Agrarian Law and Social Legislation
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SECOND DIVISION
G.R. No. 218666, April 26, 2017
HEIRS OF LEONILO P. NUÑEZ, SR., NAMELY, VALENTINA A. NUÑEZ, FELIX A. NUÑEZ, FELIXITA A.
NUÑEZ, LEONILO A. NUÑEZ, JR., MA. ELIZA A. NUÑEZ, EMMANUEL A. NUÑEZ, ROSE ANNA A. NUÑEZ-
DE VERA, AND MA. DIVINA A. NUÑEZ-SERNADILLA, REPRESENTED BY THEIR CO-HEIR AND
ATTORNEY-IN-FACT, ROSE ANNA A. NUÑEZ-DE VERA, Petitioners, v. HEIRS OF GABINO T. VILLANOZA,
REPRESENTED BY BONIFACIO A. VILLANOZA, Respondents.
DECISION
LEONEN, J.:
Under the Comprehensive Agrarian Reform Law, the landowner may retain a maximum of five (3) hectares of
land, but this land must be compact or contiguous. If the area selected for retention is tenanted, the tenant-
farmer may choose to remain in the area or be a beneficiary in a comparable area.
This is a Petition for Review on Certiorari 1 under Rule 45, seeking to reverse the Court of Appeals' September
26, 2014 Decision2 and June 4, 2015 Resolution,3 which affirmed the August 11, 2011 Decision of the Office of
the President and reinstated the February 23, 2005 Order of the Department of Agrarian Reform Regional
Director. This case arose from the proceedings in CA-G.R. SP No. 130544.
Leonilo Sebastian Nuñez (Sebastian) owned a land4 measuring "more or less" 2.833 hectares (28,333 square
meters) located at Barangay Castellano, San Leonardo, Nueva Ecija. 5 This land was covered by Transfer
Certificate of Title (TCT) No. NT-1430036 and was registered on March 16, 1976 to "Leonilo Sebastian . . .
married to Valentina Averia."7
On July 7, 1976, Sebastian mortgaged this property to then ComSavings Bank or Royal Savings and Loan
Association, now GSIS Family Bank,8 to secure a loan. His loan matured on June 30, 1978, but the bank did
nothing to collect the payment due at that time. 9
In 1981, tenant-farmer Gabino T. Villanoza (Villanoza) started tilling Sebastian's land. 10
It was only on December 11, 1997, about 19 years after the maturity of Sebastian's loan, that GSIS Family Bank
extrajudicially foreclosed his mortgaged properties including the land tenanted by Villanoza. 11 A public auction
was held, and GSIS Family Bank emerged as "the highest and only bidder." 12
Sebastian's land title was cancelled and TCT No. NT-271267 was issued in the name of the new owner, GSIS
Family Bank.13
On June 20, 2000, Sebastian filed a complaint before the Regional Trial Court to annul the extrajudicial
foreclosure sale.14 Sebastian argued that an action to foreclose the mortgage prescribed after 10 years. GSIS
Family Bank's right of action accrued on June 30, 1978, 15 but it only foreclosed the property 19 years
later.16 Thus, its right to foreclose the property was already barred. 17
While the case was pending at the Regional Trial Court, the Department of Agrarian Reform sent a notice of
coverage under Republic Act No. 6657 or the Comprehensive Agrarian Reform Program to GSIS Family Bank,
then landowner of the disputed property.18 Neither GSIS Family Bank nor Sebastian exercised any right of
retention within 60 days from this notice of coverage.
On November 10, 2000, the government compulsorily acquired from GSIS Family Bank the land covered by
TCT No. NT-271267. The bank's land title was cancelled, and TCT No. NT-276395 was issued in the name of
the Republic of the Philippines. The Department of Agrarian Reform put a portion of what is now TCT No. NT-
276395 under agrarian reform.19
On November 27, 2000, the Department of Agrarian Reform issued an emancipation patent or Certificate of
Land Ownership Award (CLOA No. 00554664) to Villanoza. 20 The Certificate of Land Ownership Award title was
generated but not yet released as of February 23, 2005. 21
During the pendency of his complaint to annul the extrajudicial foreclosure sale, Sebastian died and his heirs,
namely: Valentina A. Nuñez, Felix A. Nuñez, Felixita A. Nuñez, Leonilo A. Nuñez, Jr., Eliza A. Nuñez,
Emmanuel A. Nuñez, and Divina A. Nuñez, substituted him. 22
On August 9, 2002, the Regional Trial Court found that GSIS Family Bank's cause of action had
prescribed.23 "[T]herefore, the proceedings for extrajudicial foreclosure of real estate mortgages [against
Sebastian, as substituted by his heirs,]24 were null and void."25 GSIS Family Bank appealed the case before the
Court of Appeals.26
On March 1, 2004, some of herein petitioners Leonilo A. Nuñez, Jr., Ma. Eliza A. Nuñez, Emmanuel A. Nuñez,
Rose Anna Nuñez-De Vera, and Ma. Divina Nuñez-Sernadilla, represented by attorney-in-fact Ma. Eliza A.
Nuñez (petitioners), submitted a Sworn Application for Retention (Application for Retention). Their Application
for Retention was made pursuant to Republic Act No. 6657 and filed before the Department of Agrarian Reform,
naming "Leonilo P. Nu[ñ]ez" (Nuñez, Sr.), instead of Sebastian, as the registered owner of the land. 27 It was filed
almost four (4) years after the Department of Agrarian Reform issued a notice of coverage over the same
property.28
Petitioners applied to retain this land29 although the stated name of their predecessor-in-interest "Leonilo
Sebastian," as found in TCT No. NT-14300330 or "Leonilo Sebastian Nuñez" as found in Nuñez v. GSIS Family
Bank, was different from "Leonilo P. Nuñez" as found in the Sworn Application for Retention.31
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In the Order dated September 2, 2004, the Department of Agrarian Reform Region III Director Narciso B. Nieto
(Regional Director Nieto) denied petitioners' Application for Retention and ordered the release of Certificate of
Land Ownership Award in favor of Villanoza. Regional Director Nieto ruled that petitioners were not entitled to
retain the land under Republic Act No. 6657, as their predecessor-in-interest was not qualified under
Presidential Decree No. 27.32 Thus, his heirs could not avail themselves of a right which he himself did not
have.33
The dispositive portion of the Department of Agrarian Reform Regional Office's September 2, 2004 Order read:
WHEREFORE, premises considered, an ORDER is hereby issued:
1. DENYING the application for retention filed by the heirs of the late Leonilo S. Nu[ñ]ez, Sr., as
represented by their co-heir/attorney-in-fact, Ma. Eliza A. Nu[ñ]ez, involving the 4.9598 hectares,
embraced by TCT Nos. NT-143003; P-8537; and P-9540, situated at Barangay Castellano, San
Leonardo, Nueva Ecija, for lack of merit;
2. DIRECTING the DAR personnel concerned to acquire the rest of the landholdings and distribute the
same to qualified beneficiaries pursuant to existing DAR policies, rules and regulations; and
3. ORDERING the DAR personnel concerned to issue and release TCT CLOA-CA-19771 with CLOA No.
00554664 covering the 28,833 square meters, more or less, in favor of Gabino T. Villanoza.
SO ORDERED.34
On September 23, 2004, petitioners filed a Motion for Reconsideration. 35
Meanwhile, Villanoza registered his Certificate of Land Ownership Award title under the Torrens system. 36 On
November 24, 2004, the Certificate of Land Ownership Award title was cancelled and a new regular title, TCT
No. NT-299755, was issued in his name.37
On February 23, 2005, Regional Director Nieto partially modified his September 2, 2004 Order. 38 He held that
petitioners were entitled to a retention area of not more than five (5) hectares from the total landholdings, but
they could not retain the property covered under TCT No. NT-143003 (now TCT No. NT-299755) as it was
neither compact nor contiguous.39 Petitioners were ordered to choose their retained area from the other lots of
their predecessor-in-interest.
40
The dispositive portion of Regional Director Nieto's reconsidered Order  dated February 23, 2005
read:chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, the ORDER, dated September 2, 2004, issued by this Office in the above
case is hereby RECONSIDERED, and is accordingly modified, as follows:
1. GRANTING the heirs of the late Leonilo P. Nu[ñ]ez, St., as represented by their co-heir/attorney-in-
fact, Ma. Eliza A. Nu[ñ]ez, to retain five (5) hectares of their landholdings at Barangay Castellano, San
Leonardo, Nueva Ecija, provided the same must be compact, contiguous[,] and least prejudicial to the
tenants therein pursuant to RA No. 6657, as amended ;
2. MAINTAINING the tenants affected in the retained area as lessees pursuant to RA No. 3844;
3. DIRECTING the DAR personnel concerned to acquire the rest of the landholdings and distribute the
same to qualified beneficiaries pursuant to existing DAR policies, rules and regulations; and
4. ORDERING the DAR personnel concerned to issue and release TCT-CA-19771 with CLOA No.
00554664 covering the 28,833 square meters, more or less, in favor of Gabino T. Villanoza.
SO ORDERED.41 (Emphasis in the original)
On March 21, 2005, petitioners appealed the February 23, 2005 Regional Director Order before the Office of
Department of Agrarian Reform Secretary Nasser C. Pangandaman (Secretary Pangandaman). 42
In the meantime, this Court reversed the ruling of the Court of Appeals and reinstated that of the Regional Trial
Court on November 17, 2005 in Nuñez v. GSIS Family Bank.43 It held that GSIS Family Bank's foreclosure of
Sebastian's mortgage was null and void and that his heirs were the rightful owners of the property. 44 The heirs,
however, did not move to execute this Decision.45
As for the Application for Retention, Secretary Pangandaman directed the cancellation of Villanoza's Certificate
of Land Ownership Award title in the Order dated August 8, 2007. 46 According to him, Section 6 of Republic Act
No. 6657 "[did] not require that the landholding (sought to be retained) should always be compact and
contiguous,"47 particularly so if it involved "small landownership of bits and pieces in hectarage." 48 The
dispositive portion of Secretary Pangandaman's August 8, 2007 Order read:chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, the instant Appeal is hereby GRANTED. Accordingly, the Order dated 23
February 2005 issued by the Regional Director of DAR Regional Office-Ill is hereby REVERSED and SET
ASIDE. Thus, a new Order is hereby issued to read as follows:
1. GRANTING the landowners, herein applicants-appellants, the five (5) hectares as their retention area;
2. DIRECTING the [Provincial Agrarian Reform Officer], [Municipal Agrarian Reform Officer], or
landowner concerned to initiate the cancellation of the CLOA No. 00554664 issued to GA[B]INO T.
VILLANOZA;
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3. GRANTING the tenant to exercise the option whether to remain in the retained area as a leaseholder
or be a beneficiary in another agricultural land with similar comparable features, the choice of one
forfeits the other option; and
4. DIRECTING the [Municipal Agrarian Reform Officer] concerned to assist the parties in the execution of
the Leasehold Agreement, if warranted.
SO ORDERED.49
On September 6, 2007, Villanoza filed a Motion for Reconsideration (Villanoza's Motion for
Reconsideration).50 He argued that the title issued to him was already indefeasible and the land it covered was
"not compact and contiguous."51
On April 25, 2008, Villanoza died52 and his heirs substituted him.53
On December 10, 2008, Secretary Pangandaman resolved to deny Villanoza's Motion for Reconsideration. 54
Respondents heirs of Villanoza appealed before the Office of the President, 55 which ruled56 in their favor on
August 11, 2011. Interpreting Section 6 of Republic Act No. 6657, it held that the land sought to be retained
"must be compact and contiguous,"57 contrary to the view of the Department of Agrarian Reform in its August 8,
2007 Order. Section 6 of Republic Act No. 6657 gives the landowners the right to retain 58 up to five (5)
hectares59 of land covered by the Comprehensive Agrarian Reform Program.
According to the Office of the President, the proceedings before Regional Director Nieto established that
petitioners had other landholdings which, taken together, exceeded the five (5)-hectare retention limit allowed by
law. Likewise, it held that Villanoza's title had become "irrevocable and indefeasible." 60
The dispositive portion of the Office of the President Decision dated August 11, 2011
read:chanRoblesvirtualLawlibrary
WHEREFORE, PREMISES CONSIDERED, the appealed Orders dated August 8, 2007 and December 10, 2008
of the-Honorable Secretary Nasser C. Pangandaman, Department of Agrarian Reform (DAR), are hereby
REVERSED and SET ASIDE. The Order dated February 23, 2005 rendered by the Regional Director of DAR
Region III is hereby reinstated.
SO ORDERED.61
Petitioners moved for reconsideration,62 which the Office of the President denied in its Order dated May 30,
2013.63
In the Decision dated September 26, 2014, the Court of Appeals likewise denied 64 the appeal for lack of merit. It
held that the Department of Agrarian Reform should have rejected petitioners' Application for Retention outright
as petitioners failed to prove that Sebastian intended to make the land, measuring more or less 2.833 hectares
and now titled in Villanoza's favor, a part of his retained holdings. 65
Neither the heirs of Sebastian may invoke this right. Citing Administrative Order No. 02-03, Section 3.3, 66 the
Court of Appeals held that petitioners could only exercise the retention right had Sebastian himself manifested
before August 23, 1990 that he wished to exercise this right. August 23, 1990 was the day when this Court's
ruling in Association of Small Landowners in the Philippines vs. Honorable Secretary of Agrarian
Reform67 became final.68 Administrative Order No. 02-03 was issued pursuant to Association of Small
Landowners in the Philippines, Presidential Decree No. 27, and Section 6 of Republic Act No. 6657. 69
The Court of Appeals added that the ruling in Nuñez v. GSIS Family Bank could not apply to the parties here.
That case pertained to the claim of "Leonilo Sebastian Nuñez" while this case pertains to the claim of petitioners
over the same lot but in their capacities as heirs of "Leonilo P. Nuñez, Sr." 70 Petitioners failed to present any
evidence that "Leonilo P. Nuñez, Sr." and "Leonilo Sebastian Nuñez" were the same person. 71
Even assuming that they referred to only one person, the Court of Appeals questioned petitioners' failure to
push for the execution of this Court's Decision in Nuñez v. GSIS Family Bank. That ruling was promulgated on
November 17, 2005, but as of September 26, 2014, there was no information yet as to the status of the decision
in that case.72 The Court of Appeals held that petitioners were barred by laches for failing to protect their rights
for an unreasonable length of time or for nine (9) long years. 73
The dispositive portion of the Decision dated September 26, 2014 read:chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, the petition for review is DENIED for lack of merit. The Decision dated
August 11, 2011 and Order dated May 30, 2013 issued by the Office of the President in O.P. Case No. 09-A-022
is AFFIRMED insofar as it reinstated the February 23, 2005 Order of the DAR Regional Director confirming the
title issued in favor of Gabino T. Villanoza.
SO ORDERED.74 (Emphases in the original)
In their Motion for Reconsideration, petitioners posited that Nuñez, Sr. did not receive a notice of
Comprehensive Agrarian Reform Program coverage from the Department of Agrarian Reform; thus, he could
not be deemed to have waived his right to retain the property. 75 They also submitted, for the first time,
photocopies of Nuñez, Sr.'s Certificate of Baptism76 and the Affidavit of Nuñez, Sr.'s mother, Teofila Patiag vda.
de Nuñez (Teofila), dated September 14, 1959.77
According to the baptismal certificate, "Leonilo S. Nuñez" was the son of Teofila Patiag and Felix
Nuñez.78 Meanwhile, Teofila's Affidavit stated that "Leonilo Sebastian Nu[ñ]ez" and "Leonilo P. Nu[ñ]ez" referred
to "one and the same person only."79 The Affidavit was allegedly an ancient document which the Court of
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Appeals could consider in evidence.80 Therefore, petitioners argued, this Court's ruling in Nuñez v. GSIS Family
Bank had become immutable and unalterable in their favor. 81
In its Resolution82 dated June 4, 2015, the Court of Appeals denied petitioners' Motion for Reconsideration,
which petitioners appealed before this Court.
On April 6, 2016, this Court83 required the respondents to comment. In their Comment 84 dated July 5, 2016,
respondents pointed out the absence of any evidence on record to show that "Leonilo Sebastian Nuñez" and
"Leonilo P. Nuñez" were the same person.85 They also objected to the petitioners' belated presentation of new
pieces of evidence in a motion for reconsideration before the Court of Appeals. 86
They added that, in the eyes of the law, GSIS Family Bank was the landowner when the government
compulsorily acquired the property.87 However, GSIS Family Bank did not exercise its retention right within 60
days from receipt of the notice of coverage.88
When this Court promulgated Nuñez v. GSIS Family Bank, the land was already distributed to tenant-farmer
Villanoza.89 Meanwhile, this Court's decision was never executed against GSIS Family Bank. 90
For resolution are the following issues:
First, whether the Court of Appeals properly exercised its appellate jurisdiction;
Second, whether Nuñez v. GSIS Family Bank binds respondents; and
Finally, whether petitioners have a right of retention over the land measuring "more or less" 2.833 hectares
awarded to farmer beneficiary Gabino T. Villanoza.
I area acquisitions into 16 hectares for private individuals and 1,024 hectares for corporations. 109 The Land
The Comprehensive Agrarian Reform Program, signed into law by then President Corazon C. Aquino on June
10, 1988, is the government initiative to comply with the constitutional directive to grant ownership of agricultural
lands to landless farmers, agricultural lessees, and farmworkers. 91 As of December 31, 2013, about 6.9 million
hectares of land, or 88% of the total land subject to agrarian reform, has been acquired and distributed by the
government.92
To understand the context of the issue relating to a retention right, this Court reviews the history of the agrarian
reform program.
Prior to any colonization, various ethnolinguistic cultures had their own customary laws governing their property
relationships. The arrival of the Spanish introduced the concept of encomienda, or royal land grants, 93 to loyal
Spanish subjects, particularly the soldiers.94 Under King Philip II's decree, the encomienderos or landowners
were tasked "to maintain peace and order" within their encomiendas, to protect the large estates from external
attacks, and to support the missionaries in converting the natives into Christians. 95 In turn, the encomienderos
had the right to collect tributes or taxes such as gold, pearls, cotton cloth, 96 chickens, and rice97 from the natives
called indios.98 The encomienda system helped Hispanicize the natives and extended Spanish colonial rule by
pacifying the early Filipinos within the estates.99
There were three (3) kinds of encomiendas: the royal encomiendas, which belonged to the King; the
ecclesiastical encomiendas, which belonged to the Church; and the private encomiendas, which belonged to
private individuals. The local elites were exempted from tribute-paying and labor, or polo services,100 required of
the natives.
The encomienda system was abused by the encomienderos. 101 Filipinos were made to pay tribute more than
what the law required. Their animals and crops were taken without just compensation, and they were forced to
work for the encomienderos.102
Thus, the indios, who once freely cultivated the lands, became mere share tenants 103 or dependent
sharecroppers of the colonial landowners.104
In the 1899 Malolos Constitution and true to one (1) of the principal concerns of the Philippine Revolution, then
President General Emilio Aguinaldo declared "his intention to confiscate large estates, especially the so-called
[f]riar lands."105 Unfortunately, the First Philippine Republic did not last long.
The encomienda system was a vital source of revenue and information on the natives for the Spanish
crown.106 In the first half of the 19th century, the cash crop economy emerged after the Philippines integrated into
the world market,107 increasing along with it the powers of the local elites, called principalias, and landlords. 108
The United States arrived later as the new colonizer. It enacted the Philippine Bill of 1902, which limited land
Registration Act of 1902 (Act No. 496) established a comprehensive registration of land titles called the Torrens
system.110 This resulted in several ancestral lands being titled in the names of the settlers. 111
The Philippines witnessed peasant uprisings including the Sakdalista movement in the 1930's.112 During World
War II, peasants and workers organizations took up arms and many identified themselves with the Hukbalahap,
or Hukbo ng Bayan Laban sa Hapon.113 After the Philippine Independence in 1946, the problems of land tenure
remained and worsened in some parts of the country. 114 The Hukbalahaps continued the peasant uprisings in
the 1950s.115
To address the farmers' unrest, the government began initiating various land reform programs, roughly divided
into three (3) stages.
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The first stage was the share tenancy system under then President Ramon Magsaysay (1953-1957). 116 In a
share tenancy agreement, the landholder provided the land while the tenant provided the labor for agricultural
production.117 The produce would then be divided between the parties in proportion to their respective
contributions.118 On August 30, 1954, Congress passed Republic Act No. 1199 (Agricultural Tenancy Act),
ensuring the "equitable division of the produce and [the] income derived from the land[.]" 119
Compulsory land registration was also established under the Magsaysay Administration. Republic Act No. 1400
(Land Reform Act) granted the Land Tenure Administration the power to purchase or expropriate large tenanted
rice and corn lands for resale to bona fide tenants or occupants who owned less than six (6) hectares of
land.120 However, Section 6(2) of Republic Act No. 1400 set unreasonable retention limits at 300 hectares for
individuals and 600 hectares for corporations,121 rendering President Magsaysay's efforts to redistribute lands
futile.
On August 8, 1963, Congress enacted Republic Act No. 3844 (Agricultural Land Reform Code) and abolished
the share tenancy system,122 declaring it to be against public policy. The second stage of land reform, the
agricultural leasehold system, thus began under President Diosdado Macapagal (1961-1965).
Under the agricultural leasehold system, the landowner, lessor, usufructuary, or legal possessor furnished his or
her landholding, while another person cultivated it123 until the leasehold relation was extinguished.124 The
landowner had the right to collect lease rental from the agricultural lessee, 125 while the lessee had the right to a
homelot126 and to be indemnified for his or her labor if the property was surrendered to the landowner or if the
lessee was ejected from the landholding.127
Republic Act No. 3844 also sought to provide economic family-sized farms to landless citizens of the Philippines
especially to qualified farmers.128 The landowners were allowed to retain as much as 75 hectares of their
landholdings. Those lands in excess of 75 hectares could be expropriated by the government. 129
The system finally transitioned from agricultural leasehold to one of full ownership under President Ferdinand E.
Marcos (1965-1986). On September 10, 1971, Congress enacted Republic Act No. 6389 or the Code of
Agrarian Reform.
Republic Act No. 6389 automatically converted share tenancy into agricultural leasehold. 130 It also established
the Department of Agrarian Reform as the implementing agency for the government's agrarian reform
program.131 Presidential Decree No. 2 proclaimed the whole country as a land reform area. 132
On October 21, 1972, Presidential Decree No. 27, or the Tenants Emancipation Decree, superseded Republic
Act No. 3844. Seeking to "emancipat[e] the tiller of the soil from his bondage," 133 Presidential Decree No. 27
mandated the compulsory acquisition of private lands to be distributed to tenant-farmers. From 75 hectares
under Republic Act No. 3844, Presidential Decree No. 27 reduced the landowner's retention area to a maximum
of seven (7) hectares of land.
Presidential Decree No. 27 implemented the Operation Land Transfer Program to cover tenanted rice or corn
lands. According to Daez v. Court of Appeals,134 "the requisites for coverage under the [Operation Land
Transfer] program are the following: (1) the land must be devoted to rice or corn crops; and (2) there must be a
system of share-crop or lease-tenancy obtaining therein." 135
Therefore, the land for acquisition and distribution must be planted with rice or corn and must be tenanted under
a share tenancy or an agricultural leasehold agreement. 136 The landowner would not enjoy the right to retain
land if his or her entire landholding was intact and undisturbed. 137
On the other hand, if a land was subjected to compulsory land reform under the Operation Land Transfer
program, the landowner, who cultivated this land, or intended to cultivate an area of the tenanted rice or corn
land, had the right to retain an area of not more than seven (7) hectares. 138
On October 21, 1976, Letter of Instruction No. 474 further amended the rule. If the landowner owned an
aggregate area of more than seven (7) hectares of other agricultural lands, he or she could no longer exercise
any right of retention. Letter of Instruction No. 474 states:chanRoblesvirtualLawlibrary
1. You shall undertake to place under the Land Transfer Program of the government pursuant to Presidential
Decree No. 27, all tenanted rice/corn lands with areas of seven hectares or less belonging to landowners who
own other agricultural lands of more than seven hectares in aggregate areas or lands used for residential,
commercial, industrial or other urban purposes from which they derive adequate income to support themselves
and their families.
Heirs of Aurelio Reyes v. Garilao139 affirmed that the landowner's retention right was restricted by the conditions
set forth in Letter of Instruction No. 474.140 In Heirs of Sandueta v. Robles,141 this Court denied the landowner's
application for retention as it fell under the first disqualifying condition of Letter of Instruction No. 474: the
landowner's total area was 14.0910 hectares, twice the seven (7)-hectare limit for retention. 142
In Vales v. Galinato:143
[B]y virtue of [Letter of Instruction No.] 474, if the landowner, as of October 21, 1976, owned less than 24
[hectares] of tenanted rice or corn lands, but additionally owned ( a) other agricultural lands of more than 7
[hectares], whether tenanted or not, whether cultivated or not, and regardless of the income derived therefrom,
or (b) lands used for residential, commercial, industrial or other urban purposes, from which he [or she] derives
adequate income to support himself [or herself] and his [or her] family, his [or her] entire landholdings shall be
similarly placed under [Operation Land Transfer] Program coverage, without any right of retention. 144
Following the People Power Revolution, then President Corazon C. Aquino (1986-1992) fulfilled the promise of
land ownership for the tenant-farmers. Proclamation No. 131 instituted the Comprehensive Agrarian Reform
Program. Executive Order No. 129 (1987) reorganized the Department of Agrarian Reform and expanded it in
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power and operation. Executive Order No. 228 (1987) declared the full ownership of the land to qualified farmer
beneficiaries under Presidential Decree No. 27.
Likewise, the 1987 Constitution, which was promulgated during President Corazon C. Aquino's term, enshrines
the promotion of rural development and agrarian reform. 145 To balance the interests of landowners and tenants,
Article XIII, Section 4 of the Constitution also recognizes the landowner's retention right, as may be prescribed
by law:chanRoblesvirtualLawlibrary
Section 4. The State shall, by law, undertake an agrarian reform program founded on the right of farmers and
regular farmworkers, who are landless, to own directly or collectively the lands they till or, in the case of other
farmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage and undertake
the just distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the
Congress may prescribe, taking into account ecological, developmental, or equity considerations, and subject to
the payment of just compensation. In determining retention limits, the State shall respect the right of small
landowners. The State shall further provide incentives for voluntary land-sharing. (Emphasis supplied)
On June 10, 1988, Congress enacted Republic Act No. 6657, 146 otherwise known as the Comprehensive
Agrarian Reform Law, to supersede Presidential Decree No. 27.
The compulsory land acquisition scheme under Republic Act No. 6657 empowers the government to acquire
private agricultural lands147 for distribution to tenant-farmers. 148 A qualified farmer beneficiary is given an
emancipation patent,149 called the Certificate of Land Ownership Award,150 which serves as conclusive proof of
his or her ownership of the land.151
To mitigate the effects of compulsory land acquisition, 152 Section 6 of Republic Act No. 6657 allows the
landowners the right to retain up to five (5) hectares of land covered by the Comprehensive Agrarian Reform
Program, thus:chanRoblesvirtualLawlibrary
Section 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...
On July 14, 1989, this Court promulgated Association of Small Land Owners in the Philippines v. Secretary of
Agrarian Reform,153 acknowledging that the landowner, whose property was subject to compulsory land reform,
might opt to retain land under Section 6 of Republic Act No. 6657.
On August 30, 2000, pursuant to Presidential Decree No. 27, Section 6 of Republic Act No. 6657 and this
Court's ruling in Association of Small Land Owners in the Philippines, the Department of Agrarian Reform issued
Administrative Order No. 05-00 to provide implementing rules on the landowner's retention right. 154
Section 9(a) of Administrative Order No. 05-00 states that the retention limit for landowners covered by
Presidential Decree No. 27 is "seven (7) hectares, except those whose entire tenanted rice and corn lands are
subject of acquisition and distribution under [Operation Land Transfer]." Section 9(a) further states that a
landowner may not exercise his or her retention right under the following conditions:chanRoblesvirtualLawlibrary
1. If [the landowner], as of 21 October 1972, owned more than twenty- four (24) hectares of tenanted rice
and corn lands; or
2. By virtue of Letter of Instruction (LOI) No. 474, if [the landowner], as of 21 October 1972, owned less
than twenty-four (24) hectares of tenanted rice and corn lands but additionally owned the following:
i. other agricultural lands of more than seven (7) hectares, whether tenanted or not, whether
cultivated or not, and regardless of the income derived therefrom; or
ii. lands used for residential, commercial, industrial or other urban purposes from which he
derives adequate income to support himself [or herself] and his [or her] family.
On January 16, 2003, the Department of Agrarian Reform issued Administrative Order No. 02-03 to further
clarify the rules governing the landowner's retention right. 155
Section 4.1 of Administrative Order No. 02-03 gives the landowner the option to exercise the right of retention at
any time before he or she receives a notice of Comprehensive Agrarian Reform Program coverage. 156
The right to choose the area to be retained belongs to the landowner, subject to the condition that the area must
be (a) a "private agricultural land"157 that is (b) compact and contiguous, and (c) "least prejudicial to the entire
landholding and the majority of the farmers" of that land. 158
Landowners who voluntarily sold or transferred their land must have exercised the right of retention
simultaneous with the offer for sale or transfer.159 If the land was compulsorily acquired by the government, the
right of retention must have been exercised "within sixty (60) days from receipt of notice of coverage." 160
Section 7 of Administrative Order No. 02-03 provides that the landowner seeking to exercise his or her retention
right must submit an affidavit stating "the aggregate area of his [or her] landholding in the entire Philippines" and
"the names of all farmers . . . actual tillers or occupants, and/or other persons directly working on the land,"
thus:chanRoblesvirtualLawlibrary
6
Agrarian Law and Social Legislation
Chapter 1
SECTION 7. Criteria/Requirements for Award of Retention — The following are the criteria in the grant of
retention area to landowners:
7.1. The land is private agricultural land;
7.2. The area chosen for retention shall be compact and contiguous and shall be least prejudicial to the entire
landholding and the majority of the farmers therein;
7.3. The landowner must execute an affidavit as to the aggregate area of his landholding in the entire
Philippines; and
7.4. The landowner must submit a list of his children who are fifteen (15) years old or over as of 15 June 1988
and who have been actually cultivating or directly managing the farm since 15 June 1988 for identification as
preferred beneficiaries, as well as evidence of such.
7.5. The landowner must execute an affidavit stating the names of all farmers, agricultural lessees and share
tenants, regular farmworkers, seasonal farmworkers, other farmworkers, actual tillers or occupants, and/or other
persons directly working on the land; if there are no such persons, a sworn statement attesting to such fact.
If the area selected by the landowner for retention is tenanted, "the tenant shall have the option to choose
whether to remain ... as lessee or be a beneficiary in the same or another agricultural land with similar or
comparable features." Section 9 of Administrative Order 02-03 states that the tenant must exercise this option
within one (1) year from the time the landowner manifests his or her choice of the area for retention, as
follows:chanRoblesvirtualLawlibrary
SECTION 9. When Retained Area is tenanted
9.1. In case the area selected by the landowner or awarded for retention by the [Department of Agrarian Reform]
is tenanted, the tenant shall have the option to choose whether to remain therein as lessee or be a beneficiary in
the same or another agricultural land with similar or comparable features.
9.3. The tenant must exercise his option within one (1) year from the time the landowner manifests his choice of
the area for retention, or from the time the [Municipal Agrarian Reform Office] has chosen the area to be
retained by the landowner, or from the time an order is issued granting the retention.
If the landowner fails to manifest an intention to exercise the right to retain within 60 calendar days after
receiving the Comprehensive Agrarian Reform Program coverage, he or she is considered to have waived the
right of retention as explained in Section 2.2 of Administrative Order No. 02-03:chanRoblesvirtualLawlibrary
2.2. The landowner shall exercise the right to retain by signifying his intention to retain within sixty (60) days
from receipt of notice of coverage. Failure to do so within the period shall constitute a waiver of the right to retain
any area.
On August 7, 2009, Republic Act No. 9700 or the Comprehensive Agrarian Reform Program Extension with
Reforms was enacted to strengthen the comprehensive agrarian reform program and to extend the acquisition
and distribution of all agricultural lands.
The rules on the retention right have remained the same.
The Court of Appeals properly exercised its jurisdiction in finding that "Leonilo P. Nuñez, Sr." was different from
"Leonilo Sebastian Nuñez." Contrary to petitioners' allegations, 161 the Court of Appeals could not be estopped
simply because the issue was never raised before the Department of Agrarian Reform. In the exercise of its
appellate jurisdiction, the Court of Appeals is empowered to have an independent finding of fact or adopt those
set forth in the decision appealed from.162 This is true especially when the factual finding on the matter
contradicts the evidence on record.
Asian Terminals, Inc. v. Simon Enterprises, Inc.163 has held that even this Court, which generally reviews
questions of law, may review questions of facts when the judgment is based on a misapprehension of
facts.164 This Court may likewise do so when there is no citation of specific evidence on which the factual
findings are based or when the relevant and undisputed facts have been manifestly overlooked which, if properly
considered, would justify a different conclusion.165 This gives all the more reason for the Court of Appeals to
review questions of facts and law. In Garcia v. Ferro Chemicals, Inc.,166 this Court has also held that a matter not
raised by the parties may be reviewed if "necessary for a complete resolution of the case." 167
II
This Court cannot apply Nuñez v. GSIS Family Bank in petitioners' favor or to respondents' prejudice.
First, neither Villanoza nor his heirs were impleaded in that case. Villanoza and his heirs were non-parties to the
mortgage and did not participate in the proceedings for foreclosure and annulment of foreclosure of mortgage.
No person can be affected by any proceeding to which he or she is a stranger. Being complete strangers in that
case, respondents are not bound by the judgment rendered by this Court.
Second, the Court of Appeals properly found that petitioners did not furnish timely and sufficient evidence to
prove that "Leonilo P. Nuñez, Sr." was also "Leonilo Sebastian Nuñez."
The new pieces of evidence that petitioners attached are inadmissible. Cansino v. Court of Appeals168 has held
that "a motion for reconsideration cannot be used as a vehicle to introduce new evidence." 169 The belated
introduction of these documents in a motion for reconsideration before the Court of Appeals violates
respondents' right to contest the new evidence presented. 170
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Agrarian Law and Social Legislation
Chapter 1
Moreover, the Certificate of Baptism and Teofila's Affidavit are "mere photocopies." 171 Petitioners failed to
present the original or certified true copies of these documents. Rule 130, Section 3 of the Rules of Court states
that "[w]hen the subject of inquiry is the contents of a document, no evidence shall be admissible other than the
original document itself[.]"
The due execution and authenticity of the baptismal certificate, being a private document, 172 were also not
established. Under Section 20 of Rule 132 of the Rules of Court:chanRoblesvirtualLawlibrary
Section 20. Proof of private document. — Before any private document offered as authentic is received in
evidence, its due execution and authenticity must be proved  either:
a. By anyone who saw the document executed or written; or
b. By evidence of the genuineness of the signature or handwriting of the maker.
Any other private document need only be identified as that which it is claimed to be. (Emphasis supplied)
Petitioners did not comply Rule 132, Section 20 of the Rules of Court. Likewise, the photocopy of Teofila's
Affidavit may not be considered an ancient document under Rule 132, Section 21 of the Rules of Court as
follows:chanRoblesvirtualLawlibrary
Section 21. When evidence of authenticity of private document not necessary. — Where a private document is
more than thirty years old, is produced from the custody in which it would naturally be found if genuine, and is
unblemished by any alterations or circumstances of suspicion, no other evidence of its authenticity need be
given.
A copy purporting to be an ancient document may be admitted in evidence if it bears a certification from the
proper government office where the document is naturally found genuine that the document is the exact copy of
the original on file.173 Here, the photocopied Affidavit of Teofila does not carry such certification from the notary
public or the Register of Notaries Public, among others. 174 Petitioners have not shown that the Affidavit of Teofila
is free from suspicion and unblemished by alterations.
Even assuming that "Leonilo P. Nuñez, Sr." is also "Leonilo Sebastian," the Court of Appeals correctly ruled that
petitioners' non-execution of this Court's Decision in Nuñez v. GSIS Family Bank constituted an abandonment of
their rights. The Court of Appeals considered this Court's judgment in that case, which was never executed for
almost 10 years,175 a hollow victory. According to the Court of Appeals, "if [petitioners] truly believe that said
decision will entitle them to get back the subject property," 176 then they had every reason to have quickly taken
steps to enforce the judgment in their favor.
The Office of the President ruled similarly, thus:chanRoblesvirtualLawlibrary
Clear from the records ... is the fact that [petitioners] are not the owners of the subject property when the same
was placed under the Comprehensive Agrarian Reform Program (CARP) of the government through the
Department of Agrarian Reform. The existence of a Court decision finding them to be the rightful owner[s]
without the decision having been executed . . . renders the decision inutile and becomes an empty victory for the
prevailing part[ies].177 (Citations omitted)
Cormero v. Court of Appeals178 has established that the failure to assert one's right for an unreasonable amount
of time leads to the presumption that he or she has abandoned this right. The Court of Appeals properly held
that petitioners were barred by laches for failing to protect their rights for at least nine (9) years, which was an
"unreasonable length of time."179
In their defense, petitioners aver that they sought for the execution of Nuñez v. GSIS Family Bank, only that the
sheriff did not implement it.180 However, they did not show any evidence to prove their claim. "Bare allegations,
unsubstantiated by evidence, are not equivalent to proof." 181 The one alleging a fact has the burden of proving
it.182
III
Finally, assuming that Sebastian could properly exercise his retention right, this could not cover the land
awarded to Villanoza.
Petitioners cite Santiago, et al. v. Ortiz-Luiz183 to claim that an emancipation grant cannot "defeat the right of the
heirs of the deceased landowner to retain the [land]." 184 However, in that case, this Court denied the landowner's
retention right for exceeding what the law provides. 185 There is no cogent reason why this Court should rule
differently in this case.
Section 6 of Republic Act No. 6657186 gives the landowner the option to choose the area to be retained only if it
is compact or contiguous. The Department of Agrarian Reform, the Office of the President, and the Court of
Appeals have consistently found that the land subject of the dispute is neither compact nor contiguous.
Section 6 also provides that if the area selected for retention is tenanted, it is for the tenant to choose whether to
remain in the area or be a beneficiary in the same or a comparable agricultural land. 187 Petitioners' Application
for Retention stated that Villanoza occupied the property as a tenant and farmer beneficiary. 188 Thus, the option
to remain in the same land was for Villanoza to make.
The landowner's retention right is subject to another condition. Under Section 3.3 of Administrative Order No.
02-03, the heirs of a deceased landowner may exercise the retention right only if the landowner signified his or
her intention to exercise the right of retention before August 23, 1990. 189 Section 3.3
states:chanRoblesvirtualLawlibrary
3.3. The right of retention of a deceased landowner may be exercised by his heirs provided that the heirs must
8
Agrarian Law and Social Legislation
Chapter 1

first show proof that the decedent landowner had manifested during his lifetime his intention to exercise his
right of retention prior to 23 August 1990 (finality of the Supreme Court ruling in the case of Association of
Small Landowners in the Philippines Incorporated versus the Honorable Secretary of Agrarian Reform).
Petitioners cannot claim the right of retention through "Leonilo Sebastian" or "Leonilo P. Nuñez, Sr." when the
alleged predecessor-in-interest himself failed to do so. The Court of Appeals correctly ruled that during his
lifetime, Sebastian did nothing to signify his intent to retain the property being tilled by Villanoza. It was only two
(2) years after his death that petitioners started to take interest over it. 190
No. 03-09 provides that "[t]he State recognizes the indefeasibility of [Certificate of Land Ownership Awards],
[Emancipation Patents] and other titles issued under any agrarian reform program."
Here, a Certificate of Land Ownership Award title was already issued and registered in Villanoza's favor on
December 7, 2007.201 Villanoza's Certificate of Land Ownership Award was titled under the Torrens system on
November 24, 2004.202 After the expiration of one (1) year, the certificate of title covering the property became
irrevocable and indefeasible. Secretary Pangandaman's August 8, 2007 Order, which came almost three (3)
years later, was thus ineffective.

Neither was any right of retention exercised within 60 days from the notice of Comprehensive Agrarian Reform WHEREFORE, the Petition is DENIED. The Court of Appeals' Decision dated September 26, 2014 and
Program coverage. The Court of Appeals properly considered this as a waiver of the right of Resolution dated June 4, 2015 in CA-G.R. SP No. 130544, which affirmed the Office of the President's Decision
retention,191 pursuant to Section 6.1 of Administrative Order No. 02-03. dated August 11, 2011 and reinstated the Department of Agrarian Reform Regional Director's Order dated
February 23, 2005, are AFFIRMED.
Section 6.1 provides that the landowner's "[f]ailure to manifest an intention to exercise his right to retain within
sixty (60) calendar days from receipt of notice of CARP coverage" is a ground for losing his or her right of SO ORDERED.
retention.
Carpio, (Chairperson), Peralta, Mendoza, and Martires, JJ., concur.
The Department of Agrarian Reform sent a notice of Comprehensive Agrarian Reform Program coverage to
GSIS Family Bank, which was then landowner of the disputed property. 192 Neither GSIS Family Bank nor
Sebastian exercised any right of retention within 60 days from this notice of coverage.

In Vda. De Dayao v. Heirs of Robles,193 this Court has held that the Department of Agrarian Reform "has no
authority to decree a retention when no application was in the first place ever filed." 194

Petitioners themselves admit that the Department of Agrarian Reform sent a notice of coverage to GSIS Family
Bank.195 During this time, no application was ever filed by GSIS Family Bank or petitioners. The same land,
which the Republic of the Philippines subsequently acquired, was awarded to Villanoza.

While all agrarian reform programs have always accommodated some forms of retention for the landowner, all
rights of retention have always been subject to conditions. Unfortunately in this case, the landowner has
miserably failed to invoke his right at the right time and in the right moment. The farmer beneficiary should not,
in equity, be made to suffer the landowner's negligence.

Finally, the issuance of the title to Villanoza could no longer be revoked or set aside by Secretary
Pangandaman.196 Acquiring the lot in good faith, Villanoza registered his Certificate of Land Ownership Award
title under the Torrens system.197 He was issued a new and regular title, TCT No. NT-299755, in fee
simple;198 that is to say, it is an absolute title, without qualification or restriction.

Estribillo v. Department of Agrarian Reform199 has held that "certificates of title issued in administrative
proceedings are as indefeasible as [those] issued in judicial proceedings." 200 Section 2 of Administrative Order

9
Agrarian Law and Social Legislation
Chapter 1
Republic of the Philippines In ancient mythology, Antaeus was a terrible giant who blocked and challenged Hercules for his life on his way
SUPREME COURT to Mycenae after performing his eleventh labor. The two wrestled mightily and Hercules flung his adversary to
Manila 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
EN BANC 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
G.R. No. 78742 July 14, 1989 crushed him to death.
ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC., JUANITO D. GOMEZ, GERARDO B. Mother Earth. The sustaining soil. The giver of life, without whose invigorating touch even the powerful Antaeus
ALARCIO, FELIPE A. GUICO, JR., BERNARDO M. ALMONTE, CANUTO RAMIR B. CABRITO, ISIDRO T. weakened and died.
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 The cases before us are not as fanciful as the foregoing tale. But they also tell of the elemental forces of life and
C. ARRESTO, CONSUELO M. MORALES, BENJAMIN R. SEGISMUNDO, CIRILA A. JOSE & NAPOLEON S. death, of men and women who, like Antaeus need the sustaining strength of the precious earth to stay alive.
FERRER, petitioners,
vs. "Land for the Landless" is a slogan that underscores the acute imbalance in the distribution of this precious
HONORABLE SECRETARY OF AGRARIAN REFORM, respondent. 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
G.R. No. 79310 July 14, 1989 place in the sun.

ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO FERRARIS, DENNIS JEREZA, HERMINIGILDO Recognizing this need, the Constitution in 1935 mandated the policy of social justice to "insure the well-being
GUSTILO, PAULINO D. TOLENTINO and PLANTERS' COMMITTEE, INC., Victorias Mill District, Victorias, and economic security of all the people," 1 especially the less privileged. In 1973, the new Constitution affirmed
Negros Occidental, petitioners, this goal adding specifically that "the State shall regulate the acquisition, ownership, use, enjoyment and
vs. disposition of private property and equitably diffuse property ownership and profits." 2 Significantly, there was
JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL AGRARIAN REFORM COUNCIL, respondents. also the specific injunction to "formulate and implement an agrarian reform program aimed at emancipating the
tenant from the bondage of the soil." 3
G.R. No. 79744 July 14, 1989
The Constitution of 1987 was not to be outdone. Besides echoing these sentiments, it also adopted one whole
INOCENTES PABICO, petitioner, and separate Article XIII on Social Justice and Human Rights, containing grandiose but undoubtedly sincere
vs. provisions for the uplift of the common people. These include a call in the following words for the adoption by the
HON. PHILIP E. JUICO, SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM, HON. JOKER State of an agrarian reform program:
ARROYO, EXECUTIVE SECRETARY OF THE OFFICE OF THE PRESIDENT, and Messrs. SALVADOR
TALENTO, JAIME ABOGADO, CONRADO AVANCENA and ROBERTO TAAY, respondents. 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
G.R. No. 79777 July 14, 1989 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
NICOLAS S. MANAAY and AGUSTIN HERMANO, JR., petitioners, Congress may prescribe, taking into account ecological, developmental, or equity considerations and subject to
vs. the payment of just compensation. In determining retention limits, the State shall respect the right of small
HON. PHILIP ELLA JUICO, as Secretary of Agrarian Reform, and LAND BANK OF THE landowners. The State shall further provide incentives for voluntary land-sharing.
PHILIPPINES, respondents.
Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land Reform Code, had already been
CRUZ, J.: enacted by the Congress of the Philippines on August 8, 1963, in line with the above-stated principles. This was

10
Agrarian Law and Social Legislation
Chapter 1
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.
11
Agrarian Law and Social Legislation
Chapter 1
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:
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(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
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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 irrelevancies that cannot influence its decision. Blandishment is as ineffectual as intimidation.
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
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.
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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
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Agrarian Law and Social Legislation
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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:
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Agrarian Law and Social Legislation
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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.
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Agrarian Law and Social Legislation
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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.
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Agrarian Law and Social Legislation
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Objection is raised, however, to the manner of fixing the just compensation, which it is claimed is entrusted to
the administrative authorities in violation of judicial prerogatives. Specific reference is made to Section 16(d),
which provides that in case of the rejection or disregard by the owner of the offer of the government to buy his
land-
... the DAR shall conduct summary administrative proceedings to determine the compensation for the land by
requiring the landowner, the LBP and other interested parties to submit evidence as to the just compensation for
the land, within fifteen (15) days from the receipt of the notice. After the expiration of the above period, the
matter is deemed submitted for decision. The DAR shall decide the case within thirty (30) days after it is
submitted for decision.
To be sure, the determination of just compensation is a function addressed to the courts of justice and may not
be usurped by any other branch or official of the government. EPZA v. Dulay 44 resolved a challenge to several
decrees promulgated by President Marcos providing that the just compensation for property under expropriation
should be either the assessment of the property by the government or the sworn valuation thereof by the owner,
whichever was lower. In declaring these decrees unconstitutional, the Court held through Mr. Justice Hugo E.
Gutierrez, Jr.:
The method of ascertaining just compensation under the aforecited decrees constitutes impermissible
encroachment on judicial prerogatives. It tends to render this Court inutile in a matter which under this
Constitution is reserved to it for final determination.
Thus, although in an expropriation proceeding the court technically would still have the power to determine the
just compensation for the property, following the applicable decrees, its task would be relegated to simply stating
the lower value of the property as declared either by the owner or the assessor. As a necessary consequence, it
would be useless for the court to appoint commissioners under Rule 67 of the Rules of Court. Moreover, the
need to satisfy the due process clause in the taking of private property is seemingly fulfilled since it cannot be
said that a judicial proceeding was not had before the actual taking. However, the strict application of the
decrees during the proceedings would be nothing short of a mere formality or charade as the court has only to
choose between the valuation of the owner and that of the assessor, and its choice is always limited to the lower
of the two. The court cannot exercise its discretion or independence in determining what is just or fair. Even a
grade school pupil could substitute for the judge insofar as the determination of constitutional just compensation
is concerned.
xxx
In the present petition, we are once again confronted with the same question of whether the courts under P.D.
No. 1533, which contains the same provision on just compensation as its predecessor decrees, still have the
power and authority to determine just compensation, independent of what is stated by the decree and to this
effect, to appoint commissioners for such purpose.
This time, we answer in the affirmative.
xxx
It is violative of due process to deny the owner the opportunity to prove that the valuation in the tax documents is
unfair or wrong. And it is repulsive to the basic concepts of justice and fairness to allow the haphazard work of a
minor bureaucrat or clerk to absolutely prevail over the judgment of a court promulgated only after expert
commissioners have actually viewed the property, after evidence and arguments pro and con have been
presented, and after all factors and considerations essential to a fair and just determination have been
judiciously evaluated.
A reading of the aforecited Section 16(d) will readily show that it does not suffer from the arbitrariness that
rendered the challenged decrees constitutionally objectionable. Although the proceedings are described as
summary, the landowner and other interested parties are nevertheless allowed an opportunity to submit
evidence on the real value of the property. But more importantly, the determination of the just compensation by
the DAR is not by any means final and conclusive upon the landowner or any other interested party, for Section
16(f) clearly provides:
Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction for final
determination of just compensation.
The determination made by the DAR is only preliminary unless accepted by all parties concerned. Otherwise,
the courts of justice will still have the right to review with finality the said determination in the exercise of what is
admittedly a judicial function.
The second and more serious objection to the provisions on just compensation is not as easily resolved.
This refers to Section 18 of the CARP Law providing in full as follows:
SEC. 18. Valuation and Mode of Compensation. — The LBP shall compensate the landowner in such amount
as may be agreed upon by the landowner and the DAR and the LBP, in accordance with the criteria provided for
in Sections 16 and 17, and other pertinent provisions hereof, or as may be finally determined by the court, as the
just compensation for the land.
The compensation shall be paid in one of the following modes, at the option of the landowner:
(1) Cash payment, under the following terms and conditions:
(a) For lands above fifty (50) hectares, insofar as the excess hectarage is concerned — Twenty-five percent
(25%) cash, the balance to be paid in government financial instruments negotiable at any time.
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Agrarian Law and Social Legislation
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(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.)
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Agrarian Law and Social Legislation
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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
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Agrarian Law and Social Legislation
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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.
V
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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.

Fernan, (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento,
Cortes, Griño-Aquino, Medialdea and Regalado, JJ., concur.

