AVILA, ROSSE RICA

Module 4-D Land Redistribution under CARL

Topic Notes
 Section 22, RA 6657 as amended

Qualified Beneficiaries SECTION 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:

(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.

Provided, however, That the children of landowners who are qualified under
Section 6 of this Act (3 hectares each child basta 15yrs old and actually tilling
the land) shall be given preference in the distribution of the land of their
parents: and Provided, further, That actual tenant-tillers in the landholdings
shall not be ejected or removed therefrom.

Beneficiaries under Presidential Decree No. 27 who have culpably sold, disposed
of, or abandoned their land are disqualified to become beneficiaries under
this Program.

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 such
beneficiary. The DAR shall submit periodic reports on the performance of the
beneficiaries to the PARC.
If, due to the landowner’s retention rights or to the number of tenants, lessees,
or workers on the land, there is not enough land to accommodate any or some
of them, they may be granted ownership of other lands available for distribution
under this Act, at the option of the beneficiaries.
Farmers already in place and those not accommodated in the distribution of
privately-owned lands will be given preferential rights in the distribution of lands
from the public domain.

 Section 48, DAR AO No. 7, series of 2011

SECTION 48.   Landowners Availing of VOS (Voluntary Offer to Sell) are

Disqualified to be ARBs (Agrarian Reform Beneficiaries). —

Land Owners who have voluntarily offered their landholdings for

coverage under CARP, and those who have previously waived their
rights to retain, are disqualified from becoming ARBs of other landholding/s
being covered or to be covered under CARP.

The LO's voluntary offer or his previous waiver is construed to be an inability

and/or unwillingness to cultivate the land and make it productive.   

 Section 22-A, RA 6657

Distribution: The Essentials
(a) agricultural lessees and share tenants;

 Section 23, RA 6657

Distribution Limit. — No qualified beneficiary may own more

than three (3) hectares of agricultural land.

 Section 93-95, DAR AO No. 7, series of 2011

SECTION 93. Allocation of Awarded Lands. — The equitable allocation of the
land shall be observed in the following manner:
a. Landholdings covered by CARP shall be allocated first to agricultural lessees,
tenants, and regular farm workers of the same landholding up to a maximum
of three (3) hectares each. In case the landholding is not sufficient to award
each agricultural lessee, tenant, and regular farm worker three (3) hectares
each, it shall be distributed in the manner provided in Section 94 of this A.O.

b. After complying with the three (3)-hectare allocation requirement for lessees,
tenants, and regular farm workers, as the case may be, the MARO shall
determine the remaining area left for distribution to seasonal farm workers,
other farm workers, actual tillers or occupants of public lands, and others
directly working on the land, in the manner provided by Section 95 of this
A.O.

c. Excess areas, if any, after the allocation mentioned in the preceding

paragraph shall be awarded to collectives or cooperatives of the above
beneficiaries. However, the tenants/lessees in such excess areas shall be
given a reasonable time to harvest the produce of his/her crop, subject to
the rules on standing crops.
In cases, however, where there are preferred beneficiaries approved upon
nomination of the LO, each preferred beneficiary may select a contiguous and
compact area, no larger than three (3) hectares, to be allocated to them prior to
determining the allocation for the ARBs, provided that in no case may the
distribution of lands to preferred beneficiaries deprive each of the agricultural
lessees and tenants of being awarded the portion of the landholding they are
actually tenanting/leasing, which in no case shall be more than three (3)
hectares.

SECTION 94. If Land Not Enough for Agricultural Lessees, Tenants, and Regular
Farmworkers. — In cases where the land area is not enough to meet the three
(3)- hectare award ceiling for each agricultural lessee, tenant, and regular
farmworkers in a
particular landholding, then the landholding shall be divided equally among
them, provided that in no case may the allocation of lands deprive each of the
agricultural lessees and tenants of being awarded the portion of the landholding
they are actually
tenanting/leasing, which in no case shall be more than three (3) hectares.

However, in the extreme cases that the land area is not enough to provide all
them one thousand (1,000) square meters each, the names of the said
agricultural lessee, tenant, and regular farmworkers shall be listed from the ARB
who has leased/served the most aggregate time to him/her who has
leased/served least. Each ARB shall, thereafter, be awarded one thousand
(1,000) square meters each starting from the person at the top of the list, until
the area remaining is less than one thousand (1,000) square meters. The
remaining land area, if any, shall then be distributed equally among those who
received one thousand (1,000) square meters each.

