review on certiorari.

The principal issue in this case is whether or not the lease of an apartment includes a sublease of the lot
on which it is constructed, as would constitute a ground for ejectment under Batas Pambansa BLg. 25.

Petitioner is of the view that Batas Pambansa Blg. 25 is not applicable because what she leased was her
own apartment house which does not include a sublease of the lot she leased from private respondent on
which the apartment is constructed.

Petitioner's contention is untenable.

This issue has already been laid to rest in the case of Duellome v. Gotico (7 SCRA 841 [1963]) where this
Court ruled that the lease of a building naturally includes the lease of the lot, and the rentals of the
building includes those of the lot. Thus:

. . . the lease of a building would naturally include the lease of the lot and that the rentals of the building
include the rentals of the lot.

Furthermore, under our Civil Code, the occupancy of a building or house not only suggests but implies
the tenancy or possession in fact of the land on which they are constructed. This is not a new
pronouncement. An extensive elaboration of this rule was discussed by this Court in the case of Baquiran,
et al., v. Baquiran, et al., 53 O.G. p. 1130.

. . . the Court of Appeals should have found the herein appellees lessees of the house, and for all legal
purposes, of the lot on which it was built as well.

But petitioner insists that the ruling in the aforecited case is not applicable to the case at bar because the
former is a damage suit while the latter is an ejectment case.

Be that as it may, this Court has categorically answered in the affirmative, the principal question, common
to both cases and on which rests the resolution of the issues involved therein. Under the above ruling it is
beyond dispute that petitioner in leasing her apartment has also subleased the lot on which it is
constructed which lot belongs to private respondent. Consequently, she has violated the provisions of
Section 5, Batas Pambansa Blg. 25 which is a ground for Ejectment.

Section 5 of Batas Pambansa Blg. 25 enumerates the grounds for judicial ejectment, among which is the
subleasing of residential units without the written consent of the owner/lessor, to wit:

Se. 5 Grounds for judicial ejectment. Ejectment shall be allowed on the following grounds:

a) Subleasing or assignment of lease of residential units in whole or in part, with the written consent of
the owner/lessor: Provided that in the case of subleases or assignments executed prior to the approval of
this Act, the sublessor/assignor shall have sixty days from the effectivity of this Act within which to obtain
the written approval of the owner/lessor or terminate the sublease or assignment.
Section 2(b) of Batas Pambansa Blg. 25 defines the term residential unit as follows:

Sec. 2. Definition of Terms — Unless otherwise indicated wherever in this Act, the following shall have the
following meaning

b. A residential unit — refers to an apartment, house and/or land on which another's dwelling is located
used for residential purposes and shall include not only buildings, parts or units thereof used solely as
dwelling places, except motels, motel rooms, hotels, hotel rooms, boarding houses, dormitories, rooms
and bedspaces for rent, but also those used for home industries, retail stores, or other business purposes
if the owner thereof and his family actually live therein and use it principally for dwelling purposes: . . .

Petitioner argued further that Batas Pambansa Blg. 25 cannot be applied in this case because there is a
perfected contract of lease without any express prohibition on subleasing which had been in effect
between petitioner and private respondent long before the enactment of Batas Pambansa Blg. 25.
Therefore, the application of said law to the case at bar is unconstitutional as an impairment of the
obligation of contracts.

It is well settled that all presumptions are indulged in favor of constitutionality; one who attacks a statute,
alleging unconstitutionality must prove its invalidity beyond a reasonable doubt (Victoriano v. Elizalde
Rope Workers' Union, 59 SCRA 54 [1974]). In fact, this Court does not decide questions of a constitutional
nature unless that question is properly raised and presented in appropriate cases and is necessary to a
determination of the case, i.e., the issue of constitutionality must be the very lis mota presented (Tropical
Homes, Inc. v. National Housing Authority, 152 SCRA 540 [1987]).

In any event, it is now beyond question that the constitutional guaranty of non-impairment of obligations
of contract is limited by and subject to the exercise of police power of the state in the interest of public
health, safety, morals and general welfare (Kabiling, et al. v. National Housing Authority, 156 SCRA 623
[1987]). In spite of the constitutional prohibition, the State continues to possess authority to safeguard the
vital interests of its people. Legislation appropriate to safeguarding said interest may modify or abrogate
contracts already in effect (Victoriano v. Elizalde Rope Workers' Union, et al., supra). In fact, every contract
affecting public interest suffers a congenital infirmity in that it contains an implied reservation of the
police power as a postulate of the existing legal order. This power can be activated at anytime to change
the provisions of the contract, or even abrogate it entirely, for the promotion or protection of the general
welfare. Such an act will not militate against the impairment clause, which is subject to and limited by the
paramount police power (Villanueva v. Castañeda, 154 SCRA 142 [1987]).

Batas Pambansa Blg. 25, "An Act Regulating Rentals of Dwelling Units or of Land On Which Another's
Dwelling is Located and For Other Purposes" shows that the subject matter of the law is the regulation of
rentals and is intended only for dwelling units with specified monthly rentals constructed before the law
became effective (Baens v. Court of Appeals, 125 SCRA 634 [1983]).

Batas Pambansa Blg. 25 is derived from P.D. No. 20 which has been declared by this Court as a police
power legislation, applicable to leases entered into prior to July 14, 1971 (effectivity date of RA 6539), so
that the applicability thereof to existing contracts cannot be denied (Gutierrez v. Cantada, 90 SCRA 1
[1979]).
Finally, petitioner invokes, among others, the promotion of social justice policy of the New Constitution.
Like P.D. No. 20, the objective of Batas Pambansa Blg. 25 is to remedy the plight of lessees, but such
objective is not subject to exploitation by the lessees for whose benefit the law was enacted. Thus, the
prohibition provided for in the law against the sublease of the premises without the consent of the owner.
As enunciated by this Court, it must be remembered that social justice cannot be invoked to trample on
the rights of property owners, who under our Constitution and laws are also entitled to protection. The
social justice consecrated in our Constitution was not intended to take away rights from a person and give
them to another who is not entitled thereto (Salonga v. Farrales, 105 SCRA 360 [1981]).

WHEREFORE, the Petition is Denied for lack of merit and the assailed decision of the Court of Appeals is
Affirmed.

SO ORDERED.