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Agrarian Law and Social Legislation
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Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 127876 December 17, 1999
ROXAS & CO., INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS, DEPARTMENT OF AGRARIAN REFORM, SECRETARY OF
AGRARIAN REFORM, DAR REGIONAL DIRECTOR FOR REGION IV, MUNICIPAL AGRARIAN REFORM
OFFICER OF NASUGBU, BATANGAS and DEPARTMENT OF AGRARIAN REFORM ADJUDICATION
BOARD, respondents.
PUNO, J.:
This case involves three (3) haciendas in Nasugbu, Batangas owned by petitioner and the validity of the
acquisition of these haciendas by the government under Republic Act No. 6657, the Comprehensive Agrarian
Reform Law of 1988.
Petitioner Roxas & Co. is a domestic corporation and is the registered owner of three haciendas, namely,
Haciendas Palico, Banilad and Caylaway, all located in the Municipality of Nasugbu, Batangas. Hacienda Palico
is 1,024 hectares in area and is registered under Transfer Certificate of Title (TCT) No. 985. This land is covered
by Tax Declaration Nos. 0465, 0466, 0468, 0470, 0234 and 0354. Hacienda Banilad is 1,050 hectares in area,
registered under TCT No. 924 and covered by Tax Declaration Nos. 0236, 0237 and 0390. Hacienda Caylaway
is 867.4571 hectares in area and is registered under TCT Nos. T-44662, T-44663, T-44664 and T-44665.
The events of this case occurred during the incumbency of then President Corazon C. Aquino. In February
1986, President Aquino issued Proclamation No. 3 promulgating a Provisional Constitution. As head of the
provisional government, the President exercised legislative power "until a legislature is elected and convened
under a new Constitution." 1 In the exercise of this legislative power, the President signed on July 22, 1987,
Proclamation No. 131 instituting a Comprehensive Agrarian Reform Program and Executive Order No. 229
providing the mechanisms necessary to initially implement the program.
On July 27, 1987, the Congress of the Philippines formally convened and took over legislative power from the
President. 2 This Congress passed Republic Act No. 6657, the Comprehensive Agrarian Reform Law (CARL) of
1988. The Act was signed by the President on June 10, 1988 and took effect on June 15, 1988.
Before the law's effectivity, on May 6, 1988, petitioner filed with respondent DAR a voluntary offer to sell
Hacienda Caylaway pursuant to the provisions of E.O. No. 229. Haciendas Palico and Banilad were later placed
under compulsory acquisition by respondent DAR in accordance with the CARL.
Hacienda Palico
On September 29, 1989, respondent DAR, through respondent Municipal Agrarian Reform Officer (MARO) of
Nasugbu, Batangas, sent a notice entitled "Invitation to Parties" to petitioner. The Invitation was addressed to
"Jaime Pimentel, Hda. Administrator, Hda. Palico." 3 Therein, the MARO invited petitioner to a conference on
October 6, 1989 at the DAR office in Nasugbu to discuss the results of the DAR investigation of Hacienda
Palico, which was "scheduled for compulsory acquisition this year under the Comprehensive Agrarian Reform
Program." 4
On October 25, 1989, the MARO completed three (3) Investigation Reports after investigation and ocular
inspection of the Hacienda. In the first Report, the MARO found that 270 hectares under Tax Declaration Nos.
465, 466, 468 and 470 were "flat to undulating (0-8% slope)" and actually occupied and cultivated by 34 tillers of
sugarcane. 5 In the second Report, the MARO identified as "flat to undulating" approximately 339 hectares under
Tax Declaration No. 0234 which also had several actual occupants and tillers of sugarcane; 6 while in the third
Report, the MARO found approximately 75 hectare under Tax Declaration No. 0354 as "flat to undulating" with
33 actual occupants and tillers also of sugarcane. 7
On October 27, 1989, a "Summary Investigation Report" was submitted and signed jointly by the MARO,
representatives of the Barangay Agrarian Reform Committee (BARC) and Land Bank of the Philippines (LBP),
and by the Provincial Agrarian Reform Officer (PARO). The Report recommended that 333.0800 hectares of
Hacienda Palico be subject to compulsory acquisition at a value of P6,807,622.20. 8 The following day, October
28, 1989, two (2) more Summary Investigation Reports were submitted by the same officers and
representatives. They recommended that 270.0876 hectares and 75.3800 hectares be placed under compulsory
acquisition at a compensation of P8,109,739.00 and P2,188,195.47, respectively. 9
On December 12, 1989, respondent DAR through then Department Secretary Miriam D. Santiago sent a "Notice
of Acquisition" to petitioner. The Notice was addressed as follows:
Roxas y Cia, Limited
Soriano Bldg., Plaza Cervantes
Manila, Metro Manila. 10
Petitioner was informed that 1,023.999 hectares of its land in Hacienda Palico were subject to immediate
acquisition and distribution by the government under the CARL; that based on the DAR's valuation criteria, the
government was offering compensation of P3.4 million for 333.0800 hectares; that whether this offer was to be
24
Agrarian Law and Social Legislation
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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
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Agrarian Law and Social Legislation
Chapter 1
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
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Agrarian Law and Social Legislation
Chapter 1
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.
27
Agrarian Law and Social Legislation
Chapter 1
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.
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Agrarian Law and Social Legislation
Chapter 1
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
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Agrarian Law and Social Legislation
Chapter 1
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).
x x x           x x x          x x x
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
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Agrarian Law and Social Legislation
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Documentation notifies DAR about compliance

x x x           x x x          x x x with posting requirements thru

5 DARMO Issue Notice of Coverage CARP return indorsement on CARP

to LO by personal delivery Form No. 2 Form No. 17.

with proof of service, or 6 DARMO Send notice to the LBP, CARP

registered mail with return BARC, DENR representatives Form No. 3

card, informing him that his and prospective ARBs of the schedule of the field investigation

property is now under CARP to be conducted on the subject

coverage and for LO to select property.

his retention area, if he desires 7 DARMO With the participation of CARP

to avail of his right of retention; BARC the LO, representatives of Form No. 4

and at the same time invites him LBP the LBP, BARC, DENR Land Use

to join the field investigation to DENR and prospective ARBs, Map

be conducted on his property Local Office conducts the investigation on

which should be scheduled at subject property to identify

least two weeks in advance of the landholding, determines

said notice. its suitability and productivity;

A copy of said Notice shall CARP and jointly prepares the Field

be posted for at least one Form No. 17 Investigation Report (FIR)

week on the bulletin board of and Land Use Map. However,

the municipal and barangay the field investigation shall

halls where the property is proceed even if the LO, the

located. LGU office concerned representatives of the DENR and

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Agrarian Law and Social Legislation
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prospective ARBs are not available and on issues affecting idle lands,

provided, they were given due the conflict shall be resolved by

notice of the time and date of a composite team of DAR, LBP,

investigation to be conducted. DENR and DA which shall jointly

Similarly, if the LBP representative conduct further investigation

is not available or could not come thereon. The team shall submit its

on the scheduled date, the field report of findings which shall be

investigation shall also be conducted, binding to both DAR and LBP,

after which the duly accomplished pursuant to Joint Memorandum

Part I of CARP Form No. 4 shall Circular of the DAR, LBP, DENR

be forwarded to the LBP and DA dated 27 January 1992.

representative for validation. If he agrees 8 DARMO Screen prospective ARBs

to the ocular inspection report of DAR, BARC and causes the signing of CARP

he signs the FIR (Part I) and the Application of Purchase Form No. 5

accomplishes Part II thereof. and Farmer's Undertaking

In the event that there is a (APFU).

difference or variance between 9 DARMO Furnishes a copy of the CARP

the findings of the DAR and the duly accomplished FIR to Form No. 4

LBP as to the propriety of the landowner by personal

covering the land under CARP, delivery with proof of

whether in whole or in part, on service or registered mail

the issue of suitability to agriculture, will return card and posts

degree of development or slope, a copy thereof for at least

32
Agrarian Law and Social Legislation
Chapter 1
one week on the bulletin
board of the municipal
and barangay halls where
the property is located.
LGU office concerned CARP
notifies DAR about Form No. 17
compliance with posting
requirement thru return
endorsement on CARP
Form No. 17.
B. Land Survey
10 DARMO Conducts perimeter or Perimeter
And/or segregation survey or
DENR delineating areas covered Segregation
Local Office by OLT, "uncarpable Survey Plan
areas such as 18% slope
and above, unproductive/
unsuitable to agriculture,
retention, infrastructure.
In case of segregation or
subdivision survey, the
plan shall be approved
by DENR-LMS.
C. Review and Completion
of Documents
11. DARMO Forward VOCF/CACF CARP
to DARPO. Form No. 6
xxx xxx xxx.
DAR A.O. No. 1, Series of 1993, modified the identification process and increased the number of government
agencies involved in the identification and delineation of the land subject to acquisition. 56 This time, the Notice
of Coverage is sent to the landowner before the conduct of the field investigation and the sending must comply
with specific requirements. Representatives of the DAR Municipal Office (DARMO) must send the Notice of
Coverage to the landowner by "personal delivery with proof of service, or by registered mail with return card,"
informing him that his property is under CARP coverage and that if he desires to avail of his right of retention, he
may choose which area he shall retain. The Notice of Coverage shall also invite the landowner to attend the field
investigation to be scheduled at least two weeks from notice. The field investigation is for the purpose of
identifying the landholding and determining its suitability for agriculture and its productivity. A copy of the Notice
of Coverage shall be posted for at least one week on the bulletin board of the municipal and barangay halls
where the property is located. The date of the field investigation shall also be sent by the DAR Municipal Office
to representatives of the LBP, BARC, DENR and prospective farmer beneficiaries. The field investigation shall
be conducted on the date set with the participation of the landowner and the various representatives. If the
landowner and other representatives are absent, the field investigation shall proceed, provided they were duly
notified thereof. Should there be a variance between the findings of the DAR and the LBP as to whether the land
be placed under agrarian reform, the land's suitability to agriculture, the degree or development of the slope,
etc., the conflict shall be resolved by a composite team of the DAR, LBP, DENR and DA which shall jointly
conduct further investigation. The team's findings shall be binding on both DAR and LBP. After the field
investigation, the DAR Municipal Office shall prepare the Field Investigation Report and Land Use Map, a copy
of which shall be furnished the landowner "by personal delivery with proof of service or registered mail with
return card." Another copy of the Report and Map shall likewise be posted for at least one week in the municipal
or barangay halls where the property is located.
Clearly then, the notice requirements under the CARL are not confined to the Notice of Acquisition set forth in
Section 16 of the law. They also include the Notice of Coverage first laid down in DAR A.O. No. 12, Series of
1989 and subsequently amended in DAR A.O. No. 9, Series of 1990 and DAR A.O. No. 1, Series of 1993. This
Notice of Coverage does not merely notify the landowner that his property shall be placed under CARP and that
he is entitled to exercise his retention right; it also notifies him, pursuant to DAR A.O. No. 9, Series of 1990, that
a public hearing, shall be conducted where he and representatives of the concerned sectors of society may
attend to discuss the results of the field investigation, the land valuation and other pertinent matters. Under DAR
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Agrarian Law and Social Legislation
Chapter 1
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
34
Agrarian Law and Social Legislation
Chapter 1
required that the Notice of Coverage must be sent "to the landowner concerned or his duly authorized
representative." 69
Assuming further that petitioner was duly notified of the CARP coverage of its haciendas, the areas found
actually subject to CARP were not properly identified before they were taken over by respondent DAR.
Respondents insist that the lands were identified because they are all registered property and the technical
description in their respective titles specifies their metes and bounds. Respondents admit at the same time,
however, that not all areas in the haciendas were placed under the comprehensive agrarian reform program
invariably by reason of elevation or character or use of the land. 70
The acquisition of the landholdings did not cover the entire expanse of the two haciendas, but only portions
thereof. Hacienda Palico has an area of 1,024 hectares and only 688.7576 hectares were targetted for
acquisition. Hacienda Banilad has an area of 1,050 hectares but only 964.0688 hectares were subject to CARP.
The haciendas are not entirely agricultural lands. In fact, the various tax declarations over the haciendas
describe the landholdings as "sugarland," and "forest, sugarland, pasture land, horticulture and woodland." 71
Under Section 16 of the CARL, the sending of the Notice of Acquisition specifically requires that the land subject
to land reform be first identified. The two haciendas in the instant case cover vast tracts of land. Before Notices
of Acquisition were sent to petitioner, however, the exact areas of the landholdings were not properly
segregated and delineated. Upon receipt of this notice, therefore, petitioner corporation had no idea which
portions of its estate were subject to compulsory acquisition , which portions it could rightfully retain, whether
these retained portions were compact or contiguous, and which portions were excluded from CARP coverage.
Even respondent DAR's evidence does not show that petitioner, through its duly authorized representative, was
notified of any ocular inspection and investigation that was to be conducted by respondent DAR. Neither is there
proof that petitioner was given the opportunity to at least choose and identify its retention area in those portions
to be acquired compulsorily. The right of retention and how this right is exercised, is guaranteed in Section 6 of
the CARL, viz:
Sec. 6. Retention Limits. — . . . .
The right to choose the area to be retained, which shall be compact or contiguous, shall pertain to the
landowner; Provided, however, That in case the area selected for retention by the landowner is tenanted, the
tenant shall have the option to choose whether to remain therein or be a beneficiary in the same or another
agricultural land with similar or comparable features. In case the tenant chooses to remain in the retained area,
he shall be considered a leaseholder and shall lose his right to be a beneficiary under this Act. In case the
tenant chooses to be a beneficiary in another agricultural land, he loses his right as a leaseholder to the land
retained by the landowner. The tenant must exercise this option within a period of one (1) year from the time the
landowner manifests his choice of the area for retention.
Under the law, a landowner may retain not more than five hectares out of the total area of his agricultural land
subject to CARP. The right to choose the area to be retained, which shall be compact or contiguous, pertains to
the landowner. If the area chosen for retention is tenanted, the tenant shall have the option to choose whether to
remain on the portion or be a beneficiary in the same or another agricultural land with similar or comparable
features.
C. The Voluntary Acquisition of Hacienda Caylaway
Petitioner was also left in the dark with respect to Hacienda Caylaway, which was the subject of a Voluntary
Offer to Sell (VOS). The VOS in the instant case was made on May 6, 1988, 72 before the effectivity of R.A. 6657
on June 15, 1988. VOS transactions were first governed by DAR Administrative Order No. 19, series of
1989, 73 and under this order, all VOS filed before June 15, 1988 shall be heard and processed in accordance
with the procedure provided for in Executive Order No. 229, thus:
III. All VOS transactions which are now pending before the DAR and for which no payment has been made shall
be subject to the notice and hearing requirements provided in Administrative Order No. 12, Series of 1989,
dated 26 July 1989, Section II, Subsection A, paragraph 3.
All VOS filed before 15 June 1988, the date of effectivity of the CARL, shall be heard and processed in
accordance with the procedure provided for in Executive Order No. 229.
xxx xxx xxx.
Sec. 9 of E.O. 229 provides:
Sec. 9. Voluntary Offer to Sell. — The government shall purchase all agricultural lands it deems productive and
suitable to farmer cultivation voluntarily offered for sale to it at a valuation determined in accordance with
Section 6. Such transaction shall be exempt from the payment of capital gains tax and other taxes and fees.
Executive Order 229 does not contain the procedure for the identification of private land as set forth in DAR A.O.
No. 12, Series of 1989. Section 5 of E.O. 229 merely reiterates the procedure of acquisition in Section 16, R.A.
6657. In other words, the E.O. is silent as to the procedure for the identification of the land, the notice of
coverage and the preliminary conference with the landowner, representatives of the BARC, the LBP and farmer
beneficiaries. Does this mean that these requirements may be dispensed with regard to VOS filed before June
15, 1988? The answer is no.
First of all, the same E.O. 229, like Section 16 of the CARL, requires that the land, landowner and beneficiaries
of the land subject to agrarian reform be identified before the notice of acquisition should be issued. 74 Hacienda
Caylaway was voluntarily offered for sale in 1989. The Hacienda has a total area of 867.4571 hectares and is
covered by four (4) titles. In two separate Resolutions both dated January 12, 1989, respondent DAR, through
the Regional Director, formally accepted the VOS over the two of these four
titles. 75 The land covered by two titles has an area of 855.5257 hectares, but only 648.8544 hectares thereof fell
within the coverage of R.A. 6657. 76 Petitioner claims it does not know where these portions are located.
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Agrarian Law and Social Legislation
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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
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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.
Davide, Jr., C.J., Bellosillo, Vitug, Mendoza, Panganiban, Purisima, Buena, Gonzaga-Reyes and De Leon, Jr.,
JJ., concur.
Melo, J., please see concurring and dissenting opinion.
Ynares-Santiago, J., concurring and dissenting opinion.
Kapunan, J., I join in the concurring and dissenting opinion of Justice C. Y. Santiago.
Quisumbing, J., I join the in the concurring and dissenting opinion of J. Santiago.
Pardo, J., I join the concurring and dissenting opinion of J. Santiago.
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.
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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
38
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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.
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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,
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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.
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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."
x x x           x x x          x x x
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
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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."
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Agrarian Law and Social Legislation
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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.
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Republic of the Philippines
SUPREME COURT
Baguio City
EN BANC
G.R. No. 164195               April 5, 2011
APO FRUITS CORPORATION and HIJO PLANTATION, INC., Petitioners,
vs.
LAND BANK OF THE PHILIPPINES, Respondent.
RESOLUTION
BRION, J.:
We resolve Land Bank of the Philippines’ ( LBP’s) 2nd Motion for Reconsideration of December 14, 2010 that
addresses our Resolutions of October 12, 2010 and November 23, 2010. This motion prays as well for the
holding of oral arguments. We likewise resolve the Office of the Solicitor General’s (OSG) Motion for Leave to
Intervene and to Admit Motion for Reconsideration-in-Intervention dated February 15, 2011 in behalf of the
Republic of the Philippines (Republic).
The Motion for Reconsideration
The LBP submits the following arguments in support of its 2nd motion for reconsideration:
a) the test of "transcendental importance" does not apply to the present case;
b) the standard of "transcendental importance" cannot justify the negation of the doctrine of immutability of a
final judgment and the abrogation of a vested right in favor of the Government that respondent LBP represents;
c) the Honorable Court ignored the deliberations of the 1986 Constitutional Commission showing that just
compensation for expropriated agricultural property must be viewed in the context of social justice; and
d) granting arguendo that the interest payment has factual and legal bases, only six (6%) percent interest per
annum may be validly imposed.
We have more than amply addressed argument (d) above in our October 12, 2010 Resolution, and we see no
point in further discussing it. Without in any way detracting from the overriding effect of our main and primary
ruling that the present 2nd motion for reconsideration is a prohibited motion that the Court can no longer
entertain, and if only to emphatically signal an unequivocal finis to this case, we examine for the last and final
time the LBP’s other arguments.
In the course of the Court’s deliberations, Mr. Justice Roberto A. Abad questioned the application of Section 3,
Rule 15 of the Internal Rules of the Supreme Court to the present 2nd motion for reconsideration. He posited
that instead of voting immediately on the present 2nd motion for reconsideration, the Court should instead first
consider the validity of our October 12, 2010 Resolution; he claimed that this Resolution is null and void
because the Court violated the above-cited provision of the Internal Rules when it did not first vote on whether
the Resolution’s underlying motion (itself a 3rd motion for reconsideration) should be entertained before voting
on the motion’s merits. We shall lay to rest Mr. Justice Abad’s observation before dwelling on the merits of the
present 2nd motion for reconsideration.
Our Ruling
We find no merit in the LBP’s second motion for reconsideration, and reject as well the Mr. Justice Abad’s
observation on how to approach the consideration of the present motion.
Mr. Justice Abad’s Observations/Objections;
The Rules on 2nd Motions for Reconsideration.
Mr. Justice Abad’s observation apparently stemmed from the peculiar history of the present case.
a. A recap of the history of the case.
This case was originally handled by the Third Division of this Court. In its original Decision of February 6, 2007,
the Division affirmed the RTC’s decision setting the just compensation to be paid and fixing the interest due on
the balance of the compensation due at 12% per annum. In its Resolution of December 19, 2007, the Third
Division resolved the parties’ motions for reconsideration by deleting the 12% interest due on the balance of the
awarded just compensation. The parties’ subsequent motions to reconsider this Resolution were denied on April
30, 2008; on May 16, 2008, entry of judgment followed. Despite the entry of judgment, the present petitioners
filed a second motion for reconsideration that prayed as well that the case be referred to the Court en banc.
Finding merit in these motions, the Third Division referred the case to the En Banc  for its disposition. On
December 4, 2009, the Court en banc denied the petitioners’ second motion for reconsideration. Maintaining
their belief in their demand to be granted 12% interest, the petitioners persisted in filing another motion for
reconsideration. In the interim, the Court promulgated its Internal Rules that regulated, among others, 2nd
motions for reconsideration. On October 12, 2010, the Court en banc granted – by a vote of 8 for and 4 against
– the petitioner’s motion and awarded the 12% interests the petitioners’ prayed for, thus affirming the interests
the RTC originally awarded. The Court subsequently denied the respondent’s motion for reconsideration, giving
rise to the present 2nd motion for reconsideration. It was at this point that the OSG moved for leave to intervene.
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Agrarian Law and Social Legislation
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b. The governing rules on
2nd motions for reconsideration
The basic rule governing 2nd motions for reconsideration is Section 2, Rule 52 (which applies to original actions
in the Supreme Court pursuant to Section 2, Rule 56) of the Rules of Court. This Rule expressly provides:
Sec. 2. Second Motion for Reconsideration. No second motion for reconsideration of a judgment or final
resolution by the same party shall be entertained.
The absolute terms of this Rule is tempered by Section 3, Rule 15 of the Internal Rules of the Supreme Court
that provides:
Sec. 3. Second Motion for Reconsideration. – The Court shall not entertain a second motion for reconsideration
and any exception to this rule can only be granted in the higher interest of justice by the Court en banc upon a
vote of at least two-thirds of its actual membership. There is reconsideration "in the higher interest of justice"
when the assailed decision is not only legally erroneous, but is likewise patently unjust and potentially capable of
causing unwarranted and irremediable injury or damage to the parties. A second motion for reconsideration can
only be entertained before the ruling sought to be reconsidered becomes final by operation of law or by the
Court’s declaration. [Emphases supplied.]
Separately from these rules is Article VIII, Section 4 (2) of the 1987 Constitution which governs the decision-
making by the Court en banc of any matter before it, including a motion for the reconsideration of a previous
decision. This provision states:
Section 4.
xxxx
(2) All cases involving the constitutionality of a treaty, international or executive agreement, or law, which shall
be heard by the Supreme Court en banc, and all other cases which under the Rules of Court are required to be
heard en banc, including those involving the constitutionality, application, or operation of presidential decrees,
proclamations, orders, instructions, ordinances, and other regulations, shall be decided with the concurrence of
a majority of the Members who actually took part in the deliberations on the issues in the case and voted
thereon.
Thus, while the Constitution grants the Supreme Court the power to promulgate rules concerning the practice
and procedure in all courts1 (and allows the Court to regulate the consideration of 2nd motions for
reconsideration, including the vote that the Court shall require), these procedural rules must be consistent with
the standards set by the Constitution itself. Among these constitutional standards is the above quoted Section 4
which applies to "all other cases which under the Rules of Court are required to be heard en banc," and does
not make any distinction as to the type of cases or rulings it applies to, i.e, whether these cases are originally
filed with the Supreme Court, or cases on appeal, or rulings on the merits of motions before the Court. Thus,
rulings on the merits by the Court en banc on 2nd motions for reconsideration, if allowed by the Court to be
entertained under its Internal Rules, must be decided with the concurrence of a majority of the Members who
actually took part in the deliberations.
When the Court ruled on October 12, 2010 on the petitioners’ motion for reconsideration by a vote of 12
Members (8 for the grant of the motion and 4 against), the Court ruled on the merits of the petitioners’ motion.
This ruling complied in all respects with the Constitution requirement for the votes that should support a ruling of
the Court.
Admittedly, the Court did not make any express prior ruling accepting or disallowing the petitioners’ motion as
required by Section 3, Rule 15 of the Internal Rules. The Court, however, did not thereby contravene its own
rule on 2nd motions for reconsideration; since 12 Members of the Court opted to entertain the motion by voting
for and against it, the Court simply did not register an express vote, but instead demonstrated its compliance
with the rule through the participation by no less than 12 of its 15 Members. 1avvphi1 Viewed in this light, the
Court cannot even be claimed to have suspended the effectiveness of its rule on 2nd motions for
reconsideration; it simply complied with this rule in a form other than by express and separate voting .
Based on these considerations, arrived at after a lengthy deliberation, the Court thus rejected Mr. Justice Abad’s
observations, and proceeded to vote on the question of whether to entertain the respondents’ present 2nd
motion for reconsideration. The vote was 9 to 2, with 9 Members voting not to entertain the LBP’s 2nd motion for
reconsideration. By this vote, the ruling sought to be reconsidered for the second time was unequivocally
upheld; its finality – already declared by the Court in its Resolution of November 23, 2010 – was reiterated. To
quote the dispositive portion of the reiterated November 23, 2010 Resolution:
On these considerations, we hereby DENY the Motion for Reconsideration with FINALITY. No further pleadings
shall be entertained. Let entry of judgment be made in due course.
Thus, this Court mandated a clear, unequivocal, final and emphatic finis to the present case.
Landowner’s right to just compensation:
a matter of public interest
In assailing our October 12, 2010 resolution, the LBP emphasizes the need to respect the doctrine of
immutability of final judgments. The LBP maintains that we should not have granted the petitioners’ motion for
reconsideration in our October 12, 2010 Resolution because the ruling deleting the 12% interest had already
attained finality when an Entry of Judgment was issued. The LBP argues, too, that the present case does not
involve a matter of transcendental importance, as it does not involve life or liberty. The LBP further contends that
the Court mistakenly used the concept of transcendental importance to recall a final ruling; this standard should
only apply to questions on the legal standing of parties.
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Agrarian Law and Social Legislation
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In his dissenting opinion, Mr. Justice Roberto Abad agrees with the LBP’s assertion, positing that this case does
not fall under any of the exceptions to the immutability doctrine since it only involves money and does not
involve a matter of overriding public interest.
We reject the basic premise of the LBP's and Mr. Justice Abad’s arguments for being flawed. The present case
goes beyond the private interests involved; it involves a matter of public interest – the proper application of a
basic constitutionally-guaranteed right, namely, the right of a landowner to receive just compensation when the
government exercises the power of eminent domain in its agrarian reform program.
Section 9, Article III of the 1987 Constitution expresses the constitutional rule on eminent domain – " Private
property shall not be taken for public use without just compensation ." While confirming the State’s inherent
power and right to take private property for public use, this provision at the same time lays down the limitation in
the exercise of this power. When it takes property pursuant to its inherent right and power, the State has the
corresponding obligation to pay the owner just compensation for the property taken. For compensation to be
considered "just," it must not only be the full and fair equivalent of the property taken; 2 it must also be paid to the
landowner without delay.3
To fully and properly appreciate the significance of this case, we have to consider it in its proper context.
Contrary to the LBP’s and Mr. Justice Abad’s assertions, the outcome of this case is not confined to the fate of
the two petitioners alone. This case involves the government’s agrarian reform program whose success largely
depends on the willingness of the participants, both the farmers-beneficiaries and the landowners, to cooperate
with the government. Inevitably, if the government falters or is seen to be faltering through lack of good faith in
implementing the needed reforms, including any hesitation in paying the landowners just compensation, this
reform program and its objectives would suffer major setbacks. That the government’s agrarian reform program
and its success are matters of public interest, to our mind, cannot be disputed as the program seeks to remedy
long existing and widespread social justice and economic problems.
In a last ditch attempt to muddle the issues, the LBP focuses on our use of the phrase "transcendental
importance," and asserts that we erred in applying this doctrine, applicable only to legal standing questions, to
negate the doctrine of immutability of judgment. This is a very myopic reading of our ruling as the context clearly
shows that the phrase "transcendental importance" was used only to emphasize the overriding public
interest involved in this case. Thus, we said:
That the issues posed by this case are of transcendental importance is not hard to discern from these
discussions. A constitutional limitation, guaranteed under no less than the all-important Bill of Rights, is at stake
in this case: how can compensation in an eminent domain case be "just" when the payment for the
compensation for property already taken has been unreasonably delayed? To claim, as the assailed Resolution
does, that only private interest is involved in this case is to forget that an expropriation involves the government
as a necessary actor. It forgets, too, that under eminent domain, the constitutional limits or standards apply to
government who carries the burden of showing that these standards have been met. Thus, to simply dismiss the
case as a private interest matter is an extremely shortsighted view that this Court should not leave uncorrected.
xxxx
More than the stability of our jurisprudence, the matter before us is of transcendental importance to the nation
because of the subject matter involved – agrarian reform, a societal objective of that the government has
unceasingly sought to achieve in the past half century. 4
From this perspective, our Resolution of October 12, 2010 only had to demonstrate, as it did, that the higher
interests of justice are duly served. All these, amply discussed in the Resolution of October 12, 2010, are briefly
summarized and reiterated below.
LBP at fault for twelve-
year delay in payment
In his dissenting opinion, Mr. Justice Abad insists that the LBP’s initial valuation of the petitioners’ properties
was fully in accord with Section 17 of the CARL. He posits that when the RTC gave a significantly higher value
to these lands, the LBP acted well within its rights when it appealed the valuation. Thus, to him, it was wrong for
this Court to characterize the LBP’s appeal as malicious or in bad faith.
A simple look at the attendant facts disproves the accuracy of this claim.
First, Mr. Justice Abad’s allegation that the LBP correctly valued the petitioners’ properties is not at all accurate.
Significantly, Mr. Justice Abad does not cite any evidence on record to support his claim that "the Land Bank
valued the lands using the compensation formula that Section 17 of Republic Act 6657 and the DAR’s
implementing rules provide."5
More to the point, this Court has already determined, in a final and executed judgment, that the RTC’s valuation
of the petitioners’ properties is the correct one. To recall, the LBP initially fixed the value of Apo Fruits
Corporation’s (AFC) properties at ₱165,484.47 per hectare or ₱16.00 per square meter (sqm), while it valued
Hijo Plantation Inc.’s (HPI) properties at ₱201,929.97 per hectare, or approximately ₱20.00/sqm. In contrast,
the Regional Trial Court fixed the valuation of the petitioners’ properties at ₱103.33/sqm., or more than five
times the initial valuation fixed by the LBP.
After reviewing the records, this Court affirmed the RTC’s valuation in its February 6, 2007 decision, noting that
it was based on the following evidence: (a) the Commissioners’ reports, (b) the Cuervo appraisers’ report, (c) the
schedule of market values of the City of Tagum per its 1993 and 1994 Revision of Assessment and Property
Classification, (d) the value of the permanent improvements found on the expropriated properties, and (e) the
comparative sales of adjacent lands from early 1995 to early 1997. The Court observed that the RTC valuation
also took into consideration the land’s nature as irrigated land, its location along the highway, market value,
assessor’s value, and the volume and value of its produce. This valuation is fully in accordance with Section 17
of RA 6657, which states:
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Agrarian Law and Social Legislation
Chapter 1
Section 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 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.
On its face, the staggering difference between the LBP’s initial valuation of the petitioners’ properties (totaling
₱251,379,104.02) and the RTC’s valuation (totaling ₱1,383,179,000.00) – a difference of ₱1,131,799,895.98
amounting to 81% of the total price – betrays the lack of good faith on the part of the government in dealing with
the landowners. The sheer enormity of the difference between the two amounts cannot but lead us to conclude
that the LBP’s error was grievous and amounted to nothing less than gross negligence in the exercise of its
duty – in this case, to properly ascertain the just compensation due to the petitioners.
Mr. Justice Abad further argues that interest on just compensation is due only where there is delay in payment.
In the present case, the petitioners allegedly did not suffer any delay in payment since the LBP made partial
payments prior to the taking of their lands.
This argument completely overlooks the definition of just compensation already established in jurisprudence.
Apart from the requirement that compensation for expropriated land must be fair and reasonable, compensation,
to be "just," must also be made without delay.6 In simpler terms, for the government’s payment to be considered
just compensation, the landowner must receive it in full without delay.
In the present case, it is undisputed that the government took the petitioners’ lands on December 9, 1996; the
petitioners only received full payment of the just compensation due on May 9, 2008. This circumstance, by itself,
already confirms the unconscionable delay in the payment of just compensation.
Admittedly, a grain of truth exists in Justice Abad’s observation that the petitioners received partial payments
from the LBP before the titles to their landholdings were transferred to the government. The full and exact truth,
however, is that the partial payments at the time of the taking only amounted to a trifling five percent (5%) of the
actual value of the expropriated properties, as determined with finality by this Court. Even taking into
consideration the subsequent partial payments made totaling ₱411,769,168.32 (inclusive of the amounts
deposited prior to the taking), these payments only constituted a mere one-third (1/3) of the actual value of the
petitioners’ properties.
It should be considered – as highlighted in our October 12, 2010 Resolution – that the properties the
government took were fully operating and earning plantations at the time of the taking. Thus, the landowners lost
not only their properties, but the fruits of these properties. These were all lost in 1996, leaving the landowners
without any replacement income from their properties, except for the possible interest for the trifling payment
made at the time of the taking that, together with the subsequent payment, only amounted to a third of the total
amount due. Thus, for twelve long years, the amount of ₱971,409,831.68 was withheld from the landowners.
An added dimension to this delayed payment is the impact of the delay. One impact – as pointed out above – is
the loss of income the landowners suffered. Another impact that the LBP now glosses over is the income that
the LBP earned from the sizeable sum it withheld for twelve long years. From this perspective, the unaccounted-
for LBP income is unjust enrichment in its favor and an inequitable loss to the landowners. This situation was
what the Court essentially addressed when it awarded the petitioners 12% interest.
Mr. Justice Abad goes on to argue that the delay should not be attributed to the LBP as it could not have
foreseen that it would take twelve years for the case to be resolved. Justice Abad’s stance could have been
correct were it not for the fact that the delay in this case is ultimately attributable to the government. Two
significant factors justify the attribution of the delay to the government.
The first is the DAR’s gross undervaluation of the petitioners’ properties – the government move that started the
cycle of court actions.
The second factor to consider is government inaction. Records show that after the petitioners received the
LBP’s initial valuation of their lands, they filed petitions with the DARAB, the responsible agency of the DAR, for
the proper determination of just compensation. Instead of dismissing these petitions outright for lack of
jurisdiction, the DARAB sat on these cases for three years. It was only after the petitioners resorted to judicial
intervention, filing their petitions for the determination of just compensation with the RTC, that the petitioners’
case advanced.
The RTC interpreted the DARAB’s inaction as reluctance of the government to pay the petitioners just
compensation, a view this Court affirmed in its October 12, 2010 Resolution.
Expropriation for agrarian reform
requires the payment of just compensation
The LBP claims that the just compensation in this case should be determined within the context of the article on
social justice found in the 1987 Constitution. In the LBP’s opinion, when we awarded the petitioners 12% interest
by way of potential income, we removed from the taking of agricultural properties for agrarian reform its main
public purpose of righting the wrong inflicted on landless farmers.
By this argument, the LBP effectively attempts to make a distinction between the just compensation given to
landowners whose properties are taken for the government’s agrarian reform program and properties taken for
other public purposes. This perceived distinction, however, is misplaced and is more apparent than real.
The constitutional basis for our agrarian reform program is Section 4, Article XIII of the 1987 Constitution, which
mandates:
Section 4. The State shall, by law, undertake an agrarian reform program founded on the right of farmers and
regular farm workers, who are landless, to own directly or collectively the lands they till or, in the case of other
48
Agrarian Law and Social Legislation
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farm workers, 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.
This provision expressly provides that the taking of land for use in the government’s agrarian reform program
is conditioned on the payment of just compensation. Nothing in the wording of this provision even remotely
suggests that the just compensation required from the taking of land for the agrarian reform program should be
treated any differently from the just compensation required in any other case of expropriation. As explained by
Commissioner Roberto R. Concepcion during the deliberations of the 1986 Constitutional Commission:
[T]he term "just compensation" is used in several parts of the Constitution, and, therefore, it must have a uniform
meaning. It cannot have in one part a meaning different from that which appears in the other portion. If, after all,
the party whose property is taken will receive the real value of the property on just compensation, that is good
enough.7
In fact, while a proposal was made during the deliberations of the 1986 Constitutional Commission to give a
lower market price per square meter for larger tracts of land, the Commission never intended to give agricultural
landowners less than just compensation in the expropriation of property for agrarian reform purposes. 8
To our mind, nothing is inherently contradictory in the public purpose of land reform and the right of landowners
to receive just compensation for the expropriation by the State of their properties. That the petitioners are
corporations that used to own large tracts of land should not be taken against them. As Mr. Justice Isagani Cruz
eloquently put it:
[S]ocial 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. 9
Interest payments borne by government,
not by farmers-beneficiaries
Nor do we find any merit in the LBP’s assertion that the large amount of just compensation that we awarded the
petitioners, together with the amount of interest due, would necessarily result in making the farmers-
beneficiaries endure another form of bondage – the payment of an exorbitant amount for the rest of their lives.
As the petitioners correctly pointed out, the government’s liability for the payment of interest to the landowner for
any delay attributable to it in paying just compensation for the expropriated property is entirely separate and
distinct from the farmers-beneficiaries’ obligations to pay regular amortizations for the properties transferred to
them.
Republic Act No. 6657 (The Comprehensive Agrarian Reform Law, or CARL) provides for the specific source of
funding to be used by the government in implementing the agrarian reform program; this funding does not come
directly from the payments made by the farmers-beneficiaries. 101avvphi1
More to the point, under the CARL, the amount the farmers-beneficiaries must pay the LBP for their land is, for
the most part, subsidized by the State and is not equivalent to the actual cost of the land that the Department of
Agrarian Reform paid to the original landowners. Section 26, Chapter VII of the CARL provides:
SEC. 26. Payment by Beneficiaries. - Lands awarded pursuant to this Act shall be paid for by the beneficiaries
to the LBP in thirty (30) annual amortizations at six percent (6%) interest per annum. The payments for the first
three (3) years after the award may be at reduced amounts as established by the PARC: Provided,  That the first
five (5) annual payments may not be more than five percent (5%) of the value of the annual gross productions
paid as established by the DAR. Should the scheduled annual payments after the fifth year exceed ten percent
(10) of the annual gross production and the failure to produce accordingly is not due to the beneficiary's fault,
the LBP may reduce the interest rate or reduce the principal obligation to make the payment affordable.
Interpreting this provision of the law, DAR Administrative Order No. 6, Series of 1993 provides:
A. As a general rule, land awarded pursuant to E.O. 229 and R.A. 6657 shall be repaid by the Agrarian Reform
Beneficiary (ARB) to LANDBANK in thirty (30) annual amortizations at six (6%) percent interest per annum. The
annual amortization shall start one year from date of Certificate of Landownership Award (CLOA) registration.
B. The payments by the ARBs for the first three (3) years shall be two and a half percent (2.5%) of AGP [Annual
Gross Production] and five percent (5.0%) of AGP for the fourth and fifth years. To further make the payments
affordable, the ARBs shall pay ten percent (10%) of AGP or the regular amortization, whichever is lower, from
the sixth (6th) to the thirtieth (30th) year.
Clearly, the payments made by the farmers-beneficiaries to the LBP are primarily based on a fixed percentage
of their annual gross production, or the value of the annual yield/produce of the land awarded to them. 11 The
cost of the land will only be considered as the basis for the payments made by the farmers-beneficiaries when
this amount is lower than the amount based on the annual gross production. Thus, there is no basis for the LBP
to claim that our ruling has violated the letter and spirit of the social justice provision of the 1987 Constitution. On
the contrary, our ruling is made in accordance with the intent of the 1987 Constitution.
Motion for Oral Arguments
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Agrarian Law and Social Legislation
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We deny as well the LBP’s motion to set the case for oral arguments. The submissions of the parties, as well as LUCAS P. BERSAMIN MARIANO C. DEL CASTILLO
the records of the case, have already provided this Court with enough arguments and particulars to rule on the Associate Justice Associate Justice
issues involved. Oral arguments at this point would be superfluous and would serve no useful purpose.

The OSG’s Intervention ROBERTO A. ABAD MARTIN S. VILLARAMA, JR.

Associate Justice Associate Justice
The interest of the Republic, for whom the OSG speaks, has been amply protected through the direct action of
petitioner LBP – the government instrumentality created by law to provide timely and adequate financial support
in all phases involved in the execution of needed agrarian reform. The OSG had every opportunity to intervene JOSE PORTUGAL PEREZ JOSE CATRAL MENDOZA
through the long years that this case had been pending but it chose to show its hand only at this very late stage Associate Justice Associate Justice
when its presence can only serve to delay the final disposition of this case. The arguments the OSG presents,
furthermore, are issues that this Court has considered in the course of resolving this case. Thus, every reason
MARIA LOURDES P.A. SERENO
exists to deny the intervention prayed for.
Associate Justice
WHEREFORE, premises considered, the respondent’s second motion for reconsideration and the motion to set
CERTIFICATION
the case for oral arguments are hereby DENIED WITH ABSOLUTE FINALITY. The motion for intervention filed
by the Office of the Solicitor General is, likewise, denied. We reiterate, under pain of contempt if our directive is Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above
disregarded or disobeyed, that no further pleadings shall be entertained. Let judgment be entered in due course. Resolution were reached in consultation before the case was assigned to the writer of the opinion of the Court.
SO ORDERED. RENATO C. CORONA
Chief Justice
ARTURO D. BRION
Associate Justice

WE CONCUR:

RENATO C. CORONA Footnotes

Chief Justice
* On Leave.

ANTONIO T. CARPIO CONCHITA CARPIO MORALES 1

 Section 5.
Associate Justice Associate Justice
(5) Promulgate rules concerning the protection and enforcement of constitutional rights, pleading, practice, and
procedure in all courts, the admission to the practice of law, the integrated bar, and legal assistance to the
(On leave) under-privileged. Such rules shall provide a simplified and inexpensive procedure for the speedy disposition of
PRESBITERO J. VELASCO, JR.
ANTONIO EDUARDO B. NACHURA* cases, shall be uniform for all courts of the same grade, and shall not diminish, increase, or modify substantive
Associate Justice
Associate Justice rights. Rules of procedure of special courts and quasi-judicial bodies shall remain effective unless disapproved
by the Supreme Court.
TERESITA J. LEONARDO-DE CASTRO DIOSDADO M. PERALTA 2
 Land Bank of the Philippines v. Orilla, G.R. No. 157206, June 27, 2008, 556 SCRA 102, 116-117.
Associate Justice Associate Justice
3
 Land Bank v. Rodriguez, G.R. No. 148892, May 6, 2010.

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Agrarian Law and Social Legislation
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4
 In our resolution dated October 12, 2010. (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,
5
 Justice Abad’s Dissent, p. 2. and other support services required by this Act;

 Land Bank v. Rodriguez, G.R. No. 148892, May 6, 2010.

6
7
 III Record at 17, cited in Bernas, SJ. The Intent of the 1986 Constitution Writers, 1995 ed., p. 948.
8
 Id. at 947; III Record at 17, where the Commissioners, in discussing just compensation within the context of
properties expropriated for redistribution to farmers in pursuance of agrarian reform, stated thus:
Fr. Bernas: We discussed earlier the idea of a progressive system of compensation and I must admit, that it was
before I discussed it with Commissioner Monsod. I think what is confusing the matter is the fact that when we
speak of progressive taxation, we mean the bigger the tax base, the higher the rate of tax. Here, what we are
saying is that the bigger the land is, the lower the value per square meter. So, it is really regressive, not
progressive.
(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.
11
 DAR Administrative Order No. 6, Series of 1993 defines Annual Gross Production (AGP) as the "peso (P)
value of the annual yield/produce per hectare of the land awarded to farmer-beneficiaries (as established jointly
by the Department of Agrarian Reform (DAR) and the Land Bank of the Philippines [LBP] during the valuation
process) which is reflected in the valuation portion of the Claims Valuation and Processing Form.
The Lawphil Project - Arellano Law Foundation

Mr. Monsod: Yes, Madam President, it is true. It is progressive with respect to the beneficiary and regressive
with respect to the landowner.