Other qualified beneficiaries under Section 22 of RA No. 6657, as amended, who

are displaced after the distribution of all available land to tenants/lessees, may
still qualify as ARBs in other lands covered under the CARP.

SECTION 95. Allocation of Seasonal Farmworkers, Other Farmworkers, Actual

Tillers or Occupants of Public Lands, and Others Directly Working on the Land.
— The remaining land shall be allocated to the seasonal farmworkers, other
farmworkers, actual tillers or occupants of public lands, and others directly
working on the land in the following manner:
(a) The remaining area shall be distributed equally among seasonal
farmworkers, but in no case shall each be awarded more than three (3)
hectares each. In the extreme cases that the land area is not enough to
provide all the seasonal farmworkers one thousand (1,000) square meters
each, the names of the said seasonal farmworkers shall be listed from the
farmworker who has served the most aggregate time to him/her who has
served least. Each seasonal farmworker shall, thereafter, be awarded one
thousand (1,000) square meters each starting from the person at the top of
the list, until the area remaining is less than one thousand (1,000) square
meters. The remaining land area, if any, shall then be distributed equally
among those who received one thousand (1,000) square meters each.

(b) If after all the seasonal farmworkers have been allocated three (3) hectares
each there still remains a land area, or if there are no seasonal
 farmworkers, it shall be distributed equally among the other farmworkers,
but in no case shall each be awarded more than three (3) hectares each. In
the extreme cases that the land area is not enough to provide all the other
farmworkers one thousand (1,000) square meters each, the names of the
said other farmworkers shall be listed from the farmworker who has served
the most aggregate time to him/her who has served least. Each of the
other farmworkers shall, thereafter, be awarded one thousand (1,000)
square meters each starting from the person at the top of the list, until the
area remaining is less than one thousand (1,000) square meters. The
remaining land area, if any, shall then be distributed equally among those
who received one thousand (1,000) square meters each.

(c) If after all the other farmworkers have been allocated three (3) hectares
each there still remains a land area, and if the landholding is an untitled
private agricultural land, it shall be distributed equally among the actual
tillers or occupants of that public land, but in no case shall each be awarded
more than three (3) hectares each. In the extreme cases that the land area
is not enough to provide all the actual tiller/occupant one thousand (1,000)
square meters each, the names of the said actual tiller/occupant shall be
listed from the actual tiller/occupant who has tilled/occupied the said land
the most aggregate time to him/her who has tilled/occupied least. Each of
the actual tiller/occupant shall, thereafter, be awarded one thousand (1,000)
square meters each starting from the person at the top of the list, until the
area remaining is less than one thousand (1,000) square meters. The
remaining land area, if any, shall then be distributed equally among those
who received one thousand (1,000) square meters each.

(d) Finally, if after all the actual tiller/occupant have been allocated three (3)
hectares each there still remains a land area, or if the landholding is not an
untitled private agricultural land, it shall be distributed equally among the
other persons directly working on the land, but in no case shall each be
awarded more than three (3) hectares each. In the extreme cases that the
land area is not enough to provide all these other persons one thousand
(1,000) square meters each, the names of these other persons shall be
listed from him/her who has worked the said land the most aggregate time
to him/her who has worked least. Each of the actual tiller/occupant shall,
thereafter, be awarded one thousand (1,000) square meters each starting
from the person at the top of the list, until the area remaining is less than
one thousand (1,000) square meters. The remaining land area, if any, shall
then be distributed equally among those who received one thousand
(1,000) square meters each.
 Section 24-25, RA 6677

Award to Beneficiaries SECTION 24. Award to Beneficiaries. — The rights and responsibilities of the
beneficiary shall commence from the time the DAR makes an award of
the land to him, which award shall be completed within one hundred
eighty (180) days from the time the DAR takes actual possession of
the land. Ownership of the beneficiary shall be evidenced by a Certificate
of Land Ownership Award, which shall contain the restrictions and conditions
provided for in this Act, and shall be recorded in the Register of Deeds
concerned and annotated on the Certificate of Title.

SECTION 25. Award Ceilings for Beneficiaries. — Beneficiaries shall be awarded

an area not exceeding three (3) hectares which may cover a
contiguous tract of land or several parcels of land cumulated up to the
prescribed award limits.