Fr. Bernas: But is it the intention of the Committee that the owner should receive less than the market value?
Mr. Monsod: It is not the intention of the Committee that the owner should receive less than the just
compensation.
 Gelos v. Court of Appeals, G.R. No. 86186, May 8, 1992, 208 SCRA 608, 616.
9
10
 Section 63 of Republic Act No. 6657 provides:
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;
DISSENTING OPINION
ABAD, J.:
I am unable to agree with the ponencia of Mr. Justice Arturo D. Brion that the respondent Land Bank of the
Philippines (Land Bank) is guilty of delay and must, therefore, pay petitioners Apo Fruits Corp. (AFC ) and Huo
Plantation, Inc. (HPI) 12% interest on the compensation awarded to them for their lands.
Brief Factual Background
On October 12, 1995 AFC-HPI voluntarily offered to sell their lands 1 to the government under Republic Act
6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL). Land Bank valued the properties
at ₱165,484.47 per hectare, but AFC-HPI rejected the offer of that amount. Consequently, on instruction of the
Department of Agrarian Reform (DAR), Land Bank deposited partial payments in AFC-HPI’s bank accounts.
Land Bank deposited for AFC and HPI ₱26,409,549.86 and ₱45,481,706.76, respectively, or a total of
₱71,891,256.62.
Upon revaluation of the expropriated properties, Land Bank eventually made additional deposits, placing the
total amount paid at ₱411,769,168.32 (₱71,891,256.62 + ₱339,877,911.70), an increase of nearly five times.
Both AFC-HPI withdrew the amounts. Still, they filed separate complaints for just compensation with the DAR

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Agrarian Law and Social Legislation
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Adjudication Board (DARAB). But due to DARAB’s inaction, they later filed complaints for determination of just
compensation with the Regional Trial Court (RTC) of Tagum City.
On September 25, 2001 the RTC ruled in favor of AFC-HPI, fixing the just compensation for 1,338.6027
hectares of land at ₱1,383,179,000.00 (₱411,769,168.32 + ₱971,409,831.68), more than double the previous
estimated value, and ordering the payment of 12% interest per annum from the time of taking until the finality of
the decision plus attorney’s fees.
The Third Division of this Court affirmed the RTC decision in its February 6, 2007 Decision. But, on motion for
reconsideration, the Third Division deleted the award of interest and attorney’s fees in its December 19, 2007
resolution. Upon finality of this resolution, entry of judgment was issued on May 16, 2008.
Undaunted, AFC-HPI filed a second motion for reconsideration with respect to the denial of the award of legal
interest and attorney’s fees and a motion to refer the second motion for reconsideration to the Court En Banc.
The Third Division subsequently referred the case to the En Banc. The Court En Banc accepted the referral but
on December 4, 2009 it denied with finality AFC-HPI’s second motion for reconsideration. An entry of its finality
was duly recorded.
Still AFC-HPI filed a third motion for reconsideration on the issue of legal interest. On October 12, 2010 the En
Banc granted AFC-HPI’s motion for reconsideration and restored the additional award of 12% legal interest in
their favor equivalent to ₱1.331 billion. The Court held that although Land Bank’s deposits might have been
sufficient for the purpose of immediate taking of the properties, the deposits were insufficient to excuse Land
Bank from the payment of interest on the unpaid balance. It found Land Bank to have grossly undervalued AFC-
HPI’s properties, thus resulting in a prolonged suit. On the issue of immutability of judgment, the Court said that
the matter was of transcendental importance since it involved agrarian reform.
The Court voted 8-3-1 to issue the above resolution. Associate Justice Arturo D. Brion wrote it; Associate
Justices Conchita Carpio Morales, Presbitero J. Velasco, Jr., Mariano C. Del Castillo, Martin S. Villarama, Jr.,
Jose Portugal Perez, Jose Catral Mendoza, and Maria Lourdes P. A. Sereno concurred. Associate Justice
Lucas P. Bersamin dissented along with Chief Justice Renato C. Corona and Associate Justice Antonio
Eduardo B. Nachura. Associate Justice Teresita J. Leonardo-De Castro maintained her previous vote for a
reduced interest of ₱400 million. Associate Justice Antonio T. Carpio took no part. Associate Justices Roberto
A. Abad and Diosdado M. Peralta who earlier voted to deny the motion for reconsideration were on leave when
the voting took place.
Land Bank moved for reconsideration of this turn-around resolution but the En Banc resolved to deny the same
on November 23, 2010 under the same vote. Consequently, Land Bank filed another motion asking for the
deletion of the award of legal interest.
The Issues Presented
Two issues emerged during the deliberation in this case:
1. Whether or not respondent Land Bank has been guilty of delay and, therefore, should be made to pay AFC-
HPI ₱1.331 billion in interest;
2. Whether or not it was error for the En Banc to have issued the October 12, 2010 resolution ordering payment
of such interest, given that AFC-HPI’s third motion for reconsideration was absolutely prohibited and, even if it
were to be treated as a second motion for reconsideration, the En Banc violated its Internal Rules which require
a vote of two-thirds of its actual membership (10 votes) to entertain such a motion.
Discussion
First. The ponencia blames Land Bank for the twelve-year delay in the payment of compensation to AFC-HPI,
claiming that had the government not grossly undervalued the expropriated properties and thus betrayed lack of
good faith, it could have prevented the lengthy legal proceedings in the case.
But the fact that Land Bank did not readily agree with AFC-HPI regarding the value of the lands should not mean
that Land Bank acted in bad faith or deliberately delayed payment of compensation. The records show that Land
Bank valued the lands, using the compensation formula that Section 17 of Republic Act 6657 and the DAR’s
implementing rules provide. Can that be malicious or in bad faith?
Granted that Land Bank appealed the RTC decision, which awarded a compensation of ₱1,383,179,000.00 to
AFC-HPI (more than double what the CARL formula provided) plus 12% interest per annum until the finality of
its decision, such appeal can hardly be regarded as dilatory and baseless. Indeed, although the Court affirmed
the principal amount that the RTC fixed, it ordered deleted the grossly excessive interest of 12% counted from
the date of taking or a period of about 12 years. Even if the Court changed its mind on a third motion for
reconsideration and after the finality of its judgment, it cannot be said, therefore, that Land Bank’s appeal was
malicious or in bad faith.
The Court’s ruling in Land Bank of the Philippines vs. Wycoco 2 is clear. Interest on just compensation is due
only in case of delay in payment, a fact which must be adequately proved. If, for instance, property is taken for
public use before compensation is given or deposited in favor of the landowner, then there is delay and the final
compensation must include an award of interest.
Here, there is no evidence to prove that Land Bank was in delay. On the contrary, pertinent amounts were
deposited, specifically ₱26,409,549.86 for AFC and ₱45,481,706.76 for HPI, within fourteen months after AFC-
HPI filed the complaint for just compensation before the RTC. Notably, Land Bank made the deposits prior to
AFC-HPI’s titles being cancelled. The bank afterwards made additional payments based on upgraded values,
swelling its total payments to ₱411,769,168.32 even before the RTC case was filed.
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The ponencia points out that Land Bank paid only a trifling of the actual value of properties as later determined
by the Court. But I do not think that ₱411,769,168.32, a third of the RTC award and paid even before the suit
was filed, can be regarded as trifling. AFC-HPI did not linger long to withdraw the deposits, negating any notion
that it suffered long with nothing to assuage its feelings about the compensation.
Likewise, Land Bank could not have foreseen that it would take twelve years for the case to be resolved. AFC-
HPI themselves erroneously filed their complaints with the DARAB instead of directly seeking recourse with the
courts. The ponencia is requiring Land Bank to pay for that error and the delays rooted in it.
To iterate, Land Bank had every right to defend an initial position dictated by law and not risk sending bank
officers to jail for giving undue benefit to others in violation of the Anti-graft and Corrupt Practices Act. Land
Bank should not be penalized for taking such cautious position with respect to money belonging to the
government. The Court should not, by its present ruling, encourage government agencies to pay more than what
the law or the rules prescribe unless directed differently by superior orders. Notably, when the Third Division of
this Court handed down its December 19, 2007 resolution, Land Bank immediately settled its unpaid balance of
₱971,409,831.68 even before entry of judgment was issued in the case.
The ponencia states that a second motion for reconsideration is prohibited. But, it must be remembered that the
October 12, 2010 resolution which Land Bank assails itself resulted from the grant of a third motion for
reconsideration filed by AFC-HPI. By then, the February 6, 2007 Decision and December 19, 2007 Resolution of
this Court had already become final and executory, and Land Bank had already complied with the same by
paying the judgment amounts. By the rule that the ponencia invokes, the Court should not have reopened the
case in the first place.
The immutability doctrine admits exceptions such as: a) the correction of clerical errors; b) the nunc pro tunc
entries that cause no prejudice to any party; c) void judgments; and d) whenever circumstances transpire after
the finality of the decision rendering its execution unjust and inequitable. This case does not fall under any of the
exceptions, nor does it involve life or liberty—only money.
Second. The Court must recall its October 12, 2010 resolution granting AFC-HPI’s motion for reconsideration for
having been voted on by the Justices present without an inkling or awareness that it was actually a third motion
for reconsideration. It was not only a prohibited motion like second motions for reconsideration but, evidently a
motion in the category of the not-filed, beyond judicial cognizance, or non-existent. The Court unwittingly made a
mistake in acting on a "nothing" motion. Consequently, it must rectify this mistake by immediately recalling such
resolution.
And, even if AFC-HPI’s motion can be treated as another second motion for reconsideration, which it is not, the
Court En Banc violated Section 3, Rule 15, of its Internal Rules which provides that it cannot entertain a second
motion for reconsideration except upon a vote of two-thirds of its actual membership in the highest interest of
justice. Thus:
SEC. 3. Second motion for reconsideration. – The Court shall not entertain a second motion for reconsideration,
and any exception to this rule can only be granted in the higher interest of justice by the Court en banc upon a
vote of at least two-thirds of its actual membership. xxx
Justice Brion of course points out that since twelve Justices took part in acting on AFC-HPI’s motion for
reconsideration, it may be assumed that such number agreed to entertain the same. But this assumption will not
do since the rules require the taking of "a vote" on whether to entertain such a motion or not. An assumption of
concurrence is not the equivalent of the taking of a vote. Moreover, in truth, those who voted to approve the
October 12, 2010 resolution simply forgot to vote before hand on whether or not to entertain AFC-HPI’s motion
for reconsideration.
Notably, it is inevitable that the procedure for entertaining second motions for reconsideration should follow the
two-step procedure observed when a Division wants to refer a case to the En Banc for its consideration. This
requires the En Banc to first accept the referral before acting to decide the referred case. This was not done in
the present case. The Minutes do not show that the En Banc voted by at least two-thirds of its actual
membership to entertain the motion for reconsideration before approving the draft resolution for release.
The omission is fatal to the resolution because the requirement of a two-thirds vote of the En Banc’s actual
membership is a specially difficult bar that the Justices precisely adopted unanimously to solve the problem of
endless motions for reconsideration that undermine the stability of the judgments of courts. If the En Banc
ignores this rule to accommodate an award of ₱1.331 billion in interest to AFC-HPI, the public who will pay for it
would probably not be able to understand the En Banc’s reason for making such an exception.
For the above reasons, I vote to RECALL the Court’s Resolution dated October 12, 2010 and REINSTATE the
Resolution dated December 4, 2009. This would render moot and academic the question of whether or not to
give due course to respondent Land Bank’s motion for reconsideration.
ROBERTO A. ABAD
Associate Justice
Footnotes
1
 AFC owned 640.3483 hectares, while HPI owned 805.5308 hectares, for a total of 1,445.8791 hectares.
However, the RTC later fixed just compensation for only 1,338.6027 hectares of land.
2
 G.R. No. 140160, January 13, 2004, 419 SCRA 67.
The Lawphil Project - Arellano Law Foundation
CONCURRING OPINION
SERENO, J.:
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Agrarian Law and Social Legislation
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I write separately to express my concern over what I perceive as an unhealthy invocation of the Internal Rules of
the Supreme Court, specifically Section 3, Rule 15, on the matter of entertaining second motions for
reconsideration to set aside a final judgment of this Court. Admittedly, having been appointed to the Court after
the effectivity of the said rule on 22 May 2010, I do not have the advantage of knowing firsthand the history of
the said rule, but I have heard enough, during the deliberations on this case, of the problem that will continue to
be engendered by Section 3, Rule 15.
I understand that at the time the above rule was formulated, the Court did not expect that a conscious two-step
process would be so rigidly demanded by any of its Members to the point that the rule would be used as basis to
move to recall a final judgment of this Court. Neither was it fully anticipated that the refusal to do so would lead
to concerns on the possible removal of Members of the Court for violation of its own rules. Thus, I agree with the
wise formulation of Justice Arturo D. Brion that the requirement of the 1987 Constitution, specifically Article VIII,
Section 4 (2) have been met by the fact that a majority of the Court took part in the deliberation on 12 October
2010; and therefore, that the voting that took place thereon was valid, and more important, that the satisfaction
of this constitutional requirement overrides any concern about the lack of a conscious, express super-majority
vote by the Court to entertain a second motion for reconsideration.
What is unhealthy from what I see is that the objection rising from a lack of a super-majority vote is raised in one
case, but not raised in others by the same objecting member -- Justice Roberto A. Abad. If Section 3, Rule 15 of
the Internal Rules was such an important bar that must be met in any motion for reconsideration, then it should
have been raised by him as well in the still unpromulgated ruling in the Dinagat case. 1 The Court has realized
the difficulty that the said rule introduces. It should not be further invoked by any of its Members in a way that
introduces further instability and fuels the public perception of a flip-flopping Court. With more reason, the rule
should not have been invoked only in this case, but not in the two other highly controversial flip-flopping cases,
by any of the Court’s Members who strongly moved for the reconsideration of the original decision in League of
Cities2 and for the recall of the entry of final judgment in Dinagat. Technically, Section 3, Rule 15 of the Internal
Rules of Court, does not apply to the reconsideration of the original Decision in League of Cities. Had there
been a consistent intent to protect the immutability of Supreme Court decisions, however, a similar rule in the
1997 Rules of Civil Procedure could have been invoked, namely, Section 2, Rule 56, in relation to Section 2,
Rule 52, prohibiting the filing of second motions for reconsideration.
While the classic lines in Banogon v. Zerna3 are writ in large part to litigants to make them accept that the
orderly administration of justice means that their causes must end at some time, it is most earnestly and humbly
believed that those lines must be re-learned by this Court as well. This re-learning seems urgent, especially with
the reversal of the original Decision in League of Cities, followed by the reversal of the fully executory Dinagat
Decision.
To recall those lines:
Litigation must end and terminate sometime and somewhere and it is essential to an effective and efficient
administration of justice that, once a judgment has become final, the winning party be not, through a mere
subterfuge, deprived of the fruits of the verdict. Courts must therefore guard against any scheme calculated to
bring about that result. Constituted as they are to put an end to controversies, courts should frown upon any
attempt to prolong them.
There should be a greater awareness on the part of litigants that the time of the judiciary, much more so of this
Court, is too valuable to be wasted or frittered away by efforts, far from commendable, to evade the operation of
a decision final and executory, especially so, where, as shown in this case, the clear and manifest absence of
any right calling for vindication, is quite obvious and indisputable.
That this concern about the endlessness of litigation should morph --from one regarding the behavior of litigants
to one regarding the stability of the decision-making instincts of the Members of this Court -- is shared by
Justices Antonio T. Carpio and Arturo D. Brion as well in their Opinions in League of Cities and Dinagat. To re-
cast the lines of Banogon v. Serna, I would venture to say this:
There should be a greater awareness of the members of judiciary, that its time, especially that of the Supreme
Court, is too valuable to be wasted or frittered away by efforts, far from commendable, that come from any
quarter including its own, to evade the operation of a decision final and executory, especially so, where, as
shown in this case, the clear and manifest absence of any right calling for vindication, is quite obvious and
indisputable.
What has been at stake in the flip-flopping cases and now in the puzzling invocation of the Internal Rules of the
Court in this case is no less than the risk that the moral force of Supreme Court judgments will be undermined.
The Supreme Court’s word is final because all the coercive forces of the state apparatus will ensure its
execution, by operation of the Constitution. The Members of the Court must never lose sight of the fact that it
owes the authority of its decisions only to the Constitution and, hence, to the people themselves. When the
moral force of the decisions of the Supreme Court is lost because the people do not see in them the application
of procedural rules in an even manner, then it is conceivable that even the automatic legal force given to its
decisions may likewise be lost. That would be a most sad period in its history.
While Justice Brion, in his Dissent in the latest Dinagat Decision, invokes the non-adherence to Sec. 3, Rule 15
of the Internal Rules of the Court as an additional reason to object to the reversal of the Dinagat original
Decision, his sentiments must be taken in the context of the recent puzzling reversals of this Court. Thus, while I
am not convinced about the necessity of the above rule, I understand and fully support the spirit in which it was
made -- to restore belief and actual adherence to the doctrine of immutability of judgments and its necessary by-
product, the stability of judicial decisions. There need actually be no hard and fast rule on the matter if the
members of this Court were to remember that there are behind every good decision, whose dispositive effect
must be immutable, lie fundamental rules of sound legal reasoning. When these are absent, as in the reversals
of the original decision in League of Cities and Dinagat, for reasons that are hollow and even appear unjust,
then the convenient invocation or non-invocation of the technical rules of procedure acquires a more egregious,
distasteful taste. Such situation must be avoided by any court with a long-term perspective of its role, and that
understands the need to guard its legacy.
54
Agrarian Law and Social Legislation
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On the substantial ruling in this case, while I have full sympathy for the financial condition of the public
respondent and the National Government, Justice Brion’s assessment of the respective legal rights and
obligations of the parties is correct. In an interim voting that took place in this case, I had wanted, and indeed
voted for, the imposition of a mere 6% interest and not a 12% interest on the principal amount due petitioners.
Thus, I do not fully agree with the rate of interest imposed by the Decision. It is also correct, however, that a
strong signal must be sent that the Government cannot willfully refuse to promptly pay a just obligation. The
problem that remains unaddressed, though, is who should bear responsibility for the unjust delay in payment
that happened here. The ponencia has already named the various government actors whose prompt resolution
of petitioners’ claim was required, and who failed to discharge such duty. Unless these actors are made
operationally liable for the unjust delay, it will be the taxpayer who will ultimately bear the adverse financial
consequences of our findings and directive in this case, as usually happen in most public accountability cases.
Our public officers responsible for guarding the coffers of our government from irresponsible acts of its officers
must do more than just accept the immediate effects of the fallo of the Decision in this case.

MARIA LOURDES P. A. SERENO

Associate Justice

Footnotes
1
 Navarro v. Executive Secretary, G.R. No 180050, 10 February 2010.
2
 G.R. Nos. 176951, 177499, 178056, 18 November 2008.
3
 G.R. No. L-35469, 9 October 1987, 154 SCRA 593.

55
Agrarian Law and Social Legislation
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SECOND DIVISION
G.R. No. 191545, March 29, 2017
HEIRS OF AUGUSTO SALAS, JR., REPRESENTED BY TERESITA D. SALAS, Petitioners, v. MARCIANO
CABUNGCAL, SERAFIN CASTILLO, DOMINGO M. MANTUANO, MANOLITO D. BINAY, MARIA M.
CABUNGCAL, REMON C. RAMOS, NENITA R. BINAY, DOMINGO L. MANTUANO, NENITA L. GUERRA,
ROSALINA B. MANTUANO, DOMINADOR C. CASTILLO, LEALINEM. CABUNGCAL, ALBERTO CAPULOY,
ALFREDO VALENCIA, MARIA L. VALENCIA, GERARDO GUERRA, GREGORIO M. LATAYAN, REMEDIOS
M. GUEVARRA,JOSE C. BASCONCILLO, APLONAR TENORIO, JULIANA V. SUMAYA, ANTONIO C.
HERNANDEZ, VERONICA MILLENA, TERSITA D.C. CASTILLO, DANTE M. LUSTRE, EFIPANIO M.
CABUNGCAL, NESTOR V. LATINA, NENITA LLORCA, ROMEL L. LOMIDA, MARILOU CASTILLO, RUBEN
CASTILLO, ARNOLD MANALO, RICARDO CAPULOY, AMELITA CALIMBAS, ROSALITA C. ELFANTE, LANIE
CAMPIT, RODILLO RENTON, RUSTICO AMAZONA, LUZVIMINDA DE OCAMPO, DANILO DE OCAMPO,
JOSE DARWIN LISTANCO, NEMESIO CABUNGCAL, RENATO ALZATE, BERNARDO AQUINO, RODRIGO
CABUNGCAL, CHONA G. AGUILA, ROSA M. MANTUANO, ALLAN M. LUSTRE, FELIPE LOQUEZ, DOMINGO
MANALO, DOMINADOR M. MANALO, JENNIFER H. MALIBIRAN, FELIXBERTO RITAN, LEONILA FERRER,
TOMAS M. LORENO, CELSO VALENCIA, CONSTANTINO LUSTRE, REYNALDO C. MALIBIRAN, ORLANDO
C. MALIBIRAN, RICARDO LLAMOSO AND SANTA DIMAYUGA, REPRESENTED BY JOSE C.
BASCONILLO, Respondents.
DECISION
LEONEN, J.:
Republic Act No. 6657 or the Comprehensive Agrarian Reform Law generally covers all public and private
agricultural lands.
This resolves a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure. The
Petition1 is an offshoot of the Court of Appeals Second Division's Decision 2 dated October 26, 2009 and
Resolution3 dated March 1, 2010 in the case docketed as CA-G.R SP No 103703. Augusto Salas, Jr. (Salas)
was the registered owner of a vast tract of agricultural land 4 traversing five barangays—Pusil, Bulacnin,
Balintawak, Marawoy, and Inosluban—in Lipa City, Batangas. 5 Respondents Marciano Cabungcal, Serafm
Castillo, Domingo M. Mantuano, Manolito D. Binay, Maria M. Cabungcal, Remon C. Ramos, Nenita R. Binay,
Domingo L. Mantuano, Nenita L. Guerra, Rosalina B. Mantuano, Dominador C. Castillo, Lealine M. Cabungcal,
Alberto Capuloy, Alfredo Valencia, Maria L. Valencia, Gerardo Guerra, Gregorio M. Latayan, Remedios M.
Guevarra, Jose C. Basconcillo, Aplonar Tenorio, Juliana V. Sumaya, Antonio C. Hernandez, Veronica Millena,
Tersita D.C. Castillo, Dante M. Lustre, Efipanio M. Cabungcal, Nestor V. Latina, Nenita llorca, Romel L. Lomida,
Marilou Castillo, Ruben Castillo, Arnold Manalo, Ricardo Capuloy, Amelita Calimbas, Rosalita C. Elfante, Lanie
Campit, Rodillo Renton, Rustico Amazona, Luzviminda De Ocampo, Danilo De Ocampo, Jose Darwin Listanco,
Nemesio Cabungcal, Renato Alzate, Bernardo Aquino, Rodrigo Cabungcal, Chona G. Aguila, Rosa m.
Mantuano, Allan M. Lustre, Felipe Loquez, Domingo Manalo, Dominador M. Manalo, Jennifer H. Malibiran,
Felixberto Ritan, Leonila Ferrer, Tomas M. Loreno, Celso Valencia, Constantino Lustre, Reynaldo C. Malibiran,
Orlando C. Malibiran, Ricardo Llamoso and Santa Dimayuga, represented by Jose C. Basconillo were tenant
farmers in his agricultural land6 and are agrarian reform beneficiaries under the Comprehensive Agrarian
Reform Program.
According to Transfer Certificate of Title (TCT) No. T-2807, 7 the agricultural land of Salas had an aggregate area
of 148.4354 hectares (roughly 1.5 million square meters), 8 covering Lots 1 and 2.9 Lot 1 spanned 56.1361
hectares,10 while Lot 2 spanned 92.2993 hectares.11
Under Section 312 of Republic Act No. 2264,13 the applicable law at that time, municipal and city councils were
empowered to adopt zoning and subdivision ordinances or regulations, in consultation with the National
Planning Commission.
On February 19, 1977, then President Ferdinand Marcos created the National Coordinating Council for Town
Planning, Housing and Zoning (National Coordinating Council) to prepare and oversee all government town
plans, housing, and zoning measures.14
After a year, the National Coordinating Council was dissolved and replaced by the Human Settlements
Regulatory Commission.15 Under Letter of Instruction No. 729, the power of the local government to convert or
reclassify agricultural lands became subject to the approval of the Human Settlements Regulatory
Commission.16
The Human Settlements Regulatory Commission was tasked to "[r]eview, evaluate and approve or disapprove
comprehensive land use development plans and zoning ordinances of local governments]." 17
On December 2, 1981, the Human Settlements Regulatory Commission issued Resolution No. 35, 18 approving
the Town Plan/Zoning Ordinance of Lipa City, Batangas. 19 Pursuant to the approved town plan of Lipa City,
Salas' agricultural land was reclassified as a farmlot subdivision 20 for cultivation, livestock production, or agro-
forestry.21
Sometime in May 1987, Salas entered into an Owner-Contractor Agreement with Laperal Realty Corporation
(Laperal Realty) for the development, subdivision, and sale of his land. 22
On November 17, 1987, the Human Settlements Regulatory Commission, now Housing and Land Use
Regularoty Board (HLURB),23 issued Development Permit No. 7-0370, granting Laperal Realty a permit for a
Nature Farmlots subdivision.24
Salas subdivided Lot 1 into Lots A to C under Psd-04-0262541, 25 and Lot 2 into Lots A to K under Psd-04-
0262542.26 A total of 14 subdivided lots were titled in his name, as follows: 27
56
Agrarian Law and Social Legislation
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Former Lot 1 Description Area in square meters New Titles Issued

Lot A (Bgy. Inosluban) 234,967 (23.4967 ha.) TCT No. 67660 Total 922,993 (92.2993 ha.)  

Lot B (Bgy. Inosluban) 9,366 (.9366 ha.) TCT No. 67661 Under Psd-04-027665, Salas further subdivided Lot J into 23 smaller lots, with areas ranging from .1025 to
2.1663 hectares each.28 Then, he consolidated Lots F, G, and H and subdivided them into 17 smaller lots under
Lot C (Bgy. Marawoy) 317,028 (31.7028 ha.) TCT No. 67662 Psd-04-003573, with areas ranging from .1546 to 2.0101 hectares each. 29

The transfer certificates of title for these subdivided lots were all issued in Salas' name. 30
Total 561,361 (56.1361 ha.)  
Meanwhile, respondents continued to farm on his landholdings. 31

On June 10, 1988, Republic Act No. 665732 was signed into law and became effective on June 15, 1988. 33 The
Former Lot 2 Description Area in square meters New Titles Issued law sought to expand the coverage of the government's agrarian reform program. 34 Salas' landholdings were
among those contemplated for acquisition and distribution to qualified farmer beneficiaries. 35
Lot A (Bgy. Balintawak) 3,058 (.3058 ha.) TCT No. 67663
Before HLURB, Salas applied for a permission to sell his subdivided lots. 36 On July 12, 1988, HLURB issued a
License to Sell37 Phase 1 of the farmlot subdivision, consisting of 31 lots. 38
Lot B (Bgy. Balintawak) 90,587 (9.0587 ha.) TCT No. 67664
From July 12, 1988 to October 1989, Laperal Realty sold unspecified portions of the subdivided lots. 39
Lot C (Bgy. Bulacnin) 2,925 (.2925 ha.) TCT No. 67665
Salas also executed in favor of Laperal Realty a Special Power of Attorney "to exercise general control,
Lot D (Bgy. Bulacnin) 75,934 (7.5934 ha.) TCT No. 67666 supervision and management of the sale of his land[holdings]". 40

Lot E (Bgy. Bulacnin) 13,909 (1.3909 ha.) TCT No. 67667 On June 10, 1989, Salas went on a business trip to Nueva Ecija and never came back. 41

Pursuant to the Special Power of Attorney,42 Laperal Realty subdivided Salas' property and sold unspecified
Lot F (Bgy. Pusil) 106,509 (10.6509 ha.) TCT No. 67668 portions of these to Rockway Real Estate Corporation and to South Ridge Village, Inc. on February 22, 1990, as
well as to spouses Thelma and Gregorio Abrajano, to Oscar Dacillo, and to spouses Virginia and Rodel Lava on
Lot G (Bgy. Pusil) 60,121 (6.0121 ha.) TCT No. 67669 June 27, 1991.43

Lot H (Bgy. Pusil) 89,202 (8.9202 ha.) TCT No. 67670 The sale of these lots resulted in only 82.5569 hectares of the original 148.4354 hectares unsold and remaining
under Salas' name,44 namely, Lots A to C (from the former Lot 1) and Lots B and J-7 to J-18 (from the former Lot
2), totaling 16 lots. Thus:45
Lot I (Bgy. Pusil) 9,086 (.9086 ha.) TCT No. 67671
Salas' remaining lots Area (in hectares) TCT No.
Lot J (Bgy. Pusil) 460,633 (46.0633 ha.) TCT No. 67672
Lot A 23.4967 67660
Lot K (Bgy. Pusil) 11,029 (1.1029 ha.) TCT No. 67673

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Agrarian Law and Social Legislation
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Lot B 0.9366 67661

On May 31, 1993, before the protests were resolved, the Municipal Agrarian Reform Officer of Lipa City sent a
Notice of Coverage48 for the landholdings that would be subject to acquisition and distribution to qualified farmer
Lot C 31.7028 67662
beneficiaries.

Lot B 9.0587 67664 Subsequently, the Department of Agrarian Reform denied petitioners' protest for lack of merit, while the
Department of Agrarian Reform Adjudication Board dismissed it for lack of jurisdiction. 49
Lot J-7 1.2159 68223
The Notice of Land Valuation and Acquisition was sent on December 28, 1993. 50
Lot J-8 1.0757 68224
Between 1995 and 1996, agrarian reform beneficiaries were given Certificates of Land Ownership Award over
portions of Salas' landholdings, covering a total area of about 40.8588 hectares. 51
Lot J-9 1.2158 68225
Thirteen (13) lots consisting of Lot A (from the former Lot 1) and Lots J-7 to J-18 (from the former Lot 2) were
Lot J-10 1.3356 68226 distributed to agrarian reform beneficiaries. 52 The lots were registered in their names, as follows:53

Lot J-11 1.0000 68227 Agrarian Reform Area

Lot Former TCT No. CLOA No.
Beneficiaries  (has.)
Lot J-12 1.0000 68228
Lot A 67660 Romeo Mantuano 0.0252 00189533
Lot J-13 1.4802 68229
Respondent Rustico
0.0277
G. Amazona
Lot J-14 2.0443 68230

Jaime Latayan 0.0308

Lot J-15 1.8060 68231

Rogelio Q. Valencia 0.0252 00189534

Lot J-16 2.1663 68232

Jose B. Guerra 0.0359 00189535

Lot J-17 1.5454 68233

Respondent Gerardo 00189536

Lot J-18 1.4769 68234 0.0327
Guerra

Total 82.5569 hectares   Alberto B. Guerra 0.0384 00189537

Petitioners Heirs of Salas assailed the inclusion of their landholdings, i.e. the 16 lots, under the Comprehensive
Agrarian Reform Program.46 They filed protest letters before the Department of Agrarian Reform on January 8, Respondent Nenita 00189538
0.0457
1991, and before the Department of Agrarian Reform Adjudication Board on April 12, 1991. 47 M. Llorca

58
Agrarian Law and Social Legislation
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Respondent Maria L. 00189539 Respondent Alfredo 00189547

0.0383 1.1958
Valencia L. Valencia

(Church/basketball Sergio I. Valencia 1.1959 00189548

0.0843
court)
Maximo M. Loza 1.1959 00189549
Respondent 00189542
Marciano V. 0.0686 Manuel L. Castillo 1.1958 00189550
Cabungcal
Respondent Nenita 00189551
Ernesto Latayan 0.0509 1.1959
M. Llorca

Feliciano Cuenca 0.0578 Jose V. Malibiran 1.1959 00189552

Respondent 00189541 Alberto B. Guerra 1.1958 00189553

0.0509
Gregorio M. Latayan
Jose B. Guerra 1.1958 00189554
Francisco Cabungcal 0.0696 00189540
Respondent 00189555
Antonina Mantuano 0.0729 1.1957
Gregorio M. Latayan

Lorenzo Ritan 0.0934 Rustico O. Roxas 1.1959 00189556

Bernardo P. Loza 0.0678 00189543 Dominador C. 00189557

0.5979
Castillo
Respondent 00189544
0.5979
Domingo M. Manalo Nemesio V. 00189558
0.5957
Cabungcal
Eduardo Castillo 0.5979 00189545
Francisco V. 00189559
1.1951
Respondent Nestor 00189546 Cabungcal
1.1958
V. Latina
Marciano V. 00189560
1.1958
Romeo Mantuano 1.1958 Cabungcal

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Agrarian Law and Social Legislation
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Mario Castillo 1.1985 00189561 Eugenia V. Latina 00305433

Lot J-15 68231 and Conchita M. 1.8060
Mario Castillo 1.1958 00189562 Latayan

Rosemarie C. De 00189563 Eugenia V. Latina 00305418

0.5976 Lot J-16 68232 2.1663
Guzman and Gabino Latayan

Rosemarie C. De 00189563 Lot J-17 68233 Gabino Latayan 1.5454 00305419

0.5976
Guzman
Lot J-18 68234 Gabino Latayan 1.4769 00305434
Ronnie D. Binay 0.5976 00189564
Total 40.8588 Hectares
Jaime and Clemente 00305426
Lot J-7 68223 1.2159 The 14th lot, Lot C from the former Lot 1, consisting of 31.7028 hectares, was also distributed to the
Latayan
beneficiaries.54
Amado Conrado 00305427
Thus, of the 16 lots unsold and remaining under Salas' name, 55 14 lots were awarded to agrarian reform
Lot J-8 68224 Latayan and 1.0757
beneficiaries.56 Only two lots remained with Salas: 9.0587 hectares (Lot B from the former Lot 2) and 9.3864
Clemente Latayan
(Lot B from the former Lot 1).57

Amado Conrado 00305428 Meanwhile, the 17th lot, Lot C from the former Lot 2, 0.2925 hectares, was designated as a school site; 58 thus, it
Lot J-9 68225 Latayan and 1.2158 was not included in the scope of the agrarian reform program. 59
Clemente Latayan
On December 8, 1995, before the Department of Agrarian Reform Adjudication Board, an action was filed for the
Candido L. Amazon, 00305429 cancellation of the Certificates of Land Ownership Award, with a prayer for the issuance of a temporary
Lot J-10 68226 1.3356 restraining order to enjoin the distribution of their landholdings to qualified farmer beneficiaries. 60
et al.

By 1996, Salas, Jr. had already been missing for more than seven (7) years. 61 On August 6, 1996, Salas' wife,
Ernesto M. and 00305430
Teresita Diaz Salas (Teresita), petitioned the court to declare him presumptively dead. 62 The court granted the
Lot J-11 68227 Diomedes H. 1
petition on December 12, 1996,63 and Teresita was appointed as administrator of his estate. 64
Latayan
In 1997, the Department of Agrarian Reform Adjudication Board denied petitioners' action for the cancellation of
Lot J-12 68228 Ernesto M. Latayan 1 00305431 respondents' Certificates of Land Ownership Award. 65

Lot J-13 68229   1.4802 On July 29, 1997, the Estate of Salas, with Teresita as the administrator, filed an Application for
Exemption/Exclusion from the Comprehensive Agrarian Reform Program for the 17 lots before the Department
Lot J-14 68230 Conchita M. Latayan 2.0443 00305417 of Agrarian Reform.66 This was allegedly not acted upon.67

Meanwhile, the Center for Land Use, Policy, Planning, and Implementation II sought for a clarification with the

60
 Agrarian Law and Social Legislation
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HLURB regarding the definition of a farmlot subdivision. 68 On July 16, 1998, then HLURB Commissioner
Francisco L. Dagnalan stated that a farmlot subdivision is a "planned community intended primarily for intensive
agricultural activities secondarily for housing."69 Such farmlot must be "located in the fringes of the urban core of
cities and municipalities."70 13. Lot J-14 2.0443 68230

On April 29, 2001,71 the Estate of Salas again filed an application for exemption from the coverage of the 14. Lot J-15 1.8060 68231
Comprehensive Agrarian Reform Program for the 17 parcels of land before the Department of Agrarian Reform
Center for Land Use, Policy, Planning, and Implementation II. 72 Petitioners prayed that an aggregate area of 15. Lot J-16 2.1663 68232
82.8494 hectares be exempted from the Comprehensive Agrarian Reform Program. 73 Located in Barangays
Bulacnin and Inosluban-Maraouy, Lipa City,74 these lots were as follows:75
16. Lot J-17 1.5454 68233
  Lots Area (has.) TCT No.
17. Lot J-18 1.4769 68234
1. Lot A 23.4967 67660
The Estate of Salas claimed that the property had been reclassified as non-agricultural prior to the effectivity of
From the former Lot 1 (subdivided Republic Act No. 6657.76 It anchored the alleged exclusion of the 17 lots on Department of Justice Opinion No.
2. Lot B 0.9366 67661 44, series of 1990.77
under Psd-04-0262541)

3. Lot C 31.7028 67662 Department of Justice Opinion No. 44 states that the Department of Agrarian Reform's authority to approve
reclassifications of agricultural lands to non-agricultural uses could be exercised only from the date of the
From the former Lot 2 (subdivided 4. Lot B 9.0587 67664 effectivity of Republic Act No. 6657 on June 15, 1988. 78 Thus:chanRoblesvirtualLawlibrary
under Psd-04-0262542)
Based on the foregoing premises, we reiterate the view that with respect to conversions of agricultural lands
5. Lot C 0.2925 67665 covered by [Republic Act] No. 6657 to non-agricultural uses, the authority of [Department of Agrarian Reform] to
approve such conversions may be exercised from the date of the law's effectivity on June 15, 1988. This
6. Lot J-7 1.2159 68223 conclusion is based on a liberal interpretation of [Republic Act] No. 6657 in the light of [Department of Agrarian
Reform's] mandate and extensive coverage of the agrarian reform program. 79
7. Lot J-8 1.0757 68224
On November 21, 2002, the farmer-beneficiaries opposed the estate's petition for exemption, 80 arguing that they
had already received Certificates of Land Ownership Award over the properties. 81
8. Lot J-9 1.2158 68225
To resolve the matter, the Department of Agrarian Reform Center for Land Use, Policy, Planning, and
9. Lot J-10 1.3356 68226 Implementation II prepared an Investigation Report, which revealed that 14 of the 17 lots were already subjected
to agrarian reform and were being paid for by the farmer-beneficiaries as owners. 82 Only Lots B and C of the
10. Lot J-11 1.0000 68227 former Lot 1 were not covered under the Comprehensive Agrarian Reform Program, while Lot B of the former
Lot 2 was pending inclusion.83
11. Lot J-12 1.0000 68228 The Department of Agrarian Reform Center for Land Use, Policy, Planning, and Implementation II also
confirmed the presence of agricultural activities in these 17 lots. 84 Thus:chanRoblesvirtualLawlibrary
12. Lot J-13 1.4802 68229

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Agrarian Law and Social Legislation
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2. The southern points, specifically Lot Nos. A [Psd-04-262541 of the former Lot 1], B [Psd-04-0262542 of the
former Lot 2], A and J-18 [of the former Lot 2] are planted to corn. Most of the rest of the area have been
cleared in preparation for planting. Patches of grass and shrubs were also noted;
3. Topography is flat;
4. Land uses of adjacent areas are agricultural and idle agricultural;
5. A dialogue with the farmer-beneficiaries was also conducted. The result of which, among others[,] are:
a. they have been tilling the properties for several years;
b. they are recipients of [Certificates of Land Ownership Award]; and
c. payments of land amortization are continuously being made to the Land Bank of the Philippines.
6. Per information given by the DAR Municipal Office, with the exception of Lots B [Psd-04-0262541] and C
[Psd-04-02625241][,] which were never covered [i.e. not distributed to agrarian reform beneficiaries,] and Lot B
[Psd-04-0262542][,] the Claim Folder (CF) of which is still at the DAR Provincial Office, the rest have been
distributed to beneficiaries.85 (Emphasis supplied)
On October 15, 2003, the HLURB issued Board Resolution No. 750, stating that "[f]or Farmlot Subdivision . . .
there is no change in principal use."86
In an Order87 dated January 7, 2004, then Secretary of Agrarian Reform Roberto Pagdanganan granted
petitioners' application for exemption of the 17 lots from the Comprehensive Agrarian Reform Program. 88 The
dispositive portion read:chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, the application for exemption clearance involving the herein described
parcels of land with an aggregate area of 82.8294 hectares, located at Barangays Bulacnin and Insoluban-
Maraouy, Lipa City[,] Batangas[,] is hereby GRANTED pursuant to [Department of Agrarian Reform]
Administrative Order No. 6, Series of 1994. Further, petitioner is directed to maintain in peaceful possession the
farmer-beneficiaries therein pending the payment of disturbance compensation due them.
SO ORDERED.89
According to respondents, they were neither informed nor furnished copies of the petitioners' application for
exemption and the Regional Trial Court's January 7, 2004 Order. 90 They learned about the application for
exemption91 and the ruling on it only from concerned neighbors92 and from Marawoy, Lipa City Municipal
Agrarian Reform Office personnel,93 who showed them a copy of the January 7, 2004 Order. 94
Respondents moved for reconsideration on February 18, 2004. 95 They asserted that the lots were agricultural
and teeming with agricultural activity, as defined under Republic Act No. 6657. 96
On September 23, 2005, the Department of Agrarian Reform Center for Land Use, Policy, Planning, and
Implementation Secretariat wrote a letter to HLURB, seeking clarification or opinion on the classification of a
farmlot subdivision.97
On December 19, 2005, HLURB Director Atty. Cesar A. Manuel (Atty. Manuel) replied in writing to the
Department of Agrarian Reform Center for Land Use, Policy, Planning, and Implementation, 98 stating that under
HLURB Rules, a farmlot subdivision is considered within an agricultural zone. 99 Moreover, notwithstanding the
reclassification, a farmlot subdivision's principal use for farming has remained. 100
In an Order dated September 19, 2006, then Officer-In-Charge Secretary of Agrarian Reform Nasser
Pangandaman granted101 respondents' motion for reconsideration and set aside the January 7, 2004 Order. The
dispositive portion read:chanRoblesvirtualLawlibrary
WHEREFORE, premises considered the MOTION FOR RECONSIDERATION (MR) filed by the movant-
oppositors, Mariano Cabungacal, et al., is hereby GRANTED SETTING ASIDE THE ORDER dated 07 January
2004 issued by then Secretary Roberto M. Pagdanganan to Mr. Augusto Salas, Jr. The CLOA holders on the
area of 40.8588 hectares shall continue the maintenance of the land while the [Provincial Agrarian Reform
Office] and the [Municipal Agrarian Reform Office] is directed to look into the possibility of covering the
remaining portion of the subject property.
SO ORDERED.102
Petitioners appealed the September 19, 2006 Order before the Office of the President. 103
In a Decision104 dated June 29, 2007, the Office of the President set aside the September 19, 2006 Order and
reinstated the January 7, 2004 Order of the Department of Agrarian Reform.
Respondents moved for reconsideration, but this was denied on April 23, 2008. 105
Respondents appealed before the Court of Appeals. 106 In a Decision107 dated October 26, 2009, the Court of
Appeals granted respondents' petition, reversed the June 29, 2007 Office of the President Decision, and
reinstated the September 19, 2006 Department of Agrarian Reform Order.
Petitioners moved for reconsideration, which the Court of Appeals denied on March 1, 2010. 108
Thus, on March 25, 2010, petitioners filed a Petition for Review on Certiorari 109 with this Court. The petition was
granted due course.110
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On November 9, 2010, petitioners moved for the issuance of a temporary restraining order. 111 They attached an
affidavit of Gloria Linang Mantuano (Gloria) in support of their motion. 112 Based on her affidavit, Gloria was told
by unnamed tenants that respondents and agrarian reform beneficiaries Ricardo Capuloy, Rodrigo Cabungcal,
Celso Valencia, Danilo de Ocampo, and Gerardo Guerra were able to sell their lands. 113
In a Resolution dated November 22, 2010, petitioners' prayer for a temporary restraining order was granted. 114 It
stated that "[t]he consummation of acts leading to the disposition of the litigated property can make it difficult to
implement this Court's decision[.]"115
On January 31, 2011, this Court resolved to approve the bond amounting to P2,000,000.00 and issue the
temporary restraining order in favor of petitioners. 116
On November 12, 2013, Jose C. Basconillo (Basconillo), one of the respondents, sent a letter to this Court,
questioning the propriety of issuing a temporary restraining order based merely on Gloria's affidavit. 117 Casting
doubt on Gloria's credibility, Basconillo said that she was not even part of the land reform
beneficiaries.118 Further, she lived in Barangay Balintawak, as stated in her Salaysay,119 and not in Barangay
Inosluban-Marawoy or in Barangay Buclanin, where the lots allegedly disposed of were located.
The principal issue in this case is whether the reclassification of petitioners' agricultural land as a farmlot
subdivision exempts the Estate of Salas from the coverage of the Comprehensive Agrarian Reform Program
under Republic Act No. 6657. Subsumed in this matter are the following issues:
(a) Whether Republic Act No. 6657 covers lands classified into non- agricultural uses prior to its effectivity;
(b) Whether Salas' farmlot subdivision falls under an "agricultural land" as defined by applicable laws; and
(c) Whether the 17 lots are covered under the Comprehensive Agrarian Reform Program.
I
The 1987 Constitution mandates the just distribution of all agricultural lands, subject to the limits prescribed by
Congress. Under Article II, Section 21 of the Constitution, "[t]he State shall promote comprehensive rural
development and agrarian reform." Article XIII, Section 4 provides that an agrarian reform program shall be
carried out in the country:chanRoblesvirtualLawlibrary
Section 4. The State shall, by law, undertake an agrarian reform program founded on the rights 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, talcing 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.
On June 10, 1988, Republic Act No. 6657 or the Comprehensive Agrarian Reform Law was enacted to fulfill this
constitutional mandate.
The Comprehensive Agrarian Reform Law covers all public and private agricultural lands, as provided in
Proclamation No. 131120 and Executive Order No. 229,121 including other lands of the public domain suitable for
agriculture, regardless of tenurial arrangement and commodity produced. 122 However, a maximum of five (5)
hectares of the landowner's compact or contiguous landholdings may not be distributed to qualified
beneficiaries, as it is within the landowner's rights to retain this area. 123
The Comprehensive Agrarian Reform Program covers the following lands: (1) all alienable and disposable lands
of the public domain devoted to or suitable for agriculture; (2) all lands of the public domain exceeding the total
area of five hectares and below to be retained by the landowner; (3) all government-owned lands that are
devoted to or suitable for agriculture; and (4) all private lands devoted to or suitable for agriculture, regardless of
the agricultural products raised or can be raised on these lands. 124
Meanwhile, Section 10 of the Comprehensive Agrarian Reform 125 provides the types of lands that are excluded
therefrom:
1. Lands that are actually, directly and exclusively used for parks, wildlife, forest reserves, reforestation,
fish sanctuaries and breeding grounds, and watersheds and mangoes;
2. Private lands that are actually, directly and exclusively used for prawn farms and fishponds; 126
3. Lands that are actually, directly and exclusively used and found to be necessary for:
a. National defense;
b. School sites and campuses including experimental farm stations operated by public or
private schools for educational purposes;
c. Seeds and seedling research and pilot production center;
d. Church sites and convents appurtenant thereto;
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e. Mosque sites and Islamic centers appurtenant thereto;
f. Communal burial grounds and cemeteries;
g. Penal colonies and penal farms actually worked by the inmates; and
h. Government and private research and quarantine centers.
4. All lands where the topography is hilly, i.e. with at least eighteen percent (18%) slope and over, and
are not developed for agriculture.
The Comprehensive Agrarian Reform Law covers all agricultural lands, save for those not used or suitable for
agricultural activities.
The law defines agricultural land as "land devoted to agricultural activity . . . and not classified as mineral, forest,
residential, commercial or industrial land."127 For agricultural land to be considered devoted to an agricultural
activity, there must be "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." 128
Aside from being devoted to an agricultural activity, the land must, likewise, not have been classified as mineral,
forest, residential, commercial, or industrial land. Administrative Order No. 01-90
states:chanRoblesvirtualLawlibrary
III. Coverage
Agricultural land refers to those devoted to agricultural activity as defined in [Republic Act No.] 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 authorities prior to 15 June 1988 for residential,
commercial, or industrial use.
Section 65 of Republic Act No. 6657,129 as reiterated by Administrative Order No. 01-90, states that
reclassification or conversion of agricultural lands into non-agricultural lands is subject to the approval of the
Department of Agrarian Reform. The law has given the Department of Agrarian Reform the power to "approve or
disapprove applications for conversion . . . of agricultural lands into non-agricultural uses[,]" 130 such as
"residential, commercial, industrial, and other land uses. . ." 131
Before the effectivity of Republic Act No. 6657 on June 15, 1988, the Department of Agrarian Reform had no
authority to approve the conversion or reclassification of agricultural lands by local governments. Under Section
3 of Republic Act No. 2264, local governments had the power to approve reclassification of agricultural lands.
Municipal and city councils could adopt zoning and subdivision ordinances or regulations reclassifying
agricultural lands in consultation with the National Planning Commission. 132
The question of whether the reclassification by local governments prior to the enactment of Republic Act No.
6657 still needed the approval of the Department of Agrarian Reform was raised by then Secretary of Agrarian
Reform Florencio Abad to the Department of Justice. 133 In response, then Secretary of Justice Franklin M. Drilon
issued Department of Justice Opinion No. 44 on March 16, 1990, stating that the conversion of agricultural lands
covered by Republic Act No. 6657 did not need the authority of the Department of Agrarian Reform before the
date of effectivity of Republic Act No. 6657 on June 15, 1988. 134 The Department of Agrarian Reform's authority
to approve conversions only began on June 15, 1988. 135
In light of Department of Justice Opinion No. 44, the Department of Agrarian Reform issued Administrative
Order No. 06-94136 to streamline the issuance of exemption clearances by the Department of Agrarian Reform. It
affirms the rule that a local government reclassification before June 15, 1988 does not need the approval of the
Department of Agrarian Reform.137
In Natalia Realty Inc. v. Department of Agrarian Reform ,138 lands not devoted to agricultural activity, including
lands previously converted to non-agricultural use prior to the effectivity of Republic Act No. 6657 by
government agencies other than the Department of Agrarian Reform, were declared outside the coverage of the
Comprehensive Agrarian Reform Law. Thus:chanRoblesvirtualLawlibrary
Indeed, lands not devoted to agricultural activity are outside the coverage of [Comprehensive Agrarian Reform
Law]. These include lands previously converted to non-agricultural uses prior to the effectivity of
[Comprehensive Agrarian Reform Law] by government agencies other than respondent [Department of Agrarian
Reform]...
....
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
[Comprehensive Agrarian Reform Law].139
II
As a general rule, agricultural lands that were reclassified as commercial, residential, or industrial by the local
government, as approved by the HLURB,140 before June 15, 1988 are excluded from the Comprehensive
Agrarian Reform Program.
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A farmlot is not included in any of these categories.
Respondents correctly argue that the 17 lots are still classified and devoted to agricultural uses. 141 The definition
of a "farmlot subdivision" under the HLURB Rules and Regulations Implementing Farmlot Subdivision Plan
(HLURB Regulations) leaves no doubt that it is an "agricultural land" as defined under Republic Act No. 3844.
Rule V, Section 18 (d) of the HLURB Regulations provides:chanRoblesvirtualLawlibrary
....
d. A Farmlot Subdivision - is a planned community intended primarily for intensive agricultural activities and
secondarily for housing. A planned community consists of the provision for basic utilities judicious allocation of
areas, good layout based on sound planning principles. (Emphasis supplied)
Under the HLURB Regulations, a farmlot for varied farm activities, such as milking cow and raising poultry, 142 is
allowed only on a "backyard scale"143 or a small-scale operation, and not for mass production. In a farmlot for
agro-industrial purposes, the maximum buildable area for food processing or preservation is limited 144 to only
twenty-five percent (25%) of the total lot area. 145 Likewise, a rice mill must be less than 300 square meters in
size, and must be more than one hectare away from another mill. 146
In contrast, under Rule 2, Section 9 (G) of the HLURB Regulations, a farmlot subdivision plan for planting tree
crops, mixed orchard, or diversified crops has none of these restrictions in scale, size, or use, thus recognizing a
farmlot subdivision's principal use for farming.
The HLURB Regulations also provide for the minimum site criteria for a farmlot subdivision plan. First, it must be
near a marketplace where the farm produce can be utilized and marketed. Second, it must meet the needs of
farming activities. Third, the topography, soil, and climate must be suited for planting crops.147 These highlight a
farmlot subdivision's primarily agricultural nature.148 Thus:chanRoblesvirtualLawlibrary
SECTION 7. SITE CRITERIA. Farmlots subdivision shall conform to the following criteria:
A. Accessibility.
The site must be accessible to transportation lines. Road, railroad facilities should add to the site's proximity to
market center and industries where farm produce maybe utilized.
B. Availability of Community Services and Facilities
Basic utilities like roads and water sources must be found and readily available to adequately serve the needs of
the intended/prospective farm activities. Where available, subdivision development must include the provision of
power lines to the farm lots.
C. Distance from the Urban Centers
Farmlot subdivisions must be away from the center of Metro Manila and/or in the fringes of the urban core of the
metropolis and of cities and municipalities. However, they shall be accessible from employment centers and
population centers where the products of the farmlots can be readily marketed.
D. Physical suitability of the site varies with respect to the intended farm activities within the subdivisions.
Natural features considered for varied activities are slope, climate/temperature and types of soil.
Even succeeding HLURB issuances affirm the agricultural use of a farmlot subdivision.
In 2003, the HLURB declared that devoting an agricultural land into a farmlot subdivision does not change its
principal use for agricultural activities.149 HLURB Director Atty. Manuel's letter dated December 19, 2005 also
confirmed that a farmlot subdivision is considered to be within an agricultural zone. 150
Moreover, HLURB Board Resolution Nos. 922-14,151 926-15,152 and 921-14153 all state that a farmlot subdivision
is "primarily intended for agricultural production, with a minimum lot area of 1,000 sq.m. and with a twenty-five
percent (25%) maximum allowable buildable area." HLURB Memorandum Circular No. 001-15 154 reiterates the
same definition.
The records show that the 17 lots are agricultural in nature. In its Investigation Report, the Department of
Agrarian Reform Center for Land Use, Policy, Planning, and Implementation II found that the lots, being flat,
were suitable for cultivating crops, and had been cleared for planting, or were planted with corn. 155 The areas
covered by the original TCT No. T-2807 had been tilled for several years 156 and had been found to be
irrigable.157 Even the "[l]and uses of adjacent areas are agricultural and idle agricultural" in nature. 158
The reclassification of Salas' landholding into a farmlot subdivision, although effected before Republic Act No.
6657, has not changed the nature of these agricultural lands, the legal relationships existing over such lands, or
the agricultural usability of the lands. Thus, these lots were properly subjected to compulsory coverage under
the Comprehensive Agrarian Reform Law.
Invoking Natalia Realty v. Department of Agrarian Reform ,159 petitioners argue for the exclusion of the 17
lots.160 They claim that, as in Natalia, a zoning ordinance prior to the effectivity of Republic Act No. 6657
prescribed the uses for the landholdings as non-agricultural; therefore, these lots are exempted from the
Comprehensive Agrarian Reform Program.161
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Petitioners cite other cases where, with the approval of HLURB, the local government converted agricultural
lands into residential162 or commercial163 lands, or reclassified an agricultural zone into an urban zone 164 prior to
June 15, 1988. Unfortunately, none of these cases applies.
For instance, Natalia165 involves a land that was converted into a town site or residential land, intended for
residential use. De Guzman v. Court of Appeals166 involves a land that was converted into a wholesale market
complex, intended for commercial use. Agrarian Reform Beneficiaries Association v. Nicolas167 involves the
reclassification of a farming area into an urban zone.
Meanwhile, this case involves a land that was reclassified as a "farmlot subdivision," intended for "intensive
agricultural activities."168 Likewise, located away from the city center,169 the farmlot subdivision has not been
developed into an urban zone.
When Salas' agricultural land was reclassified as a farmlot subdivision, the applicable law was Republic Act No.
3844, as amended.170
Republic Act No. 3844, sought "to make the small farmers more independent, self-reliant and responsible
citizens, and a source of genuine strength in our democratic society." 171 Thus, Republic Act No. 3844
established the Land Authority172 to initiate proceedings for the acquisition of private agricultural lands, 173 and the
subdivision of these lands into economic family-size farm units for resale to bona fide tenants, occupants, and
qualified farmers.174
Section 166 (1) of Republic Act No. 3844 defined an agricultural land as " land devoted to any growth, including
but not limited to crop lands[.]"175 The law neither made reference to a "farmlot subdivision," nor did it exclude a
farmlot from the definition of an agricultural land.
Not being excluded, Salas' landholdings were thus contemplated in the definition of an agricultural land under
Republic Act No. 3844.
Likewise, Republic Act No. 6657 does not exclude a farmlot subdivision from the definition of an agricultural
land. Section 3(c) of Republic Act No. 6657 states that agricultural lands refer to "land devoted to agricultural
activity . . . and not classified as mineral, forest, residential, commercial, or industrial land." Section 76 expressly
provides that any other definition inconsistent with Republic Act No. 6657 has been repealed by this law. 176
III
Insisting on the exclusion of the 17 lots from the Comprehensive Agrarian Reform Program, petitioners rely on
the definition of an agricultural land under the HLURB Regulations. Rule V, Section 18 (e) states that agricultural
lands are "parcels of land ranging from 0.2 to 50 or more hectares . . . exclusively or predominantly used for
cultivation, livestock production and agro-forestry without the intended qualities of the farmlot subdivision."
A farmlot subdivision has the following intended qualities under the HLURB Regulations: it is a planned
community primarily for intensive agricultural activities, and secondarily for housing. 177
Petitioners argue that, to be considered an agricultural land, the property must be used exclusively for
agricultural purposes and cannot be used secondarily for housing. 178 Since the reclassification as a farmlot
subdivision rendered the lots no longer exclusively for agricultural purposes, then these lots ceased to be
agricultural land.179
Petitioners are mistaken.
First, an executive regulation cannot go beyond the law. 180 Republic Act No. 3844 (1963) broadly defined an
agricultural land as "land devoted to any growth, including but not limited to crop lands." 181 Republic Act No.
6657, as amended, also broadly defines agricultural land as land devoted to agricultural activity. 182 In contrast,
the HLURB Regulations restrict the definition of agricultural lands to those lands "exclusively or predominantly
used for cultivation," not being a farmlot subdivision. 183
In limiting the definition of an agricultural land to one "without the intended qualities of a farmlot subdivision," the
HLURB Regulations are overriding, supplanting, and modifying a statutory definition. This is prohibited. A mere
executive issuance cannot alter, expand, or restrict the provisions of the law it seeks to enforce. 184
It bears stressing that neither Republic Act No. 3844 nor Republic Act No. 6657 excludes a farmlot subdivision,
which is primarily agricultural in nature, from the definition of an agricultural land.
Second, in case of doubt, any other definition of an agricultural land inconsistent with the law, such as that found
under the HLURB Regulations, has been expressly185 repealed by Section 76 of Republic Act No. 6657.
Republic Act No. 6657 never required that a landholding must be exclusively used for agricultural purposes to
be covered by the Comprehensive Agrarian Reform Program. What determines a tract of land's inclusion in the
program is its suitability for any agricultural activity.
The Department of Agrarian Reform Administrative Order No. 01-90 (Revised Rules and Regulations Governing
Conversion of Private Agricultural Lands to Non-Agricultural Uses) defines agricultural land as
follows:chanRoblesvirtualLawlibrary
III. Coverage
Agricultural land refers to those devoted to agricultural activity as defined in [Republic Act No.] 6657 and not
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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 authorities prior to 15 June 1988 for residential,
commercial, or industrial use.
We parse this definition into its three elements. Agricultural lands consist of lands:
(1) Devoted to agricultural activity, as defined in Republic Act No. 6657;
(2) Not classified as mineral or forest by the Department of Environment and Natural Resources; and
(3) Prior to June 15, 1988, not classified for residential, commercial, or industrial use under a local government
town plan and zoning ordinance, as approved by the HLURB (or its predecessors, the National
Coordinating Council and the Human Settlements Regulatory Commission).
Salas' farmlot subdivision fulfills these elements.
For the first element, the lots are devoted to agricultural activity.
Agricultural activity refers to 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."186
Petitioners never denied the continued existence of agricultural activity within these lots. 187
Moreover, the Department of Agrarian Reform Center for Land Use, Policy, Planning, and Implementation II, as
affirmed by the Court of Appeals, found that the estate's landholdings have been used for agricultural
purposes.188
In issuing a Notice of Coverage and Notice of Valuation to the Estate of Salas, 189 the Municipal Agrarian Reform
Office also found that the lots are for agricultural use, and therefore, covered under the Comprehensive Agrarian
Reform Program.190 The awarding of the lands191 to the agrarian reform beneficiaries bolsters the agricultural
activity present in them.
For the second element, it is undisputed that the lots have not been declared as mineral or forest lands by the
Department of Environment and Natural Resources. No application has been filed to declare the landholdings as
mineral or forest lands, and neither has the Department of Environment and Natural Resources ever declared
the properties as such.
As to the third element, the lands were not classified by the Lipa City Town Plan/Zoning Ordinance as
commercial, residential, or industrial lands prior to June 15, 1988. Rather, the reclassification, which was
approved by HLURB's predecessor agency, was that of a "farmlot subdivision." 192
Section 4 (d) of Republic Act No. 6657 covers "[a]ll private lands devoted to or suitable for agriculture[,]
regardless of the agricultural products raised or that can be raised thereon." As the estate's private lands are (a)
devoted to or suitable for agriculture; and (b) not classified as mineral, forest, residential, commercial, or
industrial, then these may be included in the Comprehensive Agrarian Reform Program.
Finally, whenever there is reasonable uncertainty in the interpretation of the law, the balance must be tilted in
favor of the poor and underprivileged.193
Republic Act No. 6657 was enacted as social legislation, pursuant to the policy of the State to pursue a
Comprehensive Agrarian Reform Program.194 Agrarian reform is the means towards a viable livelihood and,
ultimately, a decent life for the landless farmers.
In Perez-Rosario v. Court of Appeals:195
Agrarian reform is a perceived solution to social instability. The edicts of social justice found in the Constitution
and the public policies that underwrite them, the extraordinary national experience, and the prevailing national
consciousness, all command the great departments of government to tilt the balance in favor of the poor and
underprivileged whenever reasonable doubt arises in the interpretation of the law. But annexed to the great and
sacred charge of protecting the weak is the diametric function to put every effort to arrive at an equitable
solution for all parties concerned: the jural postulates of social justice cannot shield illegal acts, nor do they
sanction false sympathy towards a certain class, nor yet should they deny justice to the landowner whenever
truth and justice happen to be on her side. In the occupation of the legal questions in all agrarian disputes
whose outcomes can significantly affect societal harmony, the considerations of social advantage must be
weighed, an inquiry into the prevailing social interests is necessary in the adjustment of conflicting demands and
expectations of the people, and the social interdependence of these interests, recognized. 196 (Emphasis
supplied, citations omitted)
The general policy of Republic Act No. 6657 is to cover as many lands suitable for agricultural activities as may
be allowed.197
Where there is doubt as to the intention of the local government in the area where the property is located, the
interpretation should be towards the declared intention of the law.
WHEREFORE, the petition filed by Heirs of Augusto Salas is DENIED, and the Decision of the Court of Appeals
Second Division, Manila, promulgated on October 20, 2009 in CA-G.R. SP No. 103703, is AFFIRMED.
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The temporary restraining order dated November 22, 2010 is PERMANENTLY LIFTED.

SO ORDERED.

Carpio, (Chairperson), Jardeleza,** and Martires, JJ., concur.

Mendoza, J., on official leave.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 188174               June 29, 2015

DEPARTMENT OF AGRARIAN REFORM, through its PROVINCIAL AGRARIAN REFORM OFFICER OF

DAVAO CITY, and THE MUNICIPAL AGRARIAN REFORM OFFICER OF CALINAN, DAVAO CITY, Petitioners,
vs.
WOODLAND AGRO-DEVELOPMENT, INC., Respondent.

DECISION

SERENO, CJ:

This Petition for Review under Rule 45 seeks the nullification of the Decision 1 dated 2 February 2009 issued by
the Regional Trial Court of Davao City Branch 14 (RTC) and its Order 2 dated 8 May 2009 in Special Civil Case
No. 30855-2005. The RTC nullified the Notice of Coverage (NOC) dated 11 December 2003 and Notice of
Acquisition (NOA) dated 5 October 2004 issued by petitioner Department of Agrarian Reform (DAR) over a
portion of a parcel of land owned by respondent Woodland Agro Development. Inc. (Woodland). The court also
denied DAR's Motion for Reconsideration.3

The issue before this Court is whether Republic Act No. 8532 (R.A. 8532) authorized the DAR to issue Notices
of Coverage and Acquisition after 15 June 1998, or beyond the 10-year implementation period provided or in
Section 5 of Republic Act No. 6657 (R.A. 6657) or the

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Comprehensive Agrarian Reform Law (CARL), which states:
SECTION 5. Schedule of Implementation. - The distribution of all lands, covered by this Act shall be
implemented immediately and completed within ten (10) years from the effectivity thereof.
The Court rules that R.A. 8532 extended the term of the implementation of the Comprehensive Agrarian Reform
Program (CARP) under the CARL. Consequently, the NOC dated 11 December 2003 and NOA dated 5 October
2004 issued over the portion of respondent's land are valid.
ANTECEDENT FACTS
Woodland is the registered owner of a parcel of agricultural land covered by Transfer Certificate of Title (TCT)
No. T-113207 with an area of 10.0680 hectares located at Subasta, Calinan, Davao City. 4 On 11 December
2003, the DAR issued an NOC5 placing 5.0680 hectares under the coverage of the CARL for having exceeded
the retention limit6 provided by law. TCT No. T-113207 was canceled, and a new title covering 5.0680 hectares
was issued in the name of the Republic of the Philippines. 7 Thereafter, on 14 February 2005, Certificates of
Land Ownership Award (CLOAs) were issued in favor of five farmer beneficiaries. 8
On 3 March 2005, Woodland filed with the RTC a Complaint 9 for "Declaratory Relief, Annulment of the Notice of
Coverage under R.A. 6657, with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction." Woodland contended that the issuance of the NOC was illegal, because R.A. 6657 had
already expired on 15 June 1998.10 It argued that pursuant to Section 5 of the law, the agency had a period of
ten (10) years to implement the CARP from the time of its effectivity on 15 June 1988. It further argued that the
CARL's amendatory law, R.A. 8532, did not extend the DAR's authority to acquire agrarian lands for distribution.
It theorized that the budget augmentations legislated in R.A. 8532 pertained only to the funding requirements of
the other facets of the CARP implementation and excluded the acquisition of private agricultural lands. 11
The DAR hinged its Answer12 on Department of Justice (DOJ) Opinion No. 009, Series of 1997 issued by then
DOJ Secretary Teofisto Guingona, Jr. He opined that Section 5 was merely directory in character; that the 10-
year period of implementation was only a time frame given to the DAR for the acquisition and distribution of
public and private agricultural lands covered by R.A. 6657. 13 The schedule was meant to guide the DAR in
setting its priorities, but it was not by any means a limitation of authority in the absence of more categorical
language to that effect.14
THE RULING OF THE RTC
The RTC ruled that the DAR's act of sending Woodland an NOC was already a breach of R.A. 6657, since the
NOC was issued beyond the 10-year period prescribed by law.15 The trial court further ruled that R.A. 8532 only
amended the CARL' s provision on the sourcing of funds for the implementation of the CARP, and not the
provision on the period within which the DAR may acquire lands for distribution. The court held that R.A. 8532
did not extend the 10-year period of land acquisition. 16 Neither did it overstep the DAR's jurisdiction to try
agrarian matters, but only determined Woodland's rights under the CARL. 17
The dispositive portion18 of the RTC Decision reads:
Premises considered, this Court rules in favor of the plaintiff and judgment is rendered as follows:
1. Declaring that Republic Act No. [8532] did not extend the acquisition of private lands beyond June 15, 1998
and;
2. Nullifying the [Notice] of Coverage dated December 11, 2003 and the Notice of Acquisition dated October 5,
2004.
After its Motion for Reconsideration was denied, petitioner elevated the case to this Court via a Petition for
Review under Rule 45.
THE ISSUE
The sole issue raised by petitioner is whether it can still issue Notices of Coverage after 15 June 1998.
THE COURT'S RULING
Article XIII, Section 4 of the 1987 Constitution encapsulates the people's yearning for genuine agrarian reform.
The provision states:
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.
Sixteen months after the ratification of the Constitution, Congress enacted the CARL. 19 The policy of the law is
to pursue a Comprehensive Agrarian Reform Program that shall give highest consideration to the welfare of
landless farmers and farmworkers to promote social justice; move the nation toward sound rural development
and industrialization; and establish owner cultivatorship of economic-size farms as the basis of Philippine
agriculture. To this end, a more equitable distribution and ownership of land shall be undertaken with due regard
for the rights of landowners to just compensation and to the ecological needs of the nation to provide farmers
and farmworkers with the opportunity to enhance their dignity and improve the quality of their lives through
greater productivity of agricultural lands.20
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Agrarian Law and Social Legislation
Chapter 1
In Secretary of Agrarian Reform v. Tropical Homes, lnc., 21 we recognized the CARL as a "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 the law's benefit, it is the
means towards a viable livelihood and ultimately, a decent life. 22
The Court is guided by these principles in the resolution of the present Petition for Review on Certiorari.
The agrarian reform program, being one of the immutable hallmarks of the 1987 Constitution, must be faithfully
implemented to meet the ends of social justice.1âwphi1 The Court cannot subscribe to Woodland's stance that
the DAR's authority to issue notices of coverage and acquisition ceased after the 10-year implementation period
mentioned in Section 5 of the CARL. Such a view runs afoul of the constitutional mandate firmly lodged in Article
XIII, Section 4, which seeks the just distribution of all agricultural lands to qualified farmers and farm workers to
free them from oppressive tenancy agreements.
The success of the CARP depends heavily on the adept implementation by the DAR. The agency's primordial
procedural tool for realizing the law's objectives is the issuance of Notices of Coverage and Acquisition. For us
to sustain Woodland's theory that the DAR can no longer issue those notices after 15 June 1998 despite the
enactment of R.A. 8532 would thwart the CARP's purpose. As the Court ruled in Gonzales v. Court of Appeals: 23
[O]ur laws on agrarian reform were enacted primarily because of the realization that there is an urgent need to
alleviate the lives of the vast number of poor farmers in our country. Yet, despite such laws, the majority of these
farmers still live on a hand-to-mouth existence. This can be attributed to the fact that these agrarian laws have
never really been effectively implemented. Woodland asserts that R.A. 8532 only amended R.A. 6657 insofar as
the funding requirements for the CARP are concerned. It disputes the extension of the DAR's authority to
acquire and distribute private agricultural lands.
The first paragraph of Section 63, as originally worded and as amended, used the phrase "this Act" to refer to
CARL as a whole.
Originally, the first paragraph of Section 63 reads:
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. (Emphasis supplied)
As amended by R.A. 8532, the first paragraph of Section 63 stated:
SECTION 63. Funding Source. - The amount needed to implement this Act until the year 2008 shall be funded
from the Agrarian Reform Fund. (Emphasis supplied)
In 2009, Congress again amended certain provisions of the CARL, including Section 63. 24 The latest revision of
the first paragraph recites:
SECTION 63. Funding Source. - The amount needed to further implement the CARP as provided in this Act,
until June 30, 2014, upon expiration of funding under Republic Act No. 8532 and other pertinent laws, shall be
funded from the Agrarian Reform Fund and other funding sources in the amount of at least One hundred fifty
billion pesos (₱150,000,000,000.00). (Emphasis supplied)
Clearly, Section 63 refers to the implementation of the CARL in its entirety, not just the funding source. Indeed,
R.A. 8532 specifically amended Section 63 of R.A. 6657, but it does not follow that only Section 63 had been
affected by the amendment. The fact that Section 63 falls under the chapter on "Financing" only emphasizes its
general applicability. Hence, the phrase "until the year 2008" used in R.A. 8532 unmistakably extends the DAR's
authority to issue NOCs for purposes of acquiring and distributing private agricultural lands.
Finally, R.A. 9700 extended the acquisition and distribution of all agricultural lands until 30 June 2014. 25 The title
alone of R.A. 9700 - An Act Strengthening the Comprehensive Agrarian Reform Program (CARP), Extending the
Acquisition and Distribution of All Agricultural Lands, Instituting Necessary Reforms, Amending for the Purpose
Certain Provisions of Republic Act No. 6657, Otherwise Known as the Comprehensive Agrarian Reform Law of
1988, As Amended, and Appropriating Funds Therefor - reveals that the CARP was indeed extended from 1998
to 2008 via R.A. 8532. Had there been no prior extension from 1998 to 2008, how else could the CARP have
been extended by R.A. 9700 until 30 June 2014? There could have been an extension only if the program
sought to be extended had not expired.
WHEREFORE, the foregoing Petition is GRANTED. The Decision dated 2 February 2009 and Order dated 8
May 2009 of the Regional Trial Court of Davao City Branch 14 in Special Civil Case No. 30855-2005 are
REVERSED and SET ASIDE. The DAR's Notice of Coverage dated 11 December 2003 and Notice of
Acquisition dated 5 October 2004 are UPHELD with full effect. SO ORDERED.
MARIA LOURDES P.A. SERENO
Chief Justice, Chairperson
WE CONCUR:
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
LUCAS P. BERSAMIN JOSE PORTUGAL PEREZ
Associate Justice Associate Justice
ESTELA M. PERLAS-BERNABE
Associate Justice
CERTIFICATION
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Agrarian Law and Social Legislation
Chapter 1
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

MARIA LOURDES P.A. SERENO

Chief Justice

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 171107               September 5, 2012

ANITA C. VIANZON, Heir of the Late Lucila Candelaria Gonzales, Petitioner,

vs.
MINOPLE MACARAEG, Respondents.

DECISION

MENDOZA, J.:

This is a Petition for Review on Certiorari under Rule 45 seeking to reverse and set aside the October 19, 2005
Decision1 of the Court of Appeals (CA), in CA-G.R. SP No. 88816, reversing the August 18, 2004 Resolution 2 of
the Office of the President (OP) which declared the late Lucila Candelaria Gonzales (Lucila) as the "legitimate
and lawful purchaser/beneficiary"3 of

x x x Lot No. 1222, Psd-78000 of the Dinalupihan Landed Estate administered by the Department of Agrarian
Reform, containing an area of 3.1671 hectares located at Barangay Saguing, Dinalupihan, Bataan. 4

The Factual and Procedural Antecedents:

The subject land formed part of the 10-hectare Lot No. 657 earlier awarded to the late Pedro Candelaria
(Pedro), the father of Lucila. In 1950, Pedro hired respondent Minople Macaraeg (Minople) to work on Lot 657.
In 1956, Pedro divided Lot 657 among his four children, including Lucila. Eventually, Lucila’s undivided share
became Lot No. 1222, the subject landholding. 5

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Agrarian Law and Social Legislation
Chapter 1
On August 17, 1960, Lucila and the Land Tenure Administration (LTA, now the Department of Agrarian Reform)
entered into a contract denominated as "Agreement to Sell No. 5216" involving Lot No. 1222. 6
After almost 30 years, or on May 8, 1989, Lucila’s representative, petitioner Anita C. Vianzon (Anita), executed a
deed of absolute sale in favor of her daughter, Redenita Vianzon (Redenita), conveying a 2.5- hectare portion of
the subject land. In connection with this, Minople also affixed his signature on a document denominated as
"Waiver of Right" purportedly relinquishing all his rights as well as his interest over the same property in favor of
Redenita.7
Soon thereafter, Anita filed two applications to purchase the subject property – one in 1990 and the other on
August 7, 1996. Minople, however, also filed his own application to purchase the same land on September 9,
1996. These conflicting claims were brought before the Department of Agrarian Reform (DAR). On November 6,
1996, the Chief of the Legal Division of the DAR Provincial Office recommended that the subject land be
"divided equally" between the two applicants since both had been in some way "remiss in their obligations under
the agrarian rules."8 Based on the recommendation, the Officer-in-Charge Municipal Agrarian Reform Officer
(MARO) referred the matter to the Provincial Agrarian Reform Officer (PARO) of Bataan. In his First
Endorsement, dated November 14, 1996, the PARO concurred with the findings and recommendation of the
Legal Division Chief and forwarded its concurrence to the DAR Regional Director. The Officer-in-Charge
Regional Director (RD) issued a corresponding order dividing the subject property equally between the parties.
According to him, the parties were "in pari delicto, the most equitable solution is to award the property to both of
them."9
Minople sought reconsideration but this was treated as an appeal by the RD and was elevated to the DAR
Secretary, who, on November 10, 1997, set aside the order and upheld Minople’s right over the property. 10 In
setting aside the RD order, the DAR Secretary found that it was Minople who was the "actual possessor/
cultivator of the lot in consideration."11 He pointed out that Lucila’s act of "hiring" Minople to render service
pertaining to all the aspects of farming did not only violate the old LTA Administrative Order (A.O.) but it also
contravened the very undertaking made by Lucila’s representative and heir, Anita, in her latest sales application
warranting its rejection.
12 
Aggrieved, Anita appealed to the OP. On June 18, 2003, the OP issued a minute decision affirming in toto the
November 10, 1997 Order of the DAR Secretary. According to the OP,
After a careful and thorough evaluation of the records of the case, this Office hereby adopts by reference the
findings of fact and conclusions of law contained in the DAR Decision dated 10 November 1997. 13
Anita then moved for reconsideration. On August 18, 2004, the OP, giving weight to the "Agreement to Sell No.
5216" between Lucila and the DAR’s predecessor (the LTA), issued a resolution reversing and setting aside its
minute decision and declaring Lucila as "the legitimate and lawful purchaser/ beneficiary of the landholding in
question."14 The OP stated that the subject lot had been paid for as early as 1971 and that the same had been
declared in the name of the late Lucila for tax purposes. In addition, according to the OP, the "personal
cultivation aspect of the said Agreement to Sell" was achieved or carried out by Lucila "with Minople Macaraeg
as her hired farmworker."15 The OP also took note that neither the LTA nor the DAR failed to give the necessary
notice of cancellation to Lucila or Anita.16
Lastly, the OP opined that when the Agreement to Sell was executed back in 1960, Minople was merely hired as
a farmworker; ergo, his actual possession and cultivation were not in the concept of owner which explained why
the LTA (now DAR) contracted with Lucila and not with Minople. 17
Not in conformity, Minople elevated the matter to the CA via a petition for review under Rule 43. In upholding
Minople’s right to the subject land, the CA anchored its Decision on Section 22 of Republic Act (R.A.) No. 6657,
or the Comprehensive Agrarian Reform Law (CARL). According to the CA, Minople had been working on the
contested lot since 1950, as a tenant and performing all aspects of farming and sharing in the harvest of the
land, in conformity with DAR’s A.O. No. 3, Series of 1990, pursuant to the CARL. 18
Undaunted, Anita is now before this Court via this petition for review on certiorari presenting the following
STATEMENT OF ISSUES
I. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN PASSING OVER THE MERITS OF
THE PETITION FOR REVIEW FILED BY THE RESPONDENT BEFORE THE SAID COURT DESPITE THE
FACT THAT RESPONDENT THEREIN FILED THE SAME BEYOND THE REGLEMENTARY PERIOD FOR
FILING THE SAME.
II. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN RULING THAT THE
RESPONDENT, AS TENANT, HAS LEGAL STANDING IN IMPUGNING THE OWNERSHIP OF THE
PETITIONER, HIS LANDLORD, IN CONTRAVENTION OF THE PROVISIONS OF ARTICLE 1436 OF THE
CIVIL CODE OF THE PHILIPPINES AS WELL AS SECTION 3(B), RULE 131 OF THE RULES OF COURT
AND OTHER JURISPRUDENCE ON THE MATTER.
III. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN DEPRIVING THE PETITIONER
OF HER PROPERTY IN VIOLATION OF DUE PROCESS OF LAW AS WELL AS THE NON-IMPAIRMENT
CLAUSE OF THE CONSTITUTION IN VIEW OF THE LACK OF NOTICE OF CANCELLATION OF THE
AGREEMENT TO SELL.
IV. WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT PETITIONER VIOLATED THE
CONDITIONS CONTAINED IN THE AGREEMENT TO SELL.
V. WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE AWARD OF THE LAND
TO THE RESPONDENT WAS EQUIVALENT TO A NOTICE OF CANCELLATION OF THE AGREEMENT TO
SELL.19
The Court finds no merit in the petition.
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Agrarian Law and Social Legislation
Chapter 1
On the procedural issue
Indeed, the perfection of an appeal in the manner and the period prescribed by law is mandatory and
jurisdictional. Necessarily, the failure to conform to the rules will render the judgment for review final and
unappealable. By way of exception, however, minor lapses are at times disregarded in order to give due course
to appeals filed beyond the reglementary period on the basis of strong and compelling reasons, such as serving
the ends of justice and preventing a grave miscarriage thereof. The period for appeal is set in order to avoid or
prevent undue delay in the administration of justice and to put an end to controversies. It is there not to hinder
the very ends of justice itself. The Court cannot have purely technical and procedural imperfections as the basis
of its decisions. In several cases, the Court held that "cases should be decided only after giving all parties the
chance to argue their causes and defenses."20
In Philippine National Bank, et al. v. Court of Appeals, we allowed, in the higher interest of justice, an appeal
filed three days late.
In Republic v. Court of Appeals, we ordered the Court of Appeals to entertain an appeal filed six days after the
expiration of the reglementary period; while in Siguenza v. Court of Appeals, we accepted an appeal filed
thirteen days late. Likewise, in Olacao v. NLRC, we affirmed the respondent Commission's order giving due
course to a tardy appeal "to forestall the grant of separation pay twice" since the issue of separation pay had
been judicially settled with finality in another case. All of the aforequoted rulings were reiterated in our 2001
decision in the case of Equitable PCI Bank v. Ku. (previous citations omitted) 21
There is no denying that the controversy between the parties involves the very right over a considerable spread
of land. In fact, it is Anita’s position that the opposing parties in this case "have equal substantive rights over the
lot in question."22 It was, therefore, correct on the part of the CA not to permit a mere procedural lapse to
determine the outcome of this all too important case. It must be noted that the CA was the first level of judicial
review, and coming from the OP’s vacillating stance over the controversy, it was but correct to afford the parties
every chance to ventilate their cause. Considering further that the party who failed to meet the exacting limits of
an appeal by a mere seven days was an old farmer who was not only unlearned and unskilled in the ways of the
law but was actually an illiterate who only knew how to affix his signature, 23 certainly, to rule based on
technicality would not only be unwise, but would be inequitable and unjust. All told, the Court sanctions the CA
ruling allowing the petition for review of Minople.
On the substantive issue
The Court now proceeds with the crux of the case, that is, who between the opposing parties has a rightful claim
to the subject landholding? In resolving the second and the fourth issues, this Court finds it inevitable to resolve
the third and the fifth issues as well. Thus, the Court will discuss them jointly.
The beacon that will serve as our guide in settling the present controversy is found in the Constitution, more
particularly Articles II and XIII:
Article II
SEC.21. The State shall promote comprehensive rural development and agrarian reform.
xxx
Article XIII
SEC. 4. The State shall, by law, undertake an agrarian reform program founded on the right of farmers and
regular farm workers, 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 land
owners. The State shall further provide incentives for voluntary land-sharing. (Underscoring supplied)
In this regard, the Court finds the elucidation of Framer Jaime Tadeo, in one of the deliberations of the
Constitutional Commission, enlightening.
MR. TADEO.
. . . Ang dahilan ng kahirapan natin sa Pilipinas ngayon ay ang pagtitipon-tipon ng vast tracts of land sa kamay
ng iilan. Lupa ang nagbibigay ng buhay sa magbubukid at sa iba pang manggagawa sa bukid. Kapag inalis sa
kanila ang lupa, parang inalisan na rin sila ng buhay. Kaya kinakailangan talagang magkaroon ng tinatawag na
just distribution. . . .
xxx
MR. TADEO.
Kasi ganito iyan. Dapat muna nating makita ang prinsipyo ng agrarian reform, iyong maging may-ari siya ng
lupa na kaniyang binubungkal. Iyon ang kauna-unahang prinsipyo nito. . . .
x x x.24
Picking up from there, Congress enacted R.A. No. 6657, or the CARL of 1988. Section 22 of this law
enumerates those who should benefit from the CARL.
SEC. 22. Qualified Beneficiaries. – The lands covered by the CARP shall be distributed as much as possible to
landless residents of the same barangay, or in the absence thereof, landless residents of the same municipality
in the following order of priority:
73
Agrarian Law and Social Legislation
Chapter 1
(a) agricultural lessees and share tenants;
(b) regular farmworkers;
(c) seasonal farmworkers;
(d) other farmworkers;
(e) actual tillers or occupants of public lands;
(f) collectives or cooperatives of the above beneficiaries; and
(g) others directly working on the land.
x x x.
A basic qualification of a beneficiary shall be his willingness, aptitude and ability to cultivate and make the land
as productive as possible. The DAR shall adopt a system of monitoring the record or performance of each
beneficiary, so that any beneficiary guilty of negligence or misuse of the land or any support extended to him
shall forfeit his right to continue as beneficiary. The DAR shall submit periodic reports on the performance of the
beneficiaries to the PARC.
x x x.
Pursuant to this, the DAR issued A.O. No. 3, Series of 1990. The foremost policy in said A.O.’s Statement of
Policies states,
Land has a social function, hence, there is a concomitant social responsibility in its ownership and should,
therefore, be distributed to the actual tillers/occupants. 25
Thus, A.O. No. 3 lays down the qualifications of a beneficiary in landed estates 26 in this wise: he or she should
be (1) landless; (2) Filipino citizen; (3) actual occupant/tiller who is at least 15 years of age or head of the family
at the time of filing of application; and (4) has the willingness, ability and aptitude to cultivate and make the land
productive.27
The significance of the allocatee/awardee being the actual tiller is made even clearer in the "Operating
Procedures" of A.O. No. 3 itself, where the MARO is required to make a determination as to who the actual tiller
is, for it is to him that the land should be awarded. In fact, item 2.1.3, states that if it is found that the allocatee or
awardee employs others to till the land, the MARO should cancel the Order of Award (OA) or Certificate of Land
Transfer (CLT) and issue a new one in favor of the "qualified actual cultivator/occupant." 28
In this case, Anita questions the existence of a tenancy relationship between her/Lucila and Minople, pointing
out the purported DAR Director’s finding that Minople deliberately failed to deliver the harvest for four
years.29 She argues that this negates any tenancy relationship between them and insists that Minople was only a
farm worker initially engaged by the late Pedro Candelaria. To this, she adds that LTA would not have entered
into an agreement to sell with Lucila in 1960 if it was Minople who was the actual possessor and cultivator back
then.30 Anita continues that even if tenancy existed, Minople could not controvert the title of Lucila/Anita being
his purported landlord.31
Anita’s argument, however, is misplaced. The cases she relied on referred to possession of leased premises in
general. In this case, the issue is farm or agricultural tenancy and, inescapably, the applicable law is the CARL
and its implementing rules. After all, the law was well in effect when Minople and Anita filed their respective
applications to purchase the subject land.
Anita argues that the earlier sale made by LTA to her predecessor was never questioned, hence, it remains
valid.32 In fact, Anita claims, the late Lucila had already paid the purchase price sometime in 1971. 33 She then
proceeds to argue that "personal cultivation" may be "with the aid of labor from within his immediate
household."34 Finally, Anita cries out for fairness. According to her:
It would be unfair and unjust if the subject lot which was originally cultivated by the Petitioner’s father, Pedro
Candelaria, would only go to another who was just a mere helper of the said Pedro Candelaria, thereby
rendering into naught the hardships of the petitioner and her father in occupying and nourishing the subject land
which they have occupied even before the 50’s decade. Respondent would not have been there in Dinalupihan
were it not for the Petitioner’s father who secured his services as ‘boy’ or mere household helper. 35
While Anita insists that "Agreement to Sell No. 5216" executed back in 1960 remains effective, her act of filing
the above-mentioned applications to purchase after three decades of waiting for its fruition only reveals her
skepticism in that very same instrument. Anita herself filed not one, but two subsequent applications. It was her
application on August 7, 1996 together with that of Minople which gave rise to the present controversy. These
conflicting applications were brought before the DAR, all the way up to the Secretary, and then to the OP. At this
point, therefore, Anita had effectively abandoned her, or rather Lucila’s "Agreement to Sell No. 5216" of 1960
with the then LTA. She cannot later on deny this and conveniently hide behind the feeble position of the OP that
it was unnecessary for Anita/ Lucila to file her application because the said agreement remained valid.
The fact remains, however, that there were two applications subsequently filed by Anita and acted upon by the
DAR, the same office charged with executing the earlier "Agreement to Sell No. 5216," where Anita would have
gone to in order to implement her all important agreement.
This is the same agency, acting through its Secretary, which found that as early as the time of Lucila, there had
been violations of "Agreement to Sell No. 5216" and the existing laws and rules upon which it was based. This is
the same agency which eventually awarded the subject landholding to Minople. The CA found, to which the
Court agrees, that this was "equivalent to a notice of cancellation of the earlier ‘Agreement to Sell No. 5216.’" 36
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Agrarian Law and Social Legislation
Chapter 1
As regards Anita’s claim that the land had been paid for, the provision that she relies on does not only speak of
payment of the purchase price but also requires the performance of all the conditions found in the said
agreement. Thus, if the Court is to assume the agreement to be valid, the LTA or the DAR may still not be
compelled to issue a deed of sale in her favor because of violations of the agreement.
Agreement to Sell No. 5216
occupation or cultivation of the land or shall not be subject of share tenancy pursuant to the provision of PD No.
132 dated March 13, 1973, x x x."39 (Emphasis supplied)
R.A. No. 6657 or the CARL "is a social justice and pove1iy alleviation program which seeks to empower the
lives of agrarian reform beneficiaries through equitable distribution and ownership of the land based on the
principle of land to the tiller." 40

Section 10. Upon full payment of the purchase price as herein stipulated including all interest thereon and the Given all the laws in place together with the undisputed fact that Minople worked on the subject landholding for
performance by the PROMISSEE of all the conditions herein required, the Administration shall execute a Deed more than half a century, the inescapable conclusion is that l'v1inople as the actual tiller of the land 1s entitled to
of Sale conveying the property subject of this Agreement to the PROMISSEE." 37 (Underscoring supplied) the land mandated by our Constitution and R.A. No. 6657.

Even if the Court assumes that there were no violations, why did Anita or her predecessor Lucila not compel the
DAR to issue a deed of sale? Why did Anita choose to file the applications to purchase in the 1990s?
For Minople’s part, there is no denying that he had been tilling the subject land since the 1950s. According to
then DAR Secretary Ernesto D. Garilao:
WHEREFORE, the petition is DENIED, the October 19, 2005 Decision and January 10, 2006 Resolution of the
Court of Appeals, in CA-G.R. SP No. 88816, arc hereby AFFIRMED. This is without prejudice on the part of
petitioner to recover her payments from the government, if warranted.
SO ORDERED.

After a thorough evaluation of the records of the case, together with its supporting documents, this Office finds JOSE CATRAL MENDOZA
the appeal to be impressed with merit, considering the fact that Minople Macaraeg is the actual Associate Justice
possessor/cultivator of the lot in consideration as contained in the Report and Recommendation dated
November 6, 1996 of Atty. Judita C. Montemayor, Chief, Legal Division of DAR Region III and the Certification WE CONCUR:
dated April 23, 1997 issued by the BARC Chairman (Punong Barangay) of Dinalupihan Bataan.
PRESBITERO J. VELASCO, JR.
The act of Lucila Candelaria Gonzales in allowing Minople Macaraeg to perform all the farming activities in the Associate Justice
subject lot established a tenancy relationship between the former and the latter because the latter is doing the Chairperson
farm chores and is paid from the produce or harvest of the land in the amount of 20 cavans of palay every
harvest. The claim of Lucila Candelaria Gonzales that Minople Macaraeg is only a hired farm worker will not DIOSDADO M. PERALTA ROBERTO A. ABAD
hold water, considering the fact that he (Minople Macaraeg) was not hired to work on just a branch of farming, Associate Justice Associate Justice
but performed work pertaining to all the branches thereof, on the basis of sharing the harvest not on a fixed
salary wage.38 JOSE PORTUGAL PEREZ*
Associate Justice
With Minople continuously performing every aspect of farming on the subject landholding, neither Anita nor
Lucila personally cultivated the subject land.1âwphi1 While Anita continues to question the existence of a ATTESTATION
tenancy relationship, she did admit that her predecessors had hired Minople to till the land decades earlier. This
clearly violated then LTA A.O. No. 2, Series of 1956 as well as the DAR’s AO No. 3 series of 1990. This also I attest that the conclusions in the above Decision had b en reached in consultation before the case was
contravened her own undertaking in her April 7, 1996 "Application to Purchase Lot." assigned to the writer of the opinion of the Court's Division.

"2.that I vvill not 1 subdivide, sold (sic) or in any manner transfer or encumber said land without the proper PRESBITERO J. VELASCO, JR.
consent of the DAR subject further to the terms and conditions provided for under Republic Act No. 6657 and Associate Justice
other Operating laws not inconsistent thereon; 3.That I shall not employ or use tenants whatever form in the Chairperson, Third Division

CERTIFICATION

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Agrarian Law and Social Legislation
Chapter 1
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that
the conclusions in the above Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Court's Division.

MARIA LOURDES P. A. SERENO

Chief Justice
Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 163026               August 29, 2012

HEIRS OF ARCADIO CASTRO,*SR., represented by ARCADIO CASTRO, JR., Petitioners,

vs.
RENA TO LOZADA, FELIPE CRUZ, ONOFRE INONCILLO, ALFREDO FRANCISCO, LIBERATO FRANCISCO,
FELIPE DE LA CRUZ, HERNANDO HERRERA, GERARDO MIRANDA, FELIX INOVERO, ARCADIO IDAGO
and RESTITUTO DE LA CRUZ, Respondents.

DECISION

VILLARAMA, JR., J.:

Assailed in this petition for review on certiorari under Rule 45 is the Decision1 dated March 30, 2004 of the Court
of Appeals (CA) in CA-G.R. SP No. 56257 affirming the Decision 2 dated August 4, 1999 of the Office of the
President (OP) which upheld the ruling of the Department of Agrarian Reform (DAR) giving due course to the
applications to purchase of respondents as occupants/tillers of lands under the provisions of Commonwealth Act
(C.A.) No. 539.

Respondents are the occupants/tillers of a rice land situated at Upig, San Ildefonso, Bulacan, designated as Lot
No. 546, Cad 320-D with an aggregate area of 274,180 square meters, which is part of the Buenavista Estate. In
April 1977, respondents filed their respective applications to purchase Lot No. 546 with the DAR-Bulacan
Provincial Office. Since the 1940’s, respondents recognized Arcadio Castro, Sr. as their landlord who claimed to
be the original tenant of the land. However, records of the DAR Region III Office showed that the registered
claimant of Lot No. 546 is one "Arcadio Cruz." Consequently, Land Inspector Rogelio I. Estrella reported to the
Ministry of Agrarian Reform (MAR) District Officer that Lot No. 546 applied for by the respondents is disposable
and recommended the issuance of corresponding clearance in favor of the applicants. 3

The processing of respondents’ applications was stalled due to the opposition of Arcadio Castro, Sr. who
submitted photocopies of certainofficial receipts and the Affidavit executed by his sister-in-law, Jacobe** Galvez.
In the said affidavit, Jacobe Galvez attested that upon the instruction of her brother-in-law, she paid on

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Agrarian Law and Social Legislation
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September 27, 1944 the "cost and rental" of Lot No. 546 in the amount of ₱ 5,091.80. Additional payments were
supposedly made in 1961 in the amounts of ₱ 1,181.77 and ₱ 530.52. Jacobe Galvez further explained that
while the receipts were issued in her name, her payments were made for and in behalf of her brother-in-law who
actually owns the land and is the one receiving rentals or share in the harvest from the tenants. 4 Arcadio Castro,
Sr. also submitted a Certification dated March 29, 1983 issued by MAR Bulacan District Office in Baliuag,
Bulacan stating that per their records, Jacobe Galvez paid cost and rental of ₱ 5,091.80 under Official Receipt
(OR) No. 5429266 dated September 27, 1944.5 On November 25, 1982, respondents’ applications and
supporting documents were forwarded to Cesar C. Jimenez, Acting District Officer, BaliuagBulacan. 6
On April 22, 1983, Benjamin M. Yambao, Trial Attorney II of the Bureau of Agrarian Legal Assistance in Baliuag,
Bulacan issued a Report7 upholding the right of Arcadio Castro, Sr. over Lot No. 546 subject to compliance with
further requirements of the MAR.
In 1989, it appears that Arcadio Castro, Sr. has voluntarily offered to sell his properties situated in the
Buenavista Estate.8 At this time also, respondents, who began doubting the ownership of Arcadio Castro, Sr.,
stopped paying rentals.
On June 19, 1990, Municipal Agrarian Reform Officer (MARO) Jose S. Danganan forwarded to Erlinda Pearl V.
Armada, Provincial Agrarian Reform Officer (PARO) of Bulacan, the documents pertaining to the conflicting
claims over the subject landholding. In his letter MARODanganan stated –
The undersigned upon review and evaluation of the documents submitted by Mr. Castro, has noted the
following:
1. That, per certification of payment it appears that only the excess area of 31,300 square meters was paid by
Jacobe Galvez sister of deceased Arcadio Castro Sr. sometime in 1961;
2. That, the total area of lot 546 is 274,180 square meters;
3. That, the xerox copy of official receipt submitted (O.R. No. 3664086) was blard[sic] and unreadable;
4. That, the report of Atty. Benjamin Yambao dated April 22, 1983 was based only on the certification of Mr.
Oscar M. Trinidad wherein, the actual payment made by Jacobe Galvez is only ₱ 1,181.77 representing 31,300
square meters only;
5. That, no application nor any documents (Order of Award, Application to Purchase) to support the claim of Mr.
Castro was submitted;
6. That, no receipt of payment on the remaining area of lot 546 was presented/submitted.
In view of the above facts, the undersign [sic] honestly believe that the Legal Affairs Division is more in a
position to review and resolve the said conflict.9
On December 20, 1990, Atty. Yambao, as directed by PARO Armada, reported on his findings, maintaining his
earlier finding that Arcadio Castro, Sr. has already acquired a vested right over Lot 546 by paying for the same
in 1944 and 1961, the latter payment having been made for the increase in area of 31,300 square meters after
the final survey. Citing the letter of OIC Trinidad, Atty. Yambao stated that Lot 546 was listed in the name of
"Arcadio Cruz" instead of "Arcadio Castro, Sr."10
On November 14, 1990, Legal Officer II Jose R. Joven of the Legal Assistance Division of the PARO rendered a
legal opinion stating that: (1) there is no evidence or public document to show that registrant "Arcadio Cruz" and
claimant Arcadio Castro, Sr. are one and the same person, and no legal action was taken to correct the
discrepancy in name as to vest unto the claimant legal personality to be the proper party-in-interest; (2) the
recognition and giving of rentals by tenant-applicants to Arcadio Castro, Sr. and subsequently to his heirs for
several years, do not constitute estoppel; (3) granting without admitting that "Arcadio Cruz" and Arcadio Castro,
Sr. are one and the same person, the latter was more than compensated by the payments made by the tenants
who are still immersed in poverty; (4) payments made by Jacobe Galvez did not specify the lot for which these
were intended, considering that Jacobe Galvez, Nieves Castro and Arcadio Castro, Sr. were all registrants over
several lots, and also because from the payment for "excess area" made by Jacobe Galvez it cannot be
presumed that it is one for the main parcel absent any documentary evidence; and (5) in case of doubt, it is
more in keeping with justice and equity to resolve the issue in favor of the actual tenants of the land. Said office
thus recommended that respondents’ application over Lot 546 may be processed subject to guidelines provided
in Administrative Order (AO) No. 3, series of 1990.11
On May 16, 1991, DAR Regional Director Antonio M. Nuesa issued the following Order 12 :
WHEREFORE, premises considered, Order is hereby issued:
1. Declaring Lot No. 546, Cad 320-D, Case I, Buenavista Estate vacant;
2. Rejecting the claims of the heirs of Arcadio Castro, Sr., to the lot;
3. Giving due course to the applications of Renato Lozada and his co-applicants.
SO ORDERED.13
The Regional Director noted that the records do not show that efforts were exerted by Arcadio Castro, Sr. or his
heirs to rectify what they claimed was an error in the listing of Arcadio Cruz as tenant of the land. While the
tenant-applicants recognized Arcadio Castro, Sr. as their landlord, such acquiescence does not bind the DAR.
Regarding the payments made by Jacobe Galvez in her name but which she later disclaimed in favor of her
brother-in-law, the Regional Director found it not credible. Arcadio Castro, Sr.’s hiring of tenants was also found
to be in contravention of AO No. 3, series of 1990, which is applicable to all landed estates. It was further noted
that Arcadio Castro, Sr. appears in the records of the Municipal Assessor of San Rafael, Bulacanas declared
owner of five other parcels of land.
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Agrarian Law and Social Legislation
Chapter 1
The heirs of Arcadio Castro, Sr. represented by Arcadio Castro, Jr., filed a motion for reconsideration which was
treated as an appeal by the Office of the DAR Secretary.
In his Order14 dated August 12, 1996, Secretary Ernesto D. Garilao affirmed the Regional Director’s ruling.
Secretary Garilao concurred with the Regional Director’s finding that Arcadio Castro, Sr., assuming him to be
the bona fide tenant of Lot 546, had violated Land Tenure Administration (LTA) AO No. 2, series of 1956 when
he leased the subject landholding already allocated to him without prior consent of the DAR. Citing the
investigation report of Land Inspector-Designate Rogelio I. Estrella, the SinumpaangSalaysay of the tenants-
applicants and the Joint SinumpaangSalaysay of barangay kagawads Renato Inovero and LuisitoSabarriaga
confirming that it is the tenants-applicants who are in possession and actual cultivators of Lot 546, Secretary
Garilaoruled thatArcadio Castro, Sr. failed to comply with the requirement of personal cultivation under LTA AO
No. 2, series of 1956. The arguments on non-retroactivity of administrative rules and regulations, as well as
Arcadio Castro, Sr.’s alleged vested right to acquire Lot 546, were rejected by Secretary Garilao who ruled that
the tenant-applicants have the right of preference to purchase their respective portions of the said landholding.
Dissatisfied, the heirs of Arcadio Castro, Sr. appealed to the OP which dismissed their appeal. The OP declared
that the assailed ruling is in accord with the policy of giving preference to the landless under C.A. No. 539 which
is a social legislation. Considering that Arcadio Castro, Sr., as found by the DAR officials, is already the
registered owner of several other real properties, Lot 546, applied for by the tenants-tillers who are landless,
should therefore be awarded to the latter. 15
The OP likewise denied the motion for reconsideration filed by the heirs of Arcadio Castro, Sr. who then
elevated the case to the CA in a petition for review under Rule 43 of the 1997 Rules of Civil Procedure, as
amended.
By Decision dated March 30, 2004, the CA concurred with the finding of the OP and DAR that Arcadio Castro,
Sr. and his heirs failed to show that they personally cultivated the subject landholding. Neither did Arcadio
Castro, Sr. acquire a vested right over Lot 546 by payments allegedly made on his behalf by Jacobe Galvez, the
amount of which was found by DAR to be insufficient and no document or application whatsoever supports the
claim of Arcadio Castro, Sr. The CA also sustained the OP and DAR in ruling that Arcadio Castro, Sr. should be
disqualified from claiming Lot 546 as he already is the declared owner of several other properties. Finally, the
CA held that the award of Lot 546 to the tenants-applicants is consistent with the policy under the 1987
Constitution upholding the right of landless farmers and farm workers to own directly or collectively the lands
they till, and the State’s duty to undertake the just distribution of all agricultural lands, subject to such priorities
and reasonable retention limits as Congress may prescribe. 16
Before this Court, petitioners assail the CA in affirming the ruling of the OP and DAR that Arcadio Castro, Sr.
has not acquired a vested right over Lot 546, which is erroneous and illegal being based on the report of MARO
Jose S. Danganan which is incomplete and defective. Petitioners averred that the fact that MARODanganan at
the time had no record of legal opinions concerning the subject landholding was admitted by him during the
September 11, 1990 meeting. Petitioners thus contend that the DAR Secretary’s reliance on the baseless report
by the MARO violated their constitutional right to due process as laid down in the case of AngTibay v.
CIR17 declaring that the tribunal must consider the evidence presented and that the decision rendered must be
on the evidence presented at the hearing and to use authorized legal methods of securing evidence and
informing itself of facts material and relevant to the controversy. They claim that the DAR Secretary ignored vital
documentary evidence showing that Arcadio Castro, Sr. was really the listed claimant of Lot 546 and that he had
made payments for it.
Petitioners argue that contrary to the conclusions of the DAR Secretary and OP, Arcadio Castro, Sr. had the
legal and equitable title to Lot 546 since the receipt by the government of payments made by him resulted in a
perfected contract of sale between them over the said lot. Further, petitioners contend that independent of such
contract of sale, Arcadio Castro, Sr. obtained legal title over Lot 546 by virtue of acquisitive prescription from the
time he paid for it in 1944 and has since possessed it adversely, openly and publicly. In any event, petitioners
impute bad faith on the part of respondents who, after all the years of having a tenancy agreement with Arcadio
Castro, Sr. and subsequently his heirs, would later repudiate the same and question the title of the landowner.
They stress that under Section 2 (b), Rule 131 of the Rules of Court, a tenant is not permitted to deny the title of
his landlord at the time of the commencement of the relation of tenant and landlord between them.
As to the qualifications of Arcadio Castro, Sr. as the original tenant under C.A. No. 539, petitioners argue that
assuming LTA AO No. 2, series of 1956 has retroactive application, it must be presumed that official duty had
been regularly performed so that by the government’s acceptance of payments, it may be presumed that they
found him to possess all qualifications set by law for the purchase of Lot 546. Hence, it is a clear blunder on the
part of the CA to uphold the erroneous findings of the DAR Secretary that Arcadio Castro, Sr. violated Section
21 of LTA AO No. 2, series of 1956. Petitioners assert that at the time respondents applied for Lot 546 in 1977,
the said rule applies to them but not to Arcadio Castro, Sr. because the latter was no longer a "claimant" or
"applicant" but rather the legal or equitable owner of the land.
Petitioners also stress that C.A. No. 539 does not impose any restrictions on the exercise of the rights and
attributes of ownership of tenants who purchase and acquire land under Section 1 thereof. It was therefore
erroneous for the DAR Secretary to conclude that Arcadio Castro, Sr.’s act of leasing the subject landholding
allocated to him without the prior consent of the DAR is a violation of LTA AO No. 2, series of 1956, with the
effect of cancellation of the agreement to sell executed by the government in favor of the transferor or assignor,
the reversion of the lot covered thereby and the forfeiture of all payments made to the government. Such
conclusion is based on the erroneous assumption that LTA AO No. 2 is applicable to tenants who have already
purchased and acquired lands under C.A. No. 539.
From the facts established, the Court is presented with the following issues for resolution: (1) whether Arcadio
Castro, Sr. acquired a vested or preferential right over Lot 546; (2) whether LTA AO No. 2, series of 1956 was
retroactively applied in this case; and (3) whether the DAR and OP erred in giving due course to the applications
of respondents.
We deny the petition.
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Agrarian Law and Social Legislation
Chapter 1
A vested right is defined as one which is absolute, complete and unconditional, to the exercise of which no
obstacle exists, and which is immediate and perfect in itself and not dependent upon a contingency. 18 The term
"vested right" expresses the concept of present fixed interest which, in right reason and natural justice, should
be protected against arbitrary State action, or an innately just and imperative right which enlightened free
society, sensitive to inherent and irrefragable individual rights, cannot deny. To be vested, a right must have
become a title—legal or equitable—to the present or future enjoyment of property. 19
In this case, the DAR and OP rejected petitioners’ claim of a vested right anchored on the payments made in
1944 and 1961 by Jacobe Galvez allegedly for Lot 546 and in behalf of Arcadio Castro, Sr. The DAR Secretary’s
finding that petitioners failed to prove that the registered claimant of said land, "Arcadio Cruz" and Arcadio
Castro, Sr. are one and the same person is based on the fact that Arcadio Castro, Sr. and his heirs never
exerted efforts to correct the supposed error in the LTA/DAR files, and the absence of any document to show
that Arcadio Castro, Sr. filed an application to purchase Lot 546. These findings of fact are binding upon the
courts and may not now be disturbed unless it can be shown that the official concerned acted arbitrarily or with
grave abuse of discretion.20
Perusing the records, we find that the photocopies of OR Nos. 3664087 and 3664088 are unreadable, 21 the
Certification22 dated March 15, 1976 issued by Cesar C. Jimenez of Agrarian Reform Team II No. 03-11-092-A
based on said receipts indicated payment of only ₱ 1,181.77 in the name of Jacobe Galvez, the letter 23 dated
March 8, 1983 of Oscar M. Trinidad indicated payments of ₱ 1,712.29 also based on the same receipts, and the
Certification24 dated March 29, 1983 issued by Corazon P. del Rosario (Accountant I, MAR Bulacan District
Office) stated only that Jacobe Galvez paid in 1944 the amount of ₱ 5,091.80 as cost and rental under OR No.
5429266 without any reference to Lot 546 of the Buenavista Estate and without any copy of such receipt
attached to it. Were it true, indeed, as petitioners claimed, that MARODanganan simply did not have complete
records before him, petitioners could have submitted those documents to the DAR Secretary or attached them
to their petition for review before the OP. But except for their bare allegation of violation of due process with the
non consideration of documentary evidence, petitioners have not adduced competent proof that Arcadio Castro,
Sr. or his heirs had made full payment for Lot 546. As it is, petitioners failed to present any document to show
that Arcadio Castro, Sr. filed an application to purchase or have a contract to sell executed by the government in
his favor. From the MARO, to PARO and DAR Secretary, petitioners’ evidence were duly considered and
evaluated by said officials and all were one in concluding that Arcadio Castro, Sr. has not acquired any vested
right over the subject land.
A party claiming a right granted or created by law must prove his claim by competent evidence. He must rely on
the strength of his evidence and not on the weakness of that of his opponent. 25
The petitioners having failed to prove their right to acquire Lot 546 under C.A. No. 539, they cannot compel the
DAR to convey the lot to them. Hence, no reversible error was committed by the CA in sustaining the DAR
Secretary’s findings and conclusions as affirmed by the OP.
We likewise find no arbitrariness in the CA’s affirmance of the DAR and OP’s ruling that the requirement of
personal cultivation under LTA AO No. 2, series of 1956 applies to Arcadio Castro, Sr. Indeed, even assuming
that Arcadio Castro, Sr. was actually the registered claimant on Lot 546, his act of entering into tenancy
contracts with respondents prior to the award of the land to him without the prior consent of LTA/DAR violated
the said AO.
Contrary to petitioners’ submission, there was no retroactive application as regards to personal cultivation which
requirement is embodied in the law itself. Section 1 of C.A. No. 539 explicitly provides that:
SECTION 1. The President of the Philippines is authorized to acquire private lands or any interest therein,
through purchase or expropriation, and to subdivide the same into home lots or small farms for resale at
reasonable prices and under such conditions as he may fix to their bona fide tenants or occupants or to private
individuals who will work the lands themselves and who are qualified to acquire and own lands in the
Philippines. (Emphasis supplied.)
Thus, LTA AO No. 2, series of 1956 merely reiterated or amplified the foregoing primary condition in the award
of lots comprising private landed estates acquired by the Government for resale to qualified beneficiaries. The
pertinent provisions of said AO are herein reproduced:
SECTION 14. Persons Qualified to Purchase: Number of Lots Granted.  — Subject to the provisions of Section
16 hereof, any private individual who is qualified to acquire and own lands in the Philippines and who will
personally cultivate and/or occupy the lot or lots which may be sold to him, may be allowed to purchase not
more than one (1) home lot and/or farm lot except that in case of farm lots with areas less than six (6) hectares,
more than one (1) lot may be purchased provided, however, that the total area of the lots which may be sold to
one person shall not exceed six (6) hectares.
x xxx
SECTION 21. Transfer of Encumbrance of Rights. — A person having a right of preference to purchase a
subdivision lot shall not be allowed to transfer, assign, alienate or encumber said right and any transfer,
assignment, alienation or encumbrance made in violation of this prohibition shall be null and void. A bona-fide
tenant, however, may transfer, assign, alienate or encumber his leasehold rights over a subdivision lot to
persons who will personally cultivate and/or occupy said lot and are qualified to acquired and own lands in the
Philippines with the prior written consent of the Chairman of the Land Tenure Administration;xxx
xxxx Any transfer, assignment, alienation or encumbrance made without the approval of the Chairman of the
Land Tenure Administration, as herein provided, is null and void and shall be sufficient ground for the Chairman
of the Land Tenure Administration to cancel the agreement to sell executed in favor of the transferor or assignor,
and to order the reversion of the lot covered thereby and the forfeiture of all payments made on account thereof
to the government. Said payments shall be considered as rentals for the occupation of said lot by the transferor
and as payment for administration expenses.
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Agrarian Law and Social Legislation
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xxxx
SECTION 24. Conditions in Agreements to Sell, Deeds of Sale and Torrens Title.  — It shall be a condition inall
agreements to sell and deeds of sale covering lots acquired under these rules and regulations that said lots shall
be personally occupied and/or cultivated by the purchasers thereof.x xx A purchaser of a farm lot who shall fail
to start cultivation of said lot within six (6) months after the execution of his agreements to sell or deed of sale
therefor shall be deemed not to have complied with said condition.
xxxx
SECTION 25. Violation of Any of the Conditions in the Preceding Section; Its Effect.  — The violation of any of
the conditions set forth in the preceding section shall be sufficient ground for the Chairman of the Land Tenure
Administration to cancel an agreement to sell or deed of sale, and to order the reversion of the lot covered
thereby and the forfeiture of all payments made on account thereof to the government. In case, however, a
transfer certificate of title has already been issued, the violation of any of said conditions shall be sufficient
ground for the Chairman of the Land Tenure Administration to initiate and prosecute the proper action in court
for the cancellation of said title and for the reversion of the lot involved to the government. (Emphases supplied.)
On the other hand, DAR AO No. 03-90 on the "Revised Rules and Procedures Governing Distribution and/or
Titling of Lots in Landed Estates Administered by DAR" directs the MARO to review and evaluate the list of
allocatees/awardees and conduct lot verification to determine whether they are still occupying and tilling the lots
subject of Orders of Awards (OAs)/Certificate of Land Transfer (CLT). 26 An awardee or allocatee who is not the
cultivator/occupant, such as when he employs tenants prior to full payment of the cost of the lot, the MARO shall
cancel the OA/CLT and issue a Certificate of Land Ownership Award (CLOA) to qualified actual
cultivator/occupant. DAR AO No. 03-90 also laid down the following qualifications of a beneficiary in these
landed estates:
V. Qualifications of a beneficiary are as follows:
1. Landless;
2. Filipino citizen;
3. Actual occupant/tiller who is at least 15 years of age or head of the family at the time of filing of application;
and
4. Has the willingness, ability and aptitude to cultivate and make the land productive. (Emphasis supplied.)
Since Arcadio Castro, Sr. and his heirs (petitioners) were not the actual occupants or tillers of Lot 546 and
merely employed tenants (respondents) to work on said land, the CA did not err in sustaining the ruling of the
DAR and OP. Thus, even assuming Arcadio Castro, Sr. to be the legitimate claimant of Lot 546, petitioners have
no right of preference in the acquisition of said land as they failed to comply with the requirement of personal
cultivation. As correctly observed by the OP, from the admission by petitioners that they leased the lands to the
respondents in 1955, petitioners continued the lease even after LTA AO No. 2 already took effect. The OP
likewise found no impairment of rights in applying retroactively the implementing rules because these are merely
enforcing C.A. No. 539 which was already in effect in 1940. 1âwphi1
It must also be mentioned that this case does not fall under the exceptional circumstances when the hiring of
laborers and employment of tenants will not result in the cancellation of agreements to sell or orders of award
under C.A. No. 539. Assuming Arcadio Castro, Sr. was indeed the original listed claimant/tenant of the land and
the real "Arcadio Cruz," evidence on record clearly established that Arcadio Castro, Sr. had never been an
awardee or allocatee. In fact, investigation by DAR officials revealed that there was not even any application to
purchase filed by Arcadio Castro, Sr. while the supposed official receipts issued in 1944 to Jacobe Galvez did
not indicate the payments as intended for Lot 546 and which payments are insufficient for the entire area of said
land.
There being no agreement to sell or order of award yet issued over Lot 546, DAR officials declared them
available for disposition to qualified beneficiaries. Since Arcadio Castro, Sr. was not an awardee or allocatee,
this case clearly falls under the general rule of personal cultivation as requirement to qualify for award of lots
under C.A. No. 539. As we held in Vitalista v. Perez27 :
In this case, the general rule requires personal cultivation in accordance with LTA Administrative Order No. 2
and DAR Administrative Order No. 3, Series of 1990. However, Land Authority Circular No. 1, Series of 1971
clearly makes three exceptions on the personal cultivation requirement in cases where land is acquired under
C.A. No. 539: (1) when the awardee or promisee dies; or (2) when the awardee or promisee is physically
incapacitated; or (3) when the land is fully paid for but the government fails to issue the corresponding deed of
sale. By specifying these excepted cases and limiting them to three, the said circular recognizes that outside
these exceptions, any deed of sale or agreement to sell involving lands acquired under C.A. No. 539 should be
cancelled in cases where the awardee fails to comply with the requirement of personal cultivation.(Emphasis
and underscoring supplied.)
Finally, the Court holds that no reversible error was committed by the CA when it ruled that the order of DAR
Regional Director giving due course to the application of respondents is consistent with the agrarian reform
policy under the 1987 Constitution. Whereas C.A. No. 539 enacted in 1940 authorized the Government to
acquire private lands and to subdivide the same into home lots or small farms for resale to bona fide tenants,
occupants or private individuals who will work the lands themselves, the social mandate under the 1987
Constitution is even more encompassing as it commands "the Congress to give the highest priority to the
enactment of measures that protect and enhance the right of all the people to human dignity, reduce social,
economic, and political inequalities, xxx".28
To achieve such goal, "the State shall, by law, undertake an agrarian reform program founded on the right of
farmers and regular farm workers, who are landless, to own directly and collectively the land they till or, in the
case of other farm workers, to receive a just share of the fruits thereof." A just distribution of all agricultural lands
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Agrarian Law and Social Legislation
Chapter 1
was undertaken by the State through Republic Act No. 6657, otherwise known as the Comprehensive Agrarian MARIA LOURDES P. A. SERENO
Reform Law (CARL), which was passed by Congress in 1988. It can thus be said that the 1987 Constitution has Chief Justice
"a much more expanded treatment of the subject of land reform than was contained in past Constitutions." 29 Chairperson