For purposes of this Act, a landless beneficiary is one who owns less than three
(3) hectares of agricultural land.

The beneficiaries may opt for collective ownership, such as co-ownership or

farmers cooperative or some other form of collective organization: Provided,
That the total area that may be awarded shall not exceed the total number of
co-owners or member of the cooperative or collective organization multiplied by
the award limit above prescribed, except in meritorious cases as determined by
the PARC. Title to the property shall be issued in the name of the co-owners or
the cooperative or collective organization as the case may be.

 Section 27-28, RA 6677

SECTION 27. Transferability of Awarded Lands. — Lands acquired by

beneficiaries under this Act may not be sold, transferred or conveyed
except through hereditary succession, or to the government, or to the
LBP, or to other qualified beneficiaries for a period of ten (10) years:

Provided, however, That the children or the spouse of the transferor shall have
a right to repurchase the land from the government or LBP within a period of
two (2) years. Due notice of the availability of the land shall be given by the LBP
to the Barangay Agrarian Reform Committee (BARC) of the barangay where the
land is situated. The Provincial Agrarian Reform Coordinating Committee
(PARCCOM) as herein provided, shall, in turn, be given due notice thereof by the
BARC.

If the land has not yet been fully paid by the beneficiary, the rights to the land
may be transferred or conveyed, with prior approval of the DAR, to any heir of
the beneficiary or to any other beneficiary who, as a condition for such transfer
or conveyance, shall cultivate the land himself. Failing compliance herewith, the
land shall be transferred to the LBP which shall give due notice of the availability
of the land in the manner specified in the immediately preceding paragraph.
In the event of such transfer to the LBP, the latter shall compensate the
beneficiary in one lump sum for the amounts the latter has already paid,
together with the value of improvements he has made on the land.

SECTION 28. Standing Crops at the Time of Acquisition. — The landowner shall
retain his share of any standing crops unharvested at the time the DAR shall
take possession of the land under Section 16 of this Act, and shall be given a
reasonable time to harvest the same.

 Section 37, 73 RA 6677

SECTION 37. Support Services to the Beneficiaries. — The PARC shall ensure
that support services to farmer-beneficiaries are provided, such as:
(a) Land surveys and titling;
(b) Liberalized terms on credit facilities and production loans;
(c) Extension services by way of planting, cropping, production and post-
harvest technology transfer, as well as marketing and management
assistance and support to cooperatives and farmers' organizations;
(d) Infrastructure such as access trails, mini-dams, public utilities, marketing
and storage facilities; and
(e) Research, production and use of organic fertilizers and other local
substances necessary in farming and cultivation.

The PARC shall formulate policies to ensure that support services to farmer
beneficiaries shall be provided at all stages of land reform.

Section 73. Prohibited Acts and Omissions. — The following are prohibited:

(a) The ownership or possession, for the purpose of circumventing the

provisions of this Act, of agricultural lands in excess of the total
retention limits or award ceilings by any person, natural or juridical, except
those under collective ownership by farmer-beneficiaries.
(b) The forcible entry or illegal detainer by persons who are not
qualified beneficiaries under this Act to avail themselves of the rights and
benefits of the Agrarian Reform Program.
(c) The conversion by any landowner of his agricultural land into any
nonagricultural use with intent to avoid the application of this Act
to his landholdings and to dispossess his tenant farmers of the land tilled by
them.
(d) The willful prevention or obstruction by any person, association or
entity of the implementation of the CARP.
(e) The sale, transfer, conveyance or change of the nature of lands
outside of urban centers and city limits either in whole or in part
after the effectivity of this Act. The date of the registration of the deed
of conveyance in the Register of Deeds with respect to titled lands and the
date of the issuance of the tax declaration to the transferee of the property
with respect to unregistered lands, as the case may be, shall be conclusive
for the purpose of this Act.
(f) The sale, transfer or conveyance by a beneficiary of the right to use
or any other usufructuary right over the land he acquired by virtue
of being a beneficiary, in order to circumvent the provisions of this
Act.

 Section 96 , DAR A.O No. 07-2011

SECTION 96. Award of Certificate of Land Ownership Award (CLOA) — In
general, the land awarded to an ARB should beunder an individual CLOA-title
covering one (1) contiguous tract or several parcels of land cumulated up to a
maximum of three (3) hectares.