Moreover, C.A. No. 539 being a social legislation, this Court has previously declared that"in the construction of TERESITA J. LEONARDO-DE CASTRO LUCAS P. BERSAMIN
laws that find its origin in the social justice mandate of the Constitution," the constant policy is " to assure that its Associate Justice Associate Justice
beneficient effects be enjoyed by thosewho have less in life." 30 And in the words of former Chief Justice Ricardo
M. Paras, Jr., "C.A. No. 539 was conceived to solve a social problem, not merely as a direct or indirect means of BIENVENIDO L. REYES
allowing accumulation of land holdings."31 In this sense, the law discourages absentee "tenants" or lessees. So it Associate Justice
is in this case, the DAR found it more in keeping with the policy of the law to give preference to respondents who
are landless tenants (or sub-lessees) of Arcadio Castro, Sr. and later his heirs, and actual tillers of Lot 546 in CERTIFICATION
Buenavista Estate, over Arcadio Castro, Sr. who may have been the original "tenant" but an absentee one and
who has other parcels of land declared in his name. Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.
That the respondents are actual tillers and qualified beneficiaries under C.A. No. 539 and its implementing rules
-- to the extent of the portions of Lot 546 they respectively occupy and cultivate for decades already -- who MARIA LOURDES P. A. SERENO
should be given preference in the distribution of said land, is a factual question beyond the scope of this petition. Chief Justice
The rule is that in a petition for review, only questions of law may be raised for the reason that already -- who
should be given preference in the distribution of said land, is a factual question beyond the scope of this petition.
The rule is that in a petition for review, only questions of law may be raised for the reason that the Supreme
Court is not a trier of facts and generally does not weigh anew the evidence already passed upon by the Court
of Appeals. 32

Finally, it is well settled that factual findings of administrative agencies are generally accorded respect and even
finality by this Court, if such findings are supported by, substantial evidence. 33 The factual findings of the DAR
Secretary, who, by reason of his official position, has acquired expertise in specific matters within his jurisdiction,
deserve full respect and, without justifiable reason, ought not to be altered, modified, or reversed. 34 In this case,
petitioners utterly failed to show justifiable reason to warrant the reversal of the decision of the DAR Secretary,
as affirmed by the OP and the CA.

WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated March 30, 2004 of the Court
of Appeals in CA-G.R. SP No. 56257 is AFFIRMED.

No pronouncement as to costs.

SO ORDERED.

MARTIN S. VILLARAMA, JR.

Associate Justice

WE CONCUR:

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SECOND DIVISION

G.R. No. 196028, April 18, 2016

SAMAHAN NG MAGSASAKA AT MANGINGISDA NG SITIO NASWE, INC. [SAMMANA], REPRESENTED BY

ROGELIO A. COMMENDADOR, PRESIDENT, Petitioner, v. TOMAS TAN, Respondent.

DECISION

BRION, J.:

We resolve the present petition for review on certiorari1 assailing the July 27, 20l0 decision2 and February 10,
2011 resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 100926. The CA dismissed the petitioner's
appeal from the decision of the Office of the President (OP), which affirmed the lifting of the Notice of Coverage
from the Comprehensive Agrarian Reform Program (CARP) issued over land sequestered by the Presidential
Commission on Good Governance (PCGG).

FACTUAL BACKGROUND

The petitioner Samahan ng Magsasaka at Mangingisda ng Sitio Naswe, Inc. (petitioner) is an association of

farmers and fishermen residing at Sitio Talaga, Barangay Ipag, Mariveles, Bataan. 4 The petitioner claimed that
its members "have resided in the area for several years doing farming activities" from which they "derive their
income for their daily sustenance."5

On April 4, 1995, the PCGG published in the newspaper an Invitation to Bid for the sale of its assets, which
included 34 hectares of a 129.4227-hectare land in Barangay Ipag, Mariveles, Bataan, previously owned by
Anchor Estate Corporation.6 The PCGG sequestered the properties of Anchor Estate Corporation after it was
identified to be a dummy corporation of the late President Ferdinand E. Marcos.

Respondent Tomas Tan emerged as the highest bidder in the bidding of the 34-hectare property. 7 The PCGG
Committee on Privatization approved the sale and a Notice of Award was issued to the respondent on May 2,
2000. The OP, through former Executive Secretary Ronaldo B. Zamora, also approved the sale of the property
to the respondent on July 16, 2000.8 On August 1, 2000, the" PCGG, representing the Republic of the
Philippines, executed a Deed of Sale in the respondent's favor. 9

On July 25, 2000, then Chairman of the PCGG Committee on Privatization Jorge V. Sarmiento wrote the
Department of Agrarian Reform (DAR) requesting to stop the acquisition of the property under the CARP. 10 It
appeared that, on June 16, 1994, a Notice of Coverage had been issued over the 129.4227-hectare land in
Barangay Ipag, Mariveles, Bataan,11 and that the 34 hectares sold by the PCGG to the respondent had been
already identified for CARP coverage and targeted for acquisition in the year 2000.12

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13
In an Order  dated July 26, 2000, DAR Secretary Horacio R. Morales, Jr. granted Chairman Sarmiento's
request and lifted the Notice of Coverage on the 129.4227-hectare property. Secretary Morales also ordered to
stop the acquisition proceedings on the property.14
On October 29, 2004,15 the petitioner filed with the DAR a Petition to Revoke Secretary Morales's July 26, 2000
Order.16 The DAR denied both the petitioner's petition in an Order dated February 3, 2006, and its subsequent
motion for reconsideration in an order dated September 26, 2006. 17 The DAR based its genial oh the ground that
the subject property, being government-owned, does not fall as 'private agricultural land' subject to the CARP.
The petitioner then appealed to the OP.
In a decision dated April 10, 2007, the OP dismissed the petitioner's appeal for lack of merit and affirmed the
DAR Secretary's Order lifting the subject Notice of Coverage. 18 The petitioner moved to reconsider but the OP
denied its motion in a resolution dated August 6, 2007. 19 The petitioner then filed a Petition for Review under
Rule 4320 with the CA.
In a decision21 dated July 27, 2010, the CA held that, while the lifting of the subject Notice of Coverage was
irregular and erroneous, the petitioner's petition for review must be dismissed on the ground that the petitioner
was not a real party in interest to the case. It held:
We, nonetheless,, find that the Petitioner is not a real party in interest in the case at bench. A real party in
interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the
avails of the suit. All that has been alleged in the records was that the members of the Petitioner are in actual
possession of the Subject Property and that farming activities were conducted thereon. Nothing, however, is
stated as to them being beneficiaries, or at least potential beneficiaries, under CARP. This Court cannot be
made to guess how a judgment setting aside the Assailed Decision and Assailed Resolution would positively
affect the Petitioner simply because it is composed of farmers and fishermen x x x. 22 (Citations omitted)
The petitioner moved to reconsider the ruling but the CA denied its motion for reconsideration; hence, the
petitioner filed the present petition for review on certiorari before this Court.
OUR RULING
We DENY the present petition for review on certiorari as we find no reversible error committed by the CA in
issuing its assailed decision and resolution.A. The petitioner is not a realparty-in-interest to
question the July 26, 2000 DAR Order; the
Constitutional right to form associations does
not make the petitioner a realparty-in-interest
in this case.Unless otherwise authorized by law or the Rules of Court, every action must be prosecuted and
defended in the name of the real party-in-interest. 23 The Rules of Court defines a real party in interest as "the
party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the
suit."24 To be properly considered as such, the party must have a real, actual, material, or substantial interest in
the subject matter of the action,25 NOT a mere expectancy or a future, contingent, subordinate, or consequential
interest.26
Republic Act (RA) No. 665727 in relation with Section 3 of the Rules of Court expressly allows farmers,
farmworkers, tillers, cultivators, etc., organizations and associations, 'through their leaders, to represent their
members in any proceedings before the DAR. It must be pointed out, however, that the law should be
harmonized with the interest requirement in bringing actions and suits. " In other words, while organizations and
associations may represent their members before the DAR, these members must have such real, actual;
material, or substantial interest in the subject matter of the action, NOT merely' an expectancy, or a future
contingent interest.
Here, the petitioner alleged that it is duly registered with the SEC acting on behalf of its farmers, and fishermen
members which allegation gave it the right to represent its members. However, it failed to allege and prove that
these members are identified and registered qualified beneficiaries of the subject land , or have already been
actually awarded portions of it, or have been issued Certificates of Land Ownership Award (CLOAs) for which
they could validly claim the status of the land's grantees having a  real, actual, material interest  to question the
July 26, 2000 Order of the DAR Secretary lifting the Notice of Coverage. Not being identified and duly registered
qualified beneficiaries, these members' interest over the subject land were at most an expectancy that,
unfortunately for them, did not ripen to actual award and ownership.
In Fortich v. Corona,28 the Court did not consider as real parties in interest the movants in the case who were
merely recommendee farmer-beneficiaries. The movants in Fortich, who claimed to be farmer-beneficiaries of
the disputed agricultural land in San Vicente, Sumilao, Bukidnon, attached to their motion' for intervention a
"Master List of Farmer-Beneficiaries" to show that they are real parties in interest in the case. The document
merely showed that the movants were those "Found Qualified and Recommended for Approval" as farmer-
beneficiaries; thus, the Court held that they were not real parties in interest as their interest over the land in
question was a mere expectancy.
The Court was later confronted with the same issue in Sumalo Homeowners Association of Hermosa, Bataan v.
Litton29 and Samahang Magsasaka ng 53 Hektarya v. Mosquera.30
In Sumalo Homeowners Association of Hermosa, Bataan, the Court rejected the petitioners' claim as real parties
in interest in the case because, aside from their self-serving 'assertions, the records were devoid of proof that
they have been identified and registered as qualified CARP beneficiaries.
Subsequently, in Samahang Magsasaka ng 53 Hektarya, the Court ruled that being 'mere qualified beneficiaries
of the CARP' was not enough to be considered a party in interest The Court, applying Fortich, held that "farmer-
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Agrarian Law and Social Legislation
Chapter 1
beneficiaries, who are not approved awardees of CARP, are not real parties in interest;" 31 that the fact that there
was "x x x certification that CLOAs were already generated in their names, but were not issued because of the
present dispute, does not vest any right to the farmers since the fact remains that they have not yet been
approved as awardees, actually awarded lands, or granted CLOAs x x x." 32
As earlier pointed out, the petitioner in this case merely alleged that its members, composed of farmers and
fishermen, were long-time residents of Sitio Talaga, Barangay Ipag, Mariveles, Bataan, and were conducting
farming activities in the area. No evidence was presented to show that the petitioner's members were approved
as awardees, or were granted CLOAs over their respective portions of the disputed property. The petitioner
even admits that the case folders of its members were not processed because of the DAR Secretary's July 26,
2000 Order.33
Thus, notwithstanding its representative capacity, the petitioner and its members are not real parties-in-interest
to question the DAR's July 26, 2000 Order.
In Department of Agrarian Reform v. Department of Education Culture and Sports,  the BARC certified the
farmers-individuals who claimed to be permanent and regular farmworkers of the disputed land as potential
CARP beneficiaries. Also, the Notice of Coverage issued by the MARO over the disputed land was approved by
the DAR Regional Director, and finally by the DAR Secretary. On the DECS's appeal, the CA set aside the DAR
Secretary's decision approving the Notice of Coverage.
The Court reversed the CA decision, declaring (on the issue of whether the farmers are qualified beneficiaries of
CARP) that the identification of actual and potential beneficiaries under CARP is vested in the DAR Secretary
pursuant to Section 15 of RA No. 6657. "Since the identification and selection of CARP beneficiaries are matters
involving strictly the administrative implementation of the CARP, 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."34
In contrast with the petitioner's case, its members were not identified and registered by the BARC as the subject
land's beneficiaries; and the Notice of Coverage was in fact lifted by the DAR Secretary via the July 26, 2000
Order which Order the OP subsequently affirmed.
As the identification and selection of CARP beneficiaries are matters involving strictly the administrative
implementation of the CARP which the Court generally respects, the CA's finding that the subject land is
covered by RA No. 6657 (which is not even reflected in its decision's fallo) cannot be validly relied upon by the
petitioner. At most, it is a non-binding obiter dictum.
DAR Administrative Order No. 9, series of 1994,35 the rules governing the hearing of protests involving the
coverage of lands under RA No. 6657 at the time the PCGG Chairman filed the letter request with the DAR
Secretary, did not provide any minimum period of time within which the protest or, in this case,;the PCGG letter-
request must be decided. As A.O. No. 9, series of 1994 provided, the MARO or PARO shall, once the protest is
filed, "comment oh said protest and submit the same to the Regional Director who shall rule on the same." 36
In short, the DAR's lifting of the Notice of Coverage issued by the MARO over the subject land one day after the
PCGG letter-request was filed was not inconsistent with then existing rules and was, therefore, not irregular.
The constitutional considerations:
provisions governing agrarian
reform program do not entail
automatic grant of lands to
every farmer and farmworker.
Social justice in the land reform program also applies to landowners, not merely to farmers and farmworkers.
This is precisely why the law - RA No. 6657 - and the applicable rules provide for the procedure for determining
the proper beneficiaries and grantees or awardees of the lands covered or to be covered under the CARP.
These procedures ensure that; only the qualified, identified, and registered farmers and/or farmworkers-
beneficiaries acquire the covered lands which they themselves actually till (subject to the landowners retention
rights as protected by the law). Conversely, these procedures likewise ensure that landowners do not lose their
lands to usurpers and other illegal settlers who wish to take advantage of the agrarian reform program to acquire
lands to which they are not entitled.
In this light, for a particular land and its farmers, farmworkers, tillers, etc. to be covered under the CARP, two
requisites must concur: first, the land should be covered by the corresponding Notice of
Coverage;37 and second, the beneficiaries must be qualified and registered by the DAR, in coordination with the
Barangay Agrarian Reform Committee (BARC); copy of the BARC list or registry must be posted 38 in accordance
with the guidelines established by the Presidential Agrarian Reform Council (PARC). 39
In Sumalo Homeowners Association of Hermosa, Bataan v. Litton, et al .,40 the Court pointed out that the "CARL
is specific in its requirements for registering qualified beneficiaries." Those who have not been identified and
registered as qualified beneficiaries are not real parties-in-interest.
Thus, Section 15 of the CARL explicitly provides:
SEC. 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 farm workers who
are qualified to be 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) Location and area of the land they work;
c) Crops planted; and
d) Their share in the harvest or amount of rental paid or wages received.
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Chapter 1
Republic of the Philippines
A copy of the registry or list of all potential CARP beneficiaries in the barangay shall be posted in the barangay SUPREME COURT
hall, school or other public buildings in the barangay where it shall be open to inspection by the public at all Manila
reasonable hours.
SECOND DIVISION

In other words, a claimant may fall under one of the categories of qualified beneficiaries as enumerated under
Section 22 of RA No. 6657, but he or she does not automatically become a grantee of the covered land. RA No.
6657 specifically requires that not only must he or she be a qualified beneficiary, he or she must, above
everything else, be identified and registered as such in accordance with the procedures and guidelines laid out
in the law and applicable rules.
In these lights, the views of Associate Justice Marvic M.V.F. Leonen ( Justice Leonen) that the social justice
principles of the Constitution guarantees the petitioner automatic standing to question the DAR's July 26, 2000
Order is misplaced. So also, Justice Leonen cannot rely on Department of Agrarian Reform v. Department of
Education Culture and Sports  that the petitioner is a real party-in-interest because the land has already been
subjected to the coverage of the CARP. To emphasize and reiterate, the land must be covered by the
corresponding Notice of Coverage and the beneficiaries must be both qualified and registered by the DAR for
the subject land and the petitioner's farmers and fishermen members to be covered by the CARP. There is thus
nothing irregular in the procedure undertaken by the DAR Secretary in the lifting of the Notice of Coverage a day
after the request was filed by the PCGG Chairman.
The July 26, 2000 DAR Order has already
attained finality is no longer reviewable
by this Court.
Even assuming that the petitioner is a real party-in-interest, which we reiterate it is not, the present petition for
review on certiorari still fails because the July 26, 2000 Order of the DAR, which the petitioner ultimately seeks
this Court to review, has already attained finality.
The petitioner alleged that they filed with the DAR their petition to revoke the lifting of the Notice of Coverage on
the subject 129.4227-hectare property only on October 29, 2004, or more than four (4) years after the Order was
issued by Secretary Morales on July 26, 2000. Section 15 of Executive Order (E.O.) No. 292,41 the applicable
general law at the time the assailed order was issued, provides that:
SECTION 15. Finality of Order.
G.R. No. 184982               August 20, 2014
LAND BANK OF THE PHILIPPINES, Petitioner,
vs.
JOSE T. LAJOM, represented by PORFIRIO RODRIGUEZ, FLORENCIA LAJOM GARCIA-DIAZ, FRANCISCO
LAJOM GARCIA, JR., FERNANDO LAJOM RODRIGUEZ, TOMAS ATAYDE, AUGUSTO MIRANDA,
JOSEFINA ATAYDE FRANCISCO, RAMON L. ATAYDE, and BLESILDA ATAYDE RIOS, Respondents.
x-----------------------x
G.R. No. 185048
JOSE T. LAJOM, represented by PORFIRIO RODRIGUEZ, FLORENCIA LAJOM GARCIA-DIAZ, FRANCISCO
LAJOM GARCIA, JR., FERNANDO LAJOM RODRIGUEZ, TOMAS ATAYDE, AUGUSTO MIRANDA,
JOSEFINA ATAYDE FRANCISCO, RAMON L. ATAYDE, and BLESILDA ATAYDE RIOS, Petitioners,
vs.
LAND BANK OF THE PHILIPPINES, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in these consolidated1 petitions for review on certiorari2 are the Decision3 dated February 26, 2008 and
the Resolution4 dated October 17, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 89545 which affirmed
with modification the Decision5 dated March 11, 2004 and the Order6 dated April 15, 2005 of the Regional Trial
Court of Cabanatuan City, Branch 23 (RTC) in SP. Civil Case No. 1483-AF, deleting the award of interest at the
rate of 6% per annum (p.a.) and imposing interest by way of damages, at the rate of 12% p.a. on the just
compensation for the land in controversy at ₱3,858,912.00, from March 11, 2004 until fully paid.
The Facts

Jose T. Lajom (Lajom)7 and his mother Vicenta Vda. De Lajom (Vda. De Lajom) 8 were the registered owners of
several parcels of land with an aggregate area of 27 hectares (ha.), more or less, located at Alua, San Isidro,
Nueva Ecija and covered by Transfer Certificate of Title (TCT) No. NT-70785 9 issued by the Registry of Deeds
ofNueva Ecija (subject land).

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Sometime in 1991, a 24-ha., more or less, portion of the subject land (subject portion) was placed under the
government's Operation Land Transfer Program pursuant to Presidential Decree No.· (PD) 27, 10 otherwise
known as the "Tenants Emancipation Decree," as amended. Accordingly, the Department of Agrarian Reform
(DAR), through the Land Bank of the Philippines (LBP), offered to pay Lajom the following amounts as just
compensation for the following constitutive areas of the subject portion: (a) 19,434.00 for 11.3060 has.; (b)
17,505.65 for 2.4173 has.; and (c) 80,733.45 for 10.3949 has. (DAR valuation). 11 Records show, however, that
despite non-payment of the offered just compensation, DAR granted twelve (12) Emancipation
Patents12 between 1994 and 1998 in favor of the following farmer-beneficiaries: Vicente Dela Cruz, Donato
Magno,13 Eutiquio Gablao,14 Ricardo Bulos, Proceso Julian, Ceferino Dela Cruz, Rufino Gripal, Simplicio
Pataleta,15 Jovita Vda. De Bondoc, and Julian Pataleta16 (farmer-beneficiaries).17
18
Lajom rejected the DAR valuation and, instead, filed an amended Petition  for determination of just
compensation and cancellation of land transfers against the DAR, the LBP, and the said farmer-beneficiaries,
docketed as SP. Civil Case No. 1483-AF.19 He alleged, inter alia, that in computing the amount of just
compensation, the DAR erroneously applied the provisions of PD 27 and Executive Order No. (EO) 228, Series
of 1997, that have been repealed by Section 17 of Republic Act No. (RA) 6657, 20 otherwise known as the
"Comprehensive Agrarian Reform Law of 1988," which took effect on June 15, 1988. Thus, he asserted that the
value of the subject portion should be computed based on the provisions of RA 6657, and not of PD 27 and/or
EO 228. He likewise claimed that the Barrio Committee on Land Production (BCLP) resolution – which fixed the
average gross production (AGP) per ha. per year at 120 cavans of palay, and which the DAR used in arriving at
its valuation – was falsified and therefore cannot validly serve as basis for determining the value of the land. In
sum, Lajom stressed that the DAR valuation was arrived at without due process, highly prejudicial and inimical
to his and his heirs’ property rights.21
For its part, the LBP agreed with the DAR valuation and insisted that PD 27 and EO 228, on which the DAR
valuation was based, were never abrogated by the passage of RA 6657,contrary to Lajom’s stance. 22
The RTC Ruling
In a Decision23 dated March 11, 2004, the RTC rejected the DAR valuation and, using the formula Land Value =
(AGP x 2.5 Hectares x Government Support Price [GSP] x Area) under PD 27 and EO 228, fixed the just
compensation for the subject portion at the total amount of ₱3,858,912.00, with legal interest at the rate of 6%
p.a. from 1991 until fully paid.24
The RTC set the AGP at 160 cavans of palayper ha. per year, taking judicial notice of the fact that the normal
production of 120 cavans thereof per ha. per year has been increased with the "advent of new modern farm
technology" coupled with the utilization of high-breed variety of palay, good weather, and continuous supply of
irrigated water.25 With respect to the GSP, the RTC pegged the same at ₱400.00, per certification from the
National Food Authority fixing the GSP at the same amount as of 1991, when the subject portion was actually
expropriated.26 Using the above formula, therefore, the RTC computedthe just compensation as follows: AGP
(160) x 2.5 x GSP (₱400.00) x Area (24.1182 has.) = ₱3,858,912.00.27
Dissatisfied, the LBP moved for reconsideration but was, however, denied in an Order 28 dated April 15, 2004,
prompting it to elevate the matter before the CA via a petition for review, docketedas CA-G.R. SP No. 89545.
The CA Ruling
In a Decision29 dated February 26, 2008, the CA affirmed with modification the RTC Decision, deleting the award
of 6% interest p.a. and, in lieu thereof, ordered LBP to pay Lajom, through his representatives and/or heirs,
interest by way of damages at the rate of 12% p.a. on the just compensation award of ₱3,858,912.00 from
March 11, 2004 until fully paid.30
The CA found no error on the part of the RTC in considering 1991 as the time of the subject portion’s actual
taking, instead of October 21, 1972 when PD 27 took effect, and in consequently using the higher GSP value of
₱400.00 prevailing in 1991 instead of ₱35.00, contrary to the LBP’s claim.31 The CA found it inequitable to
determine just compensation based on the guidelines provided by PD 27 and EO 228 considering that the actual
taking of the subject property took place in 1991. Hence, just compensation, being the "full and fair equivalent of
the property taken from its owner by the expropriator, the equivalent being real, substantial, full and
ample,"32 should be determined in accordance with RA 6657, not with PD 27 and EO 228. 33
However, the CA deleted the award of interest at the rate of 6% p.a. imposed on the amount of just
compensation in accordance with DAR Administrative Order No. 13, Series of 1994, 34 because the RTC had
already used the higher GSP value of 400.00 in1991. Nonetheless, the CA deemed it necessary to impose legal
interest pegged at the rate of 12% p.a. to serve as damages for the delay incurred in the payment of just
compensation to the landowner.35 Lajom’s representative, Porfirio Rodriguez (Rodriguez), who had substituted
him in these proceedings, moved for a partial reconsideration of the CA Decision, while the LBP and the rest of
Lajom’s heirs filed separate motions for reconsideration, all of which the CA denied in a Resolution 36 dated
October 17, 2008, hence, these consolidated petitions.
The Issues Before the Court
In its petition,37 the LBP contends that the CA committed reversible error in: (a) retroactively applying the
provisions of RA 6657 to land acquired under PD 27 and EO 228; (b) reckoning the period to determine just
compensation on the date of actual payment instead of the date of taking; and (c) imposing interest at the rate of
12% p.a. on the just compensation award in the nature ofdamages from March 11, 2004 until full payment.
On the other hand, Lajom, through his representatives, raises in his Petition 38 the sole question of whether or not
the CA erred in deleting the award of 6% interest p.a. on the justcompensation award from the time of taking
until full payment.
The Court’s Ruling
The petitions are meritorious.
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Agrarian Law and Social Legislation
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Case law instructs that when the agrarian reform process under PD 27 remains incomplete and is overtaken by
RA 6657, such aswhen the just compensation due the landowner has yet to be settled, as in this case, such just
compensation should be determined and the process concluded under RA 6657, with PD 27 and EO 228
applying only suppletorily.39 Hence, where RA 6657 is sufficient, PD27 and EO 228 are superseded. 40
Records show that even before Lajom filed a petition for the judicial determination of just compensation in May
1993, RA 6657 had already taken effect on June 15, 1988. Similarly, the emancipation patents had been issued
in favor of the farmer-beneficiaries prior to the filing of the said petition, and both the taking and the valuation of
the subject portion occurred after the passage of RA 6657. Quite evidently, the matters pertaining to the correct
just compensation award for the subject portion were still in contention at the time RA 6657 took effect; thus, as
correctly ruled by the CA, its provisions should have been applied, with PD 27 and EO 228 applying only
suppletorily.
As to the proper reckoning point, it is fundamental that just compensation should be determined atthe time of the
property’s taking.41 Taking may be deemed to occur, for instance, at the time emancipation patents are issued
by the government. As enunciated in LBP v. Heirs of Angel T. Domingo: 42
The date of taking of the subject land for purposes of computing just compensation should be reckoned from the
issuance dates of the emancipation patents. An emancipation patent constitutes the conclusive authority for the
issuance of a TransferCertificate of Title in the name of the grantee. It is from the issuance of an emancipation
patent that the grantee can acquirethe vested right of ownership in the landholding, subject to the payment of
justcompensation to the landowner.43 (Emphasis supplied)
Since the emancipation patents in this case had been issued between the years 1994 and 1998, the just
compensation for the subject portion should then be reckoned therefrom, being considered the "time of taking"
or the time when the landowner was deprived of the use and benefit of his property. 44 On this score, it must be
emphasized that while the LBP is charged with the initial responsibility of determining the value of lands placed
under the land reform and, accordingly, the just compensation therefor, its valuation is considered only as an
initial determination and, thus, not conclusive. Verily, it is well-settled that it is the RTC, sitting as a Special
Agrarian Court, which should make the final determination of just compensation in the exerciseof its judicial
function.45 In this respect, the RTC is required to consider the factors enumerated in Section 17 of RA 6657, as
amended, viz.:
SEC. 17. Determination of Just Compensation. — In determining just compensation, the cost of acquisition of
the land, the current value of like properties, its nature, actual use and income, the sworn valuation by the
owner, the tax declarations, and the assessment made by government assessors shall be considered. The
social and economic benefits contributed by the farmers and the farmworkers and by the Government to the
property 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.
After a punctilious review of the records, however, the Court finds that none of the aforementioned factors had
been considered by the RTC in determining the just compensation for the subject portion. Thus, the Court must
reject the valuation pronounced inthe RTC Decision, as affirmed by the CA, and consequently direct the remand
of the case to the trial court in order to determine the proper amountof just compensation anew in accordance
with the following guidelines:
First. Just compensation must be valuedat the time of the taking, or the "time when the landowner was deprived
of the use and benefit of his property"46 which, in this case, is reckoned from the date of the issuance of the
emancipation patents.47 Hence, the valuation of the subject portion must be based on evidence showing the
valuesprevalent on such time of taking for like agricultural lands. 48
Second.The evidence must conform to Section 17 of RA 6657, as amended, priorto its amendment by RA
9700.49 While RA 9700 took effect on July 1, 2009, which amended furthercertain provisions of RA 6657, as
amended, among them Section 17, declaring "[t]hat all previously acquired lands wherein valuation is subject to
challenge by landowners shall be completed and finally resolved pursuant to Section 17 of [RA 6657], as
amended,"50 the law should not be applied retroactively to pending cases. Considering that the present
consolidated petitions had been filed before the effectivity of RA 9700, or on December 8, 2008 for G.R. No.
184982 and May 18, 2009 for G.R. No. 185048, Section 17 of RA 6657, as amended, priorto its further
amendment by RA 9700, should therefore apply.
Third.With respect to the commonly raised issue on interest, the RTC may impose the same on the just
compensation award as may be justified by the circumstances of the case and in accordance with prevailing
jurisprudence.51 The Court has previously allowed the grant of legal interest in expropriation cases where there
was delay in the payment of just compensation, deeming the same to bean effective forbearance on the part of
the State.52 To clarify, this incremental interest is not granted on the computed just compensation; rather, it is a
penaltyimposed for damages incurred by the landowner due tothe delay in its payment. 53 Thus, legal interest
shall be pegged at the rate of 12% p.a. from the time of taking until June 30, 2013. Thereafter, or beginning July
1, 2013, until fully paid, just compensation shall earn interest at the new legal rate of 6% p.a., conformably with
the modification on the rules respecting interest rates introduced by Bangko Sentral ng Pilipinas Monetary Board
Circular No. 799, Series of 2013.54
Fourth.The RTC, sitting as a Special Agrarian Court, is reminded that while it should take into account the
various formulae created by the DAR in arriving at the just compensation for the subject land, it is not strictly
bound thereby if the situations before it do not warrant their application. The RTC, in the exercise of its judicial
function of determining just compensation, cannot be restrained or delimited in the performance thereof. As
explained in LBP v. Heirs of Maximo Puyat:55
[T]he determination of just compensation is a judicial function; hence, courts cannot be unduly restricted in their
determination thereof. To do so would deprive the courts of their judicial prerogatives and reduce them to the
bureaucratic function of inputting data and arriving at the valuation. While the courts should be mindful of the
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different formulae created by the DAR in arriving at just compensation, they are not strictly bound to adhere WE CONCUR:
thereto if the situations before them do not warrant it. x x x:
ANTONIO T. CARPIO
"x x x [T]he basic formula and itsalternatives – administratively determined (as it is not found in Republic Act No. Associate Justice
6657, but merely set forth in DAR AO No. 5, Series of 1998) – although referred to and even applied by the Chairperson
courts in certain instances, does not and cannot strictly bind the courts. To insist that the formula must be
applied with utmost rigidity whereby the valuation is drawn following a strict mathematical computation goes PRESBITERO J. VELASCO, JR.* MARIANO C. DEL CASTILLO
beyond the intent and spirit of the law.1âwphi1 The suggested interpretation is strained and would render the Associate Justice Associate Justice
law inutile. Statutory construction should not kill but give life to the law. As we have established in earlier
jurisprudence, the valuation of property in eminent domain is essentially a judicial function which is vested in the JOSE PORTUGAL PEREZ
regional trial court acting as a SAC, and not inadministrative agencies. The SAC, therefore, must still be able to Associate Justice
reasonably exercise its judicial discretion in the evaluation of the factors for just compensation, which cannot be
arbitrarily restricted by a formula dictated by the DAR, an administrative agency. Surely, DAR AO No. 5 did not ATTESTATION
intend to straightjacket the hands ofthe court in the computation of the land valuation. While it provides a
formula, it could not have been its intention to shackle the courts into applying the formula in every instance. The I attest that the conclusions in the above Decision had been reached in consultation before the case was
court shall apply the formula after an evaluation of the three factors, orit may proceed to make its own assigned to the writer of the opinion of the Court's Division.
computation based on the extended list in Section 17 of Republic Act No. 6657, which includes other factors[.] x
ANTONIO T. CARPIO
x x"
Associate Justice
As a final word, the Court would like to emphasize that while the agrarian reform program was Chairperson, Second Division
undertakenprimarily for the benefit of our landless farmers, this undertaking should, however, not result in the
CERTIFICATION
oppression of landowners by pegging the cheapest value for their lands. Indeed, although the taking of
properties for agrarian reform purposes is a revolutionary kind of expropriation, it should not be carried out at the Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson's Attestation, I certify that
undue expense of landowners who are alsoentitled to protection under the Constitution and agrarian reform the conclusions in the above Decision had been reached in consultation before the case was assigned to the
laws.56 writer of the opinion of the Court's Division.
WHEREFORE, the petitions are GRANTED. The Decision dated February 26, 2008 and the Resolution dated MARIA LOURDES P. A. SERENO
October 17, 2008 of the Court of Appeals in CA-G.R. SP No. 89545 which: (a) upheld the valuation of the Chief Justice
subject portion computed by the Regional Trial Court of Cabanatuan City, Branch 23 (RTC) without, however,
taking into account the factors enumerated under Section 17 of Republic Act No. 6657, as amended; and (b)
deleted the interest award pegged at the rate of 6% per annum (p.a.) from 1991 until fully paid and, instead,
awarded the interest at the rate of 12% p.a. in the nature of damages from March 11, 2004 until fully paid, are
hereby REVERSED and SET ASIDE. SP. Civil Case No. 1483-AF is REMANDED to the RTC for reception of
evidence on the issue of just compensation in accordance with the guidelines set in this Decision. The RTC is
directed to conduct the proceedings in said case with reasonable dispatch and submit to the Court a report on
its findings and recommended conclusions within sixty (60) days from notice of this Decision.

SO ORDERED.

ESTELA M. PERLAS-BERNABE
Associate Justice

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THIRD DIVISION

G.R. No. 161796               February 8, 2012

LAND BANK OF THE PHILIPPINES, Petitioner,

vs.
ESTATE OF J. AMADO ARANETA, Respondent.