Qualified beneficiaries may opt for collective ownership, through a co-workers or

farmers' cooperative/association or some other form of collective organization,
for the issuance of collective ownership titles: Provided, That the total area to
be awarded
shall not exceed the total number of co-owners or members of the cooperative
or collective organization multiplied by the award limit of three (3) hectares,
except in meritorious cases as may be determined by the PARC, and provided
further that the conditions for the grant of collective CLOAs under this A.O. are
met.

Under collective ownership, a collective CLOA to the property shall be issued in

the names of the co-owners, who may form a farmers' cooperative/association
or collective organization. If the CLOAs are issued collectively, the names of all
the beneficiaries must be listed in the CLOA. If the subject land is legally
transferred, the transferee, if qualified, can be substituted as beneficiary of the
individual CLOA upon the approval of the PARO.

Collective CLOAs may be issued under the following instances:

i. The current farm management system of the land covered by CARP is not
appropriate for either individual farming or division of the landholding into
farm parcels;
ii. The farm labor system is specialized, where the farmworkers are organized by
functions such as spraying, weeding, packing, and other similar activities,
and not by specific parcels;
iii. The potential beneficiaries are currently not farming individual parcels but
collectively working on large contiguous areas; and
iv. The farm consists of multiple crops being farmed in an integrated manner, or
includes non-crop production areas that are necessary for the viability of
farm operations, such as packing plants, storage areas, dikes, and other
similar facilities that cannot be subdivided or assigned to individual farmers.
The names of the ARBs sharing a collective CLOA issued in the name of a
farmers' cooperative/association or collective organization shall be listed at
the back thereof. Those listed shall be deemed as the owners of the
landholding covered by the said collective CLOA.

Cases:

DAR v. Carriedo
Facts:
Romeo C. Carriedo bought approximately 70.4788 hectares of agricultural land covered
by the following titles and tax declarations:

Transfer Certificate of Title No. 35055

Tax Declaration No. 48354
Transfer Certificate of Title No. 17681
Transfer Certificate of Title No. 56897
Transfer Certificate of Title No. 17680

The area sold to Romeo C. Carriedo included a part covered by Transfer Certificate of
Title No. 17680 of which herein petitioner, Pablo Mendoza, was a tenant.

In June of 1990, Romeo C. Carriedo then sold these lands to the Peoples’ Livelihood
Foundation, Inc. Except for that area covered by Transfer Certificate of Title No. 17680,
the lands were subjected to the Voluntary Land Transfer/Direct Payment Scheme and
were awarded to agrarian reform beneficiaries in 1997.

On 5 October 1999, the land covered by Transfer Certificate of Title No. 17680 was
divided into five (5) sub-lots.

Three of these lots were then distributed to beneficiaries under Presidential Decree No.
27 and covered by Transfer Certificate of Title Nos. 44384, 44385, and 44386, issued on
10 September 1999.

The remaining two (2) lots, consisting of approximately 5 hectares and which was also
the land being occupied by Pablo Mendoza, were registered in the name of Romeo C.
Carriedo and covered by Transfer Certificate of Title Nos. 344281 and 344282,
respectively.

On 26 February 2002, Pablo Mendoza, Corazon Mendoza, and Orlando Gomez filed a
Petition for Coverage of these two (2) lots under Comprehensive Agrarian Reform Law
of 1988. They claimed that they had been in physical and material possession of the
said land as tenants since 1956 and had made the land productive. They prayed that an
order be issued placing the land under Comprehensive Agrarian Reform Program; and
the Department of Agrarian Reform, the Provincial Agrarian Reform Officer, and the
Municipal Agrarian Reform Officer be ordered to proceed with the acquisition and
distribution of the land in their favor.

The Regional Director granted the petition in an Order dated 2 October 2002.

The Supreme Court, in Department of Agrarian Reform v. Carriedo, G.R. No. 176549,
January 20, 2016, however, reversed the said order and declared that the land covered
by Transfer Certificate of Title Nos. 344281 and 344282 was Romeo C. Carriedo’s
retained area.

There was a resolution.

Issues:
The sole issue for our consideration is whether Carriedo has the right to retain the land

Ruling:
In the present case, the Court acknowledged that the sale of the first (5) hectares of
agricultural land to the Peoples’ Livelihood Foundation, Inc. made by Romeo C.
Carriedo could be viewed as valid.
However, said sale should also be treated as the exercise of Romeo C. Carriedo’s
retention rights, such that he would no longer be able to lawfully claim the subject
landholding as his retained area.

Accordingly, the remaining landholding also can no longer be part of his retention area
and therefore shall be covered under Comprehensive Agrarian Reform Program. As
narrated above, the remaining land that pertained to Transfer Certificate of Title No.
17680 was divided into sub-lots, of which two (2) of the lots (the land covered by
Transfer Certificate of Title Nos. 344281 and 344282) were thereafter registered in the
name of Romeo C. Carriedo.

1) Both the Constitution and Comprehensive Agrarian Reform Law of

19886 underscore the underlying principle of the agrarian reform program, that is, to
endeavor a more equitable and just distribution of agricultural lands taking into
account, among others, equity considerations. The objective of Department of Agrarian
Reform Administrative Order No. 05, Series of 2006 is equitable — that in order to
ensure the effective implementation of the law, previous sales of landholding (without
Department of Agarian Reform clearance) should be treated as the exercise of
retention rights of the landowner, as embodied in Item No. 4 of the said administrative
order.

2) The equity in this policy of Department of Agrarian Reform Administrative Order No.
05, Series of 2006 is apparent and easily discernible. With the sale of the lands, it was
reasonably presumed that the landowner already received an amount (as purchase
price) commensurate to the just compensation conformable with the constitutional
and statutory requirement. At this point, equity dictates that he ought not to claim
anymore, either in the guise of his retention area or otherwise, that which he already
received in the previous sale of his land.

3) Department of Agrarian Reform Administrative Order No. 05, Series of 2006 is in

consonance with the Stewardship Doctrine, under which private property is supposed
to be held by the individual only as a trustee for the people in general, who are its real
owners. As a mere steward, the individual must exercise his rights to the property not
for his own exclusive and selfish benefit but for the good of the entire community or
nation. Property use must not only be for the benefit of the owner but of society as
well. The State, in the promotion of social justice, may regulate the acquisition,
ownership, use, enjoyment, and disposition of private property, and equitably diffuse
property ownership and profits.

4) The objective of land distribution to the landless farmers and farmworkers is carried
out by Item No. 4, Statement of Policies, Department of Agrarian Reform
Administrative Order No. 05, Series of 2006, as it provides for the consequences in
situations where a landowner had sold portions of his/her land with an area more than
the statutory limitation of five (5) hectares. In this scenario, such administrative order
treats the sale of the first five hectares as the exercise of the landowner’s retention
rights because, effectively, the landowner has already chosen, and in fact has already
disposed of, and has been duly compensated for, the area he is entitled to retain under
the law.

5) Item No. 4, Statement of Policies, Department of Agrarian Reform Administrative

Order No. 05, Series of 2006 is consistent with Section 707 of the Comprehensive
Agrarian Reform Law of 1988, as the former likewise treats the sale of the first five
hectares (in case of multiple/series of transactions) as valid, such that the same already
constitutes the retained area of the landowner. This legal consequence arising from the
previous sale of land therefore eliminates the prejudice, in terms of equitable land
distribution, that may befall the landless farmers and farmworkers.

6) Finally, the sale of Romeo C. Carriedo’s landholdings was made in violation of the
Comprehensive Agrarian Reform Law of 19888, having been made without the
clearance of the Department of Agrarian Reform. To rule that Romeo C. Carriedo was
still entitled to retain the land covered by Transfer Certificate of Title Nos. 344281 and
344282 will, in effect, reward the violation, which the Court maintains will not allow.
The Court stressed that the right of retention serves to mitigate the effects of
compulsory land acquisition by balancing the rights of the landowner and the tenant,
and by implementing the doctrine that social justice is not meant to perpetrate an
injustice against the landowner.

In this case, however, the Court noted that Romeo C. Carriedo has claimed his right
over the land covered by Transfer Certificate of Title Nos. 344281 and 344282, not
because he was “deprived” of a portion of his land as a consequence of compulsory
land coverage, but precisely because he already previously sold his landholdings, so
that the remaining portion would still be his.