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

G.R. No. 161830

DEPARTMENT OF AGRARIAN REFORM,1 Petitioner,

NORBERTO RESULTA, EDITHA ABAD, LEDELIA ASIDOY, GIL PAGARAGAN, ROSALITO PAGHUBASAN,
EDWIN FAUSTINO, FELOMINO JUSOL, EDELBERTO POBLARES, EFREN APON, NELSON VILLAREAL,
JIMMY ZONIO, SERLISTO ZONIO, WILFREDO MARCELINO, ROGELIO RODERO, SERGIO ZONIO,
NORBERTO FRANCISCO, AURORA VILLACORTE, JOVITO NINONUEVO, ELIZABETH ZAUSA, RUBEN
VILLANUEVA, VICENTA RACCA, ROGELIO RACCA, MERCEDES VILLANUEVA, EDUARDO BIUTE,
APOLINARIO TORRAL, BENJAMIN TANJER, JR., MINDA SOLIMAN, CIPRIANO REQUIOLA, GLORIA
ROMERO, SILVERIO ZONIO, NESTOR ZONIO, NILO ZAUSA, ROMUALDO ZAUSA, REYNALDO ZAUSA,
LUMILYN ZAUSA, GILBERT BAUTISTA, GILDA PACETES, ALUDIA CALUB, LOURDES CAGNO, ABELARDO
CAGNO, BENJAMIN MARINAS, CRISPINA ARNAIZ, MARIA CABUS, RESTITUTA PRETENCIO, MA. LUZ
ABALOS, ABELARDO DEL ROSARIO, CANDELARIA CEPEDA, HAYDEE MARQUILENCIA, LEONCIA ZATA,
LUCIA LOPEZ, MARGARITA MANLANGIT, CRISTINA PACIS, LEONELDA FIDELA, MA. BLESS MASAGNAY,
AGUSTIN CADAO, DOLORES FELICIANO, MA. JESSICA FELICIANO, MA. LOURDES FELICIANO, MA.
JULITA FELICIANO, FEDERICO ZONIO, NENITA SINGSON, LIBRADA ZASPA, THELMA ELISERIO,
SALVADOR VILLORENTE, SATURNINA TESORERO, ROGELIO PARACUELES, ANITA MENDOZA,
AMADEO MASAGNAY, ELVIRA CAMPOS, LAURIANO CAMPOS, BENITO VILLAGANAS, VIRGILIO FERRER,
SALVADOR RESULTA, NORLITO RESULTA, DIANA SEPTIMO, SALVADOR SEPTIMO, DIOSDADO
LAGMAN, CLAUDIA MIRALLES, RICARDO FRANCISCO, RODOLFO FRANCISCO, ALEXANDER YURONG,
ALFREDO BUENAVENTURA, ISIDRO DELA CRUZ, REMEDIOS CABUNDOC, ARTEMIO MIRASOL, MINDA
COPINO, ANDRES IBARBIA, WILFREDO BALLOS, ELSA BANGCA, ARTURO CANTURIA, PABLITO
SAGUIBO, CARLITO VILLONES, JOSEFINA TABANGCURA, NEDA MASAGNAY, Petitioners-Intervenors,
ESTELA MARIE MALOLOS, LORETO DELA CRUZ, JOSE PAJARILLO, IMELDA ZAUSA, FEDERICO ZAUSA
represented by ROSALINDA ZAUSA, LUDEVICO ZAUSA, GLORIA VILLANUEVA, ZENAIDA MASAGNAY,
ELSIO ESTO, RODOLFO VILLONES, ALVINO NARCI represented by LILIA VILLONES, RUFINO ZONIO,
ALBERTO ROSI, ZENAIDA VILLENA, ANTONIO ZAUSA, SALDITO ZONIO, ZACARIAS CORTEZ, LARRY
MASAGNAY represented by LEONEL MASAGNAY, ERLINDA MORISON, JUAN CORTEZ, PRIMITIBO
Republic of the Philippines NICASIO, CARMELO CESAR, ANDRES ZONIO represented by RUFINO ZONIO, JUANITO ZONIO,
SUPREME COURT JERENCIO ZONIO, ALEX CORTEZ, PEPITO VILLAREAL, Petitioners-Movants,
Manila

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Agrarian Law and Social Legislation
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vs.
ESTATE OF J. AMADO ARANETA, Respondent.
x-----------------------x
G.R. No. 190456
ERNESTO B. DURAN, LOPE P. ABALOS (deceased) represented by LOPE ABALOS, JR., ARTEMIO T.
GONZALES (deceased) represented by PAUL GONZALES, AUGUSTO LIM, IMELDA MARCELINO, ERNESTO
NAVARTE (deceased) represented by surviving spouse NELIA NAVARTE, FLORANTE M. QUIMZON,
MANUEL R. QUIMZON (deceased) represented by FLORANTE M. QUIMZON, NELIA ZAUSA, Petitioners-
Intervenors,
vs.
ESTATE OF J. AMADO ARANETA, Respondent.
DECISION
VELASCO, JR., J.:
In these three petitions for review under Rule 45, petitioners Land Bank of the Philippines (Land Bank),
Department of Agrarian Reform (DAR), and Ernesto B. Duran, et al. (Duran, et al.) separately assail and seek to
nullify the Decision2 of the Court of Appeals (CA) dated September 19, 2003 in CA-G.R. SP No. 65822 that set
aside the February 7, 2001 Decision of the DAR Adjudication Board (DARAB) in DARAB Case No. 4176.
Likewise sought to be annulled is the Resolution of the CA dated January 22, 2004 3 that denied separate
motions for reconsideration of the September 19, 2003 Decision.
The reversed DARAB decision upheld the agrarian reform coverage of 1,266 hectares of respondent estate’s
1,644.55-hectare property and its award to over a thousand farmer-beneficiaries. The CA’s reversing decision,
on the other hand, is hinged on the illegality of the coverage and the consequent award. According to the CA,
the property in question, having meanwhile ceased to be agricultural, is not amenable to land reform coverage
and, hence, falls outside of DAR’s jurisdiction to implement agrarian enactments.
In G.R. No. 161796, petitioner Land Bank faults the CA insofar as it accorded retroactive exclusionary
application to Presidential Proclamation No. (Proclamation) 1283, 4 as amended by Proclamation 1637.5 In so
doing, so Land Bank claims, the appellate court effectively but illegally extended exempt-coverage status to the
subject land and in the process negated the purpose behind Presidential Decree No. (PD) 27: to emancipate
rice/corn land tenant-farmers from the bondage of the soil under their tillage.
Pursuing cognate arguments, petitioner DAR, in G.R. No. 161830, assails the CA’s holding, and the premises
tying it together, on the department’s jurisdiction over the property subject of the case.
In G.R. No. 190456, petitioners Duran, et al. take issue at the CA’s pronouncement on the validity of service of
the petition for review effected by respondent upon their long-deceased counsel of record, Atty. Eduardo Soliven
Lara (Atty. Lara).6 Like Land Bank and DAR, Duran, et al. impute reversible error on the CA for holding that the
concerned farmer-beneficiaries never acquired ownership over their respective portions subject of the DAR
award, owing to the prior conversion of the whole property to non-agricultural uses before the completion of the
land reform process.
Per its Resolution of June 28, 2004, the Court ordered the consolidation of G.R. Nos. 161796 and 161830 with
G.R. No. 163174 (Nell-Armin Raralio v. Estate of J. Amado Araneta). Another Resolution issued on November
17, 2010 directed that G.R. No. 190456 be consolidated with G.R. Nos. 161796, 161830 and 163174.
Due, however, to the denial, per Resolution of August 18, 2004, of the petition in G.R. No. 163174 and pursuant
to entry of judgment dated December 9, 2004, the Court, by Resolution dated July 11, 2011, deconsolidated
G.R. No. 163174 with the other three cases and considered it closed and terminated. 7
The Facts
At the heart of the controversy is a large tract of land, denominated as Lot No. 23 of the Montalban Cadastre
(Lot 23), located in Brgy. Mascap, Montalban, Rizal with an area of 1,645 hectares, more or less. Lot 23 was
originally registered in the name of Alfonso Doronilla (Doronilla) under Original Certificate of Title (OCT) No.
7924 of the Rizal Registry.
On June 21, 1974, then President Marcos issued Proclamation 1283, carving out a wide expanse from the
Watershed Reservation in Antipolo, Rizal and reserving the segregated area for townsite purposes, "subject to
private rights, if any there be." In its pertinent parts, Proclamation 1283 reads:
"Excluding from the Operation of Executive Order No. 33 dated July 26, 1904, as Amended by Executive Orders
Nos. 14 and 16, Both Series of 1915, which Established the Watershed Reservation Situated in the Municipality
of Antipolo, Province of Rizal, Island of Luzon, a Certain Portion of the Land Embraced therein and Reserving
the Same, Together with the Adjacent Parcel of Land of the Public Domain, for Townsite Purposes Under the
Provisions of Chapter XI of the Public Land Act"
Upon recommendation of the Secretary of Agriculture and Natural Resources x x x, I, FERDINAND E.
MARCOS, President of the Philippines, do hereby exclude from the operation of Executive Order No. 33 dated
July 26, 1904, as amended x x x, which established the Watershed Reservation situated in the Municipality of
Antipolo, Province of Rizal, Island of Luzon, certain portions of land embraced therein and reserve the same,
together with the adjacent parcel of land of the public domain, for townsite purposes under the provisions of
Chapter XI of the Public Land Act, subject to private rights, if any there be, and to future subdivision survey in
accordance with the development plan to be prepared and approved by the Department of Local Government
and Community Development, which parcels are more particularly described as follows:
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Chapter 1
Lot A (Part of Watershed Reservation)
A parcel of land (Lot A of Proposed Poor Man’s Baguio, being a portion of the Marikina Watershed, IN-2),
situated in the municipality of Antipolo, Province of Rizal, Island of Luzon x x x;
[technical description omitted]
Containing an area of THREE THOUSAND SEVEN HUNDRED EIGHTY (3,780) Hectares, more or less.
Lot B (Alienable and Disposable Land)
A parcel of land (Lot B of Proposed Poor Man’s Baguio, being a portion of alienable and disposable portion of
public domain) situated in the municipality of Antipolo, Province of Rizal x x x;
[technical description omitted]
Containing an area of ONE THOUSAND TWO HUNDRED TWENTY FIVE (1,225) Hectares, more or less.
(Emphasis supplied.)
Then came the amendatory issuance, Proclamation 1637 dated April 18, 1977, thereby increasing the size of
the reservation, designated as "Lungsod Silangan Townsite" (LS Townsite), by 20.312 hectares and revising its
technical description so as to include, within its coverage, other lands in the municipalities of San Mateo and
Montalban, Rizal to absorb "the population overspill in Greater Manila Area," but again "subject to private rights,
if any there be," thus:
Upon recommendation of the Secretary of Natural Resources x x x, I, FERDINAND E. MARCOS, President of
the Philippines, do hereby amend Proclamation No. 1283, dated June 21, 1974 which established the townsite
reservation in the municipalities of Antipolo and San Mateo, Province of Rizal, Island of Luzon, by increasing the
area and revising the technical descriptions of the land embraced therein, subject to private rights, if any there
be, which parcel of land is more particularly described as follows:
(Proposed Lungsod Silangan Townsite)
A PARCEL OF LAND (Proposed Lungsod Silangan Townsite Reservation amending the area under SWO-
41762 establishing the Bagong Silangan Townsite Reservation) situated in the Municipalities of Antipolo, San
Mateo, and Montalban, Province of Rizal, Island of Luzon. Bounded on the E., along lines x x x.
Beginning at a point marked "1" on the Topographic Maps with the Scale of 1:50,000 which is the identical
corner 38 IN-12, Marikina Watershed Reservation.
[technical description omitted]
Containting an area of TWENTY THOUSAND THREE HUNDRED TWELVE (20,312) hectares, more or less.
NOTE: all data are approximate and subject to change based on future survey. (Emphasis supplied.)
On November 9, 1977, Letter of Instructions No. (LOI) 625 addressed to several agencies was issued for the
implementation of the aforementioned proclamations. The Office of the Solicitor General (OSG), in particular,
was directed to initiate condemnation proceedings for the acquisition of private lands within the new townsite,
among which was Lot 23 (the Doronilla property).
Prior to the issuance of the LS Townsite proclamations, the following events transpired:
(1) On October 21, 1972, PD 27 (Tenant’s Emancipation Decree) was issued. In accordance with PD 27 in
relation to LOI 474 and related issuances, the DAR undertook to place under the Operation Land Transfer (OLT)
program of the government all tenanted rice/corn lands with areas of seven hectares or less belonging to
landowners who own other agricultural lands of more than seven (7) hectares. In line with this program, the
tenants of Doronilla tilling portions of his property, who claimed their primary crops to be rice and/or corn,
organized themselves into farmers’ cooperatives or Samahang Nayons and applied for certificates of land
transfer (CLTs); and
(2) The DAR, to which the processed applications were forwarded, processed 106 CLTs involving 100 tenants-
beneficiaries covering 73 hectares out of the total 1,645 hectares of Lot 23. However, out of the 106 CLTs
generated, only 75 CLTs had actually been distributed.
Upon the issuance of Proclamation 1637 on April 18, 1977, on-going parcellary mapping, survey and other
processing activities related to the Doronilla property were stopped. 8
In 1978, the OSG, conformably with the directive embodied in LOI 625, filed with the then Court of First Instance
(CFI) of Rizal an expropriation complaint against the Doronilla property. Meanwhile, on June 6, 1979, Doronilla
issued a Certification,9 copy furnished the Agrarian Reform Office, among other agencies, listing seventy-nine
(79) "bona fide planters" he allegedly permitted to occupy a portion of his land. On September 9, 1987 or nine
(9) years after it commenced expropriation proceedings, the OSG moved 10 for and secured, per the Rizal CFI
Order11 dated September 18, 1987, the dismissal of the expropriation case.
Earlier, or on March 15, 1983, J. Amado Araneta, now deceased, acquired ownership of the subject Doronilla
property by virtue of court litigation. A little over a week later, he had OCT No. 7924 canceled and secured the
issuance of Transfer Certificate of Title (TCT) No. N-70860 in his name.
On July 22, 1987, then President Corazon C. Aquino issued Proclamation No. 131 instituting the
Comprehensive Agrarian Reform Program (CARP). Thereafter, then DAR Undersecretary Jose C. Medina, in a
memorandum of March 10, 1988, ordered the Regional Director of DAR Region IV to proceed with the OLT
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Agrarian Law and Social Legislation
Chapter 1
coverage and final survey of the Doronilla property.12 Republic Act No. (RA) 6657, otherwise known as the
Comprehensive Agrarian Reform Law (CARL)13 of 1988, was then enacted, and took effect on June 15, 1988.
On July 27, 1989, Jorge L. Araneta, as heir of J. Amado Araneta and administrator of his estate, wrote the DAR
Secretary requesting approval, for reasons stated in the covering letter, of the conversion of Lot 23 from
agricultural to commercial, industrial and other non-agricultural uses. 14 Appended to the letter were maps,
location clearance and other relevant documents. Through Jorge L. Araneta, respondent Estate of J. Amado
Araneta (Araneta or Araneta Estate) would, however, reiterate the conversion request owing to what it viewed
as DAR’s inaction on said request.
On December 12, 1989, DAR issued a "Notice of Acquisition" addressed to Doronilla, covering 7.53 hectares of
the land now covered by TCT No. 216746 and offering compensation at a valuation stated in the
notice.15 Alarmed by the turn of events whereby DAR was having its property, or a portion of it, surveyed,
incidental to effecting compulsory land acquisition, the Araneta Estate addressed a letter 16 to DAR dated June
27, 1990, formally protesting the series of land surveys being conducted by the Bureau of Lands on what is now
its property. It claimed that the CARL does not cover the said property, being part of the LS Townsite
reservation, apart from being mountainous, with a slope of more than 70 degrees and containing commercial
quantities of marble deposit. The Araneta Estate followed its protest letter with two (2) more letters dated June
20, 1990 and May 28, 1991, in which it reiterated its request for conversion, citing, for the purpose, Department
of Justice (DOJ) Opinion No. 181, Series of 1990.17
On November 29, 1991, the Office of the Provincial Adjudication Board of Rizal set a hearing to determine the
just compensation for the subject property, docketed as P.A. Case No. IV-Ri-0024-91. Notwithstanding
Araneta’s protest against the compulsory agrarian reform coverage and acquisition of the property in question,
the Land Bank, nonetheless, proceeded to approve, on January 21, 1992, the land transfer claim (Claim No.
EO-91-1266) covering 1,266 hectares. On February 26, 1992, Land Bank notified Araneta of its entitlement,
upon its compliance with certain requirements, of the amount of PhP 3,324,412.05, representing just
compensation for its covered parcels of land.18
By September 25, 1990, some 1,200 emancipation patents (EPs) had been generated in favor of 912 farmer-
beneficiaries and TCTs derived from the EPs issued.19
It is upon the foregoing backdrop of events that Araneta, sometime in April 1992, filed with the DARAB an action
against the DAR and Land Bank for Cancellation of Compulsory Coverage under PD 27 and Exemption from
CARL Coverage of the erstwhile Doronilla property, docketed as DARAB Case No. DCN-JC-RIV-R12-026-
CO.20 Thereafter, DARAB turned over the case folder to the Rizal Provincial Agrarian Reform Adjudicator
(PARAD) where the matter was re-docketed as PARAD Case No. IV-Ri-0057-92. Before the Rizal PARAD
Office and with its leave, some 1,022 individuals affiliated with different farmer groups intervened and filed an
answer-in- intervention,21 joining a group of earlier intervenors led by one Anastacia Ferrer claiming to be EP
grantees.
Save for Land Bank, all the parties subsequently submitted their respective position papers.
Ruling of the Regional Adjudicator
By Decision dated October 17, 1994,22 Regional Agrarian Reform Adjudicator (RARAD) Fe Arche-Manalang
ruled against Araneta, denying its bid to have its property excluded from OLT coverage and/or the compulsory
scheme under CARL. The fallo of the RARAD’s Decision reads as follows:
WHEREFORE, premises considered, judgment is hereby rendered:
1. Dismissing the petition for lack of merit;
2. Upholding the OLT coverage of the property described in Paragraph 1 of the Petition, pursuant to the
provision of P.D. 27 as affirmed by E.O. 228 in relation to Section 7 of R.A. 6657;
3. Affirming the regularity of the OLT processing undertaken on the subject Property and sustaining the validity
of the Transfer Certificates of Title emanating from the Emancipation Patents generated in favor of the
Intervenors-awardees;
4. Directing the Respondent Land Bank of the Philippines to effect and release immediate payment to the
Petitioner-Landowner under approved Land Transfer Claim No. EO-91-1266 dated February 3, 1992; and
5. Without pronouncement as to costs.
SO ORDERED.
Therefrom, Araneta appealed to the DARAB proper. The appeal was docketed as DARAB Case No. 4176. In
due time, the DARAB, following the RARAD’s line that the intervenor-appellees were deemed owners of the land
they tilled as of October 21, 1972, rendered a Decision dated February 7, 2001 23 affirming in toto that of the
RARAD’s, disposing as follows:
WHEREFORE, premises considered, this Board hereby AFFIRMS the appealed decision in toto without
pronouncement as to costs.
SO ORDERED.
Just like that of the RARAD, the DARAB ruling did not name individuals in whose favor the EPs were specifically
generated, albeit, 86 were, per Our count, impleaded as "intervenor-appellees" in DARAB Case No. 4176.
Subsequently, Araneta went to the CA via a petition for review under Rule 43 of the 1997 Rules of Civil
Procedure on the stated principal issue of whether or not the DARAB in its appealed decision unduly expanded
the scope of coverage of PD 27.
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Ruling of the CA
By Decision of September 19, 2003, the CA, as earlier stated, set aside the Decision of the DARAB, in effect
nullifying all the individual farm lots awards thus made by the DARAB ostensibly in favor of the named
intervenor-appellees and necessarily all other unnamed awardees. The decretal portion of the CA decision
reads as follows:
WHEREFORE, premises considered, the present petition is hereby GIVEN DUE COURSE. The challenged
Decision of the DARAB in DARAB Case No. 4176 (Reg. Case No. IV-RI-0057-92) is hereby ANNULLED and
SET ASIDE. The DARAB is hereby ordered to reconvey to petitioner [Araneta] the subject portions of
petitioner’s property embraced in TCT No. N-70860, earlier awarded to intervenors-appellees under their
individual EPs now covered by their respective certificates of title, in accordance with pertinent administrative
issuances of DARAB.
No pronouncement as to costs.
SO ORDERED.
In the main, the CA predicated its reversal action on the interplay of the ensuing premises, juxtaposed with the
pertinent pronouncements in the cited cases of Natalia Realty, Inc. v. DAR 24 and Paris v. Alfeche,25 among other
landmark agrarian cases, thus:
(1) Agricultural lands found within the boundaries of declared townsite reservations are reclassified for
residential use. They ceased to be agricultural lands upon approval of their inclusion in the reservation, as in the
case of agricultural lands situated within the LS Townsite reservation upon its establishment pursuant to
Proclamation 1637.
(2) The processing of the OLT coverage of the Doronilla property was not completed prior to the passage of
CARL or RA 6657; hence, the governing law should be RA 6657, with PD 27 and Executive Order No. (EO)
22826 only having suppletory effect.
(3) Full payment of the cost of the land, inclusive of interest, is in every case considered a mandatory
requirement prior to the transfer of the title to the farmer-beneficiary. Before that time, the term "subject to
private rights, if any" found in Proclamation 1637 refers to the landowner’s private rights. At the time
Proclamation 1637 was issued, the farmer-beneficiaries of the Doronilla property have no "vested rights" yet
under PD 27 to their allotted lot, as erroneously ruled by the DARAB.
(4) The DARAB, as the adjudicating arm of DAR, was divested of jurisdiction over the Araneta property upon its
inclusion in the LS Townsite reservation by virtue of Proclamation 1637, as can be gleaned from LOI 625 which
directed the implementation of Proclamation 1637.
From the foregoing decision, Land Bank, DAR/DARAB and Araneta separately moved for but were denied
reconsideration by the appellate court in its Resolution of January 22, 2004.
In due time, Land Bank and DARAB/DAR interposed before the Court separate petitions for review.
On the other hand, in December 2009, or some six (6) years after the CA rendered its appealed judgment,
Duran and eight others, as self-styled petitioners-intervenors, came to this Court on a petition for review under
Rule 45. In a bid to justify the six-year hiatus between the two events, Duran, et al. claimed that, through the
machinations of Araneta’s counsel, they have been virtually kept in the dark about CA-G.R. SP No. 65822 and
consequently were deprived of their right to appeal what turned out to be an adverse CA ruling. How the
supposed deprivation came about, per Duran, et al.’s version, shall be explained shortly. Duran, et al. presently
allege being EP holders over portions of the property in question, their rights to the patents having been decreed
in the October 17, 1994 RARAD Decision, as affirmed by the DARAB.
The Issues
Apart from what it considers the appellate court’s misapplication of the holdings in Natalia Realty, Inc. and Paris,
Land Bank, in G.R. No. 161796,27 ascribes to the CA the commission of serious errors of law:
1) When it gave retroactive effect or application to Proclamation Nos. 1283 & 1637 resulting in the negation of
"full land ownership to qualified farmer-beneficiaries covered by P.D. No. 27 x x x."
2) When it gave imprimatur to the virtual conversion through Proclamation Nos. 1283 & 1637 of erstwhile
agricultural lands to residential use without the requisite expropriation/condemnation proceedings pursuant to
LOI No. 625.
3) When it upheld the nullification of the CLTs and EPs in the name of farmer-beneficiaries through a mere
collateral attack which is not allowed by law.
4) When it recognized respondent’s alleged private right which had been reduced into a mere claim for just
compensation upon promulgation or effectivity of P.D. No. 27 on October 21, 1972.
In G.R. No. 161830,28 the DAR raises the following issues:
1) Whether the subject agricultural landholding is exempt from CARP coverage, being non-agricultural, pursuant
to Proclamation Nos. 1283, as amended, over and above the statutory emancipation of the tenants from the
bondage of the soil under P.D. No. 27;
2) Whether or not DAR was no longer possessed of jurisdiction over respondent Araneta’s landholding after the
same was included in the LS Townsite; and
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3) Whether or not DAR should reconvey to Araneta the portion of its property that was subjected to OLT under
P.D. 27.
Aside from the procedural concerns articulated in their petition, the main substantive issue raised by Duran, et
al. in G.R. No. 190456,29 as outlined at the outset, revolves around the question, and its implication on their
ownership rights over a portion of the subject estate, of whether or not the process of land reform was
incomplete at the time of issuance of Proclamation 1637.
The different but oftentimes overlapping issues tendered in this consolidated recourse boil down to this relatively
simple but pregnant question: whether or not the Doronilla, now the Araneta, property, in light of the issuance of
the land reclassifying Proclamation 1283, as amended, is, as held by the CA, entirely outside the ambit of PD 27
and RA 6657, and, thus, excluded from compulsory agrarian reform coverage, unfettered by the private claim of
the farmer-beneficiaries.
The Court’s Ruling
We find the petitions partly meritorious.
Classification of the Doronilla Property
Several basic premises should be made clear at the outset. Immediately prior to the promulgation of PD 27 in
October 1972, the 1,645-hectare Doronilla property, or a large portion of it, was indisputably agricultural, some
parts devoted to rice and/or corn production tilled by Doronilla’s tenants. Doronilla, in fact, provided concerned
government agencies with a list of seventy-nine (79) 30 names he considered bona fide "planters" of his land.
These planters, who may reasonably be considered tenant-farmers, had purposely, so it seems, organized
themselves into Samahang Nayon(s) so that the DAR could start processing their applications under the PD 27
OLT program. CLTs were eventually generated covering 73 hectares, with about 75 CLTs actually distributed to
the tenant-beneficiaries. However, upon the issuance of Proclamation 1637, "all activities related to the OLT
were stopped."31
The discontinuance of the OLT processing was obviously DAR’s way of acknowledging the implication of the
townsite proclamation on the agricultural classification of the Doronilla property. It ought to be emphasized, as a
general proposition, however, that the former agricultural lands of Doronilla––situated as they were within areas
duly set aside for townsite purposes, by virtue particularly of Proclamation 1637––were converted for residential
use. By the terms of Natalia Realty, Inc., they would be exempt from land reform and, by necessarily corollary,
beyond DAR’s or DARAB’s jurisdictional reach. Excerpts from Natalia Realty, Inc.:
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." 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."
Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills Subdivison 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. x x x
xxxx
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.32 (Emphasis added; italics in the original.)
Guided by the foregoing doctrinal pronouncement, the key date to reckon, as a preliminary matter, is the precise
time when Doronilla’s Lot 23, now Araneta’s property, ceased to be agricultural. This is the same crucial cut-off
date for considering the existence of "private rights" of farmers, if any, to the property in question. This, in turn,
means the date when Proclamation 1637 establishing LS Townsite was issued: April 18, 1977. From then on,
the entire Lot 23 was, for all intents and purposes, considered residential, exempted ordinarily from land reform,
albeit parts of the lot may still be actually suitable for agricultural purposes. Both the Natalia lands, as
determined in Natalia Realty, Inc., and the Doronilla property are situated within the same area covered by
Proclamation 1637; thus, the principles regarding the classification of the land within the Townsite stated in
Natalia Realty, Inc. apply mutatis mutandis to the instant case.
Applicability of PD 27, RA 6657
and Proclamation 1637 to the Doronilla Estate
From the standpoint of agrarian reform, PD 27, being in context the earliest issuance, governed at the start the
disposition of the rice-and-corn land portions of the Doronilla property. And true enough, the DAR began
processing land transfers through the OLT program under PD 27 and thereafter issued the corresponding CLTs.
However, when Proclamation 1637 went into effect, DAR discontinued with the OLT processing. The tenants of
Doronilla during that time desisted from questioning the halt in the issuance of the CLTs. It is fairly evident that
DAR noted the effect of the issuance of Proclamation 1637 on the subject land and decided not to pursue its
original operation, recognizing the change of classification of the property from agricultural to residential.
When it took effect on June 15, 1988, RA 6657 became the prevailing agrarian reform law. This is not to say,
however, that its coming into effect necessarily impeded the operation of PD 27, which, to repeat, covers only
rice and corn land. Far from it, for RA 6657, which identifies "rice and corn land" under PD 27 as among the
properties the DAR shall acquire and distribute to the landless, 33 no less provides that PD 27 shall be of
suppletory application. We stated in Land Bank of the Philippines v. Court of Appeals, "We cannot see why Sec.
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18 of R.A. 6657 should not apply to rice and corn lands under P.D. 27. Section 75 of R.A. 6657 clearly states
that the provisions of P.D. 27 and E.O. 228 shall only have a suppletory effect." 34
All told, the primary governing agrarian law with regard to agricultural lands, be they of private or public
ownership and regardless of tenurial arrangement and crops produced, is now RA 6657. Section 3(c) of RA
6657 defines "agricultural lands" as "lands devoted to agricultural activity as defined in the Act and not classified
as mineral, forest, residential, commercial or industrial land." The DAR itself refers to "agricultural lands" as:
those devoted to agricultural activity as defined in RA 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. 35
At the time of the effectivity of RA 6657 on June 15, 1998, the process of agrarian reform on the Doronilla
property was, however, to reiterate, far from complete. In fact, the DAR sent out a Notice of Acquisition to
Araneta only on December 12, 1989, after the lapse of around 12 years following its discontinuance of all
activities incident to the OLT.
Proclamation 1637, a martial law and legislative-powers issuance, partakes the nature of a law. In Natalia
Realty, Inc., the Court in fact considered and categorically declared Proclamation 1637 a special law, since it
referred specifically to the LS Townsite Reservation.36 As such, Proclamation 1637 enjoys, so Natalia Realty,
Inc. intones, applying basic tenets of statutory construction, primacy over general laws, like RA 6657.
In light of the foregoing legal framework, the question that comes to the fore is whether or not the OLT coverage
of the Doronilla property after June 15, 1988, ordered by DAR pursuant to the provisions of PD 27 and RA 6657,
was still valid, given the classificatory effect of the townsite proclamation.
To restate a basic postulate, the provisions of RA 6657 apply only to agricultural lands under which category the
Doronilla property, during the period material, no longer falls, having been effectively classified as residential by
force of Proclamation 1637. It ceased, following Natalia Realty, Inc., to be agricultural land upon approval of its
inclusion in the LS Townsite Reservation pursuant to the said reclassifying presidential issuance. In this regard,
the Court cites with approval the following excerpts from the appealed CA decision:
The above [Natalia Realty, Inc.] ruling was reiterated in National Housing Authority vs. Allarde where the
Supreme Court held that lands reserved for, converted to, non-agricultural uses by government agencies other
than the [DAR], prior to the effectivity of [RA] 6657 x x x are not considered and treated as agricultural lands and
therefore, outside the ambit of said law. The High Court declared that since the Tala Estate as early as April 26,
1971 was reserved, inter alia, under Presidential Proclamation No. 843, for the housing program of the [NHA],
the same has been categorized as not being devoted to agricultural activity contemplated by Section 3(c) of R.A.
No. 6657, and therefore outside the coverage of CARL. 37 (Emphasis supplied.)
"Private Rights" and Just Compensation as Payment
Unlike in Natalia Realty, Inc., however, where pre-existing tenancy arrangement over the Natalia land, among
other crucial considerations, was not part of the equation, this case involves farmers claiming before April 18,
1979 to be actual tenants of the rice and/or corn portion of the Doronilla property. The Court has, to be sure,
taken stock of the fact that PD 27 ordains the emancipation of tenants and "deems" them owners of the rice and
corn lands they till as of October 21, 1972. The following provisions of the decree have concretized this
emancipation and ownership policy:
This [decree] shall apply to tenant farmers of private agricultural lands primarily devoted to rice and corn under a
system of sharecrop or lease-tenancy, whether classified as landed estate or not;
The tenant farmer x x x shall be deemed owner of a portion constituting a family-size farm of five (5) hectares if
not irrigated and three (3) hectares if irrigated. (Emphasis added.)
Complementing PD 27 is EO 228, Series of 1987, Sec. 1 of which states, "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.)
Petitioners DAR, Land Bank and Duran, et al. uniformly maintain that the PD 27 tenant-beneficiaries have
acquired "vested rights" over the lands they tilled as of October 21, 1972 when the decree took effect. Pursuing
this point, they argue that, as of that date, the farmer-beneficiaries were "deemed owners" of what was to be
Araneta’s property, and the issuance of Proclamation 1637 did not alter the legal situation.
The CA, however, was of a different mind, predicating its stance on the following:
Since actual title remained with the landowner Alfonso Doronilla at the time Presidential Proclamation No. 1637
was issued in 1977, it follows that it is the "private rights" of such owner which are contemplated by the
exemption declared in said proclamation. Definitely, the proviso "subject to private rights" could not refer to the
farmer-tenants the process of land reform having just been commenced with the filing of their application with
the DAR. The conclusion finds support in a similar proclamation covering the Baguio Townsite Reservation. Our
Supreme Court in a case involving an application for registration of lots situated within the Baguio Townsite
Reservation cited the decision dated November 13, 1922 of the Land Registration Court in Civil Reservation No.
1, GLRO Record No. 211, which held that all lands within the Baguio Townsite are public land with the exception
of (1) lands reserved for specific public uses and (2) lands claimed and adjudicated as private property. It is
therefore in that sense that the term "private rights" under the subject proviso in Presidential Proclamation No.
1637 must be understood.38 x x x (Emphasis added.)
In fine, the CA held that the "private rights" referred to in the proclamation pertained to the rights of the
registered owner of the property in question, meaning Doronilla or Araneta, as the case may be.
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The Court cannot lend full concurrence to the above holding of the appellate court and the consequent
wholesale nullification of the awards made by the DARAB.
The facts show that several farmer-beneficiaries received 75 CLTs prior to the issuance of Proclamation 1637
on June 21, 1974. The 75 CLTs seemingly represent the first batch of certificates of bona fide planting rice and
corn. These certificates were processed pursuant to the OLT program under PD 27. It bears to stress, however,
that the mere issuance of the CLT does not vest on the recipient-farmer-tenant ownership of the lot described in
it. At best, the certificate, in the phraseology of Vinzons-Magana v. Estrella, 39 "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 [tilled] by him as provided under [PD] 27."
The clause "now deemed full owners as of October 21, 1972" could not be pure rhetoric, without any beneficial
effect whatsoever descending on the actual tillers of rice and/or corn lands, as the appealed decision seems to
convey. To Us, the clause in context means that, with respect to the parcel of agricultural land covered by PD 27
and which is under his or her tillage, the farmer-beneficiary ipso facto acquires, by weight of that decree,
ownership rights over it. That ownership right may perhaps not be irrevocable and permanent, nay vested, until
the tenant-farmer shall have complied with the amortization payments on the cost of the land and other
requirements exacted in the circular promulgated to implement PD 27. Vinzons-Magana holds:
This Court has therefore clarified that it is only compliance with the prescribed conditions which entitled the
farmer/grantee to an emancipation patent by which he acquires the vested right of absolute ownership in the
landholding––a right which has become fixed and established and is no longer open to doubt and
controversy.40 x x x
Said ownership right is, nonetheless, a statutory right to be respected.
Plainly enough then, the farmer-beneficiaries vis-à-vis the PD 27 parcel they till, especially that brought within
the coverage of OLT under PD 27, own in a sense the lot which they can validly set up against the original
owners notwithstanding the fact that the latter have not yet been paid by Land Bank and/or even if the farmers
have not yet fully paid their amortization obligation to the Land Bank, if that be the case. After all, the former
landowners, by force of PD 27, is already divested of their ownership of the covered lot, their right to payment of
just compensation or of the un-amortized portion payable by Land Bank 41 being assured under EO 228 and RA
6657.
If only to stress, while the PD 27 tenant-farmers are considered the owners by virtue of that decree, they cannot
yet exercise all the attributes inherent in ownership, such as selling the lot, because, with respect to the
government represented by DAR and LBP, they have in the meantime only inchoate rights in the lot––the being
"amortizing owners." This is because they must still pay all the amortizations over the lot to Land Bank before an
EP is issued to them. Then and only then do they acquire, in the phraseology of Vinzons-Magana, "the vested
right of absolute ownership in the landholding."
This brings us to the question, to whom does "private rights" referred to in Proclamation 1637 pertain? Absent
any agrarian relationship involving the tract of lands covered by the proclamation, We can categorically state
that the reference is to the private rights of the registered lot owner, in this case Doronilla and subsequently,
Araneta. But then the reality on the ground was that the Araneta property or at least a portion was placed under
OLT pursuant to PD 27 and subject to compulsory acquisition by DAR prior to the issuance of Proclamation
1637 on June 21, 1974, and 75 CLTs were also issued to the farmer-beneficiaries. Stated a bit differently,
before Proclamation 1637 came to be, there were already PD 27 tenant-farmers in said property. In a very real
sense, the "private rights" belong to these tenant-farmers. Since the said farmer-beneficiaries were deemed
owners of the agricultural land awarded to them as of October 21, 1972 under PD 27 and subsequently deemed
full owners under EO 228, the logical conclusion is clear and simple: the township reservation established under
Proclamation 1637 must yield and recognize the "deemed ownership rights" bestowed on the farmer-
beneficiaries under PD 27. Another way of looking at the situation is that these farmer-beneficiaries are
subrogated in the place of Doronilla and eventual transferee Araneta.
To Us, the private rights referred to in Proclamation 1637 means those of the farmer-beneficiaries who were
issued the 75 CLTs. As to them, farm lots are EXCLUDED from the coverage of Proclamation 1637 and are
governed by PD 27 and subsequently RA 6657.
With respect to the 912 farmer-beneficiaries who were issued around 1,200 EPs as a result of the DAR Notice of
Acquisition dated December 12, 1989, We are constrained to affirm the CA ruling invalidating the individual lot
awarded to them. Obviously, they are not rice/corn land tenant-farmers contemplated in PD 27. They do not
possess the rights flowing from the phrase "deemed owner as of October 21, 1972." In this regard, the Court
notes only too distinctly that Doronilla no less only named some 79 individuals as coming close to being
legitimate PD 27 tenant-farmers of Lot 23. We reiterate the ensuing pronouncement in Natalia Realty, Inc., as
cited by the CA, that agricultural lands reclassified as a residential land are outside the ambit of compulsory
acquisition under RA 6657 ought to be brought to bear against the 912 farmer-beneficiaries adverted to:
The issue of whether such lands of the Lungsod Silangan Townsite are covered by the Comprehensive Agrarian
Reform Law of 1988, the Supreme Court categorically declared, viz:
We now determine whether such lands are covered by the CARL. Section 4 of R.A. 6657 provides that CARL
shall ‘cover, regardless of tenurial agreement and commodity produced, all public and private agricultural lands.’
As to what constitutes ‘agricultural land,’ it is referred to as ‘land devoted to agricultural activity as defined in this
Act and not classified as mineral, forest, residential, commercial or industrial land.’ The deliberations of the
Constitutional Commission confirm this limitation. ‘Agricultural lands’ are only those lands which are ‘arable and
suitable agricultural lands’ and do not include commercial, industrial and residential lands.’
"Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills Subdivision cannot in any
language be considered as ‘agricultural lands.’ These lots were intended for residential use. They ceased to be
agricultural lands upon approval of their inclusion in the Lungsod Silangan Reservation. Even today, the areas in
question continued to be developed as a low-cost housing subdivision, albeit at a snail’s pace. x x x
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"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, DAR itself defined ‘agricultural land; thus –
‘x x x Agricultural land refers to those devoted to agricultural activity as defined in R.A. 6657 and not classified
as mineral or forest by the Department of Environment and Natural Resources (DENR) and its predecessor
agencies, and not classified in town plans and zoning ordinances as approved by the Housing and Land Use
Regulatory Board (HLURB) and its preceding competent authorities prior to June 15, 1988 for residential,
commercial or industrial use..’
"Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is bound by such conversion.
It was therefore error to include the undeveloped portions of the Antipolo Hills Subdivision within the coverage of
CARL.
"Be that as it may, the Secretary of Justice, responding to a query by the Secretary of Agrarian Reform noted in
an Opinion that lands covered by Presidential Proclamation No. 1637, inter alia, of which the NATALIA lands are
part, having been reserved for townsite purposes ‘to be developed as human settlements by the proper land and
housing agency,’ are not deemed ‘agricultural lands’ within the meaning and intent of Section 3 (c) of R.A. No.
6657.’ Not being deemed ‘agricultural lands,’ they are outside the coverage of CARL." 42
Summarizing, the farmer-beneficiaries who were given the 75 CLTs prior to the issuance of Proclamation 1283,
as amended by Proclamation 1637, are deemed full owners of the lots covered by 75 CLTs vis-à-vis the real
registered owner. The farmer-beneficiaries have private rights over said lots as they were deemed owners prior
to the establishment of the LS Townsite reservation or at least are subrogated to the rights of the registered lot
owner. Those farmer-beneficiaries who were issued CLTs or EPs after June 21, 1974 when Proclamation 1283,
as amended, became effective do not acquire rights over the lots they were claiming under PD 27 or RA 6657,
because the lots have already been reclassified as residential and are beyond the compulsory coverage for
agrarian reform under RA 6657. Perforce, the said CLTs or EPs issued after June 21, 1974 have to be annulled
and invalidated for want of legal basis, since the lots in question are no longer subject to agrarian reform due to
the reclassification of the erstwhile Doronilla estate to non-agricultural purposes.
Power of Reclassification of Land
Petitioners DAR and Land Bank ascribe error on the CA in giving Proclamation 1637, an administrative
issuance, preference and weight over PD 27, a law. As argued, it is basic that, in the hierarchy of issuances, a
law has greater weight than and takes precedence over a mere administrative issuance.
Petitioners’ contention may be accorded some measure of plausibility, except for the fact that it ignores a basic
legal principle: that the power to classify or reclassify lands is essentially an executive prerogative, 43 albeit local
government units, thru zoning ordinances, may, subject to certain conditions, very well effect reclassification of
land use within their respective territorial jurisdiction. 44 Reclassification decrees issued by the executive
department, through its appropriate agencies, carry the same force and effect as any statute. As it were, PD 27
and Proclamation 1637 are both presidential issuances, each forming, by virtue of Sec. 3(2), Article XVII of the
1973 Constitution, a part of the law of the land. Sec. 3(2), Art. XVII of the 1973 Constitution provides that:
[A]ll proclamations, orders, decrees, instructions, and acts promulgated, issued or done by the incumbent
President shall be part of the law of the land, and shall remain valid, legal, binding and effective even after the
lifting of Martial Law or the ratification of this Constitution unless modified, revoked, or superseded by
subsequent proclamations, orders, decrees, instructions or unless expressly or impliedly modified or repealed by
the regular Batasang Pambansa. (Emphasis supplied.)
While not determinative of the outcome of this dispute, the Court has, in Agrarian Reform Beneficiaries
Association (ARBA) v. Nicolas,45 held that the principles enunciated in Natalia Realty, Inc. hold sway regardless
of what non-agricultural use to which an agricultural land is converted. ARBA, in fine, declares that the Natalia
Realty, Inc. ruling is not confined solely to agricultural lands located within the townsite reservations; it is also
applicable to other agricultural lands converted to non-agricultural uses prior to the effectivity of the CARL. The
land classifying medium that ARBA teaches is not limited solely to a proclamation, but may also involve a city
ordinance.
Jurisdiction of DAR and its Adjudicating Arm
The DARAB has been created and designed to exercise the DAR’s adjudicating functions. 46 And just like any
quasi-judicial body, DARAB derives its jurisdiction from law, specifically RA 6657, which invested it with
adjudicatory powers over agrarian reform disputes47 and matters related to the implementation of CARL. We
need not belabor that DARAB’s jurisdiction over the subject matter, the Doronilla property, cannot be conferred
by the main parties, let alone the intervening farmer-beneficiaries claiming to have "vested rights" under PD 27.
As earlier discussed, the process of land reform covering the 1,266 hectares of the Araneta estate was not
completed prior to the issuance of Proclamation 1637. So the intervenors, with the exception of the 79 tenant-
beneficiaries who were granted CLTs, failed to acquire private rights of ownership under PD 27 before the
effective conversion of the Doronilla property to non-agricultural uses. Hence, the Doronilla property, being
outside of CARP coverage, is also beyond DARAB’s jurisdiction.
The OSG’s withdrawal of the expropriation suit on September 9, 1987 did not, as Land Bank posits,
automatically restore the Doronilla property to its original classification nor did it grant DAR or DARAB the power
or jurisdiction to order the compulsory acquisition of the property and to place it under CARP. And, as the CA
aptly noted, the DOJ Secretary, through Opinion No. 181, 48 even advised the DAR Secretary that lands covered
by Proclamation 1637, having been reserved for townsite purposes, are not deemed "agricultural lands" within
the meaning and intent of Sec. 3(c) of RA 6657 and, hence, outside the coverage of CARL. 49 The Secretary of
Justice further stated that RA 6657 did not supersede or repeal Proclamations 1283 and 1637 and they remain
operative until now; their being townsite reservations still remain valid and subsisting. To clarify, a DOJ opinion
carries only a persuasive weight upon the courts. However since this Court, in Natalia Realty, Inc., cited with
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approval DOJ Opinion No. 181, such citation carries weight and importance as jurisprudence. Be that as it may,
We recognize and apply the principles found in Natalia Realty, Inc. regarding the character of the Doronilla
property being converted to a townsite and, thus, non-agricultural in character.
Worth mentioning at this juncture is the fact that DAR itself issued administrative circulars governing lands
exempted from CARP. For instance, Administrative No. (AO) 3, Series of 1996, declares in its policy statement
what categories of lands are outside CARP coverage and unequivocally states that properties not covered by
CARP shall be reconveyed to the original transferors or owners. Significantly, AO 3 defines lands not so covered
as "property determined to be exempted from CARP coverage pursuant to [DOJ] Opinion Nos. 44 and 181" and
"where Presidential Proclamation has been issued declaring the subject property for certain uses other than
agricultural." Said policy of the DAR, as explained in the CA Decision, 50 should be "applied and upheld in cases
where the DAR had erroneously ordered the compulsory acquisition of the lands found outside CARP
coverage." This is true with the case at bar due to the fact that Proclamation 1283, as amended by Proclamation
1637, had effectively reclassified respondent’s land as "residential."
To address erroneous compulsory coverage or acquisition of non-agricultural lands or agricultural lands subject
of retention, especially where Certificates of Land Ownership Award (CLOAs) or EPs have been generated, the
said AO itself provides the mechanism/remedy for the reconveyance of lots thus covered or acquired, viz:
1. The Emancipation Patents (EPs) or Certificate of Land Ownership Awards (CLOAs) already generated for
landholdings to be reconveyed shall have to be cancelled first pursuant to Administrative Order No. 02, Series of
1994 prior to the actual reconveyance. The cancellation shall either be through administrative proceedings in
cases where the EP/CLOA has not yet been registered with the ROD or through quasi-judicial proceedings in
cases where the said EP/CLOA has already been registered. 51
Given the foregoing perspective, private petitioners’ lament about the injustice done to them due to the
cancellation of their EPs or CLOAs, as the case may be, is specious at best, for those EPs or CLOAs were
generated or granted based on the invalid order by DAR for the inclusion of the bulk of the Doronilla property
under PD 27 and CARP.
With Respect to Petitioners-Intervenors Duran, et al.
In their petition for intervention filed before Us on December 17, 2009, Duran, et al. claim that Atty. Lara, the
counsel who won their case before the DARAB, passed away on March 6, 1995. 52 They bemoan the fact that
due to his death, which was unbeknownst to them at that time, they were not able to receive a copy of, thus are
not bound by, the CA Decision dated September 19, 2003. They blame Araneta for this unfortunate incident,
alleging, "[S]ix years after Atty. Lara died, the Estate of J. Amado Araneta x x x filed a Petition for Review [of the
DARAB’s decision] before the Court of Appeals. x x x The Araneta estate faked and feigned the service of its
Petition upon Atty. Lara and the farmers by registered mail with the Explanation ‘unavailability of messenger.’
"53 On the basis of the foregoing premises, Duran, et al. pray to be allowed to intervene in the instant case and
admit their petition for review.
In its Comment (with motion to exclude) on intervenors’ petition for review, Araneta stated the observation that if
a handling lawyer dies, it is the that lawyer’s client who is in the better position to know about the former’s death,
not his adversary or the court. Assuming that court notices and pleadings continued to be sent and delivered to
Atty. Lara even after his death, at his given address, the comment added, it was intervenors’ fault. 54 And in
support of the motion to exclude, Araneta draws attention to the rule governing how intervention is done, i.e., via
a motion with a pleading-in- intervention attached to it. Exclusion is also sought on the ground that the petition
includes individuals who are long dead and parties who are not parties below.
We resolve to deny due course to the plea for intervention of Duran, et al.
As the records would show, the DARAB promulgated its Decision on February 7, 2001 or six (6) years after Atty.
Lara died. Yet, intervening petitioners opted to make an issue only with respect about their inability, due to Atty.
Lara’s death, to receive the adverse CA Decision, but curiously not about the DARAB judgment favorable to
them. Noticeably, in the instant petition, they only focused on questioning what they termed as the "malicious"
failure of the Estate of Araneta to individually inform them of the filing of its petition for review with the CA.
Nowhere can it be gleaned that they are questioning the failure of the CA and the DARAB to send copies of their
respective decisions to them. Thus, the Court is at a loss to understand how Duran, et al. can insinuate malice
on the part of the Estate of Araneta’s for its alleged failure to provide them with a copy of the CA decision and
yet not have any problem with respect to the DARAB decision which they also failed to personally receive due to
their counsel’s demise.
While the fault clearly lies with Duran, et al. themselves, they found it convenient to point fingers. To be sure,
they were remiss in their duty of coordinating with their counsel on the progress of their pending case. The
constant communication link needed to be established between diligent clients and their attorney did not obtain
in this case. It is not surprising, therefore, that Duran and his group only filed their instant petition 14 years after
the death of their counsel, Atty. Lara. Parties cannot blame their counsel for negligence when they themselves
were guilty of neglect.55 Relief cannot be granted to parties who seek to be relieved from the effects of a
judgment when the loss of the remedy was due to their own negligence. 56 Equity serves the vigilant and not
those who slumber on their rights.57 Duran, et al., as are expected of prudent men concerned with their ordinary
affairs, should have had periodically touched base at least to be apprised with the status of their case.
Judiciousness in this regard would have alerted them about their counsel’s death, thus enabling them to take the
necessary steps to protect their claimed right and interest in the case.
As Araneta aptly suggested in its Comment on the petition for review-in-intervention, it is Duran, et al., as
clients, not the court or their adversary, who are in a better position or at least expected to know about their
lawyer’s death due to the nature of a client-lawyer relationship. And knowing, fair play demands that the client
accordingly advises the court and the adverse party about the fact of death. It is not for the appellate court or
respondent Araneta to inquire why service of court processes or pleadings seemingly remained unacted by Atty.
De Lara and/or his clients.
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The long inaction of Duran, et al. to assert their rights over the subject case should be brought to bear against that the 75 CLTs issued prior to the effectivity of Presidential Proclamation No. 1283 on June 21, 1974 are
them. Thus, We held in Esmaquel v. Coprada:58 declared legal and valid. The other CLTs, EPs, CLOAs issued by DAR involving the subject property are hereby
CANCELED and NULLIFIED.
Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which, by
exercising due diligence, could or should have been done earlier; it is negligence or omission to assert a right The Land Bank and DAR are hereby ordered to COMPUTE the just compensation of the land subject of the 75
within a reasonable time, warranting the presumption that the party entitled to assert it either has abandoned or CLTs and PAY the just compensation to the Estate of J. Amado Araneta.
declined to assert it. There is no absolute rule as to what constitutes laches or staleness of demand; each case
is to be determined according to its particular circumstances, with the question of laches addressed to the sound No pronouncement as to cost.
discretion of the court. Because laches is an equitable doctrine, its application is controlled by equitable
considerations and should not be used to defeat justice or to perpetuate fraud or injustice. SO ORDERED.

There can be little quibble about Duran, et al. being guilty of laches. They failed and neglected to keep track of PRESBITERO J. VELASCO, JR.
their case with their lawyer for 14 long years. As discussed above, Atty. Lara died even prior to the promulgation Associate Justice
of the DARAB Decision. Even then, they failed to notify the DARAB and the other parties of the case regarding
the demise of Atty. Lara and even a change of counsel. It certainly strains credulity to think that literally no one, WE CONCUR:
among those constituting the petitioning-intervenors, had the characteristic good sense of following up the case
DIOSDADO M. PERALTA
with their legal counsel. Only now, 14 years after, did some think of fighting for the right they slept on. Thus, as
Associate Justice
to them, the CA Decision is deemed final and executory based on the principle of laches.
ROBERTO A. ABAD JOSE CATRAL MENDOZA
Agrarian reform finds context in social justice in tandem with the police power of the State. But social justice
Associate Justice Associate Justice
itself is not merely granted to the marginalized and the underprivileged. But while the concept of social justice is
intended to favor those who have less in life, it should never be taken as a toll to justify let alone commit an
ESTELA M. PERLAS-BERNABE
injustice. To borrow from Justice Isagani A. Cruz:
Associate Justice
[S]ocial justice––or any justice for that matter––is for the deserving whether he be a millionaire in his mansion or
ATTESTATION
a pauper in his hovel. It is true that, in a 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 I attest that the conclusions in the above Decision had been reached in consultation before the case was
compassion. But never is it justified to prefer the poor simply because they are poor, or to eject the rich simply assigned to the writer of the opinion of the Court’s Division.
because they are rich, for justice must always be served, for poor and rich alike, according to the mandate of the
law.59 PRESBITERO J. VELASCO, JR.
Associate Justice
At any rate, all is not lost on the part of Duran and the other petitioners-intervenors. In the event that they belong Chairperson
to the group of 75 PD 27 tenant-farmers who, as earlier adverted, were awarded individual CLT covering parcels
of lands described in the CLT, then it is just but fair and in keeping with the imperatives of social justice that their CERTIFICATION
rights to the covered lots should be recognized and respected.
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, I certify that
To the 912 holders of EPs, this decision might be a big let down. 1avvphi1 But then the facts and applicable laws the conclusions in the above Decision had been reached in consultation before the case was assigned to the
and jurisprudence call for this disposition. writer of the opinion of the Court’s Division.
WHEREFORE, the petitions are hereby partly DENIED. The CA Decision dated September 19, 2003, as RENATO C. CORONA
effectively reiterated in its Resolution of January 22, 2004 and April 2, 2004, is AFFIRMED with the modification Chief Justice

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Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 176692               June 27, 2012

LAND BANK OF THE PHILIPPINES, Petitioner,

vs.
VERONICA ATEGA NABLE, Respondent.

DECISION

BERSAMIN, J.:

Land Bank of the Philippines (LBP) hereby assails the amount of ₱26,523,180.00 as just compensation for the
taking of landowner Veronica Atega Nable’s landholding pursuant to the Comprehensive Agrarian Reform
Program (CARP) determined by the Regional Trial Court (RTC) as Special Agrarian Court (SAC) and affirmed
by the Court of Appeals (CA).