The Court accordingly stated that although the exercise by a landowner of his retention
right is constitutionally guaranteed, the same should not be done without due regard
to other considerations which may affect the implementation of the agrarian reform
program. This is especially true when such exercise pays no heed to the intent of the
law, or worse, when such exercise amounts to its circumvention.

The Court upheld the validity of Item No. 4, Statement of Policies, Department of
Agrarian Reform Administrative Order No. 05, Series of 2006. As a corollary, Romeo C.
Carriedo no longer possessed retention rights to the land covered by Transfer
Certificate of Title Nos. 344281 and 344282.

Spouses Pasco v. Pison-Arcedo Agricultural Land

Facts:
Pison-Arceo Agricultural and Development Corporation, is the registered owner of
a parcel of land in Negros Occidental. Constructed on the said land are houses occupied
by the corporation‘s workers. Jesus Pasco et al. are former workers of the corporation.
When their employment contracts were terminated, they were asked to vacate the
house but they refused to do so. The corporation thereafter filed a complaint for
unlawful detainer before the Metropolitan Trial Court in Cities in Bacolod City. The trial
court rendered judgment in favor of Pasco et al. On appeal, the Regional Trial Court
affirmed the decision. Pasco et al. appealed the decision contending that the court has
no jurisdiction over the case on the ground of a pending agrarian
reform dispute between them and the corporation.
The Court of Appeals rendered a decision which affirmed the RTC‘s decision.

Issue:
Whether or not one who has been identified by the Department of Agrarian Reform
(DAR) as potential agrarian reform beneficiary may be ejected from the land where he
is identified as such, by the landowner, who has already been notified by the DAR of
the coverage of his land by the Comprehensive Agrarian Reform Program of
the government

Ruling:
The issuance during the pendency of the case of a Notice of Coverage to Pison-Arceo
Agricultural and Developmevnt Corporation does not, however, automatically make the
ejectment case an agrarian dispute over which the Department of Agrarian Reform
Adjudication Board (DARAB) has jurisdiction. The issuance of a Notice of Coverage is
 merely a preliminary step for the State‘s acquisition of the land for agrarian
reform purposes and it does not automatically vest title or transfer the ownership of
the land to the government.

Since during a field investigation the DAR and Land Bank of the Philippines would make
a determination as to whether, among other things, “the land will be placed under
agrarian reform, the land‘s suitability to agriculture,” a Notice of Coverage does not
ipso facto render the land subject thereof a land reform area. The owner retains its
right to eject unlawful possessors of his land, as what respondent Pison- Arceo
Agricultural and Development Corporation did in the present case.

Nothing in the records of the case shows that the DAR has made an award in favor of
Spouses Pasco et al. Hence, no rights over the land they occupy can be considered to
have vested in their favor in accordance with Section 24 of the CARL which provides
that the rights and responsibilities of the beneficiary shall commence from the time the
DAR makes an award of the land to him, which award shall be completed within one
hundred eighty (180) days from the time the DAR takes actual possession of the land.

 Section 26, RA 6677

Payment by Beneficiaries
Payment by Beneficiaries . —
 Lands awarded pursuant to thisAct shall be paid for by the beneficiaries to
the LBP in thirty (30) annual amortization 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 production 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 repayment
affordable.
 The LBP shall have a lien by way of mortgage on the land awarded to the
beneficiary; and this mortgage may be foreclosed by the LBP for non-
payment of an aggregate of three (3) annual amortizations. The LBP shall
advise the DAR of such proceedings and the latter shall subsequently
award the forfeited landholdings to other qualified beneficiaries. A
beneficiary whose land, as provided herein, has been foreclosed shall
thereafter be permanently disqualified from becoming a beneficiary under
this Act.

Facts:
Corporate Farms
The SC en banc voted 11-0 dismissing the petition filed by HLI Affirm with
modifications the resolutions of the Presidential Agrarian Reform Council (PARC
for brevity) revoking Hacienda Luisita Inc.  (HLI for brevity) Stock Distribution
Plan (SDP) and placing the subject land in HL under compulsory coverage of the
CARP of the government.

Thereafter, the SC voting 6-5 averred that there are operative facts that
occurred in the premises.  The SC thereat declared that the revocation of the
SDP shall, by application of the operative fact principle, give the 5296 qualified
Farmworkers Beneficiaries (FWBs for brevity) to choose whether they want to
remain as HLI stockholders or choose actual land distribution. Considering the
premises, DAR immediately scheduled a meeting regarding the effects of their
choice and therefrom proceeded to secret voting of their choice.

The parties, thereafter, filed their respective Motion for Reconsideration

regarding the SC’s decision.

Issue:

1)   Whether or not operative fact doctrine is applicable in the said case.

2)   Whether or not Sec. 31 of R.A. 6657 unconstitutional.

3)   Whether or not the 10-year period prohibition on the transfer of awarded

lands under RA 6657 lapsed on May 10, 1999, since Hacienda Luisita were
placed under CARP coverage through the SDOA scheme on May 11, 1989, and
thus the qualified FWBs should now be allowed to sell their land interests in
 Hacienda Luisita to third parties, whether they have fully paid for the lands or
not?

4)   Whether or not qualified FWBs shall be entitled to the option of remaining

as stockholder be reconsidered.

Ruling:

1)   Operative Fact Doctrine is applicable to the instant case. The court ruled
that the doctrine is not limited only to invalid or unconstitutional law but also to
decisions made by the president or the administrative agencies that have the
force and effect of laws, especially if the said decisions produced acts and
consequences that must be respected. That the implementation of PARC
resolution approving SDP of HLI manifested such right and benefits favorable to
the FWBs;

2)   The SC said that the constitutionality of Sec. 31 of R.A. 6657 is not the lis
mota of the case and it was not raised at the earliest opportunity and did not
rule on the constitutionality of the law;

3)   The SC ruled that it has not yet lapsed on May 10, 1999, and qualified FWBs
are not allowed to sell their land interest in HL to third parties; That the start of
the counting of the prohibitive period shall be ten years from the issuance and
registration of the Emancipation Patent (EP for brevity) or Certificate of Land
Ownership Award (CLOA for brevity), and considering that the EPs and CLOAs
have not yet been issued, the prohibitive period has not started yet.

4)   The SC ruled in the affirmative, giving qualified FWBs the option to remain
as stockholder

YES, the ruling in the July 5, 2011 Decision that the qualified FWBs be given an
option to remain as stockholders of HLI should be reconsidered.

[The Court reconsidered its earlier decision that the qualified FWBs should be
given an option to remain as stockholders of HLI, inasmuch as these qualified
FWBs will never gain control [over the subject lands] given the present
proportion of shareholdings in HLI. The Court noted that the share of the FWBs
in the HLI capital stock is [just] 33.296%. Thus, even if all the holders of this
33.296% unanimously vote to remain as HLI stockholders, which is unlikely,
control will never be in the hands of the FWBs.  Control means the majority of
[sic] 50% plus at least one share of the common shares and other voting
shares.  Applying the formula to the HLI stockholdings, the number of shares
that will constitute the majority is 295,112,101 shares (590,554,220 total HLI
capital shares divided by 2 plus one [1] HLI share).  The 118,391,976.85 shares
subject to the SDP approved by PARC substantially fall short of the 295,112,101
shares needed by the FWBs to acquire control over HLI.]

The SC PARTIALLY GRANTED the motions for reconsideration of respondents

PARC, et al., The 6,296 original FWBs shall forfeit and relinquish their rights
over the HLI shares of stock issued to them in favor of HLI.  The HLI Corporate
Secretary shall cancel the shares issued to the said FWBs and transfer them to
HLI in the stocks and transfer book. The 4,206 non-qualified FWBs shall remain
as stockholders of HLI.

SECTION 27. Transferability of Awarded Lands. –

 Lands acquired by beneficiaries under this Act may not be sold,
Transferability of Acquired Land under CARL, transferred or conveyed except through hereditary succession, or to the
as amended government, or to the LBP, or to other qualified beneficiaries for a period
of ten (10) years:
 Provided, however, That the children or the spouse of the
transferor shall have a right to repurchase the land from the
government or LBP within a period of two (2) years.
 Due notice of the availability of the land shall be given by the
LBP to the Barangay Agrarian Reform Committee (BARC) of the
barangay where the land is situated. The Provincial Agrarian
Reform Coordinating Committee (PARCCOM) as herein
provided, shall, in turn, be given due notice thereof by the
BARC.
 If the land has not yet been fully paid by the beneficiary, the rights to the
land may be transferred or conveyed, with prior approval of the DAR, to
any heir of the beneficiary or to any other beneficiary who, as a condition
for such transfer or conveyance, shall cultivate the land himself.
 Failing compliance herewith, the land shall be transferred to the LBP which
shall give due notice of the availability of the land in the manner specified
in the immediately preceding paragraph.
 In the event of such transfer to the LBP, the latter shall compensate the
beneficiary in one lump sum for the amounts the latter has already paid,
together with the value of improvements he has made on the land.