Antecedents

Veronica Atega Nable (Nable) was the sole owner of a landholding consisting of three contiguous agricultural
lots situated in Barangay Taligaman, Butuan City and covered by Original Certificate of Title (OCT) No. P-5
whose total area aggregated to 129.4615 hectares. 1 She had inherited the landholding from her late parents,
Spouses Pedro C. Atega and Adela M. Atega. In 1993, the Department of Agrarian Reform (DAR) compulsorily
acquired a portion of the landholding with an area of 127.3365 hectares pursuant to Republic Act No. 6657
(Comprehensive Agrarian Reform Law of 1988, or CARL).2 LBP valued the affected landholding at only ₱
5,125,036.05,3 but Nable rejected the valuation.4

On January 17, 2001, the Department of Agrarian Reform Adjudication Board (DARAB) affirmed the valuation of
LBP.5 After DARAB denied her motion for reconsideration, 6 Nable instituted against DAR and LBP a petition for
the judicial determination of just compensation in the RTC in Butuan City, praying that the affected landholding
and its improvements be valued at ₱ 350,000.00/hectare, for an aggregate valuation of ₱ 44,567,775.00.7

During pre-trial, the parties agreed to refer the determination of just compensation to a board of
commissioners,8 who ultimately submitted a written report to the RTC on June 27, 2003 recommending ₱
57,660,058.00 as the just compensation for Nable. 9

On November 26, 2004, the RTC rendered its judgment, as follows:

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WHEREFORE, in the light of the foregoing consideration, this Court hereby renders judgment ordering the
public defendants to pay the following:
a) The total amount of ₱26,523,180.00 for the land and improvements;
b) The 6% interest based on the total amount as Just Compensation to be reckoned at the time of taking that is
January 1993;
c) Commissioner’s fee in the amount of ₱25,000.00;
d) Attorney’s Fee which is 10% percent of the total amount awarded as Just Compensation; and
e) Litigation expenses.
SO ORDERED.10
The RTC later denied LBP’s motion for reconsideration. 11
On appeal, LBP urged in its petition for review that the RTC gravely erred as follows:
I
IN TOTALLY DISREGARDING DAR ADMINISTRATIVE ORDER (AO) NO. 11, S. OF 1994 AS AMENDED BY
AO NO. 5, S. 1998 IN CONJUNCTION WITH SEC. 17, RA 6657 AND THE DECISION OF THE DARAB
CENTRAL, QUEZON CITY [JC-RX-BUT-0055-CO-97] AND THE DECISION OF THE SUPREME COURT IN
THE CASE OF VICENTE AND LEONIDAS BANAL VS. LANDBANK, G.R. NO. 143276 PROMULGATED ON 20
JULY 2004;
II
IN TAKING JUDICIAL NOTICE OF THE RESPONDENT’S CARETAKER AFFIDAVIT; FARMING
EXPERIENCE" AND "RULE OF THUMB METHOD OF CONVERSION" IN DEROGATION OF THE
PRODUCTION DATA FROM THE DEPARTMENT OF AGRICULTURE, AND PHILIPPINE COCONUT
AUTHORITY (PCA) USED BY LBP/DAR IN THE DETERMINATION OF JUST COMPENSATION; AND
III
IN (1) AWARDING SIX (6%) PERCENT INTEREST ON THE TOTAL AMOUNT OF JUST COMPENSATION; (2)
COMMISSIONER’S FEES IN THE AMOUNT OF ₱25,000.00; AND (3) TEN (10%) ATTORNEY’S FEES OF
THE TOTAL AMOUNT AWARDED.
On August 17, 2006, the CA affirmed the RTC judgment with modifications, 12 to wit:
IN THE LIGHT OF THE FOREGOING, the petition for review is DENIED for lack of merit. The assailed decision
is AFFIRMED with MODIFICATION that the just compensation of the subject property is ₱36,159,855.00 less
the amount of ₱5,125,036.05 paid by petitioner to private respondent.
Petitioner Bank is hereby ORDERED to immediately pay:
A] Respondent the remaining balance of ₱31,034,819.00 plus twelve (12%) percent per annum as interest
(computed from the above remaining balance and from 1993 until full payment thereof); and
B] Mr. Hospicio T. Suralta, Jr., Mr. Rogelio C. Virtudazo, and Mr. Simeon E. Avila, Jr. the sum of ₱25,000.00 as
Commissioners’ fee.
The Writ of Preliminary Injunction issued is hereby DISSOLVED.
SO ORDERED.
Upon denial of its motion for reconsideration on January 30, 2007, 13 LBP has appealed by petition for review on
certiorari.
Issues
LBP asserts that:
A
THE COURT OF APPEALS GRAVELY ERRED IN SUSTAINING THE SAC’s DECISION WHICH TOTALLY
DISREGARDED SEC. 17, RA 6657 IN CONJUNCTION WITH DAR ADMINISTRATIVE ORDER (AO) NO. 11, S.
OF 1994 AS AMENDED BY AO NO. 5, S. 1998; THE DECISION OF THE DARAB CENTRAL, QUEZON CITY
[JC-RX-BUT-0055-CO-97] AND THE DECISION OF THE SUPREME COURT IN THE CASE OF VICENTE AND
LEONIDAS BANAL VS. LANDBANK, G.R. NO. 143276 PROMULGATED ON 20 JULY 2004 AND LBP VS
CELADA, G.R. NO. 164876 PROMULGATED ON 23 JANUARY 2006.
B
THE COURT OF APPEALS GRAVELY ERRED IN SUSTAINING THE SAC’s DECISION WHICH TAKE
JUDICIAL NOTICE OF THE RESPONDENT’S OWN FACTORS OF VALUATION SUCH AS CARETAKER
AFFIDAVIT; "FARMING EXPERIENCE" AND "RULE OF THUMB METHOD OF CONVERSION" WHICH ARE
NOT RELATED TO OR NECESSARILY IMPLIED FROM THE FACTORS ENUMERATED UNDER SEC. 17, RA
6657 AND DAR AOs.
C
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THE COURT OF APPEALS GRAVELY ERRED IN GIVING PROBATIVE VALUE AND JUDICIAL NOTICE TO
THE BOARD OF COMMISSIONER’S REPORT WHICH IS NOT ONLY HEARSAY AND IRRELEVANT AS NO
HEARING WAS CONDUCTED THEREON IN VIOLATION OF SEC. 3, RULE 129 OF THE RULES OF COURT
AS THE PARTIES WERE REQUESTED TO SUBMIT THEIR RESPECTIVE MEMORANDA.
D secured from any government financing institution on the land.
THE COURT OF APPEALS GRAVELY ERRED IN AWARDING (1) TWELVE (12%) PER CENT INTEREST
PER ANNUM COMPUTED FROM THE REMAINING BALANCE OF ₱31,034,819.00 FROM 1993 UNTIL FULL
PAYMENT THEREOF; (2) COMMISSIONER’S FEES IN THE AMOUNT OF ₱25,000.00; AND (3) TEN (10%)
PER CENT ATTORNEY’S FEES OF THE TOTAL AMOUNT AWARDED.14
Ruling
The appeal lacks merit.
I.
The CA and the RTC did not disregard Section 17, Republic Act No. 6657, and DAR AO No. 5, Series of 1998
Section 4, Article XIII, of the Constitution has mandated the implementation of an agrarian reform program for
the distribution of agricultural lands to landless farmers subject to the payment of just compensation to the
landowners, viz:
Section 4. The Sate shall, by law, undertake an agrarian reform program founded on the right of farmers and
regular farmworkers, who are landless, to own directly or collectively the lands they till or, in the case of other
farmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage and undertake
the just distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the
Congress may prescribe, taking into account ecological, developmental, or equity considerations, and subject to
the payment of just compensation. In determining retention limits, the State shall respect the rights of small
landowners. The State shall further provide incentives for voluntary land-sharing.
The Congress has later enacted Republic Act No. 6657 to implement the constitutional mandate. Section 17 of
Republic Act No. 6657 has defined the parameters for the determination of the just compensation, viz:
Section 17. Determination of Just Compensation. – In determining just compensation, the cost of acquisition of
the land, the current value of like properties, its nature, actual use and income, the sworn valuation by the
owner, the tax declarations, and the assessment made by government assessors shall be considered. The
social and economic benefits contributed by the farmers and the farmworkers and by the Government to the
property as well as the nonpayment of taxes or loans secured from any government financing institution on the
said land shall be considered as additional factors to determine its valuation.
The Congress has thereby required that any determination of just compensation should consider the following
factors, namely: (a) the cost of the acquisition of the land; (b) the current value of like properties; (c) the nature,
actual use and income of the land; (d) the sworn valuation by the owner; (e) the tax declarations; (f) the
assessment made by government assessors; (g) the social and economic benefits contributed to the property by
the farmers and farmworkers and by the Government; and (h) the fact of the non-payment of any taxes or loans
Pursuant to its rule-making power under Section 49 of Republic Act No. 6657, 15 the Department of Agrarian
Reform (DAR) promulgated DAR Administrative Order (AO) No. 6, Series of 1992, DAR AO No. 11, Series of
1994 (to amend AO No. 6), and DAR AO No. 5, Series of 1998 (to amend AO No. 11) ostensibly to translate the
factors provided under Section 17 in a basic formula. The formulae embodied in these AOs have been used in
computing the just compensation upon taking into account all the factors stated in Section 17, supra. It is
relevant to note that the Court has consistently regarded reliance on the formulae under these AOs to be
mandatory.16
Of relevance here is DAR AO No. 5, whose formula of just compensation follows:
A. II. The following rules and regulations are hereby promulgated to govern the valuation of lands subject of
acquisition whether under voluntary offer to sell (VOS) or compulsory acquisition (CA).
A. There shall be one basic formula for the valuation of lands covered by VOS or CA:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
Where: LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
The above formula shall be used if all three factors are present, relevant, and applicable.
A1. When the CS factor is not present and CNI and MV are applicable, the formula shall be:
LV = (CNI x 0.9) + (MV x 0.1)
A2. When the CNI factor is not present, and CS and MV are applicable, the formula shall be:
LV = (CS x 0.9) + (MV x 0.1)
A.3 When both the CS and CNI are not present and only MV is applicable, the formula shall be:
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Agrarian Law and Social Legislation
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LV = MV x 2. To compute the CNI, the following formula shall be used, to wit:

The RTC found that the entire landholding was prime coconut land located along the national highway planted to (AGP X SP) – CO
95 fruit-bearing coconut trees per hectare, more or less, or a total of 12,153 fruit-bearing coconut trees. It
ascertained Nable’s just compensation by considering the affected landholding’s nature, location, value and the CNI =
volume of the produce, and by applying the formula under DAR AO No. 5, Series of 1998, viz:
0.12
xxx
The cost of operation could not be obtained or verified and since the landholdings subject in the instant case are
Nonetheless, the said report (commissioners’ report) impliedly belied the classification made by the defendants planted to coconut which are productive at the time of Field Investigation (FI), it will continue to use the assumed
(DAR and LBP) by stating among others, that the land is fully cultivated contrary to the allegation that portion of NIR of 70%.
which is an idle land. While this Court may affirm, modify or disregard the Commissioner’s Report, the Court
may consider the number of listed coconut trees and bananas actually counted by the Board during their field Thus, the computation, to wit:
inspection.
CNI (AGP X SP (70%)
xxx
=
The Court is of the opinion that the actual production data not the government statistics is the most accurate
data that should be used if only to reflect the true and fair equivalent value of the property taken by the .12
defendant through expropriation. Considering the number of coconut trees to a high of 12,153 all bearing fruits,
it would be contrary to farming experience involving coconuts to have an average production per month of (5,671.3 kls. X 5.93) 70%
2,057.14 kilos without necessarily stating that the said land is classified as prime coconut land. Apportioning the
number of coconut trees to the total land area would yield, more or less 95 trees per hectare well within the =
classification of a prime coconut land.
.12
Even the settled rule of thumb method of conversion, 1000 kilos of nuts make 250 kilos copra resecada long
before adopted by coconut farmers spells substantial difference. The Court deems it more reasonable the 23,541.56
production data submitted by the plaintiff supported by the affidavit of Mrs. Wilma Rubi, to wit:
=
xxx Hence, the computation of the just compensation of the subject land, to wit:
.12
FORMULA: LV = (CNI X 0.6) + (CS X 0.3) + (MV X 0.1)
CNI = 196,179.7
WHERE: LV = Land Values

CNI = Capitalized Net Income LV = (196,179.7 X 0.9) + (14,158 X 0.1)

CS = Comparable Sales
MV = Market Value per Tax Declaration = 176,561.73 + 1,415.8

Since the Comparable Sales factor is missing, the formula shall be as follows: LV = ₱ 22,662,466

LV = (CNI X 0.9) + (MV X 0.1) Improvements:

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Computation: Whole Nuts Resecada - 209,908 kilos 4,373 kilos
(converted tibook)
xxx

Total - ₱ 3,860,714.00
5,671.3 kilos
Summary Computation of Total Just Compensation:
We likewise observe that in the computation of the CNI OR Capitalized Net Income, both DARAB and the court
1) Land Value - ₱ 22,662,466.00 a quo used the following formula:

2) Improvements - ₱ 3,860,714.00 (AGP x SP) - CO

CNI =

Total - ₱ 26,523,180.00
"Just compensation means the equivalent for the value of the property at the time of its taking. It means a fair
and full equivalent value for the loss sustained. All the facts as to the condition of the property and its
surroundings, its improvements and capabilities should be considered" (Export Processing Zone Authority vs.
Dulay 149 SCRA 305 [1987]). Consistent with the said ruling, the Court considered the findings of the
commissioners as to the plants/fruit tree introduced into the land constituting as valuable improvements thereto.
Thus, the above computation.
.12
Unfortunately, DARAB and the court a quo committed an error in the calculation thereon (emphasis supplied).
After multiplying the AGP (Average Gross Production) from SP (Selling Price/kilo), they multiplied the result with
the CO (Cost of Operation), instead of subtracting the same as reflected in the above formula.
Thus, pursuant to Administrative Order No. 11, as amended, the correct computation should be:
(AGP x SP) - CO

xxx CNI =

Considering therefore the actual production in addition with the desirable land attributes as a contiguous titled .12
property fertile, with valuable intercrops, constituting as improvements, fully cultivated, proximate location along
the national highway, the Court deems it just and equitable the valuation in total per Court’s computation. 17 Wherein: AGP – 5,671.3 kilos (Average Gross Production)

The CA affirmed the RTC’s valuation upon finding that the evidence on record substantiated the valuation, but SP - ₱ 5.93/kilo (Selling Price – from PCA data)
saw the need to correct the amount from ₱ 26,523,180.00 to ₱ 31,034,819.00 because of the RTC’s honest CO – 70% (assumed Cost of Operations, AO No. 11)
error in calculation. The CA’s following explanation for its affirmance is worth noting:
(5,671.53 kilos x 5.93) – 70%
To recapitulate, the Annual and Monthly Gross Production of copra on the subject property are as follows:
=
Average Yearly Average Monthly
Production Production .12

= 33.632.17 -.7
Directly Processed Copra – 15,580 kilos 1,298.3 kilos

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.12 = ₱ 32,299,141.00

33.631.472 Summary of Valuation:

= 1) Total Land Value - ₱ 32,299,141.00

.12 2) Improvements - ₱ 3,860,714.00 (as found by the court a quo)

CNI = 280,262.26 TOTAL - ₱ 36,159,855.00

To compute the Land Value (LV) per hectare, we use the formula as prescribed by Administrative Order No. 11, Hence, the correct just compensation that must be paid to herein respondent is Thirty Six Million One Hundred
as amended: Fifty Nine Thousand Eight Hundred Fifty Five Pesos (₱ 36,159,855.00).18

LV = (CNI x 0.9) + (CS x 0.3) + (MV x 0.1) xxx

WHERE: LV = Land Values In the case at bench, petitioner Bank initially paid respondent the sum of ₱ 5,125,036.05 on August 26, 1993.
The total just compensation payable to the latter, as computed above, is ₱ 36,159,855.00. Hence, the difference
CNI = Capitalized Net Income of ₱ 31,034,819.00 (emphasis supplied) must earn the interest of 12% per annum, or ₱ 3,724,178.20, from
1993 until fully paid thereon in order to place the owner in a position as good (but not better than) the position
CS = Comparable Sales she was in before the taking occurred as mandated by the Reyes doctrine. 19 (Emphasis supplied)

MV = Market Value per Tax Declaration We cannot fail to note that the computation by the CA closely conformed to the factors listed in Section 17 of
Republic Act No. 6657, especially the factors of the actual use and income of the affected landholding. The
When CS is not present and CNI and MV are applicable, the formula shall be: Court has consistently ruled that the ascertainment of just compensation by the RTC as SAC on the basis of the
landholding’s nature, location, market value, assessor’s value, and the volume and value of the produce is valid
LV = (CNI x 0.9) + (MV x 0.1) and accords with Section 17, supra.20 The Court has likewise ruled that in appraising just compensation the
courts must consider, in addition, all the facts regarding the condition of the landholding and its surroundings, as
Wherein: CNI – 280,262.26 well as the improvements and the capabilities of the landholding. 21 Thus, we sustain the computation.
MV - ₱ 14,158.40 (Market Value per Tax Declaration of the subject property) We also stress that the factual findings and conclusions of the RTC, when affirmed by the CA, are conclusive on
the Court. We step in to review the factual findings of the CA only when we have a compelling reason to do so,
LV = (280,262.26 x 0.9) + (₱ 14,158.40 x 0.1)
such as any of the following:
= 252,236.03 + ₱ 1,415.84 1. When the factual findings of the CA and the RTC are contradictory;
LV = ₱ 253,651.87/hectare 2. When the findings are grounded entirely on speculation, surmises, or conjectures;

3. When the inference made by the CA is manifestly mistaken, absurd, or impossible;

Total Land Value = ₱ 253,651.87 hectare x 127.3365 hectares 4. When there is grave abuse of discretion in the appreciation of facts;

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5. When the CA, in making its findings, went beyond the issues of the case, and such findings are contrary to the respondent and the other landowners." 27 Apparently, the RTC had used only a single factor in determining
the admissions of both appellant and appellee; just compensation. Here, on the other hand, the RTC took into consideration not only the board of
commissioners’ report on the affected landholding’s value, but also the several factors enumerated in Section 17
6. When the judgment of the CA is premised on a misapprehension of facts; of Republic Act No. 6657 and the applicable DAR AOs as well as the value of the improvements.

7. When the CA fails to notice certain relevant facts that, if properly considered, will justify a different conclusion; II.

8. When the findings of fact are themselves conflicting; Farming Experience and Rule of Thumb Method of Conversion are relevant to the statutory factors
for determining just compensation
9. When the findings of fact are conclusions without citation of the specific evidence on which they are based;
and, The RTC elucidated:

10. When the findings of fact of the CA are premised on the absence of evidence, but such findings are The Court is of the opinion that the actual production data not the government statistics is the most accurate
contradicted by the evidence on record.22 data that should be used if only to reflect the true and fair equivalent value of the property taken by the
defendant through expropriation. Considering the number of coconut trees to a high of 12,153 all bearing fruits,
Considering that LBP has not shown and established the attendance of any of the foregoing compelling reasons it would be contrary to farming experience involving coconuts to have an average production per month of
to justify a review of the findings of fact of the CA, we do not disturb the findings of fact of the CA and the RTC. 2,057.14 kilos without necessarily stating that the said land is classified as prime coconut land. Apportioning the
number of coconut trees to the total land area would yield, more or less 95 trees per hectare well within the
Nonetheless, LBP urges that the CA should have relied on the rulings in Land Bank of the Philippines v. classification of a prime coconut land.
Banal23 and Land Bank of the Philippines v. Celada24 in resolving the issue of just compensation.
Even the settled rule of thumb method of conversion, 1000 kilos of nuts make 250 kilos copra resecada long
In Banal, the Court invalidated the land valuation by the RTC because the RTC did not observe the basic rules before adopted by coconut farmers spells substantial difference. The Court deems it more reasonable the
of procedure and the fundamental requirements in determining just compensation cases. In Celada, the Court production data submitted by the plaintiff supported by the affidavit of Mrs. Wilma Rubi, to wit:
set aside the land valuation because the RTC had used only one factor in valuing the land and had disregarded
the formula under DAR AO No. 5, Series of 1998. The Court stated that the RTC "was at no liberty to disregard COPRA RESECADA:
the formula which was devised to implement the said provision." 25 Thus, LBP submits that the RTC’s land
valuation, as modified by the CA, should be disregarded because of the failure to consider the factors listed in Months No. of Kilos Sales
Section 17 of RA 6657 and the formula prescribed under DAR AO No. 5, Series of 1998, amending DAR AO No.
11, Series of 1994. a.) November 1992 No copra -0-
LBP’s submission is grossly misleading. As the Court has already noted, the CA and the RTC did not disregard
b.) October 1992 1,416 ₱ 9,345.60
but applied the formula adopted in DAR AO No. 5. Moreover, the reasons for setting aside the RTC’s
determinations of just compensation in Banal and Celada did not obtain here. In Banal, the RTC as SAC did not
c.) September 1992 2,225 ₱ 14,540.65
conduct a hearing to determine the landowner’s compensation with notice to and upon participation of all the
parties, but merely took judicial notice of the average production figures adduced in another pending land case
d.) August 1992 No copra -0-
and used the figures without the consent of the parties. 26 The RTC did not also appoint any commissioners to aid
it in determining just compensation. In contrast, the RTC as SAC herein conducted actual hearings to receive
e.) July 1992 323.5 ₱ 2,523.30
the evidence of the parties; appointed a board of commissioners to inspect and to estimate the affected
landholding’s value; and gave due regard to the various factors before arriving at its valuation. In Celada, the
f.) June 1992 1,867 ₱ 15,946.10
Court accepted the valuation by LBP and set aside the valuation determined by the RTC because the latter
valuation had been based "solely on the observation that there was a patent disparity between the price given to
g.) May 1992 713 ₱ 5,940.60

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Report; and because it (LBP) was deprived of the opportunity to contest the Commissioners’ Report and Wilma
Rubi’s affidavit.
h.) April 1992 746 ₱ 6,490.20
LBP’s insistence is factually and legally unwarranted.
i.) March 1992 1,962.5 ₱ 16,485.00
It appears that upon its receipt of the Commissioners’ Report, LBP submitted to the RTC on July 30, 2003 an
opposition to the Commissioners’ Report and to Nable’s motion to approve the Commissioners’ Report; 29 and
j.) February 1992 2,652.5 ₱ 22,281.00
that the RTC later sent to LBP a notice for the hearing on September 19, 2003 of the motion to approve the
Commissioner’s Report.30 LBP’s counsel received the notice of hearing on August 28, 2003. 31 Yet, neither LBP’s
k.) January 1992 495.5 ₱ 4,558.00
counsel nor its representative appeared at the hearing held on September 19, 2003; instead, only Nable’s
counsel attended.32 Even so, the RTC still directed the parties to submit their respective memoranda on the
3,178.5 ₱ 27,419.05
l.) December 1991 Commissioners’ Report.33 On its part, LBP filed its memorandum (with supporting documents attached). 34
------------------- --------------------
Under the circumstances, LBP had no justification to complain that it had not been allowed the opportunity to
15,580 ₱ 125,080.10 oppose or comment on the Commissioners’ Report.
xxx Anent Wilma Rubi’s affidavit, LBP did not object to its presentation during the trial. LBP objected to the affidavit
for the first time only on appeal in the CA. Expectedly, the CA rejected its tardy objection, and further deemed
The defendant (LBP) did not bother to disprove the aforestated documentary evidence submitted by the plaintiff LBP’s failure to timely object to "respondent’s introduction of (the) affidavit" as an implied admission of the
(Nable). However, the selling price/kilo (SP/Kg.) used by the defendants (DAR and LBP) in their computation is affidavit itself.35
more reasonable/fair price per kilo of copra during the time of taking. The time of taking must have relevance on
the determination of the selling price (SP) prevailing when expropriation was effected. xxx 28 The Court agrees with the CA’s rejection of LBP’s objection to the affidavit.
LBP protests the use by the RTC of the farming experience and the thumb method of conversion as gauges of Any objection to evidence must be timely raised in the course of the proceedings in which the evidence is first
the justness of LBP and DARAB’s valuation of the affected landholding. offered.36 This enables the adverse party to meet the objection to his evidence, as well as grants to the trial court
the opportunity to pass upon and rule on the objection. The objection to evidence cannot be made for the first
The Court finds nothing objectionable or irregular in the use by the RTC of the assailed the farming experience time on appeal, both because the party who has failed to timely object becomes estopped from raising the
and the thumb method of conversion tests. Such tests are not inconsistent or incompatible with the factors listed objection afterwards; and because to assail the judgment of the lower court upon a cause as to which the lower
in Section 17 of Republic Act No. 6657, as the aforequoted elucidation of the RTC shows. court had no opportunity to pass upon and rule is contrary to basic fairness and procedural orderliness. 37
Although Section 17 of Republic Act No. 6657 has not explicitly mentioned the farming experience and the IV.
thumb method of conversion as methods in the determination of just compensation, LBP cannot deny that such
methods were directly relevant to the factors listed in Section 17, particularly those on the nature, actual use and Awarding of interest and commissioners’ fee, and deletion of attorney’s fee are proper
income of the landholding.
The CA correctly prescribed 12% interest per annum on the unpaid balance of ₱ 31,034,819.00 reckoned from
III. the taking of the land in 1993 until full payment of the balance. This accords with our consistent rulings on the
matter of interest in the expropriation of private property for a public purpose. 38 The following justification for that
LBP was allowed the opportunity to refute the Commissioners’ Report and Rubi’s affidavit rate of interest rendered in Republic v. Reyes39 is now worthy of reiteration, viz:
LBP insists that the CA and the RTC both erred in relying on the Commissioners’ Report and on caretaker The constitutional limitation of "just compensation" is considered to be the sum equivalent to the market value of
Wilma Rubi’s affidavit because the RTC did not conduct a hearing on the motion to approve the Commissioners’ the property, broadly described to be the price fixed by the seller in open market in the usual and ordinary

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course of legal action and competition or the fair value of the property as between one who receives, and one We sustain the CA’s deletion of the RTC’s award of 10% attorney’s fees. Under Article 2208, Civil Code, an
who desires to sell, it fixed at the time of the actual taking by the government. Thus, if property is taken for public award of attorney’s fees requires factual, legal, and equitable justifications. Clearly, the reason for the award
use before compensation is deposited with the court having jurisdiction over the case, the final compensation must be explained and set forth by the trial court in the body of its decision. The award that is mentioned only in
must include interests on its just value to be computed from the time the property is taken to the time when the dispositive portion of the decision should be disallowed. 41
compensation is actually paid or deposited with the court. In fine, between the taking of the property and the
actual payment, legal interests accrue in order to place the owner in a position as good as (but not better than) Considering that the reason for the award of attorney’s fees was not clearly explained and set forth in the body
the position he was in before the taking occurred. of the RTC’s decision, the Court has nothing to review and pass upon now. The Court cannot make its own
findings on the matter because an award of attorney’s fees demands the making of findings of fact.
The Bulacan trial court, in its 1979 decision, was correct in imposing interests on the zonal value of the property
to be computed from the time petitioner instituted condemnation proceedings and "took" the property in WHEREFORE, the Court AFFIRMS the decision promulgated on August 17, 2006 by the Court of Appeals; and
September 1969. This allowance of interest on the amount found to be the value of the property as of the time of ORDERS petitioner to pay the costs of suit.
the taking computed, being an effective forbearance, at 12% per annum should help eliminate the issue of the
constant fluctuation and inflation of the value of the currency over time. Article 1250 of the Civil Code, providing SO ORDERED.
that, in case of extraordinary inflation or deflation, the value of the currency at the time of the establishment of
the obligation shall be the basis for the payment when no agreement to the contrary is stipulated, has strict LUCAS P. BERSAMIN
application only to contractual obligations. In other words, a contractual agreement is needed for the effects of Associate Justice
extraordinary inflation to be taken into account to alter the value of the currency. (Emphasis supplied)
WE CONCUR:
The charging of ₱ 25,000.00 as commissioners’ fees against LBP is likewise upheld. Section 16, Rule 141 of
TERESITA J. LEONARDO-DE CASTRO
the Rules of Court, expressly recognizes such fees, to wit:
Associate Justice
Section 16. Fees of commissioners in eminent domain proceedings. – The commissioners appointed to appraise Acting Chairperson, First Division
land sought to be condemned for public uses in accordance with the rules shall each receive a compensation to
MARIANO C. DEL CASTILLO MARTIN S. VILLARAMA, JR.
be fixed by the court of not less than (₱ 300.00) Pesos per day for the time actually and necessarily employed in
Associate Justice Associate Justice
the performance of their duties and in making their report to the court which fees shall be taxed as a part of
costs of the proceedings.
ESTELA M. PERLAS-BERNABE
Applying the rule, the Court finds the amount of ₱ 25,000.00 as fair and commensurate to the work performed Associate Justice
by the commissioners, which the CA summed up as follows:
ATTESTATION
We observe that in the Commissioners’ Report, the three (3) appointed Commissioners actually inspected 127
I attest that the conclusions in the above Decision had been reached in consultation before the case was
hectares of the subject property. It took them five (5) days to complete the ocular inspection and individually
assigned to the writer of the opinion of the Court’s Division.
counted 12,153 coconut trees, 28,024 bananas, 4,928 Tundan, 821 Falcata, 1,126 Temani, 298 Bamboos,
Jackfruit, 90 Santol, 51 Rombuon, 260 Ipil-Ipil, 5,222 Abaca plant, 68 Star Apple, 1,670 Antipolo, 67 Narra trees, TERESITA J. LEONARDO-DE CASTRO
23 Durian trees, 139 Mango trees, 83 Avocado trees, 23 Lanzones trees, 84 Cacao, 18 Marang, and 13 trees of Associate Justice
Lawaan. Acting Chairperson, First Division
Hence, for the actual time spent and thoroughness of its Report, it is proper for the said commissioners to be CERTIFICATION
compensated in the amount of ₱ 25,000.00, which is only ₱ 1,666.66 per day.40

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Pursuant to Section 13, Article VII of the Constitution and the Division Acting Chairperson’s Attestation, I certify LUZ FARMS, Petitioner, vs.  THE HONORABLE SECRETARY OF THE DEPARTMENT OF AGRARIAN
that the conclusions in the above Decision had been reached in consultation before the case was assigned to REFORM, Respondent.
the writer of the opinion of the Court’s Division.
DECISION
ANTONIO T. CARPIO
Senior Associate Justice PARAS, J.:
(Per Section 12, R.A. 296, The Judiciary Act of 1948, as amended)
This is a petition for prohibition with prayer for restraining order and/or preliminary and permanent injunction
against the Honorable Secretary of the Department of Agrarian Reform for acting without jurisdiction in enforcing
the assailed provisions of R.A. No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988
and in promulgating the Guidelines and Procedure Implementing Production and Profit Sharing under R.A. No.
6657, insofar as the same apply to herein petitioner, and further from performing an act in violation of the
constitutional rights of the petitioner.

As gathered from the records, the factual background of this case, is as follows:

On June 10, 1988, the President of the Philippines approved R.A. No. 6657, which includes the raising of
livestock, poultry and swine in its coverage (Rollo, p. 80).

On January 2, 1989, the Secretary of Agrarian Reform promulgated the Guidelines and Procedures
Implementing Production and Profit Sharing as embodied in Sections 13 and 32 of R.A. No. 6657 (Rollo, p. 80).

On January 9, 1989, the Secretary of Agrarian Reform promulgated its Rules and Regulations implementing
Section 11 of R.A. No. 6657 (Commercial Farms). (Rollo, p. 81).

Luz Farms, petitioner in this case, is a corporation engaged in the livestock and poultry business and together
with others in the same business allegedly stands to be adversely affected by the enforcement of Section 3(b),
Section 11, Section 13, Section 16(d) and 17 and Section 32 of R.A. No. 6657 otherwise known as
Comprehensive Agrarian Reform Law and of the Guidelines and Procedures Implementing Production and Profit
Sharing under R.A. No. 6657 promulgated on January 2, 1989 and the Rules and Regulations Implementing
Section 11 thereof as promulgated by the DAR on January 9, 1989 (Rollo, pp. 2-36).: rd

Hence, this petition praying that aforesaid laws, guidelines and rules be declared unconstitutional. Meanwhile, it
is also prayed that a writ of preliminary injunction or restraining order be issued enjoining public respondents
from enforcing the same, insofar as they are made to apply to Luz Farms and other livestock and poultry raisers.

This Court in its Resolution dated July 4, 1939 resolved to deny, among others, Luz Farms' prayer for the
EN BANC issuance of a preliminary injunction in its Manifestation dated May 26, and 31, 1989. (Rollo, p. 98).

[G.R. No. 86889 :  December 4, 1990.] Later, however, this Court in its Resolution dated August 24, 1989 resolved to grant said Motion for
Reconsideration regarding the injunctive relief, after the filing and approval by this Court of an injunction bond in
192 SCRA 51

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the amount of P100,000.00. This Court also gave due course to the petition and required the parties to file their
respective memoranda (Rollo, p. 119).
The petitioner filed its Memorandum on September 6, 1989 (Rollo, pp. 131-168).
On December 22, 1989, the Solicitor General adopted his Comment to the petition as his Memorandum (Rollo,
pp. 186-187).
Luz Farms questions the following provisions of R.A. 6657, insofar as they are made to apply to it:
(a) Section 3(b) which includes the "raising of livestock (and poultry)" in the definition of "Agricultural, Agricultural
Enterprise or Agricultural Activity."
(b) Section 11 which defines "commercial farms" as "private agricultural lands devoted to commercial, livestock,
poultry and swine raising . . ."
(c) Section 13 which calls upon petitioner to execute a production-sharing plan.
(d) Section 16(d) and 17 which vest on the Department of Agrarian Reform the authority to summarily determine
the just compensation to be paid for lands covered by the Comprehensive Agrarian Reform Law.
(e) Section 32 which spells out the production-sharing plan mentioned in Section 13 —
". . . (W)hereby three percent (3%) of the gross sales from the production of such lands are distributed within
sixty (60) days of the end of the fiscal year as compensation to regular and other farmworkers in such lands over
and above the compensation they currently receive: Provided, That these individuals or entities realize gross
sales in excess of five million pesos per annum unless the DAR, upon proper application, determine a lower
ceiling.
In the event that the individual or entity realizes a profit, an additional ten (10%) of the net profit after tax shall be
distributed to said regular and other farmworkers within ninety (90) days of the end of the fiscal year . . ."
The main issue in this petition is the constitutionality of Sections 3(b), 11, 13 and 32 of R.A. No. 6657 (the
Comprehensive Agrarian Reform Law of 1988), insofar as the said law includes the raising of livestock, poultry
and swine in its coverage as well as the Implementing Rules and Guidelines promulgated in accordance
therewith.:-cralaw
The constitutional provision under consideration reads as follows:
ARTICLE XIII
x  x  x
AGRARIAN AND NATURAL RESOURCES REFORM
Section 4. The State shall, by law, undertake an agrarian reform program founded on the right of farmers and
regular farmworkers, who are landless, to own directly or collectively the lands they till or, in the case of other
farmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage and undertake
the just distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the
Congress may prescribe, taking into account ecological, developmental, or equity considerations, and subject to
the payment of just compensation. In determining retention limits, the State shall respect the rights of small
landowners. The State shall further provide incentives for voluntary land-sharing.
x  x  x"
Luz Farms contended that it does not seek the nullification of R.A. 6657 in its entirety. In fact, it acknowledges
the correctness of the decision of this Court in the case of the Association of Small Landowners in the
Philippines, Inc. vs.  Secretary of Agrarian Reform (G.R. 78742, 14 July 1989) affirming the constitutionality of
the Comprehensive Agrarian Reform Law. It, however, argued that Congress in enacting the said law has
transcended the mandate of the Constitution, in including land devoted to the raising of livestock, poultry and
swine in its coverage (Rollo, p. 131). Livestock or poultry raising is not similar to crop or tree farming. Land is not
the primary resource in this undertaking and represents no more than five percent (5%) of the total investment of
commercial livestock and poultry raisers. Indeed, there are many owners of residential lands all over the country
who use available space in their residence for commercial livestock and raising purposes, under "contract-
growing arrangements," whereby processing corporations and other commercial livestock and poultry raisers
(Rollo, p. 10). Lands support the buildings and other amenities attendant to the raising of animals and birds. The
use of land is incidental to but not the principal factor or consideration in productivity in this industry. Including
backyard raisers, about 80% of those in commercial livestock and poultry production occupy five hectares or
less. The remaining 20% are mostly corporate farms (Rollo, p. 11).
On the other hand, the public respondent argued that livestock and poultry raising is embraced in the term
"agriculture" and the inclusion of such enterprise under Section 3(b) of R.A. 6657 is proper. He cited that
Webster's International Dictionary, Second Edition (1954), defines the following words:
"Agriculture — the art or science of cultivating the ground and raising and harvesting crops, often, including also,
feeding, breeding and management of livestock, tillage, husbandry, farming.
It includes farming, horticulture, forestry, dairying, sugarmaking . . .
Livestock — domestic animals used or raised on a farm, especially for profit.
Farm — a plot or tract of land devoted to the raising of domestic or other animals." (Rollo, pp. 82-83).
The petition is impressed with merit.
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The question raised is one of constitutional construction. The primary task in constitutional construction is to
ascertain and thereafter assure the realization of the purpose of the framers in the adoption of the Constitution
(J.M. Tuazon & Co. vs.  Land Tenure Administration, 31 SCRA 413 [1970]).: rd
Ascertainment of the meaning of the provision of Constitution begins with the language of the document itself.
The words used in the Constitution are to be given their ordinary meaning except where technical terms are
employed in which case the significance thus attached to them prevails (J.M. Tuazon & Co. vs.  Land Tenure
Administration, 31 SCRA 413 [1970]).
It is generally held that, in construing constitutional provisions which are ambiguous or of doubtful meaning, the
courts may consider the debates in the constitutional convention as throwing light on the intent of the framers of
the Constitution. It is true that the intent of the convention is not controlling by itself, but as its proceeding was
preliminary to the adoption by the people of the Constitution the understanding of the convention as to what was
meant by the terms of the constitutional provision which was the subject of the deliberation, goes a long way
toward explaining the understanding of the people when they ratified it (Aquino, Jr. v. Enrile, 59 SCRA 183
[1974]).
The transcripts of the deliberations of the Constitutional Commission of 1986 on the meaning of the word
"agricultural," clearly show that it was never the intention of the framers of the Constitution to include livestock
and poultry industry in the coverage of the constitutionally-mandated agrarian reform program of the
Government.
The Committee adopted the definition of "agricultural land" as defined under Section 166 of R.A. 3844, as laud
devoted to any growth, including but not limited to crop lands, saltbeds, fishponds, idle and abandoned land
(Record, CONCOM, August 7, 1986, Vol. III, p. 11).
The intention of the Committee is to limit the application of the word "agriculture." Commissioner Jamir proposed
to insert the word "ARABLE" to distinguish this kind of agricultural land from such lands as commercial and
industrial lands and residential properties because all of them fall under the general classification of the word
"agricultural". This proposal, however, was not considered because the Committee contemplated that
agricultural lands are limited to arable and suitable agricultural lands and therefore, do not include commercial,
industrial and residential lands (Record, CONCOM, August 7, 1986, Vol. III, p. 30).
In the interpellation, then Commissioner Regalado (now a Supreme Court Justice), posed several questions,
among others, quoted as follows:
x  x  x
"Line 19 refers to genuine reform program founded on the primary right of farmers and farmworkers. I wonder if
it means that leasehold tenancy is thereby proscribed under this provision because it speaks of the primary right
of farmers and farmworkers to own directly or collectively the lands they till. As also mentioned by Commissioner
Tadeo, farmworkers include those who work in piggeries and poultry projects.
I was wondering whether I am wrong in my appreciation that if somebody puts up a piggery or a poultry project
and for that purpose hires farmworkers therein, these farmworkers will automatically have the right to own
eventually, directly or ultimately or collectively, the land on which the piggeries and poultry projects were
constructed. (Record, CONCOM, August 2, 1986, p. 618).
x  x  x
The questions were answered and explained in the statement of then Commissioner Tadeo, quoted as follows:
x  x  x
"Sa pangalawang katanungan ng Ginoo ay medyo hindi kami nagkaunawaan. Ipinaaalam ko kay Commissioner
Regalado na hindi namin inilagay ang agricultural worker sa kadahilanang kasama rito ang piggery, poultry at
livestock workers. Ang inilagay namin dito ay farm worker kaya hindi kasama ang piggery, poultry at livestock
workers (Record, CONCOM, August 2, 1986, Vol. II, p. 621).
It is evident from the foregoing discussion that Section II of R.A. 6657 which includes "private agricultural lands
devoted to commercial livestock, poultry and swine raising" in the definition of "commercial farms" is invalid, to
the extent that the aforecited agro-industrial activities are made to be covered by the agrarian reform program of
the State. There is simply no reason to include livestock and poultry lands in the coverage of agrarian reform.
(Rollo, p. 21).
Hence, there is merit in Luz Farms' argument that the requirement in Sections 13 and 32 of R.A. 6657 directing
"corporate farms" which include livestock and poultry raisers to execute and implement "production-sharing
plans" (pending final redistribution of their landholdings) whereby they are called upon to distribute from three
percent (3%) of their gross sales and ten percent (10%) of their net profits to their workers as additional
compensation is unreasonable for being confiscatory, and therefore violative of due process (Rollo, p. 21).:-
cralaw
It has been established that this Court will assume jurisdiction over a constitutional question only if it is shown
that the essential requisites of a judicial inquiry into such a question are first satisfied. Thus, there must be an
actual case or controversy involving a conflict of legal rights susceptible of judicial determination, the
constitutional question must have been opportunely raised by the proper party, and the resolution of the
question is unavoidably necessary to the decision of the case itself (Association of Small Landowners of the
Philippines, Inc. v. Secretary of Agrarian Reform, G.R. 78742; Acuna v. Arroyo, G.R. 79310; Pabico v. Juico,
G.R. 79744; Manaay v. Juico, G.R. 79777, 14 July 1989, 175 SCRA 343).
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Agrarian Law and Social Legislation
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However, despite the inhibitions pressing upon the Court when confronted with constitutional issues, it will not
hesitate to declare a law or act invalid when it is convinced that this must be done. In arriving at this conclusion,
its only criterion will be the Constitution and God as its conscience gives it in the light to probe its meaning and
discover its purpose. Personal motives and political considerations are irrelevancies that cannot influence its
decisions. Blandishment is as ineffectual as intimidation, for all the awesome power of the Congress and
Executive, the Court will not hesitate "to make the hammer fall heavily," where the acts of these departments, or
of any official, betray the people's will as expressed in the Constitution (Association of Small Landowners of the
Philippines, Inc. v. Secretary of Agrarian Reform, G.R. 78742; Acuna v. Arroyo, G.R. 79310; Pabico v. Juico,
G.R. 79744; Manaay v. Juico, G.R. 79777, 14 July 1989).
Thus, where the legislature or the executive acts beyond the scope of its constitutional powers, it becomes the
duty of the judiciary to declare what the other branches of the government had assumed to do, as void. This is
the essence of judicial power conferred by the Constitution "(I)n one Supreme Court and in such lower courts as
may be established by law" (Art. VIII, Section 1 of the 1935 Constitution; Article X, Section I of the 1973
Constitution and which was adopted as part of the Freedom Constitution, and Article VIII, Section 1 of the 1987
Constitution) and which power this Court has exercised in many instances (Demetria v. Alba, 148 SCRA 208
[1987]).
PREMISES CONSIDERED, the instant petition is hereby GRANTED. Sections 3(b), 11, 13 and 32 of R.A. No.
6657 insofar as the inclusion of the raising of livestock, poultry and swine in its coverage as well as the
Implementing Rules and Guidelines promulgated in accordance therewith, are hereby DECLARED null and void
for being unconstitutional and the writ of preliminary injunction issued is hereby MADE permanent.
SO ORDERED.
Fernan (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Gancayco, Padilla, Bidin, Griño-Aquino,
Medialdea and Regalado, JJ., concur.
Feliciano, J., is on leave.
Separate Opinions
SARMIENTO, J., concurring:
I agree that the petition be granted.
It is my opinion however that the main issue on the validity of the assailed provisions of R.A. 6657 (the
Comprehensive Agrarian Reform Law of 1988) and its Implementing Rules and Guidelines insofar as they
include the raising of livestock, poultry, and swine in their coverage cannot be simplistically reduced to a
question of constitutional construction.
It is a well-settled rule that construction and interpretation come only after it has been demonstrated that
application is impossible or inadequate without them. A close reading however of the constitutional text in point,
specifically, Sec. 4, Art. XIII, particularly the phrase, ". . . in case of other farmworkers, to receive a just share of
the fruits thereof," provides a basis for the clear and possible coverage of livestock, poultry, and swine raising
within the ambit of the comprehensive agrarian reform program. This accords with the principle that every
presumption should be indulged in favor of the constitutionality of a statute and the court in considering the
validity of a statute should give it such reasonable construction as can be reached to bring it within the
fundamental law.  1
The presumption against unconstitutionality, I must say, assumes greater weight when a ruling to the contrary
would, in effect, defeat the laudable and noble purpose of the law, i.e., the welfare of the landless farmers and
farmworkers in the promotion of social justice, by the expedient conversion of agricultural lands into livestock,
poultry, and swine raising by scheming landowners, thus, rendering the comprehensive nature of the agrarian
program merely illusory.
The instant controversy, I submit, boils down to the question of whether or not the assailed provisions violate the
equal protection clause of the Constitution (Article II, section 1) which teaches simply that all persons or things
similarly situated should be treated alike, both as to rights conferred and responsibilities imposed.  2
There is merit in the contention of the petitioner that substantial distinctions exist between land directed purely to
cultivation and harvesting of fruits or crops and land exclusively used for livestock, poultry and swine raising,
that make real differences, to wit:
x  x  x
No land is tilled and no crop is harvested in livestock and poultry farming. There are no tenants nor landlords,
only employers and employees.
Livestock and poultry do not sprout from land nor are they "fruits of the land."
Land is not even a primary resource in this industry. The land input is inconsequential that all the commercial
hog and poultry farms combined occupy less than one percent (1%) (0.4% for piggery, 0.2% for poultry) of the
5.45 million hectares of land supposedly covered by the CARP. And most farms utilize only 2 to 5 hectares of
land.: nad
In every respect livestock and poultry production is an industrial activity. Its use of an inconsequential portion of
land is a mere incident of its operation, as in any other undertaking, business or otherwise.
The fallacy of defining livestock and poultry production as an agricultural enterprise is nowhere more evident
when one considers that at least 95% of total investment in these farms is in the form of fixed assets which are
industrial in nature.
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Agrarian Law and Social Legislation
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These include (1) animal housing structures and facilities complete with drainage, waterers, blowers, misters
and in some cases even piped-in music; (2) feedmills complete with grinders, mixers, conveyors, exhausts,
generators, etc.; (3) extensive warehousing facilities for feeds and other supplies; (4) anti-pollution equipment
such as bio-gas and digester plants augmented by lagoons and concrete ponds; (5) deepwells, elevated water
tanks, pumphouses and accessory facilities; (6) modern equipment such as sprayers, pregnancy testers, etc.;
(7) laboratory facilities complete with expensive tools and equipment; and a myriad other such technologically
advanced appurtances.
How then can livestock and poultry farmlands be arable when such are almost totally occupied by these
structures?
The fallacy of equating the status of livestock and poultry farmworkers with that of agricultural tenants surfaces
when one considers contribution to output. Labor cost of livestock and poultry farms is no more than 4% of total
operating cost. The 98% balance represents inputs not obtained from the land nor provided by the farmworkers
— inputs such as feeds and biochemicals (80% of the total cost), power cost, cost of money and several others.
Moreover, livestock and poultry farmworkers are covered by minimum wage law rather than by tenancy law.
They are entitled to social security benefits where tenant-farmers are not. They are paid fixed wages rather than
crop shares. And as in any other industry, they receive additional benefits such as allowances, bonuses, and
other incentives such as free housing privileges, light and water.
Equating livestock and poultry farming with other agricultural activities is also fallacious in the sense that like the
manufacturing sector, it is a market for, rather than a source of agricultural output. At least 60% of the entire
domestic supply of corn is absorbed by livestock and poultry farms. So are the by-products of rice (rice-bran),
coconut (copra meal), banana (banana pulp meal), and fish (fish meal).  3
x  x  x
In view of the foregoing, it is clear that both kinds of lands are not similarly situated and hence, cannot be
treated alike. Therefore, the assailed provisions which allow for the inclusion of livestock and poultry industry
within the coverage of the agrarian reform program constitute invalid classification and must accordingly be
struck down as repugnant to the equal protection clause of the Constitution.chanrobles virtual law library
 
Republic of the Philippines
SUPREME COURT
EN BANC
G.R. No. 162070 October 19, 2005
DEPARTMENT OF AGRARIAN REFORM, represented by SECRETARY JOSE MARI B. PONCE
(OIC), Petitioner
vs.
DELIA T. SUTTON, ELLA T. SUTTON-SOLIMAN and HARRY T. SUTTON, Respondents.
DECISION
PUNO, J.:
This is a petition for review filed by the Department of Agrarian Reform (DAR) of the Decision and Resolution of
the Court of Appeals, dated September 19, 2003 and February 4, 2004, respectively, which declared DAR
Administrative Order (A.O.) No. 9, series of 1993, null and void for being violative of the Constitution.
The case at bar involves a land in Aroroy, Masbate, inherited by respondents which has been devoted
exclusively to cow and calf breeding. On October 26, 1987, pursuant to the then existing agrarian reform
program of the government, respondents made a voluntary offer to sell (VOS) 1 their landholdings to petitioner
DAR to avail of certain incentives under the law.
On June 10, 1988, a new agrarian law, Republic Act (R.A.) No. 6657, also known as the Comprehensive
Agrarian Reform Law (CARL) of 1988, took effect. It included in its coverage farms used for raising livestock,
poultry and swine.
On December 4, 1990, in an en banc decision in the case of Luz Farms v. Secretary of DAR,2 this Court ruled
that lands devoted to livestock and poultry-raising are not included in the definition of agricultural land. Hence,
we declared as unconstitutional certain provisions of the CARL insofar as they included livestock farms in the
coverage of agrarian reform.
In view of the Luz Farms ruling, respondents filed with petitioner DAR a formal request to withdraw their VOS as
their landholding was devoted exclusively to cattle-raising and thus exempted from the coverage of the CARL. 3
On December 21, 1992, the Municipal Agrarian Reform Officer of Aroroy, Masbate, inspected respondents’ land
and found that it was devoted solely to cattle-raising and breeding. He recommended to the DAR Secretary that
it be exempted from the coverage of the CARL.
On April 27, 1993, respondents reiterated to petitioner DAR the withdrawal of their VOS and requested the
return of the supporting papers they submitted in connection therewith. 4 Petitioner ignored their request.
On December 27, 1993, DAR issued A.O. No. 9, series of 1993,5 which provided that only portions of private
agricultural lands used for the raising of livestock, poultry and swine as of June 15, 1988 shall be excluded from
the coverage of the CARL. In determining the area of land to be excluded, the A.O. fixed the following retention
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Agrarian Law and Social Legislation
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limits, viz: 1:1 animal-land ratio (i.e.,  1 hectare of land per 1 head of animal shall be retained by the landowner),
and a ratio of 1.7815 hectares for livestock infrastructure for every 21 heads of cattle shall likewise be excluded
from the operations of the CARL.
On February 4, 1994, respondents wrote the DAR Secretary and advised him to consider as final and
irrevocable the withdrawal of their VOS as, under the Luz Farms doctrine, their entire landholding is exempted
from the CARL.6
On September 14, 1995, then DAR Secretary Ernesto D. Garilao issued an Order 7 partially granting the
application of respondents for exemption from the coverage of CARL. Applying the retention limits outlined in the
DAR A.O. No. 9, petitioner exempted  1,209 hectares of respondents’ land for grazing purposes, and a
maximum of 102.5635 hectares for infrastructure. Petitioner ordered the rest of respondents’ landholding to be
segregated and placed under Compulsory Acquisition.
Respondents moved for reconsideration. They contend that their entire landholding should be exempted as it is
devoted exclusively to cattle-raising. Their motion was denied. 8 They filed a notice of appeal9 with the Office of
the President assailing: (1) the reasonableness and validity of DAR A.O. No. 9, s. 1993, which provided for a
ratio between land and livestock in determining the land area qualified for exclusion from the CARL, and (2) the
constitutionality of DAR A.O. No. 9, s. 1993, in view of the Luz Farms case which declared cattle-raising lands
excluded from the coverage of agrarian reform.
On October 9, 2001, the Office of the President affirmed the impugned Order of petitioner DAR. 10 It ruled that
DAR A.O. No. 9, s. 1993, does not run counter to the Luz Farms case as the A.O. provided the guidelines to
determine whether a certain parcel of land is being used for cattle-raising. However, the issue on the
constitutionality of the assailed A.O. was left for the determination of the courts as the sole arbiters of such
issue.
On appeal, the Court of Appeals ruled in favor of the respondents. It declared DAR A.O. No. 9, s. 1993, void for
being contrary to the intent of the 1987 Constitutional Commission to exclude livestock farms from the land
reform program of the government. The dispositive portion reads:
WHEREFORE, premises considered, DAR Administrative Order No. 09, Series of 1993 is
hereby DECLARED null and void. The assailed order of the Office of the President dated 09 October 2001 in so
far as it affirmed the Department of Agrarian Reform’s ruling that petitioners’ landholding is covered by the
agrarian reform program of the government is REVERSED and SET ASIDE.
SO ORDERED.11
Hence, this petition.
The main issue in the case at bar is the constitutionality of DAR A.O. No. 9, series of 1993, which prescribes a
maximum retention limit for owners of lands devoted to livestock raising.
Invoking its rule-making power under Section 49 of the CARL, petitioner submits that it issued DAR A.O. No. 9
to limit the area of livestock farm that may be retained by a landowner pursuant to its mandate to place all public
and private agricultural lands under the coverage of agrarian reform. Petitioner also contends that the A.O.
seeks to remedy reports that some unscrupulous landowners have converted their agricultural farms to livestock
farms in order to evade their coverage in the agrarian reform program.
Petitioner’s arguments fail to impress.
Administrative agencies are endowed with powers legislative in nature, i.e.,  the power to make rules and
regulations. They have been granted by Congress with the authority to issue rules to regulate the
implementation of a law entrusted to them. Delegated rule-making has become a practical necessity in modern
governance due to the increasing complexity and variety of public functions. However, while administrative rules
and regulations have the force and effect of law, they are not immune from judicial review. 12 They may be
properly challenged before the courts to ensure that they do not violate the Constitution and no grave abuse of
administrative discretion is committed by the administrative body concerned.
The fundamental rule in administrative law is that, to be valid, administrative rules and regulations must be
issued by authority of a law and must not contravene the provisions of the Constitution. 13 The rule-making power
of an administrative agency may not be used to abridge the authority given to it by Congress or by the
Constitution. Nor can it be used to enlarge the power of the administrative agency beyond the scope
intended. Constitutional and statutory provisions control with respect to what rules and regulations may be
promulgated by administrative agencies and the scope of their regulations. 14
In the case at bar, we find that the impugned A.O. is invalid as it contravenes the Constitution. The A.O. sought
to regulate livestock farms by including them in the coverage of agrarian reform and prescribing a maximum
retention limit for their ownership. However, the deliberations of the 1987 Constitutional Commission show a
clear intent to exclude, inter alia, all lands exclusively devoted to livestock, swine and poultry- raising. The Court
clarified in the Luz Farms case that livestock, swine and poultry-raising are industrial activities and do not fall
within the definition of "agriculture" or "agricultural activity." The raising of livestock, swine and poultry is different
from crop or tree farming. It is an industrial, not an agricultural, activity. A great portion of the investment in this
enterprise is in the form of industrial fixed assets, such as: animal housing structures and facilities, drainage,
waterers and blowers, feedmill with grinders, mixers, conveyors, exhausts and generators, extensive
warehousing facilities for feeds and other supplies, anti-pollution equipment like bio-gas and digester plants
augmented by lagoons and concrete ponds, deepwells, elevated water tanks, pumphouses, sprayers, and other
technological appurtenances.15
Clearly, petitioner DAR has no power to regulate livestock farms which have been exempted by the Constitution
from the coverage of agrarian reform. It has exceeded its power in issuing the assailed A.O.
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Agrarian Law and Social Legislation
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The subsequent case of Natalia Realty, Inc. v. DAR16 reiterated our ruling in the Luz Farms case. In Natalia SO ORDERED.
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 REYNATO S. PUNO
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 Associate Justice
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. WE CONCUR:

A similar logical deduction should be followed in the case at bar. Lands devoted to raising of livestock, poultry HILARIO G. DAVIDE, JR.
and swine have been classified as industrial, not agricultural, lands and thus exempt from agrarian reform.
Chief Justice
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 ARTEMIO V. PANGANIBAN, LEONARDO A. QUISUMBING
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 Associate Justice Associate Justice
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 CONSUELO YNARES-SANTIAGO, ANGELINA SANDOVAL-GUTIERREZ
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 Associate Justice Associate Justice
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 ANTONIO T. CARPIO, MA. ALICIA AUSTRIA-MARTINEZ
been no change of business interest in the case of respondents.
Associate Justice Associate Justice
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 RENATO C. CORONA, CONCHITA CARPIO MORALES
hand, by making a new law, Congress seeks to supersede an earlier one. 19 In the case at bar, after the passage
Associate Justice Associate Justice
of the 1988 CARL, Congress enacted R.A. No. 7881 20 which amended certain provisions of the CARL.
Specifically, the new law changed the definition of the terms "agricultural activity" and "commercial farming" by ROMEO J. CALLEJO, SR. ADOLFO S. AZCUNA
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 Associate Justice Associate Justice
1987 Constitutional Commission to exclude livestock farms from the coverage of agrarian reform.
DANTE O. TINGA, MINITA V. CHICO-NAZARIO
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 Associate Justice Associate Justice
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 CANCIO C. GARCIA
unconstitutional as it enlarges the coverage of agrarian reform beyond the scope intended by the 1987
Constitution. Associate Justice

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

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Chapter 1
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above DECISION
Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.
BRION, J.:
HILARIO G. DAVIDE, JR.
This petition for review on certiorari seeks to reverse and set aside the November 28, 2012 resolution1 of the
Chief Justice Court of Appeals (CA) in CA-G.R. SP No. 121519.2 The CA dismissed petitioner Urbano F. Estrella's (Estrella)
appeal from the Department of Agrarian Reform Adjudication Board's ( DARAB) February 23, 2009
decision3 in DARAB Case No. 13185 which denied Estrella's right of redemption over an agricultural
landholding.