Case:

Vda De Panillo v. Dizon

Facts:
De Panlilio is the owner of the disputed landholdings over a vast tract of land,
with an aggregate area of 115.41 hectares called Hacienda Masamatlocated in
Masamat, Mexico, Pampanga covered by TCT Nos. 3510, 3513, 3514, 3515,
3522, 3523, 3524, 3525, 3526, 3528, 3530, 3531, 3532, 3533, RT-499 (9191),
and RT-500 (11670), all of the Pampanga Registry of Deeds.

On April 19, 1961, Panlilio entered into a contract of lease over the said
landholdings with Paulina Mercado, wife of Panlilio's nephew. The contract of
lease was subsequently renewed on October 13, 1964 and September 18, 1974,
covering agricultural years from 1961 to 1979.

Sometime in 1973, pursuant to the OLT under PD 27, the Department of

Agrarian
Reform (DAR) issued thirty eight (38) Certificates of Land Transfer (CLTs) to
Panlilio's tenants. The tenant-awardees were made defendants in the instant
consolidated complaints filed by petitioner Lizares.

Lessee Paulina Mercado filed a letter-complaint with the DAR questioning the
issuance of CLTs to Panlilio's tenants, alleging, among others, that the DAR
should not have issued the CLTs since the land involved was principally being
planted with sugar and was outside the coverage of PD 27. She claimed that
respondents surreptitiously planted palay (rice plant) instead of sugar in order to
bring the land within the purview of the law. After proper investigation, the DAR
concluded that the CLTs were "properly and regularly issued."

Paulina Mercado likewise filed a similar complaint with the Court of Agrarian
Relations (CAR) at San Fernando, Pampanga. The tenants of the portion of the
land planted with sugar cane petitioned the DAR to cause the reversion of their
sugarland to riceland so that it may be covered by the Agrarian Reform Law.
The petition was with the conformity of Panlilio.

Thus, on January 12, 1977, Panlilio executed an Affidavit, That it is my desire

that my entire subject property which is referred to as Hacienda Masamat be
placed under the coverage of P.D. 27 without exception and that thereafter the
same be sold to tenant-petitioners.

Ruling:

Petitioner Lizares asseverates that ownership of lands granted to tenant-farmers

under PD 27 may not be transferred or conveyed to third parties except by
hereditary succession or to the Government. He contends that the CA
committed grave abuse of discretion in declaring the sale of the land by private
respondents Gonzalo Dizon, et al. to third persons valid. The CA ratiocinated
that EO 228 was enacted after PD 27 and since EO 228 is a later law, it will
prevail over PD 27. Thus, the ownership of the lot may now be transferred to
persons other than the heirs of the beneficiary or the Government.
Petitioner is correct.

EO 228 not inconsistent with PD 27 on prohibition of transfers. The prohibition

in PD 27, the Tenants Emancipation Decree, which took effect on October 21,
1972, states that "[t]itle to land acquired pursuant to this Decree or the Land
Reform Program of the Government shall not be transferable except by
hereditary succession or to the Government in accordance with the provisions of
this Decree, the Code of Agrarian Reforms and other existing laws and
regulations.

Hereditary succession means succession by intestate succession or by will to the

compulsory heirs under the Civil Code, but does not pertain to testamentary
succession to other persons. "Government" means the DAR through the Land
Bank of the Philippines which has superior lien by virtue of mortgages in its
favor.
Thus, PD 27 is clear that after full payment and title to the land is acquired, the
land shall not be transferred except to the heirs of the beneficiary or the
Government. If the amortizations for the land have not yet been paid, then
there can be no transfer to anybody since the lot is still owned by the
Government. The prohibition against transfers to persons other than the heirs of
other qualified beneficiaries stems from the policy of the Government to develop
generations of farmers to attain its avowed goal to have an adequate and
sustained agricultural production. With certitude, such objective will not see the
light of day if lands covered by agrarian reform can easily be converted for non-
agricultural purposes.