ANTECEDENTS

Lope Cristobal (Cristobal) was the owner of a twenty-three thousand nine hundred and thirty-three square meter
(23,933 sqm.) parcel of agricultural riceland (subject landholding) in Cacarong Matanda, Pandi, Bulacan,
covered by Transfer Certificate of Title (TCT) No. T-248106 of the Register of Deeds of Bulacan. Estrella was
the registered agricultural tenant-lessee of the subject landholding.

On September 22, 1997, Cristobal sold the subject landholding to respondent Priscilla Francisco ( Francisco) for
five hundred thousand pesos (P500,000.00),4 without notifying Estrella.

Upon discovering the sale, Estrella sent Cristobal a demand letter dated March 31, 1998, for the return of the
subject landholding.5 He also sent Francisco a similar demand letter dated July 31, 1998. Neither Cristobal nor
Francisco responded to Estrella's demands.6chanrobleslaw

On February 12, 2001, Estrella filed a complaint7 against Cristobal and Francisco for legal redemption, recovery,
and maintenance of peaceful possession before the Office of the Provincial Agrarian Reform Adjudicator
(PARAD). His complaint was docketed as DCN. R-03-02-2930'01.

Estrella alleged that the sale between Cristobal and Francisco was made secretly and in bad faith, in violation of
Republic Act No. (R.A.) 3844, the Agricultural Land Reform Code ( the Code).8 He insisted that he never waived
his rights as a registered tenant over the property and that he was willing to match the sale price. Estrella
concluded that as the registered tenant, he is entitled to legally redeem the property from Francisco. He also
manifested his ability and willingness to deposit the amount of P500,000.00 with the PARAD as the redemption
price.9chanrobleslaw
SECOND DIVISION
Cristobal did not file an answer while Francisco denied all the allegations in the complaint except for the fact of
G.R. No. 209384, June 27, 2016 the sale.10 Francisco claimed that she was an innocent purchaser in good faith because she only bought the
property after: (1) Cristobal assured her that there would be no problems regarding the transfer of the property;
URBANO F. ESTRELLA, Petitioner, v. PRISCILLA P. FRANCISCO, Respondent. and (2) Cristobal personally undertook to compensate Estrella. Therefore, Estrella had no cause of action
against her.

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prescribed because he was not given written notice of the sale to Francisco. 22chanrobleslaw
11
On June 23, 2002, the PARAD rendered its decision recognizing Estrella's right of redemption.  The PARAD
found that neither Cristobal nor Francisco notified Estrella in writing of the sale. In the absence of such notice, On May 30, 2013, the CA denied Estrelia's motions for extension of time, citing the rule that the reglementary
an agricultural lessee has a right to redeem the landholding from the buyer pursuant to Section 12 of the period to file a motion for reconsideration is non-extendible. 23 The CA likewise denied Estrelia's Motion for
Code.12chanrobleslaw Reconsideration.

Francisco appealed the PARAD's decision to the DARAB where it was docketed as DARAB Case No. 13185. Hence, the present recourse to this Court.

On February 23, 2009, the DARAB reversed the PARAD's decision and denied Estrella the right of
redemption.13 Citing Section 12 of the Code as amended, the DARAB held that the right of redemption may be
exercised within 180 days from written notice of the sale. Considering that more than three years had lapsed
between Estrella's discovery of the sale and his filing of the case for redemption, the DARAB concluded that
Estrella slept on his rights and lost the right to redeem the landholding.
On August 23, 2013, Estrella filed a motion for extension of time to file his petition for review and a motion to be
declared as a pauper litigant.24 We granted both motions on October 13, 2013.
THE PARTIES' ARGUMENTS

Estrella moved for reconsideration but the DARAB denied the motion. Estrella argues that an agricultural tenant's right of redemption over the landholding cannot prescribe when
neither the lessor-seller nor the buyer has given him written notice of the sale.
On September 30, 2011, Estrella filed a motion before the CA to declare himself as a pauper litigant and
manifested his intention to file a petition for review of the DARAB's decision. 14 He alleged that he was living On the other hand, Francisco counters that Estrella failed to make a formal tender of or to consign with the
below the poverty line and did not have sufficient money or property for food, shelter, and other basic PARAD the redemption price as required in Quiño v. Court of Appeals.25cralawred She also questioned the
necessities. genuineness of Estrelia's claim to be a pauper litigant. Francisco points out that a person who claims to be
willing to pay the redemption price of P500,000.00 is not, by any stretch of the imagination, a
On October 17, 2011, Estrella filed a petition for review 15 of the DARAB's decision before the CA. The petition pauper.26chanrobleslaw
was docketed as CA-G.R. SP No. 121519.
OUR RULING
Estrella emphasized that the purpose of the State in enacting the agrarian reform laws is to protect the welfare
of landless farmers and to promote social justice towards establishing ownership over the agricultural land by
We find no merit in the petition.
the tenant-lessees.16 He insisted that the DARAB erred in denying him the right of redemption based on a
technicality and that the redemption period in Sec. 12 of the Code does not apply in his case because neither
The use and ownership of property bears a social function, and all economic agents are expected to contribute
the lessor nor the vendee notified him in writing of the sale. 17chanrobleslaw
to the common good.27 To this end, property ownership and economic activity are always subject to the duty of
the State to promote distributive justice and intervene when the common good requires. 28chanrobleslaw
On November 28, 2012, the CA dismissed Estrella's petition for review for failure to show any reversible error in
the DARAB's decision.18 Estrella received a copy of the CA's resolution on April 10, 2013. 19chanrobleslaw
As early as 1973, the Philippines has already declared our goal of emancipating agricultural tenants from the
bondage of the soil.29 The State adopts a policy of promoting social justice, establishing owner cultivatorship of
On April 11, 2013, Estrella filed a motion for a twenty-day extension of time (or until April 31, 2013) to file his
economic-size farms as the basis of Philippine agriculture, and providing a vigorous and systematic land
motion for reconsideration of the November 28, 2012 resolution. 20chanrobleslaw
resettlement and redistribution program. 30chanrobleslaw
On April 30, 2013, Estrella requested another ten-day extension of time (or until May 9, 2013) to file his motion
In pursuit of land reform, the State enacted the Agricultural Land Reform Code in 1963. The Code established
for reconsideration.21chanrobleslaw
an agricultural leasehold system that replaced all existing agricultural share tenancy systems at that point.
On May 9, 2013, Estrella filed his Motion for Reconsideration arguing that his right of redemption had not yet
The existence of an agricultural tenancy relationship between the lessor and the lessee gives the latter rights

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Chapter 1
that attach to the landholding, regardless of whoever may subsequently become its owner. 31 This strengthens
the security of tenure of the tenants and protects them from being dispossessed of the landholding or ejected
from their leasehold by the death of either the lessor or of the tenant, the expiration of a term/period in the
leasehold contract, or the alienation of the landholding by the lessor. 32 If either party dies, the leasehold
continues to bind the lessor (or his heirs) in favor of the tenant (or his surviving spouse/descendants). In case
the lessor alienates the land, the transferee is subrogated to the rights and substituted to the obligations of the
lessor-transferor. The agricultural leasehold subsists, notwithstanding the resulting change in ownership of the
landholding, and the lessee's rights are made enforceable against the transferee or other successor-in-interest
of the original lessor.
To protect the lessee's security of tenure, the Code grants him the right of pre-emption - the preferential right to
buy the landholding under reasonable terms and conditions if ever the agricultural lessor decides to sell it. 33 As
an added layer of protection, the Code also grants him the right to redeem the landholding from the vendee in
the event that the lessor sells it without the lessee's knowledge. 34chanrobleslaw
Originally, the lessee had a redemption period of two years from registration of the
sale:ChanRoblesVirtualawlibrary
Sec. 12. Lessee's Right of Redemption - In case the landholding is sold to a third person without the knowledge
of the agricultural lessee, the latter shall have the right to redeem the same at a reasonable price and
consideration: Provided, That the entire landholding sold must be redeemed: Provided, further, That where there
are two or more agricultural lessees, each shall be entitled to said right of redemption only to the extent of the
area actually cultivated by him. The right of redemption under this Section may be exercised within two years
from the registration of the sale, and shall have priority over any other right of legal
redemption.35chanroblesvirtuallawlibrary
In Padasas v. Court of Appeals,36 we held that a lessee's actual knowledge of the sale of the landholding is
immaterial because the Code specifically and definitively provides that the redemption period must be counted
from the registration of the sale. This ruling was subsequently affirmed in Manuel v. Court of
Appeals.37chanrobleslaw
In 1971, R.A. 6389 amended Section 12 of the Code and shortened the redemption
period:ChanRoblesVirtualawlibrary
Sec. 12. Lessee's right of Redemption. - In case the landholding is sold to a third person without the knowledge
of the agricultural lessee, the latter shall have the right to redeem the same at a reasonable price and
consideration: Provided, That where there are two or more agricultural lessees, each shall be entitled to said
right of redemption only to the extent of the area actually cultivated by him. The right of redemption under this
Section may be exercised within one hundred eighty days from notice in writing which shall be served by the
vendee on all lessees affected and the Department of Agrarian Reform upon the registration of the sale, and
shall have priority over any other right of legal redemption. The redemption price shall be the reasonable price of
the land at the time of the sale.
Upon the filing of the corresponding petition or request with the department or corresponding case in court by
the agricultural lessee or lessees, the period of one hundred and eighty days shall cease to run.
Any petition or request for redemption shall be resolved within sixty days from the filing thereof; otherwise, the
said period shall start to run again.
The Department of Agrarian Reform shall initiate, while the Land Bank shall finance, said redemption as in the
case of pre-emption.38 [emphases and underscoring supplied]
In Mallari v. Court of Appeals,39 we held that the lessee's right of redemption will not prescribe if he is not served
written notice of the sale. We affirmed this ruling in Springsun Management Systems v. Camerino40 and Planters
Development Bank v. Garcia.41chanrobleslaw
More recently in Po v. Dampal,42 we held that the failure of the vendee to serve written notice of the sale to the
lessee and the DAR prevents the running of the 180-day redemption period; the lessee's constructive
knowledge of the sale does not dispense with the vendee's duty to give written notice.
Simply put, Section 12 expressly states that the 180-day period must be reckoned from written notice of sale. If
the agricultural lessee was never notified in writing of the sale of the landholding, there is yet no prescription
period to speak of.43chanrobleslaw
As the vendee, respondent Francisco had the express duty to serve written notice on Estrella, the agricultural
lessee, and on the DAR. Her failure to discharge this legal duty prevented the commencement of the 180-day
redemption period. Francisco only gave written notice of the sale in her answer 44 before the PARAD wherein she
admitted the fact of the sale.45 Thus, Estrella timely exercised his right of redemption. To hold otherwise would
allow Francisco to profit from her own neglect to perform a legally mandated duty.
However, despite the timely filing of the redemption suit, Estrella did not validly exercise his right to redeem the
property. As early as 1969 in Basbas v. Entena,46 this Court had already held that the valid exercise of the right
of redemption requires either tender of the purchase price or valid consignation thereof in
Court:ChanRoblesVirtualawlibrary
x x x the right of legal redemption must be exercised within specified time limits: and the statutory periods would
be rendered meaningless and of easy evasion unless the redemptioner is required to make an actual tender in
good faith of what he believed to be the reasonable price of the land sought to be redeemed. The existence of
the right of redemption operates to depress the market value of the land until the period expires, and to render
that period indefinite by permitting the tenant to file a suit for redemption, with either party unable to foresee
when final judgment will terminate the action, would render nugatory the period of two years [now 180 days]
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Agrarian Law and Social Legislation
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fixed by the statute for making the redemption and virtually paralyze any efforts of the landowner to realize the
value of his land. No buyer can be expected to acquire it without any certainty as to the amount for which it may
be redeemed, so that he can recover at least his investment in case of redemption. In the meantime, the
landowner's needs and obligations cannot be met. It is doubtful if any such result was intended by the statute,
absent clear wording to that effect.
The situation becomes worse when, as shown by the evidence in this case, the redemptioner has no funds and
must apply for them to the Land Authority, which, in turn, must depend on the availability of funds from the Land
Bank. It then becomes practically certain that the landowner will not be able to realize the value of his property
for an indefinite time beyond the two years redemption period. 47chanroblesvirtuallawlibrary
After the amendment of Section 12 of the Code, a certification from the Land Bank that it will finance the
redemption will also suffice in lieu of tender of payment or consignation. 48chanrobleslaw
In the present case, Estrella manifested his willingness to pay the redemption price but failed to tender payment
or consign it with the PARAD when he filed his complaint. To be sure, a tenant's failure to tender payment or
consign it in court upon filing the redemption suit is not necessarily fatal; he can still cure the defect and
complete his act of redemption by consigning his payment with the court within the remaining prescriptive
period.49chanrobleslaw
Ordinarily, the 180-day redemption period begins to run from the date that the vendee furnishes written notice of
the sale to the lessee. The filing of a petition or request for redemption with the DAR (through the PARAD)
suspends the running of the redemption period.
However, as the cases of Basbas and Almeda v. Court of Appeals50 - as well the amendment to Section 12 of
the Code - evidently show, Congress did not intend the redemption period to be indefinite. This 180-day period
resumes running if the petition is not resolved within sixty days. 51chanrobleslaw
Because Francisco failed to serve Estrella written notice of the sale, Estrella's 180-day redemption period was
intact when he filed the complaint before the PARAD. The filing of the complaint prevented the running of the
prescription period and gave Estrella time to cure the defect of his redemption through consignment of the
redemption price.
After the lapse of sixty days, Estrella's 180-day redemption period began running pursuant to Section 12 of the
Code. Nevertheless, Estrella could still have consigned payment within this 180-day period.
The exercise of the right of redemption must be made in accordance with the law. Tender of the redemption
price or its valid consignation must be made within the prescribed redemption period. 52 The reason for this rule
is simple:ChanRoblesVirtualawlibrary
xxx Only by such means can the buyer become certain that the offer to redeem is one made seriously and in
good faith. A buyer cannot be expected to entertain an offer of redemption without attendant evidence that the
redemptioner can, and is willing to accomplish the repurchase immediately. A different rule would leave the
buyer open to harassment by speculators or crackpots as well as to unnecessary prolongation of the redemption
period, contrary to the policy of the law. While consignation of the tendered price is not always necessary
because legal redemption is not made to discharge a pre-existing debt, a valid tender is indispensable, for the
reasons already stated. Of course, consignation of the price would remove all controversy as to the
redemptioner's ability to pay at the proper time. 53 [Emphasis supplied]
Unfortunately, even after the lapse of the 240 days (the 60-day freeze period and the 180-day redemption
period), there was neither tender nor judicial consignation of the redemption price. Even though Estrella
repeatedly manifested his willingness to consign the redemption price, he never actually did.
While Estrella exercised his right of redemption in a timely manner, the redemption was ineffective because he
failed to exercise this right in accordance with the law. Notably, he had also repeatedly manifested his inability to
even pay judicial costs and docket fees. He has been declared (twice) as a pauper litigant who was "living below
the poverty threshold level because of limited income." 54 This casts considerable doubt on Estrella's ability to
pay the full price of the property. In sum, we have no choice but to deny the petition.
The Agricultural Land Reform Code is a social legislation designed to promote economic and social stability. It
must be interpreted liberally to give full force and effect to its clear intent, which is "to achieve a dignified
existence for the small farmers" and to make them "more independent, self-reliant and responsible citizens, and
a source of genuine strength in our democratic society." 55 Nevertheless, while we endeavor to protect the rights
of agricultural lessees, we must be mindful not to do so at the expense of trampling upon the landowners' rights
which are likewise protected by law.
WHEREFORE, we hereby DENY the petition for lack of merit; accordingly, we AFFIRM the November 28, 2012
resolution of the Court of Appeals in CA-G.R. SP No. 121519. No costs.
SO ORDERED.chanRoblesvirtualLawlibrary
Carpio, (Chairperson), Mendoza, and Leonen, JJ., concur.
Del Castillo, J., on leave.
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HEIRS OF RAMON ARCE, SR., Petitioners, v. DEPARTMENT OF AGRARIAN REFORM, REPRESENTED BY
SECRETARY VIRGILIO DELOS REYES, Respondent.

DECISION

TIJAM, J.:

We resolve this petition for Review on Certiorari1 under Rule 45 of the Rules of Court, assailing the
Decision2 dated August 5, 2016 and the Resolution3 dated November 28, 2016 of the Court of Appeals (CA) in
CA-G.R. SP No. 140755.

The Antecedent Facts

As early as the 1950s, even before the advent of Republic Act (RA) No. 6657, 4 otherwise known as the
Comprehensive Agrarian Reform Law (CARL) of 1988, through which the State implements its policy for a
Comprehensive Agrarian Reform Program (CARP), the Heirs of Ramon Arce, Sr., namely, Eulalio Arce, Lorenza
Arce, Ramon Arce, Jr., Mauro Arce and Esperanza Arce, (petitioners) were registered owners of a parcel of land
located in Brgy. Macabud, Montalban, Rizal with an area of 76.39 hectares (ha.), covered by Transfer
Certificates of Title Nos. T-442673, 442674, 442675, and 442676 (referred to as subject lands). The subject
lands were utilized as pasture lands for the petitioners' cattle, i.e., buffaloes, carabaos and goats (hereinafter
referred to as livestock), for milk and dairy production in the manufacture of Selecta Carabao's Milk and Ice
Cream (now Arce Dairy Ice Cream).5 The farming method adopted by the petitioners was known as "feedlot
operation" where the animals were confined and fed on a cut-and-carry basis or zero grazing. 6

Sometime in 1998, the Philippine Carabao Center-Department of Agriculture (PCC-DA) recommended that
petitioners' livestock be transferred to avoid the liver fluke infestation in the area. In compliance with PCC-DA's
recommendation, petitioners transferred the older and milking livestock, which are susceptible to infection, to
their feedlot facility located in Novaliches, Quezon City (Novaliches property). The younger cattle, which are not
susceptible to the fluke infection, remained in the subject lands. 7

Notwithstanding the transfer of some of their livestock, petitioners continued to plant and grow napier grass in
the subject lands. The napier grass were then cut, carried and used as fodder for their livestock which were
maintained both in the subject lands and in the Novaliches property. 8

FIRST DIVISION
G.R. No. 228503, July 25, 2018
On August 6, 2008, the Provincial Agrarian Reform Officer (PARO) of Teresa, Rizal issued a Notice of Coverage
(NOC)9 over the subject lands under the CARP. In response, petitioners sent a letter 10 dated October 17, 2008
to the PARO of DAR Region IV-A, seeking to exclude and exempt the subject lands from the NOC considering
that it has been utilized for livestock raising even before the enactment of the CARP. To prove this, the
petitioners enclosed documents,11 among them were: Certificates of Ownership of Large Cattle registered under
the name of Mauro Arce; Photocopy of Livestock Inventory as of December 1987 stating that they have 102
registered cattle, 125 unregistered cattle and 212 heads of goats; Current photos taken on September 17, 2008

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of the Arce livestock farm, feeding, and milking techniques, the milk processing and ice cream making
machinery at the Arcefoods Plant on Selecta Drive in Balintawak, Quezon City; Current (2008) Certificates of
Ownership of 104 heads of cattle under the name of Mauro Arce/Selarce Farms, Inc; and, Photocopy of
Livestock Inventory in the Year 2008 showing 150 heads of large cattle. The PARO of DAR Region IV-A
considered the letter as a Petition for Exclusion from CARP Coverage. 12
On December 2, 2008, Municipal Agrarian Reform Officer (MARO) of DAR Region IV-A, issued a Report and
Recommendation and recommended the grant of the Petition for Exclusion from CARP Coverage. The Report
stated, among others, that:
xxx the method of farming practiced by the Arce Farm is by feed rearing. This means that the animals are not
freely grazing in the open field but instead are confined separately in a feedlot where they are fed and milked;
xxx pasture grass of 76 hectares subject landholdings serve as food production area to provide the feed
requirements of the animals reared in a separate area; xxx the existence of large cattle is evidently proven by
Certificates of Ownership of Large Cattle presented by the landowners, the existence of such cover the years
1981 to present; xxx inspection conducted at the feedlot facility xxx at Novaliches xxx there exists 7 buildings
where different livestock are fed/housed. xxx. 13
xxx the clear scenario xxx is that (the subject property) has been a livestock farm and it continues to exist until
now under the exclusive operation and management of its owner, regardless of the method (traditional or
modern) of farming xxx.14
On March 4, 2009, the Legal Division of the DAR Provincial Office (DARPO) issued an Evaluation Report and
Recommendation and likewise recommended the grant of the Petition for Exclusion from CARP Coverage. The
Evaluation Report stated, among others, that:
xxx the subject properties, which are undulating in topography and predominantly more than 18% slope are
registered in the names of Heirs of Ramon Arce, Sr., and is not devoted to any agricultural activity by any
person, but actually and directly devoted to the production of napier grass for feeding purposes by Selarce
Farms, owned by the applicant Heirs;15 xxx there were employees of the applicant who were actually gathering
napier grasses on the subject properties to meet the daily needs of the cattles, buffaloes and goats in the Feed
and Fattening Facility which they declared that they used to cut and gather napier grass at the volume of 6 tons
of napier grasses daily;16 xxx the aggregate area of the property of 76.3964 hectares has been actually, directly,
exclusively devoted to livestock (cattle, buffaloes/carabaos, and goats) for milk and dairy production since the
1960s, or long before the advent of the CARP Law in 1988; 17 xxx the applicant has fully complied with all the
requirements under DAR A.O. No. 7, Series of 2008 and AO. No. 9, Series of 1993; 18 and xxx the confinement
of cattles, buffalos/carabaos and goats in a separate place other than the herein subject properties are but
necessary for health and sanitary reasons, there is the chain of connection of the utilization of the livestocks
exclusively and directly from farm to livestock facility; xxx19
On September 30, 2009, the petitioners filed a Manifestation to Lift Notice of Coverage with the PARO, which
was treated as a petition and docketed as Case No. A-0400-0250-09 of DAR Regional Office IV-A with the
PARO.20 This was anchored on the ground that petitioners were in the business of livestock raising, and were
using the subject lands as pasture lands for their buffaloes which produce the carabao milk for their ice cream
products. The petitioners claimed that the NOC is contrary to the 1987 Philippine Constitution which provides
that livestock farms are not among those described as agricultural lands subject to land reform.
On November 20, 2009, Rommel Bote, Attorney II of DARPO, submitted a Memorandum addressed to
DARPO's Chief of Legal Divsion, indicating therein that the petition is meritorious and thus, recommending the
lifting of the NOC upon the subject lands.21
Based on these findings, DAR Regional Director Antonio G. Evangelista (RD Evangelista) issued an
Order22 dated December 22, 2009, granting the Petition to Lift Notice of Coverage, the dispositive portion of
which reads, thus:
WHEREFORE, premises considered, the Petition for Lifting of Notice of Coverage filed by the Heirs of Ramon
S. Arce, Sr. represented by Rodolfo S. Arce, namely: 1. Eulalio Arce, 2. Lorenza Arce, 3. Ramon Arce, Jr., 4.
Mauro Arce, and 5. Esperanza Arce involving four (4) parcels of land covered by TCT Nos. 442673 (17.3645
hectares), 442674 (40.5424 hectares), 442675 (15.6485 hectares), and 442676 (2.8410 hectares), with an
aggregate area of 76.3964 located at Brgy. Macabuid, Rodriguez, Rizal is hereby GRANTED.23
On April 29, 2011, RD Evangelista issued a Certification, 24 stating that the Order dated December 22, 2009 had
become final and executory, considering that no motion for reconsideration and/or appeal was filed.
Meanwhile, Joevin M. Ucag (Ucag) of DAR Region IV-A submitted an Ocular Inspection Report dated May 12,
2011 to the MARO, stating that "there was no livestock/cattle found in the area of Macabud, Rodriguez, Rizal". 25
Subsequently, the Samahan ng mga Magsasakang Nagkakaisa sa Sitio Calumpit (SAMANACA), through their
leaders, sent letters dated March 2, 2011 and June 14, 2011, to DAR Secretary Virgilio R. De Los Reyes
(Secretary De Los Reyes), seeking to annul RD Evangelista's Order dated December 22, 2009. The letters were
treated as a Petition to Annul an Invalid Resolution by the Regional Director. 26
On November 8, 2011, petitioners filed their Comment and countered that RD Evangelista's Order dated
December 22, 2009 had become final and executory and that the subject lands were within the retention limit.
Thus, they prayed for the dismissal of SAMANACA's Letters-Petition. 27
On December 7, 2012, DAR Secretary De Los Reyes issued an Order, 28 denying petitioners' Petition for
Exclusion from CARP Coverage. The DAR ruled, among others, that while it is true that the subject lands had
been a livestock farm prior to the CARP's enactment, the petitioners failed to prove that the said lands are
actually, directly, exclusively and continuously used for livestock activity up to the present. According to the
DAR, there were no longer cattle and livestock facilities within the subject lands.
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Petitioners filed a Motion for Reconsideration (with Motion for Ocular Inspection) 29 dated January 15, 2013; a
Supplemental Motion for Reconsideration30 dated January 28, 2013; and, a Second Supplemental Motion for
Reconsideration31 dated March 18, 2013 of the DAR's Order. In these motions, the petitioners, alleged, among
others that their right to due process were violated when the alleged ocular inspection on the subject lands was
conducted by Ucag without prior notice to them, thereby depriving them the right to refute such findings. They
averred that Ucag never entered the gated premises of the subject lands and that, had there been an inspection,
he must have conducted the same only from outside the premises. Petitioners likewise averred that it is unlikely
that Ucag could have spotted the livestock therein considering that the same were lying on a sloping plain,
combined with the tall napier grasses.
Thereafter, petitioners filed an Appeal Memorandum32 with the Office of the President (OP) and averred, among
others, as follows: (1) DAR Secretary De Los Reyes erred in reversing RD Evangelista's Order dated December
22, 2009 after it already attained finality; (2) the subject lands were presently and exclusively utilized for
livestock raising; (3) only a number of livestock (older and milking) were transferred from the subject lands to the
Novaliches facility at the instance of the PCC-DA, while the younger livestock remained in the subject lands;
and, (4) SAMANACA has no legal standing to assail RD Evangelista's Order dated December 22, 2009 since
they were never in possession of the subject lands and they were not tenants, farmers and tillers thereon.
On April 29, 2015, the OP rendered its Decision,33 and ruled that petitioners' subject lands were exempted from
the coverage of CARP. The dispositive portion of its decision reads, thus:
WHEREFORE, premises considered, the Order dated 7 December 2012 of the Secretary of the Department of
Agrarian Reform is hereby REVERSED AND SET ASIDE. The petition for exclusion from CARP coverage with
respect to the 76.3964 hectares of lands, located in Brgy. Macabud, Montalban, Rizal, owned by the Heirs of
Ramon Arce, is hereby GRANTED.
SO ORDERED.34
The DAR filed a Petition for Review35 with the CA and prayed for the reversal of the OP's April 29, 2015
Decision. The CA granted the same in its assailed Decision 36 dated August 5, 2016. The CA held, among
others, that petitioners failed to refute or deny that since 1998, there were no longer cattle in the subject lands
and that the same were no longer used as grazing lands.
Their Motion for Reconsideration,37 having been denied in the CA's November 28, 2016 Resolution, 38 petitioners
filed this instant petition, anchored on the following grounds:
A.
THE ASSAILED DECISION AND RESOLUTION WERE NOT IN ACCORD WITH LAW AND APPLICABLE
DECISIONS OF THE SUPREME COURT CONSIDERING THAT THE COURT OF APPEALS ERRONEOUSLY
UPHELD THE FINDINGS OF FACTS OF THE DAR SECRETARY WHICH WERE BASED ON PROCEEDINGS
UNDERTAKEN IN BLATANT VIOLATION OF PETITIONERS' BASIC RIGHTS TO ADMINISTRATIVE DUE
PROCESS AND DESPITE PETITIONERS' PRESENTATION OF SUBSTANTIAL EVIDENCE SHOWING
PRESENCE OF LIVESTOCK IN THE SUBJECT PROPERTIES.
B.
THE ASSAILED DECISION AND RESOLUTION WERE NOT IN ACCORD WITH LAW AND APPLICABLE
DECISIONS OF THE SUPREME COURT CONSIDERING THAT THE COURT OF APPEALS ERRONEOUSLY
RULED THAT THE SUBJECT PROPERTIES ARE NO LONGER ACTUALLY, DIRECTLY, AND EXCLUSIVELY
USED FOR LIVESTOCK RAISING PURPOSES DESPITE THE FACT THAT THE SUBJECT PROPERTIES
ARE UTILIZED TO SUSTAIN THE FEEDLOT OPERATIONS/INTENSIVE SYSTEM OF FARMING OF
PETITIONERS.
C.
THE ASSAILED DECISION AND RESOLUTION WERE NOT MADE IN ACCORD WITH LAW AND
APPLICABLE DECISIONS OF THE SUPREME COURT CONSIDERING THAT THE COURT OF APPEALS
HAD ERRONEOUSLY GIVEN DUE COURSE TO RESPONDENT'S PETITION FOR REVIEW DESPITE THE
NON-OBSERVANCE OF THE RULE ON EXHAUSTION OF ADMINISTRATIVE REMEDIES. 39
Meanwhile, on March 20, 2018, SAMANACA filed an Ex-parte Motion for Leave (for Intervention and for
Admission of Comment),40 arguing that its members have already been identified as qualified beneficiaries of the
subject lands and hence, has the right to participate and air its side of the controversy.
This Court's Ruling
The petition is granted.
This case falls under the recognized exceptions to the
rule that this Court is not a trier of facts  –
As a general rule, factual issues are not within the province of this Court. However, if the factual findings of the
government agency and the CA are conflicting,41 or the evidence that was misapprehended was of such nature
as to compel a contrary conclusion if properly appreciated, 42 the reviewing court may delve into the records and
examine for itself the questioned findings.
Here, considering the disparity between the findings of fact of the OP, on the one hand, and that of the DAR
Secretary and the CA on the other hand, with respect to the following issues on whether the petitioners' subject
lands were used for livestock raising on or before June 15, 1988; and, whether there were still livestock grazing
in the subject lands up to the present, We are constrained to re-examine the facts of this case based on the
evidence presented by both parties.
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The subject lands are devoted to livestock raising; thus,
they remain to be exempted from the coverage of the
CARP –
Contrary to the rulings of the DAR and the CA, the subject lands are exempted from the coverage of the CARP.
The CARP shall cover all public and private agricultural lands, including other lands of the public domain
suitable for agriculture, regardless of tenurial arrangement and commodity produced. 43 Section 3(c) thereof
defines "agricultural land" as land devoted to agricultural activity and not classified as mineral, forest, residential,
commercial or industrial land.44
In Luz Farms v. The Honorable Secretary of the Department of Agrarian Reform ,45 the Court declared
unconstitutional the CARL provisions46 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.47 (Emphasis ours)
Reiterating Our ruling in the Luz Farms case, We held in Natalia Realty and Estate Developers and Investors
Corp. Inc. v. Department of Agrarian Reform Sec. Benjamin T. Leong and Dir. Wilfredo Leano, DAR REGION
IV,48 that industrial, commercial and residential lands are not covered by the CARL. In the same case, We
stressed 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.
Guided by the foregoing, lands devoted to the raising of livestock, poultry and swine have been classified as
industrial, not agricultural, and thus, exempted from agrarian reform. 49
A thorough review of the records reveals that there is substantial evidence to show that the entirety of the
petitioners' subject lands were devoted to livestock production since the 1950s, i.e., even before the enactment
of the CARL on June 15, 1988. No less than the DAR, who has the competence to determine the status of the
land,50 acknowledged this when it held that:
It cannot be denied that the Arce properties [subject lands] had been a livestock farm. The documentary
evidence presented by the Applicants [petitioners] established the existence of livestock activity in the
landholding prior (sic) the enactment of the CARL on 15 June 1988, such as Certificates of Ownership of Large
Cattle issued from 1981 to 1988, Certification from the Philippine Carabao Center attesting that the Selarce
Farm is a cooperator of the Center as early as 1982, and the Technical Paper published by the Philippine
Council for Agriculture and Resources Research featuring the Arce Farm in the "Philippines Recommends for
Carabao Production 1978." These documents were positively affirmed by DARPO personnel in their
investigation report and recommending for the exclusion of the said landholdings. 51
Indeed, the subject lands are utilized for livestock raising, and as such, classified as industrial, and not
agricultural lands. Thus, they are exempted from agrarian reform.
This notwithstanding, the DAR denied petitioners' Petition for Exclusion from CARP Coverage. The DAR ruled
that the subject lands were no longer being utilized for livestock purposes since there were no longer livestock
grazing in the area of Brgy. Macabud, Rizal, based on an Ocular Inspection Report conducted by Ucag of DAR
Region IV-A. The CA, relying on the DAR's pronouncement and in the case of Department of Agrarian Reform
v. Vicente K. Uy,52 pointed out that the status of the subject lands as an industrial land was not maintained
because these were no longer exclusively, directly and actually devoted to livestock activity up to the present.
We differ.
First, the records disclosed that sometime in 1998, the PCC-DA recommended that the livestock in the subject
lands be transferred to petitioners' Novaliches property due to a fluke infection in Macabud, Montalban, RizaL
While the petitioners followed the recommendation and transferred the older and milking livestock to the
Novaliches property, the younger cattle, which were not susceptible to the fluke infection, remained in the
subject lands.53 Petitioners proved this by the submission, among others, of photographs of livestock freely
grazing in the subject lands. Contrary to the DAR's and CA's findings, the transfer of some of petitioners'
livestock to the Novaliches property, did not detract from the usage of the subject lands which was for the
breeding of livestock. As correctly observed by the OP:
xxx. The confinement of the cattles, buffalos, carabaos and goats in a separate facility other than the subject
landholdings is of no moment since the transfer, as established, was necessary for health and sanitary
considerations having been recommended by the Executive Director of the Philippine Carabao Center of the
Department of Agriculture (PCC-DA). Such transfer is temporary in nature and did not divert the use thereof
from the purpose of livestock farming. Thus, the DAR Secretay committed an error in immediately considering
the subject properties as agricultural. xxx54 (Emphasis ours)
Second, upon petitioners' filing of the Petition for Exclusion from CARP Coverage, both the MARO and the
DARPO issued their respective reports on the inspection over the subject lands and recommended that the the
petition be granted for being meritorious.
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.55
In its ocular inspection, the MARO found, among others, that the subject lands were devoted for livestock farm
up to the present and that there were large cattle thereon as proven by Certificates of Ownership of Large Cattle
presented by the petitioners, the existence of such, cover the years 1981 to the present. The DARPO's report
was more explicit in that it stated that the subject lands have been actually, directly and exclusively utilized for
livestock raising long before the advent of the CARL.
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Unfortunately, the DAR and the CA gave little weight to these reports. Instead, they relied on the ocular
inspection conducted by Ucag, to the effect that there were no longer livestock grazing in the area of Macabud,
Rodriguez, Rizal.
The reliance is erroneous.
For one thing, Ucag's ocular inspection was done without the knowledge and prior notice to the petitioners.
Aside from the fact that the Ocular Inspection Report did not specify the area over which the alleged inspection
was made, there was dearth of evidence that Ucag was permitted to enter the gated premises of the subject
lands. Had there been indeed an inspection, the same must have been conducted only from outside the
premises. As such, it is likely that Ucag failed to spot the livestock therein. As pointed out by the petitioners,
there could have no vantage point from where Ucag could fully inspect the subject lands considering that the
same were lying on a sloping plain, combined with the tall napier grasses, which could have easily hidden the
livestock. For another thing, the records did not show that petitioners were given the opportunity to submit their
respective sets of evidence against Ucag's Ocular Inspection Report so as to be duly considered and taken into
account by the DAR in arriving at its ruling.
Third, the subject lands remained to be non-agricultural, despite the fact that they were being used, not only as
a grazing pasture, but as a production area where napier grass were grown to supply food for the livestock
maintained in the subject lands and in the Novaliches property.
"Feedlot operation", the method adopted by the petitioners in rearing their livestock, was recognized by the
DAR, in Administrative Order No. 01, Series of 2004 (AO No. 01-04). 56 As explained by the MARO, this means
that the animals were not freely grazing in the open field but instead were confined separately in a feedlot where
they were fed and milked.
Indeed, the subject lands have been utilized as an exclusive source for the food requirements of all the
petitioners' livestock, i.e., those occupying the subject lands and those that were transferred to the Novaliches
facility. Without the subject lands where napier grass were grown, petitioners could not have raised the livestock
which were necessary in breeding their livestock.
Contrary to the DAR's avermen,57 the mere fact that petitioners were sowing napier grass in the subject lands
did not automatically make the same an agricultural land so as to be covered under the CARP. It would be
surprising if there were no napier grass on the subject lands considering that the same has been used as a
grazing pasture for petitioners' livestock. Also, the DAR did not adduce any proof to show that the napier grass
were planted and used for agricultural business. There can be no other presumption, other than that the napier
grass was used to augment the supply of fodder for the petitioners' livestock which was in line with petitioners'
method of farming. As aptly observed by the OP:
xxx the records are bereft of any evidence showing that there are agricultural activities in the subject area. To be
covered, private lands should be devoted to or suitable for agriculture and/or presently occupied and tilled by
farmers. What is evident, however, is that the landholdings are covered and planted with napier grass which is
gathered by employees of appellants to meet the daily needs of the cattle, buffalos and goats that were
transferred to Novaliches, instead of just allowing the said livestock to graze in the area at the risk of getting
diseases like liver fluke infections as warned by the Executive Director of PCC-DA. Evidently, the subject
properties have always been maintained as a pasture land only with napier grass.
xxx the records are likewise bereft of any evidence showing that the land is suitable for agriculture. What is clear
in the ocular inspection of the MARO and the DARPO Legal is that the subject landholdings are undulating in
topography and predominantly with a slope of more than 18 percent. As provided in the CARP Law, all lands
with 18% slope and over shall be exempt from the coverage of the said law. xxx the Certification dated 23 June
2014 issued by the Bureau of Soils and Water Management of the Department of Agriculture and the finding in
the Highlight of Accomplishment by Bureau of Soils and Water Management of the Department of Agriculture
dated 18 June 2014, revealed that the subject land is idled, underutilized, and not suitable for agriculture. 58
Fourth, the CA misread Our pronouncement in the Uy case. On page 8 of its decision, the CA cited the following
passages from the Uy case, thus:
xxx the law only requires that for exemption of CARP to apply, the subject landholding should be devoted to
cattle-raising as of June 15, 1988 is not entirely correct, for the law requires that it be exclusively, directly and
actually used for livestock as of June 15, 1988. Under A.O. No. 9, Series of 1993, two conditions must be
established: 1) it must be shown that the subject landholding was EXCLUSIVELY, DIRECTLY AND ACTUALLY
used for livestock, poultry or swine on or before June 15, 1988; and, 2) the farm must satisfy the ratios of land to
livestock.59
The aforecited paragraph, however, was merely a part of the "facts", and not indicated in the "decision" portion
of the Uy case. We did not declare in the Uy case that the two conditions set forth in A.O. No. 09, Series of 1993
(quoted above), should first be established in order that a land be excluded from the coverage of the CARP.
Contrariwise, in the Uy case, We held that we have already strucked down A.O. No. 09-93 in the Department of
Agrarian Reform v. Sutton.60 for being unconstitutional. Thus, We explained:
xxx the threshold substantive issue is the validity and implementation of DAR Administrative Order No. 9, Series
of 1993 on the respondent's landholding of more or less 472 ha. in light of the ruling of this Court in Department
of Agrarian Reform v. Sutton, where DAR Administrative Order No. 9, Series of 1993 was declared
unconstitutional.61
xxx to be valid, administrative rules and regulations must be issued by authority of law and must not contravene
the provisions of the Constitution. 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 . xxx.62
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xxx 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. xxx. 63
In the Sutton case, We discussed that what A.O. No. 09-93 sought to address were the reports that some
unscrupulous landowners have been converting their agricultural lands to livestock farms to avoid their coverage
from the agrarian reform. In that case, as well as in the present one, the odious scenario which A.O. No. 09-93
seeks to prevent is clearly non-existent. Recall that petitioners acquired their landholdings as early as the 1950s.
Since then, they have long been utilizing the subject lands covered by napier grass for the raising of their
livestock. Evidently, there was no evidence on record that petitioners have just recently engaged in or converted
to the raising of livestock after the enactment of the CARL that may lead to the suspicion that petitioners had the
intention of evading its coverage. Stated differently, the usage of the subject lands for livestock raising, has been
a going concern by the petitioners even before the passage of the CARL.
Lastly, We stress that what the CARL prohibits is the conversion of agricultural lands for non-agricultural
purposes after the effectivity of the CARL.64 Here, there was no showing that the subject lands which were
devoted for livestock raising prior to the CARL, had been converted to an agricultural land, after its passage.
Thus, the petitioners' subject lands remained to be non-agricultural, i.e., devoted to livestock raising, and thus,
excluded from the coverage of the CARP.
SAMANACA's Motion for Leave (for Intervention and for
Admission of Comment) cannot be given due course –
Intervention under Rule 19 of the Rules of Court is a remedy by which a third party, not originally impleaded in
the proceedings, becomes a litigant therein for a certain purpose: to enable the third party to protect or preserve
a right or interest that may be affected by those proceedings. 65
In Hon. Executive Secretary, Commissioner of Custom and the District Collector of Customs of the Port of Subic
v. Northeast Freight Forwarders, Inc.,66 We explained the rationale of this remedy, in this wise:
material, a concern which is more than mere curiosity, or academic or sentimental desire; it must not be indirect
and contingent, indirect and remote, conjectural, consequential or collateral. However, notwithstanding the
presence of a legal interest, permission to intervene is subject to the sound discretion of the court, the exercise
of which is limited by considering "whether or not the intervention will unduly delay or prejudice the adjudication
of the rights of the original parties and whether or not the intervenor's rights may be fully protected in a separate
proceeding."67
Keeping these factors in mind, SAMANACA may not be allowed to intervene.
SAMANACA's allegation that its members have a substantial interest in the outcome of the present case, since
they have been identified to be the qualified beneficiaries of the subject lands is not sufficient The records show
that the members of SAMANACA were never in possession of the subject lands nor were they, at one time or
another, tenants, farmers, or tillers thereon. Likewise, SAMANACA failed to substantiate their claim that they
have been identified as qualified beneficiaries of the subject lands under the CARP. No shred of evidence was
ever submitted to prove this claim.
Clearly, SAMANACA's assertions do not amount to a direct and immediate legal interest, so much so that they
will either gain or lose by the direct legal operation of the court's judgment. At most, their interest, if any, is
characterized as inchoate, contingent and expectant – which could not have justified intervention.
After an assiduous review of the records of this case, this Court concludes that petitioners' subject lands are
beyond the coverage of the agrarian reform program.
WHEREFORE, premises considered, the August 5, 2016 Decision and the November 28, 2016 Resolution of
the Court of Appeals in CA-G.R. SP No. 140755, are REVERSED and SET ASIDE, and a new one entered
upholding the exemption of the subject lands from the coverage of Republic Act No. 6657, otherwise known as
the Comprehensive Agrarian Reform Law of 1988.
SO ORDERED.
Leonardo-De Castro (Acting Chairperson),* Del Castillo, Jardeleza, and Gesmundo,** JJ., concur.

Intervention is not a matter of absolute right but may be permitted by the court when the applicant shows facts
which satisfy the requirements of the statute authorizing intervention. Under our Rules of Court, what qualifies a
person to intervene is his possession of a legal interest in the matter in litigation or in the success of either of the
parties, or an interest against both; or when he is so situated as to be adversely affected by a distribution or
other disposition of property in the custody of the court or an officer thereof As regards the legal interest as
qualifying factor, this Court has ruled that such interest must be of a direct and immediate character so that the
intervenor will either gain or lose by the direct legal operation of the judgment. The interest must be actual and

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